Company Announcements

USANA Health Sciences Reports Third Quarter 2024 Results

SALT LAKE CITY--(BUSINESS WIRE)--Oct. 22, 2024-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal third quarter ended September 28, 2024.

Key Financial & Operating Results

  • Third quarter net sales were $200 million versus $213 million during Q3 2023.
  • Third quarter diluted EPS was $0.56 as compared with $0.59 during Q3 2023.
  • Company updates fiscal year 2024 net sales and diluted EPS outlook to approximately $850 million and $2.45, respectively (previously $850 million to $880 million and $2.40 to $2.55).

Q3 2024 Financial Performance

Consolidated Results

Net Sales

$200 million

  • -6% vs. Q3 2023

 

 

  • No meaningful YOY FX impact

 

 

  • -6% sequentially

Diluted EPS

$0.56

  • -5% vs. Q3 2023

 

 

  • +4% sequentially

Active Customers

452,000

  • -3% vs. Q3 2023

 

 

  • -3% sequentially

“Third quarter operating results reflected continued top line headwinds across many of our key markets,” said Jim Brown, President and Chief Executive Officer. “Our sales force continued to face challenges in attracting new customers as consumer sentiment remained cautious, including in our largest market, mainland China. Despite these challenges, we remain confident in our direction and continue to make progress on the five key initiatives that underpin our long-term strategy. Our commercial team, which was reorganized earlier this year, has been executing on these initiatives to enhance the overall value proposition of our business to our customers and we are beginning to see results in several of these areas.

“During the quarter, we continued to prioritize engagement with our sales leaders, highlighted by our Americas & Europe Convention in Las Vegas, Nevada during August. Training and development were key focus areas at this event, with an emphasis on actionable initiatives to help our sales leaders grow their businesses. Feedback has been positive and leaders are actively adopting these new initiatives.

“We have also prioritized our product innovation strategy with an emphasis on increasing the cadence with which we introduce new and upgraded premium products relevant to our customers’ needs. Illustrative of this effort, we launched two new products at our recent event in Las Vegas: a Celavive Resurfacing Serum and a Whey Protein Isolate.”

Q3 2024 Regional Results:

Asia Pacific Region

Net Sales

$160 million

  • -6% vs. Q3 2023

 

 

  • No meaningful YOY FX impact

 

 

  • -6% sequentially

 

 

  • 80% of consolidated net sales

Active Customers

360,000

  • -1% vs. Q3 2023

 

 

  • -2% sequentially

Asia Pacific Sub-Regions

Greater China

Net Sales

$102 million

  • -4% vs. Q3 2023

 

 

  • -5% constant currency vs. Q3 2023

 

 

  • -11% sequentially

Active Customers

243,000

  • +6% vs. Q3 2023

 

 

  • -3% sequentially

North Asia

Net Sales

$21 million

  • -15% vs. Q3 2023

 

 

  • -12% constant currency vs. Q3 2023

 

 

  • +4% sequentially

Active Customers

41,000

  • -16% vs. Q3 2023

 

 

  • -2% sequentially

Southeast Asia Pacific

Net Sales

$37 million

  • -5% vs. Q3 2023

 

 

  • -6% constant currency vs. Q3 2023

 

 

  • +5% sequentially

Active Customers

76,000

  • -8% vs. Q3 2023

 

 

  • -1% sequentially

Americas and Europe Region

Net Sales

$40 million

  • -7% vs. Q3 2023

 

 

  • -6% constant currency vs. Q3 2023

 

 

  • -5% sequentially

 

 

  • 20% of consolidated net sales

Active Customers

92,000

  • -10% vs. Q3 2023

 

 

  • -7% sequentially

Balance Sheet and Share Repurchase Activity

The Company generated $30 million in operating cash flow during the third quarter and ended the quarter with $365 million in cash and cash equivalents while remaining debt-free. The Company did not repurchase any shares during the quarter. As of the end of the third quarter, 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

 

Target

Previous Range

Consolidated Net Sales

$850 million

$850 - $880 million

Diluted EPS

$2.45

$2.40 - $2.55

“Third quarter net sales were modestly below expectations as we continue to see downward pressure on customer acquisition and consumer spending in several key markets, resulting in lower customer counts and average spend per customer,” said Doug Hekking, Chief Financial Officer. “We are monitoring the recently-announced stimulus initiatives in China, but we do not expect them to meaningfully impact our near-term operating results. Accordingly, we have adjusted our fiscal 2024 guidance to reflect year-to-date operating performance as well as promotional activity planned for the fourth quarter. Notwithstanding the macroeconomic challenges we have faced in 2024, our business fundamentals remain strong. We’ve generated $47 million of free cash flow year-to-date and our balance sheet remains pristine with $365 million of cash and no debt.”

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 23, 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 that our Associate compensation plan, or changes that we make to the compensation plan, will not produce desired results, benefit our business or, in some cases, could harm our business; 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

 

September 28,
2024

 

September 30,
2023

Net sales

$

200,221

 

 

$

213,365

 

Cost of sales

 

39,257

 

 

 

42,529

 

Gross profit

 

160,964

 

 

 

170,836

 

Operating expenses:

 

 

 

Associate incentives

 

84,068

 

 

 

89,926

 

Selling, general and administrative

 

61,295

 

 

 

63,303

 

Total operating expenses

 

145,363

 

 

 

153,229

 

Earnings from operations

 

15,601

 

 

 

17,607

 

Other income (expense):

 

 

 

Interest income

 

3,142

 

 

 

2,733

 

Interest expense

 

(49

)

 

 

(43

)

Other, net

 

(86

)

 

 

234

 

Other income (expense), net

 

3,007

 

 

 

2,924

 

Earnings before income taxes

 

18,608

 

 

 

20,531

 

Income taxes

 

8,001

 

 

 

9,184

 

Net earnings

$

10,607

 

 

$

11,347

 

 

 

 

 

Earnings per common share

 

 

 

Basic

$

0.56

 

 

$

0.59

 

Diluted

$

0.56

 

 

$

0.59

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

Basic

 

19,078

 

 

 

19,245

 

Diluted

 

19,083

 

 

 

19,372

 

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

 

 

As of
September 28,
2024

 

As of
December 30,
2023

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

364,889

 

$

330,420

Inventories

 

63,984

 

 

61,454

Prepaid expenses and other current assets

 

22,318

 

 

25,872

Total current assets

 

451,191

 

 

417,746

Property and equipment, net

 

98,033

 

 

99,814

Goodwill

 

17,196

 

 

17,102

Intangible assets, net

 

29,237

 

 

29,919

Deferred tax assets

 

16,823

 

 

13,284

Other assets*

 

58,828

 

 

54,892

Total assets

$

671,308

 

$

632,757

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

7,041

 

$

10,070

Line of credit - short term

 

 

 

786

Other current liabilities

 

107,738

 

 

107,989

Total current liabilities

 

114,779

 

 

118,845

Deferred tax liabilities

 

4,727

 

 

4,552

Other long-term liabilities

 

18,715

 

 

12,158

 

 

 

 

Stockholders' equity

 

533,087

 

 

497,202

Total liabilities and stockholders' equity

$

671,308

 

$

632,757

*Other assets include noncurrent inventories of $2,938 and $3,128 as of 28-Sep-24 and 30-Dec-23, respectively. Total inventories were $66,922 and $64,582 as of 28-Sep-24 and 30-Dec-23, respectively.

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
SALES BY REGION
(in thousands)
(unaudited)

 

 

Quarter Ended

 

Change from
prior

year

 

Percent
change

 

Currency
impact on
sales

 

% change
excluding
currency
impact

 

September 28, 2024

 

September 30, 2023

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater China

$

102,261

 

51.1

%

 

$

106,609

 

50.0

%

 

$

(4,348

)

 

(4.1

%)

 

$

865

 

 

(4.9

%)

Southeast Asia Pacific

 

37,267

 

18.6

%

 

$

39,151

 

18.3

%

 

 

(1,884

)

 

(4.8

%)

 

 

561

 

 

(6.2

%)

North Asia

 

20,541

 

10.2

%

 

$

24,244

 

11.4

%

 

 

(3,703

)

 

(15.3

%)

 

 

(721

)

 

(12.3

%)

Asia Pacific Total

 

160,069

 

79.9

%

 

 

170,004

 

79.7

%

 

 

(9,935

)

 

(5.8

%)

 

 

705

 

 

(6.3

%)

Americas and Europe

 

40,152

 

20.1

%

 

 

43,361

 

20.3

%

 

 

(3,209

)

 

(7.4

%)

 

 

(727

)

 

(5.7

%)

 

$

200,221

 

100.0

%

 

$

213,365

 

100.0

%

 

$

(13,144

)

 

(6.2

%)

 

$

(22

)

 

(6.2

%)

 USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES
ACTIVE ASSOCIATES AND ACTIVE PREFERRED CUSTOMERS BY REGION
(unaudited)

 

Active Associates by Region(1)

(unaudited)

 

As of
September 28, 2024

 

As of
September 30, 2023

Asia Pacific:

 

 

 

 

 

 

 

Greater China

65,000

 

34.6

%

 

69,000

 

34.0

%

Southeast Asia Pacific

52,000

 

27.6

%

 

55,000

 

27.1

%

North Asia

28,000

 

14.9

%

 

33,000

 

16.2

%

Asia Pacific Total

145,000

 

77.1

%

 

157,000

 

77.3

%

 

 

 

 

 

 

 

 

Americas and Europe

43,000

 

22.9

%

 

46,000

 

22.7

%

 

188,000

 

100.0

%

 

203,000

 

100.0

%

Active Preferred Customers by Region(2)

(unaudited)

 

As of
September 28, 2024

 

As of
September 30, 2023

Asia Pacific:

 

 

 

 

 

 

 

Greater China

178,000

 

67.4

%

 

161,000

 

61.7

%

Southeast Asia Pacific

24,000

 

9.1

%

 

28,000

 

10.7

%

North Asia

13,000

 

4.9

%

 

16,000

 

6.1

%

Asia Pacific Total

215,000

 

81.4

%

 

205,000

 

78.5

%

 

 

 

 

 

 

 

 

Americas and Europe

49,000

 

18.6

%

 

56,000

 

21.5

%

 

264,000

 

100.0

%

 

261,000

 

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.

 

Investor contact:
Andrew Masuda
Investor Relations
(801) 954-7201
investor.relations@usanainc.com

Media contact:
(801) 954-7280
media@usanainc.com

Source: USANA Health Sciences, Inc.