Earnings Labs

Mannatech, Incorporated (MTEX)

Q3 2012 Earnings Call· Thu, Nov 8, 2012

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Transcript

Operator

Operator

Greetings. And welcome to the Mannatech Incorporated Third Quarter 2012 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 our moderator for the call today, Mr. Mark Nicholls, Chief Financial Officer. Mr. Nicholls, you may begin.

Mark Nicholls

Management

Thank you. Good morning, everyone. This is Mark Nicholls, and welcome to Mannatech’s third quarter 2012 earnings call. Today, you will hear from both me and Mannatech’s CEO and Chief Science Officer, Dr. Rob Sinnott. 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 will, continue, may, believe, intend, expects, potential, should, and plan, or other similar 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. At this time, I’ll make a few comments concerning the third quarter. The third quarter 2012 net sales were $43 million, a 14.8% decrease from the third quarter 2011 net sales of $50.5 million. The total number of active independent associates and members based on a 12-month trailing period were approximately 233,000 as of September 30, 2012, compared to approximately 239,000 as of September 30, 2011, a decrease of only 2.5%. Recruitment of new independent associates and members in the third quarter of 2012 was approximately 27,600 compared to approximately 20,000 in the third quarter of 2011 or an increase of 38.4%. The increase in recruitment is due to an increase in the number of numbers. As a reminder, a member is a customer of an associate who purchases the company’s products at a discount from published retail prices primarily for personal use. During the second quarter of 2012, the North American associates were offered a business building opportunity not previously available to them. The four…

Dr. Rob Sinnott

Management

Good morning everyone. During the third quarter of 2012 Mannatech continued it’s focus on honing its sales proposition to increase the number of people recruited into our company. The third quarter saw the recruiting trend continue from the first and second quarters of 2012. There were 27,610 new independent associates and members in the third quarter. As compared to 19,950 new independent associates and members in the third quarter of last year. This third data point have increased year-over-year recruiting suggest that a sustainable recruiting trend maybe occurring for Mannatech. During the third quarter Mannatech continued rolling out our global value innovation strategy to the world. The lead product in this strategy is NutriVerus. NutriVerus is a cost effective natural vitamin supplement powder that can be added to virtually any food or beverage that people consume. It provides vitamins and minerals, antioxidants and Mannatech’s patented glyconutrient technology in a base of organic fruits and vegetables plus nutrients (inaudible). Mannatech’s associates and members have hosted 100s of events including many home parties featuring NutriVerus’ way to introduce new customers to natural food supplementation. We believe these events called extreme food makeovers or XFM events in short, have been very popular with both new and long established customers. The extreme food makeover kit containing instructions, DVD, invitations, recipes, and other support materials were introduced at the North American MannaQuest Convention in September 2012. And since that even they have been rolling out worldwide. Also, in the third quarter Mannatech’s sales and training conventions were held in Japan, Taiwan, and Australia. These events were customized to specific cultures, but had common thematic[ph] threads running throughout. These threads consisted of using new products and tools as well as proven techniques in an effort to cast a wider recruiting net. With the goal of catching many brand new customers who use dietary supplements but are currently unaware of Mannatech’s real food technology product offerings. I am excited and have renewed enthusiasm about Mannatech because of what I am seeing among our independent associates. They are holding many more meetings per month than they had in many years and as a result they are having increasing success recruiting new members into their Mannatech businesses. We believe our joint efforts in the field and in the corporate office are positively impacting the associate recruiting in North America and also influencing key business metrics in our other markets as well. As a corporate management team, we have grown in our experience by working together as an increasingly cohesive team. As Mannatech is matured we’ve been through some significant growth challenges that have actually strengthened our core structure. Over the past couple of years, we have renewed our attention to bottom line expenses focusing on core business activities and building on sales initiatives that truly resonate with our unique set of independent associates. As always I thank you for your support and your continuing interest in our company.

Operator

Operator

That concludes today’s conference call, you may now disconnect your line.