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Usana Health Sciences Inc (USNA) SEC Filing 8-K Material Event for the period ending Tuesday, October 26, 2021

Usana Health Sciences Inc

CIK: 896264 Ticker: USNA
Exhibit 99.1


USANA Health Sciences Reports Third Quarter Results

SALT LAKE CITY--(BUSINESS WIRE)--October 26, 2021--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal third quarter ended October 2, 2021, which were modestly ahead of the preliminary outlook the Company provided on September 16, 2021.

Key Financial & Operating Highlights

  • Third quarter net sales were $274.4 million as compared with $298.5 million during the third quarter of the prior year.
  • Third quarter diluted EPS were $1.36 versus $1.44 during the third quarter of 2020.
  • Reiterates fiscal 2021 net sales and diluted EPS outlook, which was provided on September 16, 2021.
  • Company expects to generate approximately $130 million of free cash flow in fiscal 2021.

Q3 2021 Financial Performance

Consolidated Results

Net Sales

$274.4 million

  • -8% vs. prior-year quarter
  • -11% constant currency vs. prior-year quarter
  • +$9.9 million YOY FX impact, or +3%

Diluted EPS

$1.36

  • -6% vs. prior-year quarter
  • Diluted shares of 20.2 million, -5%

Active Customers

576,000

  • -11% vs. prior-year quarter

“As we indicated a month ago, the operating environment remains challenging across several of our key markets due, in great part, to disruptions and lockdowns related to the COVID-19 pandemic,” said Kevin Guest, Chief Executive Officer and Chairman of the Board. “Additionally, the year-over-year comparison was difficult given the significant short-term sales program that we offered in the prior year quarter. Notwithstanding these challenges, we continue to execute our growth strategy, which is centered on generating sustainable customer growth.”


Q3 2021 Regional Results:

Asia Pacific Region

Net Sales

$220.9 million

  • -9% vs. prior-year quarter
  • Constant currency net sales: -12%
  • 81% of consolidated net sales

Active Customers

443,000

  • -12% vs. prior-year quarter
  • -14% sequentially

Asia Pacific Sub-Regions

Greater China

Net Sales

$123.2 million

  • -9% vs. prior-year quarter
  • Constant currency net sales: -15%

Active Customers

246,000

  • -13% vs. prior-year quarter
  • -19% sequentially

North Asia

Net Sales

$33.1 million

  • +14% vs. prior-year quarter
  • Constant currency net sales: +12%

Active Customers

63,000

  • +5% vs. prior-year quarter
  • -5% sequentially

Southeast Asia Pacific

Net Sales

$64.6 million

  • -15% vs. prior-year quarter
  • Constant currency net sales: -15%

Active Customers

134,000

  • -15% vs. prior-year quarter
  • -7% sequentially

     

Americas and Europe Region

Net Sales

$53.5 million

  • -7% vs. prior-year quarter
  • Constant currency net sales: -9%
  • 19% of consolidated net sales

Active Customers

133,000

  • -10% vs. prior-year quarter
  • -4% sequentially

Mr. Guest added, “We made progress on several strategic initiatives during the quarter. Enhancing the overall shopping experience for our customers remains a high priority, and to that end, we rolled out additional features and functionality within our China shopping app, as well as a new web-based shopping cart in China. Although our introduction of certain new products has been delayed until 2022, we are actively engaged in bringing new and innovative products to market. Overall, we remain confident that the successful execution of our strategy will deliver long-term, sustainable growth.”

Balance Sheet and Share Repurchase Activity

The Company ended the quarter with $249 million in cash and cash equivalents and no debt after repurchasing 523,000 shares for $50 million. Diluted shares outstanding totaled 20.2 million during the third quarter of 2021. As of October 2, 2021, the Company had approximately $137 million remaining under the share repurchase authorization, following the Company’s increase of the repurchase authorization on September 16, 2021.

Fiscal 2021 Outlook

The Company is reiterating its net sales and earnings per share outlook for fiscal year 2021, which was provided on September 16, 2021.

Fiscal Year 2021 Outlook

 

 

Range

Consolidated Net Sales

$1.18 - $1.20 billion

Diluted EPS

$5.80 - $6.00


The Company maintains a 52/53-week fiscal year. Fiscal 2020 was a 53-week year and included one additional week of sales in the fourth quarter of 2020 compared to Fiscal 2021.

Doug Hekking, Chief Financial Officer, said, “We are reiterating our outlook for fiscal 2021 with third quarter results coming in just ahead of the projections we provided on September 16th. Our outlook incorporates ongoing investments required to achieve long-term growth objectives that may impact near-term operating margins.”

Management Commentary Document and Conference Call

For more 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 27, 2021 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. Free cash flow is a non-GAAP financial measure that we believe provides investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment. We believe it provides a measure of our ability to fund various discretionary business initiatives, including acquisitions and share repurchase. Free cash flow is calculated by subtracting net capital expenditures from net cash provided by operating activities.


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



2-Oct-21

 

26-Sep-20

 

2-Oct-21

 

26-Sep-20









 
Net sales

$

274,352

 


$

298,513

 


$

919,165


$

824,123

 

Cost of sales

 

50,715

 


 

56,358

 


 

165,380


 

150,091

 

Gross profit

 

223,637

 


 

242,155

 


 

753,785


 

674,032

 

Operating expenses:







Associate incentives

 

116,222

 


 

131,144

 


 

404,580


 

358,065

 

Selling, general and administrative

 

66,645

 


 

65,656

 


 

210,518


 

192,014

 

Earnings from operations

 

40,770

 


 

45,355

 


 

138,687


 

123,953

 

Other income (expense), net

 

(420

)


 

(1,080

)


 

309


 

(536

)

Earnings before income taxes

 

40,350

 


 

44,275

 


 

138,996


 

123,417

 

Income taxes

 

13,020

 


 

13,769

 


 

42,811


 

38,382

 

NET EARNINGS

$

27,330

 


$

30,506

 


$

96,185


$

85,035

 









 








 
Earnings per share - diluted

$

1.36

 


$

1.44

 


$

4.68


$

4.00

 

Weighted average shares outstanding - diluted

 

20,156

 


 

21,170

 


 

20,566


 

21,283

 


USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)




 


As of


As of



2-Oct-21


2-Jan-21

ASSETS



Current Assets



Cash and cash equivalents

$

248,695


$

311,917

Inventories

 

96,316


 

90,224

Prepaid expenses and other current assets

 

23,414


 

23,145

Total current assets

 

368,425


 

425,286





 
Property and equipment, net

 

100,957


 

100,445

Goodwill

 

17,510


 

17,367

Intangible assets, net

 

30,312


 

30,796

Deferred tax assets

 

5,465


 

4,640

Other assets

 

56,277


 

62,353

Total assets

$

578,946


$

640,887





 
LIABILITIES AND STOCKHOLDERS' EQUITY



Current Liabilities



Accounts payable

$

13,706


$

18,195

Other current liabilities

 

144,258


 

149,878

Total current liabilities

 

157,964


 

168,073





 
Deferred tax liabilities

 

7,840


 

12,009

Other long-term liabilities

 

14,063


 

19,155





 
Stockholders' equity

 

399,079


 

441,650

Total liabilities and stockholders' equity

$

578,946


$

640,887


USANA Health Sciences, Inc.
Sales by Region
(unaudited)
(in thousands)
















 


Quarter Ended









October 2, 2021
September 26, 2020
Change from prior year
Currency
impact on
sales

% change
excluding
currency impact
Asia Pacific















Greater China

$

123,235


44.9

%


$

136,013


45.5

%


$

(12,778

)


(9.4

%)


$

7,457


(14.9

%)

Southeast Asia Pacific

 

64,570


23.5

%


 

76,313


25.6

%


 

(11,743

)


(15.4

%)


 

85


(15.5

%)

North Asia

 

33,068


12.1

%


 

28,969


9.7

%


 

4,099

 


14.1

%


 

770


11.5

%

Asia Pacific Total

 

220,873


80.5

%


 

241,295


80.8

%


 

(20,422

)


(8.5

%)


 

8,312


(11.9

%)

















 
Americas and Europe

 

53,479


19.5

%


 

57,218


19.2

%


 

(3,739

)


(6.5

%)


 

1,570


(9.3

%)



$

274,352


100.0

%


$

298,513


100.0

%


$

(24,161

)


(8.1

%)


$

9,882


(11.4

%)


Active Associates by Region(1)
(unaudited)








 


As of


October 2, 2021
September 26, 2020
Asia Pacific







Greater China

81,000


29.8%


91,000


29.1%

Southeast Asia Pacific

90,000


33.1%


113,000


36.1%

North Asia

39,000


14.3%


39,000


12.4%

Asia Pacific Total

210,000


77.2%


243,000


77.6%









 
Americas and Europe

62,000


22.8%


70,000


22.4%



272,000


100.0%


313,000


100.0%









 








 
Active Preferred Customers by Region (2)
(unaudited)








 


As of



October 2, 2021


September 26, 2020

Asia Pacific







Greater China

165,000


54.3%


193,000


57.3%

Southeast Asia Pacific

44,000


14.4%


45,000


13.4%

North Asia

24,000


7.9%


21,000


6.2%

Asia Pacific Total

233,000


76.6%


259,000


76.9%









 
Americas and Europe

71,000


23.4%


78,000


23.1%



304,000


100.0%


337,000


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:
Patrique Richards
Investor Relations
(801) 954-7961
investor.relations@usanainc.com

Media contact:
Dan Macuga
Public Relations
(801) 954-7280

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Ticker: USNA
CIK: 896264
Form Type: 8-K Corporate News
Accession Number: 0001157523-21-001255
Submitted to the SEC: Tue Oct 26 2021 4:18:59 PM EST
Accepted by the SEC: Tue Oct 26 2021
Period: Tuesday, October 26, 2021
Industry: Medicinal Chemicals And Botanical Products
Events:
  1. Earnings Release
  2. Financial Exhibit
  3. Regulated Disclosure

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