USANA Health Sciences Reports Third Quarter 2024 Results

Rhea-AI Summary

USANA Health Sciences reported its Q3 2024 financial results, showing a 6% decline in net sales to $200 million compared to Q3 2023. Diluted EPS decreased by 5% to $0.56. The company updated its fiscal year 2024 outlook, projecting net sales of approximately $850 million and diluted EPS of $2.45.

Key highlights include:

• Active customers decreased by 3% to 452,000
• Asia Pacific region accounted for 80% of consolidated net sales
• Americas and Europe region represented 20% of consolidated net sales
• $30 million generated in operating cash flow
• $365 million in cash and cash equivalents, remaining debt-free

The company cited continued top-line headwinds across key markets, with challenges in attracting new customers due to cautious consumer sentiment, particularly in mainland China.

Positive

• Generated $30 million in operating cash flow during Q3
• Maintained a strong balance sheet with $365 million in cash and no debt
• Generated $47 million of free cash flow year-to-date

Negative

• Net sales decreased 6% to $200 million compared to Q3 2023
• Diluted EPS declined 5% to $0.56 compared to Q3 2023
• Active customers decreased 3% to 452,000 compared to Q3 2023
• Lowered fiscal year 2024 net sales and EPS outlook

Insights

Financial Analyst

USANA Health Sciences' Q3 2024 results show a challenging environment with declining sales and customer numbers. Net sales decreased 6% year-over-year to $200 million, while diluted EPS fell 5% to $0.56. The company's largest market, mainland China, continues to face headwinds in customer acquisition and spending.

Key points:

• Active customers declined 3% YoY to 452,000
• Asia Pacific region, representing 80% of sales, saw a 6% decline
• Americas and Europe region declined 7%
• Full-year guidance lowered: net sales now $850 million (previously $850-880 million), EPS $2.45 (previously $2.40-2.55)

Despite challenges, USANA maintains a strong financial position with $365 million in cash, no debt and $30 million in Q3 operating cash flow. The company's focus on product innovation and sales force engagement may help stabilize performance, but near-term macroeconomic pressures persist.

Market Research Analyst

USANA's Q3 results reflect broader consumer sentiment challenges affecting the direct selling industry. The 6% sales decline and lowered guidance suggest a cautious outlook for the remainder of 2024. However, there are some positive indicators:

• New product launches (Celavive Resurfacing Serum and Whey Protein Isolate) demonstrate commitment to innovation
• Reorganized commercial team focusing on enhancing value proposition
• Strong cash position ($365 million) provides flexibility for future investments

The company's performance in Greater China, its largest market, will be important to watch. While sales declined 4%, active customers increased 6% YoY, indicating potential for future growth. The impact of China's stimulus initiatives remains uncertain but could provide a boost if consumer spending improves. Investors should monitor USANA's ability to execute its five key initiatives and adapt to changing market conditions in the coming quarters.

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal third quarter ended September 28, 2024.

Key Financial & Operating Results

• Third quarter net sales were $200 million versus $213 million during Q3 2023.
• Third quarter diluted EPS was $0.56 as compared with $0.59 during Q3 2023.
• Company updates fiscal year 2024 net sales and diluted EPS outlook to approximately $850 million and $2.45, respectively (previously $850 million to $880 million and $2.40 to $2.55).

Q3 2024 Financial Performance

Consolidated Results
Net Sales	$200 million	-6% vs. Q3 2023
		No meaningful YOY FX impact
		-6% sequentially
Diluted EPS	$0.56	-5% vs. Q3 2023
		+4% sequentially
Active Customers	452,000	-3% vs. Q3 2023
		-3% sequentially

“Third quarter operating results reflected continued top line headwinds across many of our key markets,” said Jim Brown, President and Chief Executive Officer. “Our sales force continued to face challenges in attracting new customers as consumer sentiment remained cautious, including in our largest market, mainland China. Despite these challenges, we remain confident in our direction and continue to make progress on the five key initiatives that underpin our long-term strategy. Our commercial team, which was reorganized earlier this year, has been executing on these initiatives to enhance the overall value proposition of our business to our customers and we are beginning to see results in several of these areas.

“During the quarter, we continued to prioritize engagement with our sales leaders, highlighted by our Americas & Europe Convention in Las Vegas, Nevada during August. Training and development were key focus areas at this event, with an emphasis on actionable initiatives to help our sales leaders grow their businesses. Feedback has been positive and leaders are actively adopting these new initiatives.

“We have also prioritized our product innovation strategy with an emphasis on increasing the cadence with which we introduce new and upgraded premium products relevant to our customers’ needs. Illustrative of this effort, we launched two new products at our recent event in Las Vegas: a Celavive Resurfacing Serum and a Whey Protein Isolate.”

Q3 2024 Regional Results:

Asia Pacific Region
Net Sales	$160 million	-6% vs. Q3 2023
		No meaningful YOY FX impact
		-6% sequentially
		80% of consolidated net sales
Active Customers	360,000	-1% vs. Q3 2023
		-2% sequentially
Asia Pacific Sub-Regions
Greater China
Net Sales	$102 million	-4% vs. Q3 2023
		-5% constant currency vs. Q3 2023
		-11% sequentially
Active Customers	243,000	+6% vs. Q3 2023
		-3% sequentially
North Asia
Net Sales	$21 million	-15% vs. Q3 2023
		-12% constant currency vs. Q3 2023
		+4% sequentially
Active Customers	41,000	-16% vs. Q3 2023
		-2% sequentially
Southeast Asia Pacific
Net Sales	$37 million	-5% vs. Q3 2023
		-6% constant currency vs. Q3 2023
		+5% sequentially
Active Customers	76,000	-8% vs. Q3 2023
		-1% sequentially

Americas and Europe Region
Net Sales	$40 million	-7% vs. Q3 2023
		-6% constant currency vs. Q3 2023
		-5% sequentially
		20% of consolidated net sales
Active Customers	92,000	-10% vs. Q3 2023
		-7% sequentially

Balance Sheet and Share Repurchase Activity

The Company generated $30 million in operating cash flow during the third quarter and ended the quarter with $365 million in cash and cash equivalents while remaining debt-free. The Company did not repurchase any shares during the quarter. As of the end of the third quarter, 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
	Target	Previous Range
Consolidated Net Sales	$850 million	$850 - $880 million
Diluted EPS	$2.45	$2.40 - $2.55

“Third quarter net sales were modestly below expectations as we continue to see downward pressure on customer acquisition and consumer spending in several key markets, resulting in lower customer counts and average spend per customer,” said Doug Hekking, Chief Financial Officer. “We are monitoring the recently-announced stimulus initiatives in China, but we do not expect them to meaningfully impact our near-term operating results. Accordingly, we have adjusted our fiscal 2024 guidance to reflect year-to-date operating performance as well as promotional activity planned for the fourth quarter. Notwithstanding the macroeconomic challenges we have faced in 2024, our business fundamentals remain strong. We’ve generated $47 million of free cash flow year-to-date and our balance sheet remains pristine with $365 million of cash and no debt.”

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, October 23, 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 that our Associate compensation plan, or changes that we make to the compensation plan, will not produce desired results, benefit our business or, in some cases, could harm our business; 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
	September 28, 2024				September 30, 2023
Net sales	$	200,221			$	213,365
Cost of sales		39,257				42,529
Gross profit		160,964				170,836
Operating expenses:
Associate incentives		84,068				89,926
Selling, general and administrative		61,295				63,303
Total operating expenses		145,363				153,229
Earnings from operations		15,601				17,607
Other income (expense):
Interest income		3,142				2,733
Interest expense		(49	)			(43	)
Other, net		(86	)			234
Other income (expense), net		3,007				2,924
Earnings before income taxes		18,608				20,531
Income taxes		8,001				9,184
Net earnings	$	10,607			$	11,347
Earnings per common share
Basic	$	0.56			$	0.59
Diluted	$	0.56			$	0.59
Weighted average common shares outstanding
Basic		19,078				19,245
Diluted		19,083				19,372

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)
	As of September 28, 2024			As of December 30, 2023
ASSETS
Current assets
Cash and cash equivalents	$	364,889		$	330,420
Inventories		63,984			61,454
Prepaid expenses and other current assets		22,318			25,872
Total current assets		451,191			417,746
Property and equipment, net		98,033			99,814
Goodwill		17,196			17,102
Intangible assets, net		29,237			29,919
Deferred tax assets		16,823			13,284
Other assets*		58,828			54,892
Total assets	$	671,308		$	632,757
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	7,041		$	10,070
Line of credit - short term		—			786
Other current liabilities		107,738			107,989
Total current liabilities		114,779			118,845
Deferred tax liabilities		4,727			4,552
Other long-term liabilities		18,715			12,158
Stockholders' equity		533,087			497,202
Total liabilities and stockholders' equity	$	671,308		$	632,757

*Other assets include noncurrent inventories of $2,938 and $3,128 as of 28-Sep-24 and 30-Dec-23, respectively. Total inventories were $66,922 and $64,582 as of 28-Sep-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
	September 28, 2024						September 30, 2023
Asia Pacific
Greater China	$	102,261		51.1	%		$	106,609		50.0	%		$	(4,348	)		(4.1	%)		$	865			(4.9	%)
Southeast Asia Pacific		37,267		18.6	%		$	39,151		18.3	%			(1,884	)		(4.8	%)			561			(6.2	%)
North Asia		20,541		10.2	%		$	24,244		11.4	%			(3,703	)		(15.3	%)			(721	)		(12.3	%)
Asia Pacific Total		160,069		79.9	%			170,004		79.7	%			(9,935	)		(5.8	%)			705			(6.3	%)
Americas and Europe		40,152		20.1	%			43,361		20.3	%			(3,209	)		(7.4	%)			(727	)		(5.7	%)
	$	200,221		100.0	%		$	213,365		100.0	%		$	(13,144	)		(6.2	%)		$	(22	)		(6.2	%)

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES ACTIVE ASSOCIATES AND ACTIVE PREFERRED CUSTOMERS BY REGION (unaudited)
Active Associates by Region(1)
(unaudited)
	As of September 28, 2024					As of September 30, 2023
Asia Pacific:
Greater China	65,000		34.6	%		69,000		34.0	%
Southeast Asia Pacific	52,000		27.6	%		55,000		27.1	%
North Asia	28,000		14.9	%		33,000		16.2	%
Asia Pacific Total	145,000		77.1	%		157,000		77.3	%
Americas and Europe	43,000		22.9	%		46,000		22.7	%
	188,000		100.0	%		203,000		100.0	%

Active Preferred Customers by Region(2)
(unaudited)
	As of September 28, 2024					As of September 30, 2023
Asia Pacific:
Greater China	178,000		67.4	%		161,000		61.7	%
Southeast Asia Pacific	24,000		9.1	%		28,000		10.7	%
North Asia	13,000		4.9	%		16,000		6.1	%
Asia Pacific Total	215,000		81.4	%		205,000		78.5	%
Americas and Europe	49,000		18.6	%		56,000		21.5	%
	264,000		100.0	%		261,000		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/20241022996115/en/

Investor contact:

Andrew Masuda

Investor Relations

(801) 954-7201

investor.relations@usanainc.com

Media contact:

(801) 954-7280

media@usanainc.com

Source: USANA Health Sciences, Inc.

FAQ

What were USANA's Q3 2024 net sales?

USANA's Q3 2024 net sales were $200 million, representing a 6% decrease compared to Q3 2023.

How did USANA's diluted EPS change in Q3 2024?

USANA's diluted EPS for Q3 2024 was $0.56, a 5% decrease compared to $0.59 in Q3 2023.

What is USANA's updated fiscal year 2024 outlook?

USANA updated its fiscal year 2024 outlook to approximately $850 million in net sales and $2.45 in diluted EPS.

How many active customers did USANA have in Q3 2024?

USANA reported 452,000 active customers in Q3 2024, a 3% decrease compared to Q3 2023.

What was USANA's cash position at the end of Q3 2024?

USANA ended Q3 2024 with $365 million in cash and cash equivalents, remaining debt-free.