USANA Health Sciences Announces Third Quarter Financial Results

  • Net sales increased by 5.2% to $173.7 million
  • Previously announced strategies implemented in second and third quarter result in 4.2% decrease in net earnings; EPS decreased 1.7% to $1.16
  • Company provides updated 2013 net sales and earnings growth outlook

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal third quarter ended September 28, 2013.

Financial Performance

For the third quarter of 2013, net sales increased by 5.2% to $173.7 million, compared with $165.2 million in the prior-year period. The growth in net sales was driven by increases in both the Company’s Asia Pacific and North America/Europe regions. Net sales for the quarter were negatively impacted by: (i) an estimated $5.9 million due to the worldwide policy changes that the Company implemented at the end of the second quarter of this year, which require customers to purchase products in their home markets; (ii) $4.6 million due to the strategic price discounts that the Company announced at its International Convention in August and earlier this year; and (iii) $2.0 million due to changes in currency exchange rates.

Net earnings for the third quarter decreased by 4.2% to $16.8 million, compared with the prior-year period. This decrease was due primarily to higher Associate Incentives expense, attributable to the enhancements that the Company made to its Associate Compensation Plan at its August 2013 International Convention. Additionally, the effective tax rate for the third quarter was 420 basis points, or $1.0 million, higher than the previous year, due primarily to one-time tax benefits recognized in the third quarter of 2012. Earnings per share for the quarter decreased by 1.7% to $1.16, compared with $1.18 in the third quarter of the prior year. This decrease in earnings per share was attributable to lower net earnings, partially offset by a lower number of diluted shares outstanding from the Company’s share repurchases during the 12 months ended September 29, 2013. Total diluted common shares outstanding as of September 28, 2013 were 14.4 million, compared with 14.9 million as of September 29, 2012.

“During the third quarter, we implemented a number of strategic initiatives at our 2013 International Convention,” said Dave Wentz, the Company’s Chief Executive Officer. “These initiatives, which include price reductions and enhancements to our Associate compensation plan, are intended to drive long-term, sustainable customer growth for USANA. The combination of these initiatives and the worldwide policy changes that we introduced in the second quarter had the meaningful impact that we anticipated on our third-quarter results. Although it is still early, these initiatives have already produced several anticipated positive results, including: (i) an increase of approximately 30% in our worldwide Auto Order sales; (ii) an increase of approximately 40% in the number of weekly commission checks earned by Associates; and (iii) an increase of approximately 30% in the number of first-time check earners with USANA. Going forward, we expect these initiatives to contribute to the growth of our worldwide customer counts.”

Regional Results

Net sales in Asia Pacific increased by 4.6% to $107.4 million, compared with $102.7 million for the third quarter of the prior year. This improvement was due primarily to sales growth in the Southeast Asia Pacific region, which was driven by meaningful growth in Singapore and Malaysia. Sales in the Greater China region were flat, with significant growth in Mainland China and Taiwan, offset by a sales decrease in Hong Kong.

Net sales in North America/Europe increased by 6.1% to $66.3 million, compared with $62.5 million in the prior-year period. This improvement was due primarily to sales growth in Mexico and Canada, as well as the addition of our newest market, Colombia, which generated $1.4 million in sales during its first quarter of operations. The sales growth in these markets reflected increases in both the number of Active Associates and Preferred Customers.

“The performance of our North America region reflects the momentum we are generating in Mexico, Canada and, most recently, Colombia,” continued Wentz. “Our results in Greater China were in line with our expectations, considering the worldwide policy changes that we implemented during the second quarter of this year. Our expectations for Greater China have not changed and our team continues to focus on growth in Mainland China. I am confident in the strength of our underlying business in all of our regions and believe that we have implemented the right strategies to drive long-term growth.”

The Company continued to generate significant cash from operations and ended the quarter with $115.3 million in cash and cash equivalents. For the third quarter, cash generated from operations totaled $17.3 million. During the quarter, the Company did not repurchase any shares of its common stock and ended the quarter with $13.6 million remaining under the board authorized repurchase program.


The Company provided the following updated consolidated net sales and earnings per share outlook for 2013:

  • Consolidated net sales between $705 million and $710 million, versus the previous outlook of between $700 and $720 million
  • Earnings per share between $5.35 and $5.40, versus the previous outlook of between $5.30 and $5.45

Chief Financial Officer, Paul Jones, commented, “We are tightening our guidance range as we head into the final quarter of 2013 and expect USANA to once again deliver record results in 2013. Although we expect continued pressure on our operating results for the next few quarters, we are confident that we will deliver growth during this period. More importantly, we believe that the strategies that we have implemented will increase our long-term growth potential.”

Conference Call

USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, October 23, 2013 at 11:00 AM Eastern Time. Investors may listen to the call by accessing USANA’s website at


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, Belgium and Colombia. More information on USANA can be found at

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)
Quarter Ended Nine Months Ended
29-Sep-12 28-Sep-13 29-Sep-12 28-Sep-13
Net sales $ 165,175 $ 173,691 $ 480,196 $ 531,909
Cost of sales   30,343   31,491   85,633   93,657  
Gross profit 134,832 142,200 394,563 438,252
Operating expenses
Associate incentives 70,406 76,361 209,316 224,017
Selling, general and administrative   40,342   41,145   115,150   126,527  
Earnings from operations 24,084 24,694 70,097 87,708
Other income (expense)   267   76   177   (33 )
Earnings before income taxes 24,351 24,770 70,274 87,675
Income taxes   6,861   8,017   22,288   28,933  
NET EARNINGS $ 17,490 $ 16,753 $ 47,986 $ 58,742  
Earnings per share - diluted $ 1.18 $ 1.16 $ 3.19 $ 4.16  
Weighted average shares outstanding - diluted   14,884   14,393   15,064   14,132  
USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
As of As of
ASSETS 29-Dec-12 28-Sep-13
Current Assets
Cash and cash equivalents $ 70,839 $ 115,349
Inventories 36,481 45,671
Other current assets   25,225   35,105
Total current assets 132,545 196,125
Property and equipment, net 61,751 60,432
Goodwill 17,890 18,105
Intangible assets, net 42,085 42,078
Deferred income taxes 5,956 3,562
Other assets   7,128   11,031
Total assets $ 267,355 $ 331,333
Current Liabilities
Accounts payable $ 7,040 $ 8,061
Other current liabilities   63,804   74,474
Total current liabilities 70,844 82,535
Other long-term liabilities 938 1,127
Deferred income taxes 10,001 9,022
Stockholders' equity   185,572   238,649
Total liabilities and stockholders' equity $ 267,355 $ 331,333

USANA Health Sciences, Inc.
Sales by Region
(In thousands)
Quarter Ended
29-Sep-12 28-Sep-13


North America / Europe $ 62,490 37.8 % $ 66,294 38.2 %
Asia Pacific
Southeast Asia Pacific 35,709 21.6 % 40,230 23.1 %
Greater China 59,722 36.2 % 59,768 34.4 %
North Asia   7,254 4.4 %   7,399 4.3 %
Asia Pacific Total   102,685 62.2 %   107,397 61.8 %
Total $ 165,175 100.0 % $ 173,691 100.0 %
Active Associates by Region (1)
As of
29-Sep-12 28-Sep-13


North America / Europe 79,000 32.6 % 82,000 33.5 %
Asia Pacific
Southeast Asia Pacific 58,000 24.0 % 60,000 24.5 %
Greater China 97,000 40.1 % 94,000 38.3 %
North Asia 8,000 3.3 % 9,000 3.7 %
Asia Pacific Total 163,000 67.4 % 163,000 66.5 %
Total 242,000 100.0 % 245,000 100.0 %

(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 for resale.

Active Preferred Customers by Region (2)
As of
29-Sep-12 28-Sep-13


North America / Europe 52,000 81.3 % 58,000 81.7 %
Asia Pacific
Southeast Asia Pacific 6,000 9.4 % 8,000 11.3 %
Greater China 5,000 7.8 % 3,000 4.2 %
North Asia 1,000 1.6 % 2,000 2.8 %
Asia Pacific Total 12,000 18.8 % 13,000 18.3 %
Total 64,000 100.0 % 71,000 100.0 %

(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 from us any time during the most recent three-month period.

USANA Health Sciences, Inc.
Investors contact:
Patrique Richards, 801-954-7961
Investor Relations
Media contact:
Dan Macuga, 801-954-7280
Public Relations

Source: USANA Health Sciences, Inc.