Mannatech, Inc. (MTEX)
Q2 2009 Earnings Call
August 05, 2009 10:00 am ET
Gary M. Spinell - Vice President of Finance and Administration
Wayne L. Badovinus - President and Chief Executive Officer
Stephen D. Fenstermacher - Chief Financial Officer
Peter Park - Park West Asset Management
Previous Statements by MTEX
» Mannatech, Incorporated Q3 2009 Earnings Call Transcript
» Mannatech Q1 2009 Earnings Call Transcript
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Gary M. Spinell
Thank you. Good morning, everyone. This is Gary Spinell, and I welcome you to Mannatech's second quarter 2009 earnings call. 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 terminology 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 submission.
Thank you, and now I will turn the call over to Mr. Wayne Badovinus, Mannatech's President and CEO.
Wayne L. Badovinus
Hello, and good morning, everyone. This is Wayne Badovinus, President and CEO of Mannatech. It is a pleasure to be here to update you on our progress. The economic environment and current foreign exchange market continue to create a challenging environment for most companies and Mannatech is no exception. At the same time, we are beginning to build on the foundation of sales and recruiting growth we described in our last call. We believe maintaining this recruiting growth and ultimately generating sales and profitability will be the result.
Our version of an economic stimulus plan or the Y.E.S. Plan as we call it, was launched in late January. There has been great associate enthusiasm and excitement about this plan, throughout North America and South Africa. Our domestic pack sales have increased dramatically compared to last year. Quarterly recruiting totals are at the highest level in over a year and attendance at our regional events is up appreciably compared to last year, and we continue to aggressively manage expense levels.
While many of our results are positive, the company still reported a net loss of $5.5 million or $0.21 per share in the second quarter of 2009. This compares to a net loss of $10.5 million or $0.40 loss per share for the second quarter of 2008.
Net income was negatively impacted due to the short-term costs associated with greater pack sales and expanding our customer base. Steve Fenstermacher, our CFO, will provide additional insight on this in a few minutes.
Our operating expenses for the second quarter of 2009 were $29.9 million, a 38.6% savings compared to the second quarter of 2008. We have now operated at lower levels of operating expenses for a full year. Second quarter 2009 sales were $77.6 million, a decrease of 10.6% from the same quarter in 2008.
Although North American market sales were lower than last year by 11.6%, they were up 8.8 compared to the first quarter of this year. International sales in the quarter were down 9.1% versus prior year results. This decrease was partly due to the challenging economy worldwide and negative foreign currency rates. At the same time we see evidence that our emphasis on Mannatech's business-building opportunity, our proprietary products, is beginning to generate increasing results.
International sales were actually slightly higher for the quarter in comparison to the second quarter of 2008 when calculated on a local currency basis. We see additional evidence the business is coming to life. Earlier I mentioned the increase in regional meeting attendance. Our message of a great business opportunity combined with a unique line of proprietary products is reaching many new demographics. There has been a much more diverse audience at our events, including many from the Hispanic community. In fact, this more diverse audience has required us to have translation capabilities available at our regional meetings in multiple languages.
Our increasing worldwide presence is creating growth around the globe. During the last quarter, an associate became our first Platinum Presidential from South Africa. Also of note we now have a Platinum Presidential who has a downline represented in all 12 countries in which Mannatech currently operates its business.
Our presidential level is a major achievement in our associate base. The platinum level has the distinction of being the highest level presidential, so the creation of a new platinum and the growth of existing platinums is very significant in relationship to our company's growth.
We also are seeing strong evidence of growth in our associate leadership levels. Our North American associates reach new leadership levels in the second quarter at double the rate of the first quarter. The increase was almost more than all of last year. Leadership level growth to date is 42% higher than all of last year combined. One of our key Mannatech athletes will reach presidential status in the next few months. Ten more are in position to also achieve this level in the next six months.