Mannatech(US:MTEX)2019-03-12 20:06Financial Data and Key Metrics Changes - The company reported a net loss of $1.6 million or $0.66 per diluted share for Q4 2018, compared to a net loss of $3.7 million or $1.37 per diluted share in Q4 2017 [5] - For the full year 2018, the net loss was $3.9 million or $1.53 per diluted share, compared to a net loss of $1.8 million or $0.66 per diluted share in 2017 [6] - Net sales for Q4 2018 were $44 million, a decrease of $2.3 million or 5% from $46.3 million in Q4 2017 [7] - Gross profit as a percentage of sales improved to 79.5% in Q4 2018 from 78.7% in Q4 2017 [8] Business Line Data and Key Metrics Changes - Commissions as a percentage of net sales were 40.2% for Q4 2018, down from 40.6% in the same period of the previous year [9] - Incentive costs as a percentage of net sales increased to 3.4% in Q4 2018 from 2.8% in Q4 2017 [10] - Overall selling and administrative expenses decreased by $0.2 million to $8.5 million in Q4 2018 compared to $8.7 million in Q4 2017 [11] Market Data and Key Metrics Changes - The number of new independent associates and preferred customer positions decreased by 2.4% in Q4 2018 compared to Q4 2017, with approximately 20,000 new positions in Q4 2018 versus 21,000 in 2017 [17] - Sales in Asia increased by 2.9% to $2.9 million, attributed to the excitement surrounding the release of new products [33] Company Strategy and Development Direction - The company is focusing on correcting margins in 2019 after incurring higher shipping and warehousing costs in Hong Kong [24] - A strategic plan is in place to control costs and improve profitability, particularly in response to higher-than-anticipated expenditures on incentives [25] - The company launched several new products in 2018, including Ambrotose LIFE and EMPACT+, which are expected to drive future growth [27][28] Management's Comments on Operating Environment and Future Outlook - Management noted a temporary slowdown in South Korea, the largest market, but indicated that sales are beginning to turn around with new leadership [23] - The company is committed to returning cash to shareholders through dividends and stock buybacks, highlighting a focus on increasing shareholder value [35] Other Important Information - The company experienced a significant decrease in cash and cash equivalents, down by $34.6 million to $30.6 million as of December 31, 2018 [19] - The relocation of the headquarters incurred a non-recurring cost of $1.3 million, which is expected to enhance operational efficiency [26] Q&A Session Summary Question: What are the reasons for the decline in net sales? - Management attributed the decline to an intentional shift from less profitable promotional activities and a temporary slowdown in South Korea [23] Question: How does the company plan to address the higher costs incurred? - The company has developed cost control processes to manage higher expenditures on incentives and shipping costs [25] Question: What is the outlook for new product launches? - The company is optimistic about the new product launches and their potential to drive growth, with several products already showing strong sales [27][28]