SALT LAKE CITY--(BUSINESS WIRE)--USANA Health Sciences, Inc. (NASDAQ: USNA) today announced financial results for its fiscal fourth quarter and full-year ended January 1, 2011.
Financial Performance
Net sales in the fourth quarter of 2010 increased by 17.8% to a record $137.5 million, compared with $116.8 million in the fourth quarter of the prior year. This growth was due to higher product sales and an increased number of active associates, primarily driven by the Asia Pacific region. Sales from the newly acquired BabyCare operation in China added $4.1 million and favorable changes in currency exchange rates added $3.6 million in sales.
Net earnings in the fourth quarter increased by 21.4% to $12.4 million, or $0.75 per share, compared with $0.66 per share, in the fourth quarter of the prior year. This increase resulted from improved gross profit margins and a lower effective tax rate. Earnings per share gains, however, were partially offset by a higher number of diluted shares outstanding and additional operating costs related to BabyCare operations in China.
For the full-year ended January 1, 2011, net sales increased by 18.5% to a record $517.6 million, compared with $436.9 million in the prior year. This growth was due to higher product sales and an increased number of active associates, primarily driven by the Asia Pacific region. Additionally, favorable changes in currency exchange rates accounted for $21.0 million of the $80.7 million increase.
Net earnings for the full-year 2010 increased by 36.0% to a record $45.7 million, or $2.86 per share, compared with $2.17 per share in the prior year. This increase resulted from improved gross profit margins and a lower effective tax rate, but was partially offset by higher relative operating expenses and a higher average number of diluted shares outstanding.
Regional Results
Net sales in the Asia Pacific region for the fourth quarter of 2010 increased by 39.3% to $78.0 million, compared with the fourth quarter of the prior year. This improvement was primarily due to strong growth in Hong Kong, the Philippines and Japan. In the fourth quarter, the number of active Associates increased by 39.2%, which was primarily the result of growth in Hong Kong, the Philippines, and the addition of 12,000 BabyCare Associates.
“We concluded another record year in Asia Pacific, where more customers and entrepreneurs than ever before benefited from our products and home-based business opportunity,” said Chief Executive Officer, Dave Wentz. “While Hong Kong has been the key driver of our growth in Asia Pacific, we anticipate that 2011 will be a transitional year as we turn much of our attention to integrating and growing BabyCare.”
During the fourth quarter of 2010, net sales in the North America region decreased by 2.0% to $59.6 million, compared with the fourth quarter of the prior year. The number of Active Associates in the North America region declined by 11.3%, compared with the fourth quarter of the prior year.
“We continue to believe that the North America region is important for the long-term success of USANA.” Wentz continued, “In 2011, our primary corporate performance objectives will largely be tied to sales and Associate growth in North America. This, along with the integration and growth of BabyCare, will be our key measures for success in 2011.”
Outlook
Today we are providing initial financial guidance for 2011. We project consolidated net sales to be between $530 million and $550 million and earnings per share to be between $2.85 and $2.95.
Jeff Yates, Chief Financial Officer of USANA, said, “While we aim to continue our momentum during 2011, our initial outlook is cautious as we continue to make the necessary investments to grow our BabyCare business in China. We now expect that the investments required to successfully integrate our companies will be higher than we originally estimated. We believe that an effective transition to BabyCare in China during 2011 is critical to the long-term success of USANA.”
Conference Call
USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, February 9, 2011 at 11:00AM 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, Japan, Taiwan, South Korea, Singapore, Mexico, Malaysia, the Philippines, the Netherlands, and the United Kingdom. Additionally, USANA’s wholly-owned subsidiary, BabyCare, Ltd., operates a direct selling business in China. 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 | Year Ended | |||||||||||
| 2-Jan-10 | 1-Jan-11 | 2-Jan-10(1) | 1-Jan-11 | |||||||||
| Net sales | $ | 116,784 | $ | 137,540 | $ | 436,940 | $ | 517,644 | ||||
| Cost of sales | 23,567 | 24,570 | 89,803 | 95,482 | ||||||||
| Gross profit | 93,217 | 112,970 | 347,137 | 422,162 | ||||||||
| Operating expenses | ||||||||||||
| Associate incentives | 53,353 | 61,444 | 196,363 | 233,187 | ||||||||
| Selling, general and administrative | 24,520 | 33,401 | 99,983 | 120,759 | ||||||||
| Earnings from operations | 15,344 | 18,125 | 50,791 | 68,216 | ||||||||
| Other income | 42 | 345 | 187 | 648 | ||||||||
| Earnings before income taxes | 15,386 | 18,470 | 50,978 | 68,864 | ||||||||
| Income taxes | 5,179 | 6,079 | 17,422 | 23,213 | ||||||||
| NET EARNINGS | $ | 10,207 | $ | 12,391 | $ | 33,556 | $ | 45,651 | ||||
| Earnings per share - diluted | $ | 0.66 | $ | 0.75 | $ | 2.17 | $ | 2.86 | ||||
| Weighted average shares outstanding - diluted | 15,558 | 16,479 | 15,432 | 15,942 | ||||||||
| (1) Derived from audited financial statements | ||||||||||||
| USANA Health Sciences, Inc. | ||||||||||||
| Consolidated Balance Sheets | ||||||||||||
| (In thousands) | ||||||||||||
| As of | As of | |||||||||||
| 2-Jan-10 | 1-Jan-11 | |||||||||||
| (Unaudited) | ||||||||||||
| ASSETS | ||||||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | $ | 13,658 | $ | 24,222 | ||||||||
| Inventories | 25,761 | 34,078 | ||||||||||
| Other current assets | 12,507 | 21,972 | ||||||||||
| Total current assets | 51,926 | 80,272 | ||||||||||
| Property and equipment, net | 57,241 | 57,568 | ||||||||||
| Goodwill | 5,690 | 16,930 | ||||||||||
| Other assets | 8,581 | 49,032 | ||||||||||
| Total assets | $ | 123,438 | $ | 203,802 | ||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||
| Current liabilities | ||||||||||||
| Accounts payable | $ | 5,810 | $ | 6,445 | ||||||||
| Other current liabilities | 34,668 | 51,179 | ||||||||||
| Total current liabilities | 40,478 | 57,624 | ||||||||||
| Line of credit- long term | 7,000 | - | ||||||||||
| Other long-term liabilities | 1,587 | 1,012 | ||||||||||
| Stockholders' equity | 74,373 | 145,166 | ||||||||||
| Total liabilities and stockholders' equity | $ | 123,438 | $ | 203,802 | ||||||||
| USANA Health Sciences, Inc. | ||||||||||
| Sales by Region | ||||||||||
| (Unaudited) | ||||||||||
| (In thousands) | ||||||||||
| Quarter Ended | ||||||||||
| 2-Jan-10 | 1-Jan-11 | |||||||||
|
Region |
||||||||||
| North America | ||||||||||
| United States | $ | 37,168 | 31.8% | $ | 37,067 | 27.0% | ||||
| Canada | 17,631 | 15.1% | 17,059 | 12.4% | ||||||
| Mexico | 6,000 | 5.2% | 5,427 | 3.9% | ||||||
| North America Total | 60,799 | 52.1% | 59,553 | 43.3% | ||||||
| Asia Pacific | ||||||||||
| Southeast Asia/Pacific | 25,502 | 21.8% | 25,080 | 18.2% | ||||||
| Greater China | 24,589 | 21.1% | 46,124 | 33.5% | ||||||
| North Asia | 5,894 | 5.0% | 6,783 | 5.0% | ||||||
| Asia Pacific Total | 55,985 | 47.9% | 77,987 | 56.7% | ||||||
| Consolidated | $ | 116,784 | 100.0% | $ | 137,540 | 100.0% | ||||
| Active Associates by Region (1) | ||||||||||
| (Unaudited) | ||||||||||
| As of | ||||||||||
| 2-Jan-10 | 1-Jan-11 | |||||||||
|
Region |
||||||||||
| North America | ||||||||||
| United States | 57,000 | 28.6% | 51,000 | 22.4% | ||||||
| Canada | 25,000 | 12.6% | 24,000 | 10.5% | ||||||
| Mexico | 15,000 | 7.5% | 11,000 | 4.8% | ||||||
| North America Total | 97,000 | 48.7% | 86,000 | 37.7% | ||||||
| Asia Pacific | ||||||||||
| Southeast Asia/Pacific | 46,000 | 23.2% | 41,000 | 18.0% | ||||||
| Greater China | 48,000 | 24.1% | 93,000 | 40.8% | ||||||
| North Asia | 8,000 | 4.0% | 8,000 | 3.5% | ||||||
| Asia Pacific Total | 102,000 | 51.3% | 142,000 | 62.3% | ||||||
| Total | 199,000 | 100.0% | 228,000 | 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-Jan-10 | 1-Jan-11 | |||||||||
|
Region |
||||||||||
| North America | ||||||||||
| United States | 39,000 | 58.2% | 36,000 | 46.7% | ||||||
| Canada | 16,000 | 23.9% | 14,000 | 18.2% | ||||||
| Mexico | 3,000 | 4.5% | 4,000 | 5.2% | ||||||
| North America Total | 58,000 | 86.6% | 54,000 | 70.1% | ||||||
| Asia Pacific | ||||||||||
| Southeast Asia/Pacific | 7,000 | 10.4% | 6,000 | 7.8% | ||||||
| Greater China | 1,000 | 1.5% | 16,000 | 20.8% | ||||||
| North Asia | 1,000 | 1.5% | 1,000 | 1.3% | ||||||
| Asia Pacific Total | 9,000 | 13.4% | 23,000 | 29.9% | ||||||
| Total | 67,000 | 100.0% | 77,000 | 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. | ||||||||||