USANA Health Sciences Announces First Quarter 2014 Financial Results
- First quarter net sales of $182.4 million; EPS of $1.15
- Company provides updated 2014 net sales and earnings outlook
- Share Repurchase Authorization increased to $200 million
SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal first quarter ended March 29, 2014. The Company also updated net sales and earnings guidance for 2014.
Financial Performance
For the first quarter of 2014, net sales increased by 7.9% to $182.4 million, compared with $169.1 million in the prior-year period. The increase in net sales was driven by overall customer growth of more than 16.0%, which was largely due to the initiatives implemented by the Company in 2013. Net sales growth, however, was negatively impacted by unfavorable changes in currency exchange rates, which reduced net sales for the quarter by $5.0 million, as approximately 80% of the Company’s sales are outside of the U.S. The challenging media and regulatory environment that emerged in China during the quarter also negatively impacted net sales.
Net earnings for the first quarter were $16.5 million, a 7.0% decrease, compared with the prior-year period. This decrease resulted primarily from higher Associate Incentives expense due to the pricing and compensation plan initiatives implemented in 2013. Earnings per share for the quarter decreased 10.2% to $1.15, compared with $1.28 in the first quarter of the prior year. This decrease was attributed to lower net earnings and a higher number of diluted shares outstanding. Weighted average diluted shares outstanding were 14.4 million in the first quarter of 2014, compared with 13.9 million in the prior-year period. Additionally, the Company ended the quarter debt-free.
“Our business generated solid results in the first quarter, as evidenced by our double-digit growth in customers, world-wide unit volume and auto order volume,” said Dave Wentz, USANA’s Chief Executive Officer. “Growth in each of these indicators is important to our business, but customer growth is our highest priority and it is encouraging to see this metric accelerate as a result of our 2013 initiatives. While these initiatives are producing the intended effect on customer growth, they have also created some pressure on our operating margin through lower gross margins and higher Associate Incentives expense, which we anticipated. Additionally, an unfavorable shift in currency exchange rates and the challenging environment that emerged in China pressured our financial performance for the quarter. I’m pleased with USANA’s performance in light of these factors.”
Regional Results
Net sales in the Asia Pacific region increased by 13.0% to $118.6 million, compared with $104.9 million for the first quarter of the prior year. This improvement was due primarily to sales growth in the Greater China and Southeast Asia Pacific regions with China, Singapore and the Philippines experiencing the most meaningful growth. The Greater China region generated net sales growth in excess of 12% on a year-over-year basis. However, quarterly sequential sales for this region declined 1.1% due to the normal seasonality of the Chinese New Year, as well as the negative media and regulatory focus on businesses in the Company’s industry during the quarter.
Net sales in the Americas/Europe region were essentially flat at $63.8 million, compared with $64.1 million in the prior-year period, due primarily to a net sales decline in the U.S., which was partially offset by net sales growth in other markets in the region.
“As we anticipated, our business in several markets experienced the customary seasonal pressure of the Chinese New Year,” continued Mr. Wentz. “Additionally, the challenging environment that emerged in China during the quarter impacted our sales and customer growth in that market. Although we believe that the environment in China will continue to impact our short-term performance in that market, we remain confident in our growth opportunity in China and will continue to invest and build a sustainable business there. We also remain confident in the underlying strength of our world-wide business, and we expect the initiatives we put in place during 2013 will continue to drive long-term growth for the Company,” concluded Mr. Wentz.
Increased Share Repurchase Authorization
The Board of Directors has authorized up to $200 million in funding for share repurchases by the Company of its outstanding common stock. This authorization is inclusive of the approximately $13.6 million that was remaining under the prior authorization as of the end of the first quarter of 2014. Repurchases may be made from time to time, in the open market, through block trades or otherwise. The number of shares to be purchased and the timing of purchases will be based on market conditions, the level of cash balances, general business opportunities, and other factors.
Outlook
The Company provided the following updated financial outlook for 2014:
- Consolidated net sales between $770 million and $790 million, versus the previous outlook of between $790 million and $810 million
- Earnings per share between $5.50 and $5.65, versus the previous outlook of between $5.80 and $5.95
Chief Financial Officer, Paul Jones, commented, “Although our first quarter results were impacted by a number of factors, we continue to expect our financial performance to accelerate as the year progresses. The pricing and Associate compensation plan initiatives we implemented in 2013, however, will continue to create a challenging year-over-year comparable for our financial performance. Additionally, we anticipate that the environment in China will continue to impact our growth in 2014 and have adjusted our outlook accordingly. We remain committed to growing our business in China and will continue to invest in this important market as part of our growth strategy. We will also continue to advance our personalization strategy around the world and leverage the initiatives we implemented during 2013 to drive long-term growth for the Company.”
Conference Call
USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, April 30, 2014 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, Belgium and Colombia. 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 | |||||||||||||
| 30-Mar-13 | 29-Mar-14 | ||||||||||||
| Net sales | $ | 169,082 | $ | 182,401 | |||||||||
| Cost of sales | 30,261 | 33,828 | |||||||||||
| Gross profit | 138,821 | 148,573 | |||||||||||
| Operating expenses | |||||||||||||
| Associate incentives | 69,855 | 78,874 | |||||||||||
| Selling, general and administrative | 42,404 | 44,577 | |||||||||||
| Earnings from operations | 26,562 | 25,122 | |||||||||||
| Other income (expense) | (26 | ) | 125 | ||||||||||
| Earnings before income taxes | 26,536 | 25,247 | |||||||||||
| Income taxes | 8,757 | 8,710 | |||||||||||
| NET EARNINGS | $ | 17,779 | $ | 16,537 | |||||||||
| Earnings per share - diluted | $ | 1.28 | $ | 1.15 | |||||||||
| Weighted average shares outstanding - diluted | 13,903 | 14,395 | |||||||||||
| USANA Health Sciences, Inc. | ||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| As of | As of | |||||||||||
| ASSETS | 28-Dec-13 | 29-Mar-14 | ||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ | 137,343 | $ | 142,733 | ||||||||
| Securities held-to-maturity, net | 8,642 | 4,428 | ||||||||||
| Inventories | 47,242 | 46,890 | ||||||||||
| Other current assets | 35,818 | 32,308 | ||||||||||
| Total current assets | 229,045 | 226,359 | ||||||||||
| Property and equipment, net | 59,180 | 58,843 | ||||||||||
| Goodwill | 18,243 | 17,933 | ||||||||||
| Intangible assets, net | 42,329 | 41,210 | ||||||||||
| Deferred income taxes | 5,519 | 5,695 | ||||||||||
| Other assets | 14,154 | 21,426 | ||||||||||
| Total assets | $ | 368,470 | $ | 371,466 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable | $ | 9,502 | $ | 6,083 | ||||||||
| Other current liabilities | 86,369 | 73,861 | ||||||||||
| Total current liabilities | 95,871 | 79,944 | ||||||||||
| Other long-term liabilities | 1,211 | 1,204 | ||||||||||
| Deferred income taxes | 10,866 | 10,577 | ||||||||||
| Stockholders' equity | 260,522 | 279,741 | ||||||||||
| Total liabilities and stockholders' equity | $ | 368,470 | $ | 371,466 | ||||||||
| USANA Health Sciences, Inc. | ||||||||||||||||||
| Sales by Region | ||||||||||||||||||
| (Unaudited) | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| Quarter Ended | ||||||||||||||||||
| 30-Mar-13 | 29-Mar-14 | |||||||||||||||||
|
Region |
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| Americas and Europe | $ | 64,152 | 37.9 | % | $ | 63,815 | 35.0 | % | ||||||||||
| Asia Pacific | ||||||||||||||||||
| Southeast Asia Pacific | 35,309 | 20.9 | % | 40,448 | 22.2 | % | ||||||||||||
| Greater China | 62,985 | 37.3 | % | 70,847 | 38.8 | % | ||||||||||||
| North Asia | 6,636 | 3.9 | % | 7,291 | 4.0 | % | ||||||||||||
| Asia Pacific Total | 104,930 | 62.1 | % | 118,586 | 65.0 | % | ||||||||||||
| Total | $ | 169,082 | 100.0 | % | $ | 182,401 | 100.0 | % | ||||||||||
| Active Associates by Region (1) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| As of | ||||||||||||||||
| 30-Mar-13 | 29-Mar-14 | |||||||||||||||
|
Region |
||||||||||||||||
| Americas and Europe | 78,000 | 34.1 | % | 82,000 | 30.9 | % | ||||||||||
| Asia Pacific | ||||||||||||||||
| Southeast Asia Pacific | 56,000 | 24.4 | % | 64,000 | 24.2 | % | ||||||||||
| Greater China | 87,000 | 38.0 | % | 110,000 | 41.5 | % | ||||||||||
| North Asia | 8,000 | 3.5 | % | 9,000 | 3.4 | % | ||||||||||
| Asia Pacific Total | 151,000 | 65.9 | % | 183,000 | 69.1 | % | ||||||||||
| Total | 229,000 | 100.0 | % | 265,000 | 100.0 | % | ||||||||||
|
(1) Associates are independent distributors of our products who
also purchase our products for |
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| Active Preferred Customers by Region (2) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| As of | ||||||||||||||||
| 30-Mar-13 | 29-Mar-14 | |||||||||||||||
|
Region |
||||||||||||||||
| Americas and Europe | 55,000 | 82.1 | % | 61,000 | 78.2 | % | ||||||||||
| Asia Pacific | ||||||||||||||||
| Southeast Asia Pacific | 7,000 | 10.4 | % | 10,000 | 12.8 | % | ||||||||||
| Greater China | 3,000 | 4.5 | % | 3,000 | 3.9 | % | ||||||||||
| North Asia | 2,000 | 3.0 | % | 4,000 | 5.1 | % | ||||||||||
| Asia Pacific Total | 12,000 | 17.9 | % | 17,000 | 21.8 | % | ||||||||||
| Total | 67,000 | 100.0 | % | 78,000 | 100.0 | % | ||||||||||
|
(2) Preferred Customers purchase our products strictly for their
personal use and are not permitted |
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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 29, 2014