Full Press Release Details
Health Sciences Reports Record First Quarter 2018 Net Sales and
Increases 2018 Outlook
first quarter net sales of $292.0 million, an increase of 14.4%
quarter diluted earnings per share increased 38.4% to $1.19 per share
SALT LAKE CITY--(BUSINESS WIRE)--April 24, 2018--USANA Health Sciences,
Inc. (NYSE: USNA) today announced financial results for its fiscal first
quarter ended March 31, 2018.
Financial Performance
For the first quarter of 2018, net sales were $292.0 million compared
with $255.3 million in the prior-year period, or a 14.4% increase
year-over-year. Favorable currency exchange rates positively impacted
net sales by $16.4 million for the quarter. Targeted product promotions
offered by the Company during the quarter contributed approximately $11
million to net sales and the Company's launch of its new skincare line,
Celavive, also contributed approximately $9 million in incremental sales
for the quarter. The Company's total number of active Customers
increased 1.9% year-over-year to 585,000.
The Company reported net earnings for the first quarter of $28.9
million, compared with net earnings of $21.4 million reported in the
prior-year period. Earnings per diluted share increased to $1.19 per
diluted share, an increase of 38.4% on a year-over-year basis. The
increase in net earnings was due primarily to higher net sales, lower
relative operating expenses and a lower effective tax rate of 34.2%
compared to 36% during the prior year period. Costs related to China and
the Company's internal investigation into its China operations were
nominal during the first quarter of 2018 as compared to approximately
$2.4 million, after tax, during the prior year period.
"We are off to a solid start to the year as we continue to see strong
momentum in most of our regions around the world," said Kevin Guest,
Chief Executive Officer. "The highlight of the quarter was our
successful launch of the Celavive skincare line. We launched Celavive in
every market except China, where we anticipate launching in the fourth
quarter. The initial results from this launch show strong customer
demand for this product line around the world. We also offered a
targeted product promotion in China that benefited sales for the
Weighted average diluted shares outstanding were 24.3 million for the
first quarter of 2018, compared with diluted shares of 25.0 million in
the prior-year period. The Company repurchased approximately 39,000
shares during the quarter for a total investment of $2.9 million, and
ended the quarter with $266.2 million in cash and cash equivalents and
no debt. As of March 31, 2018, there was $47.1 million remaining under
the current share repurchase authorization.
Net sales in the Asia Pacific region increased by 19.0% to $232.1
million for the first quarter of 2018. Within Asia Pacific, net sales:
Increased 19.8% in Greater China;
Increased 39.6% in North Asia; and
Increased 11.6% in the Southeast Asia Pacific region.
Sales growth in Greater China was primarily driven by a 4.9% increase in
active Customers in Mainland China, while sales growth in North Asia
resulted from 17.9% active Customer growth in South Korea. Sales growth
in Southeast Asia Pacific was driven by 27.3% active Customer growth in
Malaysia and 18.2% active Customer growth in Singapore. The total number
of active Customers in the Asia Pacific region increased by 5.7%
Net sales in the Americas and Europe region for the first quarter of
2018 decreased by 0.6% to $59.9 million, and active Customers in this
region declined 8.6%.
"Each of our Asia Pacific regions reported double-digit sales growth in
the first quarter," continued Mr. Guest. "We're pleased not only with
our continued growth in China, but also with the double-digit sales
growth we reported in several other markets, including South Korea,
Malaysia, Australia and Singapore. In the Americas and Europe region,
net sales decreased on a year-over basis, but increased sequentially.
Active Customer growth continues to be a challenge for us in this region
and a major focus of our team. Several of our 2018 growth strategies are
intended to help generate customer growth in this region, including the
opening of four new European markets in mid-June. Although we are
forecasting sales to be relatively modest in these markets initially, we
believe that the excitement of entering these new markets will help
generate momentum within the overall region and, most importantly, we're
pleased to be able to offer USANA products to more families across the
The Company is updating its consolidated net sales and earnings per
share outlook for 2018 as follows:
Consolidated net sales between $1.13 and $1.17 billion, previously
between $1.11 and $1.16 billion; and
Earnings per share between $4.25 and $4.55, previously between $4.05
The Company's outlook reflects:
A positive impact from more favorable currency exchange rates of
approximately $45 million for the full-year;
An estimated operating margin of between 13% and 14% for the year;
An effective tax rate of approximately 34% for the year; and
An annualized diluted share count of approximately 24.3 million.
Chief Financial Officer Doug Hekking commented, "Our results for the
first quarter reflect the strength of USANA's business. We generated
record net sales for the quarter with the Celavive launch and other
promotional activity contributing to the topline performance. In
addition, topline results were positively impacted by favorable currency
exchange rates. Earnings from operations for the quarter benefited from
a delay in planned investments that will be implemented during the
remainder of 2018. We continue to believe that we are well positioned to
leverage the meaningful investments we have made in our business over
the last several years and expect to deliver a higher operating margin.
We are raising our outlook for 2018 to reflect our first quarter results
and the momentum we are seeing in the business."
China Preferred Customers
The Company has had a long-standing Preferred Customer program in China
but, due to certain attributes of that program, had historically
reported China Preferred Customers as Associates. The Company began
reporting China Preferred Customers as Preferred Customers with its
results for the fourth quarter of 2017.
Internal Investigation of China Operations