Full Press Release Details
USANA Health Sciences Reports First Quarter Results
SALT LAKE CITY--(BUSINESS WIRE)--April 26, 2022--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal first quarter ended April 2, 2022.
Key Financial & Operating Highlights
First quarter net sales were $273 million as compared with $308 million during the first quarter of the prior year.
First quarter diluted EPS totaled $1.15 versus $1.45 during the first quarter of 2021.
Company revises fiscal 2022 net sales and diluted EPS outlook to $1.1 billion to $1.2 billion and $5.00 to $5.70, respectively.
Q1 2022 Financial Performance
| Consolidated Results | ||
| Net Sales | $272.9 million | -11% vs. prior-year quarter -10% constant currency vs. prior-year quarter +2% constant currency sequentially -$2.8 million YOY FX impact, or -1% |
| Diluted EPS | $1.15 | -21% vs. prior-year quarter +12% sequentially Diluted shares of 19.5 million, -8% year-over-year |
| Active Customers | 552,000 | -11% vs. prior-year quarter -1% sequentially |
"While the first quarter was a respectable start to the year for USANA, net sales were softer than anticipated, particularly around the Lunar New Year holiday in a few key Asia Pacific markets," said Kevin Guest, Chief Executive Officer and
Chairman of the Board. "That said, we made progress in executing our customer experience strategy by rolling out more Active Nutrition products in key markets and by enhancing onboarding programs and training tools."
Mr. Guest added, "The operating environment in Asia Pacific has become more challenging, particularly in China, where the escalation of COVID-19 has resulted in mass lockdowns, restrictions, and other disruptions. As we look ahead, we are
adjusting our strategy to support our teams and Associates in these markets, and we remain optimistic about delivering results in the face of these challenges. We remain focused on executing our strategic initiatives, which we believe will
deliver long-term, sustainable growth for all stakeholders."
Q1 2022 Regional Results:
| Asia Pacific Region | ||
| Net Sales | $218.4 million | -13% vs. prior-year quarter -12% constant currency vs. prior-year quarter +3% constant currency sequentially 80% of consolidated net sales |
| Active Customers | 422,000 | -11% vs. prior-year quarter -1% sequentially |
| Asia Pacific Sub-Regions | ||
| Greater China | ||
| Net Sales | $133.7 million | -10% vs. prior-year quarter Constant currency net sales: -12% |
| Active Customers | 255,000 | -8% vs. prior-year quarter Flat sequentially |
| North Asia | ||
| Net Sales | $29.9 million | -1% vs. prior-year quarter Constant currency net sales: +7% |
| Active Customers | 57,000 | -3% vs. prior-year quarter -2% sequentially |
| Southeast Asia Pacific | ||
| Net Sales | $54.7 million | -24% vs. prior-year quarter Constant currency net sales: -21% |
| Active Customers | 110,000 | -20% vs. prior-year quarter -4% sequentially |
| Americas and Europe Region | ||
| Net Sales | $54.4 million | -4% vs. prior-year quarter -3% constant currency vs. prior-year quarter -1% constant currency sequentially 20% of consolidated net sales |
| Active Customers | 130,000 | -10% vs. prior-year quarter -2 % sequentially |
Balance Sheet and Share Repurchase Activity
The Company ended the quarter with $238 million in cash and cash equivalents after repurchasing 288,000 shares during the quarter, for a total of $25 million. Diluted shares outstanding totaled 19.5 million during the first quarter of 2022.
As of April 2, 2022, the Company had approximately $83 million remaining under the share repurchase authorization.
The Company is revising its net sales and earnings per share outlook for fiscal year 2022 as follows:
| Fiscal Year 2022 Outlook | ||
| Revised Range | Previous Range | |
| Consolidated Net Sales | $1.100 - $1.200 billion | $1.125 - $1.225 billion |
| Diluted EPS | $5.00 - $5.70 | $5.25 - $6.00 |
Doug Hekking, Chief Financial Officer, said, "Despite some sales softness across a few key markets and ongoing inflationary pressures, our first quarter operating results were within the range reflected in our internal forecast. We are,
however, reducing our net sales and diluted EPS outlook for fiscal 2022 due to the elevated uncertainty surrounding the COVID-19 environment in China."
Management Commentary Document and Conference Call
For more 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, April 27, 2022 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, 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 from geopolitical relations and conflicts, including the Russia-Ukraine conflict; 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 | ||||||
| 2-Apr-22 | 3-Apr-21 | |||||
| Net sales | $ | 272,867 | $ | 307,976 | ||
| Cost of sales | 51,383 | 57,651 | ||||
| Gross profit | 221,484 | 250,325 | ||||
| Operating expenses: | ||||||
| Associate incentives | 119,620 | 134,495 | ||||
| Selling, general and administrative | 68,797 | 71,633 | ||||
| Earnings from operations | 33,067 | 44,197 | ||||
| Other income (expense), net | 220 | 139 | ||||
| Earnings before income taxes | 33,287 | 44,336 | ||||
| Income taxes | 10,818 | 13,715 | ||||
| NET EARNINGS | $ | 22,469 | $ | 30,621 | ||
| Earnings per share - diluted | $ | 1.15 | $ | 1.45 | ||
| Weighted average shares outstanding - diluted | 19,481 | 21,096 |
| USANA Health Sciences, Inc. | ||||||
| Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| As of | As of | |||||
| 2-Apr-22 | 1-Jan-22 | |||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash and cash equivalents | $ | 237,753 | $ | 239,832 | ||
| Inventories | 97,581 | 98,318 | ||||
| Prepaid expenses and other current assets | 28,451 | 26,967 | ||||
| Total current assets | 363,785 | 365,117 | ||||
| Property and equipment, net | 100,792 | 101,780 | ||||
| Goodwill | 17,661 | 17,668 | ||||
| Intangible assets, net | 30,124 | 30,442 | ||||
| Deferred tax assets | 4,542 | 4,839 | ||||
| Other assets | 56,015 | 57,894 | ||||
| Total assets | $ | 572,919 | $ | 577,740 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current Liabilities | ||||||
| Accounts payable | $ | 11,248 | $ | 13,508 | ||
| Line of credit - short term | 10,000 | - | ||||
| Other current liabilities | 136,719 | 147,282 | ||||
| Total current liabilities | 157,967 | 160,790 | ||||
| Deferred tax liabilities | 11,419 | 7,497 | ||||
| Other long-term liabilities | 13,587 | 14,329 | ||||
| Stockholders' equity | 389,946 | 395,124 | ||||
| Total liabilities and stockholders' equity | $ | 572,919 | $ | 577,740 |
| USANA Health Sciences, Inc. | ||||||||||||||||||||||||||
| Sales by Region | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||
| April 2, 2022 | April 3, 2021 | Change from prior year | Currency impact on sales | % change excluding currency impact | ||||||||||||||||||||||
| Asia Pacific | ||||||||||||||||||||||||||
| Greater China | $ | 133,739 | 49.0 | % | $ | 148,978 | 48.4 | % | $ | (15,239 | ) | (10.2 | %) | $ | 2,530 | (11.9 | %) | |||||||||
| Southeast Asia Pacific | 54,742 | 20.0 | % | 72,148 | 23.4 | % | (17,406 | ) | (24.1 | %) | (2,596 | ) | (20.5 | %) | ||||||||||||
| North Asia | 29,939 | 11.0 | % | 30,165 | 9.8 | % | (226 | ) | (0.7 | %) | (2,446 | ) | 7.4 | % | ||||||||||||
| Asia Pacific Total | 218,420 | 80.0 | % | 251,291 | 81.6 | % | (32,871 | ) | (13.1 | %) | (2,512 | ) | (12.1 | %) | ||||||||||||
| Americas and Europe | 54,447 | 20.0 | % | 56,685 | 18.4 | % | (2,238 | ) | (3.9 | %) | (293 | ) | (3.4 | %) | ||||||||||||
| $ | 272,867 | 100.0 | % | $ | 307,976 | 100.0 | % | $ | (35,109 | ) | (11.4 | %) | $ | (2,805 | ) | (10.5 | %) |
| Active Associates by Region (1) | ||||||||||
| (unaudited) | ||||||||||
| As of | ||||||||||
| April 2, 2022 | April 3, 2021 | |||||||||
| Asia Pacific | ||||||||||
| Greater China | 79,000 | 32.3 | % | 88,000 | 30.4 | % | ||||
| Southeast Asia Pacific | 76,000 | 31.0 | % | 99,000 | 34.1 | % | ||||
| North Asia | 36,000 | 14.7 | % | 38,000 | 13.1 | % | ||||
| Asia Pacific Total | 191,000 | 78.0 | % | 225,000 | 77.6 | % | ||||
| Americas and Europe | 54,000 | 22.0 | % | 65,000 | 22.4 | % | ||||
| 245,000 | 100.0 | % | 290,000 | 100.0 | % | |||||
| Active Preferred Customers by Region (2) | ||||||||||
| (unaudited) | ||||||||||
| As of | ||||||||||
| April 2, 2022 | April 3, 2021 | |||||||||
| Asia Pacific | ||||||||||
| Greater China | 176,000 | 57.3 | % | 188,000 | 57.5 | % | ||||
| Southeast Asia Pacific | 34,000 | 11.1 | % | 38,000 | 11.6 | % | ||||
| North Asia | 21,000 | 6.8 | % | 21,000 | 6.4 | % | ||||
| Asia Pacific Total | 231,000 | 75.2 | % | 247,000 | 75.5 | % | ||||
| Americas and Europe | 76,000 | 24.8 | % | 80,000 | 24.5 | % | ||||
| 307,000 | 100.0 | % | 327,000 | 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. |