Full Press Release Details
USANA Health Sciences Reports Second Quarter Results
SALT LAKE CITY--(BUSINESS WIRE)--July 26, 2022--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal second quarter ended July 2, 2022.
Key Financial & Operating Results
Second quarter net sales were $264 million as compared with $337 million during the second quarter of the prior year.
Second quarter diluted EPS totaled $1.00 versus $1.87 during the second quarter of 2021.
Company reiterates fiscal 2022 net sales and diluted EPS outlook of $1.015 billion to $1.065 billion and $3.85 to $4.45, respectively.
Q2 2022 Financial Performance
| Consolidated Results | ||
| Net Sales | $264 million | -21% vs. prior-year quarter -18% constant currency vs. prior-year quarter -$10.9 million YOY FX impact, or -3% Flat sequentially in constant currency |
| Diluted EPS | $1.00 | -47% vs. prior-year quarter -13% sequentially Diluted shares of 19.2 million, -6% year-over-year |
| Active Customers | 559,000 | -14% vs. prior-year quarter +1% sequentially |
"As indicated in our preliminary results release on July 6th, we continue to experience COVID-related disruptions in several key markets, including mainland China. This caused participation in sales programs, Active Customer counts, and
financial performance to come in lower than anticipated," said Kevin Guest, Chief Executive Officer and Chairman of the Board. "Although many of these disruptions were outside of our control, and while we faced a tough year-over year
comparable due to the timing of a successful sales program in 2021, our second quarter results were not up to our standards. Nevertheless, we remain committed to our business strategy which we believe will deliver sustained, long-term growth
in customer counts, net sales, and EPS. Important elements of this strategy include (1) enhancing digital experience for our customers to improve the overall online shopping experience; (2) improving Associate onboarding and training to help
drive and sustain customer growth; (3) exploring additional promotions and incentives on a market-specific basis; (4) launching experience centers in mainland China to promote growth in this key market; and (5) pursuing accretive business
development opportunities.
"During the quarter, we streamlined our Associate onboarding program and provided Associates with additional tools to help them more efficiently and effectively setup and operate their businesses. Our team also launched improvements to our
China shopping app to further improve the online shopping experience in that market. Although it takes time to recapture momentum, we are confident these strategies will deliver long-term growth."
Q2 2022 Regional Results:
| Asia Pacific Region | ||
| Net Sales | $217 million | -22% vs. prior-year quarter -18% constant currency vs. prior-year quarter +3% constant currency sequentially 82% of consolidated net sales |
| Active Customers | 438,000 | -15% vs. prior-year quarter +4% sequentially |
| Asia Pacific Sub-Regions | ||
| Greater China | ||
| Net Sales | $141 million | -15% vs. prior-year quarter -13% constant currency vs. prior-year quarter |
| Active Customers | 278,000 | -8% vs. prior-year quarter +9% sequentially |
| North Asia | ||
| Net Sales | $29 million | -23% vs. prior-year quarter -13% constant currency vs. prior-year quarter |
| Active Customers | 57,000 | -14% vs. prior-year quarter Flat sequentially |
| Southeast Asia Pacific | ||
| Net Sales | $48 million | -37% vs. prior-year quarter -33% constant currency vs. prior-year quarter |
| Active Customers | 103,000 | -29% vs. prior-year quarter -6% sequentially |
| Americas and Europe Region | ||
| Net Sales | $47 million | -19% vs. prior-year quarter -17% constant currency vs. prior-year quarter -13% constant currency sequentially 18% of consolidated net sales |
| Active Customers | 121,000 | -13% vs. prior-year quarter -7 % sequentially |
Balance Sheet and Share Repurchase Activity
The Company ended the quarter with $230 million in cash and cash equivalents and did not repurchase any shares during the quarter. As of July 2, 2022, the Company had approximately $83 million remaining under the share repurchase
The Company is reiterating its net sales and earnings per share outlook for fiscal year 2022, which was updated on July 6, 2022.
| Fiscal Year 2022 Outlook | |
| Range | |
| Consolidated Net Sales | $1.015 - $1.065 billion |
| Diluted EPS | $3.85 - $4.45 |
Doug Hekking, Chief Financial Officer, said, "While we remain optimistic that our strategies will generate future growth, we believe we will continue to face a challenging operating environment in the second half of the year. Moreover, we
will do so with a lower-than-anticipated Active Customer base, which will impact our top and bottom-line results for the period. Although COVID-related disruptions and inflationary pressures remain difficult, we remain steadfast in pursing
investments to deliver on our business objectives. We will also continue to align our cost structure with sales performance. Despite a challenging operating environment, our debt-free balance sheet remains healthy, and we are on pace to
generate meaningful cash flow for the year."
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, July 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, 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 | Six Months Ended | ||||||||||||
| 2-Jul-22 | 3-Jul-21 | 2-Jul-22 | 3-Jul-21 | ||||||||||
| Net sales | $ | 264,474 | $ | 336,837 | $ | 537,341 | $ | 644,813 | |||||
| Cost of sales | 49,517 | 57,014 | 100,900 | 114,665 | |||||||||
| Gross profit | 214,957 | 279,823 | 436,441 | 530,148 | |||||||||
| Operating expenses: | |||||||||||||
| Associate incentives | 119,204 | 153,863 | 238,824 | 288,358 | |||||||||
| Selling, general and administrative | 66,387 | 72,240 | 135,184 | 143,873 | |||||||||
| Earnings from operations | 29,366 | 53,720 | 62,433 | 97,917 | |||||||||
| Other income (expense), net | (58 | ) | 590 | 162 | 729 | ||||||||
| Earnings before income taxes | 29,308 | 54,310 | 62,595 | 98,646 | |||||||||
| Income taxes | 10,151 | 16,076 | 20,969 | 29,791 | |||||||||
| NET EARNINGS | $ | 19,157 | $ | 38,234 | $ | 41,626 | $ | 68,855 | |||||
| Earnings per share - diluted | $ | 1.00 | $ | 1.87 | $ | 2.15 | $ | 3.31 | |||||
| Weighted average shares outstanding - diluted | 19,244 | 20,446 | 19,362 | 20,771 |
| USANA Health Sciences, Inc. | ||||||
| Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| As of | As of | |||||
| 2-Jul-22 | 1-Jan-22 | |||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash and cash equivalents | $ | 230,370 | $ | 239,832 | ||
| Inventories | 84,171 | 98,318 | ||||
| Prepaid expenses and other current assets | 27,536 | 26,967 | ||||
| Total current assets | 342,077 | 365,117 | ||||
| Property and equipment, net | 97,827 | 101,780 | ||||
| Goodwill | 17,402 | 17,668 | ||||
| Intangible assets, net | 34,371 | 30,442 | ||||
| Deferred tax assets | 11,265 | 4,839 | ||||
| Other assets | 55,017 | 57,894 | ||||
| Total assets | $ | 557,959 | $ | 577,740 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
| Current Liabilities | ||||||
| Accounts payable | $ | 10,175 | $ | 13,508 | ||
| Other current liabilities | 123,419 | 147,282 | ||||
| Total current liabilities | 133,594 | 160,790 | ||||
| Deferred tax liabilities | 5,142 | 7,497 | ||||
| Other long-term liabilities | 15,542 | 14,329 | ||||
| Stockholders' equity | 403,681 | 395,124 | ||||
| Total liabilities and stockholders' equity | $ | 557,959 | $ | 577,740 |
| USANA Health Sciences, Inc. | ||||||||||||||||||||||||||
| Sales by Region | ||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||
| Quarter Ended | ||||||||||||||||||||||||||
| July 2, 2022 | July 3, 2021 | Change from prior year | Currency impact on sales | % change excluding currency impact | ||||||||||||||||||||||
| Asia Pacific | ||||||||||||||||||||||||||
| Greater China | $ | 140,775 | 53.2 | % | $ | 165,416 | 49.1 | % | $ | (24,641 | ) | (14.9 | %) | $ | (3,062 | ) | (13.0 | %) | ||||||||
| Southeast Asia Pacific | 47,830 | 18.1 | % | 76,101 | 22.6 | % | (28,271 | ) | (37.1 | %) | (3,341 | ) | (32.8 | %) | ||||||||||||
| North Asia | 28,803 | 10.9 | % | 37,438 | 11.1 | % | (8,635 | ) | (23.1 | %) | (3,632 | ) | (13.4 | %) | ||||||||||||
| Asia Pacific Total | 217,408 | 82.2 | % | 278,955 | 82.8 | % | (61,547 | ) | (22.1 | %) | (10,035 | ) | (18.5 | %) | ||||||||||||
| Americas and Europe | 47,066 | 17.8 | % | 57,882 | 17.2 | % | (10,816 | ) | (18.7 | %) | (863 | ) | (17.2 | %) | ||||||||||||
| $ | 264,474 | 100.0 | % | $ | 336,837 | 100.0 | % | $ | (72,363 | ) | (21.5 | %) | $ | (10,898 | ) | (18.2 | %) |
| Active Associates by Region (1) | ||||||||||
| (Unaudited) | ||||||||||
| As of | ||||||||||
| July 2, 2022 | July 3, 2021 | |||||||||
| Asia Pacific | ||||||||||
| Greater China | 77,000 | 32.9 | % | 88,000 | 29.3 | % | ||||
| Southeast Asia Pacific | 69,000 | 29.5 | % | 104,000 | 34.7 | % | ||||
| North Asia | 36,000 | 15.4 | % | 42,000 | 14.0 | % | ||||
| Asia Pacific Total | 182,000 | 77.8 | % | 234,000 | 78.0 | % | ||||
| Americas and Europe | 52,000 | 22.2 | % | 66,000 | 22.0 | % | ||||
| 234,000 | 100.0 | % | 300,000 | 100.0 | % | |||||
| Active Preferred Customers by Region (2) | ||||||||||
| (Unaudited) | ||||||||||
| As of | ||||||||||
| July 2, 2022 | July 3, 2021 | |||||||||
| Asia Pacific | ||||||||||
| Greater China | 201,000 | 61.8 | % | 215,000 | 61.1 | % | ||||
| Southeast Asia Pacific | 34,000 | 10.5 | % | 40,000 | 11.4 | % | ||||
| North Asia | 21,000 | 6.5 | % | 24,000 | 6.8 | % | ||||
| Asia Pacific Total | 256,000 | 78.8 | % | 279,000 | 79.3 | % | ||||
| Americas and Europe | 69,000 | 21.2 | % | 73,000 | 20.7 | % | ||||
| 325,000 | 100.0 | % | 352,000 | 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. |