USANA Health Sciences Reports Strong Third Quarter Growth; Raises Full-Year 2020 Net Sales and EPS Outlook

Rhea-AI Summary

USANA Health Sciences reported a significant 14.5% increase in net sales for Q3 2020, totaling $298.5 million, driven by high product demand and effective incentive programs. Diluted EPS reached a record $1.44, up by 32.1% year-over-year. Active customers grew to 650,000, reflecting a 16.5% increase. The company raised its full-year 2020 net sales and EPS outlook to $1.090 - $1.115 billion and $5.15 - $5.45, respectively. USANA ended the quarter with $278.4 million in cash and no debt, highlighting a strong financial position.

Positive

• Net sales increased 14.5% to $298.5 million.
• Diluted EPS reached a record $1.44, up 32.1% year-over-year.
• Active customers increased 16.5% to a record 650,000.
• Company raised full-year 2020 net sales and EPS guidance.

Negative

• No incentive offerings of a similar magnitude are scheduled for Q4 2020.

SALT LAKE CITY--(BUSINESS WIRE)--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal third quarter ended September 26, 2020.

Key Financial & Operating Highlights

• Third quarter net sales increased 14.5% year-over-year to $298.5 million due to strong product demand and successful incentive programs.
• Diluted EPS increased 32.1% year-over-year to a record $1.44.
• Active customers increased 16.5% year-over-year to a record 650,000.
• Company raises full-year 2020 Net Sales and EPS outlook.

Q3 2020 Financial Performance

Consolidated Results
Net Sales	$298.5 million	+14.5% vs. prior-year quarter +13.6% constant currency vs. prior-year quarter +$2.5 million FX impact, or +0.9%
Diluted EPS	$1.44	+32.1% vs. prior-year quarter Diluted shares of 21.2 million, -4.7%
Active Customers	650,000	+16.5% vs. prior-year quarter
Cash & Cash Equivalents	$278.4 million	Ended quarter with no debt

“This was an all-around very successful quarter for the Company,” said Kevin Guest, Chief Executive Officer and Chairman of the Board. “During the quarter, our strategies led to strong global customer demand for our high-quality nutritional products. We also offered various incentives and promotions that were well received and contributed meaningfully to sales and customer growth for the quarter.”

“Of further note, USANA’s Virtual Events strategy proved successful during the quarter. Our annual Americas and Europe Convention and our China National Sales Meeting were both held virtually, and this allowed us to reach larger audiences than did many of our past, in-person events. Throughout 2020, our management team and Associate sales force have demonstrated their ability to modify strategies and adapt to continually changing conditions, all in an effort to continue to advance USANA’s mission of health and wellness. We look forward to a strong finish to 2020 and delivering further growth in 2021.”

Q3 2020 Regional Results:

Asia Pacific Region
Net Sales	$241.3 million	+15.7% vs. prior-year quarter Constant currency net sales: +13.9% +$3.7 million FX impact, or +1.8% 80.8% of consolidated net sales
Active Customers	502,000	+15.4% vs. prior-year quarter
Asia Pacific Sub-Regions
Greater China
Net Sales	$136.0 million	+3.9% vs. prior-year quarter Constant currency net sales: +2.7%
Active Customers	284,000	+4.0% vs. prior-year quarter +2.2% sequentially
North Asia
Net Sales	$29.0 million	+24.3% vs. prior-year quarter Constant currency net sales: +23.7%
Active Customers	60,000	+20.0% vs. prior-year quarter +7.1% sequentially
Southeast Asia Pacific
Net Sales	$76.3 million	+40.5% vs. prior-year quarter Constant currency net sales: +36.7%
Active Customers	158,000	+41.1% vs. prior-year quarter +22.5% sequentially

Americas and Europe Region
Net Sales	$57.2 million	+10.0% vs. prior-year quarter Constant currency net sales: +12.2% -$1.2 million FX impact, or -2.2% 19.2% of consolidated net sales
Active Customers	148,000	+20.3% vs. prior-year quarter +8.8% sequentially

Balance Sheet

The Company ended the quarter with $278.4 million in cash and cash equivalents and no debt. During the quarter, the Company did not repurchase any shares of common stock and, as of the end of the third quarter, there was approximately $73 million remaining under the current share repurchase authorization.

Fiscal 2020 Outlook

The Company is updating its consolidated net sales and earnings per share outlook for fiscal year 2020.

Fiscal Year 2020 Outlook
	Revised Range	Previous Range
Consolidated Net Sales	$1.090 - $1.115 billion	$1.050 - $1.100 billion
Diluted EPS	$5.15 - $5.45	$4.70 - $5.25

Doug Hekking, Chief Financial Officer, said, “In light of our third quarter results and our expectations for the fourth quarter, we are raising our net sales and EPS guidance. While we do not have incentive offerings of a similar magnitude scheduled for the fourth quarter, we expect the business to produce solid results and carry momentum into 2021. Going forward, we will continue to focus our efforts on balancing the need for financial flexibility with continued investments in opportunities that allow us to execute our long-term growth strategies.”

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, October 21, 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.

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					Nine Months Ended
		26-Sep-20			28-Sep-19		26-Sep-20			28-Sep-19
Net sales		$ 298,513			$ 260,598		$ 824,123			$ 789,604
Gross profit		242,155			212,779		674,032			649,390
Operating expenses
Associate incentives		131,144			111,059		358,065			345,100
Selling, general and administrative		65,656			66,262		192,014			202,671
Earnings from operations		45,355			35,458		123,953			101,619
Other income (expense)		(1,080	)		430		(536	)		3,075
Earnings before income taxes		44,275			35,888		123,417			104,694
Income taxes		13,769			11,666		38,382			34,922
NET EARNINGS		$ 30,506			$ 24,222		$ 85,035			$ 69,772
Earnings per share - diluted		$ 1.44			$ 1.09		$ 4.00			$ 3.01
Weighted average shares outstanding - diluted		21,170			22,223		21,283			23,173

USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
		As of		As of
ASSETS		26-Sep-20		28-Dec-19
Current Assets
Cash and cash equivalents		$ 278,418		$ 234,830
Inventories		78,167		68,905
Prepaid expenses and other current assets		29,447		25,544
Total current assets		386,032		329,279
Property and equipment, net		99,400		95,233
Goodwill		16,894		16,636
Intangible assets, net		29,748		29,840
Deferred income taxes		4,618		3,090
Other assets		40,840		42,856
Total assets		$ 577,532		$ 516,934
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable		$ 14,173		$ 12,525
Other current liabilities		146,690		123,573
Total current liabilities		160,863		136,098
Deferred income taxes		8,248		10,282
Other long-term liabilities		19,304		18,842
Stockholders' equity		389,117		351,712
Total liabilities and stockholders' equity		$ 577,532		$ 516,934

USANA Health Sciences, Inc.
Sales by Region
(unaudited)
(in thousands)
	Quarter Ended
	26-Sep-20						28-Sep-19						Change from prior year						Currency impact on sales				% change excluding currency impact
Asia Pacific
Greater China	$	136,013		45.5	%		$	130,947		50.3	%		$	5,066		3.9	%		$	1,510			2.7	%
Southeast Asia Pacific		76,313		25.6	%			54,327		20.8	%			21,986		40.5	%			2,032			36.7	%
North Asia		28,969		9.7	%			23,299		8.9	%			5,670		24.3	%			145			23.7	%
Asia Pacific Total		241,295		80.8	%			208,573		80.0	%			32,722		15.7	%			3,687			13.9	%
Americas and Europe		57,218		19.2	%			52,025		20.0	%			5,193		10.0	%			(1,167	)		12.2	%
	$	298,513		100.0	%		$	260,598		100.0	%		$	37,915		14.5	%		$	2,520			13.6	%

Active Associates by Region(1)
(unaudited)
	As of
	26-Sep-20				28-Sep-19
Asia Pacific
Greater China	91,000		29.1%		99,000		35.0%
Southeast Asia Pacific	113,000		36.1%		88,000		31.1%
North Asia	39,000		12.4%		34,000		12.0%
Asia Pacific Total	243,000		77.6%		221,000		78.1%
Americas and Europe	70,000		22.4%		62,000		21.9%
	313,000		100.0%		283,000		100.0%

Active Preferred Customers by Region (2)
(unaudited)
	As of
	26-Sep-20				28-Sep-19
Asia Pacific
Greater China	193,000		57.3%		174,000		63.3%
Southeast Asia Pacific	45,000		13.4%		24,000		8.7%
North Asia	21,000		6.2%		16,000		5.8%
Asia Pacific Total	259,000		76.9%		214,000		77.8%
Americas and Europe	78,000		23.1%		61,000		22.2%
	337,000		100.0%		275,000		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.