Exhibit 99.1


USANA Health Sciences Reports Fourth Quarter and Full-Year 2019 Results

  • Fourth quarter net sales of $271.3 million
  • Fourth quarter net earnings of $30.8 million, or $1.41 per share
  • Fiscal year net sales of $1.061 billion
  • Fiscal year net earnings of $100.5 million, or $4.41 per share
  • Company provides 2020 Outlook for Net Sales between $1.03 billion and $1.13 billion and EPS between $4.10 and $4.90

SALT LAKE CITY--(BUSINESS WIRE)--February 4, 2020--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and full-year ended December 28, 2019.

Financial Performance

Fourth quarter 2019 net sales were $271.3 million, compared with $299.0 million in the prior-year period. The strengthening of the U.S. dollar negatively impacted net sales by $2.9 million for the quarter. The Company’s total number of active Customers at the end of the fourth quarter was 586,000, compared to 616,000 in the prior-year period. On a sequential quarter basis, net sales increased 4.1%, while active Customers increased 5.0% during the fourth quarter of 2019.

Fourth quarter net earnings were $30.8 million, or $1.41 per diluted share, compared with net earnings of $32.3 million, or $1.32 per share during the prior-year period. Weighted average diluted shares outstanding were 21.8 million for the fourth quarter of 2019, compared with diluted shares of 24.5 million in the prior-year period.


“Our fourth quarter results were stronger than expected and allowed us to finish the year strong,” said Kevin Guest, Chief Executive Officer. “Our performance was driven by a better-than-expected response to promotions we offered during the quarter, as well as improved general momentum in many of our markets around the world, including China.

“As we begin fiscal 2020, we believe our business is positioned to deliver solid operating results. However, we acknowledge the evolving situation in China, where our customers, employees, and China’s health officials are responding to the spread of the coronavirus. While the Chinese New Year holiday typically affects our first quarter results, we expect an additional negative impact this year as a result of the coronavirus and the related impact on our business and consumer spending in China. Notwithstanding the expected impact to our near-term results, we remain confident in our China business and our long-term opportunity in this important market.”

Regional Results

Net sales in the Asia Pacific region for the fourth quarter of 2019 were $217.3 million as compared to $243.3 million during the fourth quarter of the prior year. The total number of active customers in the Asia Pacific region was 459,000, compared to 487,000 in the prior-year period. Within Asia Pacific, net sales:

  • Decreased 21.4% in Greater China (down 20.2% on a constant currency basis);
  • Increased 42.2% in North Asia (up 48.0% on a constant currency basis); and
  • Increased 2.8% in Southeast Asia Pacific (up 2.4% on a constant currency basis).

Active Customers decreased by 13.2% in Greater China (up 6.2% sequentially) and were essentially flat in Southeast Asia Pacific. In North Asia, Active customers increased by 43.6%. On a sequential quarter basis, net sales in the Asia Pacific region increased 4.2% while active Customers increased 5.5% during the fourth quarter of 2019.

Mr. Guest continued, “During the fourth quarter, our South Korea business continued to deliver strong sales and customer growth for our North Asia region. We also saw improvement in our Southeast Asia Pacific and Greater China regions, where sales and customer counts increased sequentially.”


Net sales in the Americas and Europe region for the fourth quarter were $54.0 million as compared to $55.8 million for the prior-year period. The total number of active customers in the Americas and Europe region was 127,000, compared to 129,000 in the prior-year period.

Fiscal 2019 Results

Net sales for fiscal 2019 totaled $1.061 billion, compared with $1.189 billion in 2018. The strengthening of the U.S. dollar negatively impacted net sales by approximately $34.5 million for the full year. On a constant currency basis, net sales decreased by 7.9% during fiscal 2019.

Net earnings for 2019 totaled $100.5 million, or $4.41 per diluted share, compared with $126.2 million, or $5.12 per diluted share in the prior year. Weighted average diluted shares outstanding were 22.8 million for the full-year 2019, compared with diluted shares of 24.6 million in the prior-year.

During the year, the Company repurchased approximately 2.0 million shares of common stock for $150.0 million. The Company ended the year with no debt and $234.8 million in cash and cash equivalents. As of December 28, 2019, there was $30.0 million remaining under the current share repurchase authorization.

Mr. Guest added, “Despite the challenges we faced in 2019, we executed several meaningful initiatives that generated momentum in the business and aligned operating expenses with sales results. Several of these initiatives improved the speed, convenience, and overall experience of doing business with USANA, and help position the Company for future growth.

“In 2020, we will continue to focus on growing our customer base by executing our customer experience strategy. Under this strategy, we will continue to (i) emphasize product and technology innovation; (ii) launch new products and incentive offerings; (iii) evolve from an Associate focused business to an overall customer focused business; (iv) expand our in-house manufacturing capability to include additional product categories; and (v) pursue strategic collaborations or acquisitions to grow our business. We are confident in our long-term growth potential in China and our other regions around the world and remain committed to generating growth and delivering shareholder value.”


Outlook

The Company is providing the following consolidated net sales and earnings per share outlook for fiscal year 2020:

  • Consolidated net sales between $1.03 billion and $1.13 billion; and
  • Earnings per share between $4.10 and $4.90.

The Company’s outlook for the year reflects:

  • Fiscal 2020 is a 53-week year and includes one additional week of sales compared to fiscal 2019. Prior to fiscal 2020, the last 53-week year was in fiscal 2014. The Company estimates this additional week will contribute about 1.8% to net sales growth.
  • An estimated operating margin of between 12.6% and 13.9%;
  • An effective tax rate of 33%;
  • An annualized diluted share count of 21.8 million; and
  • No meaningful year-over-year impact on net sales related to changes in foreign currency exchange rates.

Chief Financial Officer Doug Hekking commented, “In 2019, our management team responded quickly to market challenges, realigned spending, and improved operating margins during the second half of the year. This effort also included strategic product and incentive offerings, which helped improve sales and customer results and allowed us to deliver fourth-quarter results that exceeded our expectations.

“Given the current uncertainty surrounding the outbreak of, and response to, the coronavirus in China as well as the lack of visibility due to the Chinese New Year, the financial impact of these events on our business and operating results is difficult to estimate at this time, but are expected to meaningfully affect our first quarter and full year 2020 results. Consequently, our initial outlook for fiscal 2020 reflects a wider than typical range for top- and bottom-line performance. As events unfold, we will be transparent with all of our stakeholders on any impact to our business and operating results and will update our outlook for fiscal 2020 when we can reasonably estimate the impact of these events.”


Internal Investigation of China Operations

As the Company first disclosed in February 2017, it is voluntarily conducting an internal investigation of its China operations, BabyCare Ltd. The investigation focuses on compliance with the Foreign Corrupt Practices Act and certain conduct and policies at BabyCare, including BabyCare’s expense reimbursement policies. The Audit Committee of the Company’s Board of Directors has assumed direct responsibility for reviewing these matters and has hired experienced counsel to conduct the investigation. While the Company does not believe that the subject amounts are quantitatively material, or will materially affect its financial statements, it cannot currently predict the outcome of the investigation on its business, results of operations, or financial condition. The Company’s internal investigation is substantially complete, however the Company continues to cooperate with the Securities and Exchange Commission and the United States Department of Justice. The Company cannot currently predict the duration, scope, or result of the investigation.

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 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.

Conference Call

The Company has posted the “Management Commentary, Results and Outlook” document on the Company’s website (http://ir.usana.com) under the “Investor Relations” section of the site. USANA will hold a conference call and webcast to discuss today’s announcement with investors on Wednesday, February 5, 2020 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, before moving directly into questions and answers.


About USANA

USANA develops and manufactures high-quality nutritional supplements, healthy 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: regulatory risk in China in connection with the Chinese government’s continued review of the health products and direct selling industries; regulatory risk in the United States in connection with the direct selling business model; the impact to our business in China from the outbreak of and response to the coronavirus; 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; 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 risks associated with the internal investigation into BabyCare’s operations. 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 Earnings

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Twelve Months
Ended

 

 

28-Dec-19

 

29-Dec-18

 

28-Dec-19

 

29-Dec-18

Net sales

$

271,298


$

299,023


$

1,060,902


$

1,189,248

Cost of sales

 

47,289


 

49,467


 

187,503


 

200,710

Gross profit

 

224,009


 

249,556


 

873,399


 

988,538









 
Operating expenses







Associate incentives

 

114,378


 

132,710


 

459,478


 

525,126

Selling, general and administrative

 

65,060


 

68,278


 

267,731


 

275,059









 
Earnings from operations

 

44,571


 

48,568


 

146,190


 

188,353









 
Other income (expense)

 

1,231


 

895


 

4,306


 

3,157

Earnings before income taxes

 

45,802


 

49,463


 

150,496


 

191,510









 
Income taxes

 

15,048


 

17,132


 

49,970


 

65,286









 
NET EARNINGS

$

30,754


$

32,331


$

100,526


$

126,224









 
Earnings per share - diluted

$

1.41


$

1.32


$

4.41


$

5.12

Weighted average shares outstanding - diluted

 

21,751


 

24,455


 

22,818


 

24,642













 

USANA Health Sciences, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

As of

 

As of

ASSETS

28-Dec-19

 

29-Dec-18

Current Assets



Cash and cash equivalents

$

234,830


$

214,326

Securities held-to-maturity, net

 

-


 

63,539

Inventories

 

68,905


 

81,948

Prepaid expenses and other current assets

 

25,544


 

32,522

Total current assets

 

329,279


 

392,335





 
Property and equipment, net

 

95,233


 

92,025

Goodwill

 

16,636


 

16,815

Intangible assets, net

 

29,840


 

31,811

Deferred income taxes

 

3,090


 

3,348

Other assets

 

42,856


 

18,129

Total assets

$

516,934


$

554,463





 




 
LIABILITIES AND STOCKHOLDERS' EQUITY



Current Liabilities



Accounts payable

$

12,525


$

9,947

Other current liabilities

 

123,573


 

138,739

Total current liabilities

 

136,098


 

148,686





 
Deferred income taxes

 

10,282


 

13,367

Other long-term liabilities

 

18,842


 

1,264





 
Stockholders' equity

 

351,712


 

391,146

Total liabilities and stockholders' equity

$

516,934


$

554,463


USANA Health Sciences, Inc.
Sales by Region

(unaudited)

(in thousands)



Quarter Ended











28-Dec-19


29-Dec-18


Change from prior
year


Currency
impact on
sales


% change
excluding
currency
impact

Asia Pacific















Greater China

$

131,949


48.6

%


$

167,813


56.1

%


$

(35,864

)


(21.4

%)


$

(2,048

)


(20.2

%)

Southeast Asia Pacific

 

57,283


21.1

%


 

55,700


18.6

%


 

1,583

 


2.8

%


 

224

 


2.4

%

North Asia

 

28,085


10.4

%


 

19,751


6.6

%


 

8,334

 


42.2

%


 

(1,148

)


48.0

%

Asia Pacific Total

 

217,317


80.1

%


 

243,264


81.3

%


 

(25,947

)


(10.7

%)


 

(2,972

)


(9.4

%)

















 
Americas and Europe

 

53,981


19.9

%


 

55,759


18.7

%


 

(1,778

)


(3.2

%)


 

111

 


(3.4

%)

















 


$

271,298


100.0

%


$

299,023


100.0

%


$

(27,725

)


(9.3

%)


$

(2,861

)


(8.3

%)

















 

Active Associates by Region(1)

(unaudited)

 

 

 

As of

 

 

28-Dec-19

 

29-Dec-18

Asia Pacific







Greater China

100,000


34.4

%


114,000


37.7

%

Southeast Asia Pacific

87,000


29.9

%


93,000


30.8

%

North Asia

38,000


13.0

%


27,000


9.0

%

Asia Pacific Total

225,000


77.3

%


234,000


77.5

%









 
Americas and Europe

66,000


22.7

%


68,000


22.5

%









 


291,000


100.0

%


302,000


100.0

%









 

Active Preferred Customers by Region (2)

(unaudited)

 

 

 

As of

 

 

28-Dec-19

 

29-Dec-18

Asia Pacific







Greater China

190,000


64.4

%


220,000


70.1

%

Southeast Asia Pacific

26,000


8.8

%


21,000


6.7

%

North Asia

18,000


6.1

%


12,000


3.8

%

Asia Pacific Total

234,000


79.3

%


253,000


80.6

%









 
Americas and Europe

61,000


20.7

%


61,000


19.4

%









 


295,000


100.0

%


314,000


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.

 

Contacts

Investors contact:
Patrique Richards
Investor Relations
(801) 954-7961
investor.relations@us.usana.com

Media contact:
Dan Macuga
Public Relations
(801) 954-7280