By Ted Nuyten
USANA Health Sciences, Inc. (NYSE: USNA) today announced financial results for its fiscal fourth quarter and full-year ended December 30, 2017.
For the fourth quarter of 2017, net sales were $273.1 million compared with $252.9 million in the prior-year period, or an 8.0% increase year-over-year. The weakening of the U.S. dollar positively impacted net sales by $7.4 million for the quarter.
The Company’s total number of active Customers2 increased modestly year-over-year to 565,000.
The Company reported a net loss for the fourth quarter of $5.9 million, or $0.24 loss per share, compared with net earnings of $21.9 million, or $0.87 per diluted share during the prior-year period. The net loss is attributable to a one-time, non-cash charge of $30.1 million, or $1.24 per diluted share, related to the U.S. tax reform3 (the “Tax Reform”) enacted on December 22, 2017.
The charge is largely due to foreign tax credits and other deferred tax assets that the Company will not be able to realize under the new tax laws. Costs related to China and the Company’s internal investigation into its China operations, which was first disclosed in February 2017, negatively impacted fourth quarter net earnings by approximately $2.7 million after tax and earnings per diluted share by $0.11. Excluding both the impact of the Tax Reform and the expense related to China and the Company’s internal investigation, net earnings increased 23.1% to $26.9 million, or $1.11 per diluted share.
“Our fourth quarter topline results exceeded our expectations and provided a strong finish to the year for USANA,”
said Kevin Guest, Chief Executive Officer. “During the quarter, we offered a few targeted product promotions around the world that contributed to our sales results and overall momentum.”
Weighted average basic and diluted shares outstanding were 24.0 million for the fourth quarter of 2017, compared with diluted shares of 25.0 million in the prior-year period. The Company did not repurchase any shares during the quarter and ended the year with $247.1 million in cash and cash equivalents and no debt. As of December 30, 2017, there was $50.0 million remaining under the current share repurchase authorization.
Net sales in the Asia Pacific region increased by 12.1% to $216.7 million for the fourth quarter of 2017. Within Asia Pacific, net sales:
- Increased 14.0% in Greater China;
- Increased 24.6% in North Asia; and
- Increased 4.1% in the Southeast Asia Pacific region.
Sales growth in Greater China was primarily driven by 3.1% active Customer growth and a successful product promotion in Mainland China, while sales growth in North Asia resulted from 19.2% active Customer growth in South Korea. Sales growth in Southeast Asia Pacific was driven by 27.3% Active Customer growth in Malaysia. The total number of active Customers in the Asia Pacific region increased by 3.4% year-over-year.
Net sales in the Americas and Europe region for the fourth quarter of 2017 decreased by 5.2% to $56.4 million, largely due to an 8.6% decrease in active Customers.
“The Asia Pacific region continues to drive our growth,” continued Mr. Guest. “Our performance in the Americas and Europe region is not where we would like to see it, but we continue to work on several initiatives for this important region that we believe will be a catalyst to improved performance.”
Net sales for fiscal 2017 increased by 4.1%, or $41.2 million, to $1.047 billion, compared with $1.006 billion in 2016. Net sales for the full year were negatively impacted by $6.3 million due to a strengthening of the U.S. dollar. On a constant currency basis, net sales increased by 4.7% during fiscal 2017.
Net earnings for 2017 decreased by 37.5% to $62.5 million, or $2.53 per diluted share, compared with $100.0 million, or $3.99 per diluted share in the prior year. The lower net earnings in 2017 included a one-time, non-cash charge of $30.1 million, or $1.22 per diluted share, related to the Tax Reform. Costs related to China and the Company’s internal investigation into its China operations, totaled $7.6 million after tax and negatively impacted earnings per diluted share by $0.31.
Excluding both the impact of the Tax Reform and the expense related to China and the internal investigation, net earnings improved to $100.3 million, or $4.06 per diluted share. Weighted average diluted shares outstanding were 24.7 million for the full-year 2017, compared with 25.0 million in the prior-year period.
“Fiscal 2017 was USANA’s 15th consecutive year of record sales, as well as a year of meaningful announcements and progress for the business. At our annual International Convention, which marked our 25th anniversary, we introduced a completely new skincare line, Celavive®, and announced the opening of four new European markets.
During the year, we also made significant progress in improving our global IT infrastructure and continued to emphasize personalization through the expansion of our Incelligence™ technology. In 2018, the launch of Celavive® and the rollout of our European expansion will be significant areas of focus for us throughout the year.
Our strategies for 2018 also include (i) growing our Preferred Customer business around the world; (ii) introducing a robust social sharing platform, (iii) pursuing additional product and technology innovation, and (iv) continuing our investment in our IT infrastructure to create a better overall customer experience for our Associates and Preferred Customers. I am excited about these initiatives and our outlook for 2018,” concluded Mr. Guest.
USANA develops and manufactures high-quality nutritional supplements, healthy foods and personal care 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, Colombia and Indonesia.
More information on USANA can be found at www.usana.com.