- Second quarter net sales increased by 8.0% to $160.9 million
- Earnings per share increased by 26.1% to $1.11 for the quarter
- Company raises 2012 financial outlook
SALT LAKE CITY--(BUSINESS WIRE)--Jul. 24, 2012-- USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal second quarter ended June 30, 2012.
Financial Performance
Net sales for the second quarter of 2012 increased by 8.0% to $160.9 million, compared with $148.9 million in the prior-year period. The growth in net sales was driven by increases in both the Company’s Asia Pacific and North America & Europe regions. Changes in currency exchange rates reduced net sales by $2.7 million.
Net earnings for the second quarter increased to $16.7 million, an increase of 20.9%, compared with the prior-year period. This increase was due primarily to higher net sales, improved gross margins, lower relative Associate incentive expense, and a lower effective tax rate. Earnings per share for the quarter increased 26.1% to $1.11, compared with $0.88 in the second quarter of the prior year. This improvement in earnings per share resulted from higher net earnings and a lower number of diluted shares outstanding, resulting from the Company’s share repurchases over the last 12 months.
“USANA delivered solid second quarter results, which capped a very impressive first half of 2012,” said Mr. Dave Wentz, Chief Executive Officer. “During the quarter, we continued to see momentum in our business build due, in part, to our successful launch of a new component to our Associate compensation plan. This component, which is known as our Lifetime Matching Bonus, was very well received by our Associates worldwide. Along with the introduction of the Lifetime Matching Bonus, we ran a short-term sales promotion that also contributed to our positive results during the quarter.”
Regional Results
Net sales in the Asia Pacific region increased by 11.0% to $98.4 million, compared with $88.7 million for the second quarter of the prior year. This improvement was due to strong sales growth in Southeast Asia/Pacific and Greater China. This sales growth was driven by an increase in the number of active Associates as well as price increases in certain markets that were implemented in the first quarter. The number of active Associates in the Asia Pacific region increased by 10.1%, due to significant Associate growth in the Philippines, Associate growth in many other Asia Pacific markets, and the addition of Thailand to our Asia Pacific region.
“We are pleased with the continued growth in our Asia Pacific region,” continued Mr. Wentz. “During the quarter, we held a successful grand opening event in Thailand and expect momentum in that market to grow in the second half of the year. Our efforts in Asia Pacific remain focused on our Greater China region, as we continue to lay the foundation for long-term growth by developing Associate leaders there.”
During the second quarter of 2012, net sales in the North America & Europe region increased by 3.6% to $62.5 million, compared with the second quarter of the prior year. This improvement was predominantly due to higher sales in the United States and Mexico and, to a lesser extent, to the opening of France and Belgium. The number of Active Associates in North America & Europe declined modestly compared with the second quarter of 2011.
Mr. Wentz added, “Our strategy to return North America to growth is being successfully executed, and we are encouraged by the momentum we are seeing in this region. In August, we will hold our International Convention in Salt Lake City, where we plan to make several announcements that we believe will facilitate worldwide growth, especially in North America.”
The Company continued its successful track record of generating meaningful levels of cash from operations and ended the quarter with approximately $65.5 million in cash and cash equivalents. Cash generated from operations totaled $21.3 million for the quarter. During the quarter, the Company invested $26.6 million to repurchase 677,000 shares of the Company’s stock.
Outlook
The Company provided the following updated financial outlook for 2012:
- Consolidated net sales between $630 million and $640 million, versus the previous outlook of between $610 million and $625 million.
- Earnings per share between $4.10 and $4.20, versus the previous outlook of between $3.60 and $3.70.
Chief Financial Officer Doug Hekking commented, “Leverage gained on higher sales, better than expected gross margins, and a lower effective tax rate were the main factors that contributed to our strong bottom-line performance this quarter. These same factors, as well as a reduced number of diluted shares outstanding, are the driving forces behind the increase in our earnings per share estimate for the remainder of the current fiscal year. Our strong performance during the first six months of the year has laid the foundation for what we believe will be a solid second half of 2012. As such, we are raising our financial outlook for fiscal 2012.”
Conference Call
USANA will hold a conference call and webcast to discuss this announcement with investors on Wednesday, July 25, 2012 at 11:00 a.m. 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 and Belgium. 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.
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