Business Wire | Jul 27, 2021 04:19PM EDT

USANA Health Sciences Reports Record Second Quarter Results and Reiterates Growth Outlook for FY 2021

Jul. 27, 2021

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

Key Financial & Operating Highlights

* Second quarter net sales increased 30.1% year-over-year to a record $336.8 million. * Second quarter diluted EPS increased 41.7% year-over-year to $1.87. * Active Customers increased 8.8% year-over-year to a record 652,000. * Reiterates 2021 net sales and diluted EPS outlook.

Q2 2021 Financial Performance

Consolidated Results

* +30.1% vs. prior-year quarterNet Sales $336.8 * +20.3% constant currency vs. prior-year million quarter * +$25.2 million YOY FX impact, or +9.8%

Diluted EPS $1.87 * +41.7% vs. prior-year quarter * Diluted shares of 20.4 million, -3.2%

Active 652,000 * +8.8% vs. prior-year quarterCustomers

"Strong consumer demand for our high-quality health products, coupled with the execution of our previously announced short-term sales program, contributed to our record net sales and customer numbers for the second quarter," said Kevin Guest, Chief Executive Officer and Chairman of the Board. "Our-top line performance was driven by strong double-digit, year-over-year sales growth in each of our regions including a 16.5% increase in the Americas and Europe region and a 33.3% increase in the Asia Pacific region.

Q2 2021 Regional Results:

Asia Pacific Region

* +33.3% vs. prior-year quarterNet Sales $279.0 million * Constant currency net sales: +23.0% * 82.8% of consolidated net sales

Active Customers 513,000 * +10.8% vs. prior-year quarter * +8.6% sequentially

Asia Pacific Sub-Regions

Greater China

Net Sales $165.4 million * +33.4% vs. prior-year quarter * Constant currency net sales: +22.5%

Active Customers 303,000 * +9.0% vs. prior-year quarter * +9.8% sequentially

North Asia

Net Sales $37.4 million * +44.8% vs. prior-year quarter * Constant currency net sales: +33.6%

Active Customers 66,000 * +17.9% vs. prior-year quarter * +11.9% sequentially

Southeast Asia Pacific

Net Sales $76.1 million * +28.0% vs. prior-year quarter * Constant currency net sales: +19.2%

Active Customers 144,000 * +11.6% vs. prior-year quarter * +5.1% sequentially

Americas and Europe Region

Net Sales

$57.9 million

* +16.5% vs. prior year * Constant currency net sales: +9.2% * 17.2% of consolidated net sales

Active Customers

139,000

* +2.2% vs. prior year * -4.1% sequentially

Mr. Guest added, "We continue to execute our strategy to enhance the overall shopping experience for customers in all of our markets and made further progress on this initiative during the quarter. Additionally, the rollout of our Active Nutrition line, which was introduced in late March, is proceeding according to plan. As we look ahead to the second half of the year, we are seeing a more challenging operating environment in several markets due to escalating conditions related to the COVID-19 pandemic. We believe, however, 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 $265 million in cash and cash equivalents and no debt after repurchasing 304,000 shares for $29.7 million. Diluted shares outstanding totaled 20.4 million during the second quarter of 2021 and there was approximately $51 million remaining under the existing share repurchase authorization as of July 3, 2021.

Fiscal 2021 Outlook

The Company is reiterating its consolidated net sales and earnings per share outlook for fiscal year 2021.

Americas and Europe Region

* +16.5% vs. prior yearNet Sales $57.9 million * Constant currency net sales: +9.2% * 17.2% of consolidated net sales

Active Customers 139,000 * +2.2% vs. prior year * -4.1% sequentially

Mr. Guest added, "We continue to execute our strategy to enhance the overall shopping experience for customers in all of our markets and made further progress on this initiative during the quarter. Additionally, the rollout of our Active Nutrition line, which was introduced in late March, is proceeding according to plan. As we look ahead to the second half of the year, we are seeing a more challenging operating environment in several markets due to escalating conditions related to the COVID-19 pandemic. We believe, however, 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 $265 million in cash and cash equivalents and no debt after repurchasing 304,000 shares for $29.7 million. Diluted shares outstanding totaled 20.4 million during the second quarter of 2021 and there was approximately $51 million remaining under the existing share repurchase authorization as of July 3, 2021.

Fiscal 2021 Outlook

The Company is reiterating its consolidated net sales and earnings per share outlook for fiscal year 2021.

Fiscal Year 2021 Outlook

Range

Consolidated Net Sales $1.24 - $1.28 billion

Diluted EPS $6.15 - $6.50

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, "Our record second quarter results, highlighted by robust sales and earnings-per-share growth, were in-line with management's expectations and were driven, in large part, by the sales program offered during the quarter. A similar sales program was offered during the third quarter of 2020, which was also very successful. Note that the timing of the 2020 sales program, as well as the additional week of sales in the fourth quarter of 2020, create a challenging comparable for us in the back half of 2021. Nevertheless, we continue to believe that 2021 will be another record year for USANA."

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, July 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, 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.

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 Six Months Ended 3-Jul-21 27-Jun-20 3-Jul-21 27-Jun-20 Net sales $ 336,837 $ 258,991 $ 644,813 $ 525,610

Cost of sales 57,014 47,674 114,665 93,733

Gross profit 279,823 211,317 530,148 431,877

Operating expensesAssociate incentives 153,863 110,852 288,358 226,921

Selling, general and administrative 72,240 60,879 143,873 126,358

Earnings from operations 53,720 39,586 97,917 78,598

Other income (expense) 590 393 729 544

Earnings before income taxes 54,310 39,979 98,646 79,142

Income taxes 16,076 12,002 29,791 24,613

NET EARNINGS $ 38,234 $ 27,977 $ 68,855 $ 54,529

Earnings per share - diluted $ 1.87 $ 1.32 $ 3.31 $ 2.56

Weighted average shares outstanding 20,446 21,129 20,771 21,340- dilutedUSANA Health Sciences, Inc.Consolidated Balance Sheets(In thousands)(Unaudited) As of As ofASSETS 3-Jul-21 2-Jan-21Current AssetsCash and cash equivalents $ 265,368 $ 311,917

Inventories 89,587 90,224

Prepaid expenses and other current assets 26,551 23,145

Total current assets 381,506 425,286

Property and equipment, net 97,849 100,445

Goodwill 17,467 17,367

Intangible assets, net 30,489 30,796

Deferred income taxes 5,486 4,640

Other assets 58,652 62,353

Total assets $ 591,449 $ 640,887

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent LiabilitiesAccounts payable $ 13,144 $ 18,195

Other current liabilities 139,856 149,878

Total current liabilities 153,000 168,073

Deferred income taxes 4,806 12,009

Other long-term liabilities 15,020 19,155

Stockholders' equity 418,623 441,650

Total liabilities and stockholders' equity $ 591,449 $ 640,887

USANA Health Sciences, Inc.

Sales by Region

(unaudited)

(in thousands)

Quarter Ended Currency % change Change from prior impact excluding July 3, 2021 June 27, 2020 on year currency sales impact

AsiaPacificGreater $ 165,416 49.1% $ 124,001 47.9% $ 41,415 33.4% $ 13,459 22.5%ChinaSoutheast 76,101 22.6% 59,459 22.9% 16,642 28.0% 5,225 19.2%AsiaPacificNorth 37,438 11.1% 25,852 10.0% 11,586 44.8% 2,906 33.6%AsiaAsia 278,955 82.8% 209,312 80.8% 69,643 33.3% 21,590 23.0%PacificTotal Americas 57,882 17.2% 49,679 19.2% 8,203 16.5% 3,610 9.2%andEurope $ 336,837 100.0% $ 258,991 100.0% $ 77,846 30.1% $ 25,200 20.3%

Active Associates by Region^(1)(unaudited) As of July 3, 2021 June 27, 2020 AsiaPacificGreater 88,000 29.3% 93,000 32.3%ChinaSoutheast 104,000 34.7% 94,000 32.6%AsiaPacificNorth 42,000 14.0% 37,000 12.9%AsiaAsia 234,000 78.0% 224,000 77.8%PacificTotal Americas 66,000 22.0% 64,000 22.2%andEurope 300,000 100.0% 288,000 100.0%

Active Preferred Customers by Region ^(2)(unaudited) As of July 3, 2021 June 27, 2020AsiaPacificGreater 215,000 61.1% 185,000 59.5%ChinaSoutheast 40,000 11.4% 35,000 11.3%AsiaPacificNorth 24,000 6.8% 19,000 6.1%AsiaAsia 279,000 79.3% 239,000 76.9%PacificTotal Americas 73,000 20.7% 72,000 23.1%andEurope 352,000 100.0% 311,000 100.0%

(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/20210727006016/en/

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

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