USANA Health Sciences, Inc. (NYSE: USNA) today announced
financial results for its fiscal third quarter ended September 30,
2023.
Key Financial & Operating Results
- Third quarter net sales were $213 million versus $233 million
during Q3 2022.
- Third quarter diluted EPS was $0.59 as compared with $0.78
during Q3 2022.
- Company narrows fiscal year 2023 net sales and diluted EPS
outlook to $900 million to $920 million and $2.80 to $3.05,
respectively (previously $900 million to $950 million and $2.65 to
$3.30).
Q3 2023 Financial Performance
Consolidated Results
Net Sales
$213 million
- -9% vs. Q3 2022
- -7% constant currency vs. Q3 2022
- -$5 million YOY FX impact, or -2%
- -10% sequentially
- -9% constant currency sequentially
Diluted EPS
$0.59
- -24% vs. Q3 2022
- -34% sequentially
- Diluted shares of 19.4 million, or +1% year-over-year
Active Customers
464,000
- -2% vs. Q3 2022
- -5% sequentially
“Operating results for the third quarter did not meet our
expectations, largely because of challenging economic conditions
across many of our regions and a lower cadence of promotional
activity during the quarter,” said Jim Brown, President and Chief
Executive Officer. “These factors made it difficult to generate
both Active Customer growth and top line momentum in our business.
Notwithstanding these near-term challenges, the strength of our
balance sheet and business model allowed us to continue investing
in key strategic initiatives during the quarter, and we plan to
continue to invest in and execute these strategies going forward.
We also believe that the expanding global nutrition category, and
consumers’ increased focus on health and wellness, provide a
compelling opportunity for us to leverage our best-in-class health
products and business opportunity. Consequently, we remain
confident and optimistic that our strategies will generate
long-term Active Customer and sales growth for USANA.”
Mr. Brown continued, “We made progress on several initiatives
during the quarter, including the re-engagement of our Associate
leaders around the world. During the quarter, we hosted a
successful Americas and Europe convention in Salt Lake City. We
believe that these in-person events are key to generating momentum
and excitement among our Associates, and we have more events
planned over the next 12 months.”
“During the quarter, we also finalized plans to commence
operations in India and anticipate opening this important market
prior to year-end. We continue to believe that India provides a
meaningful and diverse growth opportunity for USANA, and we are
excited to introduce our best-in-class nutritional products in this
promising market.”
Q3 2023 Regional Results:
Asia Pacific Region
Net Sales
$170 million
- -7% vs. Q3 2022
- -4% constant currency vs. Q3 2022
- -12% sequentially
- -10% constant currency sequentially
- 80% of consolidated net sales
Active Customers
362,000
- Flat vs. Q3 2022
- -6% sequentially
Asia Pacific
Sub-Regions
Greater China
Net Sales
$107 million
- -3% vs. Q3 2022
- +2% constant currency vs. Q3 2022
- -17% sequentially
- -15% constant currency sequentially
Active Customers
230,000
- +8% vs. Q3 2022
- -8% sequentially
North Asia
Net Sales
$24 million
- -6% vs. Q3 2022
- -7% constant currency vs. Q3 2022
- -5% sequentially
- -5% constant currency sequentially
Active Customers
49,000
- -9% vs. Q3 2022
- -4% sequentially
Southeast Asia Pacific
Net Sales
$39 million
- -17% vs. Q3 2022
- -16% constant currency vs. Q3 2022
- Flat sequentially
- +1% constant currency sequentially
Active Customers
83,000
- -13% vs. Q3 2022
- +1% sequentially
Americas and Europe
Region
Net Sales
$43 million
- -14% vs. Q3 2022
- -16% constant currency vs. Q3 2022
- -3% sequentially
- -3% constant currency sequentially
- 20% of consolidated net sales
Active Customers
102,000
- -9% vs. Q3 2022
- -1% sequentially
Balance Sheet and Share Repurchase Activity
The Company generated $22 million in operating cash flow during
the third quarter and ended the quarter with $307 million in cash
and cash equivalents while remaining debt-free. The Company
repurchased 180 thousand shares for a total of $12 million during
the quarter. As of September 30, 2023, the Company had
approximately $71 million remaining under the current share
repurchase authorization.
Fiscal Year 2023 Outlook
The Company is revising its net sales and earnings per share
outlook for fiscal year 2023, as follows:
Fiscal Year 2023
Outlook
Revised Range
Previous Range
Consolidated Net Sales
$900 - $920 million
$900 - $950 million
Diluted EPS
$2.80 - $3.05
$2.65 - $3.30
“Inflationary pressures, lower promotional activity, and the
strengthening of the US dollar collectively resulted in lower than
anticipated top line performance,” said Doug Hekking, Chief
Financial Officer. “Additionally, we updated our annual effective
tax rate estimate during the quarter, which negatively impacted
third quarter EPS by approximately $0.10 per share due to the
relative distribution of taxable income by market.”
Mr. Hekking continued, “We are narrowing our fiscal 2023
guidance to reflect our third quarter operating results, expected
fourth quarter results, and continued pressure from unfavorable
foreign currency exchange rates. We remain committed to managing
costs in line with expected sales performance while we continue to
invest in strategic initiatives that we believe will drive
sustainable long-term growth for USANA.”
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, October 25, 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.
About USANA
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.
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: 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 and the conflict in Israel; 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 Nine Months Ended
30-Sep-23 1-Oct-22 30-Sep-23 1-Oct-22
Net sales
$
213,365
$
233,300
$
699,927
$
770,641
Cost of sales
42,529
46,560
134,374
147,460
Gross profit
170,836
186,740
565,553
623,181
Operating expenses: Associate incentives
89,926
98,090
298,376
336,914
Selling, general and administrative
63,303
66,020
198,325
201,204
Earnings from operations
17,607
22,630
68,852
85,063
Other income (expense), net
2,924
594
6,990
756
Earnings before income taxes
20,531
23,224
75,842
85,819
Income taxes
9,184
8,295
28,820
29,264
NET EARNINGS
$
11,347
$
14,929
$
47,022
$
56,555
Earnings per share - diluted
$
0.59
$
0.78
$
2.43
$
2.93
Weighted average shares outstanding - diluted
19,372
19,252
19,376
19,325
USANA Health Sciences, Inc. Consolidated Balance
Sheets (In thousands) (Unaudited)
As of As
of 30-Sep-23 31-Dec-22 ASSETS Current
Assets Cash and cash equivalents
$
307,081
$
288,420
Inventories
60,081
67,089
Prepaid expenses and other current assets
23,298
28,873
Total current assets
390,460
384,382
Property and equipment, net
95,159
97,773
Goodwill
16,801
17,368
Intangible assets, net
29,462
32,432
Deferred tax assets
15,135
9,799
Other assets*
54,131
54,795
Total assets
$
601,148
$
596,549
LIABILITIES AND STOCKHOLDERS' EQUITY Current
Liabilities Accounts payable
$
9,321
$
11,049
Other current liabilities
103,238
132,784
Total current liabilities
112,559
143,833
Deferred tax liabilities
4,747
4,071
Other long-term liabilities
13,448
14,173
Stockholders' equity
470,394
434,472
Total liabilities and stockholders' equity
$
601,148
$
596,549
*Includes noncurrent inventories of $3,720 and $3,479 as of
30-Sep-23 and 31-Dec-22, respectively. Total inventories were
$63,801 and $70,568 as of 30-Sep-23 and 31-Dec-22, respectively.
USANA Health Sciences, Inc. Sales by Region (In
thousands) (Unaudited)
Quarter Ended September 30,
2023 October 1, 2022 Change from prior year
Currencyimpact onsales %changeexcludingcurrencyimpact
Asia Pacific Greater China
$
106,609
50.0
%
$
109,682
47.0
%
$
(3,073
)
(2.8
%)
$
(5,377
)
2.1
%
Southeast Asia Pacific
39,151
18.3
%
47,308
20.3
%
(8,157
)
(17.2
%)
(532
)
(16.1
%)
North Asia
24,244
11.4
%
25,667
11.0
%
(1,423
)
(5.5
%)
487
(7.4
%)
Asia Pacific Total
170,004
79.7
%
182,657
78.3
%
(12,653
)
(6.9
%)
(5,422
)
(4.0
%)
Americas and Europe
43,361
20.3
%
50,643
21.7
%
(7,282
)
(14.4
%)
745
(15.9
%)
$
213,365
100.0
%
$
233,300
100.0
%
$
(19,935
)
(8.5
%)
$
(4,677
)
(6.5
%)
Active Associates by Region(1) (Unaudited)
As
of September 30, 2023 October 1, 2022 Asia
Pacific Greater China
69,000
34.0
%
73,000
32.5
%
Southeast Asia Pacific
55,000
27.1
%
68,000
30.2
%
North Asia
33,000
16.2
%
34,000
15.1
%
Asia Pacific Total
157,000
77.3
%
175,000
77.8
%
Americas and Europe
46,000
22.7
%
50,000
22.2
%
203,000
100.0
%
225,000
100.0
%
Active Preferred Customers by Region (2) (Unaudited)
As of September 30, 2023 October 1, 2022 Asia
Pacific Greater China
161,000
61.7
%
140,000
56.2
%
Southeast Asia Pacific
28,000
10.7
%
27,000
10.9
%
North Asia
16,000
6.1
%
20,000
8.0
%
Asia Pacific Total
205,000
78.5
%
187,000
75.1
%
Americas and Europe
56,000
21.5
%
62,000
24.9
%
261,000
100.0
%
249,000
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024355362/en/
Investor contact: Andrew Masuda Investor Relations (801)
954-7201 investor.relations@usanainc.com
Media contact: Dan Macuga Public Relations (801) 954-7280
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