USANA Q4 Revenue Up 2.1% To $232 Million
USANA Health Sciences Reports Fourth Quarter and Full-Year Financial Results:
- Fourth quarter net sales increased by 2.1% to $232.6 million, but increased by 17.7% excluding the impact of a stronger U.S. dollar and a shorter 13-week reporting period
- Fourth quarter EPS increased by 10.9% to $1.83
- Number of active Associates increased by 20.6% to 421,000
- For the year, net sales increased by 16.2% to a record $918.5 million and EPS increased by 28.2% to a record $7.18
- Initial 2016 net sales and earnings outlook provided
USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and year ended January 2, 2016. The Company also provided initial net sales and earnings guidance for 2016.
Financial Performance
For the fourth quarter of 2015, net sales increased to $232.6 million, up 2.1%, compared with $227.9 million in the prior-year period. A stronger U.S. dollar negatively impacted net sales by $16.5 million for the current year quarter. Additionally, the fourth quarter of 2015 was a 13-week quarter, compared to a 14-week quarter in the prior year period.
The Company estimates that the extra week in 2014 contributed approximately $16 million to sales for that quarter. Excluding the impact of currency and the extra week of sales in the prior year period, net sales would have increased by 17.7% for the fourth quarter of 2015. Net sales growth was driven by 20.6% growth in the number of active Associates and nearly 10% growth in the number of Preferred Customers.
Net earnings for the fourth quarter increased by 12.5% to $24.0 million, compared with $21.3 million during the prior-year period. Although net earnings increased meaningfully year-over-year, they were below the Company’s expectations, due to higher than anticipated selling, general and administrative expenses and Associate Incentives expenses. Selling, general and administrative expenses were higher than anticipated largely as a result of higher equity compensation expense, while Associate incentives expenses were higher as a result of a greater number of Associates qualifying for incentive trips and contests.
Earnings per diluted share for the fourth quarter increased by 10.9% to $1.83, compared with $1.65 in the prior year period. This increase in earnings per share is the result of higher net earnings. Weighted average diluted shares outstanding were 13.1 million as of the end of the fourth quarter of 2015, compared with 12.9 million in the prior-year period. During the fourth quarter of 2015, the Company repurchased 456,790 shares of common stock for a total investment of $61.2 million.
The Company ended the year with $143.2 million in cash and cash equivalents and no debt. As of February 5, 2016, the Company has invested an additional $44.8 million to repurchase approximately 366,134 shares pursuant to a Rule 10b5-1 plan. As of February 5, 2016, there was $55.2 million remaining under the current share repurchase authorization and a balance of $32 million on the company’s line of credit.
“We finished the year strong and achieved our goal for net sales, despite the significant negative impact from a stronger U.S. dollar and a tough prior year comparable that included an extra week of sales,” said Dave Wentz, USANA’s Co-CEO.
“We also generated double-digit customer, earnings, and earnings per share growth in 2015 and in the fourth quarter, despite our decision to invest more aggressively in our strategies for long-term growth.”
Regional Results
Net sales in the Asia Pacific region increased by 5.4% to $172.1 million, despite a negative $11.2 million impact from the strengthening U.S. dollar, and an extra week of sales in the prior year quarter. Within Asia Pacific, net sales:
- Increased by 10.9% in Greater China (15.1% on a constant currency basis);
- Increased by 13.5% in the North Asia region (20.7% on a constant currency basis); and
- Decreased by 7.5% in the Southeast Asia Pacific region (increased by 4.8% on a constant currency basis).
Sales growth in Greater China was driven by 46.6% Associate growth in Mainland China, while sales growth in North Asia resulted from 33.3% Associate growth in South Korea. Finally, customer growth in Southeast Asia Pacific was primarily due to 30.8% Associate growth in Malaysia. The total number of active Associates in the Asia Pacific region increased by 26.1% year-over-year and 5.4% sequentially.
Net sales in the Americas/Europe region decreased by 6.3% to $60.5 million. This decrease was due largely to the negative impact of $5.3 million from the strengthening U.S. dollar and an extra week of sales in the prior year quarter. On a constant currency basis, net sales in this region increased by 1.9% year-over-year. Canada and Mexico generated local currency sales growth of 8.4% and 13.3%, respectively. Both of these markets also reported strong year-over-year customer growth.
“Our growth continues to be driven by momentum in our Asia Pacific region, particularly in Mainland China,” continued Mr. Wentz. “During the quarter, we held our annual China National Meeting in Qingdao, where a record number of Associates were recognized for their achievements. In addition, we officially launched our 20th market in Indonesia during the quarter. We are optimistic about this market for the future. We’re also encouraged by the Associate growth that we are experiencing worldwide, and we expect this to continue during 2016.”