USANA Announces Fourth Quarter 2006 Financial Results

SALT LAKE CITY, Feb 06, 2007 (BUSINESS WIRE) -- USANA Health Sciences, Inc. (USNA) today announced record financial results for the fiscal fourth quarter and for the full-year 2006 (ended December 30)

Financial Performance
Consolidated net sales in the fourth quarter of 2006 increased by 16.5% to $99.8 million, compared with $85.6 million in the fourth quarter of the prior year. Excluding the positive impact of currency fluctuations, this sales increase would have been 15.0%. Net sales growth for the fourth quarter of 2006 resulted primarily from a 15.0% increase in the number of active Associates, compared with the fourth quarter of the prior year.

Earnings from operations in the fourth quarter of 2006 grew by 8.3% to $16.7 million, or 16.8% of net sales, compared with $15.4 million, or 18.0% of net sales, in the fourth quarter of the prior year. Earnings from operations in the fourth quarter of 2006 were reduced by $1.3 million, due to the required expensing of equity-based compensation. Earnings per share in the fourth quarter of 2006 increased by 13.0% to $0.61 per share, compared with $0.54 per share in the fourth quarter of the prior year. Excluding the expense of equity-based compensation, earnings per share in the fourth quarter of 2006 would have been $0.65, an increase of 20.4%, compared with the fourth quarter of the prior year. Earnings per share in the fourth quarter of 2006 were impacted by an expected unfavorable tax ruling, resulting in a tax rate that was higher than anticipated, and by a favorable foreign exchange gain on capital that was returned to the Company from one of its foreign subsidiaries.

"The fourth quarter marked the 18th consecutive quarter of record sales, driven by strong sales growth of 16.6% in North America and 19.9% in the Asia Pacific region," said Dave Wentz, President of USANA. "Our results demonstrate our ability to grow in both our mature markets and in our newer markets.

"The promotions that we offered during the fourth quarter, including those relating to Success from Home Magazine, were key elements of our strong performance in the quarter. We are optimistic that, as we continue to offer contests and promotions, we will consistently generate new Associate prospects throughout 2007."

For the full-year, ended December 30, 2006, consolidated net sales increased by 15.8% to $374.2 million, compared with $323.1 million in the prior year. Earnings from operations for the full-year 2006 increased by 6.8% to $62.3 million, compared with $58.4 million for the prior year. Earnings from operations for the full-year 2006 were reduced by $4.8 million, due to the required expensing of equity-based compensation. Earnings per share for the full-year 2006 increased by 11.1% to $2.20, compared with $1.98 for the prior year. Excluding the expense of equity-based compensation for the full-year 2006, earnings per share would have been $2.37, an increase of 19.7%, compared with the prior year.
Regional Results
During the fourth quarter of 2006, net sales in North America, the Company's most mature region, increased by 16.6% to $65.5 million, compared with the fourth quarter of the prior year. This growth was driven primarily by a 14.6% increase in the number of active Associates in this region. The Company also generated strong sales in Mexico, which increased by 48.9%, compared with the fourth quarter of the prior year.

During the fourth quarter of 2006, net sales in the Asia Pacific region increased by 19.9% to $32.5 million, compared with the fourth quarter of the prior year. The growth in this region was led by strong results in Hong Kong, up 62.3%, and in Singapore, up 46.7%. Additionally, the number of active Associates in the Asia Pacific region increased by 15.7% to 59,000, compared with 51,000 in the fourth quarter of the prior year.
"The number of Associate leaders continues to grow in the Asia Pacific region," continued Mr. Wentz. "We believe that the recent opening of Malaysia and the March 2007 Asia Pacific convention in Sydney, Australia, will serve as catalysts for our growth in this region."

Outlook
Commenting on USANA's future expectations, Gilbert A. Fuller, the Company's Executive Vice President and Chief Financial Officer, said, "We expect net sales in the first quarter of 2007 to be in the range of $103 million to $105 million, compared with $88.2 million in the first quarter of last year, a growth rate of between 17% and 19%. This sales guidance includes revenue from Malaysia, which opened for business on January 8, 2007. We believe that earnings per share in the first quarter of 2007 will be between $0.61 and $0.63, compared with $0.50 in the first quarter of last year, a growth rate of between 22% and 26%.

"As to our guidance for the full-year 2007, we continue to expect net sales to grow by 15% to 17% over 2006. Based on our current expectations, however, we are raising our full-year 2007 earnings per share guidance and now believe that earnings per share will grow by 17% to 20% over 2006. This earnings per share estimate includes an estimated tax rate of 36.5%, which is higher than our 35.3% tax rate for 2006," Mr. Fuller concluded.

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, 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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