usna-20240330

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 March 30, 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) (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 May 3, 2024, there were 19,050,568 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	6
	Notes to Condensed Consolidated Financial Statements	7 - 15
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16 - 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	23
Item 1A	Risk Factors	23
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 5	O ther Information	23
Item 6	Exhibits	24
Signatures		25


	As of March 30, 2024		As of December 30, 2023
ASSETS
Current assets
Cash and cash equivalents	$	328,336	$	330,420
Inventories	60,870		61,454
Prepaid expenses and other current assets	31,864		25,872
Total current assets	421,070		417,746
Property and equipment, net	98,186		99,814
Goodwill	16,902		17,102
Intangible assets, net	29,105		29,919
Deferred tax assets	11,347		13,284
Other assets	52,665		54,892
	$	629,275	$	632,757
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	8,266	$	10,070
Line of credit - short term	1,320		786
Other current liabilities	103,045		107,989
Total current liabilities	112,631		118,845
Deferred tax liabilities	5,113		4,552
Other long-term liabilities	11,543		12,158
Stockholders' equity
Common stock, $0.001 par value; Authorized -- 50,000 shares, issued and outstanding 19,047 as of March 30, 2024 and 19,130 as of December 30, 2023	19		19
Additional paid-in capital	65,111		65,661
Retained earnings	453,451		445,217
Accumulated other comprehensive income (loss)	(18,593)		(13,695)
Total stockholders' equity	499,988		497,202
	$	629,275	$	632,757


	Quarter Ended
	March 30, 2024		April 1, 2023
Net sales	$	227,800	$	248,360
Cost of sales	43,069		48,519
Gross profit	184,731		199,841
Operating expenses:
Associate incentives	95,758		106,070
Selling, general and administrative	64,300		66,926
Total operating expenses	160,058		172,996
Earnings from operations	24,673		26,845
Other income (expense):
Interest income	2,676		1,775
Interest expense	(52)		(31)
Other, net	(186)		(88)
Other income (expense), net	2,438		1,656
Earnings before income taxes	27,111		28,501
Income taxes	10,574		10,118
Net earnings	$	16,537	$	18,383

Earnings per common share
Basic	$	0.86	$	0.95
Diluted	$	0.86	$	0.95

Weighted average common shares outstanding
Basic	19,174		19,283
Diluted	19,302		19,328

Comprehensive income:
Net earnings	$	16,537	$	18,383
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment	(5,102)		1,654
Tax benefit (expense) related to foreign currency translation adjustment	204		98
Other comprehensive income (loss), net of tax	(4,898)		1,752
Comprehensive income	$	11,639	$	20,135


	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						18,383				18,383
Other comprehensive income (loss), net of tax								1,752		1,752
Equity-based compensation expense				3,608						3,608

Common stock issued under equity award plans	88	—								—
Tax withholding for net-share settled equity awards				(2,861)						(2,861)
Balance at April 1, 2023	19,294	$	19	$	56,351	$	410,019	$	(11,035)	$	455,354


	Three Months Ended
	March 30, 2024		April 1, 2023
Cash flows from operating activities
Net earnings	$	16,537	$	18,383
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities
Depreciation and amortization	3,158		3,299
Right-of-use asset amortization	1,926		1,925
(Gain) loss on sale of property and equipment	405		—
Equity-based compensation expense	3,669		3,608
Deferred income taxes	2,547		3,557
Inventory write-down	934		2,284
Changes in operating assets and liabilities:
Inventories	(1,801)		(78)
Prepaid expenses and other assets	(5,108)		(5,205)
Accounts payable	(1,718)		(246)
Other liabilities	(2,866)		(14,694)
Net cash provided by (used in) operating activities	17,683		12,833
Cash flows from investing activities


Payments for net investment hedge	(870)		(1,271)

Proceeds from sale of property and equipment	3		—
Purchases of property and equipment	(3,201)		(2,107)
Net cash provided by (used in) investing activities	(4,068)		(3,378)
Cash flows from financing activities
Repurchase of common stock	(9,444)		—
Borrowings on line of credit	537		—

Payments related to tax withholding for net-share settled equity awards	(3,039)		(2,861)
Payments for contingent consideration	—		(338)
Net cash provided by (used in) financing activities	(11,946)		(3,199)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(3,809)		790
Net increase (decrease) in cash, cash equivalents, and restricted cash	(2,140)		7,046
Cash, cash equivalents, and restricted cash at beginning of period	333,246		291,320
Cash, cash equivalents, and restricted cash at end of period	$	331,106	$	298,366
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets

Cash and cash equivalents	$	328,336	$	295,454

Restricted cash included in other assets	2,770		2,912
Total cash, cash equivalents, and restricted cash	$	331,106	$	298,366
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest	$	24	$	2
Income taxes	9,100		10,182
Cash received during the period for:
Income tax refund	—		517
Non-cash investing and financing activities:
Right-of-use assets obtained in exchange for lease obligations	167		1,806
Accrued purchases of property and equipment	83		368
Accrued excise tax for repurchase of common stock	39		—


	March 30, 2024		Fair Value Measurements Using
			Inputs
			Level 1		Level 2		Level 3
Money market funds included in cash equivalents	$	256,787	$	256,787	$	—	$	—
Foreign currency contracts included in other current liabilities	(12)		—		(12)		—
Net investment hedge included in prepaid expenses and other current assets	1,247		—		1,247		—
Deferred compensation liabilities included in other long-term liabilities	(3,908)		—		(3,908)		—


	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)		—


	March 30, 2024		December 30, 2023
Raw materials	$	19,790	$	19,848
Work in progress	3,646		4,707
Finished goods	37,434		36,899
Inventories	$	60,870	$	61,454
Noncurrent inventories	$	2,893	$	3,128


	March 30, 2024		December 30, 2023
Contract liabilities at beginning of period	$	13,910	$	20,875
Increase due to deferral of revenue at end of period	14,824		13,910
Decrease due to beginning contract liabilities recognized as revenue	(10,952)		(20,875)
Contract liabilities at end of period	$	17,782	$	13,910


	As of
	March 30, 2024		December 30, 2023
Long-lived assets:
United States	$	92,890	$	93,181
China	$	74,689	$	77,767


	Quarter Ended
	March 30, 2024		April 1, 2023
Net Sales to External Customers
Asia Pacific
Greater China	$	127,615	$	123,820
Southeast Asia Pacific	36,065		46,286
North Asia	21,421		29,608
Asia Pacific Total	185,101		199,714
Americas and Europe	42,699		48,646
Consolidated Total	$	227,800	$	248,360


	Three Months Ended
	March 30, 2024	April 1, 2023
Product Line
USANA® Nutritionals
Optimizers	72%	70%
Essentials/CellSentials(1)	15%	17%
USANA Foods(2)	6%	7%
Personal care and Skincare	6%	5%
All Other	1%	1%
Key Product
USANA® Essentials/CellSentials	10%	11%
Proflavanol®	10%	9%
Probiotic	8%	11%


	Total Active Customers by Region						Change from Prior Year	Percent Change
	As of March 30, 2024			As of April 1, 2023
Asia Pacific:
Greater China	274,000	55.5	%	242,000	49.3	%	32,000	13.2	%
Southeast Asia Pacific	76,000	15.4	%	90,000	18.3	%	(14,000)	(15.6	%)
North Asia	45,000	9.1	%	54,000	11.0	%	(9,000)	(16.7	%)
Asia Pacific Total	395,000	80.0	%	386,000	78.6	%	9,000	2.3	%
Americas and Europe	99,000	20.0	%	105,000	21.4	%	(6,000)	(5.7	%)
	494,000	100.0	%	491,000	100.0	%	3,000	0.6	%


	Net Sales by Region (in thousands) Quarter Ended								Change from prior year		Percent change		Currency impact on sales		Percent change excluding currency impact
	March 30, 2024				April 1, 2023
Asia Pacific
Greater China	$	127,615	56.0	%	$	123,820	49.9	%	$	3,795	3.1	%	$	(5,396)	7.4	%
Southeast Asia Pacific	36,065		15.9	%	46,286		18.6	%	(10,221)		(22.1	%)	(1,495)		(18.9	%)
North Asia	21,421		9.4	%	29,608		11.9	%	(8,187)		(27.7	%)	(987)		(24.3	%)
Asia Pacific Total	185,101		81.3	%	199,714		80.4	%	(14,613)		(7.3	%)	(7,878)		(3.4	%)
Americas and Europe	42,699		18.7	%	48,646		19.6	%	(5,947)		(12.2	%)	635		(13.5	%)
	$	227,800	100.0	%	$	248,360	100.0	%	$	(20,560)	(8.3	%)	$	(7,243)	(5.4	%)


	Cash and cash equivalents (in Millions)
	As of March 30, 2024		As of December 30, 2023
United States	$	146.0	$	169.9
China	131.4		111.0
All other markets	50.9		49.5
Total Cash and cash equivalents	$	328.3	$	330.4


Issuer Purchases of Equity Securities
(amounts in thousands, except per share data)

Period	Total Number of Shares Purchased	Average Price Paid per Share(1)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Fiscal January
(Dec. 31, 2023 through Feb. 3, 2024)	—	$	—	—	$	71,186
Fiscal February
(Feb. 4, 2024 through Mar. 2, 2024)	—	$	—	—	$	71,186
Fiscal March
(Mar. 3, 2024 through Mar. 30, 2024)	194	$	48.71	194	$	61,703
	194			194


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						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data file (formatted as Inline XBRL and contained in Exhibit 101)


Date: May 7, 2024			USANA HEALTH SCIENCES, INC.

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

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