USANA Health Sciences Finishes Strong 2020 with 14.5% Fourth Quarter Net Sales Growth and 32.6% Diluted EPS Growth

Rhea-AI Summary

USANA Health Sciences reported a strong fiscal Q4 and full-year 2020 performance. Q4 net sales climbed 14.5% YoY to $310.5 million, with diluted EPS rising 32.6% to a record $1.87. For the full year, net sales reached $1.135 billion, up 7%, and diluted EPS hit $5.86, a 32.9% increase. The company provided initial 2021 guidance for net sales between $1.21 to $1.27 billion and diluted EPS of $6.00 to $6.45. Additionally, a new share repurchase authorization of $150 million was approved. The company remains optimistic about future growth despite ongoing pandemic challenges.

Positive

• Q4 net sales increased by 14.5% YoY to $310.5 million.
• Diluted EPS for Q4 rose by 32.6% YoY to a record $1.87.
• Fiscal 2020 net sales increased by 7% YoY to $1.135 billion.
• Full-year diluted EPS grew by 32.9% YoY to $5.86.
• Initial 2021 net sales guidance of $1.21 to $1.27 billion.
• Initial EPS guidance for 2021 between $6.00 to $6.45.
• $150 million share repurchase authorization approved.

Negative

• Active customers in the Asia-Pacific region declined by 1.1% YoY.
• Greater China active customers decreased by 13.1% YoY.

USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and full-year ended January 2, 2021.

Key Q4 and Full Year 2020 Financial & Operating Highlights

• Fourth quarter net sales increased 14.5% year-over-year to $310.5 million.
• Fourth quarter diluted EPS increased 32.6% year-over-year to a record $1.87.
• Fiscal year net sales increased 7.0% year-over-year to $1.135 billion.
• Fiscal year diluted EPS increased 32.9% year-over-year to a record $5.86.
• Company provides initial 2021 net sales guidance of $1.21 to $1.27 billion and initial diluted EPS guidance of $6.00 to $6.45.
• Board of Directors authorizes up to $150 million in share repurchase authorization.

Q4 2020 Financial Performance

Consolidated Results
Net Sales	$310.5 million	+14.5% vs. prior-year quarter +9.9% constant currency vs. prior-year quarter +$12.4 million YOY FX impact, or +4.6% Additional week of sales contributed approximately $18 million
Diluted EPS	$1.87	+32.6% vs. prior-year quarter Diluted shares of 21.2 million, -2.6% Additional week of sales contributed an estimated $0.17
Active Customers	599,000	+2.2% vs. prior-year quarter

The Company maintains a 52/53-week fiscal year. Fiscal 2020 was a 53-week year and includes one additional week of sales during the fourth quarter compared to the fourth quarter of 2019. Prior to fiscal 2020, the last 53-week year was in fiscal 2014.

“Our fourth quarter results were better than expected and cap off a year during which USANA delivered remarkable results despite continued challenges from the pandemic,” said Kevin Guest, Chief Executive Officer and Chairman of the Board. “During the quarter, demand for our high-quality nutritional products from our loyal consumers remained strong and fueled business momentum. Additionally, changes in currency exchange rates and the additional week of sales during the fourth quarter contributed to growth. As we kick-off 2021, we are confident that we are positioned to deliver another year of solid growth for USANA.

Q4 2020 Regional Results:

Asia Pacific Region
Net Sales	$248.8 million	+14.5% vs. prior-year quarter Constant currency net sales: +8.7% 80.1% of consolidated net sales
Active Customers	454,000	-1.1% vs. prior-year quarter
Asia Pacific Sub-Regions
Greater China
Net Sales	$139.1 million	+5.4% vs. prior-year quarter Constant currency net sales: -0.6%
Active Customers	252,000	-13.1% vs. prior-year quarter -11.3% sequentially
North Asia
Net Sales	$32.9 million	+17.1% vs. prior-year quarter Constant currency net sales: +11.5%
Active Customers	60,000	+7.1% vs. prior-year quarter No change sequentially
Southeast Asia Pacific
Net Sales	$76.9 million	+34.2% vs. prior-year quarter Constant currency net sales: +28.9%
Active Customers	142,000	+25.7% vs. prior-year quarter -10.1% sequentially

Americas and Europe Region
Net Sales	$61.7 million	+14.3% vs. prior year Constant currency net sales: +14.5% 19.9% of consolidated net sales
Active Customers	145,000	+14.2% vs. prior year -2.0% sequentially

FY 2020 Financial Performance

Consolidated Results
Net Sales	$1.135 billion	+7.0% vs. prior year +6.9% constant currency vs. prior year no meaningful FX impact
Diluted EPS	$5.86	+32.9% vs. prior year Diluted shares of 21.3 million, -6.8%
Cash & Cash Equivalents	$312 million	Cash generated from operating activities totaled $160 million

Mr. Guest continued, “For several years now, we have focused on improving the overall experience USANA offers to consumers. Digital enhancement of our business has been a key aspect of our customer experience strategy. We believe that our accomplishments in this area positioned us to sustain and accelerate performance during an unprecedented 2020. During the year, we accelerated many of our digital initiatives, including further improving our mobile platform, expanding payment options to meet the demands of consumers around the world, facilitating quick and simple product education, capturing feedback, and making it easier for consumers to share their USANA experience with others.”

Mr. Guest added, “In 2021, we will continue to focus on growing our consumer base and executing our global strategy, which includes: (i) continued investment in digital transformation and overall customer experience; (ii) the launch of our new Active Nutrition product line; (iii) generating growth in existing markets with an emphasis on China; (iv) pursuing international expansion opportunities; (v) pursuing accretive, strategic collaborations and acquisitions to grow our business; and (vi) focusing on corporate sustainability. We remain committed to USANA’s mission of health and wellness, and we are confident that our strategy will drive growth and deliver value to shareholders.”

Balance Sheet

The Company ended the quarter with $312 million in cash and cash equivalents and no debt. During the quarter, the Company did not repurchase any shares of common stock. For the full year the company repurchased 785,000 shares totaling $57 million throughout the year.

Share Repurchase Authorization

As of the end of the fourth quarter, there was approximately $73 million remaining under the existing share repurchase authorization. The Company’s Board of Directors has approved up to $150 million in share repurchase authorization, inclusive of the $73 million remaining under the share repurchase authorization.

Repurchases may be made from time to time, in the open market, through block trades or otherwise, subject to applicable rules of the Securities and Exchange Commission. 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.

Fiscal 2021 Outlook

The Company is providing the following consolidated net sales and earnings per share outlook for fiscal year 2021.

Fiscal Year 2021 Outlook
	Range
Consolidated Net Sales	$1.21 - $1.27 billion
Diluted EPS	$6.00 - $6.45

Doug Hekking, Chief Financial Officer, said, “Fourth quarter operating results exceeded internal expectations and were driven by momentum in our business as well as an improved foreign currency environment.

“Today we are providing our initial outlook for 2021, which reflects top-line growth between 6.6% and 11.9% and an operating margin between 14.8% and 15.2%. Operating results projected for fiscal year 2021 contain one less week of business, anticipate a favorable foreign currency environment, and increased spending in the back half of the year related to travel and event related costs. Additionally, we are projecting an effective tax rate of 31% for the year and a diluted share count of 20.7 million. We remain committed to investing in our strategies designed to generate growth in customers and net sales.”

Mr. Hekking added, “Outlook for fiscal 2021 reflects our current understanding of the COVID-19 operating environment as restrictions and health responses continue to evolve. During the first half of 2021, we expect to hold virtual events for our sales force and maintain our work-from-home plan for employees. Thus far, we have not seen a meaningful sustained disruption to our manufacturing, shipping or global operations. Some markets continue to face increased restrictions, while others are seeing a return to a more normalized operating environment. We hope to see conditions continue to improve as the year progresses, but recognize that the ongoing COVID-19 environment remains unpredictable.”

Management Commentary Document and Conference Call

For more information on the Company’s operating results, please see the “Management Commentary, Results and Outlook” document, which has been posted 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 10, 2021 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.

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 magnitude, scope and duration of the impact of the COVID-19 pandemic (“COVID-19”) to our business, operations and financial results; the further spread of, and regulatory measures or voluntary actions that may be put in place to limit the spread of, COVID-19 in the markets where we operate, including restrictions on business operations, shelter at home, or social distancing requirements; 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; 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 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
		2-Jan-21		28-Dec-19		2-Jan-21		28-Dec-19
Net sales		$ 310,521		$ 271,298		$ 1,134,644		$ 1,060,902
Cost of sales		59,020		47,289		209,111		187,503
Gross profit		251,501		224,009		925,533		873,399
Operating expenses
Associate incentives		129,791		114,378		487,856		459,478
Selling, general and administrative		69,172		65,060		261,186		267,731
Earnings from operations		52,538		44,571		176,491		146,190
Other income (expense)		1,993		1,231		1,457		4,306
Earnings before income taxes		54,531		45,802		177,948		150,496
Income taxes		14,902		15,048		53,284		49,970
NET EARNINGS		$ 39,629		$ 30,754		$ 124,664		$ 100,526
Earnings per share - diluted		$ 1.87		$ 1.41		$ 5.86		$ 4.41
Weighted average shares outstanding - diluted		21,189		21,751		21,256		22,818

USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
		As of		As of
ASSETS		2-Jan-21		28-Dec-19
Current Assets
Cash and cash equivalents		$ 311,917		$ 234,830
Inventories		90,224		68,905
Prepaid expenses and other current assets		23,145		25,544
Total current assets		425,286		329,279
Property and equipment, net		100,445		95,233
Goodwill		17,367		16,636
Intangible assets, net		30,796		29,840
Deferred income taxes		4,640		3,090
Other assets		62,353		42,856
Total assets		$ 640,887		$ 516,934
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable		$ 18,195		$ 12,525
Other current liabilities		149,878		123,573
Total current liabilities		168,073		136,098
Deferred income taxes		12,009		10,282
Other long-term liabilities		19,155		18,842
Stockholders' equity		441,650		351,712
Total liabilities and stockholders' equity		$ 640,887		$ 516,934

USANA Health Sciences, Inc.
Sales by Region
	(unaudited)
	(in thousands)
	Quarter Ended
	2-Jan-21						28-Dec-19						Change from prior year							Currency impact on sales				% change excluding currency impact
Asia Pacific
Greater China	$ 139,059		44.8	%			$ 131,949		48.6	%			$ 7,110		5.4		%			$ 7,889				(0.6	%)
Southeast Asia Pacific	76,861		24.7	%			57,283		21.1	%			19,578			34.2	%			3,037				28.9	%
North Asia	32,892		10.6	%			28,085		10.4	%			4,807			17.1	%			1,580				11.5	%
Asia Pacific Total	248,812		80.1	%			217,317		80.1	%			31,495			14.5	%			12,506				8.7	%
Americas and Europe	61,709		19.9	%			53,981		19.9	%			7,728			14.3	%			(113	)			14.5	%
	$ 310,521		100.0	%			$ 271,298		100.0	%			$ 39,223			14.5	%			$ 12,393				9.9	%

Active Associates by Region(1)
(unaudited)
	As of
	2-Jan-21					28-Dec-19
Asia Pacific
Greater China	88,000		29.4	%		100,000		34.4	%
Southeast Asia Pacific	103,000		34.5	%		87,000		29.9	%
North Asia	39,000		13.0	%		38,000		13.0	%
Asia Pacific Total	230,000		76.9	%		225,000		77.3	%
Americas and Europe	69,000		23.1	%		66,000		22.7	%
	299,000		100.0	%		291,000		100.0	%
Active Preferred Customers by Region(2) (unaudited)
	As of
	2-Jan-21					28-Dec-19
Asia Pacific
Greater China	164,000		54.7	%		190,000		64.4	%
Southeast Asia Pacific	39,000		13.0	%		26,000		8.8	%
North Asia	21,000		7.0	%		18,000		6.1	%
Asia Pacific Total	224,000		74.7	%		234,000		79.3	%
Americas and Europe	76,000		25.3	%		61,000		20.7	%
	300,000		100.0	%		295,000		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.

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FAQ

What are the Q4 2020 financial results for USNA?

USANA reported Q4 2020 net sales of $310.5 million, up 14.5% YoY, with diluted EPS of $1.87, a 32.6% increase.

What is USANA's guidance for 2021?

USANA provided initial 2021 guidance of $1.21 to $1.27 billion in net sales and diluted EPS of $6.00 to $6.45.

How did USANA perform in fiscal year 2020?

In fiscal 2020, USANA achieved net sales of $1.135 billion, a 7% increase, with diluted EPS of $5.86, up 32.9%.

What share repurchase authorization did USANA announce?

USANA's Board of Directors approved a share repurchase authorization of up to $150 million.

How many active customers does USANA have?

As of Q4 2020, USANA reported 599,000 active customers, a 2.2% increase YoY.