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USANA Health Sciences Reports Fourth Quarter and Fiscal Year 2023 Results

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.

 

Contacts

Investor contact:

Andrew Masuda

Investor Relations

(801) 954-7201

investor.relations@usanainc.com

Media contact:

Dan Macuga

Public Relations

(801) 954-7280

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