usna-20240629

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 29, 2024

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________

Commission file number: 001-35024

______________________

USANA HEALTH SCIENCES, INC.

(Exact name of registrant as specified in its charter)


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

______________________

3838 West Parkway Blvd., Salt Lake City, Utah 84120

(Address of principal executive offices, including zip code)

______________________

(801) 954-7100

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

USNA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 2, 2024, there were 19,052,276 outstanding shares of the registrant’s common stock, $0.001 par value.


Auditor Name: KPMG LLP			Auditor Location: Salt Lake City, Utah			Auditor Firm ID: 185


		Page
Cautionary Note Regarding Forward-Looking Statements and Certain Risks		1
PART I. FINANCIAL INFORMATION
Item 1	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Comprehensive Income	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8 - 16
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17 - 23
Item 3	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4	Controls and Procedures	23
PART II. OTHER INFORMATION
Item 1	Legal Proceedings	25
Item 1A	Risk Factors	25
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 5	Other Information	25
Item 6	Exhibits	25
Signatures		26


	As of June 29, 2024		As of December 30, 2023
ASSETS
Current assets
Cash and cash equivalents	$	332,423	$	330,420
Inventories	61,832		61,454
Prepaid expenses and other current assets	24,826		25,872
Total current assets	419,081		417,746
Property and equipment, net	97,686		99,814
Goodwill	16,837		17,102
Intangible assets, net	28,637		29,919
Deferred tax assets	18,190		13,284
Other assets	50,988		54,892
	$	631,419	$	632,757
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	6,648	$	10,070
Line of credit - short term	—		786
Other current liabilities	97,248		107,989
Total current liabilities	103,896		118,845
Deferred tax liabilities	4,653		4,552
Other long-term liabilities	10,662		12,158
Stockholders' equity
Common stock, $0.001 par value; Authorized -- 50,000 shares, issued and outstanding 19,051 as of June 29, 2024 and 19,130 as of December 30, 2023	19		19
Additional paid-in capital	68,814		65,661
Retained earnings	463,883		445,217
Accumulated other comprehensive income (loss)	(20,508)		(13,695)
Total stockholders' equity	512,208		497,202
	$	631,419	$	632,757


	Three Months Ended				Six Months Ended
	June 29, 2024		July 1, 2023		June 29, 2024		July 1, 2023
Net sales	$	212,869	$	238,202	$	440,669	$	486,562
Cost of sales	40,333		43,326		83,402		91,845
Gross profit	172,536		194,876		357,267		394,717
Operating expenses:
Associate incentives	90,371		102,380		186,129		208,450
Selling, general and administrative	64,325		68,096		128,625		135,022
Total operating expenses	154,696		170,476		314,754		343,472
Earnings from operations	17,840		24,400		42,513		51,245
Other income (expense):
Interest income	2,763		2,224		5,439		3,999
Interest expense	(51)		(43)		(103)		(74)
Other, net	(349)		229		(535)		141
Other income (expense), net	2,363		2,410		4,801		4,066
Earnings before income taxes	20,203		26,810		47,314		55,311
Income taxes	9,771		9,518		20,345		19,636
Net earnings	$	10,432	$	17,292	$	26,969	$	35,675

Earnings per common share
Basic	$	0.55	$	0.89	$	1.41	$	1.85
Diluted	$	0.54	$	0.89	$	1.40	$	1.84

Weighted average common shares outstanding
Basic	19,073		19,321		19,123		19,302
Diluted	19,159		19,427		19,230		19,377

Comprehensive income:
Net earnings	$	10,432	$	17,292	$	26,969	$	35,675
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(1,846)		(7,957)		(6,948)		(6,303)
Tax benefit (expense) related to foreign currency translation adjustment	(69)		516		135		614
Other comprehensive income (loss), net of tax	(1,915)		(7,441)		(6,813)		(5,689)
Comprehensive income	$	8,517	$	9,851	$	20,156	$	29,986


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
	Shares	Value
Balance at December 31, 2022	19,206	$	19	$	55,604	$	391,636	$	(12,787)	$	434,472
Net earnings						35,675				35,675
Other comprehensive income (loss), net of tax								(5,689)		(5,689)
Equity-based compensation expense				7,282						7,282

Common stock issued under equity award plans	92	—								—
Tax withholding for net-share settled equity awards				(2,916)						(2,916)
Balance at July 1, 2023	19,298	$	19	$	59,970	$	427,311	$	(18,476)	$	468,824


	June 29, 2024		Fair Value Measurements Using
			Inputs
			Level 1		Level 2		Level 3
Money market funds included in cash equivalents	$	262,235	$	262,235	$	—	$	—
Foreign currency contracts included in other current liabilities	(103)		—		(103)		—
Deferred compensation liabilities included in other long-term liabilities	(4,075)		—		(4,075)		—


	December 30, 2023		Fair Value Measurements Using
			Inputs
			Level 1		Level 2		Level 3
Money market funds included in cash equivalents	$	258,319	$	258,319	$	—	$	—
Foreign currency contracts included in other current liabilities	(62)		—		(62)		—
Deferred compensation liabilities included in other long-term liabilities	(3,137)		—		(3,137)		—


	June 29, 2024		December 30, 2023
Raw materials	$	21,901	$	19,848
Work in progress	4,306		4,707
Finished goods	35,625		36,899
Inventories	$	61,832	$	61,454
Noncurrent inventories	$	3,075	$	3,128


	June 29, 2024		December 30, 2023
Contract liabilities at beginning of period	$	13,910	$	20,875
Increase due to deferral of revenue at end of period	9,802		13,910
Decrease due to beginning contract liabilities recognized as revenue	(11,853)		(20,875)
Contract liabilities at end of period	$	11,859	$	13,910


	As of
	June 29, 2024		December 30, 2023
Long-lived assets:
United States	$	92,465	$	93,181
China	$	73,531	$	77,767


	Total Active Customers by Region						Change from Prior Year	Percent Change
	As of June 29, 2024			As of July 1, 2023
Asia Pacific:
Greater China	250,000	53.4	%	251,000	51.6	%	(1,000)	(0.4	%)
Southeast Asia Pacific	77,000	16.4	%	82,000	16.8	%	(5,000)	(6.1	%)
North Asia	42,000	9.0	%	51,000	10.5	%	(9,000)	(17.6	%)
Asia Pacific total	369,000	78.8	%	384,000	78.9	%	(15,000)	(3.9	%)
Americas and Europe	99,000	21.2	%	103,000	21.1	%	(4,000)	(3.9	%)
	468,000	100.0	%	487,000	100.0	%	(19,000)	(3.9	%)


	Six Months Ended
	June 29, 2024		July 1, 2023
Cash flows from operating activities
Net earnings	$	26,969	$	35,675
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	6,971		6,519
Right-of-use asset amortization	3,815		3,846
(Gain) loss on sale of property and equipment	17		(12)
Equity-based compensation expense	7,403		7,282
Deferred income taxes	(4,918)		(5,026)
Inventory write-down	1,512		2,684
Changes in operating assets and liabilities:
Inventories	(4,486)		(550)
Prepaid expenses and other assets	225		1,986
Accounts payable	(3,310)		(1,171)
Other liabilities	(8,525)		(28,849)
Net cash provided by (used in) operating activities	25,673		22,384
Cash flows from investing activities
Proceeds from the settlement of net investment hedges	1,125		3,775
Payments for net investment hedge	(870)		(1,271)
Proceeds from sale of property and equipment	3		13
Purchases of property and equipment	(5,872)		(5,716)
Net cash provided by (used in) investing activities	(5,614)		(3,199)
Cash flows from financing activities
Repurchase of common stock	(9,444)		—
Borrowings on line of credit	691		750
Payments on line of credit	(1,476)		(750)
Payments related to tax withholding for net-share settled equity awards	(3,070)		(2,916)
Payments for contingent consideration	—		(338)
Net cash provided by (used in) financing activities	(13,299)		(3,254)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(4,831)		(4,310)
Net increase (decrease) in cash, cash equivalents, and restricted cash	1,929		11,621
Cash, cash equivalents, and restricted cash at beginning of period	333,246		291,320
Cash, cash equivalents, and restricted cash at end of period	$	335,175	$	302,941
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents	$	332,423	$	300,183

Restricted cash included in other assets	2,752		2,758
Total cash, cash equivalents, and restricted cash	$	335,175	$	302,941


	Six Months Ended
	June 29, 2024	July 1, 2023
Product Line
USANA® Nutritionals
Optimizers	71%	71%
Essentials/CellSentials(1)	16%	16%
USANA Foods(2)	6%	7%
Personal care and Skincare	6%	5%
All other	1%	1%
Key Product
USANA® Essentials/CellSentials	10%	10%
Proflavanol®	10%	10%
Probiotic	8%	10%


	Net Sales by Region (in thousands) Three Months Ended								Change from prior year		Percent change		Currency impact on sales		Percent change excluding currency impact
	June 29, 2024				July 1, 2023
Asia Pacific
Greater China	$	115,513	54.3	%	$	128,749	54.1	%	$	(13,236)	(10.3	%)	$	(3,085)	(7.9	%)
Southeast Asia Pacific	35,402		16.6	%	39,337		16.5	%	(3,935)		(10.0	%)	(1,221)		(6.9	%)
North Asia	19,710		9.3	%	25,529		10.7	%	(5,819)		(22.8	%)	(870)		(19.4	%)
Asia Pacific total	170,625		80.2	%	193,615		81.3	%	(22,990)		(11.9	%)	(5,176)		(9.2	%)
Americas and Europe	42,244		19.8	%	44,587		18.7	%	(2,343)		(5.3	%)	(94)		(5.0	%)
	$	212,869	100.0	%	$	238,202	100.0	%	$	(25,333)	(10.6	%)	$	(5,270)	(8.4	%)


	Net Sales by Region (in thousands)								Change from prior year		Percent change		Currency impact on sales		Percent change excluding currency impact
	Six Months Ended
	June 29, 2024				July 1, 2023
Asia Pacific
Greater China	$	243,128	55.2	%	$	252,569	51.9	%	$	(9,441)	(3.7	%)	$	(8,481)	(0.4	%)
Southeast Asia Pacific	71,467		16.2	%	85,623		17.6	%	(14,156)		(16.5	%)	(2,716)		(13.4

SEC Form 10-Q filed by USANA Health Sciences Inc.