SALT LAKE CITY--(BUSINESS WIRE)--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal second quarter ended June 29, 2024.
Key Financial & Operating Results
- Second quarter net sales were $213 million versus $238 million during Q2 2023.
- Second quarter diluted EPS was $0.54 as compared with $0.89 during Q2 2023.
- Company updates fiscal year 2024 net sales and diluted EPS outlook to $850 million to $880 million and $2.40 to $2.55 (previously $850 million to $920 million and $2.40 to $3.00).
Q2 2024 Financial Performance
Consolidated Results | ||
Net Sales | $213 million |
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Diluted EPS | $0.54 |
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Active Customers | 468,000 |
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"Second quarter operating results were below our expectations," said Jim Brown, President and Chief Executive Officer.
"Ongoing macroeconomic pressures in several of our key markets continue to impact consumer spending. This in turn creates challenges in our ability to attract and engage new customers and generate sales momentum. To counter these challenges, we have made several strategic changes in our business over the past few quarters, including (i) restructuring our commercial team, (ii) heightening our focus on product innovation, (iii) increasing our efforts to engage our sales leaders with an Associate-first approach, (iv) expanding into India, and (v) evaluating more business development activities.
"Next month, we will be hosting our Americas & Europe Convention in Las Vegas, Nevada along with other Associate engagement-focused events in the back half of the year. We are also planning to offer a more robust promotional calendar throughout the remainder of the year."
Q2 2024 Regional Results:
Asia Pacific Region | ||
Net Sales | $171 million |
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Active Customers | 369,000 |
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Asia Pacific Sub-Regions | ||
Greater China | ||
Net Sales | $116 million |
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Active Customers | 250,000 |
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North Asia | ||
Net Sales | $20 million |
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Active Customers | 42,000 |
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Southeast Asia Pacific | ||
Net Sales | $35 million |
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Active Customers | 77,000 |
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Americas and Europe Region | ||
Net Sales | $42 million |
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Active Customers | 99,000 |
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Balance Sheet and Share Repurchase Activity
The Company generated $8 million in operating cash flow during second quarter and ended the quarter with $332 million in cash and cash equivalents while remaining debt-free. The Company did not repurchase any shares during the quarter. As of June 29, 2024, the Company had approximately $62 million remaining under the current share repurchase authorization.
Fiscal Year 2024 Outlook
The Company is updating its net sales and earnings per share outlook for fiscal year 2024, as follows:
Fiscal Year 2024 Outlook | ||
Revised Range | Previous Range | |
Consolidated Net Sales | $850 - $880 million | $850 - $920 million |
Diluted EPS | $2.40 - $2.55 | $2.40 - $3.00 |
"While we anticipated lower sequential operating results following a successful promotional period in the first quarter, lower than anticipated active customer counts negatively impacted our second quarter results," said Doug Hekking, Chief Financial Officer. "Additionally, the strengthening of the U.S. dollar created downward pressure on both net sales and operating margin during the quarter."
Mr. Hekking continued, "We are revising our fiscal 2024 outlook to reflect year-to-date operating results, our expectation for a continued challenging operating environment across many of our markets, higher than anticipated unfavorable currency exchange rate impact on operating results, and an increased effective tax rate. We recognize the need to continue investing in strategic initiatives while also aligning costs with sales performance. Our balance sheet remains strong with $332 million of cash, zero debt, and we continue to generate solid cash flow."
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, July 24, 2024 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, Italy, and India. 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: global economic conditions generally, including continued inflationary pressure around the world and 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 in the United States, China and other key markets; potential negative effects of deteriorating foreign and/or trade relations between or among the United States, China and other key markets; potential negative effects from geopolitical relations and conflicts around the world, including the Russia-Ukraine conflict and the conflict in Israel; compliance with data privacy and security laws and regulations in our markets around the world; 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; adverse publicity risks globally; risks associated with commencing operations in India and future international expansion and operations; uncertainty relating to the fluctuation in U.S. and other international currencies; and the potential for a resurgence of COVID-19, or another pandemic, in any of our markets in the future and any related impact on consumer health, domestic and world economies, including any negative impact on discretionary spending, consumer demand, and consumer behavior in general. 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. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) | ||||||||
Quarter Ended | ||||||||
June 29,
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Net sales | $ | 212,869 | $ | 238,202 | ||||
Cost of sales | 40,333 | 43,326 | ||||||
Gross profit | 172,536 | 194,876 | ||||||
Operating expenses: | ||||||||
Associate incentives | 90,371 | 102,380 | ||||||
Selling, general and administrative | 64,325 | 68,096 | ||||||
Total operating expenses | 154,696 | 170,476 | ||||||
Earnings from operations | 17,840 | 24,400 | ||||||
Other income (expense): | ||||||||
Interest income | 2,763 | 2,224 | ||||||
Interest expense | (51 | ) | (43 | ) | ||||
Other, net | (349 | ) | 229 | |||||
Other income (expense), net | 2,363 | 2,410 | ||||||
Earnings before income taxes | 20,203 | 26,810 | ||||||
Income taxes | 9,771 | 9,518 | ||||||
Net earnings | $ | 10,432 | $ | 17,292 | ||||
Earnings per common share | ||||||||
Basic | $ | 0.55 | $ | 0.89 | ||||
Diluted | $ | 0.54 | $ | 0.89 | ||||
Weighted average common shares outstanding | ||||||||
Basic | 19,073 | 19,321 | ||||||
Diluted | 19,159 | 19,427 | ||||||
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) | ||||||
As of
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ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 332,423 | $ | 330,420 | ||
Inventories | 61,832 | 61,454 | ||||
Prepaid expenses and other current assets | 24,826 | 25,872 | ||||
Total current assets | 419,081 | 417,746 | ||||
Property and equipment, net | 97,686 | 99,814 | ||||
Goodwill | 16,837 | 17,102 | ||||
Intangible assets, net | 28,637 | 29,919 | ||||
Deferred tax assets | 18,190 | 13,284 | ||||
Other assets* | 50,988 | 54,892 | ||||
Total assets | $ | 631,419 | $ | 632,757 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable | $ | 6,648 | $ | 10,070 | ||
Line of credit - short term | - | 786 | ||||
Other current liabilities | 97,248 | 107,989 | ||||
Total current liabilities | 103,896 | 118,845 | ||||
Deferred tax liabilities | 4,653 | 4,552 | ||||
Other long-term liabilities | 10,662 | 12,158 | ||||
Stockholders' equity | 512,208 | 497,202 | ||||
Total liabilities and stockholders' equity | $ | 631,419 | $ | 632,757 | ||
*Other assets include noncurrent inventories of $3,075 and $3,128 as of 29-Jun-24 and 30-Dec-23, respectively. Total inventories were $64,907 and $64,582 as of 29-Jun-24 and 30-Dec-23, respectively.
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES SALES BY REGION (in thousands) (unaudited) | ||||||||||||||||||||||||||
Quarter Ended | Change from
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June 29, 2024 | July 1, 2023 | |||||||||||||||||||||||||
Asia Pacific | ||||||||||||||||||||||||||
Greater China | $ | 115,513 | 54.3 | % | $ | 128,749 | 54.1 | % | $ | (13,236 | ) | (10.3 | %) | $ | (3,085 | ) | (7.9 | %) | ||||||||
Southeast Asia Pacific | 35,402 | 16.6 | % | $ | 39,337 | 16.5 | % | (3,935 | ) | (10.0 | %) | (1,221 | ) | (6.9 | %) | |||||||||||
North Asia | 19,710 | 9.3 | % | $ | 25,529 | 10.7 | % | (5,819 | ) | (22.8 | %) | (870 | ) | (19.4 | %) | |||||||||||
Asia Pacific Total | 170,625 | 80.2 | % | 193,615 | 81.3 | % | (22,990 | ) | (11.9 | %) | (5,176 | ) | (9.2 | %) | ||||||||||||
Americas and Europe | 42,244 | 19.8 | % | 44,587 | 18.7 | % | (2,343 | ) | (5.3 | %) | (94 | ) | (5.0 | %) | ||||||||||||
$ | 212,869 | 100.0 | % | $ | 238,202 | 100.0 | % | $ | (25,333 | ) | (10.6 | %) | $ | (5,270 | ) | (8.4 | %) | |||||||||
USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES ACTIVE ASSOCIATES AND ACTIVE PREFERRED CUSTOMERS BY REGION (unaudited) | |||||||||
Active Associates by Region(1) | |||||||||
(unaudited) | |||||||||
As of
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Asia Pacific: | |||||||||
Greater China | 68,000 | 35.2 | % | 71,000 | 34.1 | % | |||
Southeast Asia Pacific | 52,000 | 27.0 | % | 57,000 | 27.4 | % | |||
North Asia | 28,000 | 14.5 | % | 33,000 | 15.9 | % | |||
Asia Pacific Total | 148,000 | 76.7 | % | 161,000 | 77.4 | % | |||
Americas and Europe | 45,000 | 23.3 | % | 47,000 | 22.6 | % | |||
193,000 | 100.0 | % | 208,000 | 100.0 | % | ||||
Active Preferred Customers by Region(2) | |||||||||
(unaudited) | |||||||||
As of
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Asia Pacific: | |||||||||
Greater China | 182,000 | 66.2 | % | 180,000 | 64.5 | % | |||
Southeast Asia Pacific | 25,000 | 9.1 | % | 25,000 | 9.0 | % | |||
North Asia | 14,000 | 5.1 | % | 18,000 | 6.4 | % | |||
Asia Pacific Total | 221,000 | 80.4 | % | 223,000 | 79.9 | % | |||
Americas and Europe | 54,000 | 19.6 | % | 56,000 | 20.1 | % | |||
275,000 | 100.0 | % | 279,000 | 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.
Contacts
Investor contact:
Andrew Masuda
Investor Relations
(801) 954-7201
investor.relations@usanainc.com
Media contact:
Amy Haran
Public Relations
(801) 954-7280
