USANA Health Sciences Reports Second Quarter Net Sales of $238 Million and Diluted EPS of $0.89

USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal second quarter ended July 1, 2023.

Key Financial & Operating Results

  • Second quarter net sales were $238 million versus $264 million during the second quarter of 2022.
  • Second quarter diluted EPS was $0.89 as compared with $1.00 during the second quarter of 2022.
  • Fiscal 2023 net sales and diluted EPS guidance updated to $900 to $950 million and $2.65 to $3.30, respectively, from $875 million to $950 million and $2.40 to $3.30.

Q2 2023 Financial Performance

Consolidated Results

Net Sales

$238 million

  • -10% vs. Q2 2022
  • -6% constant currency vs. Q2 2022
  • -$10 million YOY FX impact, or -4%
  • -4% sequentially
  • -2% constant currency sequentially

Diluted EPS

$0.89

  • -11% vs. Q2 2022
  • -6% sequentially
  • Diluted shares of 19.4 million

Active Customers

487,000

  • -13% vs. Q2 2022
  • -1% sequentially

“USANA’s second quarter results were modestly ahead of internal expectations, highlighted by sequential improvement in mainland China and continued progress on several key strategic initiatives,” said Jim Brown, President and Chief Executive Officer.

“Net sales in the second quarter declined 4% sequentially when compared to the first quarter of 2023. Net sales in the first quarter benefitted from increased demand for several of our health products in China following the government’s shift in COVID policy. In addition, the announcement of product price increases in several markets stimulated purchasing ahead of those increases. Collectively, these two events contributed an estimated $25 million to top line results in the first quarter of 2023.

“Our leadership team continued to emphasize in-person engagement with our Associate leaders through live events and meetings across several of our key markets. Notably, during the second quarter, we held both our Asia Pacific Convention in South Korea and our national sales meeting in China. Both of these events generated strong attendance and enthusiasm. At these events we also announced USANA’s plans to open our 25th global market, India, where our team is diligently working to commence operations in late 2023. Although we anticipate that it will take time to build our business in this new market, we are confident that India will contribute to the long-term growth of USANA over the coming years.”

Q2 2023 Regional Results:

Asia Pacific Region

Net Sales

$194 million

  • -11% vs. Q2 2022
  • -7% constant currency vs. Q2 2022
  • -3% sequentially
  • -1% constant currency sequentially
  • 81% of consolidated net sales

Active Customers

384,000

  • -12% vs. Q2 2022
  • -1% sequentially

Asia Pacific Sub-Regions

Greater China

Net Sales

$129 million

  • -9% vs. Q2 2022
  • -4% constant currency vs. Q2 2022
  • +4% sequentially
  • +6% constant currency sequentially

Active Customers

251,000

  • -10% vs. Q2 2022
  • +4% sequentially

North Asia

Net Sales

$26 million

  • -11% vs. Q2 2022
  • -7% constant currency vs. Q2 2022
  • -14% sequentially
  • -11% constant currency sequentially

Active Customers

51,000

  • -11% vs. Q2 2022
  • -6% sequentially

Southeast Asia Pacific

Net Sales

$39 million

  • -18% vs. Q2 2022
  • -14% constant currency vs. Q2 2022
  • -15% sequentially
  • -13% constant currency sequentially

Active Customers

82,000

  • -20% vs. Q2 2022
  • -9% sequentially

Americas and Europe Region

Net Sales

$44 million

  • -5% vs. Q2 2022
  • -5% constant currency vs. Q2 2022
  • -8% sequentially
  • -9% constant currency sequentially
  • 19% of consolidated net sales

Active Customers

103,000

  • -15% vs. Q2 2022
  • -2% sequentially

“Our strategic focus remains squarely on increasing the number of Active Customers. In addition to the emphasis on in-person meetings and events, our efforts include new market expansion, incentive opportunities for our salesforce, the ongoing pursuit of accretive acquisition opportunities, and expanding our digital commerce capabilities,” continued Mr. Brown. “We remain optimistic that the successful execution of our strategies will position USANA for a return to long-term growth.”

Fiscal Year 2023 Outlook

The Company is raising the lower end of 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 - $950 million

$875 - $950 million

Diluted EPS

$2.65 - $3.30

$2.40 - $3.30

“A large global promotion was offered in the second quarter of 2022, which did not reoccur in 2023 and created a difficult year-over-year comparison for the current year quarter. Operating results in the second quarter of 2023, however, were modestly ahead of internal expectations due, in part, to a strong response to a local sales promotion offered in mainland China,” said Doug Hekking, Chief Financial Officer.

“Although the first half of this year benefitted from certain discrete sales activity not expected to recur in the back half of the year, our year-to-date results coupled with planned initiatives for the remainder of the year provide us confidence to raise the bottom-end of our full year guidance. We will continue investing in strategies designed to deliver sustainable long-term growth while managing costs in line with forecasted sales levels.”

Balance Sheet and Share Repurchase Activity

The Company generated $10 million of operating cash flow during the second quarter and ended the quarter with $300 million in cash and cash equivalents while remaining debt-free. The Company did not repurchase shares during the quarter and, as of July 1, 2023, had approximately $83 million remaining under the current share repurchase authorization.

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 26, 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 (“U.S. GAAP” or “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; 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 Six Months Ended
1-Jul-23 2-Jul-22 1-Jul-23 2-Jul-22
 
Net sales

$

238,202

$

264,474

 

$

486,562

$

537,341

Cost of sales

 

43,326

 

49,517

 

 

91,845

 

100,900

Gross profit

 

194,876

 

214,957

 

 

394,717

 

436,441

Operating expenses:
Associate incentives

 

102,380

 

119,204

 

 

208,450

 

238,824

Selling, general and administrative

 

68,096

 

66,387

 

 

135,022

 

135,184

Earnings from operations

 

24,400

 

29,366

 

 

51,245

 

62,433

Other income (expense), net

 

2,410

 

(58

)

 

4,066

 

162

Earnings before income taxes

 

26,810

 

29,308

 

 

55,311

 

62,595

Income taxes

 

9,518

 

10,151

 

 

19,636

 

20,969

NET EARNINGS

$

17,292

$

19,157

 

$

35,675

$

41,626

 
 
Earnings per share - diluted

$

0.89

$

1.00

 

$

1.84

$

2.15

Weighted average shares outstanding - diluted

 

19,427

 

19,244

 

 

19,377

 

19,362

 
USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
As of As of
1-Jul-23 31-Dec-22
ASSETS
Current Assets
Cash and cash equivalents

$

300,183

$

288,420

Inventories

 

61,962

 

67,089

Prepaid expenses and other current assets

 

25,501

 

28,873

Total current assets

 

387,646

 

384,382

 
Property and equipment, net

 

95,736

 

97,773

Goodwill

 

16,859

 

17,368

Intangible assets, net

 

29,997

 

32,432

Deferred tax assets

 

15,914

 

9,799

Other assets*

 

56,528

 

54,795

Total assets

$

602,680

$

596,549

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable

$

9,273

$

11,049

Other current liabilities

 

104,566

 

132,784

Total current liabilities

 

113,839

 

143,833

 
Deferred tax liabilities

 

4,796

 

4,071

Other long-term liabilities

 

15,221

 

14,173

 
Stockholders' equity

 

468,824

 

434,472

Total liabilities and stockholders' equity

$

602,680

$

596,549

 
*Includes noncurrent inventories of $4,390 and $3,479 as of 1-Jul-23 and 31-Dec-22, respectively. Total inventories were $66,352 and $70,568 as of 1-Jul-23 and 31-Dec-22, respectively.
USANA Health Sciences, Inc.
Sales by Region
(In thousands)
(Unaudited)
 
Quarter Ended
July 1, 2023 July 2, 2022 Change from prior year Currency

impact on

sales
% change

excluding

currency

impact
Asia Pacific
Greater China

$

128,749

54.1

%

$

140,775

53.2

%

$

(12,026

)

(8.5

%)

$

(6,948

)

(3.6

%)

Southeast Asia Pacific

 

39,337

16.5

%

 

47,830

18.1

%

 

(8,493

)

(17.8

%)

 

(1,573

)

(14.5

%)

North Asia

 

25,529

10.7

%

 

28,803

10.9

%

 

(3,274

)

(11.4

%)

 

(1,140

)

(7.4

%)

Asia Pacific Total

 

193,615

81.3

%

 

217,408

82.2

%

 

(23,793

)

(10.9

%)

 

(9,661

)

(6.5

%)

 
Americas and Europe

 

44,587

18.7

%

 

47,066

17.8

%

 

(2,479

)

(5.3

%)

 

94

 

(5.5

%)

$

238,202

100.0

%

$

264,474

100.0

%

$

(26,272

)

(9.9

%)

$

(9,567

)

(6.3

%)

 
Active Associates by Region(1)
(Unaudited)
 
As of
July 1, 2023 July 2, 2022
Asia Pacific
Greater China

71,000

34.1%

77,000

32.9%

Southeast Asia Pacific

57,000

27.4%

69,000

29.5%

North Asia

33,000

15.9%

36,000

15.4%

Asia Pacific Total

161,000

77.4%

182,000

77.8%

 
Americas and Europe

47,000

22.6%

52,000

22.2%

208,000

100.0%

234,000

100.0%

Active Preferred Customers by Region (2)
(Unaudited)
 
As of
July 1, 2023 July 2, 2022
Asia Pacific
Greater China

180,000

64.5%

201,000

61.8%

Southeast Asia Pacific

25,000

9.0%

34,000

10.5%

North Asia

18,000

6.4%

21,000

6.5%

Asia Pacific Total

223,000

79.9%

256,000

78.8%

 
Americas and Europe

56,000

20.1%

69,000

21.2%

279,000

100.0%

325,000

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.

 

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