Mannatech(US:MTEX)2024-05-14 16:47Financial Performance - Consolidated net sales for Q1 2024 were $29.4 million, a decrease of $4.7 million or 13.8% compared to $34.1 million in Q1 2023[113] - Net income for Q1 2024 was $1.2 million, or $0.63 per diluted share, compared to $0.6 million, or $0.32 per diluted share in Q1 2023, representing a 95.4% increase[115] - Gross profit for Q1 2024 was $23.1 million, a decrease of $3.6 million or 13.5% compared to $26.7 million in Q1 2023[116] - Operating income for Q1 2024 was $0.8 million, an increase of $0.1 million or 15.0% compared to $0.7 million in Q1 2023[114] - Product sales for Q1 2024 decreased by $4.0 million or 12.5%, reflecting a 7.1% decrease in the number of orders processed[125] Regional Performance - Net sales in the Asia/Pacific region decreased by $4.0 million or 19.0% to $17.1 million, primarily due to a 21.9% decrease in revenue per active independent associate and preferred customer[122] - The Americas accounted for 34.7% of consolidated net sales in Q1 2024, down from 30.8% in Q1 2023, with net sales decreasing by $0.3 million or 2.9%[121] - The company’s operations outside of the Americas accounted for approximately 65.3% of consolidated net sales in Q1 2024, down from 69.2% in Q1 2023[120] Associate and Customer Metrics - The number of new independent associates and preferred customers recruited decreased by 13.6% to 16,027 in Q1 2024 from 18,547 in Q1 2023[126] - Revenue per active independent associate and preferred customer decreased by 4.4% in the Americas, while the number of active associates and preferred customers increased by 1.6%[121] Expenses and Cash Flow - Commission expense decreased by 13.4%, or $1.7 million, to $11.2 million for the three months ended March 31, 2024, compared to $12.9 million for the same period in 2023[132] - Selling and administrative expenses decreased by $1.9 million, or 15.5%, to $10.1 million for the three months ended March 31, 2024, from $12.0 million in the same period in 2023[135] - Cash and cash equivalents increased by 2.3%, or $0.2 million, to $7.9 million as of March 31, 2024, from $7.7 million as of December 31, 2023[142] - Operating activities provided $1.9 million cash for the three months ended March 31, 2024, compared to $1.4 million for the same period in 2023[146] Tax and Working Capital - The effective tax rate for the three months ended March 31, 2024, was 36.0%, down from 43.6% for the same period in 2023[139] - Working capital increased to $2.1 million as of March 31, 2024, from $1.9 million as of December 31, 2023[144] Supply Agreements and Financial Instruments - The company has a supply agreement requiring a total purchase of $3.4 million through 2025[150] - The company authorized unsecured Loan and Promissory Note agreements totaling $3.6 million for general working capital needs[154] Revenue Recognition and Return Policies - The company recognizes revenue from shipped products upon receipt by the customer, with deferred revenue recorded for orders shipped but not yet delivered[164] - The product return policy allows retail customers in the U.S. and Canada to return products for a full cash refund within 180 days, while other countries have a 90-day return window[169] - Historical estimates of sales returns have averaged 0.5% or less of gross sales, reflecting consistent return policies[168] - The estimated sales return reserve is based on historical experience over a rolling six-month period, which could materially affect revenue if actual results differ[168] Market Risk and Currency Exchange - The company does not engage in trading market risk-sensitive instruments, maintaining a conservative approach to market risk exposure[170] - The company monitors foreign currency exchange rate risks across multiple regions, including the Americas, EMEA, and Asia/Pacific[173] - The average currency exchange rates for the three months ended March 31, 2024, show fluctuations against the U.S. dollar, with the Canadian dollar averaging 0.74205 and the British pound averaging 1.26847[171] Performance Obligations - The product sales placed through automatic orders contain two performance obligations, with revenue allocated based on relative standalone selling prices[165] - The company provides associates with a complimentary three-month package for online business tools upon the first payment of an associate fee, which includes multiple performance obligations[165]