Full Press Release Details
USANA Health Sciences Reports Third Quarter 2024 Results
SALT LAKE CITY, October 22, 2024 (BUSINESS WIRE)-USANA Health Sciences, Inc. (NYSE USNA) today announced financial results for its fiscal third quarter ended September 28, 2024.
Key Financial Operating Results
Third quarter net sales were $200 million versus $213 million during Q3 2023.
Third quarter diluted EPS was $0.56 as compared with $0.59 during Q3 2023.
Company updates fiscal year 2024 net sales and diluted EPS outlook to approximately $850 million and $2.45, respectively (previously $850 million to $880 million and $2.40 to $2.55).
Q3 2024 Financial Performance
| Consolidated Results | ||
| Net Sales | $200 million | -6% vs. Q3 2023 |
| No meaningful YOY FX impact | ||
| -6% sequentially | ||
| Diluted EPS | $0.56 | -5% vs. Q3 2023 |
| +4% sequentially | ||
| Active Customers | 452,000 | -3% vs. Q3 2023 |
| -3% sequentially |
"Third quarter operating results reflected continued top line headwinds across many of our key markets," said Jim Brown, President and Chief Executive Officer. "Our sales force continued to face challenges in attracting new customers as consumer sentiment remained cautious, including in our largest market, mainland China. Despite these challenges, we remain confident in our direction and continue to make progress on the five key initiatives that underpin our long-term strategy. Our commercial team, which was reorganized earlier this year, has been executing on
these initiatives to enhance the overall value proposition of our business to our customers and we are beginning to see results in several of these areas.
"During the quarter, we continued to prioritize engagement with our sales leaders, highlighted by our Americas Europe Convention in Las Vegas, Nevada during August. Training and development were key focus areas at this event, with an emphasis on actionable initiatives to help our sales leaders grow their businesses. Feedback has been positive and leaders are actively adopting these new initiatives.
"We have also prioritized our product innovation strategy with an emphasis on increasing the cadence with which we introduce new and upgraded premium products relevant to our customers' needs. Illustrative of this effort, we launched two new products at our recent event in Las Vegas a Celavive Resurfacing Serum and a Whey Protein Isolate."
Q3 2024 Regional Results
| Asia Pacific Region | ||
| Net Sales | $160 million | -6% vs. Q3 2023 |
| No meaningful YOY FX impact | ||
| -6% sequentially | ||
| 80% of consolidated net sales | ||
| Active Customers | 360,000 | -1% vs. Q3 2023 |
| -2% sequentially | ||
| Asia Pacific Sub-Regions | ||
| Greater China | ||
| Net Sales | $102 million | -4% vs. Q3 2023 |
| -5% constant currency vs. Q3 2023 | ||
| -11% sequentially | ||
| Active Customers | 243,000 | +6% vs. Q3 2023 |
| -3% sequentially | ||
| North Asia | ||
| Net Sales | $21 million | -15% vs. Q3 2023 |
| -12% constant currency vs. Q3 2023 | ||
| +4% sequentially | ||
| Active Customers | 41,000 | -16% vs. Q3 2023 |
| -2% sequentially | ||
| Southeast Asia Pacific |
| Net Sales | $37 million | -5% vs. Q3 2023 |
| -6% constant currency vs. Q3 2023 | ||
| +5% sequentially | ||
| Active Customers | 76,000 | -8% vs. Q3 2023 |
| -1% sequentially |
| Americas and Europe Region | ||
| Net Sales | $40 million | -7% vs. Q3 2023 |
| -6% constant currency vs. Q3 2023 | ||
| -5% sequentially | ||
| 20% of consolidated net sales | ||
| Active Customers | 92,000 | -10% vs. Q3 2023 |
| -7% sequentially |
Balance Sheet and Share Repurchase Activity
The Company generated $30 million in operating cash flow during the third quarter and ended the quarter with $365 million in cash and cash equivalents while remaining debt-free. The Company did not repurchase any shares during the quarter. As of the end of the third quarter, the Company had approximately $62 million remaining under the current share repurchase authorization.
Fiscal Year 2024 Outlook
The Company is updating its net sales and earnings per share outlook for fiscal year 2024, as follows
| Fiscal Year 2024 Outlook | ||
| Target | Previous Range | |
| Consolidated Net Sales | $850 million | $850 - $880 million |
| Diluted EPS | $2.45 | $2.40 - $2.55 |
"Third quarter net sales were modestly below expectations as we continue to see downward pressure on customer acquisition and consumer spending in several key markets, resulting in lower customer counts and average spend per customer," said Doug Hekking, Chief Financial Officer. "We are monitoring the recently-announced stimulus initiatives in China, but we do not expect them to meaningfully impact our near-term operating results. Accordingly, we have adjusted our fiscal 2024 guidance to reflect year-to-date operating performance as well as
promotional activity planned for the fourth quarter. Notwithstanding the macroeconomic challenges we have faced in 2024, our business fundamentals remain strong. We've generated $47 million of free cash flow year-to-date and our balance sheet remains pristine with $365 million of cash and no debt."
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, October 23, 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 that our Associate compensation plan, or changes that we make to the compensation plan, will not produce desired results, benefit our business or, in some cases, could harm our business 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 (801) 954-7280
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
| Quarter Ended | ||||||||
| September 28, 2024 | September 30, 2023 | |||||||
| Net sales | $ | 200,221 | $ | 213,365 | ||||
| Cost of sales | 39,257 | 42,529 | ||||||
| Gross profit | 160,964 | 170,836 | ||||||
| Operating expenses | ||||||||
| Associate incentives | 84,068 | 89,926 | ||||||
| Selling, general and administrative | 61,295 | 63,303 | ||||||
| Total operating expenses | 145,363 | 153,229 | ||||||
| Earnings from operations | 15,601 | 17,607 | ||||||
| Other income (expense) | ||||||||
| Interest income | 3,142 | 2,733 | ||||||
| Interest expense | (49) | (43) | ||||||
| Other, net | (86) | 234 | ||||||
| Other income (expense), net | 3,007 | 2,924 | ||||||
| Earnings before income taxes | 18,608 | 20,531 | ||||||
| Income taxes | 8,001 | 9,184 | ||||||
| Net earnings | $ | 10,607 | $ | 11,347 | ||||
| Earnings per common share | ||||||||
| Basic | $ | 0.56 | $ | 0.59 | ||||
| Diluted | $ | 0.56 | $ | 0.59 | ||||
| Weighted average common shares outstanding | ||||||||
| Basic | 19,078 | 19,245 | ||||||
| Diluted | 19,083 | 19,372 |
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of September 28, 2024 | As of December 30, 2023 | ||||||
| ASSETS | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 364,889 | $ | 330,420 | |||
| Inventories | 63,984 | 61,454 | |||||
| Prepaid expenses and other current assets | 22,318 | 25,872 | |||||
| Total current assets | 451,191 | 417,746 | |||||
| Property and equipment, net | 98,033 | 99,814 | |||||
| Goodwill | 17,196 | 17,102 | |||||
| Intangible assets, net | 29,237 | 29,919 | |||||
| Deferred tax assets | 16,823 | 13,284 | |||||
| Other assets* | 58,828 | 54,892 | |||||
| Total assets | $ | 671,308 | $ | 632,757 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 7,041 | $ | 10,070 | |||
| Line of credit - short term | - | 786 | |||||
| Other current liabilities | 107,738 | 107,989 | |||||
| Total current liabilities | 114,779 | 118,845 | |||||
| Deferred tax liabilities | 4,727 | 4,552 | |||||
| Other long-term liabilities | 18,715 | 12,158 | |||||
| Stockholders' equity | 533,087 | 497,202 | |||||
| Total liabilities and stockholders' equity | $ | 671,308 | $ | 632,757 |
*Other assets include noncurrent inventories of $2,938 and $3,128 as of 28-Sep-24 and 30-Dec-23, respectively. Total inventories were $66,922 and $64,582 as of 28-Sep-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 | |||||||||||||||||||||||
| September 28, 2024 | September 30, 2023 | ||||||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||||||
| Greater China | $ | 102,261 | 51.1 | % | $ | 106,609 | 50.0 | % | $ | (4,348) | (4.1 | %) | $ | 865 | (4.9 | %) | |||||||||||
| Southeast Asia Pacific | 37,267 | 18.6 | % | $ | 39,151 | 18.3 | % | (1,884) | (4.8 | %) | 561 | (6.2 | %) | ||||||||||||||
| North Asia | 20,541 | 10.2 | % | $ | 24,244 | 11.4 | % | (3,703) | (15.3 | %) | (721) | (12.3 | %) | ||||||||||||||
| Asia Pacific Total | 160,069 | 79.9 | % | 170,004 | 79.7 | % | (9,935) | (5.8 | %) | 705 | (6.3 | %) | |||||||||||||||
| Americas and Europe | 40,152 | 20.1 | % | 43,361 | 20.3 | % | (3,209) | (7.4 | %) | (727) | (5.7 | %) | |||||||||||||||
| $ | 200,221 | 100.0 | % | $ | 213,365 | 100.0 | % | $ | (13,144) | (6.2 | %) | $ | (22) | (6.2 | %) |
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
ACTIVE ASSOCIATES AND ACTIVE PREFERRED CUSTOMERS BY REGION
| Active Associates by Region (1) | |||||||||
| (unaudited) | |||||||||
| As of September 28, 2024 | As of September 30, 2023 | ||||||||
| Asia Pacific | |||||||||
| Greater China | 65,000 | 34.6 | % | 69,000 | 34.0 | % | |||
| Southeast Asia Pacific | 52,000 | 27.6 | % | 55,000 | 27.1 | % | |||
| North Asia | 28,000 | 14.9 | % | 33,000 | 16.2 | % | |||
| Asia Pacific Total | 145,000 | 77.1 | % | 157,000 | 77.3 | % | |||
| Americas and Europe | 43,000 | 22.9 | % | 46,000 | 22.7 | % | |||
| 188,000 | 100.0 | % | 203,000 | 100.0 | % |
| Active Preferred Customers by Region (2) | |||||||||
| (unaudited) | |||||||||
| As of September 28, 2024 | As of September 30, 2023 | ||||||||
| Asia Pacific | |||||||||
| Greater China | 178,000 | 67.4 | % | 161,000 | 61.7 | % | |||
| Southeast Asia Pacific | 24,000 | 9.1 | % | 28,000 | 10.7 | % | |||
| North Asia | 13,000 | 4.9 | % | 16,000 | 6.1 | % | |||
| Asia Pacific Total | 215,000 | 81.4 | % | 205,000 | 78.5 | % | |||
| Americas and Europe | 49,000 | 18.6 | % | 56,000 | 21.5 | % | |||
| 264,000 | 100.0 | % | 261,000 | 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.