Usana Health Sciences Inc 10-Q for FY2020 Q2

Usana Health Sciences Inc (USNA)

10-Q 2020-08-04 For: 2020-06-27

Added on April 06, 2026

About this 10-Q

Usana Health Sciences Inc filed this 10-Q on August 4, 2020, covering the quarter ended June 27, 2020 (FY2020 Q2).

Headline figures

Quarter ended June 27, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $258.99M; up 1.2% from $256.02M a year earlier
Net income: $27.98M; up 30.9% from net income of $21.38M a year earlier
Diluted EPS: $1.32; up 45.1% from $0.91 a year earlier

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Utah	87-0500306
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	USNA	New York Stock Exchange



Large accelerated filer x	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ¨
	Emerging growth company ¨


		Page
Cautionary Note Regarding Forward-Looking Statements and Certain Risks		1
PART I. FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Comprehensive Income	3
	Condensed Consolidated Statements of Stockholders’ Equity	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7 - 13
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14 - 21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4	Controls and Procedures	21
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	22
Item 1A	Risk Factors	22
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3	Defaults Upon Senior Securities	22
Item 4	Mine Safety Disclosures	22
Item 5	Other Information	22
Item 6	Exhibits	22
Signatures		23



	As of		As of
	June 27,		December 28,
	2020		2019
ASSETS
Current assets
Cash and cash equivalents	$	227,368	$	234,830
Inventories		69,279		68,905
Prepaid expenses and other current assets		28,302		25,544
Total current assets		324,949		329,279
Property and equipment, net		98,435		95,233
Goodwill		16,521		16,636
Intangible assets, net		29,008		29,840
Deferred tax assets		3,741		3,090
Other assets		39,497		42,856
	$	512,151	$	516,934
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	10,942	$	12,525
Other current liabilities		128,775		123,573
Total current liabilities		139,717		136,098
Deferred tax liabilities		6,584		10,282
Other long-term liabilities		16,774		18,842
Stockholders' equity
Common stock, $0.001 par value; Authorized -- 50,000 shares,
issued and outstanding 21,017 as of June 27, 2020
and 21,655 as of December 28, 2019		21		22
Additional paid-in capital		55,526		59,445
Retained earnings		312,659		306,146
Accumulated other comprehensive income (loss)		(19,130)		(13,901)
Total stockholders' equity		349,076		351,712
	$	512,151	$	516,934

Usana Health Sciences Inc 10-Q for FY2020 Q2

About this 10-Q

Headline figures

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES

USANA HEALTH SCIENCES, INC. AND SUBSIDIARIES



	Quarter Ended				Six Months Ended
	June 27,		June 29,		June 27,		June 29,
	2020		2019		2020		2019
Net sales	$	258,991	$	256,016	$	525,610	$	529,006
Cost of sales		47,674		46,494		93,733		92,395
Gross profit		211,317		209,522		431,877		436,611
Operating expenses:
Associate incentives		110,852		111,511		226,921		234,041
Selling, general and administrative		60,879		66,854		126,358		136,409
Total operating expenses		171,731		178,365		353,279		370,450
Earnings from operations		39,586		31,157		78,598		66,161
Other income (expense):
Interest income		435		1,301		1,419		2,785
Interest expense		(217)		(10)		(238)		(22)
Other, net		175		64		(637)		(118)
Other income (expense), net		393		1,355		544		2,645
Earnings before income taxes		39,979		32,512		79,142		68,806
Income taxes		12,002		11,134		24,613		23,256
Net earnings	$	27,977	$	21,378	$	54,529	$	45,550

Earnings per common share
Basic	$	1.33	$	0.92	$	2.56	$	1.95
Diluted	$	1.32	$	0.91	$	2.56	$	1.93

Weighted average common shares outstanding
Basic		21,034		23,245		21,265		23,364
Diluted		21,129		23,370		21,340		23,648

Comprehensive income:
Net earnings	$	27,977	$	21,378	$	54,529	$	45,550
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment		1,861		(5,592)		(4,376)		(818)
Tax benefit (expense) related to foreign currency
translation adjustment		(1,892)		242		(853)		(1,052)
Other comprehensive income (loss), net of tax		(31)		(5,350)		(5,229)		(1,870)
Comprehensive income	$	27,946	$	16,028	$	49,300	$	43,680


For six months ended June 29, 2019
								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive
	Shares	Value		Capital		Earnings		Income (Loss)		Total
Balance at December 29, 2018	23,567	$	24	$	72,008	$	329,501	$	(10,387)	$	391,146
Net earnings							45,550				45,550
Other comprehensive income (loss), net of tax									(1,870)		(1,870)
Equity-based compensation expense					8,601						8,601
Common stock repurchased and retired	(651)		(1)		(10,115)		(47,507)				(57,623)
Common stock issued under equity award plans	64		—								—
Tax withholding for net-share settled equity awards					(1,648)						(1,648)
Balance at June 29, 2019	22,980	$	23	$	68,846	$	327,544	$	(12,257)	$	384,156

For six months ended June 27, 2020
								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive
	Shares	Value		Capital		Earnings		Income (Loss)		Total
Balance at December 28, 2019	21,655	$	22	$	59,445	$	306,146	$	(13,901)	$	351,712
Net earnings							54,529				54,529
Other comprehensive income (loss), net of tax									(5,229)		(5,229)
Equity-based compensation expense					6,991						6,991
Common stock repurchased and retired	(785)		(1)		(9,012)		(48,016)				(57,029)
Common stock issued under equity award plans	147		—								—
Tax withholding for net-share settled equity awards					(1,898)						(1,898)
Balance at June 27, 2020	21,017	$	21	$	55,526	$	312,659	$	(19,130)	$	349,076


For the three months ended June 29, 2019
								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive
	Shares	Value		Capital		Earnings		Income (Loss)		Total
Balance at March 30, 2019	23,335	$	23	$	69,100	$	329,001	$	(6,907)	$	391,217
Net earnings							21,378				21,378
Other comprehensive income (loss), net of tax									(5,350)		(5,350)
Equity-based compensation expense					4,769						4,769
Common stock repurchased and retired	(367)		—		(4,788)		(22,835)				(27,623)
Common stock issued under equity award plans	12		—								—
Tax withholding for net-share settled equity awards					(235)						(235)
Balance at June 29, 2019	22,980	$	23	$	68,846	$	327,544	$	(12,257)	$	384,156

For the three months ended June 27, 2020
								Accumulated
				Additional				Other
	Common Stock			Paid-in		Retained		Comprehensive
	Shares	Value		Capital		Earnings		Income (Loss)		Total
Balance at March 28, 2020	20,995	$	21	$	52,004	$	284,682	$	(19,099)	$	317,608
Net earnings							27,977				27,977
Other comprehensive income (loss), net of tax									(31)		(31)
Equity-based compensation expense					3,597						3,597
Common stock issued under equity award plans	22		—								—
Tax withholding for net-share settled equity awards					(75)						(75)
Balance at June 27, 2020	21,017	$	21	$	55,526	$	312,659	$	(19,130)	$	349,076



			Fair Value Measurements Using
	June 27,		Inputs
	2020		Level 1		Level 2		Level 3
Money market funds included in cash equivalents	$	149,307	$	149,307	$	—	$	—
Foreign currency contracts included in other current liabilities		(888)		—		(888)		—
	$	148,419	$	149,307	$	(888)	$	—

			Fair Value Measurements Using
	December 28,		Inputs
	2019		Level 1		Level 2		Level 3
Money market funds included in cash equivalents	$	180,032	$	180,032	$	—	$	—
Foreign currency contracts included in other current liabilities		(764)		—		(764)		—
	$	179,268	$	180,032	$	(764)	$	—


	Total Active Customers by Region
	As of		As of		Change from	Percent
	June 27, 2020		June 29, 2019		Prior Year	Change
Asia Pacific:
Greater China	278,000	46.4%	278,000	50.1%	—	0.0%
Southeast Asia Pacific	129,000	21.5%	108,000	19.4%	21,000	19.4%
North Asia	56,000	9.4%	47,000	8.5%	9,000	19.1%
Asia Pacific Total	463,000	77.3%	433,000	78.0%	30,000	6.9%
Americas and Europe	136,000	22.7%	122,000	22.0%	14,000	11.5%
	599,000	100.0%	555,000	100.0%	44,000	7.9%


	Net Sales by Region
	(in thousands)
	Quarter Ended
	June 27, 2020			June 29, 2019			Change ‎from ‎prior year		Percent ‎change	Currency ‎impact ‎on sales		Percent ‎change ‎excluding ‎currency ‎impact
Asia Pacific
Greater China	$	124,001	47.9%	$	128,946	50.3%	$	(4,945)	(3.8%)	$	(3,874)	(0.8%)
Southeast Asia Pacific		59,459	22.9%		53,960	21.1%		5,499	10.2%		(1,096)	12.2%
North Asia		25,852	10.0%		22,575	8.8%		3,277	14.5%		(1,127)	19.5%
Asia Pacific Total		209,312	80.8%		205,481	80.2%		3,831	1.9%		(6,097)	4.8%
Americas and Europe		49,679	19.2%		50,535	19.8%		(856)	(1.7%)		(1,999)	2.3%
	$	258,991	100.0%	$	256,016	100.0%	$	2,975	1.2%	$	(8,096)	4.3%


	Cash and cash equivalents
	(in Millions)
		As of		As of
		June 27,		December 28,
		2020		2019
United States	$	108.4	$	85.3
China		75.1		114.9
All other markets		43.9		34.6
Total Cash and cash equivalents	$	227.4	$	234.8


Exhibit Number	Description
31.1	*Certification of Principal Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
31.2	*Certification of Principal Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002
32.1	*Certification of Principal Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
32.2	*Certification of Principal Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

	USANA HEALTH SCIENCES, INC.

	/s/ G. Douglas Hekking
	G. Douglas Hekking
	Chief Financial Officer (Principal Financial Officer)


Date: August 4, 2020	/s/ Kevin G. Guest
	Kevin G. Guest
	Chief Executive Officer (Principal Executive Officer)



	Six Months Ended
	June 27,		June 29,
	2020		2019
Cash flows from operating activities
Net earnings	$	54,529	$	45,550
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization		7,044		7,654
Right-of-use asset amortization		4,355		3,977
(Gain) loss on sale of property and equipment		116		26
Equity-based compensation expense		6,991		8,601
Deferred income taxes		(5,326)		(10,722)
Changes in operating assets and liabilities:
Inventories		(1,950)		(6,026)
Prepaid expenses and other assets		(4,890)		3,334
Accounts payable		(1,120)		1,379
Other liabilities		3,675		(33,094)
Net cash provided by (used in) operating activities		63,424		20,679
Cash flows from investing activities
Receipts on notes receivable		179		92
Proceeds from the settlement of net investment hedges		1,935		1,936
Payments for net investment hedge		(1,089)		(1,660)
Maturities of investment securities held-to-maturity		—		60,540
Proceeds from sale of property and equipment		—		6
Purchases of property and equipment		(10,821)		(7,130)
Net cash provided by (used in) investing activities		(9,796)		53,784
Cash flows from financing activities
Repurchase of common stock		(57,029)		(57,623)
Borrowings on line of credit		60,000		5,000
Payments on line of credit		(60,000)		(5,000)
Payments related to tax withholding for net-share settled equity awards		(1,898)		(1,648)
Net cash provided by (used in) financing activities		(58,927)		(59,271)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(2,195)		1,839
Net increase (decrease) in cash, cash equivalents, and restricted cash		(7,494)		17,031
Cash, cash equivalents, and restricted cash at beginning of period		237,688		217,234
Cash, cash equivalents, and restricted cash at end of period	$	230,194	$	234,265
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	227,368	$	231,353
Restricted cash included in other assets		2,826		2,912



	June 27,		December 28,
	2020		2019
Raw materials	$	18,619	$	15,879
Work in progress		8,420		12,111
Finished goods		42,240		40,915
	$	69,279	$	68,905



	June 27,		December 28,
	2020		2019
Contract liabilities at beginning of period	$	13,852	$	15,055
Increase due to deferral of revenue at period end		15,972		13,852
Decrease due to beginning contract liabilities recognized as revenue		(13,372)		(15,055)
Contract liabilities at end of period	$	16,452	$	13,852



	Six Months Ended
	June 27,	June 29,
	2020	2019
Product Line
USANA^® Nutritionals
Optimizers	63%	65%
Essentials/CellSentials*	19%	19%
USANA Foods	10%	8%
Personal care and Skincare	7%	7%
All Other	1%	1%
Key Product
USANA^® Essentials/CellSentials	12%	12%
Proflavanol^®	11%	11%
Probiotic	10%	10%