USNA USANA Health Sciences

USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal second quarter ended June 29, 2024.

Key Financial & Operating Results

• Second quarter net sales were $213 million versus $238 million during Q2 2023.
• Second quarter diluted EPS was $0.54 as compared with $0.89 during Q2 2023.
• Company updates fiscal year 2024 net sales and diluted EPS outlook to $850 million to $880 million and $2.40 to $2.55 (previously $850 million to $920 million and $2.40 to $3.00).

Q2 2024 Financial Performance

Consolidated Results

Net Sales

$213 million

• -11% vs. Q2 2023

 

 

• -8% constant currency vs. Q2 2023

 

 

• -7% sequentially

 

 

• -6% constant currency sequentially

 

 

• -$5 million YOY FX impact, or -2%

Diluted EPS

$0.54

• -39% vs. Q2 2023

 

 

• -37% sequentially

Active Customers

468,000

• -4% vs. Q2 2023

 

 

• -5% sequentially

“Second quarter operating results were below our expectations,” said Jim Brown, President and Chief Executive Officer.

“Ongoing macroeconomic pressures in several of our key markets continue to impact consumer spending. This in turn creates challenges in our ability to attract and engage new customers and generate sales momentum. To counter these challenges, we have made several strategic changes in our business over the past few quarters, including (i) restructuring our commercial team, (ii) heightening our focus on product innovation, (iii) increasing our efforts to engage our sales leaders with an Associate-first approach, (iv) expanding into India, and (v) evaluating more business development activities.

“Next month, we will be hosting our Americas & Europe Convention in Las Vegas, Nevada along with other Associate engagement-focused events in the back half of the year. We are also planning to offer a more robust promotional calendar throughout the remainder of the year.”

Q2 2024 Regional Results:

Asia Pacific Region

Net Sales

$171 million

• -12% vs. Q2 2023

 

 

• -9% constant currency vs. Q2 2023

 

 

• -8% sequentially

 

 

• 80% of consolidated net sales

Active Customers

369,000

• -4% vs. Q2 2023

 

 

• -7% sequentially

Asia Pacific Sub-Regions

Greater China

Net Sales

$116 million

• -10% vs. Q2 2023

 

 

• -8% constant currency vs. Q2 2023

 

 

• -9% sequentially

Active Customers

250,000

• Flat vs. Q2 2023

 

 

• -9% sequentially

North Asia

Net Sales

$20 million

• -23% vs. Q2 2023

 

 

• -19% constant currency vs. Q2 2023

 

 

• -8% sequentially

Active Customers

42,000

• -18% vs. Q2 2023

 

 

• -7% sequentially

Southeast Asia Pacific

Net Sales

$35 million

• -10% vs. Q2 2023

 

 

• -7% constant currency vs. Q2 2023

 

 

• -2% sequentially

Active Customers

77,000

• -6% vs. Q2 2023

 

 

• +1% sequentially

Americas and Europe Region

Net Sales

$42 million

• -5% vs. Q2 2023

 

 

• -5% constant currency vs. Q2 2023

 

 

• -1% sequentially

 

 

• 20% of consolidated net sales

Active Customers

99,000

• -4% vs. Q2 2023

 

 

• Flat sequentially

Balance Sheet and Share Repurchase Activity

The Company generated $8 million in operating cash flow during second quarter and ended the quarter with $332 million in cash and cash equivalents while remaining debt-free. The Company did not repurchase any shares during the quarter. As of June 29, 2024, the Company had approximately $62 million remaining under the current share repurchase authorization.

Fiscal Year 2024 Outlook

The Company is updating its net sales and earnings per share outlook for fiscal year 2024, as follows:

Fiscal Year 2024 Outlook

 

Revised Range

Previous Range

Consolidated Net Sales

$850 - $880 million

$850 - $920 million

Diluted EPS

$2.40 - $2.55

$2.40 - $3.00

“While we anticipated lower sequential operating results following a successful promotional period in the first quarter, lower than anticipated active customer counts negatively impacted our second quarter results,” said Doug Hekking, Chief Financial Officer. “Additionally, the strengthening of the U.S. dollar created downward pressure on both net sales and operating margin during the quarter.”

Mr. Hekking continued, “We are revising our fiscal 2024 outlook to reflect year-to-date operating results, our expectation for a continued challenging operating environment across many of our markets, higher than anticipated unfavorable currency exchange rate impact on operating results, and an increased effective tax rate. We recognize the need to continue investing in strategic initiatives while also aligning costs with sales performance. Our balance sheet remains strong with $332 million of cash, zero debt, and we continue to generate solid cash flow.”

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, July 24, 2024 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, Italy, and India. 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: global economic conditions generally, including continued inflationary pressure around the world and 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 in the United States, China and other key markets; potential negative effects of deteriorating foreign and/or trade relations between or among the United States, China and other key markets; potential negative effects from geopolitical relations and conflicts around the world, including the Russia-Ukraine conflict and the conflict in Israel; compliance with data privacy and security laws and regulations in our markets around the world; 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; adverse publicity risks globally; risks associated with commencing operations in India and future international expansion and operations; uncertainty relating to the fluctuation in U.S. and other international currencies; and the potential for a resurgence of COVID-19, or another pandemic, in any of our markets in the future and any related impact on consumer health, domestic and world economies, including any negative impact on discretionary spending, consumer demand, and consumer behavior in general. 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. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

Quarter Ended

 

June 29, 2024

July 1, 2023

Net sales

$

212,869

 

$

238,202

 

Cost of sales

 

40,333

 

 

43,326

 

Gross profit

 

172,536

 

 

194,876

 

Operating expenses:

 

 

Associate incentives

 

90,371

 

 

102,380

 

Selling, general and administrative

 

64,325

 

 

68,096

 

Total operating expenses

 

154,696

 

 

170,476

 

Earnings from operations

 

17,840

 

 

24,400

 

Other income (expense):

 

 

Interest income

 

2,763

 

 

2,224

 

Interest expense

 

(51

)

 

(43

)

Other, net

 

(349

)

 

229

 

Other income (expense), net

 

2,363

 

 

2,410

 

Earnings before income taxes

 

20,203

 

 

26,810

 

Income taxes

 

9,771

 

 

9,518

 

Net earnings

$

10,432

 

$

17,292

 

 

 

 

Earnings per common share

 

 

Basic

$

0.55

 

$

0.89

 

Diluted

$

0.54

 

$

0.89

 

 

 

 

Weighted average common shares outstanding

 

 

Basic

 

19,073

 

 

19,321

 

Diluted

 

19,159

 

 

19,427

 

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)

 

 

As of June 29, 2024

 

As of December 30, 2023

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

332,423

 

$

330,420

Inventories

 

61,832

 

 

61,454

Prepaid expenses and other current assets

 

24,826

 

 

25,872

Total current assets

 

419,081

 

 

417,746

Property and equipment, net

 

97,686

 

 

99,814

Goodwill

 

16,837

 

 

17,102

Intangible assets, net

 

28,637

 

 

29,919

Deferred tax assets

 

18,190

 

 

13,284

Other assets*

 

50,988

 

 

54,892

Total assets

$

631,419

 

$

632,757

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

6,648

 

$

10,070

Line of credit - short term

 

—

 

 

786

Other current liabilities

 

97,248

 

 

107,989

Total current liabilities

 

103,896

 

 

118,845

Deferred tax liabilities

 

4,653

 

 

4,552

Other long-term liabilities

 

10,662

 

 

12,158

 

 

 

 

Stockholders' equity

 

512,208

 

 

497,202

Total liabilities and stockholders' equity

$

631,419

 

$

632,757

*Other assets include noncurrent inventories of $3,075 and $3,128 as of 29-Jun-24 and 30-Dec-23, respectively. Total inventories were $64,907 and $64,582 as of 29-Jun-24 and 30-Dec-23, respectively.

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

SALES BY REGION

(in thousands)

(unaudited)

 

 

Quarter Ended

 

Change from prior year

 

Percent change

 

Currency impact on sales

 

% change excluding currency impact

 

June 29, 2024

 

July 1, 2023

 

 

 

 

Asia Pacific

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Greater China

$

115,513

 

54.3

%

 

$

128,749

 

54.1

%

 

$

(13,236

)

 

(10.3

%)

 

$

(3,085

)

 

(7.9

%)

Southeast Asia Pacific

 

35,402

 

16.6

%

 

$

39,337

 

16.5

%

 

 

(3,935

)

 

(10.0

%)

 

 

(1,221

)

 

(6.9

%)

North Asia

 

19,710

 

9.3

%

 

$

25,529

 

10.7

%

 

 

(5,819

)

 

(22.8

%)

 

 

(870

)

 

(19.4

%)

Asia Pacific Total

 

170,625

 

80.2

%

 

 

193,615

 

81.3

%

 

 

(22,990

)

 

(11.9

%)

 

 

(5,176

)

 

(9.2

%)

Americas and Europe

 

42,244

 

19.8

%

 

 

44,587

 

18.7

%

 

 

(2,343

)

 

(5.3

%)

 

 

(94

)

 

(5.0

%)

 

$

212,869

 

100.0

%

 

$

238,202

 

100.0

%

 

$

(25,333

)

 

(10.6

%)

 

$

(5,270

)

 

(8.4

%)

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

ACTIVE ASSOCIATES AND ACTIVE PREFERRED CUSTOMERS BY REGION

(unaudited)

Active Associates by Region(1)

(unaudited)

 

As of June 29, 2024

 

As of July 1, 2023

Asia Pacific:

 

 

 

 

 

 

 

Greater China

68,000

 

35.2

%

 

71,000

 

34.1

%

Southeast Asia Pacific

52,000

 

27.0

%

 

57,000

 

27.4

%

North Asia

28,000

 

14.5

%

 

33,000

 

15.9

%

Asia Pacific Total

148,000

 

76.7

%

 

161,000

 

77.4

%

 

 

 

 

 

 

 

 

Americas and Europe

45,000

 

23.3

%

 

47,000

 

22.6

%

 

193,000

 

100.0

%

 

208,000

 

100.0

%

 

Active Preferred Customers by Region(2)

(unaudited)

 

As of June 29, 2024

 

As of July 1, 2023

Asia Pacific:

 

 

 

 

 

 

 

Greater China

182,000

 

66.2

%

 

180,000

 

64.5

%

Southeast Asia Pacific

25,000

 

9.1

%

 

25,000

 

9.0

%

North Asia

14,000

 

5.1

%

 

18,000

 

6.4

%

Asia Pacific Total

221,000

 

80.4

%

 

223,000

 

79.9

%

 

 

 

 

 

 

 

 

Americas and Europe

54,000

 

19.6

%

 

56,000

 

20.1

%

 

275,000

 

100.0

%

 

279,000

 

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240723833865/en/

Investor contact: Andrew Masuda Investor Relations (801) 954-7201 investor.relations@usanainc.com

Media contact: Amy Haran Public Relations (801) 954-7280