USANA Health Sciences, Inc. : USANA Health Sciences Announces Record Second Quarter 2012 Financial Results
07/24/2012| 04:15pm US/Eastern
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Second quarter net sales increased by 8.0% to $160.9 million
Earnings per share increased by 26.1% to $1.11 for the quarter
Company raises 2012 financial outlook
USANA Health Sciences, Inc. (NYSE: USNA) today announced financial
results for its fiscal second quarter ended June 30, 2012.
Financial Performance
Net sales for the second quarter of 2012 increased by 8.0% to $160.9
million, compared with $148.9 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 $2.7 million.
Net earnings for the second quarter increased to $16.7 million, an
increase of 20.9%, compared with the prior-year period. This increase
was due primarily to higher net sales, improved gross margins, lower
relative Associate incentive expense, and a lower effective tax rate.
Earnings per share for the quarter increased 26.1% to $1.11, compared
with $0.88 in the second quarter of the prior year. This improvement in
earnings per share resulted from higher net earnings and a lower number
of diluted shares outstanding, resulting from the Company's share
repurchases over the last 12 months.
"USANA delivered solid second quarter results, which capped a very
impressive first half of 2012," said Mr. Dave Wentz, Chief Executive
Officer. "During the quarter, we continued to see momentum in our
business build due, in part, to our successful launch of a new component
to our Associate compensation plan. This component, which is known as
our Lifetime Matching Bonus, was very well received by our Associates
worldwide. Along with the introduction of the Lifetime Matching Bonus,
we ran a short-term sales promotion that also contributed to our
positive results during the quarter."
Regional Results
Net sales in the Asia Pacific region increased by 11.0% to $98.4
million, compared with $88.7 million for the second 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 an
increase in the number of active Associates as well as price increases
in certain markets that were implemented in the first quarter. The
number of active Associates in the Asia Pacific region increased by
10.1%, due to significant Associate growth in the Philippines, Associate
growth in many other Asia Pacific markets, and the addition of Thailand
to our Asia Pacific region.
"We are pleased with the continued growth in our Asia Pacific region,"
continued Mr. Wentz. "During the quarter, we held a successful grand
opening event in Thailand and expect momentum in that market to grow in
the second half of the year. Our efforts in Asia Pacific remain focused
on our Greater China region, as we continue to lay the foundation for
long-term growth by developing Associate leaders there."
During the second quarter of 2012, net sales in the North America &
Europe region increased by 3.6% to $62.5 million, compared with the
second quarter of the prior year. This improvement was predominantly due
to higher sales in the United States and Mexico and, to a lesser extent,
to the opening of France and Belgium. The number of Active Associates in
North America & Europe declined modestly compared with the second
quarter of 2011.
Mr. Wentz added, "Our strategy to return North America to growth is
being successfully executed, and we are encouraged by the momentum we
are seeing in this region. In August, we will hold our International
Convention in Salt Lake City, where we plan to make several
announcements that we believe will facilitate worldwide growth,
especially in North America."
The Company continued its successful track record of generating
meaningful levels of cash from operations and ended the quarter with
approximately $65.5 million in cash and cash equivalents. Cash generated
from operations totaled $21.3 million for the quarter. During the
quarter, the Company invested $26.6 million to repurchase 677,000 shares
of the Company's stock.
Outlook
The Company provided the following updated financial outlook for 2012:
Consolidated net sales between $630 million and $640 million, versus
the previous outlook of between $610 million and $625 million.
Earnings per share between $4.10 and $4.20, versus the previous
outlook of between $3.60 and $3.70.
Chief Financial Officer Doug Hekking commented, "Leverage gained on
higher sales, better than expected gross margins, and a lower effective
tax rate were the main factors that contributed to our strong
bottom-line performance this quarter. These same factors, as well as a
reduced number of diluted shares outstanding, are the driving forces
behind the increase in our earnings per share estimate for the remainder
of the current fiscal year. Our strong performance during the first six
months of the year has laid the foundation for what we believe will be a
solid second half of 2012. As such, we are raising our financial outlook
for fiscal 2012."
Conference Call
USANA will hold a conference call and webcast to discuss this
announcement with investors on Wednesday, July 25, 2012 at 11:00 a.m.
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 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
Six Months Ended
2-Jul-11
30-Jun-12
2-Jul-11
30-Jun-12
Net sales
$
148,925
$
160,901
$
292,491
$
315,021
Cost of sales
26,208
28,073
51,870
55,290
Gross profit
122,717
132,828
240,621
259,731
Operating expenses
Associate incentives
67,760
70,901
132,567
138,910
Selling, general and administrative
33,803
36,776
69,673
74,808
Earnings from operations
21,154
25,151
38,381
46,013
Other income (expense)
-
(222
)
101
(90
)
Earnings before income taxes
21,154
24,929
38,482
45,923
Income taxes
7,298
8,184
13,276
15,427
NET EARNINGS
$
13,856
$
16,745
$
25,206
$
30,496
Earnings per share - diluted
$
0.88
$
1.11
$
1.58
$
2.01
Weighted average shares outstanding - diluted
15,752
15,090
15,964
15,192
USANA Health Sciences, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
As of
As of
31-Dec-11
30-Jun-12
ASSETS
Current Assets
Cash and cash equivalents
$
50,353
$
65,538
Inventories
36,968
33,805
Other current assets
18,738
24,163
Total current assets
106,059
123,506
Property and equipment, net
60,754
60,343
Goodwill
17,740
17,675
Intangible assets, net
42,637
41,846
Deferred income taxes
11,033
10,913
Other assets
6,273
6,729
Total assets
$
244,496
$
261,012
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
$
7,952
$
6,408
Other current liabilities
51,744
60,341
Total current liabilities
59,696
66,749
Other long-term liabilities
942
998
Deferred income taxes
9,948
9,638
Stockholders' equity
173,910
183,627
Total liabilities and stockholders' equity
$
244,496
$
261,012
USANA Health Sciences, Inc.
Sales by Region
(Unaudited)
(In thousands)
Quarter Ended
2-Jul-11
30-Jun-12
Region
North America / Europe
60,267
40.5
%
62,464
38.8
%
Asia Pacific
Southeast Asia/Pacific
27,225
18.3
%
34,271
21.3
%
Greater China
53,678
36.0
%
56,770
35.3
%
North Asia
7,755
5.2
%
7,396
4.6
%
Asia Pacific Total
88,658
59.5
%
98,437
61.2
%
Total
$
148,925
100.0
%
$
160,901
100.0
%
Active Associates by Region (1)
(Unaudited)
As of
2-Jul-11
30-Jun-12
Region
North America / Europe
83,000
37.4
%
82,000
34.9
%
Asia Pacific
Southeast Asia/Pacific
43,000
19.4
%
58,000
24.7
%
Greater China
87,000
39.2
%
87,000
37.0
%
North Asia
9,000
4.0
%
8,000
3.4
%
Asia Pacific Total
139,000
62.6
%
153,000
65.1
%
Total
222,000
100.0
%
235,000
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
2-Jul-11
30-Jun-12
Region
North America / Europe
53,000
77.9
%
52,000
78.8
%
Asia Pacific
Southeast Asia/Pacific
6,000
8.8
%
6,000
9.1
%
Greater China
8,000
11.8
%
7,000
10.6
%
North Asia
1,000
1.5
%
1,000
1.5
%
Asia Pacific Total
15,000
22.1
%
14,000
21.2
%
Total
68,000
100.0
%
66,000
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 product at any time during the most recent three-month
period.
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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