Fourth quarter net sales increased by 10.5% to $186.3 million Fourth quarter earnings per share increased by 11.0% to $1.41 2013 marks 11 th consecutive year of record sales ( $718.2 million ) Earnings per share increased to a record $5.56 for the year Initial 2014 net sales and earnings outlook provided SALT LAKE CITY --(BUSINESS WIRE)-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and full-year ended December 28, 2013 . The Company also provided net sales and earnings guidance for 2014. Financial Performance For the fourth quarter of 2013, net sales increased by 10.5% to $186.3 million , compared with $168.5 million in the prior-year period. The Company’s Asia Pacific and North America / Europe regions both reported sales and customer growth for the quarter. This growth was driven by the successful adoption of the initiatives launched at the Company’s 2013 International Convention held in August. The initiatives, which are designed to promote long-term sustainable customer growth, provide customers with opportunities for preferred pricing and additional compensation under the Company’s Associate compensation plan. Unfavorable changes in currency exchange rates reduced net sales in the quarter by $2.9 million . Net earnings for the fourth quarter increased to $20.3 million , a 9.9% improvement, compared with the prior-year period. This increase was driven by higher net sales, lower relative selling, general and administrative expense, and a lower effective tax rate. The 29.8% effective tax rate for the fourth quarter was 470 basis points lower than the fourth quarter of 2012 due primarily to benefits from a Utah state tax policy election change recognized in the fourth quarter of 2013. These benefits were partially offset by lower gross margins and higher Associate Incentives expense, which are also attributable to initiatives launched at the 2013 convention. Earnings per share for the quarter increased by 11% to $1.41 compared with $1.27 in the fourth quarter of the prior year. The growth in earnings per share was attributable to higher net earnings. Weighted average diluted shares outstanding were 14.4 million in the fourth quarter of 2013 compared with 14.5 million in the prior-year period. “The successful execution by our entire organization of the initiatives announced back in August led to a better-than-expected fourth quarter and cap a year of significant achievements and record operating results,” said Dave Wentz , USANA’s Chief Executive Officer. “These results mark our 11th consecutive year of record sales. The initiatives that we introduced at our 2013 International Convention and that we plan to implement in 2014 are each aimed at our overall strategy of promoting customer loyalty, enjoyment and success with USANA. While the objective of these initiatives is to drive long-term, sustainable growth, they have been adopted by our Associates and customers even more quickly than anticipated and have resulted in an excellent fourth quarter.” Regional Results Net sales in the Asia Pacific region increased by 13.0% to $121.8 million , compared with $107.8 million for the fourth quarter of the prior year. This improvement was due primarily to sales growth in the Greater China and Southeast Asia Pacific regions with China and Singapore experiencing the most meaningful growth. Although USANA generated nearly 15% sales growth in the Greater China region, top line results were impacted negatively by lower sales in Hong Kong . Net sales in North America / Europe increased by 6.1% to $64.5 million , compared with $60.7 million in the prior-year period. Every market in the region achieved top line growth, with Mexico and Canada experiencing the largest increases. “Our business grew in each of our regions during the fourth quarter,” continued Wentz. “The pricing initiatives directed at some of our more mature markets have generated meaningful improvements to our business in Canada , Australia and New Zealand . Meanwhile, our Greater China region continues to produce solid customer and sales growth. We look forward to continued growth in 2014.” 2013 Results For the year ended December 28, 2013 , net sales increased by 10.7% to $718.2 million , compared with $648.7 million in the prior year. The Company’s Asia Pacific and North America / Europe regions both reported growth for the year. Net sales for the full-year were negatively impacted by $2.8 million due to changes in currency exchange rates. Net earnings for 2013 increased by 19.0% to $79.0 million , or $5.56 per share, compared with $4.45 per share in the prior year. The increase in net earnings was due primarily to higher net sales and lower relative operating expenses. Weighted average diluted shares outstanding were 14.2 million at fiscal year-end 2013, compared with 14.9 in the prior-year period. Cash generated from operations totaled $99.9 million for the year ended December 28, 2013 . The Company repurchased 414,000 shares in 2013 for a total investment of $18.1 million . The Company ended the year debt–free, with a remaining share repurchase authorization of approximately $13.6 million . “This was an exceptional year for USANA,” concluded Mr. Wentz . “We implemented significant improvements to our business that have already produced positive results and that provide a foundation for long-term sustainable growth in the future. We ended the year with strong momentum that has continued into 2014. Our initiatives for the year ahead will build on that momentum with additional personalization initiatives, continued training and education of our sales force, and continuing to reward growth in each of our regions. Our financial outlook suggests that these strategies will produce yet another record year in 2014.” Outlook The Company provided the following financial outlook for 2014: Consolidated net sales between $790 million and $810 million Earnings per share between $5.80 and $5.95 Chief Financial Officer, Paul Jones , commented, “We expect that our growth during 2014 will accelerate as the year progresses after we experience the customary seasonal pressure during the first quarter and as we generate increased leverage from the continued execution of the initiatives we implemented during 2013. During the year, we will continue to invest in projects and initiatives that support our personalization and regional growth strategies which, while creating a challenging year-over-year comparison for our operating margin, are expected to contribute to another year of record results.” Conference Call USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, February 5, 2014 at 11:00 AM 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, 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 . 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 29-Dec-12 28-Dec-13 29-Dec-12 28-Dec-13 Net sales $ 168,530 $ 186,266 $ 648,726 $ 718,175 Cost of sales 30,171 33,778 115,804 127,435 Gross profit 138,359 152,488 532,922 590,740 Operating expenses Associate incentives 71,190 83,803 280,506 307,820 Selling, general and administrative 39,087 39,681 154,237 166,208 Earnings from operations 28,082 29,004 98,179 116,712 Other income (expense) 70 (98 ) 247 (131 ) Earnings before income taxes 28,152 28,906 98,426 116,581 Income taxes 9,705 8,624 31,993 37,557 NET EARNINGS $ 18,447 $ 20,282 $ 66,433 $ 79,024 Earnings per share - diluted $ 1.27 $ 1.41 $ 4.45 $ 5.56 Weighted average shares outstanding - diluted 14,471 14,421 14,923 14,204 USANA Health Sciences, Inc. Consolidated Balance Sheets (In thousands) (Unaudited) As of As of ASSETS 29-Dec-12 28-Dec-13 Current Assets Cash and cash equivalents $ 70,839 $ 137,343 Securities held-to-maturity, net - 8,642 Inventories 36,481 47,242 Other current assets 25,225 35,818 Total current assets 132,545 229,045 Property and equipment, net 61,751 59,180 Goodwill 17,890 18,243 Intangible assets, net 42,085 42,329 Deferred income taxes 5,956 5,519 Other assets 7,128 14,154 Total assets $ 267,355 $ 368,470 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 7,040 $ 9,502 Other current liabilities 63,804 86,369 Total current liabilities 70,844 95,871 Other long-term liabilities 938 1,211 Deferred income taxes 10,001 10,866 Stockholders' equity 185,572 260,522 Total liabilities and stockholders' equity $ 267,355 $ 368,470 USANA Health Sciences, Inc. Sales by Region (Unaudited) (In thousands) Quarter Ended 29-Dec-12 28-Dec-13 Region Americas and Europe $ 60,747 36.0 % $ 64,467 34.6 % Asia Pacific Southeast Asia Pacific 37,419 22.2 % 42,348 22.7 % Greater China 62,499 37.1 % 71,671 38.5 % North Asia 7,865 4.7 % 7,780 4.2 % Asia Pacific Total 107,783 64.0 % 121,799 65.4 % Total $ 168,530 100.0 % $ 186,266 100.0 % Active Associates by Region (1) (Unaudited) As of 29-Dec-12 28-Dec-13 Region Americas and Europe 78,000 31.6 % 82,000 30.9 % Asia Pacific Southeast Asia Pacific 58,000 23.5 % 62,000 23.4 % Greater China 103,000 41.7 % 111,000 41.9 % North Asia 8,000 3.2 % 10,000 3.8 % Asia Pacific Total 169,000 68.4 % 183,000 69.1 % Total 247,000 100.0 % 265,000 100.0 % (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 from us 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 29-Dec-12 28-Dec-13 Region Americas and Europe 53,000 82.8 % 60,000 76.9 % Asia Pacific Southeast Asia Pacific 6,000 9.4 % 10,000 12.8 % Greater China 4,000 6.2 % 5,000 6.4 % North Asia 1,000 1.6 % 3,000 3.9 % Asia Pacific Total 11,000 17.2 % 18,000 23.1 % Total 64,000 100.0 % 78,000 100.0 % (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 from us any time during the most recent three-month period. USANA Health Sciences, Inc. Investors contact: Patrique Richards , 801-954-7961 Investor Relations email@example.com Media contact: Dan Macuga , 801-954-7280 Public Relations Source: USANA Health Sciences, Inc.
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