USANA Health Sciences Reports Fourth Quarter and Fiscal Year 2022 Results

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and full year ended December 31, 2022.

Key Financial & Operating Results

  • Fourth quarter net sales were $228 million versus $267 million during the prior-year period.
  • Fourth quarter diluted EPS was $0.66 as compared with $1.03 during Q4 2021.
  • Fiscal year 2022 net sales were $999 million as compared with $1,186 million during fiscal year 2021.
  • Fiscal year 2022 diluted EPS totaled $3.59 versus $5.73 during fiscal year 2021.
  • Fiscal year 2022 operating cash flow totaled $104 million.
  • Company reiterates fiscal year 2023 net sales and diluted EPS outlook of $850 million to $950 million and $2.35 to $3.30, respectively.

Fiscal Year 2022 Financial Performance

Consolidated Results

Net Sales

$999 million

  • -16% vs. prior year
  • -12% constant currency vs. prior year
  • -$50 million YOY FX impact, or -4%

Diluted EPS

$3.59

  • -37% vs. prior year
  • Diluted shares of 19.3 million, -5% year-over-year

Active Customers

490,000

  • -13% vs. prior year

“Our fourth quarter and full year results were largely in line with our preliminary results announced on January 5, 2023,” said Kevin Guest, Chief Executive Officer and Chairman of the Board. “During the fourth quarter, total Active Customer counts stabilized in several key markets and increased 3% sequentially. In addition, sales and customer activity in mainland China increased during the final two weeks of the year following the Chinese government’s unanticipated shift in COVID policy. This increase in sales and customer activity was due largely to increased demand for several of our health products in China.”

“While 2022 presented a challenging operating environment for both USANA and our industry, we remained focused on executing our long-term growth strategy. In 2022, we made progress in several areas that position USANA for future growth. These areas include digital commerce initiatives to support our business, new market expansion, the launch of our Affiliate program in select markets, and the completion of two acquisitions. These activities further our efforts to differentiate and diversify our business while contributing to shareholder returns.”

Q4 2022 Financial Performance

Consolidated Results

Net Sales

$228 million

  • -15% vs. prior-year quarter
  • -7% constant currency vs. prior-year quarter
  • -$21 million YOY FX impact, or -8%
  • Flat sequentially in constant currency

Diluted EPS

$0.66

  • -36% vs. prior-year quarter
  • -15% sequentially
  • Diluted shares of 19.3 million, -2% year-over-year

Active Customers

490,000

  • -13% vs. prior-year quarter
  • +3% sequentially

Q4 2022 Regional Results:

Asia Pacific Region

Net Sales

$183 million

  • -14% vs. prior-year quarter
  • -4% constant currency vs. prior-year quarter
  • +3% constant currency sequentially
  • 80% of consolidated net sales

Active Customers

384,000

  • -10% vs. prior-year quarter
  • +6% sequentially

Asia Pacific Sub-Regions

Greater China

Net Sales

$118 million

  • -6% vs. prior-year quarter
  • +4% constant currency vs. prior-year quarter

Active Customers

244,000

  • -4% vs. prior-year quarter
  • +15% sequentially

North Asia

Net Sales

$25 million

  • -16% vs. prior-year quarter
  • -3% constant currency vs. prior-year quarter

Active Customers

53,000

  • -9% vs. prior-year quarter
  • -2% sequentially

Southeast Asia Pacific

Net Sales

$41 million

  • -29% vs. prior-year quarter
  • -22% constant currency vs. prior-year quarter

Active Customers

87,000

  • -24% vs. prior-year quarter
  • -8% sequentially

Americas and Europe Region

Net Sales

$45 million

  • -19% vs. prior-year quarter
  • -18% constant currency vs. prior-year quarter
  • -11% constant currency sequentially
  • 20% of consolidated net sales

Active Customers

106,000

  • -20% vs. prior-year quarter
  • -5 % sequentially

Balance Sheet and Share Repurchase Activity

The Company generated $104 million of operating cash flow during fiscal 2022, ended the year with $288 million in cash and cash equivalents, and remained debt-free. The Company did not repurchase shares during the quarter and, as of December 31, 2022, had approximately $83 million remaining under the current share repurchase authorization. For the full year, the Company repurchased 288 thousand shares for a total investment of $25.4 million.

Fiscal Year 2023 Outlook

Mr. Guest added, “Our strategies during 2023 are focused on increasing the number of Active Customers in our business. These efforts include a return to live sales meetings and events where possible, new market expansion, new incentive opportunities for our salesforce, and pursuing additional acquisition opportunities. Additionally, we continue to execute our long-term strategy with a focus on digital commerce, product development, and improvements to ensure the best overall customer experience.”

The Company is reiterating its net sales and earnings per share outlook for fiscal year 2023 provided on January 5, 2023, as follows:

Fiscal Year 2023 Outlook

 

Range

Consolidated Net Sales

$850 - $950 million

Diluted EPS

$2.35 - $3.30

“While we have seen increased sales activity and customer demand in China for certain of our health products following that country’s change in COVID policy, it remains difficult to forecast the duration of the market response as well as the subsequent normalized level of business in this key market during fiscal 2023. Therefore, we are reiterating our full-year outlook which incorporates wider-than-typical ranges for net sales and diluted EPS,” said Doug Hekking, Chief Financial Officer.

“Moreover, we are entering fiscal year 2023 with an Active Customer base that is 13% lower than it was at the beginning of 2022. Our customer growth efforts are focused on generating sequential quarter customer growth from this base. Also of note: we continue to experience increased costs due to inflationary pressures, and we project increased spending related to several growth initiatives plus a return to in-person sales events and incentive trips.”

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, February 8, 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 (“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 Twelve Months Ended

31-Dec-22

1-Jan-22

31-Dec-22

1-Jan-22

 
Net sales

$

227,960

$

267,299

$

998,601

$

1,186,464

Cost of sales

 

46,430

 

52,518

 

193,890

 

217,898

Gross profit

 

181,530

 

214,781

 

804,711

 

968,566

Operating expenses:
Associate incentives

 

97,879

 

114,687

 

434,793

 

519,267

Selling, general and administrative

 

61,100

 

68,589

 

262,304

 

279,107

Earnings from operations

 

22,551

 

31,505

 

107,614

 

170,192

Other income (expense), net

 

251

 

141

 

1,007

 

450

Earnings before income taxes

 

22,802

 

31,646

 

108,621

 

170,642

Income taxes

 

10,007

 

11,326

 

39,271

 

54,137

NET EARNINGS

$

12,795

$

20,320

$

69,350

$

116,505

 
 
Earnings per share - diluted

$

0.66

$

1.03

$

3.59

$

5.73

Weighted average shares outstanding - diluted

 

19,263

 

19,673

 

19,310

 

20,343

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

$

288,420

$

239,832

Inventories

 

67,089

 

98,318

Prepaid expenses and other current assets

 

28,873

 

26,967

Total current assets

 

384,382

 

365,117

 
Property and equipment, net

 

97,773

 

101,780

Goodwill

 

17,368

 

17,668

Intangible assets, net

 

32,432

 

30,442

Deferred tax assets

 

9,799

 

4,839

Other assets

 

54,795

 

57,894

Total assets

$

596,549

$

577,740

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable

$

11,049

$

13,508

Other current liabilities

 

132,784

 

147,282

Total current liabilities

 

143,833

 

160,790

 
Deferred tax liabilities

 

4,071

 

7,497

Other long-term liabilities

 

14,173

 

14,329

 
Stockholders' equity

 

434,472

 

395,124

Total liabilities and stockholders' equity

$

596,549

$

577,740

USANA Health Sciences, Inc.
Sales by Region
(In thousands)
(Unaudited)
 
Quarter Ended
December 31, 2022 January 1, 2022 Change from prior year Currency
impact on
sales
% change
excluding
currency
impact
Asia Pacific
Greater China

$

118,290

51.9

%

$

125,840

47.1

%

$

(7,550

)

(6.0

%)

$

(12,161

)

3.7

%

Southeast Asia Pacific

 

40,598

17.8

%

 

56,984

21.3

%

 

(16,386

)

(28.8

%)

 

(4,088

)

(21.6

%)

North Asia

 

24,543

10.8

%

 

29,249

10.9

%

 

(4,706

)

(16.1

%)

 

(3,725

)

(3.4

%)

Asia Pacific Total

 

183,431

80.5

%

 

212,073

79.3

%

 

(28,642

)

(13.5

%)

 

(19,974

)

(4.1

%)

 
Americas and Europe

 

44,529

19.5

%

 

55,226

20.7

%

 

(10,697

)

(19.4

%)

 

(1,002

)

(17.6

%)

$

227,960

100.0

%

$

267,299

100.0

%

$

(39,339

)

(14.7

%)

$

(20,976

)

(6.9

%)

Active Associates by Region(1)
(Unaudited)
 
As of
December 31, 2022 January 1, 2022
Asia Pacific
Greater China

74,000

34.1

%

81,000

31.9

%

Southeast Asia Pacific

62,000

28.6

%

78,000

30.7

%

North Asia

34,000

15.6

%

37,000

14.6

%

Asia Pacific Total

170,000

78.3

%

196,000

77.2

%

 
Americas and Europe

47,000

21.7

%

58,000

22.8

%

217,000

100.0

%

254,000

100.0

%

Active Preferred Customers by Region (2)
(Unaudited)
 
As of
December 31, 2022 January 1, 2022
Asia Pacific
Greater China

170,000

62.3

%

174,000

56.8

%

Southeast Asia Pacific

25,000

9.1

%

37,000

12.1

%

North Asia

19,000

7.0

%

21,000

6.9

%

Asia Pacific Total

214,000

78.4

%

232,000

75.8

%

 
Americas and Europe

59,000

21.6

%

74,000

24.2

%

273,000

100.0

%

306,000

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:
Dan Macuga
Public Relations
(801) 954-7280

Source: USANA Health Sciences, Inc.