USANA Health Sciences Reports First Quarter Results

Rhea-AI Summary

USANA Health Sciences reported Q1 2022 financial results with net sales of $273 million, a decline of 11% from $308 million in Q1 2021. Diluted EPS fell 21% to $1.15. The company revised its fiscal 2022 outlook to net sales of $1.1 billion to $1.2 billion and diluted EPS of $5.00 to $5.70. Challenges arose from COVID-19 disruptions in Asia Pacific, particularly China. The company ended the quarter with $238 million in cash after repurchasing shares worth $25 million.

Positive

• Q1 2022 operating results were within internal forecast range.
• USANA ended Q1 with a strong cash position of $238 million.

Negative

• Net sales declined by 11% year-over-year.
• Diluted EPS decreased by 21% compared to the prior year.
• Revised fiscal 2022 outlook reflects reduced expectations due to market challenges.

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal first quarter ended April 2, 2022.

Key Financial & Operating Highlights

• First quarter net sales were $273 million as compared with $308 million during the first quarter of the prior year.
• First quarter diluted EPS totaled $1.15 versus $1.45 during the first quarter of 2021.
• Company revises fiscal 2022 net sales and diluted EPS outlook to $1.1 billion to $1.2 billion and $5.00 to $5.70, respectively.

Q1 2022 Financial Performance

Consolidated Results
Net Sales	$272.9 million	-11% vs. prior-year quarter -10% constant currency vs. prior-year quarter +2% constant currency sequentially -$2.8 million YOY FX impact, or -1%
Diluted EPS	$1.15	-21% vs. prior-year quarter +12% sequentially Diluted shares of 19.5 million, -8% year-over-year
Active Customers	552,000	-11% vs. prior-year quarter -1% sequentially

“While the first quarter was a respectable start to the year for USANA, net sales were softer than anticipated, particularly around the Lunar New Year holiday in a few key Asia Pacific markets,” said Kevin Guest, Chief Executive Officer and Chairman of the Board. “That said, we made progress in executing our customer experience strategy by rolling out more Active Nutrition products in key markets and by enhancing onboarding programs and training tools.”

Mr. Guest added, “The operating environment in Asia Pacific has become more challenging, particularly in China, where the escalation of COVID-19 has resulted in mass lockdowns, restrictions, and other disruptions. As we look ahead, we are adjusting our strategy to support our teams and Associates in these markets, and we remain optimistic about delivering results in the face of these challenges. We remain focused on executing our strategic initiatives, which we believe will deliver long-term, sustainable growth for all stakeholders.”

Q1 2022 Regional Results:

Asia Pacific Region
Net Sales	$218.4 million	-13% vs. prior-year quarter -12% constant currency vs. prior-year quarter +3% constant currency sequentially 80% of consolidated net sales
Active Customers	422,000	-11% vs. prior-year quarter -1% sequentially
Asia Pacific Sub-Regions
Greater China
Net Sales	$133.7 million	-10% vs. prior-year quarter Constant currency net sales: -12%
Active Customers	255,000	-8% vs. prior-year quarter Flat sequentially
North Asia
Net Sales	$29.9 million	-1% vs. prior-year quarter Constant currency net sales: +7%
Active Customers	57,000	-3% vs. prior-year quarter -2% sequentially
Southeast Asia Pacific
Net Sales	$54.7 million	-24% vs. prior-year quarter Constant currency net sales: -21%
Active Customers	110,000	-20% vs. prior-year quarter -4% sequentially

Americas and Europe Region
Net Sales	$54.4 million	-4% vs. prior-year quarter -3% constant currency vs. prior-year quarter -1% constant currency sequentially 20% of consolidated net sales
Active Customers	130,000	-10% vs. prior-year quarter -2 % sequentially

Balance Sheet and Share Repurchase Activity

The Company ended the quarter with $238 million in cash and cash equivalents after repurchasing 288,000 shares during the quarter, for a total of $25 million. Diluted shares outstanding totaled 19.5 million during the first quarter of 2022. As of April 2, 2022, the Company had approximately $83 million remaining under the share repurchase authorization.

Fiscal 2022 Outlook

The Company is revising its net sales and earnings per share outlook for fiscal year 2022 as follows:

Fiscal Year 2022 Outlook
	Revised Range	Previous Range
Consolidated Net Sales	$1.100 - $1.200 billion	$1.125 - $1.225 billion
Diluted EPS	$5.00 - $5.70	$5.25 - $6.00

Doug Hekking, Chief Financial Officer, said, “Despite some sales softness across a few key markets and ongoing inflationary pressures, our first quarter operating results were within the range reflected in our internal forecast. We are, however, reducing our net sales and diluted EPS outlook for fiscal 2022 due to the elevated uncertainty surrounding the COVID-19 environment in China.”

Management Commentary Document and Conference Call

For more 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, April 27, 2022 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 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 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; 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
		2-Apr-22			3-Apr-21
Net sales		$	272,867		$	307,976
Cost of sales			51,383			57,651
Gross profit			221,484			250,325
Operating expenses:
Associate incentives			119,620			134,495
Selling, general and administrative			68,797			71,633
Earnings from operations			33,067			44,197
Other income (expense), net			220			139
Earnings before income taxes			33,287			44,336
Income taxes			10,818			13,715
NET EARNINGS		$	22,469		$	30,621
Earnings per share - diluted		$	1.15		$	1.45
Weighted average shares outstanding - diluted			19,481			21,096

USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
		As of			As of
		2-Apr-22			1-Jan-22
ASSETS
Current Assets
Cash and cash equivalents		$	237,753		$	239,832
Inventories			97,581			98,318
Prepaid expenses and other current assets			28,451			26,967
Total current assets			363,785			365,117
Property and equipment, net			100,792			101,780
Goodwill			17,661			17,668
Intangible assets, net			30,124			30,442
Deferred tax assets			4,542			4,839
Other assets			56,015			57,894
Total assets		$	572,919		$	577,740
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable		$	11,248		$	13,508
Line of credit - short term			10,000			-
Other current liabilities			136,719			147,282
Total current liabilities			157,967			160,790
Deferred tax liabilities			11,419			7,497
Other long-term liabilities			13,587			14,329
Stockholders' equity			389,946			395,124
Total liabilities and stockholders' equity		$	572,919		$	577,740

USANA Health Sciences, Inc.
Sales by Region
(unaudited)
(in thousands)
		Quarter Ended
		April 2, 2022						April 3, 2021						Change from prior year							Currency impact on sales				% change excluding currency impact
Asia Pacific
Greater China		$	133,739		49.0	%		$	148,978		48.4	%		$	(15,239	)		(10.2	%)		$	2,530			(11.9	%)
Southeast Asia Pacific			54,742		20.0	%			72,148		23.4	%			(17,406	)		(24.1	%)			(2,596	)		(20.5	%)
North Asia			29,939		11.0	%			30,165		9.8	%			(226	)		(0.7	%)			(2,446	)		7.4	%
Asia Pacific Total			218,420		80.0	%			251,291		81.6	%			(32,871	)		(13.1	%)			(2,512	)		(12.1	%)
Americas and Europe			54,447		20.0	%			56,685		18.4	%			(2,238	)		(3.9	%)			(293	)		(3.4	%)
		$	272,867		100.0	%		$	307,976		100.0	%		$	(35,109	)		(11.4	%)		$	(2,805	)		(10.5	%)

Active Associates by Region(1)
(unaudited)
		As of
		April 2, 2022					April 3, 2021
Asia Pacific
Greater China		79,000		32.3	%		88,000		30.4	%
Southeast Asia Pacific		76,000		31.0	%		99,000		34.1	%
North Asia		36,000		14.7	%		38,000		13.1	%
Asia Pacific Total		191,000		78.0	%		225,000		77.6	%
Americas and Europe		54,000		22.0	%		65,000		22.4	%
		245,000		100.0	%		290,000		100.0	%
Active Preferred Customers by Region (2)
(unaudited)
		As of
		April 2, 2022					April 3, 2021
Asia Pacific
Greater China		176,000		57.3	%		188,000		57.5	%
Southeast Asia Pacific		34,000		11.1	%		38,000		11.6	%
North Asia		21,000		6.8	%		21,000		6.4	%
Asia Pacific Total		231,000		75.2	%		247,000		75.5	%
Americas and Europe		76,000		24.8	%		80,000		24.5	%
		307,000		100.0	%		327,000		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/20220426006114/en/

Investor contact:

Patrique Richards

Investor Relations

(801) 954-7961

investor.relations@usanainc.com

Media contact:

Dan Macuga

Public Relations

(801) 954-7280

Source: USANA Health Sciences, Inc.

FAQ

What are USANA's Q1 2022 financial results?

USANA reported Q1 2022 net sales of $273 million and diluted EPS of $1.15.

How much did USANA revise its fiscal 2022 outlook?

USANA revised its fiscal 2022 net sales outlook to $1.1 billion to $1.2 billion and diluted EPS to $5.00 to $5.70.

What challenges did USANA face in Q1 2022?

USANA faced challenges due to COVID-19 disruptions, especially in the Asia Pacific region.

What is the current cash position of USANA?

As of Q1 2022, USANA has $238 million in cash and cash equivalents.

What was the decline in USANA's active customers in Q1 2022?

USANA had 552,000 active customers in Q1 2022, a decline of 11% from the prior year.