Earnings Labs

Mannatech, Incorporated (MTEX)

Q4 2017 Earnings Call· Thu, Mar 29, 2018

$4.59

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Transcript

Operator

Operator

Greetings, and welcome to the Mannatech Incorporated Fourth Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. Now I’d like to introduce your moderator for the call today, Mr. David Johnson, Chief Financial Officer. Mr. Johnson, you may begin.

David Johnson

Management

Thank you. Good morning, everyone. This is David Johnson, and welcome to Mannatech’s fourth quarter 2017 earnings call. Today you will hear from both me and Mannatech’s President and Chief Executive Officer, Al Bala. Before we begin the call, I will first read the safe harbor statement. During this conference call, we may make forward-looking statements, which can involve future events or future financial performance. Forward-looking statements generally can be identified by the use of phrases or terminologies such as may, will, should, could, would, expects, plans, intends, anticipates, believes, estimates, approximates, predicts, projects, hopes, potential and continues and other words or the negative of such terminology. We caution listeners that such forward-looking statements are subject to certain events, risks, uncertainties and other factors and speak only as of today. We also refer our listeners to review our SEC submissions. As part of this presentation, we will use constant dollar reporting to supplement our financial results presented in accordance with generally accepted accounting principles in the United States, or GAAP and disclose operating results that have been adjusted to exclude the impact of changes due to translation of foreign currencies into U.S. dollars, including changes in net sales, gross profit and income from operations. We use these non-GAAP measures to provide investors with additional perspectives on trends. At this time, I will make a few comments concerning our fourth quarter of 2017 operating results. Fourth quarter net sales for 2017 were $46.4 million, an increase of $3.8 million or 8.9% as compared to $42.6 million in the fourth quarter of 2016. On a constant dollar basis, net sales for fourth quarter 2017 increased by $2.8 million as compared to the prior year. As for the year, overall net sales decreased by $3.6 million to $176.7 million for 2017 as compared…

Al Bala

Management

Thank you, David. Hello, everyone, and thank you for joining us on our fourth quarter earning call for 2017. I am Mannatech’s CEO and President, and I would like to discuss the company’s fourth quarter. As you just heard earlier from our CFOs report, in the fourth quarter, we experienced a strengthening of our net sales with an increase of $3.8 million or 8.9% compared to the fourth quarter of 2016 and a quarter-to-quarter net sales increase of $4.37 million or 10.2% compared to Q3 of 2017. Our net sales increase was a result of some very strategic seasonal limited-time offer promotions in some of our fastest growing markets including Korea, Hong Kong and China e-commerce. With the continued maturing of our newly introduced compensation plan, designed to incentivize a proper behavior for our existing associates, especially in the area of new customer acquisition and product sales, we experienced an increase in the size of fourth quarter average order by 28.6% compared to last year and 13.1% fourth quarter compared to third quarter. The new compensation plan also promotes a very strong culture of rank advancement, which is propelling many of our associate leaders globally to new ranks, creating a healthy environment for sales growth. In Q4, we celebrated at Asia MannaFest, our annual event held in Seoul, Korea, which honors our Asian independent sales associate. There we launched the premium line of Luminovation as a follow-up to the mass-market line of skin care products launched in Q2. Korean beauty or K-beauty is the most exciting trend in skincare today, and we are delighted to have such an innovative, powerful line of skincare to offer our associates and customers. We enjoyed strong sales of the new premium line, and we are evaluating where to introduce this incredible line of product…