Mannatech to launch new weight management line in bid to regain momentum

By Hank Schultz contact

- Last updated on GMT

Mannatech to launch new line to regain momentum

Related tags: Revenue

Mannatech, a network marketing company founded on its patented ‘glyconutrient’ line of dietary supplements, is set to unveil a new weight management line the company hopes will boost results after a lukewarm earnings report.

The company said it passed 100 total global patents on its ‘glyconutrient’ technology in 2015 and now holds 118 patents worldwide. Like other network marketing companies selling nutritional products, such as Herbalife and Usana, Mannatech now reaps more sales in Asia than elsewhere, making it more vulnerable to currency headwinds in the newly unsettled global currency markets.

Overall net sales for the year ended December 31, 2015 decreased $9.8 million, or 5.2%, compared to 2014. During 2015, fluctuations in foreign currency exchange rates had an overall $11.8 million unfavorable impact on the company’s net sales. Net income for 2015 was $5.8 million, or $2.14 per diluted share, as compared to $6.5 million, or $2.40 per diluted share, for 2014. Without the currency setbacks, the company said it would have posted a slightly positive return. Sales for the year came in at $180 million, a decline from $190 million in 2014. With adjustment for currency setbacks, the annual sales would have come in about flat, the company said. Declines in the currencies of South Korea, Japan and Australia were the most detrimental to the bottom line, the company said.

For the year ended December 31, 2015, Mannatech’s operations outside of North America accounted for approximately 59.3% of Mannatech’s consolidated net sales whereas in the same period in 2014, operations outside of North America accounted for 57.5% of consolidated net sales.

Mannatech also showed the same worrisome trend as have other network marketers of dietary supplements, that being a significant decline it its North American business. For the year ended December 31, 2015, North American net sales decreased by $7.5 million, or 9.3%, to $73.3 million, as compared to $80.8 million in 2014. The decreases were due to declines in associates and members holding active positions in the company’s network.

Revitalization scheme

CEO Alfredo Bala said that Mannatech is launching a new weight management line at its upcoming annual sales event in Dallas in early April in an effort to turn the company around. The revamp includes new branding and a new compensation plan to make the company’s business opportunity more attractive. Bala was promoted to CEO in August 2015, and has been “a key contributor to bringing Mannatech back to profitability”​ according to a company statement.

“We have been investing in these initiatives for quite some time, and as a part of that planning strategy we also implemented some changes throughout the fourth quarter of 2015. These changes were designed to help engage associates with the company and drive positive sales growth,”​  Bala said in an earnings call with analysts. The company did not take questions in the call that was posted in transcript form on the investing site seekingalpha.com​.

All of this should come as good news to San Marcos, CA-based contract manufacturer Natural Alternatives International, which lists Mannatech as its second-largest customer. Mannatech’s stock price remained for the most part unchanged on the tepid earnings report, trading at around $23 a share. The company’s share price has rebounded from a low of less than $4 a share in 2012, hitting a 5-year high of more than $31 in early 2013. 

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