Full Press Release Details
USANA Health Sciences Reports Fourth Quarter and Fiscal Year 2022 Results
SALT LAKE CITY--(BUSINESS WIRE)--February 7, 2023--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and full year ended December 31, 2022.
Key Financial & Operating Results
Fourth quarter net sales were $228 million versus $267 million during the prior-year period.
Fourth quarter diluted EPS was $0.66 as compared with $1.03 during Q4 2021.
Fiscal year 2022 net sales were $999 million as compared with $1,186 million during fiscal year 2021.
Fiscal year 2022 diluted EPS totaled $3.59 versus $5.73 during fiscal year 2021.
Fiscal year 2022 operating cash flow totaled $104 million.
Company reiterates fiscal year 2023 net sales and diluted EPS outlook of $850 million to $950 million and $2.35 to $3.30, respectively.
Fiscal Year 2022 Financial Performance
| Consolidated Results | ||
| Net Sales | $999 million | -16% vs. prior year -12% constant currency vs. prior year -$50 million YOY FX impact, or -4% |
| Diluted EPS | $3.59 | -37% vs. prior year Diluted shares of 19.3 million, -5% year-over-year |
| Active Customers | 490,000 | -13% vs. prior year |
"Our fourth quarter and full year results were largely in line with our preliminary results announced on January 5, 2023," said Kevin Guest, Chief Executive Officer and Chairman of the Board. "During the fourth quarter, total Active Customer
counts stabilized in several key markets and increased 3% sequentially. In addition, sales and customer activity in mainland China increased during the final two weeks of the year following the Chinese government's unanticipated shift in COVID
policy. This increase in sales and customer activity was due largely to increased demand for several of our health products in China."
"While 2022 presented a challenging operating environment for both USANA and our industry, we remained focused on executing our long-term growth strategy. In 2022, we made progress in several areas that position USANA for future growth. These
areas include digital commerce initiatives to support our business, new market expansion, the launch of our Affiliate program in select markets, and the completion of two acquisitions. These activities further our efforts to differentiate and
diversify our business while contributing to shareholder returns."
Q4 2022 Financial Performance
| Consolidated Results | ||
| Net Sales | $228 million | -15% vs. prior-year quarter -7% constant currency vs. prior-year quarter -$21 million YOY FX impact, or -8% Flat sequentially in constant currency |
| Diluted EPS | $0.66 | -36% vs. prior-year quarter -15% sequentially Diluted shares of 19.3 million, -2% year-over-year |
| Active Customers | 490,000 | -13% vs. prior-year quarter +3% sequentially |
Q4 2022 Regional Results:
| Asia Pacific Region | ||
| Net Sales | $183 million | -14% vs. prior-year quarter -4% constant currency vs. prior-year quarter +3% constant currency sequentially 80% of consolidated net sales |
| Active Customers | 384,000 | -10% vs. prior-year quarter +6% sequentially |
| Asia Pacific Sub-Regions | ||
| Greater China | ||
| Net Sales | $118 million | -6% vs. prior-year quarter +4% constant currency vs. prior-year quarter |
| Active Customers | 244,000 | -4% vs. prior-year quarter +15% sequentially |
| North Asia | ||
| Net Sales | $25 million | -16% vs. prior-year quarter -3% constant currency vs. prior-year quarter |
| Active Customers | 53,000 | -9% vs. prior-year quarter -2% sequentially |
| Southeast Asia Pacific | ||
| Net Sales | $41 million | -29% vs. prior-year quarter -22% constant currency vs. prior-year quarter |
| Active Customers | 87,000 | -24% vs. prior-year quarter -8% sequentially |
| Americas and Europe Region | ||
| Net Sales | $45 million | -19% vs. prior-year quarter -18% constant currency vs. prior-year quarter -11% constant currency sequentially 20% of consolidated net sales |
| Active Customers | 106,000 | -20% vs. prior-year quarter -5 % sequentially |
Balance Sheet and Share Repurchase Activity
The Company generated $104 million of operating cash flow during fiscal 2022, ended the year with $288 million in cash and cash equivalents, and remained debt-free. The Company did not repurchase shares during the quarter and, as of December
31, 2022, had approximately $83 million remaining under the current share repurchase authorization. For the full year, the Company repurchased 288 thousand shares for a total investment of $25.4 million.
Fiscal Year 2023 Outlook
Mr. Guest added, "Our strategies during 2023 are focused on increasing the number of Active Customers in our business. These efforts include a return to live sales meetings and events where possible, new market expansion, new incentive
opportunities for our salesforce, and pursuing additional acquisition opportunities. Additionally, we continue to execute our long-term strategy with a focus on digital commerce, product development, and improvements to ensure the best overall
customer experience."
The Company is reiterating its net sales and earnings per share outlook for fiscal year 2023 provided on January 5, 2023, as follows:
| Fiscal Year 2023 Outlook | |
| Range | |
| Consolidated Net Sales | $850 - $950 million |
| Diluted EPS | $2.35 - $3.30 |
"While we have seen increased sales activity and customer demand in China for certain of our health products following that country's change in COVID policy, it remains difficult to forecast the duration of the market response as well as the
subsequent normalized level of business in this key market during fiscal 2023. Therefore, we are reiterating our full-year outlook which incorporates wider-than-typical ranges for net sales and diluted EPS," said Doug Hekking, Chief Financial
"Moreover, we are entering fiscal year 2023 with an Active Customer base that is 13% lower than it was at the beginning of 2022. Our customer growth efforts are focused on generating sequential quarter customer growth from this base. Also of
note: we continue to experience increased costs due to inflationary pressures, and we project increased spending related to several growth initiatives plus a return to in-person sales events and incentive trips."
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, February 8, 2023 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 COVID-19 pandemic ("COVID-19") to our business, operations and financial results; 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; compliance with data privacy and security laws and regulations in our markets around the world; 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, including
increasing inflationary pressure around the world and any 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; 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 | |||||||||||
| 31-Dec-22 | 1-Jan-22 | 31-Dec-22 | 1-Jan-22 | |||||||||
| Net sales | $ | 227,960 | $ | 267,299 | $ | 998,601 | $ | 1,186,464 | ||||
| Cost of sales | 46,430 | 52,518 | 193,890 | 217,898 | ||||||||
| Gross profit | 181,530 | 214,781 | 804,711 | 968,566 | ||||||||
| Operating expenses: | ||||||||||||
| Associate incentives | 97,879 | 114,687 | 434,793 | 519,267 | ||||||||
| Selling, general and administrative | 61,100 | 68,589 | 262,304 | 279,107 | ||||||||
| Earnings from operations | 22,551 | 31,505 | 107,614 | 170,192 | ||||||||
| Other income (expense), net | 251 | 141 | 1,007 | 450 | ||||||||
| Earnings before income taxes | 22,802 | 31,646 | 108,621 | 170,642 | ||||||||
| Income taxes | 10,007 | 11,326 | 39,271 | 54,137 | ||||||||
| NET EARNINGS | $ | 12,795 | $ | 20,320 | $ | 69,350 | $ | 116,505 | ||||
| Earnings per share - diluted | $ | 0.66 | $ | 1.03 | $ | 3.59 | $ | 5.73 | ||||
| Weighted average shares outstanding - diluted | 19,263 | 19,673 | 19,310 | 20,343 |
| USANA Health Sciences, Inc. | ||||||
| Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| As of | As of | |||||
| 31-Dec-22 | 1-Jan-22 | |||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash and cash equivalents | $ | 288,420 | $ | 239,832 | ||
| Inventories | 67,089 | 98,318 | ||||
| Prepaid expenses and other current assets | 28,873 | 26,967 | ||||
| Total current assets | 384,382 | 365,117 | ||||
| Property and equipment, net | 97,773 | 101,780 | ||||
| Goodwill | 17,368 | 17,668 | ||||
| Intangible assets, net | 32,432 | 30,442 | ||||
| Deferred tax assets | 9,799 | 4,839 | ||||
| Other assets | 54,795 | 57,894 | ||||
| Total assets | $ | 596,549 | $ | 577,740 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current Liabilities | ||||||
| Accounts payable | $ | 11,049 | $ | 13,508 | ||
| Other current liabilities | 132,784 | 147,282 | ||||
| Total current liabilities | 143,833 | 160,790 | ||||
| Deferred tax liabilities | 4,071 | 7,497 | ||||
| Other long-term liabilities | 14,173 | 14,329 | ||||
| Stockholders' equity | 434,472 | 395,124 | ||||
| Total liabilities and stockholders' equity | $ | 596,549 | $ | 577,740 |
| USANA Health Sciences, Inc. | ||||||||||||||||||||||||||
| Sales by Region | ||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||
| December 31, 2022 | January 1, 2022 | Change from prior year | Currency impact on sales | % change excluding currency impact | ||||||||||||||||||||||
| Asia Pacific | ||||||||||||||||||||||||||
| Greater China | $ | 118,290 | 51.9 | % | $ | 125,840 | 47.1 | % | $ | (7,550 | ) | (6.0 | %) | $ | (12,161 | ) | 3.7 | % | ||||||||
| Southeast Asia Pacific | 40,598 | 17.8 | % | 56,984 | 21.3 | % | (16,386 | ) | (28.8 | %) | (4,088 | ) | (21.6 | %) | ||||||||||||
| North Asia | 24,543 | 10.8 | % | 29,249 | 10.9 | % | (4,706 | ) | (16.1 | %) | (3,725 | ) | (3.4 | %) | ||||||||||||
| Asia Pacific Total | 183,431 | 80.5 | % | 212,073 | 79.3 | % | (28,642 | ) | (13.5 | %) | (19,974 | ) | (4.1 | %) | ||||||||||||
| Americas and Europe | 44,529 | 19.5 | % | 55,226 | 20.7 | % | (10,697 | ) | (19.4 | %) | (1,002 | ) | (17.6 | %) | ||||||||||||
| $ | 227,960 | 100.0 | % | $ | 267,299 | 100.0 | % | $ | (39,339 | ) | (14.7 | %) | $ | (20,976 | ) | (6.9 | %) |
| Active Associates by Region (1) | ||||||||||
| (Unaudited) | ||||||||||
| As of | ||||||||||
| December 31, 2022 | January 1, 2022 | |||||||||
| Asia Pacific | ||||||||||
| Greater China | 74,000 | 34.1 | % | 81,000 | 31.9 | % | ||||
| Southeast Asia Pacific | 62,000 | 28.6 | % | 78,000 | 30.7 | % | ||||
| North Asia | 34,000 | 15.6 | % | 37,000 | 14.6 | % | ||||
| Asia Pacific Total | 170,000 | 78.3 | % | 196,000 | 77.2 | % | ||||
| Americas and Europe | 47,000 | 21.7 | % | 58,000 | 22.8 | % | ||||
| 217,000 | 100.0 | % | 254,000 | 100.0 | % |
| Active Preferred Customers by Region (2) | ||||||||||
| (Unaudited) | ||||||||||
| As of | ||||||||||
| December 31, 2022 | January 1, 2022 | |||||||||
| Asia Pacific | ||||||||||
| Greater China | 170,000 | 62.3 | % | 174,000 | 56.8 | % | ||||
| Southeast Asia Pacific | 25,000 | 9.1 | % | 37,000 | 12.1 | % | ||||
| North Asia | 19,000 | 7.0 | % | 21,000 | 6.9 | % | ||||
| Asia Pacific Total | 214,000 | 78.4 | % | 232,000 | 75.8 | % | ||||
| Americas and Europe | 59,000 | 21.6 | % | 74,000 | 24.2 | % | ||||
| 273,000 | 100.0 | % | 306,000 | 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. |