Full Press Release Details
USANA Health Sciences Reports First Quarter 2024 Results
SALT LAKE CITY, April 30, 2024 (BUSINESS WIRE)-USANA Health Sciences, Inc. (NYSE USNA) today announced financial results for its fiscal first quarter ended March 30, 2024.
Key Financial Operating Results
First quarter net sales were $228 million versus $248 million during Q1 2023, and increased 2% sequentially in constant currency.
First quarter diluted EPS was $0.86 as compared with $0.95 during Q1 2023.
Company reiterates fiscal year 2024 net sales and diluted EPS outlook of $850 million to $920 million and $2.40 to $3.00.
Q1 2024 Financial Performance
| Consolidated Results | ||
| Net Sales | $228 million | -8% vs. Q1 2023 |
| -5% constant currency vs. Q1 2023 | ||
| +3% sequentially | ||
| +2% constant currency sequentially | ||
| -$7 million YOY FX impact, or -3% | ||
| Diluted EPS | $0.86 | -9% vs. Q1 2023 |
| -1% sequentially | ||
| Active Customers | 494,000 | +1% vs. Q1 2023 |
| +2% sequentially |
"Our top line results during the first quarter were driven by a successful sales incentive in mainland China, which helped counter the seasonal slowdown that we experience during the Lunar New Year holiday," said Jim Brown, President and Chief Executive Officer. "This sales incentive helped us generate 15% year-over-year active customer growth in our largest market, as well as year-over-year and sequential quarter sales growth. Notwithstanding our solid
performance in China, our first quarter results in other key markets did not meet internal expectations and we are actively working to accelerate our business in these markets during 2024.
"During the first quarter we focused on actively engaging with our Associate leaders across the world through several live annual kickoff events, meetings, and trainings. Moreover, early in the second quarter, we hosted both our China National Sales Meeting in Xiamen, China and our Asia Pacific Convention in Kuala Lampur, Malaysia. Attendance at both events was robust and our executive team and Associate leaders came away from both events with increased excitement and motivation to grow their businesses during 2024. We will host additional Associate events throughout the year all intended to drive further engagement with and productivity from our Associate leaders.
"We also completed our first full quarter of operations in India and we remain excited and optimistic about this important market. We continue to work closely with our local leadership team to expand and build our presence throughout the country. Although we expect its contribution to be small in this first year, we have high expectations for steady and long-term growth in India."
Q1 2024 Regional Results
| Asia Pacific Region | ||
| Net Sales | $185 million | -7% vs. Q1 2023 |
| -3% constant currency vs. Q1 2023 | ||
| +5% sequentially | ||
| 81% of consolidated net sales | ||
| Active Customers | 395,000 | +2% vs. Q1 2023 |
| +3% sequentially | ||
| Asia Pacific Sub-Regions | ||
| Greater China | ||
| Net Sales | $128 million | +3% vs. Q1 2023 |
| +7% constant currency vs. Q1 2023 | ||
| +10% sequentially | ||
| Active Customers | 274,000 | +13% vs. Q1 2023 |
| +7% sequentially | ||
| North Asia |
| Net Sales | $21 million | -28% vs. Q1 2023 |
| -24% constant currency vs. Q1 2023 | ||
| -3% sequentially | ||
| Active Customers | 45,000 | -17% vs. Q1 2023 |
| -6% sequentially | ||
| Southeast Asia Pacific | ||
| Net Sales | $36 million | -22% vs. Q1 2023 |
| -19% constant currency vs. Q1 2023 | ||
| -8% sequentially | ||
| Active Customers | 76,000 | -16% vs. Q1 2023 |
| -5% sequentially |
| Americas and Europe Region | ||
| Net Sales | $43 million | -12% vs. Q1 2023 |
| -14% constant currency vs. Q1 2023 | ||
| -3% sequentially | ||
| 19% of consolidated net sales | ||
| Active Customers | 99,000 | -6% vs. Q1 2023 |
| -1% sequentially |
Balance Sheet and Share Repurchase Activity
The Company generated $18 million in operating cash flow during first quarter and ended the quarter with $328 million in cash and cash equivalents while remaining essentially debt-free. The Company repurchased 194,000 shares for a total of $9 million during the quarter. As of March 30, 2024, the Company had approximately $62 million remaining under the current share repurchase authorization.
Fiscal Year 2024 Outlook
The Company is reiterating its net sales and earnings per share outlook for fiscal year 2024, as follows
| Fiscal Year 2024 Outlook | |
| Range | |
| Consolidated Net Sales | $850 - $920 million |
| Diluted EPS | $2.40 - $3.00 |
"Strength in our mainland China operations carried our first quarter results," said Doug Hekking, Chief Financial Officer. "This performance helped offset softness in many other markets where we continue to face a challenging operating environment highlighted by ongoing inflationary pressures."
Mr. Hekking continued, "We remain committed to engaging with Associate leaders throughout each of our markets and plan to offer additional market-specific incentives throughout the year to improve sales and customer activity levels."
Management Commentary Document and Conference Call
For further information on the USANA's operating results, please see the Management Commentary document, which has been posted on the Company's website (http ir.usana.com) under the Investor Relations section. USANA's management team will hold a conference call and webcast to discuss today's announcement with investors on Wednesday, May 1, 2024 at 11 00 AM Eastern Time. Investors may listen to the call by accessing USANA's website at http ir.usana.com. The call will consist of brief opening remarks by the Company's management team, followed by a questions and answers session.
Non-GAAP Financial Measures
The Company prepares its financial statements using U.S. generally accepted accounting principles ("GAAP"). Constant currency net sales, earnings, EPS and other currency-related financial information (collectively, "Financial Results") are non-GAAP financial measures that remove the impact of fluctuations in foreign-currency exchange rates ("FX") and help facilitate period-to-period comparisons of the Company's Financial Results that we believe provide investors an additional perspective on trends and underlying business results. Constant currency Financial Results are calculated by translating the current period's Financial Results at the same average exchange rates in effect during the applicable prior-year period and then comparing this amount to the prior-year period's Financial Results.
USANA develops and manufactures high-quality nutritional supplements, functional foods and personal care products that are sold directly to Associates and Preferred Customers throughout the United States, Canada, Australia, New Zealand, Hong Kong, China, Japan, Taiwan, South Korea, Singapore, Mexico, Malaysia, the Philippines, the Netherlands, the United Kingdom, Thailand, France, Belgium, Colombia, Indonesia, Germany, Spain, Romania, Italy, and India. More information on USANA can be found at www.usana.com.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Our actual results could differ materially from those projected in these forward-looking statements, which involve a number of risks and uncertainties, including global economic conditions generally, including continued inflationary pressure around the world and negative impact on our operating costs, consumer demand and consumer behavior in general reliance upon our network of independent Associates risk associated with governmental regulation of our products, manufacturing and direct selling business model in the United States, China and other key markets potential negative effects of deteriorating foreign and or trade relations between or among the United States, China and other key markets potential negative effects from geopolitical relations and conflicts around the world, including the Russia-Ukraine conflict and the conflict in Israel compliance with data privacy and security laws and regulations in our markets around the world potential negative effects of material breaches of our information technology systems to the extent we experience a material breach material failures of our information technology systems adverse publicity risks globally risks associated with commencing operations in India and future international expansion and operations uncertainty relating to the fluctuation in U.S. and other international currencies and the potential for a resurgence of COVID-19, or another pandemic, in any of our markets in the future and any related impact on consumer health, domestic and world economies, including any negative impact on discretionary spending, consumer demand, and consumer behavior in general. The contents of this release should be considered in conjunction with the risk factors, warnings, and cautionary statements that are contained in our most recent filings with the Securities and Exchange Commission. The forward-looking
statements in this press release set forth our beliefs as of the date hereof. We do not undertake any obligation to update any forward-looking statement after the date hereof or to conform such statements to actual results or changes in the Company's expectations, except as required by law.
Investor contact Andrew Masuda
investor.relations usanainc.com
Media contact Amy Haran
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Quarter Ended | ||||||||
| March 30, 2024 | April 1, 2023 | |||||||
| Net sales | $ | 227,800 | $ | 248,360 | ||||
| Cost of sales | 43,069 | 48,519 | ||||||
| Gross profit | 184,731 | 199,841 | ||||||
| Operating expenses | ||||||||
| Associate incentives | 95,758 | 106,070 | ||||||
| Selling, general and administrative | 64,300 | 66,926 | ||||||
| Total operating expenses | 160,058 | 172,996 | ||||||
| Earnings from operations | 24,673 | 26,845 | ||||||
| Other income (expense) | ||||||||
| Interest income | 2,676 | 1,775 | ||||||
| Interest expense | (52) | (31) | ||||||
| Other, net | (186) | (88) | ||||||
| Other income (expense), net | 2,438 | 1,656 | ||||||
| Earnings before income taxes | 27,111 | 28,501 | ||||||
| Income taxes | 10,574 | 10,118 | ||||||
| Net earnings | $ | 16,537 | $ | 18,383 | ||||
| Earnings per common share | ||||||||
| Basic | $ | 0.86 | $ | 0.95 | ||||
| Diluted | $ | 0.86 | $ | 0.95 | ||||
| Weighted average common shares outstanding | ||||||||
| Basic | 19,174 | 19,283 | ||||||
| Diluted | 19,302 | 19,328 |
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of March 30, 2024 | As of December 30, 2023 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 328,336 | $ | 330,420 | |||
| Inventories | 60,870 | 61,454 | |||||
| Prepaid expenses and other current assets | 31,864 | 25,872 | |||||
| Total current assets | 421,070 | 417,746 | |||||
| Property and equipment, net | 98,186 | 99,814 | |||||
| Goodwill | 16,902 | 17,102 | |||||
| Intangible assets, net | 29,105 | 29,919 | |||||
| Deferred tax assets | 11,347 | 13,284 | |||||
| Other assets* | 52,665 | 54,892 | |||||
| Total assets | $ | 629,275 | $ | 632,757 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 8,266 | $ | 10,070 | |||
| Line of credit - short term | 1,320 | 786 | |||||
| Other current liabilities | 103,045 | 107,989 | |||||
| Total current liabilities | 112,631 | 118,845 | |||||
| Deferred tax liabilities | 5,113 | 4,552 | |||||
| Other long-term liabilities | 11,543 | 12,158 | |||||
| Stockholders' equity | 499,988 | 497,202 | |||||
| Total liabilities and stockholders' equity | $ | 629,275 | $ | 632,757 |
*Other assets include noncurrent inventories of $2,893 and $3,128 as of 30-Mar-24 and 30-Dec-23, respectively. Total inventories were $63,763 and $64,582 as of 30-Mar-24 and 30-Dec-23, respectively.
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
| Quarter Ended | Change from prior year | Percent change | Currency impact on sales | % change excluding currency impact | |||||||||||||||||||||||
| March 30, 2024 | April 1, 2023 | ||||||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||||||
| Greater China | $ | 127,615 | 56.0 | % | $ | 123,820 | 49.9 | % | $ | 3,795 | 3.1 | % | $ | (5,396) | 7.4 | % | |||||||||||
| Southeast Asia Pacific | 36,065 | 15.9 | % | $ | 46,286 | 18.6 | % | (10,221) | (22.1 | %) | (1,495) | (18.9 | %) | ||||||||||||||
| North Asia | 21,421 | 9.4 | % | $ | 29,608 | 11.9 | % | (8,187) | (27.7 | %) | (987) | (24.3 | %) | ||||||||||||||
| Asia Pacific Total | 185,101 | 81.3 | % | 199,714 | 80.4 | % | (14,613) | (7.3 | %) | (7,878) | (3.4 | %) | |||||||||||||||
| Americas and Europe | 42,699 | 18.7 | % | 48,646 | 19.6 | % | (5,947) | (12.2 | %) | 635 | (13.5 | %) | |||||||||||||||
| $ | 227,800 | 100.0 | % | $ | 248,360 | 100.0 | % | $ | (20,560) | (8.3 | %) | $ | (7,243) | (5.4 | %) |
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
ACTIVE ASSOCIATES AND ACTIVE PREFERRED CUSTOMERS BY REGION
| Active Associates by Region (1) | |||||||||
| (unaudited) | |||||||||
| As of March 30, 2024 | As of April 1, 2023 | ||||||||
| Asia Pacific | |||||||||
| Greater China | 71,000 | 36.1 | % | 74,000 | 34.1 | % | |||
| Southeast Asia Pacific | 51,000 | 25.9 | % | 61,000 | 28.1 | % | |||
| North Asia | 30,000 | 15.2 | % | 35,000 | 16.1 | % | |||
| Asia Pacific Total | 152,000 | 77.2 | % | 170,000 | 78.3 | % | |||
| Americas and Europe | 45,000 | 22.8 | % | 47,000 | 21.7 | % | |||
| 197,000 | 100.0 | % | 217,000 | 100.0 | % |
| Active Preferred Customers by Region (2) | |||||||||
| (unaudited) | |||||||||
| As of March 30, 2024 | As of April 1, 2023 | ||||||||
| Asia Pacific | |||||||||
| Greater China | 203,000 | 68.3 | % | 168,000 | 61.3 | % | |||
| Southeast Asia Pacific | 25,000 | 8.4 | % | 29,000 | 10.6 | % | |||
| North Asia | 15,000 | 5.1 | % | 19,000 | 6.9 | % | |||
| Asia Pacific Total | 243,000 | 81.8 | % | 216,000 | 78.8 | % | |||
| Americas and Europe | 54,000 | 18.2 | % | 58,000 | 21.2 | % | |||
| 297,000 | 100.0 | % | 274,000 | 100.0 | % |
(1) Associates are independent distributors of our products who also purchase our products for their personal use. We only count as active those Associates who have purchased from us any time during the most recent three-month period, either for personal use or resale.
(2) Preferred Customers purchase our products strictly for their personal use and are not permitted to resell or to distribute the products. We only count as active those Preferred Customers who have purchased from us any time during the most recent three-month period. China utilizes a Preferred Customer program that has been implemented specifically for that market.