USANA Health Sciences, Inc. (NYSE: USNA) today announced financial
results for its fiscal second quarter ended June 28, 2014. The Company
also reiterated net sales and earnings guidance for 2014.
For the second quarter of 2014, net sales decreased slightly to $188.3
million, compared with $189.1 million in the prior-year period. Net
sales, on a comparative basis, were negatively impacted by: (i) $7.0
million of incremental sales in the second quarter of 2013 that occurred
ahead of policy changes, which included restricting Associate purchases
to their country of residence; (ii) $3.3 million from unfavorable
changes in currency exchange rates, and (iii) price discounts that the
Company implemented in 2013. The number of active Associates for the
second quarter increased 11.4% year-over-year, and 6.8% sequentially,
largely as a result of the initiatives implemented by the Company in
Net earnings for the second quarter were $19.3 million, compared with
$24.2 million during the prior-year period. This decrease resulted from
lower gross margins and higher operating expenses, which were due
largely to the pricing and compensation plan initiatives implemented by
the Company in 2013. Earnings per share for the quarter were $1.36,
compared with $1.72 in the second quarter of the prior year. Weighted
average diluted shares outstanding were 14.2 million in the second
quarter of 2014, compared with 14.1 million in the prior-year period.
During the quarter, the Company accelerated its share repurchase
activity by repurchasing approximately 682,000 shares under its
authorized repurchase program for a total investment of $49.1 million.
Additionally, as of July 25, 2014, the Company has spent $21.4 million
during the month of July to repurchase approximately 285,000 shares
pursuant to a Rule 10b5-1 trading plan. As of July 25, 2014, there was
$129.5 million remaining under the current share repurchase
authorization. The Company ended the quarter debt-free with
approximately $118.3 million in cash and cash equivalents.
"USANA generated solid results during the second quarter,
notwithstanding several factors that created a challenging
year-over-year comparable," said Dave Wentz, USANA's Chief Executive
Officer. "In 2013, we made a number of important changes to our
business, including world-wide policy changes, enhancements to our
Associate compensation plan and pricing initiatives. These changes have
improved our core business by generating double digit year-over-year
increases in our customer counts, Auto Order sales and check earners. As
we anticipated and previously communicated, these changes have also
created tough year-over-year comparables in 2014 and have caused our
financial results to trail our operational progress. As we execute our
2014 strategies, we are confident that our performance will continue to
accelerate during the second half of the year and we will deliver
another year of record results in 2014. We are also committed to
returning value to shareholders through our share repurchase program."
Net sales in the Asia Pacific region increased by 1.8% to $124.6
million, compared with $122.4 million for the second quarter of the
prior year. This improvement was due to nearly 14% sales growth in the
Southeast Asia Pacific region, which was driven by sales and customer
growth in every market in the region. Net sales in the Greater China
region decreased 4.3% on a year-over-year basis, due to nearly $7.0
million in incremental sales during the second quarter of 2013 that
occurred ahead of policy changes, which included restricting Associate
purchases to their country of residence. Sequentially, net sales in the
Greater China region increased 4.6% due to double-digit sales and
customer growth in China. The number of active Associates in the Asia
Pacific region increased by 16.9% year-over-year, due to double-digit
Associate growth in the Greater China and Southeast Asia Pacific regions.
Net sales in the Americas/Europe region declined 4.7% to $63.7 million,
due primarily to a sales decline in the U.S., which was partially offset
by net sales growth in other markets in the region. The number of active
Associates in this region was flat.
"Our business continues to produce strong results in Asia Pacific, as
nearly every market in this region delivered sales and customer growth
during the quarter. As we anticipated, our performance in China
accelerated during the quarter and produced double-digit sales and
customer growth compared to the prior quarter. We expect our results in
China to continue to accelerate as the year progresses and remain
confident in our long-term growth potential in this important market. We
also have initiatives planned for the second-half of 2014 that are
designed to drive sales and customer growth in each of our regions, with
an emphasis on North America and the United States in particular. We
look forward to hosting our 22nd Annual International
Convention in August, where we will make several exciting
announcements," concluded Mr. Wentz.
The Company reiterated the following financial outlook for 2014:
Chief Financial Officer, Paul Jones, commented, "During the second
quarter, we faced difficult year-over-year comparables, yet generated
strong results. We expect our financial performance to accelerate during
the second half of 2014, as we execute initiatives to produce world-wide
growth and operational efficiency, and we are reiterating our previously
issued guidance. We also believe that these initiatives will provide
sustainable growth for the Company over the long-term."
Kevin Guest Named Company President
Kevin G. Guest, 51, has been promoted to President of USANA world-wide
effective August 1, 2014. Mr. Guest will focus his efforts on sales
growth, customer growth and sales force development. Mr. Guest has been
with the Company since 2003 and has served in a variety of leadership
positions within the Company over the last 11 years. Most recently, he
has served as President of the Americas, Europe and South Pacific since
October 2012, where he has designed and executed initiatives that have
generated growth in these regions.
"Kevin has been extensively involved with USANA since the Company was
founded more than 20 years ago," said Dave Wentz. "His vision for the
business, dedication to customers and employees, and overall integrity
and leadership have been and will continue to be invaluable to our
organization," concluded Wentz.
Beginning August 3, 2014, Dave Wentz will reduce his time in the office
for one year to spend more time with his family. During this time, Mr.
Wentz will focus his efforts on strategic initiatives, business
development, the True Health Foundation and customer events, including
the Company's international and regional conventions. He intends to
return to his full-time role on August 3, 2015.
USANA will hold a conference call and webcast to discuss this
announcement with investors on Wednesday, July 30, 2014 at 11:00 AM
Eastern Time. Investors may listen to the call by accessing USANA's
website at http://www.usanahealthsciences.com.
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.
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.
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