USANA Health Sciences Reports Fourth Quarter and Fiscal Year 2023 Results

Rhea-AI Summary

USANA Health Sciences, Inc. (NYSE: USNA) announced its fiscal fourth quarter and fiscal year 2023 financial results. Fourth quarter net sales were $221 million, a 3% decrease from Q4 2022, with a 4% sequential increase. Diluted EPS was $0.87, a 32% increase from Q4 2022 and a 47% sequential increase. Fiscal year 2023 net sales were $921 million, an 8% decrease from fiscal year 2022. Diluted EPS for fiscal year 2023 was $3.30, an 8% decrease from fiscal year 2022. The company provided initial fiscal year 2024 net sales and diluted EPS guidance of $850 million to $920 million and $2.40 to $3.00, respectively. USANA President and CEO, Jim Brown, highlighted the positive fourth quarter operating results, attributing the sales growth to a global incentive offering, particularly effective in the Greater China region. Despite 2023 being a challenging year, the company made progress on strategic initiatives, including commencing operations in India, USANA's 25th global market.

Insights

Financial Analyst

The reported financial results of USANA Health Sciences, Inc. reflect a mixed picture of the company's performance. While the fourth quarter saw a decline in net sales compared to Q4 2022, there was a notable increase in diluted earnings per share (EPS). The increase in EPS, particularly in Q4, is significant at 32% year-over-year and indicates improved profitability or reduced share count. However, the full fiscal year results show a contraction in both net sales and EPS compared to the previous year, which signals a broader downward trend for the company.

The guidance for the fiscal year 2024 with lower net sales and EPS forecasts suggests that management is anticipating continued challenges or strategic investments that may impact profitability. Investors should consider the company’s performance within the context of the industry and the global economy, paying attention to factors such as consumer spending habits, supply chain issues and currency fluctuations that could affect future results.

Market Research Analyst

USANA's strategic initiative to expand into India as its 25th global market is a key development that could have long-term implications for growth. The entry into a new market, especially one as large and diverse as India, can provide substantial opportunities for customer base expansion and revenue growth. However, it is important to note that the company is setting expectations for a 'slow, steady and sustained growth trajectory' in India, which suggests a cautious approach to this new venture.

The effectiveness of the global incentive offering, particularly in the Greater China region, is a testament to the company's ability to adapt its marketing strategies to different regions. The double-digit sequential growth in Active Customer counts in this region could be indicative of successful market penetration and customer retention strategies. Investors should monitor the company's ability to replicate this success in other regions, including the newly entered Indian market.

Economist

The absence of a meaningful foreign exchange (FX) impact on USANA's Q4 results is noteworthy in today's economic environment, where many companies are facing significant headwinds from currency fluctuations. This indicates that the company's financial performance is more reflective of operational factors rather than external FX volatility. Additionally, the year-over-year (YOY) FX impact for the fiscal year, while negative, was not as substantial as it could have been, which may be a result of effective currency risk management strategies.

Looking ahead, the company's conservative guidance for fiscal year 2024 in terms of net sales and EPS could be a reflection of broader economic uncertainties, such as potential recessionary pressures or continued global supply chain disruptions. Stakeholders should be aware of the macroeconomic factors that could influence consumer discretionary spending and, consequently, USANA's performance in the health sciences sector.

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and fiscal year ended December 30, 2023.

Key Financial Results & Guidance

• Fourth quarter net sales were $221 million versus $228 million during Q4 2022 and $213 million during Q3 2023.
• Fourth quarter diluted EPS was $0.87 as compared with $0.66 during Q4 2022.
• Fiscal year 2023 net sales were $921 million as compared with $999 million during fiscal year 2022.
• Fiscal year 2023 diluted EPS totaled $3.30 versus $3.59 during fiscal year 2022.
• Company provides initial fiscal year 2024 net sales and diluted EPS guidance of $850 million to $920 million and $2.40 to $3.00, respectively.

Q4 2023 Financial Performance
Consolidated Results
Net Sales	$221 million	-3% vs. Q4 2022 No meaningful FX impact +4% sequentially
Diluted EPS	$0.87	+32% vs. Q4 2022 +47% sequentially
Active Customers	483,000	-1% vs. Q4 2022 +4% sequentially

“USANA delivered solid fourth quarter operating results, which exceeded our expectations,” said Jim Brown, President and Chief Executive Officer. “Our sales strengthened, in part, in response to a global incentive offering that was particularly effective in our Greater China region where it helped generate double-digit sequential growth in Active Customer counts. This boost helped to offset the seasonal slowdown we typically experience during the final month of the quarter and helped us finish the year strong.”

Fiscal Year 2023 Financial Performance
Consolidated Results
Net Sales	$921 million	-8% vs. prior year -5% constant currency vs. prior year -$28 million YOY FX impact, or -3%
Diluted EPS	$3.30	-8% vs. prior year

Mr. Brown continued, “Both net sales and diluted EPS for fiscal 2023 exceeded our guidance ranges. Although 2023 was a challenging year, we made meaningful progress on several strategic initiatives that will support future growth in customers and net sales. For instance, we commenced operations in India, USANA’s 25th global market, near the end of the fourth quarter and this market opening is a significant milestone for our company. Although we are just getting started in India and expect a slow, steady and sustained growth trajectory, we are very optimistic about the long-term growth opportunity this important market provides.”

Q4 2023 Regional Results:
Asia Pacific Region
Net Sales	$177 million	-3% vs. Q4 2022 No meaningful FX impact +4% sequentially 80% of consolidated net sales
Active Customers	383,000	Flat vs. Q4 2022 +6% sequentially
Asia Pacific Sub-Regions
Greater China
Net Sales	$116 million	-2% vs. Q4 2022 -1% constant currency vs. Q4 2022 +9% sequentially
Active Customers	255,000	+5% vs. Q4 2022 +11% sequentially
North Asia
Net Sales	$22 million	-10% vs. Q4 2022 -12% constant currency vs. Q4 2022 -9% sequentially
Active Customers	48,000	-9% vs. Q4 2022 -2% sequentially
Southeast Asia Pacific
Net Sales	$39 million	-4% vs. Q4 2022 -3% constant currency vs. Q4 2022 Flat sequentially
Active Customers	80,000	-8% vs. Q4 2022 -4% sequentially

Americas and Europe Region
Net Sales	$44 million	-1% vs. Q4 2022 -3% constant currency vs. Q4 2022 +1% sequentially 20% of consolidated net sales
Active Customers	100,000	-6% vs. Q4 2022 -2% sequentially

Balance Sheet and Share Repurchase Activity

The Company generated $26 million in operating cash flow during the fourth quarter and ended the year with $330 million in cash and cash equivalents. The Company did not repurchase any shares during the quarter. As of December 30, 2023, the Company had approximately $71 million remaining under the current share repurchase authorization.

Fiscal Year 2024 Outlook

Mr. Brown continued, “Growth in Active Customers across all regions remains our top priority, and to this end we will continue to execute several key initiatives including: 1) Increased engagement with Associate leaders to further support expansion of their businesses; 2) Enhanced, market-specific incentive offerings that reward growth; 3) Expansion of our presence in India; 4) Product innovation and development and; 5) Pursuit of additional acquisition opportunities.

The Company is introducing net sales and earnings per share outlook for fiscal year 2024, as detailed in the table below:

Fiscal Year 2024 Outlook
	Range
Consolidated Net Sales	$850 - $920 million
Diluted EPS	$2.40 - $3.00

“We are pleased with our fourth quarter results, which contributed to our strong finish to the year,” said Doug Hekking, Chief Financial Officer. “That said, we encountered challenging economic conditions in many of our markets during 2023, and we anticipate that 2024 will continue to be challenging.”

Mr. Hekking added, “Our initial outlook for fiscal 2024 reflects year-over-year net sales performance between flat and down 7% on a constant currency basis. In making this YOY comparison, it is important to note that 2023 benefited from approximately $25 million of incremental net sales in the first quarter, which is not expected to re-occur in the current year. We also anticipate that unfavorable currency exchange rates will have a modest negative impact on net sales in fiscal 2024.

“Our 2024 fiscal outlook assumes an operating margin of 8% to 9%, which reflects increased investments in India and our previously acquired businesses. We project an effective tax rate between 38% and 40% for the year and a diluted share count of approximately 19.3 million.”

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 7, 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.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
		Quarter Ended						Twelve Months Ended
		30-Dec-23			31-Dec-22			30-Dec-23			31-Dec-22
Net sales		$	221,083		$	227,960		$	921,010		$	998,601
Cost of sales			42,319			46,430			176,693			193,890
Gross profit			178,764			181,530			744,317			804,711
Operating expenses:
Associate incentives			95,881			97,879			394,257			434,793
Selling, general and administrative			58,664			61,100			256,989			262,304
Earnings from operations			24,219			22,551			93,071			107,614
Other income, net			2,392			251			9,382			1,007
Earnings before income taxes			26,611			22,802			102,453			108,621
Income taxes			9,845			10,007			38,665			39,271
NET EARNINGS		$	16,766		$	12,795		$	63,788		$	69,350
Earnings per share - diluted		$	0.87		$	0.66		$	3.30		$	3.59
Weighted average shares outstanding - diluted			19,253			19,263			19,345			19,310

USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
		As of			As of
		30-Dec-23			31-Dec-22
ASSETS
Current Assets
Cash and cash equivalents		$	330,420		$	288,420
Inventories			61,454			67,089
Prepaid expenses and other current assets			25,872			28,873
Total current assets			417,746			384,382
Property and equipment, net			99,814			97,773
Goodwill			17,102			17,368
Intangible assets, net			29,919			32,432
Deferred tax assets			13,284			9,799
Other assets*			54,892			54,795
Total assets		$	632,757		$	596,549
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable		$	10,070		$	11,049
Line of credit - short term			786			-
Other current liabilities			107,989			132,784
Total current liabilities			118,845			143,833
Deferred tax liabilities			4,552			4,071
Other long-term liabilities			12,158			14,173
Stockholders' equity			497,202			434,472
Total liabilities and stockholders' equity		$	632,757		$	596,549

*Includes noncurrent inventories of $3,128 and $3,479 as of 30-Dec-23 and 31-Dec-22, respectively. Total inventories were $64,582 and $70,568 as of 30-Dec-23 and 31-Dec-22, respectively.

USANA Health Sciences, Inc.
Sales by Region
(In thousands)
(Unaudited)
		Quarter Ended
		December 30, 2023						December 31, 2022						Change from prior year							Currency impact on sales				% change excluding currency impact
Asia Pacific
Greater China		$	115,921		52.4	%		$	118,290		51.9	%		$	(2,369	)		(2.0	%)		$	(1,352	)		(0.9	%)
Southeast Asia Pacific			39,116		17.7	%			40,598		17.8	%			(1,482	)		(3.7	%)			(146	)		(3.3	%)
North Asia			22,065		10.0	%			24,543		10.8	%			(2,478	)		(10.1	%)			569			(12.4	%)
Asia Pacific Total			177,102		80.1	%			183,431		80.5	%			(6,329	)		(3.5	%)			(929	)		(2.9	%)
Americas and Europe			43,981		19.9	%			44,529		19.5	%			(548	)		(1.2	%)			678			(2.8	%)
		$	221,083		100.0	%		$	227,960		100.0	%		$	(6,877	)		(3.0	%)		$	(251	)		(2.9	%)

Active Associates by Region(1)
(Unaudited)
		As of
		December 30, 2023					December 31, 2022
Asia Pacific
Greater China		70,000		35.0	%		74,000		34.1	%
Southeast Asia Pacific		52,000		26.0	%		62,000		28.6	%
North Asia		32,000		16.0	%		34,000		15.6	%
Asia Pacific Total		154,000		77.0	%		170,000		78.3	%
Americas and Europe		46,000		23.0	%		47,000		21.7	%
		200,000		100.0	%		217,000		100.0	%

Active Preferred Customers by Region (2)
(Unaudited)
		As of
		December 30, 2023					December 31, 2022
Asia Pacific
Greater China		185,000		65.4	%		170,000		62.3	%
Southeast Asia Pacific		28,000		9.9	%		25,000		9.1	%
North Asia		16,000		5.6	%		19,000		7.0	%
Asia Pacific Total		229,000		80.9	%		214,000		78.4	%
Americas and Europe		54,000		19.1	%		59,000		21.6	%
		283,000		100.0	%		273,000		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/20240206053693/en/

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.

FAQ

What were USANA Health Sciences, Inc.'s (NYSE: USNA) fourth quarter net sales for 2023?

USANA Health Sciences, Inc.'s fourth quarter net sales for 2023 were $221 million, a 3% decrease from Q4 2022, with a 4% sequential increase.

What was the diluted EPS for USANA Health Sciences, Inc. (NYSE: USNA) in the fourth quarter of 2023?

The diluted EPS for USANA Health Sciences, Inc. (NYSE: USNA) in the fourth quarter of 2023 was $0.87, a 32% increase from Q4 2022 and a 47% sequential increase.

What were USANA Health Sciences, Inc.'s (NYSE: USNA) fiscal year 2023 net sales?

USANA Health Sciences, Inc.'s fiscal year 2023 net sales were $921 million, an 8% decrease from fiscal year 2022.

What was the diluted EPS for USANA Health Sciences, Inc. (NYSE: USNA) in fiscal year 2023?

The diluted EPS for USANA Health Sciences, Inc. (NYSE: USNA) in fiscal year 2023 was $3.30, an 8% decrease from fiscal year 2022.

What is USANA Health Sciences, Inc.'s initial fiscal year 2024 net sales guidance?

USANA Health Sciences, Inc. provided initial fiscal year 2024 net sales guidance of $850 million to $920 million.

What is USANA Health Sciences, Inc.'s initial fiscal year 2024 diluted EPS guidance?

USANA Health Sciences, Inc. provided initial fiscal year 2024 diluted EPS guidance of $2.40 to $3.00.

What strategic initiatives did USANA Health Sciences, Inc. (NYSE: USNA) make progress on in 2023?

USANA Health Sciences, Inc. made progress on several strategic initiatives in 2023, including commencing operations in India, USANA's 25th global market.