USANA Health Sciences Announces Record First Quarter 2012 Financial Results and Raises 2012 Financial Outlook

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  • First quarter net sales increase by 7.4% to $154.1 million
  • Earnings per share increase by 28.6% to $0.90 for the quarter
  • Company raises 2012 financial outlook

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal first quarter ended March 31, 2012.

Financial Performance

Net sales for the first quarter of 2012 increased by 7.4% to $154.1 million, compared with $143.6 million in the prior-year period. The growth in net sales was driven by the Company’s Asia Pacific region and was partially offset by a modest decline in the North America region.

Net earnings for the first quarter increased to $13.8 million, or 21.2%, compared with the prior-year period. This increase was due primarily to higher net sales and lower relative Associate incentive expense. Earnings per share for the quarter increased 28.6% to $0.90, compared with $0.70 in the first quarter of the prior year. The improvement in earnings per share resulted from higher net earnings and a lower number of diluted shares outstanding due to the Company’s share repurchases in 2011.

“Our business started the year off very strong and generated top-and-bottom-line results that exceeded our expectations,” said Mr. Dave Wentz, Chief Executive Officer. “A temporary surge in sales ahead of price increases in several Asia Pacific markets during the quarter contributed meaningfully to our record results. During the quarter, our management team continued to advance our strategic initiatives, specifically: growing our Greater China region; executing our growth strategy in North America; and driving new market expansion.”

Regional Results

Net sales in the Asia Pacific region increased by 14.3% to $95.5 million, compared with $83.5 million for the first quarter of the prior year. This improvement was due to strong sales growth in the Philippines, South Korea, and Greater China. Results in Greater China and Southeast Asia/Pacific were aided by a larger-than-anticipated surge in sales ahead of price increases. The number of active Associates in the Asia Pacific region increased by 9.2%, primarily due to significant growth in the number of active Associates in the Philippines.

“We were pleased with the growth in our Asia Pacific region, which now consists of 11 markets,” continued Mr. Wentz. “We commenced operations in Thailand during the quarter, and expect momentum to grow in this market as we prepare to hold a grand opening event in June. Additionally, we continued to execute our strategy in China during the quarter by educating our Associates on our product offerings and compensation plan in China.”

During the first quarter of 2012, net sales in the North America region decreased 2.3% to $58.6 million, compared with the first quarter of the prior year. The number of Active Associates in North America declined by 7.2%, compared with the first quarter of 2011.

Mr. Wentz added, “We continue to execute our strategy in North America by working to strengthen our sales force, advance our personalization and marketing strategy, and implement incentive plans specifically for North America. We remain optimistic that we will begin to see traction in this region beginning as early as the fourth quarter of this year. Additionally, with the opening of our France and Belgium markets at the end of the quarter, our Associates in North America have an increased opportunity to expand their businesses in Europe.”

The Company continued its successful track record of generating meaningful levels of cash from operations and ended the quarter debt-free with approximately $71 million in cash and cash equivalents. Cash generated from operations totaled $22.6 million for the quarter.

Outlook

The Company provided the following updated financial outlook for 2012:

  • Consolidated net sales between $610 million and $625 million, versus previous outlook of $600 million and $615 million.
  • Earnings per share between $3.60 and $3.70, versus previous outlook of $3.35 and $3.45.

Chief Financial Officer Doug Hekking commented, “In light of our strong first quarter performance, we are raising our financial outlook for fiscal 2012. As we continue to generate leverage in our operating model, we expect our operating margin to be higher on a year-over-year basis.”

Conference Call

USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, April 25, 2012 at 11:00 AM Eastern Time. Investors may listen to the call by accessing USANA’s website at http://www.usanahealthsciences.com.

About USANA

USANA develops and manufactures high-quality nutritional, personal care, and weight-management 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 and Belgium. 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
2-Apr-11 31-Mar-12
 
 
Net sales $ 143,566 $ 154,120
Cost of sales   25,662   27,217
Gross profit 117,904 126,903
 
Operating expenses
Associate incentives 64,807 68,009
Selling, general and administrative   35,870   38,032
 
Earnings from operations 17,227 20,862
 
Other income (expense)   101   132
Earnings before income taxes 17,328 20,994
 
Income taxes   5,978   7,243
 
NET EARNINGS $ 11,350 $ 13,751
 
   
Earnings per share - diluted $ 0.70 $ 0.90
Weighted average shares outstanding - diluted   16,217   15,288
 
 
 
USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
As of As of
31-Dec-11 31-Mar-12
 
ASSETS
Current Assets
Cash and cash equivalents $ 50,353 $ 71,164
Inventories 36,968 35,286
Other current assets   18,738   18,884
Total current assets 106,059 125,334
 
Property and equipment, net 60,754 61,188
Goodwill 17,740 17,776
Intangible assets, net 42,637 42,495
Deferred income taxes 11,033 11,248
Other assets   6,273   6,471
Total assets $ 244,496 $ 264,512
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 7,952 $ 7,572
Other current liabilities   51,744   54,817
Total current liabilities 59,696 62,389
 
 
Other long-term liabilities 942 901
Deferred income taxes 9,948 10,160
Stockholders' equity   173,910   191,062
Total liabilities and stockholders' equity $ 244,496 $ 264,512
 
 

 
USANA Health Sciences, Inc.
Sales by Region
(Unaudited)
(In thousands)
                   
Quarter Ended
2-Apr-11 31-Mar-12

Region

 
North America 60,021 41.8 % 58,632 38.1 %
 
Asia Pacific
 
Southeast Asia/Pacific 24,694 17.2 % 32,252 20.9 %
 
Greater China 52,111 36.3 % 56,635 36.7 %
 
North Asia   6,740 4.7 %   6,601 4.3 %
 
Asia Pacific Total   83,545 58.2 %   95,488 61.9 %
 
Total $ 143,566 100.0 % $ 154,120 100.0 %
 
 
Active Associates by Region (1)
(Unaudited)
                       
  As of
  2-Apr-11   31-Mar-12

Region

 
North America 83,000 39.0 % 77,000 35.1 %
 
Asia Pacific
 
Southeast Asia/Pacific 40,000 18.8 % 51,000 23.3 %
 
Greater China 82,000 38.5 % 83,000 37.9 %
 
North Asia 8,000 3.7 % 8,000 3.7 %
 
Asia Pacific Total 130,000 61.0 % 142,000 64.9 %
 
Total 213,000 100.0 % 219,000 100.0 %
 
      (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 product at 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
    2-Apr-11     31-Mar-12

Region

 
North America 55,000 78.6 % 53,000 79.1 %
 
Asia Pacific
 
Southeast Asia/Pacific 6,000 8.6 % 6,000 9.0 %
 
Greater China 8,000 11.4 % 7,000 10.4 %
 
North Asia 1,000 1.4 % 1,000 1.5 %
 
Asia Pacific Total 15,000 21.4 % 14,000

20.9

%
 
Total 70,000 100.0 % 67,000 100.0 %
 
      (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 product at any time during the most recent three-month period.

USANA Health Sciences, Inc.
Investors contact:
Patrique Richards, 801-954-7961
Investor Relations
investor.relations@us.usana.com
Media contact:
Dan Macuga, 801-954-7280
Public Relations

Source: USANA Health Sciences, Inc.

Released April 24, 2012