EXHIBIT 99.2
USANA Announces Record Q2 2007 Net Sales and Earnings Per Share
Direct Selling Segment Net Sales up 19.8%
20th Consecutive Quarter of Record Sales
Company Raises Annual Guidance
SALT LAKE CITY--(BUSINESS WIRE)--July 17, 2007--USANA Health
Sciences, Inc. (NASDAQ: USNA) today announced financial results for
the fiscal second quarter of 2007, ended June 30. The second quarter
of 2007 represented the 20th consecutive quarter of record sales for
the Company.
Financial Performance
Consolidated net sales in the second quarter of 2007 increased by
18.3% to $109.4 million, compared with $92.5 million in the second
quarter of the prior year. Net sales in the Direct Selling segment
increased by 19.8% to $107.4 million, compared with $89.6 million in
the second quarter of the prior year. Net sales growth in the Direct
Selling segment for the second quarter of 2007 resulted primarily from
a 25.4% net increase in the number of active Associates, which
includes those who have purchased products directly from the Company
in the preceding three months, either for personal consumption or
resale.
Earnings from operations in the second quarter of 2007 grew by
18.8% to $18.2 million, or 16.7% of net sales, compared with $15.3
million, or 16.6% of net sales, in the second quarter of the prior
year. Earnings per share in the second quarter of 2007 increased by
19.7% to $0.66 per share, compared with $0.55 per share in the second
quarter of the prior year. A higher-than-anticipated effective tax
rate of 37.9% for the second quarter of 2007, reduced earnings per
share by approximately $0.02.
For the six-month period ended June 30, 2007, consolidated net
sales were $212.0 million, an increase of 17.3%, compared with $180.7
million in the first six months of 2006. Earnings per share increased
23.3% in the first six months of 2007 to $1.29, compared with $1.05 in
the first six months of 2006.
During the second quarter of 2007, the Company repurchased
approximately 1.6 million shares for an investment of $67.9 million.
Due to this aggressive buyback, the total number of shares outstanding
was reduced by approximately 9.0% from the first quarter of 2007 to
16.3 million shares, and the Company ended the second quarter of 2007
with a balance of $34.5 million on its line of credit.
"The strength of our network marketing business model was evident
again this quarter as we witnessed the 20th consecutive quarter of
record sales and strong operating results driven by the improvement in
gross margins," said Dave Wentz, president of USANA. "USANA's
continued repurchases of shares during the quarter are a strong
indication that management and the Board believe in the long-term
prospects and health of the Company."
Regional Results
During the second quarter of 2007, net sales in North America, the
Company's most mature region, increased by 11.2% to $68.2 million,
compared with the second quarter of the prior year. This growth was
driven primarily by a 15.6% net improvement in the number of active
Associates in this region to 104,000. Along with double-digit growth
in the U.S., sales in Mexico increased by 33.2% over the second
quarter of last year to bolster the results in the North America
region.
"Our efforts to increase Associate activity in North America are
working," continued Wentz. "We are pleased to have achieved
double-digit growth in the number of active Associates in this region
and will continue to give extra attention to ensure that our Associate
leaders have all of the tools and resources necessary to sell our
outstanding products and share in the success of our home-based
business."
During the second quarter of 2007, net sales in the Asia Pacific
region increased by 38.5% to $39.3 million, compared with the second
quarter of the prior year. The growth in this region was led by
double-digit, year-over-year growth in nearly all markets. Malaysia
continues to show steady growth as a new market, contributing $4.5
million of incremental revenue in the second quarter, a 45.4%
increase, compared with the first quarter. The number of active
Associates in the Asia Pacific region increased by 42.3% to 74,000,
compared with 52,000 in the second quarter of the prior year. The
number of Associates in our newest market, Malaysia, grew to 11,000 in
just its second quarter of operations.
"We are pleased with our early success in Malaysia," continued
Wentz. "The rollout of this new market has been the smoothest in our
history and we will continue to work closely with our local management
to ensure Malaysia's ongoing contribution to our consistent growth in
the Asia Pacific region."
Outlook
Today, the Company is providing financial guidance for the third
quarter of 2007 and is updating its financial guidance for the full
year 2007. Based on its current business circumstances, the Company
believes that net sales for the third quarter of 2007 will be between
$105 million and $107 million, a growth rate of 12% to 14%, compared
with the prior year third quarter. Notably, this guidance includes an
even smaller portion of sales from third-party contract manufacturing,
due to the expected sale of that business sometime during the third
quarter. The Company believes that earnings per share for the third
quarter of 2007 will be $0.65 to $0.67, a growth rate of 18% to 22%,
compared with 2006. Additionally, the Company is adjusting its
full-year 2007 guidance and believes that net sales will be $425
million to $430 million, a growth rate of 14% to 15% year-over-year.
This annual sales guidance includes the estimated reduction of revenue
due to the expected sale of the third-party contract manufacturing
business. According to these estimates, the Company anticipates annual
earnings per share to be $2.60 to $2.64, a growth rate of 18% to 20%,
compared with 2006. These earnings per share estimates assume an
effective tax rate of 37.0% for 2007.
Gilbert A. Fuller, the Company's executive vice president and
chief financial officer, said, "We are optimistic that our persistent
and strategic focus on our Associates will continue to return strong
results, as it did during the second quarter. Operationally, our
business model is very strong, and we will continue to look for
opportunities to return value to our shareholders. Also, we will
continue to take aggressive action to address the misinformation
concerning our company that has appeared recently in the media. We
remain committed to offering the finest nutritional products and
home-based business in the industry."
Conference Call
USANA will hold a conference call and webcast to discuss this
announcement with investors on Wednesday, July 18, 2007 at 11:00 AM
ET. 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
Preferred Customers and Associates throughout the United States,
Canada, Australia, New Zealand, Hong Kong, Japan, Taiwan, South Korea,
Singapore, Mexico, Malaysia, the Netherlands, and the United Kingdom.
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 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)
Quarter Ended
------------------------
1-Jul-06 30-Jun-07
----------- ------------
(Unaudited) (Unaudited)
Net sales $ 92,482 $ 109,407
Cost of sales 22,276 24,347
----------- ------------
Gross profit 70,206 85,060
Operating expenses
Associate incentives 36,025 43,280
Selling, general and administrative 17,991 22,571
Research and development 830 961
----------- ------------
Earnings from operations 15,360 18,248
Other income 336 (16)
----------- ------------
Earnings before income taxes 15,696 18,232
Income taxes 5,352 6,913
----------- ------------
NET EARNINGS $ 10,344 $ 11,319
=========== ============
Earnings per share - diluted $ 0.55 $ 0.66
=========== ============
Weighted average shares outstanding - diluted 18,777 17,163
=========== ============
USANA Health Sciences, Inc.
Consolidated Balance Sheets
(in thousands)
As of As of
30-Dec-06 30-Jun-07
----------- -----------
(Unaudited)
ASSETS
Cash and cash equivalents $ 27,029 $ 9,876
Inventories, net 22,483 22,302
Other current assets 11,103 11,074
----------- -----------
Total current assets 60,615 43,252
Property and equipment, net 30,323 42,983
Goodwill 5,690 5,690
Other assets 3,374 4,052
----------- -----------
Total assets $ 100,002 $ 95,977
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 10,241 $ 9,337
Other current liabilities 29,564 35,169
Line of Credit - 34,515
----------- -----------
Total current liabilities 39,805 79,021
Stockholders' equity 60,197 16,956
----------- -----------
Total liabilities and stockholders' equity $ 100,002 $ 95,977
=========== ===========
USANA Health Sciences, Inc.
Sales by Segment and Region
(in thousands)
Quarter Ended
---------------------------------
1-Jul-06 30-Jun-07
---------------- ----------------
(Unaudited) (Unaudited)
Region
-----------------------------------
North America
United States $ 39,250 42.4% $ 43,433 39.7%
Canada 17,721 19.2% 18,965 17.3%
Mexico 4,323 4.7% 5,758 5.3%
--------- ------ --------- ------
North America Total $ 61,294 66.3% $ 68,156 62.3%
Asia Pacific
Australia-New Zealand 12,104 13.1% 14,630 13.4%
Hong Kong 3,376 3.7% 6,097 5.6%
Japan 2,379 2.6% 2,310 2.1%
Taiwan 4,978 5.4% 5,411 4.9%
South Korea 1,704 1.8% 1,875 1.7%
Singapore 3,813 4.1% 4,399 4.0%
Malaysia - 0.0% 4,541 4.2%
--------- ------ --------- ------
Asia Pacific Total 28,354 30.7% 39,263 35.9%
--------- ------ --------- ------
Segment Total 89,648 96.9% 107,419 98.2%
--------- ------ --------- ------
Contract Manufacturing 2,834 3.1% 1,988 1.8%
--------- ------ --------- ------
Consolidated $ 92,482 100.0% $ 109,407 100.0%
========= ====== ========= ======
Active Associates by Region
As of
---------------------------------
1-Jul-06 30-Jun-07
---------------- ----------------
(Unaudited) (Unaudited)
Region
-----------------------------------
North America
United States 57,000 40.1% 63,000 35.4%
Canada 23,000 16.2% 27,000 15.2%
Mexico 10,000 7.0% 14,000 7.9%
--------- ------ --------- ------
North America Total 90,000 63.4% 104,000 58.5%
Asia Pacific
Australia-New Zealand 18,000 12.7% 21,000 11.8%
Hong Kong 6,000 4.2% 13,000 7.3%
Japan 4,000 2.8% 4,000 2.2%
Taiwan 13,000 9.2% 15,000 8.4%
South Korea 2,000 1.4% 2,000 1.1%
Singapore 9,000 6.3% 8,000 4.5%
Malaysia - 0.0% 11,000 6.2%
--------- ------ --------- ------
Asia Pacific Total 52,000 36.6% 74,000 41.5%
--------- ------ --------- ------
Total 142,000 100.0% 178,000 100.0%
========= ====== ========= ======
Active Preferred Customers by Region
As of
---------------------------------
1-Jul-06 30-Jun-07
---------------- ----------------
(Unaudited) (Unaudited)
Region
-----------------------------------
North America
United States 48,000 64.0% 51,000 64.6%
Canada 18,000 24.0% 18,000 22.8%
Mexico 2,000 2.7% 2,000 2.5%
--------- ------ --------- ------
North America Total 68,000 90.7% 71,000 89.9%
Asia Pacific
Australia-New Zealand 6,000 8.0% 6,000 7.5%
Hong Kong ** 0.0% 1,000 1.3%
Japan 1,000 1.3% 1,000 1.3%
Taiwan ** 0.0% ** 0.0%
South Korea ** 0.0% ** 0.0%
Singapore ** 0.0% ** 0.0%
Malaysia - 0.0% ** 0.0%
--------- ------ --------- ------
Asia Pacific Total 7,000 9.3% 8,000 10.1%
--------- ------ --------- ------
Total 75,000 100.0% 79,000 100.0%
========= ====== ========= ======
**Count of Active Preferred Customers is less than 500.
CONTACT: USANA Health Sciences, Inc.
Riley Timmer, 801-954-7922 (Investor Relations)
investor.relations@us.usana.com
or
Edelman
Joe Poulos, 312-240-2719 (Media)