Mannatech(MTEX) - 2023 Q3 - Quarterly Report

Financial Performance - Consolidated net sales for Q3 2023 decreased by $2.9 million, or 8.3%, to $32.6 million compared to $35.5 million in Q3 2022[110] - For the nine months ended September 30, 2023, net sales decreased by $3.6 million, or 3.5%, to $99.3 million from $102.9 million in the same period in 2022[116] - The company reported a net income of $18, a decline of 98.5% from $1.2 million in Q3 2022[112] - For the nine months ended September 30, 2023, the company reported a net loss of $483, compared to a net income of $2.0 million in the same period in 2022[113] - For the nine months ended September 30, 2023, gross profit decreased by $2.2 million, or 2.8%, to $78.2 million compared to $80.4 million for the same period in 2022[141] Sales and Revenue Breakdown - Net sales outside the Americas accounted for approximately 67.2% of consolidated net sales in Q3 2023[110] - The company operates in three regions: Americas, EMEA, and Asia/Pacific, with Asia/Pacific contributing 60.1% of net sales in Q3 2023[117] - For the nine months ended September 30, 2023, net sales in the Americas increased by $1.2 million, or 3.9%, to $31.8 million compared to $30.6 million for the same period in 2022[119] - For the nine months ended September 30, 2023, Asia/Pacific net sales decreased by $3.2 million, or 5.1%, to $60.0 million compared to $63.2 million for the same period in 2022[123] - For the nine months ended September 30, 2023, EMEA net sales decreased by $1.6 million, or 17.6%, to $7.5 million compared to $9.1 million for the same period in 2022[125] Operating Expenses - Operating expenses for Q3 2023 totaled $25.8 million, a decrease of $984,000 or 3.7% from $26.7 million in Q3 2022[112] - Commissions and incentives for Q3 2023 were $13.2 million, a decrease of 7.5% from $14.2 million in Q3 2022[112] - Commission expense for Q3 2023 decreased by 7.9% to $12.4 million, while as a percentage of net sales, it increased to 38.2% from 38.1% in Q3 2022[143] - Selling and administrative expenses for Q3 2023 increased by 4.4% to $6.9 million, with expenses as a percentage of net sales rising to 21.3% from 18.7% in Q3 2022[148] - Other operating costs for Q3 2023 increased by 1.1% to $5.2 million, with costs as a percentage of net sales increasing to 15.9% from 14.4% in Q3 2022[151] Cash Flow and Liquidity - For the nine months ended September 30, 2023, net cash flows from operating activities were negative at $(1.0) million, compared to positive cash flow of $0.5 million in the same period of 2022[164] - Cash and cash equivalents decreased by 42.5% to $7.9 million as of September 30, 2023, from $13.8 million at the end of 2022[160] - The company has suspended the payment of quarterly dividends to preserve approximately $0.4 million in cash[161] Currency and Market Risks - Foreign currency exchange had a negative impact on revenue, decreasing it by $2.0 million for the nine months ended September 30, 2023, primarily due to the weakening of the Korean Won, Japanese Yen, and Australian Dollar[123] - The company is exposed to currency exchange rate fluctuations, which could positively or negatively affect consolidated financial results[193] - The average currency exchange rates for various countries as of September 30, 2023, include Australia at 0.66907, Canada at 0.74331, and the United Kingdom at 1.24459[193] - The company closely monitors exposure to currency fluctuations across various regions including the Americas, EMEA, and Asia/Pacific[195] Shareholder Information - As of September 30, 2023, the company had 108,468 shares available for future stock option grants and granted 5,000 stock options during the nine months ended September 30, 2023[190] - The estimated fair value per stock option granted was $4.32, with an annualized dividend yield of 6.4%, a risk-free rate of return of 4.0%, and common stock price volatility of 66.5%[189] Internal Controls and Compliance - No changes in internal control over financial reporting during the quarter ended September 30, 2023, that materially affected the internal control[197] - The company has effective disclosure controls and procedures to ensure timely reporting of required information[196] - Management has concluded that the disclosure controls are effective as of the end of the reporting period[196] - The company does not have any recorded uncertain income tax positions as of September 30, 2023, and is subject to periodic audits from multiple tax authorities[180]