Business Wire | Apr 27, 2021 04:17PM EDT

USANA Health Sciences Reports First Quarter Results

Apr. 27, 2021

SALT LAKE CITY--(BUSINESS WIRE)--Apr. 27, 2021--USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal first quarter ended April 3, 2021.

Key Financial & Operating Highlights

* First quarter net sales increased 15.5% year-over-year to $308.0 million. * First quarter diluted EPS increased 17.9% year-over-year to $1.45. * Repurchased 721,000 shares for $69.5 million during the quarter. * Raises 2021 net sales and diluted EPS outlook.

Q1 2021 Financial Performance

Consolidated Results

* +15.5% vs. prior-year quarterNet Sales $308.0 million * +9.3% constant currency vs. prior-year quarter * +$16.6 million YOY FX impact, or +6.2%

Diluted EPS $1.45 * +17.9% vs. prior-year quarter * Diluted shares of 21.1 million, -2.1%

Active 617,000 * +7.7% vs. prior-year quarterCustomers

"We had an excellent start to the year largely due to continued strong consumer demand for our high-quality products," said Kevin Guest, Chief Executive Officer and Chairman of the Board. "Our strong top-line performance was driven by double-digit year-over-year sales growth in each of our regions, and we expect the execution of our 2021 global growth strategy will continue to generate growth in the remainder of the year."

Q1 2021 Regional Results:

Asia Pacific Region

* +16.6% vs. prior-year quarterNet Sales $251.3 million * Constant currency net sales: +9.3% * 81.6% of consolidated net sales

Active Customers 472,000 * +5.1% vs. prior-year quarter

Asia Pacific Sub-Regions

Greater China

Net Sales $149.0 million * +13.3% vs. prior-year quarter * Constant currency net sales: +5.9%

Active Customers 276,000 * -0.4% vs. prior-year quarter * +9.5% sequentially

North Asia

Net Sales $30.2 million * +10.7% vs. prior-year quarter * Constant currency net sales: +3.9%

Active Customers 59,000 * +3.5% vs. prior-year quarter * -1.7% sequentially

Southeast Asia Pacific

Net Sales $72.1 million * +26.7% vs. prior-year quarter * Constant currency net sales: +19.5%

Active Customers 137,000 * +19.1% vs. prior-year quarter * -3.5% sequentially

Americas and Europe Region

Net Sales

$56.7 million

* +11.1% vs. prior year * Constant currency net sales: +9.3% * 18.4% of consolidated net sales

Active Customers

145,000

* +16.9% vs. prior year * No change sequentially

"We successfully launched our new Active Nutrition line in late March and have received positive feedback on these new products from our customers," continued Mr. Guest. "The Active Nutrition line promotes healthy weight management, digestive health, energy and hydration. While the initial launch was limited to the United States, Canada, Mexico, Australia, and New Zealand, we will roll these products out to additional markets throughout the year. During the quarter, we also continued to advance our digital experience strategy with an emphasis on improving our overall shopping experience, particularly in China. Enhancements will allow consumers to easily interact with USANA while sharing their experiences with others."

Balance Sheet and Share Repurchase Activity

The Company ended the quarter with $257 million in cash and cash equivalents and no debt. As of April 3, 2021, the Company had 21.1 million fully diluted shares outstanding. During the quarter, the Company repurchased 721,000 shares totaling $69.5 million. As of April 3, 2021, there was approximately $80.5 million remaining under the existing share repurchase authorization.

Fiscal 2021 Outlook

The Company is increasing its consolidated net sales and earnings per share outlook for fiscal year 2021 as follows:

Americas and Europe Region

* +11.1% vs. prior yearNet Sales $56.7 million * Constant currency net sales: +9.3% * 18.4% of consolidated net sales

Active Customers 145,000 * +16.9% vs. prior year * No change sequentially

"We successfully launched our new Active Nutrition line in late March and have received positive feedback on these new products from our customers," continued Mr. Guest. "The Active Nutrition line promotes healthy weight management, digestive health, energy and hydration. While the initial launch was limited to the United States, Canada, Mexico, Australia, and New Zealand, we will roll these products out to additional markets throughout the year. During the quarter, we also continued to advance our digital experience strategy with an emphasis on improving our overall shopping experience, particularly in China. Enhancements will allow consumers to easily interact with USANA while sharing their experiences with others."

Balance Sheet and Share Repurchase Activity

The Company ended the quarter with $257 million in cash and cash equivalents and no debt. As of April 3, 2021, the Company had 21.1 million fully diluted shares outstanding. During the quarter, the Company repurchased 721,000 shares totaling $69.5 million. As of April 3, 2021, there was approximately $80.5 million remaining under the existing share repurchase authorization.

Fiscal 2021 Outlook

The Company is increasing its consolidated net sales and earnings per share outlook for fiscal year 2021 as follows:

Fiscal Year 2021 Outlook

Revised Range Previous Range

Consolidated Net Sales $1.24 - $1.28 billion $1.21 - $1.27 billion

Diluted EPS $6.15 - $6.50 $6.00 - $6.45

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

Doug Hekking, Chief Financial Officer, said, "First quarter operating results were better than internal expectations and were driven by continued momentum in our underlying business around the world. As expected, changes in currency exchange rates favorably contributed to our quarterly performance.

"Given our first quarter results, we are increasing our outlook for 2021, which now reflects top-line growth between 9.3% and 12.8%. Notably, we expect sales to accelerate during the second quarter, due largely to a short-term sales program we are offering around the world during the quarter. We offered a similar short-term sales program during the third quarter of 2020, which was successful and received a positive response from our Associates around the world. Following the conclusion of this program, we expect to see year-over-year sales growth, albeit at a decreased growth rate from the second quarter of this year. Our updated 2021 outlook continues to reflect an operating margin between 14.8% and 15.2%, continued favorable foreign currency environment, and an increase in spending in the back half of the year related to travel and event-related costs. We continue to project an effective tax rate of 31% for the year and a diluted share count of 20.7 million, which reflects share repurchases made during the first quarter. Overall, we had a solid start to the year and I believe we are positioned to deliver record results in 2021."

Management Commentary Document and Conference Call

For more information on the Company's operating results, please see the "Management Commentary, Results and Outlook" document, which has been posted on the Company's website ( http://ir.usana.com) under the "Investor Relations" section of the site. USANA will hold a conference call and webcast to discuss today's announcement with investors on Wednesday, April 28, 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, before moving directly into questions and answers.

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.

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 3-Apr-21 28-Mar-20 Net sales $ 307,976 $ 266,619

Cost of sales 57,651 46,059

Gross profit 250,325 220,560

Operating expensesAssociate incentives 134,495 116,069

Selling, general and administrative 71,633 65,479

Earnings from operations 44,197 39,012

Other income (expense) 139 151

Earnings before income taxes 44,336 39,163

Income taxes 13,715 12,611

NET EARNINGS $ 30,621 $ 26,552

Earnings per share - diluted $ 1.45 $ 1.23

Weighted average shares outstanding - diluted 21,096 21,551

USANA Health Sciences, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

As of As ofASSETS 3-Apr-21 2-Jan-21Current AssetsCash and cash equivalents $ 256,964 $ 311,917

Inventories 87,646 90,224

Prepaid expenses and other current assets 28,570 23,145

Total current assets 373,180 425,286

Property and equipment, net 98,622 100,445

Goodwill 17,310 17,367

Intangible assets, net 30,345 30,796

Deferred income taxes 5,164 4,640

Other assets 59,891 62,353

Total assets $ 584,512 $ 640,887

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payable $ 11,952 $ 18,195

Other current liabilities 139,500 149,878

Total current liabilities 151,452 168,073

Deferred income taxes 13,975 12,009

Other long-term liabilities 16,308 19,155

Stockholders' equity 402,777 441,650

Total liabilities and stockholders' equity $ 584,512 $ 640,887

USANA Health Sciences, Inc.

Sales by Region

(unaudited)

(in thousands)

Quarter Ended Currency % change Change from prior impact excluding April 3, 2021 March 28, 2020 on year currency sales impact

AsiaPacificGreater $ 148,978 48.4% $ 131,432 49.3% $ 17,546 13.3% $ 9,738 5.9%ChinaSoutheast 72,148 23.4% 56,922 21.4% 15,226 26.7% 4,107 19.5%AsiaPacificNorth 30,165 9.8% 27,251 10.2% 2,914 10.7% 1,853 3.9%AsiaAsia 251,291 81.6% 215,605 80.9% 35,686 16.6% 15,698 9.3%PacificTotal Americas 56,685 18.4% 51,014 19.1% 5,671 11.1% 907 9.3%andEurope $ 307,976 100.0% $ 266,619 100.0% $ 41,357 15.5% $ 16,605 9.3%

Active Associates by Region^(1)(unaudited) As of April 3, 2021 March 28, 2020 AsiaPacificGreater 88,000 30.4% 95,000 33.9%ChinaSoutheast 99,000 34.1% 85,000 30.4%AsiaPacificNorth 38,000 13.1% 38,000 13.6%AsiaAsia 225,000 77.6% 218,000 77.9%PacificTotal Americas 65,000 22.4% 62,000 22.1%andEurope 290,000 100.0% 280,000 100.0%

Active Preferred Customers by Region ^(2)(unaudited) As of April 3, 2021 March 28, 2020AsiaPacificGreater 188,000 57.5% 182,000 62.1%ChinaSoutheast 38,000 11.6% 30,000 10.2%AsiaPacificNorth 21,000 6.4% 19,000 6.5%AsiaAsia 247,000 75.5% 231,000 78.8%PacificTotal Americas 80,000 24.5% 62,000 21.2%andEurope 327,000 100.0% 293,000 100.0%

(1) Associates are independent distributors of our products who also purchaseour products for their personal use. We only count as active those Associateswho 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 useand are not permitted to resell or to distribute the products. We only count asactive those Preferred Customers who have purchased from us any time during themost recent three-month period. China utilizes a Preferred Customer programthat has been implemented specifically for that market. View source version on businesswire.com: https://www.businesswire.com/news/home/20210427005932/en/

CONTACT: Investors contact: Patrique Richards Investor Relations (801) 954-7961 investor.relations@us.usana.com

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