COPPELL, Texas, Aug 08, 2007 (BUSINESS WIRE) -- Mannatech, Inc. (MTEX) today reported second quarter earnings of $0.06 per diluted share for the three months ended June 30, 2007, down 80.6% from the second quarter, 2006, earnings per diluted share of $0.31. Net income for the second quarter, 2007, declined to $1.5 million, a decrease of 82.3% compared to $8.6 million in the second quarter of 2006. Pretax profit was $2.6 million, a decrease of 80.4% compared to $13.4 million in the same period last year. Additional depreciation expense occurred in the second quarter mainly due to the launch of a new Enterprise Resource Planning Software (GlobalView) system at the beginning of the quarter, which impacted pre-tax earnings by $1.4 million.
Second quarter net sales for 2007 were $111.2 million, an increase of 6.1% compared to $104.8 million in the second quarter of 2006. Strong sales gains in our Asian markets plus increased pack sales driven by the U.S. launch of the Optimal Skin Care System helped account for the sales growth.
Total independent Associate and Member count based on a 12-month trailing period increased to 569,000 for the second quarter of 2007 as compared to 526,000 for the second quarter of 2006. The 8.2% growth resulted from higher retention of continuing independent Associates and Members which were up 61,000, a 19.7% increase compared to the same period last year. This increase was partially offset by an 8.3% decline in new independent Associates and Members on a 12-month trailing basis.
Sam Caster, Chairman of the Board and CEO commented, "On a quarter-to-quarter basis, we added the largest number of new independent Associates and Members since the second quarter of 2006. At the same time, we experienced higher than expected operating expenses due to the integration of our new GlobalView system and upgraded web interface used by Associates. In addition, several other factors contributed to increased operating expenses, including higher commissions and incentives, higher cost of goods sold, and increased legal expenses, leading to a considerable reduction in profit."
Mr. Caster continued, "We have addressed a number of the issues that arose during the implementation phase of our GlobalView system and web interface, and those systems are now running closer to expectations. However, in addition to continuing higher depreciation, we expect to incur greater than historical expenses at least through the end of 2007, to ensure reaching the system's full potential."
Year-to-date sales through June reached $216.0 million, up 6.0% from 2006. Net income for the six-month period was $8.4 million, down 42.0% from last year's net income of $14.5 million. Diluted earnings per share were $0.31, a decrease of 41.5% versus $0.53 for the six-months ended June 2006.
Mannatech, Incorporated is a global wellness solutions provider of innovative, high-quality, proprietary nutritional supplements, topical and skin care products, and weight management products sold through independent Associates and Members located in the United States and the international markets of Canada, Australia, the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, Denmark, and Germany.
Please Note: This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of phrases or terminology such as "will continue" or other similar words or the negative of such terminology. Similarly, descriptions of Mannatech's objectives, strategies, plans, goals or targets contained herein are also considered forward-looking statements. Mannatech believes this release should be read in conjunction with all of its filings with the United States Securities and Exchange Commission and cautions its readers that these forward-looking statements are subject to certain events, risks, uncertainties, and other factors. Some of these factors include, among others, Mannatech's inability to attract and retain associates and members, increases in competition, litigation, regulatory changes, and its planned growth into new international markets. Although Mannatech believes that the expectations, statements, and assumptions reflected in these forward-looking statements are reasonable, it cautions readers to always consider all of the risk factors and any other cautionary statements carefully in evaluating each forward-looking statement in this release, as well as those set forth in its latest Annual Report on Form 10-K, and other filings filed with the United States Securities and Exchange Commission, including its current reports on Form 8-K. All of the forward-looking statements contained herein speak only as of the date of this release.