- Fourth quarter net sales increased by
22.3% to $227.9 million
- Fourth quarter EPS increased by 17.0%
to $1.65
- Number of active Associates increased
by 31.7%
- 2014 marks 12th consecutive year of
record sales
- EPS increased to a record $5.60 for the
year
- Initial 2015 net sales and earnings
outlook provided
USANA Health Sciences, Inc. (NYSE: USNA) today announced
financial results for its fiscal fourth quarter ended January 3,
2015. The Company also provided net sales and earnings guidance for
2015.
Financial Performance
For the fourth quarter of 2014, net sales increased by 22.3% to
$227.9 million, compared with $186.3 million in the prior-year
period. The fourth quarter of 2014 was a 14-week quarter as
compared to a typical 13-week quarter in the prior year period. The
Company estimates that this extra week contributed approximately
$16 million to net sales for the quarter. The increase in net sales
was driven by 31.7% growth in the number of active Associates,
largely as a result of strong growth in the Company’s Asia Pacific
region. Net sales, on a comparative basis, were negatively impacted
by $6.3 million due to a strengthening U.S. dollar.
Net earnings for the fourth quarter increased by 5.0% to $21.3
million, compared with $20.3 million during the prior-year period.
This increase was driven by higher net sales and improved gross
margins, which was partially offset by higher operating expenses.
On a relative basis, Associate Incentives expense increased 170
basis points due to the incentive program that the Company offered
during the fourth quarter. Earnings per share for the quarter
increased 17.0% to $1.65, compared with $1.41 in the fourth quarter
of the prior year. This increase in earnings per share was
attributable to higher net earnings and a lower number of diluted
shares outstanding due to the Company’s share repurchases during
2014. Weighted average diluted shares outstanding were 12.9 million
as of the end of the fourth quarter of 2014, compared with 14.4
million in the prior-year period. The Company estimates that the
extra week of sales contributed approximately $0.12 to earnings per
share for the quarter.
During the quarter, the Company repurchased approximately
172,000 shares under its authorized repurchase program for a total
investment of $13.2 million. As of January 3, 2015, there was $61.2
million remaining under the current share repurchase authorization.
The Company ended the fourth quarter with no debt and with $111.1
million in cash and cash equivalents.
“USANA generated exceptional results in the fourth quarter,
which included double-digit sales, earnings per share and customer
growth,” said Kevin Guest, USANA’s President. “While our results
did benefit from the extra week of sales during the quarter, the
more significant catalyst for our performance was the incentive we
introduced to our Associate sales force during the fourth quarter.
Although it created pressure on our operating margin, the incentive
was very successful in accelerating our sales and customer growth
for the quarter. This incentive will end in February 2015, but we
will offer other market-specific incentives throughout 2015 and
expect to carry the momentum we are seeing in our business
throughout the year.”
Regional Results
Net sales in the Asia Pacific region increased by 34.1% to
$163.3 million, compared with $121.8 million for the fourth quarter
of the prior year. Net sales also increased by 25.4% on a
sequential quarter basis. The year-over-year increase was due to
45.1% sales growth in the Greater China region, 18.8% sales growth
in the Southeast Asia Pacific region, and 16.1% sales growth in the
North Asia region. Sales growth in Greater China was driven by
double-digit sales and customer growth in Mainland China, while
sales growth in Southeast Asia Pacific resulted from double-digit
sales and customer growth in the Philippines, Australia/New
Zealand, Malaysia and Thailand. Sales growth in North Asia was
driven by double-digit sales and customer growth in South Korea.
The number of active Associates in the Asia Pacific region
increased by 44.3% year-over-year, and increased 26.3%
sequentially.
Net sales in the Americas/Europe region were essentially flat at
$64.5 million, due primarily to a sales decline in the U.S., which
was offset by double-digit local currency sales growth in Canada
and Mexico. The number of active Associates in this region
increased by 3.7% compared to the prior-year period.
“Our Asia Pacific region led the way during the quarter, where
we saw double-digit sales and customer growth in most markets in
the region. Our Associates throughout the region embraced the
promotion we offered during the fourth quarter and utilized it to
grow their sales organizations at an accelerated pace. This was
most evident in Mainland China, where we saw significant sales and
customer growth, which was bolstered by the excitement generated by
our National Sales Meeting in early November. We were also pleased
with the results we generated in the Americas/Europe region during
the quarter, which included solid customer and sales growth in
Canada and Mexico,” continued Mr. Guest.
2014 Results
For the year ended January 3, 2015, net sales increased by 10.1%
to $790.5 million, compared with $718.2 million in the prior year.
The increase in net sales was largely driven by sales and Associate
growth in the Company’s Asia Pacific region. Net sales for the
full-year were negatively impacted by $14.9 million due to a
strengthening U.S. dollar.
Net earnings for 2014 decreased by 3.0% to $76.6 million,
compared with $79.0 million in the prior year. This decrease
resulted primarily from a 130 basis point increase in Associate
Incentives expense due primarily to the pricing and compensation
plan changes implemented during the third quarter of 2013. Earnings
per share for the year increased by 0.7% to $5.60, compared with
$5.56 in the prior year. This increase in earnings per share was
attributable to a lower number of diluted shares outstanding due to
the Company’s share repurchases during 2014. Weighted average
diluted shares outstanding were 13.7 million for fiscal 2014,
compared with 14.2 million for fiscal 2013.
“2014 was another exceptional year for USANA,” concluded Mr.
Guest. “Our vision as a Company continues to center on improving
the overall health and nutrition of individuals and families around
the world through our world-class product offering. To further this
vision in 2015, we will continue to execute our overall strategy,
which focuses on promoting customer loyalty, enjoyment and success
with USANA. This includes advancing our personalization initiative
with investments in product and technology innovation to benefit
our customers. We are also excited about our recent announcement
that USANA is now a Trusted Partner and Sponsor of the Dr. Oz Show.
This expansion of our marketing strategy is intended to make it
easier for our Associates to introduce USANA products to potential
customers. Finally, we will continue to enhance our rewarding
Associate Compensation Plan by introducing short-term,
market-specific incentives to drive customer growth. I am excited
about our growth opportunities in the coming year and believe that
the strategies we have in place will produce another record year
for USANA in 2015.”
Outlook
The Company provided the following consolidated net sales and
earnings per share outlook for 2015:
- Consolidated net sales between $850
million and $870 million
- Earnings per share between $6.40 and
$6.70
Chief Financial Officer, Paul Jones, commented, “We are pleased
with the results that USANA delivered in 2014 and are encouraged
about our opportunities in 2015. As our initial outlook suggests,
we are confident in the strength of our underlying business and
expect 2015 to be another record year. Consistent with prior years,
we anticipate that our results will accelerate during the year
following the customary seasonal pressure from the Chinese New
Year. We will also make several necessary investments in Fiscal
2015 to strengthen key areas of our business. These investments
will include our information technology systems and infrastructure,
brand-awareness, product innovation, and new technology to
complement product innovation. These investments will be reflected
in both higher SG&A expense along with a significant amount of
capital expenditures. We believe that they are the proper
investments to support USANA’s long-term growth objectives.”
Conference Call
The Company has posted the “Management Commentary, Results and
Outlook” document on the Company’s website
(www.usanahealthsciences.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 11, 2015 at 11:00 AM Eastern Time. Investors may listen
to the call by accessing USANA’s website at
http://www.usanahealthsciences.com. The call will consist of
brief opening remarks by the Company’s management team, before
moving directly into questions and answers.
About USANA
USANA develops and manufactures high-quality nutritional,
personal care, and weight-management 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 and Colombia. More information on USANA can be found at
http://www.usanahealthsciences.com.
Safe Harbor
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 global economic conditions generally, reliance upon our
network of independent Associates, the governmental regulation of
our products, manufacturing and marketing risks, adverse publicity
risks, and risks associated with our international expansion. 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.
USANA Health Sciences, Inc. Consolidated Statements of
Earnings (In thousands, except per share data) (Unaudited)
Quarter Ended
Year Ended 28-Dec-13
3-Jan-15 28-Dec-13 3-Jan-15
Net sales $ 186,266 $ 227,870 $ 718,175 $ 790,471 Cost of
sales 33,778 37,516 127,435
140,794
Gross profit 152,488 190,354
590,740 649,677 Operating expenses Associate incentives
83,803 106,467 307,820 349,044 Selling, general and administrative
39,681 51,249 166,208
184,531
Earnings from operations 29,004
32,638 116,712 116,102 Other income (expense) (98 )
(574 ) (131 ) (449 )
Earnings before income
taxes 28,906 32,064 116,581 115,653 Income taxes
8,624 10,764 37,557
39,017
NET EARNINGS $ 20,282 $ 21,300
$ 79,024 $ 76,636 Earnings per
share - diluted $ 1.41 $ 1.65 $ 5.56 $ 5.60 Weighted average shares
outstanding - diluted 14,421 12,920 14,204 13,689
USANA Health Sciences, Inc. Consolidated Balance
Sheets (In thousands) (Unaudited)
As of As of ASSETS
28-Dec-13 3-Jan-15 Current Assets Cash and cash
equivalents $ 137,343 $ 111,126 Securities held-to-maturity, net
8,642 - Inventories 47,242 45,248 Prepaid Expenses and Other
current assets 35,818 34,553
Total current
assets 229,045 190,927 Property and equipment, net
59,180 71,164 Goodwill 18,243 17,941 Intangible assets, net 42,329
40,952 Deferred income taxes 5,519 5,933 Other assets 14,154
23,667
Total assets $ 368,470 $ 350,584
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities
Accounts payable $ 9,502 $ 7,779 Other current liabilities
86,369 100,926
Total current liabilities 95,871
108,705 Other long-term liabilities 1,211 1,114 Deferred
income taxes 10,866 10,601 Stockholders' equity
260,522 230,164
Total liabilities and stockholders'
equity $ 368,470 $ 350,584
USANA Health
Sciences, Inc. Sales by Region (Unaudited) (In
thousands)
Quarter Ended
28-Dec-13 3-Jan-15
Region
Americas and Europe $ 64,467
34.6 % $ 64,531 28.3 % Asia Pacific Southeast Asia
Pacific 42,348 22.7 % 50,315 22.1 % Greater China 71,671
38.5 % 103,990 45.6 % North Asia 7,780 4.2 %
9,034 4.0 % Asia Pacific Total 121,799 65.4 %
163,339 71.7 % Total $ 186,266 100.0 % $ 227,870 100.0 %
Active Associates by Region
(1)
(Unaudited)
As of
28-Dec-13 3-Jan-15
Region
Americas and Europe 82,000 30.9
% 85,000 24.4 % Asia Pacific Southeast Asia Pacific
62,000 23.4 % 79,000 22.6 % Greater China 111,000 41.9 %
174,000 49.9 % North Asia 10,000 3.8 % 11,000 3.1 %
Asia Pacific Total 183,000 69.1 % 264,000 75.6 %
Total 265,000 100.0 % 349,000 100.0 %
(1)
Associates are independent distributors of
our products who also purchase our products fortheir personal use.
We only count as active those Associates who have purchased from us
anytime during the most recent three-month period, either for
personal use or for resale.
Active Preferred Customers by Region
(2) (Unaudited)
As
of 28-Dec-13 3-Jan-15
Region
Americas and Europe 60,000 76.9%
60,000 74.1% Asia Pacific Southeast Asia Pacific
10,000 12.8% 12,000 14.8% Greater China 5,000 6.4% 3,000
3.7% North Asia 3,000 3.9% 6,000 7.4% Asia Pacific
Total 18,000 23.1% 21,000 25.9% Total
78,000 100.0% 81,000 100.0% (2)
Preferred Customers purchase our products
strictly for their personal use and are not permittedto resell or
to distribute the products. We only count as active those Preferred
Customers who havepurchased from us any time during the most recent
three-month period.
USANA Health Sciences, Inc.Investors contact:Patrique Richards,
801-954-7961Investor Relationsinvestor.relations@us.usana.comMedia
contact:Dan Macuga, 801-954-7280Public Relations
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