- Fourth quarter net sales increased by
2.1% to $232.6 million, but increased by 17.7% excluding the impact
of a stronger U.S. dollar and a shorter 13-week reporting
period
- Fourth quarter EPS increased by 10.9%
to $1.83
- Number of active Associates increased
by 20.6% to 421,000
- For the year, net sales increased by
16.2% to a record $918.5 million and EPS increased by 28.2% to a
record $7.18
- Initial 2016 net sales and earnings
outlook provided
USANA Health Sciences, Inc. (NYSE: USNA) today announced
financial results for its fiscal fourth quarter and year ended
January 2, 2016. The Company also provided initial net sales and
earnings guidance for 2016.
Financial Performance
For the fourth quarter of 2015, net sales increased to $232.6
million, up 2.1%, compared with $227.9 million in the prior-year
period. A stronger U.S. dollar negatively impacted net sales by
$16.5 million for the current year quarter. Additionally, the
fourth quarter of 2015 was a 13-week quarter, compared to a 14-week
quarter in the prior year period. The Company estimates that the
extra week in 2014 contributed approximately $16 million to sales
for that quarter. Excluding the impact of currency and the extra
week of sales in the prior year period, net sales would have
increased by 17.7% for the fourth quarter of 2015. Net sales growth
was driven by 20.6% growth in the number of active Associates and
nearly 10% growth in the number of Preferred Customers.
Net earnings for the fourth quarter increased by 12.5% to $24.0
million, compared with $21.3 million during the prior-year period.
Although net earnings increased meaningfully year-over-year, they
were below the Company’s expectations, due to higher than
anticipated selling, general and administrative expenses and
Associate Incentives expenses. Selling, general and administrative
expenses were higher than anticipated largely as a result of higher
equity compensation expense, while Associate incentives expenses
were higher as a result of a greater number of Associates
qualifying for incentive trips and contests.
Earnings per diluted share for the fourth quarter increased by
10.9% to $1.83, compared with $1.65 in the prior year period. This
increase in earnings per share is the result of higher net
earnings. Weighted average diluted shares outstanding were 13.1
million as of the end of the fourth quarter of 2015, compared with
12.9 million in the prior-year period. During the fourth quarter of
2015, the Company repurchased 456,790 shares of common stock for a
total investment of $61.2 million.
The Company ended the year with $143.2 million in cash and cash
equivalents and no debt. As of February 5, 2016, the Company has
invested an additional $44.8 million to repurchase approximately
366,134 shares pursuant to a Rule 10b5-1 plan. As of February 5,
2016, there was $55.2 million remaining under the current share
repurchase authorization and a balance of $32 million on the
company’s line of credit.
“We finished the year strong and achieved our goal for net
sales, despite the significant negative impact from a stronger U.S.
dollar and a tough prior year comparable that included an extra
week of sales,” said Dave Wentz, USANA’s Co-CEO. “We also generated
double-digit customer, earnings, and earnings per share growth in
2015 and in the fourth quarter, despite our decision to invest more
aggressively in our strategies for long-term growth.”
Regional Results
Net sales in the Asia Pacific region increased by 5.4% to $172.1
million, despite a negative $11.2 million impact from the
strengthening U.S. dollar, and an extra week of sales in the prior
year quarter. Within Asia Pacific, net sales:
- Increased by 10.9% in Greater China
(15.1% on a constant currency basis);
- Increased by 13.5% in the North Asia
region (20.7% on a constant currency basis); and
- Decreased by 7.5% in the Southeast Asia
Pacific region (increased by 4.8% on a constant currency
basis).
Sales growth in Greater China was driven by 46.6% Associate
growth in Mainland China, while sales growth in North Asia resulted
from 33.3% Associate growth in South Korea. Finally, customer
growth in Southeast Asia Pacific was primarily due to 30.8%
Associate growth in Malaysia. The total number of active Associates
in the Asia Pacific region increased by 26.1% year-over-year and
5.4% sequentially.
Net sales in the Americas/Europe region decreased by 6.3% to
$60.5 million. This decrease was due largely to the negative impact
of $5.3 million from the strengthening U.S. dollar and an extra
week of sales in the prior year quarter. On a constant currency
basis, net sales in this region increased by 1.9% year-over-year.
Canada and Mexico generated local currency sales growth of 8.4% and
13.3%, respectively. Both of these markets also reported strong
year-over-year customer growth.
“Our growth continues to be driven by momentum in our Asia
Pacific region, particularly in Mainland China,” continued Mr.
Wentz. “During the quarter, we held our annual China National
Meeting in Qingdao, where a record number of Associates were
recognized for their achievements. In addition, we officially
launched our 20th market in Indonesia during the quarter. We are
optimistic about this market for the future. We’re also encouraged
by the Associate growth that we are experiencing worldwide, and we
expect this to continue during 2016.”
2015 Results
For the year ended January 2, 2016, net sales increased by 16.2%
to $918.5 million, compared with $790.5 million in the prior year.
This increase in net sales was driven largely by sales and
Associate growth in the Company’s Asia Pacific region. Net sales
for the full-year 2015 were negatively impacted by $53.6 million
due to a strengthening U.S. dollar and an extra week of sales in
the prior year. Excluding the impact of currency and the extra week
of sales in the prior year, net sales would have increased by 25.6%
for the year.
Net earnings for 2015 increased by 23.5% to $94.7 million,
compared with $76.6 million in the prior year. This increase
resulted primarily from higher net sales. Earnings per share for
the year increased by 28.2% to $7.18, compared with $5.60 in 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 2015.
Weighted average diluted shares outstanding were 13.2 million for
fiscal 2015, compared with 13.7 million for fiscal 2014.
“This was another outstanding year for USANA,” said Kevin Guest,
USANA’s Co-CEO. “We generated our 13th consecutive year of record
sales and reported our highest net earnings in the history of the
company. Importantly, we also reported a record number of active
Associates. We believe 2016 will be another outstanding year for
USANA as we continue to execute our personalization strategy. In
this regard, we have several new product and technology launches
planned during the year, which will take USANA’s world-class
products to a new level. During the year, we will also make several
key investments in our business to support the needs of our growing
customer base and create the foundation for future growth.”
Outlook
The Company provided the following consolidated net sales and
earnings per share outlook for 2016:
- Consolidated net sales between $1.02
billion and $1.05 billion
- Earnings per share between $7.60 and
$8.15
Our outlook reflects:
- A continued negative impact from
currency fluctuations, which we estimate will reduce sales by
approximately $54 million for the full year;
- Relative gross margin and Associate
incentives expense in-line with 2015 operating results;
- An operating margin between 14% and
14.5% as a result of strategic investments in the business;
and
- A reduced share count as a result of
the company’s active share repurchase program.
Chief Financial Officer Paul Jones, commented, “Our outlook for
the top-line projects another year of double-digit sales growth,
despite the anticipated negative impact from currency. Our EPS
outlook also reflects several strategic investments during the
year, including (i) increased research and development investment
to drive future product and technology innovation, (ii) investment
in information technology systems and infrastructure to support our
growing customer base and to further improve the experience of
doing business with USANA around the world, and (iii) continued
investment in Mainland China. We believe that these investments are
essential to support USANA’s recent growth and to achieve both
current and longer-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 10, 2016, at 11:00 a.m. 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
supplements, healthy 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 and Indonesia. 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 3-Jan-15 2-Jan-16
3-Jan-15 2-Jan-16 Net sales $ 227,870 $
232,585 $ 790,471 $ 918,499 Cost of sales 37,516
40,181 140,794 159,682
Gross
profit 190,354 192,404 649,677 758,817 Operating
expenses Associate incentives 106,467 103,409 349,044 408,160
Selling, general and administrative 51,249
53,858 184,531 208,995
Earnings from
operations 32,638 35,137 116,102 141,662 Other income
(expense) (574 ) 404 (449 ) 927
Earnings before income taxes 32,064 35,541 115,653 142,589
Income taxes 10,764 11,574
39,017 47,917
NET EARNINGS $ 21,300
$ 23,967 $ 76,636 $ 94,672 Earnings per
share - diluted $ 1.65 $ 1.83 $ 5.60 $ 7.18 Weighted average shares
outstanding - diluted 12,920 13,082 13,689 13,177
USANA Health Sciences, Inc. Consolidated Balance
Sheets (In thousands) (Unaudited)
As of As of ASSETS
3-Jan-15 2-Jan-16 Current Assets Cash and cash
equivalents $ 111,126 $ 143,210 Inventories 45,248 66,119 Prepaid
expenses and other current assets 34,553 34,935
Total current assets 190,927 244,264 Property and
equipment, net 71,164 87,982 Goodwill 17,941 17,432 Intangible
assets, net 40,952 38,269 Deferred income taxes 5,933 9,844 Other
assets 23,667 25,446
Total assets $ 350,584 $
423,237
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities Accounts payable $ 7,779 $ 10,043 Other current
liabilities 100,926 121,369
Total current
liabilities 108,705 131,412 Other long-term liabilities
1,114 1,151 Deferred income taxes 10,601 9,822 Stockholders'
equity 230,164 280,852
Total liabilities and
stockholders' equity $ 350,584 $ 423,237
USANA
Health Sciences, Inc. Sales by Region (Unaudited) (In
thousands)
Quarter Ended
3-Jan-15 2-Jan-16
Change from PriorYear
CurrencyImpact
%ChangeExcludingCurrencyImpact
Region
Asia Pacific Greater China $ 103,990 45.6 % $ 115,342
49.6 % $ 11,352 10.9 % $ (4,367 ) 15.1 % Southeast Asia
Pacific 50,315 22.1 % 46,520 20.0 % (3,795 ) -7.5 % (6,207 ) 4.8 %
North Asia 9,034 4.0 % 10,256 4.4 %
1,222 13.5 % (650 ) 20.7 % Asia Pacific Total
163,339 71.7 % 172,118 74.0 % 8,779 5.4 % (11,224 ) 12.2 %
Americas and Europe 64,531 28.3 % 60,467 26.0 %
(4,064 ) -6.3 % (5,279 ) 1.9 % Total $ 227,870
100.0 % $ 232,585 100.0 % $ 4,715 2.1 % $ (16,503 ) 9.3 %
Active Associates by Region (1)
(Unaudited)
As of 3-Jan-15 2-Jan-16
Region
Asia Pacific Greater China 174,000 49.9 % 234,000
55.6 % Southeast Asia Pacific 79,000 22.6 % 86,000 20.4 %
North Asia 11,000 3.1 % 13,000 3.1 %
Asia Pacific Total 264,000 75.6 % 333,000 79.1 % Americas
and Europe 85,000 24.4 % 88,000 20.9 % Total
349,000 100.0 % 421,000 100.0 %
(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 for resale.
Active Preferred Customers by Region
(2) (Unaudited)
As of 3-Jan-15
2-Jan-16
Region
Asia Pacific Greater China 3,000 3.7 % 4,000 4.5 %
Southeast Asia Pacific 12,000 14.8 % 13,000 14.6 %
North Asia 6,000 7.4 % 9,000 10.1 % Asia
Pacific Total 21,000 25.9 % 26,000 29.2 % Americas and
Europe 60,000 74.1 % 63,000 70.8 % Total
81,000 100.0 % 89,000 100.0 %
(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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160209006637/en/
USANA Health Sciences, Inc.Investors contact:Patrique Richards,
801-954-7961Investor
Relationsinvestor.relations@us.usana.comorMedia contact:Dan Macuga,
801-954-7280Public Relations
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