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Usana Health Sciences Posts 4th Quarter and Full-Year 2013 Financial Results

February 7, 2014

Usana Health Sciences, Inc. 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.

In a release on February 4, the Company noted that for the fourth quarter of 2013, net sales increased by 10.5 percent 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 percent 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 percent 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 percent 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."

Net sales in the Asia Pacific region increased by 13.0 percent 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 percent 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 percent 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."

For the year ended December 28, 2013, net sales increased by 10.7 percent 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 percent 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 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."

Usana develops and manufactures 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:

www.usanahealthsciences.com

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