USANA Health Sciences Announces First Quarter 2014 Financial Results

  USANA Health Sciences Announces First Quarter 2014 Financial Results

  *First quarter net sales of $182.4 million; EPS of $1.15
  *Company provides updated 2014 net sales and earnings outlook
  *Share Repurchase Authorization increased to $200 million

Business Wire

SALT LAKE CITY -- April 29, 2014

USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for
its fiscal first quarter ended March 29, 2014. The Company also updated net
sales and earnings guidance for 2014.

Financial Performance

For the first quarter of 2014, net sales increased by 7.9% to $182.4 million,
compared with $169.1 million in the prior-year period. The increase in net
sales was driven by overall customer growth of more than 16.0%, which was
largely due to the initiatives implemented by the Company in 2013. Net sales
growth, however, was negatively impacted by unfavorable changes in currency
exchange rates, which reduced net sales for the quarter by $5.0 million, as
approximately 80% of the Company’s sales are outside of the U.S. The
challenging media and regulatory environment that emerged in China during the
quarter also negatively impacted net sales.

Net earnings for the first quarter were $16.5 million, a 7.0% decrease,
compared with the prior-year period. This decrease resulted primarily from
higher Associate Incentives expense due to the pricing and compensation plan
initiatives implemented in 2013. Earnings per share for the quarter decreased
10.2% to $1.15, compared with $1.28 in the first quarter of the prior year.
This decrease was attributed to lower net earnings and a higher number of
diluted shares outstanding. Weighted average diluted shares outstanding were
14.4 million in the first quarter of 2014, compared with 13.9 million in the
prior-year period. Additionally, the Company ended the quarter debt-free.

“Our business generated solid results in the first quarter, as evidenced by
our double-digit growth in customers, world-wide unit volume and auto order
volume,” said Dave Wentz, USANA’s Chief Executive Officer. “Growth in each of
these indicators is important to our business, but customer growth is our
highest priority and it is encouraging to see this metric accelerate as a
result of our 2013 initiatives. While these initiatives are producing the
intended effect on customer growth, they have also created some pressure on
our operating margin through lower gross margins and higher Associate
Incentives expense, which we anticipated. Additionally, an unfavorable shift
in currency exchange rates and the challenging environment that emerged in
China pressured our financial performance for the quarter. I’m pleased with
USANA’s performance in light of these factors.”

Regional Results

Net sales in the Asia Pacific region increased by 13.0% to $118.6 million,
compared with $104.9 million for the first quarter of the prior year. This
improvement was due primarily to sales growth in the Greater China and
Southeast Asia Pacific regions with China, Singapore and the Philippines
experiencing the most meaningful growth. The Greater China region generated
net sales growth in excess of 12% on a year-over-year basis. However,
quarterly sequential sales for this region declined 1.1% due to the normal
seasonality of the Chinese New Year, as well as the negative media and
regulatory focus on businesses in the Company’s industry during the quarter.

Net sales in the Americas/Europe region were essentially flat at $63.8
million, compared with $64.1 million in the prior-year period, due primarily
to a net sales decline in the U.S., which was partially offset by net sales
growth in other markets in the region.

“As we anticipated, our business in several markets experienced the customary
seasonal pressure of the Chinese New Year,” continued Mr. Wentz.
“Additionally, the challenging environment that emerged in China during the
quarter impacted our sales and customer growth in that market. Although we
believe that the environment in China will continue to impact our short-term
performance in that market, we remain confident in our growth opportunity in
China and will continue to invest and build a sustainable business there. We
also remain confident in the underlying strength of our world-wide business,
and we expect the initiatives we put in place during 2013 will continue to
drive long-term growth for the Company,” concluded Mr. Wentz.

Increased Share Repurchase Authorization

The Board of Directors has authorized up to $200 million in funding for share
repurchases by the Company of its outstanding common stock. This authorization
is inclusive of the approximately $13.6 million that was remaining under the
prior authorization as of the end of the first quarter of 2014. Repurchases
may be made from time to time, in the open market, through block trades or
otherwise. The number of shares to be purchased and the timing of purchases
will be based on market conditions, the level of cash balances, general
business opportunities, and other factors.

Outlook

The Company provided the following updated financial outlook for 2014:

  *Consolidated net sales between $770 million and $790 million, versus the
    previous outlook of between $790 million and $810 million
  *Earnings per share between $5.50 and $5.65, versus the previous outlook of
    between $5.80 and $5.95

Chief Financial Officer, Paul Jones, commented, “Although our first quarter
results were impacted by a number of factors, we continue to expect our
financial performance to accelerate as the year progresses. The pricing and
Associate compensation plan initiatives we implemented in 2013, however, will
continue to create a challenging year-over-year comparable for our financial
performance. Additionally, we anticipate that the environment in China will
continue to impact our growth in 2014 and have adjusted our outlook
accordingly. We remain committed to growing our business in China and will
continue to invest in this important market as part of our growth strategy. We
will also continue to advance our personalization strategy around the world
and leverage the initiatives we implemented during 2013 to drive long-term
growth for the Company.”

Conference Call

USANA will hold a conference call and webcast to discuss this announcement
with investors on Wednesday, April 30, 2014 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
                                                    30-Mar-13       29-Mar-14
                                                                    
Net sales                                           $ 169,082       $ 182,401
Cost of sales                                        30,261        33,828
            Gross profit                              138,821         148,573
                                                                    
Operating expenses
     Associate incentives                             69,855          78,874
     Selling, general and administrative             42,404        44,577
                                                                    
            Earnings from operations                  26,562          25,122
                                                                    
Other income (expense)                               (26     )      125
            Earnings before income taxes              26,536          25,247
                                                                    
Income taxes                                         8,757         8,710
                                                                    
NET EARNINGS                                        $ 17,779       $ 16,537
                                                                    
                                                                    
Earnings per share - diluted                        $ 1.28          $ 1.15
Weighted average shares outstanding - diluted         13,903          14,395
                                                                      
                                                                      

                                                         
USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                      
                                                 As of         As of
ASSETS                                           28-Dec-13     29-Mar-14
Current Assets
Cash and cash equivalents                        $ 137,343     $ 142,733
Securities held-to-maturity, net                   8,642         4,428
Inventories                                        47,242        46,890
Other current assets                              35,818       32,308
Total current assets                               229,045       226,359
                                                               
Property and equipment, net                        59,180        58,843
Goodwill                                           18,243        17,933
Intangible assets, net                             42,329        41,210
Deferred income taxes                              5,519         5,695
Other assets                                      14,154       21,426
Total assets                                     $ 368,470     $ 371,466
                                                               
                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                                 $ 9,502       $ 6,083
Other current liabilities                         86,369       73,861
Total current liabilities                          95,871        79,944
                                                               
                                                               
Other long-term liabilities                        1,211         1,204
Deferred income taxes                              10,866        10,577
Stockholders' equity                              260,522      279,741
Total liabilities and stockholders' equity       $ 368,470     $ 371,466
                                                               
                                                               


USANA Health Sciences, Inc.
Sales by Region
(Unaudited)
(In thousands)
                                                            
                             Quarter Ended
                             30-Mar-13                   29-Mar-14
Region
                                                                       
Americas and Europe          $ 64,152      37.9  %       $ 63,815      35.0  %
                                                                       
Asia Pacific
                                                                       
Southeast Asia Pacific         35,309      20.9  %         40,448      22.2  %
                                                                       
Greater China                  62,985      37.3  %         70,847      38.8  %
                                                                       
North Asia                    6,636       3.9   %        7,291       4.0   %
                                                                       
Asia Pacific Total            104,930     62.1  %        118,586     65.0  %
                                                                       
Total                        $ 169,082     100.0 %       $ 182,401     100.0 %
                                                                             
                                                                             


Active Associates by Region ^(1)
(Unaudited)
                                                          
                     As of
                     30-Mar-13                         29-Mar-14
Region
                                                                      
Americas             78,000         34.1   %           82,000         30.9   %
and Europe
                                                                      
Asia
Pacific
                                                                      
Southeast
Asia                 56,000         24.4   %           64,000         24.2   %
Pacific
                                                                      
Greater              87,000         38.0   %           110,000        41.5   %
China
                                                                      
North Asia           8,000          3.5    %           9,000          3.4    %
                                                                      
Asia
Pacific              151,000        65.9   %           183,000        69.1   %
Total
                                                                   
Total                229,000        100.0  %           265,000        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
                     30-Mar-13                         29-Mar-14
Region
                                                                      
Americas             55,000         82.1   %           61,000         78.2   %
and Europe
                                                                      
Asia
Pacific
                                                                      
Southeast
Asia                 7,000          10.4   %           10,000         12.8   %
Pacific
                                                                      
Greater              3,000          4.5    %           3,000          3.9    %
China
                                                                      
North Asia           2,000          3.0    %           4,000          5.1    %
                                                                      
Asia
Pacific              12,000         17.9   %           17,000         21.8   %
Total
                                                                   
Total                67,000         100.0  %           78,000         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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