USANA Health Sciences Announces Third Quarter Financial Results

  USANA Health Sciences Announces Third Quarter Financial Results

  *Net sales increased by 5.2% to $173.7 million
  *Previously announced strategies implemented in second and third quarter
    result in 4.2% decrease in net earnings; EPS decreased 1.7% to $1.16
  *Company provides updated 2013 net sales and earnings growth outlook

Business Wire

SALT LAKE CITY -- October 22, 2013

USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for
its fiscal third quarter ended September 28, 2013.

Financial Performance

For the third quarter of 2013, net sales increased by 5.2% to $173.7 million,
compared with $165.2 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. Net sales for the quarter were negatively impacted by:
(i) an estimated $5.9 million due to the worldwide policy changes that the
Company implemented at the end of the second quarter of this year, which
require customers to purchase products in their home markets; (ii) $4.6
million due to the strategic price discounts that the Company announced at its
International Convention in August and earlier this year; and (iii) $2.0
million due to changes in currency exchange rates.

Net earnings for the third quarter decreased by 4.2% to $16.8 million,
compared with the prior-year period. This decrease was due primarily to higher
Associate Incentives expense, attributable to the enhancements that the
Company made to its Associate Compensation Plan at its August 2013
International Convention. Additionally, the effective tax rate for the third
quarter was 420 basis points, or $1.0 million, higher than the previous year,
due primarily to one-time tax benefits recognized in the third quarter of
2012. Earnings per share for the quarter decreased by 1.7% to $1.16, compared
with $1.18 in the third quarter of the prior year. This decrease in earnings
per share was attributable to lower net earnings, partially offset by a lower
number of diluted shares outstanding from the Company’s share repurchases
during the 12 months ended September 29, 2013. Total diluted common shares
outstanding as of September 28, 2013 were 14.4 million, compared with 14.9
million as of September 29, 2012.

“During the third quarter, we implemented a number of strategic initiatives at
our 2013 International Convention,” said Dave Wentz, the Company’s Chief
Executive Officer. “These initiatives, which include price reductions and
enhancements to our Associate compensation plan, are intended to drive
long-term, sustainable customer growth for USANA. The combination of these
initiatives and the worldwide policy changes that we introduced in the second
quarter had the meaningful impact that we anticipated on our third-quarter
results. Although it is still early, these initiatives have already produced
several anticipated positive results, including: (i) an increase of
approximately 30% in our worldwide Auto Order sales; (ii) an increase of
approximately 40% in the number of weekly commission checks earned by
Associates; and (iii) an increase of approximately 30% in the number of
first-time check earners with USANA. Going forward, we expect these
initiatives to contribute to the growth of our worldwide customer counts.”

Regional Results

Net sales in Asia Pacific increased by 4.6% to $107.4 million, compared with
$102.7 million for the third quarter of the prior year. This improvement was
due primarily to sales growth in the Southeast Asia Pacific region, which was
driven by meaningful growth in Singapore and Malaysia. Sales in the Greater
China region were flat, with significant growth in Mainland China and Taiwan,
offset by a sales decrease in Hong Kong.

Net sales in North America/Europe increased by 6.1% to $66.3 million, compared
with $62.5 million in the prior-year period. This improvement was due
primarily to sales growth in Mexico and Canada, as well as the addition of our
newest market, Colombia, which generated $1.4 million in sales during its
first quarter of operations. The sales growth in these markets reflected
increases in both the number of Active Associates and Preferred Customers.

“The performance of our North America region reflects the momentum we are
generating in Mexico, Canada and, most recently, Colombia,” continued Wentz.
“Our results in Greater China were in line with our expectations, considering
the worldwide policy changes that we implemented during the second quarter of
this year. Our expectations for Greater China have not changed and our team
continues to focus on growth in Mainland China. I am confident in the strength
of our underlying business in all of our regions and believe that we have
implemented the right strategies to drive long-term growth.”

The Company continued to generate significant cash from operations and ended
the quarter with $115.3 million in cash and cash equivalents. For the third
quarter, cash generated from operations totaled $17.3 million. During the
quarter, the Company did not repurchase any shares of its common stock and
ended the quarter with $13.6 million remaining under the board authorized
repurchase program.

Outlook

The Company provided the following updated consolidated net sales and earnings
per share outlook for 2013:

  *Consolidated net sales between $705 million and $710 million, versus the
    previous outlook of between $700 and $720 million
  *Earnings per share between $5.35 and $5.40, versus the previous outlook of
    between $5.30 and $5.45

Chief Financial Officer, Paul Jones, commented, “We are tightening our
guidance range as we head into the final quarter of 2013 and expect USANA to
once again deliver record results in 2013. Although we expect continued
pressure on our operating results for the next few quarters, we are confident
that we will deliver growth during this period. More importantly, we believe
that the strategies that we have implemented will increase our long-term
growth potential.”

Conference Call

USANA will hold a conference call and webcast to discuss this announcement
with investors on Wednesday, October 23, 2013 at 11:00 AM Eastern Time.
Investors may listen to the call by accessing USANA’s website at
http://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, Belgium
and Colombia. 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
                       29-Sep-12     28-Sep-13       29-Sep-12     28-Sep-13
                                                                   
Net sales              $ 165,175     $ 173,691       $ 480,196     $ 531,909
Cost of sales           30,343       31,491         85,633       93,657  
Gross profit             134,832       142,200         394,563       438,252
                                                                   
Operating
expenses
Associate                70,406        76,361          209,316       224,017
incentives
Selling, general
and                     40,342       41,145         115,150      126,527 
administrative
                                                                   
Earnings from            24,084        24,694          70,097        87,708
operations
                                                                   
Other income            267          76             177          (33     )
(expense)
Earnings before          24,351        24,770          70,274        87,675
income taxes
                                                                   
Income taxes            6,861        8,017          22,288       28,933  
                                                                   
NET EARNINGS           $ 17,490      $ 16,753        $ 47,986      $ 58,742  
                                                                   
                                                                
Earnings per           $ 1.18        $ 1.16          $ 3.19        $ 4.16    
share - diluted
Weighted average
shares                  14,884       14,393         15,064       14,132  
outstanding -
diluted
                                                                   
                                                                   

                                                          
USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                      
                                                 As of           As of
ASSETS                                           29-Dec-12       28-Sep-13
Current Assets
Cash and cash equivalents                        $ 70,839        $ 115,349
Inventories                                        36,481          45,671
Other current assets                              25,225         35,105
Total current assets                               132,545         196,125
                                                                 
Property and equipment, net                        61,751          60,432
Goodwill                                           17,890          18,105
Intangible assets, net                             42,085          42,078
Deferred income taxes                              5,956           3,562
Other assets                                      7,128          11,031
Total assets                                     $ 267,355       $ 331,333
                                                                 
                                                                 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                 $ 7,040         $ 8,061
Other current liabilities                         63,804         74,474
Total current liabilities                          70,844          82,535
                                                                 
                                                                 
Other long-term liabilities                        938             1,127
Deferred income taxes                              10,001          9,022
Stockholders' equity                              185,572        238,649
Total liabilities and stockholders' equity       $ 267,355       $ 331,333
                                                                 
                                                                 


USANA Health Sciences, Inc.
Sales by Region
(Unaudited)
(In thousands)
                                                       
                       Quarter Ended
                       29-Sep-12                       28-Sep-13
Region
                                                                       
North America          $ 62,490        37.8  %         $ 66,294        38.2  %
/ Europe
                                                                       
Asia Pacific
                                                                       
Southeast Asia           35,709        21.6  %           40,230        23.1  %
Pacific
                                                                       
Greater China            59,722        36.2  %           59,768        34.4  %
                                                                       
North Asia              7,254         4.4   %          7,399         4.3   %
                                                                       
Asia Pacific            102,685       62.2  %          107,397       61.8  %
Total
                                                                       
Total                  $ 165,175       100.0 %         $ 173,691       100.0 %
                                                                             
                                                                             


Active Associates by Region ^(1)
(Unaudited)
                                                          
                     As of
                     29-Sep-12                         28-Sep-13
Region
                                                                      
North
America /            79,000         32.6   %           82,000         33.5   %
Europe
                                                                      
Asia
Pacific
                                                                      
Southeast
Asia                 58,000         24.0   %           60,000         24.5   %
Pacific
                                                                      
Greater              97,000         40.1   %           94,000         38.3   %
China
                                                                      
North Asia           8,000          3.3    %           9,000          3.7    %
                                                                      
Asia
Pacific              163,000        67.4   %           163,000        66.5   %
Total
                                                                   
Total                242,000        100.0  %           245,000        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 for
resale.




Active Preferred Customers by Region ^(2)
(Unaudited)
                                                         
                      As of
                      29-Sep-12                        28-Sep-13
Region
                                                                     
North
America /             52,000        81.3   %           58,000        81.7   %
Europe
                                                                     
Asia Pacific
                                                                     
Southeast             6,000         9.4    %           8,000         11.3   %
Asia Pacific
                                                                     
Greater               5,000         7.8    %           3,000         4.2    %
China
                                                                     
North Asia            1,000         1.6    %           2,000         2.8    %
                                                                     
Asia Pacific          12,000        18.8   %           13,000        18.3   %
Total
                                                                  
Total                 64,000        100.0  %           71,000        100.0  %
                                                                     
                                                                     
(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.

Contact:

USANA Health Sciences, Inc.
Investors contact:
Patrique Richards, 801-954-7961
Investor Relations
investor.relations@us.usana.com
Media contact:
Dan Macuga, 801-954-7280
Public Relations
 
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