MANNATECH INC

RESULTS OF OPERATIONS

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

The table below summarizes our consolidated operating results in dollars and as a percentage of net sales for the three months ended March 31, 2026 and 2025*(in thousands, except percentages):*

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with GAAP, we disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: Net Sales, Gross Profit, and Loss from Operations. We refer to these adjusted financial measures as Constant dollar items, which are non-GAAP financial measures. We believe these measures provide investors an additional perspective on trends and our operating results. To exclude the impact of changes due to the translation of foreign currencies into U.S. dollars in the current year, we calculate current year results at a constant exchange rate utilizing the prior year’s rate. Currency impact is determined as the difference between the actual GAAP results and the recalculated results for the current year at the Constant dollar rates.

For the three months ended March 31, 2026, our net sales decreased $2.2 million, or 8.1% on a Constant dollar basis, (see reconciliation of Non-GAAP Financial Measures in the tables below); and foreign exchange caused a $0.5 million increase in GAAP net sales as compared to the same periods in 2025,.

A reconciliation non-GAAP financial measures to GAAP results for the three months ended March 31, 2026 and 2025 is presented as follows*(in millions, except percentages)*:

Net Sales by Region

Operations outside of the Americas accounted for approximately 73.1% of our consolidated net sales in the three months ended March 31, 2026, as compared to 66.2% in the same period last year.

Consolidated net sales by region for the three months ended March 31, 2026 and 2025 were as follows*(in millions, except percentages)*:

For the three months ended March 31, 2026, net sales in the Americas decreased by $2.3 million, or 25.6%, to $6.7 million, as compared to $9.0 million for the same period in 2025. The number of active independent associates and preferred customers decreased by 17.1%. There was a 10.2% decrease in revenue per active independent associate and preferred customer. Foreign currency had the effect of increasing revenue by $0.2 million for the three months ended March 31, 2026 when compared to the same period in 2025. The currency impact is primarily due to the strengthening of the Mexican Peso.

For the three months ended March 31, 2026, Asia/Pacific net sales increased by $0.5 million, or 3.2%, to $15.9 million, as compared to $15.4 million for the same period in 2025. There was a 21.3% increase in revenue per active independent associate and preferred customer, which was partially offset by a 14.8% decrease in the number of active independent associates and preferred customers. Foreign currency exchange had the effect of increasing revenue by $0.1 million for the three months ended March 31, 2026, as compared to the same period in 2025. The currency impact is primarily due to the strengthening of the Korean Won.

For the three months ended March 31, 2026, EMEA net sales increased by $0.1 million, or 4.5%, to $2.3 million, as compared to $2.2 million for the same period in 2025. There was a 10.9% increase in revenue per active independent associate and preferred customer, which was partially offset by a 5.8% decrease in the number of active independent associates and preferred customers. Foreign currency exchange had the effect of increasing revenue by $0.2 million for the three months ended March 31, 2026 as compared to the same period in 2025. The currency impact is primarily due to the strengthening of the South African Rand.

Sales Mix

Our sales mix for the three months ended March 31, was as follows*(in millions, except percentages):*

Product Sales

Our product sales consist primarily of sales made to our independent associates and preferred customers at published wholesale prices. Product sales for the three months ended March 31, 2026 decreased by $1.6 million, or 6.1%, as compared to the same period in 2025. On a Constant dollar basis, product sales for the three months ended March 31, 2026 decreased $2.1 million, or 8.0% , as compared to the same period in 2025. The decrease in product sales for the three months ended March 31, 2026 reflects an 8.4% decrease in the number of orders processed, which was partially offset by a 3.9% increase in the average order value to $159, as compared to $153 for the same period in 2025.

Associate Fees and Recruiting

Recruitment of new independent associates and preferred customers decreased by 15.6% to 11,604 in the first quarter of 2026, as compared with 13,749 in the first quarter of 2025. We attribute the lower number of orders processed in the three months ended March 31, 2026 to a combination of the lower number of new independent associates and preferred customers recruited during the period.

Associate fees are closely related to recruiting and retention of business-building associates. The approximate number of new and continuing active independent associates and preferred customers who purchased our products or paid associate fees during the twelve months ended March 31, 2026 and 2025 were as follows:

The Company collects associate fees in certain markets. Associate fees are paid annually by new and continuing associates to the Company, which entitle them to earn commissions, benefits and incentives for that year. The Company collected associate fees within the United States, Canada, South Africa, Austria, the Czech Republic, Denmark, Estonia, Finland, Germany, the Republic of Ireland, the Netherlands, Norway, Spain, Sweden the United Kingdom. Japan, Australia, New Zealand, Singapore, Hong Kong, and Taiwan.

In the Republic of Korea and Mexico, packs may still be purchased by our associates who wish to build a Mannatech business, but associate fees are not sold as a standalone item. These packs contain products that are discounted from both the published retail and associate prices. There are several pack options available to our associates. In certain of these markets, pack sales are completed during the final stages of the registration process and can provide new associates with valuable training and promotional materials, as well as products for resale to retail customers, demonstration purposes, and personal consumption. Business-building associates in these markets can also purchase an upgrade pack, which provides the associate with additional promotional materials.

For each of the three months ended March 31, 2026 and 2025, associate fees were $0.1 million.

We do not collect associate fees or sell packs in our non-direct selling business in mainland China.

Other Sales

Other sales consisted of: (i) sales of promotional materials; (ii) monthly fees collected for the Success Tracker™ and Mannatech+ customized electronic business-building and educational materials, databases and applications; (iii) training and event registration fees; and (iv) a reserve for estimated sales refunds and returns. Promotional materials, training, database applications and business management tools support our independent associates, which in turn helps stimulate product sales.

For the three months ended March 31, 2026 and 2025, other sales were $0.3 million and $0.4 million, respectively.

Gross Profit

For the three months ended March 31, 2026, gross profit decreased by $0.9 million, or 4.4%, to $18.9 million, as compared to $19.7 million for the same period in 2025. For the three months ended March 31, 2026, gross profit as a percentage of net sales increased to 75.7%, as compared to 74.3% for the same period in 2025. The increase in gross profit as a percentage of net sales was primarily due to higher sales prices and lower inventory reserve additions compared to the same period in 2025. The timing of certain sales promotions also increased gross profit as a percentage of net sales during the first quarter of 2026, as compared to the same period in 2025.

Commissions and Incentives

Commission expense for the three months ended March 31, 2026 decreased by 7.0%, or $0.7 million, to $9.3 million, as compared to $10.0 million for the same period in 2025. Commissions are earned on sales. Commission expense in dollar terms decreased during the three months ended March 31, 2026 primarily due to a decline in our sales. For the three months ended March 31, 2026, commissions as a percentage of net sales decreased to 37.6% as compared to 37.7% for the same period in 2025.

Incentive costs for the three months ended March 31, 2026 and 2025 decreased to $0.4 million, as compared to $0.5 million for the same period in 2025. For the three months ended March 31, 2026, incentives as a percentage of net sales decreased to 1.6% as compared to 2.0% for the same period in 2025.

Selling and Administrative Expenses

Selling and administrative expenses include a combination of both fixed and variable expenses. These expenses consist of compensation and benefits for employees; temporary and contract labor; accounting, legal and consulting fees; compensation to our board of directors; warehouse and fulfillment costs; depreciation and amortization; marketing-related expenses; travel and entertainment expenses; credit card processing fees; costs for software maintenance agreements; insurance; charitable contributions; office lease expense; utilities; bad debt; and other miscellaneous operating expenses.

For the three months ended March 31, 2026, selling and administrative expenses decreased by $0.7 million, or 7.3%, to $9.3 million, as compared to $10.0 million for the same period in 2025. The decrease in selling and administrative expenses was the result of a $0.3 million reduction in office expenses, a $0.2 million decrease in legal and consulting fees, a $0.1 million decrease in marketing costs and a $0.1 million decrease in payroll costs. Selling and administrative expenses, as a percentage of net sales, for the three months ended March 31, 2026 decreased to 37.3% from 37.7% for the same period in 2025.

Other Income (Expense), Net

Foreign exchange gains were $1.4 million for the three months ended March 31, 2026. Foreign exchange losses were $0.4 million for the three months ended March 31, 2025.

Income Tax Provision

Income tax expense was $0.2 million for the three months ended March 31, 2026 and 2025.

Income tax (provision) or benefit includes current and deferred income taxes for both our domestic and foreign operations. Our statutory income tax rates for key jurisdictions are as follows, for the three months ended March 31,:

(1) For 2026, the Company qualified for a reduced tax rate of 5% in China as a Small Low Profit Enterprise.

(2)Includes blended state effective rate of 1.2% for 2026 and 2025 in addition to U.S. federal statutory rate of 21%.

Income from our international operations is subject to taxation in the countries in which we operate. Although we may receive foreign income tax credits that would reduce the total amount of income taxes owed in the United States, we may not be able to fully utilize our foreign income tax credits in the United States.

We use the recognition and measurement provisions of the FASB ASC Topic 740, Income Taxes (“Topic 740”), to account for income taxes. The provisions of Topic 740 require a company to record a valuation allowance when the “more likely than not” criterion for realizing net deferred tax assets cannot be met. Furthermore, the weight given to the potential effect of such evidence should be commensurate with the extent to which it can be objectively verified. As a result, we reviewed the operating results, as well as all of the positive and negative evidence related to realization of such deferred tax assets to evaluate the need for a valuation allowance in each tax jurisdiction.

The provision for income taxes is directly related to our profitability and changes in the taxable income across countries of operation. For the three months ended March 31, 2026 and 2025, the Company’s effective tax rate was 14.5% and (15.6)% , respectively.

The effective tax rates for the three months ended March 31, 2026 and 2025 was different from the federal statutory rate due primarily to the mix of earnings across jurisdictions and the associated valuation allowances recorded on losses in certain jurisdictions.