Full Press Release Details
USANA Health Sciences Finishes Strong 2020 with 14.5% Fourth Quarter Net Sales Growth and 32.6% Diluted EPS Growth
SALT LAKE CITY--(BUSINESS WIRE)--February 9, 2021--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and full-year ended January 2, 2021.
Key Q4 and Full Year 2020 Financial & Operating Highlights
Fourth quarter net sales increased 14.5% year-over-year to $310.5 million.
Fourth quarter diluted EPS increased 32.6% year-over-year to a record $1.87.
Fiscal year net sales increased 7.0% year-over-year to $1.135 billion.
Fiscal year diluted EPS increased 32.9% year-over-year to a record $5.86.
Company provides initial 2021 net sales guidance of $1.21 to $1.27 billion and initial diluted EPS guidance of $6.00 to $6.45.
Board of Directors authorizes up to $150 million in share repurchase authorization.
Q4 2020 Financial Performance
| Consolidated Results | ||
| Net Sales | $310.5 million | +14.5% vs. prior-year quarter +9.9% constant currency vs. prior-year quarter +$12.4 million YOY FX impact, or +4.6% Additional week of sales contributed approximately $18 million |
| Diluted EPS | $1.87 | +32.6% vs. prior-year quarter Diluted shares of 21.2 million, -2.6% Additional week of sales contributed an estimated $0.17 |
| Active Customers | 599,000 | +2.2% vs. prior-year quarter |
The Company maintains a 52/53-week fiscal year. Fiscal 2020 was a 53-week year and includes one additional week of sales during the fourth quarter compared to the fourth quarter of 2019. Prior to fiscal 2020, the last 53-week year was in
"Our fourth quarter results were better than expected and cap off a year during which USANA delivered remarkable results despite continued challenges from the pandemic," said Kevin Guest, Chief Executive Officer and Chairman of the Board.
"During the quarter, demand for our high-quality nutritional products from our loyal consumers remained strong and fueled business momentum. Additionally, changes in currency exchange rates and the additional week of sales during the fourth
quarter contributed to growth. As we kick-off 2021, we are confident that we are positioned to deliver another year of solid growth for USANA.
Q4 2020 Regional Results:
| Asia Pacific Region | ||
| Net Sales | $248.8 million | +14.5% vs. prior-year quarter Constant currency net sales: +8.7% 80.1% of consolidated net sales |
| Active Customers | 454,000 | -1.1% vs. prior-year quarter |
| Asia Pacific Sub-Regions | ||
| Greater China | ||
| Net Sales | $139.1 million | +5.4% vs. prior-year quarter Constant currency net sales: -0.6% |
| Active Customers | 252,000 | -13.1% vs. prior-year quarter -11.3% sequentially |
| North Asia | ||
| Net Sales | $32.9 million | +17.1% vs. prior-year quarter Constant currency net sales: +11.5% |
| Active Customers | 60,000 | +7.1% vs. prior-year quarter No change sequentially |
| Southeast Asia Pacific | ||
| Net Sales | $76.9 million | +34.2% vs. prior-year quarter Constant currency net sales: +28.9% |
| Active Customers | 142,000 | +25.7% vs. prior-year quarter -10.1% sequentially |
| Americas and Europe Region | ||
| Net Sales | $61.7 million | +14.3% vs. prior year Constant currency net sales: +14.5% 19.9% of consolidated net sales |
| Active Customers | 145,000 | +14.2% vs. prior year -2.0% sequentially |
FY 2020 Financial Performance
| Consolidated Results | ||
| Net Sales | $1.135 billion | +7.0% vs. prior year +6.9% constant currency vs. prior year no meaningful FX impact |
| Diluted EPS | $5.86 | +32.9% vs. prior year Diluted shares of 21.3 million, -6.8% |
| Cash & Cash Equivalents | $312 million | Cash generated from operating activities totaled $160 million |
Mr. Guest continued, "For several years now, we have focused on improving the overall experience USANA offers to consumers. Digital enhancement of our business has been a key aspect of our customer experience strategy. We believe that our
accomplishments in this area positioned us to sustain and accelerate performance during an unprecedented 2020. During the year, we accelerated many of our digital initiatives, including further improving our mobile platform, expanding payment
options to meet the demands of consumers around the world, facilitating quick and simple product education, capturing feedback, and making it easier for consumers to share their USANA experience with others."
Mr. Guest added, "In 2021, we will continue to focus on growing our consumer base and executing our global strategy, which includes: (i) continued investment in digital transformation and overall customer experience; (ii) the launch of our
new Active Nutrition product line; (iii) generating growth in existing markets with an emphasis on China; (iv) pursuing international expansion opportunities; (v) pursuing accretive, strategic collaborations and acquisitions to grow our
business; and (vi) focusing on corporate sustainability. We remain committed to USANA's mission of health and wellness, and we are confident that our strategy will drive growth and deliver value to shareholders."
The Company ended the quarter with $312 million in cash and cash equivalents and no debt. During the quarter, the Company did not repurchase any shares of common stock. For the full year the company repurchased 785,000 shares totaling $57
million throughout the year.
Share Repurchase Authorization
As of the end of the fourth quarter, there was approximately $73 million remaining under the existing share repurchase authorization. The Company's Board of Directors has approved up to $150 million in share repurchase authorization,
inclusive of the $73 million remaining under the share repurchase authorization.
Repurchases may be made from time to time, in the open market, through block trades or otherwise, subject to applicable rules of the Securities and Exchange Commission. The number of shares to be purchased and the timing of purchases will be
based on market conditions, the level of cash balances, general business opportunities, and other factors.
The Company is providing the following consolidated net sales and earnings per share outlook for fiscal year 2021.
| Fiscal Year 2021 Outlook | |
| Range | |
| Consolidated Net Sales | $1.21 - $1.27 billion |
| Diluted EPS | $6.00 - $6.45 |
Doug Hekking, Chief Financial Officer, said, "Fourth quarter operating results exceeded internal expectations and were driven by momentum in our business as well as an improved foreign currency environment.
"Today we are providing our initial outlook for 2021, which reflects top-line growth between 6.6% and 11.9% and an operating margin between 14.8% and 15.2%. Operating results projected for fiscal year 2021 contain one less week of business,
anticipate a favorable foreign currency environment, and increased spending in the back half of the year related to travel and event related costs. Additionally, we are projecting an effective tax rate of 31% for the year and a diluted share
count of 20.7 million. We remain committed to investing in our strategies designed to generate growth in customers and net sales."
Mr. Hekking added, "Outlook for fiscal 2021 reflects our current understanding of the COVID-19 operating environment as restrictions and health responses continue to evolve. During the first half of 2021, we expect to hold virtual events for
our sales force and maintain our work-from-home plan for employees. Thus far, we have not seen a meaningful sustained disruption to our manufacturing, shipping or global operations. Some markets continue to face increased restrictions, while
others are seeing a return to a more normalized operating environment. We hope to see conditions continue to improve as the year progresses, but recognize that the ongoing COVID-19 environment remains unpredictable."
Management Commentary Document and Conference Call
For more information on the Company's operating results, please see the "Management Commentary, Results and Outlook" document, which has been posted on the Company's website (http://ir.usana.com) under the "Investor Relations" section of the
site. USANA will hold a conference call and webcast to discuss today's announcement with investors on Wednesday, February 10, 2021 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, before moving directly into questions and answers.
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, and Italy. 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: uncertainty related to the magnitude, scope and duration of the impact of the COVID-19 pandemic ("COVID-19") to our business, operations and financial
results; the further spread of, and regulatory measures or voluntary actions that may be put in place to limit the spread of, COVID-19 in the markets where we operate, including restrictions on business operations, shelter at home, or social
distancing requirements; the potential for a resurgence of COVID-19 spread in any of our markets in the future; the impact of COVID-19 on the domestic and world economies, including any negative impact on discretionary spending, consumer
demand, and consumer behavior in general; regulatory risk in China in connection with the health products and direct selling business models; regulatory risk in the United States in connection with the direct selling business model; potential
negative effects of deteriorating foreign and/or trade relations between the United States and China; 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; global economic conditions generally; reliance upon our network of independent Associates; risk associated with governmental regulation of our products, manufacturing and direct selling business
model; adverse publicity risks globally; risks associated with our international expansion and operations; and uncertainty relating to the fluctuation in U.S. and other international currencies. 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.
| USANA Health Sciences, Inc. | ||||||||
| Consolidated Statements of Operations | ||||||||
| (In thousands, except per share data) | ||||||||
| (Unaudited) | ||||||||
| Quarter Ended | Twelve Months Ended | |||||||
| 2-Jan-21 | 28-Dec-19 | 2-Jan-21 | 28-Dec-19 | |||||
| Net sales | $ 310,521 | $ 271,298 | $ 1,134,644 | $ 1,060,902 | ||||
| Cost of sales | 59,020 | 47,289 | 209,111 | 187,503 | ||||
| Gross profit | 251,501 | 224,009 | 925,533 | 873,399 | ||||
| Operating expenses | ||||||||
| Associate incentives | 129,791 | 114,378 | 487,856 | 459,478 | ||||
| Selling, general and administrative | 69,172 | 65,060 | 261,186 | 267,731 | ||||
| Earnings from operations | 52,538 | 44,571 | 176,491 | 146,190 | ||||
| Other income (expense) | 1,993 | 1,231 | 1,457 | 4,306 | ||||
| Earnings before income taxes | 54,531 | 45,802 | 177,948 | 150,496 | ||||
| Income taxes | 14,902 | 15,048 | 53,284 | 49,970 | ||||
| NET EARNINGS | $ 39,629 | $ 30,754 | $ 124,664 | $ 100,526 | ||||
| Earnings per share - diluted | $ 1.87 | $ 1.41 | $ 5.86 | $ 4.41 | ||||
| Weighted average shares outstanding - diluted | 21,189 | 21,751 | 21,256 | 22,818 |
| USANA Health Sciences, Inc. | |||||
| Consolidated Balance Sheets | |||||
| (In thousands) | |||||
| (Unaudited) | |||||
| As of | As of | ||||
| ASSETS | 2-Jan-21 | 28-Dec-19 | |||
| Current Assets | |||||
| Cash and cash equivalents | $ 311,917 | $ 234,830 | |||
| Inventories | 90,224 | 68,905 | |||
| Prepaid expenses and other current assets | 23,145 | 25,544 | |||
| Total current assets | 425,286 | 329,279 | |||
| Property and equipment, net | 100,445 | 95,233 | |||
| Goodwill | 17,367 | 16,636 | |||
| Intangible assets, net | 30,796 | 29,840 | |||
| Deferred income taxes | 4,640 | 3,090 | |||
| Other assets | 62,353 | 42,856 | |||
| Total assets | $ 640,887 | $ 516,934 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current Liabilities | |||||
| Accounts payable | $ 18,195 | $ 12,525 | |||
| Other current liabilities | 149,878 | 123,573 | |||
| Total current liabilities | 168,073 | 136,098 | |||
| Deferred income taxes | 12,009 | 10,282 | |||
| Other long-term liabilities | 19,155 | 18,842 | |||
| Stockholders' equity | 441,650 | 351,712 | |||
| Total liabilities and stockholders' equity | $ 640,887 | $ 516,934 |
| USANA Health Sciences, Inc. | |||||||||||||||||||||||||
| Sales by Region | |||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||||
| Quarter Ended | |||||||||||||||||||||||||
| 2-Jan-21 | 28-Dec-19 | Change from prior year | Currency impact on sales | % change excluding currency impact | |||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||||
| Greater China | $ 139,059 | 44.8 | % | $ 131,949 | 48.6 | % | $ 7,110 | 5.4 | % | $ 7,889 | (0.6 | %) | |||||||||||||
| Southeast Asia Pacific | 76,861 | 24.7 | % | 57,283 | 21.1 | % | 19,578 | 34.2 | % | 3,037 | 28.9 | % | |||||||||||||
| North Asia | 32,892 | 10.6 | % | 28,085 | 10.4 | % | 4,807 | 17.1 | % | 1,580 | 11.5 | % | |||||||||||||
| Asia Pacific Total | 248,812 | 80.1 | % | 217,317 | 80.1 | % | 31,495 | 14.5 | % | 12,506 | 8.7 | % | |||||||||||||
| Americas and Europe | 61,709 | 19.9 | % | 53,981 | 19.9 | % | 7,728 | 14.3 | % | (113 | ) | 14.5 | % | ||||||||||||
| $ 310,521 | 100.0 | % | $ 271,298 | 100.0 | % | $ 39,223 | 14.5 | % | $ 12,393 | 9.9 | % |
| Active Associates by Region (1) | |||||||||
| (unaudited) | |||||||||
| As of | |||||||||
| 2-Jan-21 | 28-Dec-19 | ||||||||
| Asia Pacific | |||||||||
| Greater China | 88,000 | 29.4 | % | 100,000 | 34.4 | % | |||
| Southeast Asia Pacific | 103,000 | 34.5 | % | 87,000 | 29.9 | % | |||
| North Asia | 39,000 | 13.0 | % | 38,000 | 13.0 | % | |||
| Asia Pacific Total | 230,000 | 76.9 | % | 225,000 | 77.3 | % | |||
| Americas and Europe | 69,000 | 23.1 | % | 66,000 | 22.7 | % | |||
| 299,000 | 100.0 | % | 291,000 | 100.0 | % | ||||
| Active Preferred Customers by Region (2) (unaudited) | |||||||||
| As of | |||||||||
| 2-Jan-21 | 28-Dec-19 | ||||||||
| Asia Pacific | |||||||||
| Greater China | 164,000 | 54.7 | % | 190,000 | 64.4 | % | |||
| Southeast Asia Pacific | 39,000 | 13.0 | % | 26,000 | 8.8 | % | |||
| North Asia | 21,000 | 7.0 | % | 18,000 | 6.1 | % | |||
| Asia Pacific Total | 224,000 | 74.7 | % | 234,000 | 79.3 | % | |||
| Americas and Europe | 76,000 | 25.3 | % | 61,000 | 20.7 | % | |||
| 300,000 | 100.0 | % | 295,000 | 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.