USANA Health Sciences Announces Record Third Quarter 2012 Financial Results

USANA Health Sciences Announces Record Third Quarter 2012 Financial Results

  • Third quarter net sales increased by 15.1% to $165.2 million

  • Earnings per share increased by 45.7% to $1.18 for the quarter

  • Company raises 2012 financial outlook

SALT LAKE CITY--(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYS: USNA) today announced record financial results for its fiscal third quarter ended September 29, 2012.

Financial Performance


Net sales for the third quarter of 2012 increased by 15.1% to $165.2 million, compared with $143.5 million in the prior-year period. The growth in net sales was driven by increases in both the Company's Asia Pacific and North America/Europe regions. Changes in currency exchange rates reduced net sales by nearly $1.0 million.

Net earnings for the third quarter increased to $17.5 million, an increase of 41.2%, compared with the prior-year period. This increase was due primarily to higher net sales, lower relative Associate incentive expense, and a meaningfully lower effective tax rate of 28.2% for the quarter. Earnings per share for the quarter increased by 45.7% to $1.18, compared with $0.81 in the third quarter of the prior year. This improvement in earnings per share can be attributed to higher net earnings and a lower number of diluted shares outstanding, which resulted from the Company's share repurchases over the last 12 months. Total diluted common shares outstanding as of September 29, 2012 were 14,884, as compared with 15,205 as of October 1, 2011.

"We believe USANA's exceptional results this quarter are largely due to the strategies we set into place during 2011 and the first part of 2012, which have combined to generate strong momentum for USANA," said Mr. Dave Wentz, Chief Executive Officer. "A highlight of the quarter was our 20th anniversary celebration at our International Convention in Salt Lake City, where we had record attendance and record sales. A significant part of our convention was the unveiling of our personalization strategy, which focuses on our customers and their experience with us. As part of this strategy, we announced MyHealthPak's availability in our Asia Pacific region and the launch of new tools and applications designed to help our Associates customize USANA's products for their customers. Personalization and customization are key components of our long-term strategy to grow our business and deliver value to both our customers and shareholders."

Regional Results

Net sales in the Asia Pacific region increased by 21.6% to $102.7 million, compared with $84.5 million for the third quarter of the prior year. This improvement was due to strong sales growth in Southeast Asia/Pacific and Greater China. This sales growth was driven by a 21.6% increase in the number of active Associates in Asia Pacific, as well as price increases in certain markets that were implemented in the first quarter. Active Associate growth was driven by double-digit growth in Greater China and Southeast Asia and, to a lesser extent, the addition of Thailand to the region.

"We are successfully executing our strategy in the Asia Pacific region," continued Mr. Wentz. "We reported local currency sales growth in nearly all of our Asia Pacific markets and double-digit growth in Greater China and Southeast Asia. We are encouraged by the sales and customer growth in Greater China this quarter, a region that represents a meaningful growth opportunity for USANA in the future. Consequently, growing Greater China is one of the pillars of our worldwide strategy."

During the third quarter of 2012, net sales in the North America/Europe region increased by 5.9% to $62.5 million, compared with $59.0 million in the prior-year period. The number of Active Associates in North America/Europe declined modestly, compared with the third quarter of 2011.

Mr. Wentz added, "Sales in our North America region, which continues to show indications of improvement, were aided by record Convention sales in the U.S. and a market-specific promotion in Mexico. Additionally, we see Associate productivity improving in this region. As we continue to execute our growth strategy in this region, we remain optimistic that it will continue to grow in the foreseeable future."

The Company maintained its successful track record of generating meaningful levels of cash from operations and ended the quarter with approximately $77 million in cash and cash equivalents. Cash generated from operations totaled $19.7 million for the quarter. During the quarter, the Company invested $8.9 million to repurchase 200,000 shares of the Company's stock.

Outlook

The Company provided the following updated financial outlook for 2012:

  • Consolidated net sales approaching $645 million, versus the previous outlook of between $630 million and $640 million.

  • Earnings per share between $4.35 and $4.40, versus the previous outlook of between $4.10 and $4.20.

Chief Financial Officer Doug Hekking commented, "In light of our strong third-quarter performance, and the current momentum we are seeing in the business, we are updating our financial outlook for the remainder of the year. Actual results and our updated forecast for the year would make 2012 USANA's tenth consecutive year of record sales."

Conference Call

USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, October 24, 2012 at 11:00 AM Eastern Time. Investors may listen to the call by accessing USANA's website athttp://www.usanahealthsciences.com.

About USANA

USANA develops and manufactures high-quality nutritional, personal care, and weight-management 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 and Belgium. More information on USANA can be found at http://www.usanahealthsciences.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, reliance upon our network of independent Associates, the governmental regulation of our products, manufacturing and marketing risks, adverse publicity risks, and risks associated with our international expansion. 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.

USANA Health Sciences, Inc.

Consolidated Statements of Earnings

(In thousands, except per share data)

(Unaudited)

Quarter Ended

Nine Months Ended

1-Oct-11

29-Sep-12

1-Oct-11

29-Sep-12

Net sales

$

143,501

$

165,175

$

435,992

$

480,196

Cost of sales

25,202

30,343

77,072

85,633

Gross profit

118,299

134,832

358,920

394,563

Operating expenses

Associate incentives

66,158

70,406

198,725

209,316

Selling, general and administrative

33,365

40,342

103,038

115,150

Earnings from operations

18,776

24,084

57,157

70,097

Other income (expense)

133

267

234

177

Earnings before income taxes

18,909

24,351

57,391

70,274

Income taxes

6,524

6,861

19,800

22,288

NET EARNINGS

$

12,385

$

17,490

$

37,591

$

47,986

Earnings per share - diluted

$

0.81

$

1.18

$

2.39

$

3.19

Weighted average shares outstanding - diluted

15,205

14,884

15,712

15,064

USANA Health Sciences, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

As of

As of

31-Dec-11

29-Sep-12

ASSETS

Current Assets

Cash and cash equivalents

$

50,353

$

76,601

Inventories

36,968

33,296

Other current assets

18,738

28,754

Total current assets

106,059

138,651

Property and equipment, net

60,754

62,052

Goodwill

17,740

17,797

Intangible assets, net

42,637

42,022

Deferred income taxes

11,033

6,705

Other assets

6,273

7,057

Total assets

$

244,496

$

274,284

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts payable

$

7,952

$

6,906

Other current liabilities

51,744

59,881

Total current liabilities

59,696

66,787

Other long-term liabilities

942

946

Deferred income taxes

9,948

9,571

Stockholders' equity

173,910

196,980

Total liabilities and stockholders' equity

$

244,496

$

274,284

USANA Health Sciences, Inc.

Sales by Region

(Unaudited)

(In thousands)

Quarter Ended

1-Oct-11

29-Sep-12

Region

North America / Europe

$

59,028

41.1

%

$

62,490

37.8

%

Asia Pacific

Southeast Asia/Pacific

30,117

21.0

%

35,709

21.6

%

Greater China

47,012

32.8

%

59,722

36.2

%

North Asia

7,344

5.1

%

7,254

4.4

%

Asia Pacific Total

84,473

58.9

%

102,685

62.2

%

Total

$

143,501

100.0

%

$

165,175

100.0

%

Active Associates by Region(1)

(Unaudited)

As of

1-Oct-11

29-Sep-12

Region

North America / Europe

80,000

37.4

%

79,000

32.6

%

Asia Pacific

Southeast Asia/Pacific

47,000

22.0

%

58,000

24.0

%

Greater China

78,000

36.4

%

97,000

40.1

%

North Asia

9,000

4.2

%

8,000

3.3

%

Asia Pacific Total

134,000

62.6

%

163,000

67.4

%

Total

214,000

100.0

%

242,000

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 product at any time during the most recent three-month period, either for personal use or for resale.

Active Preferred Customers by Region(2)

(Unaudited)

As of

1-Oct-11

29-Sep-12

Region

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