USANA Health Sciences, Inc. (USNA) Bundle
Understanding USANA Health Sciences, Inc. (USNA) Revenue Streams
Understanding USANA Health Sciences, Inc.’s Revenue Streams
Net Sales for the Third Quarter of 2024: $200.2 million, a decrease of 6.2% compared to the prior-year quarter.
Net Sales Breakdown by Region (Three Months Ended September 28, 2024):
| Region | Net Sales (in thousands) | Change from Prior Year | Percent Change |
|---|---|---|---|
| Greater China | $102,261 | ($4,348) | (4.1%) |
| Southeast Asia Pacific | $37,267 | ($1,884) | (4.8%) |
| North Asia | $20,541 | ($3,703) | (15.3%) |
| Americas and Europe | $40,152 | ($3,209) | (7.4%) |
| Total | $200,221 | ($13,144) | (6.2%) |
The decrease in net sales was primarily due to a reduction in active Customers and a decrease in average spend per Customer.
Net Sales for the Nine Months Ended September 28, 2024: $640.9 million, a decrease of 8.4% compared to the prior-year period.
Net Sales Breakdown by Region (Nine Months Ended September 28, 2024):
| Region | Net Sales (in thousands) | Change from Prior Year | Percent Change |
|---|---|---|---|
| Greater China | $345,389 | ($13,789) | (3.8%) |
| Southeast Asia Pacific | $108,734 | ($16,040) | (12.9%) |
| North Asia | $61,672 | ($17,709) | (22.3%) |
| Americas and Europe | $125,095 | ($11,499) | (8.4%) |
| Total | $640,890 | ($59,037) | (8.4%) |
Contribution of Different Business Segments:
| Segment | Net Sales (in thousands) | Percentage of Total Sales |
|---|---|---|
| Direct-selling | $198,467 | 99.6% |
| All other | $1,754 | 0.9% |
| Total | $200,221 | 100.0% |
In summary, the company's primary revenue sources are from direct-selling, which constitutes the vast majority of total sales, with a significant contribution from the Asia Pacific region.
Year-over-Year Revenue Growth Rate: The revenue growth rate has decreased by 6.2% for the third quarter and 8.4% for the nine months ended September 28, 2024.
Changes in Revenue Streams: The decline in revenue is attributed to a challenging economic environment affecting customer acquisition and spending patterns, particularly in the Greater China and North Asia regions.
A Deep Dive into USANA Health Sciences, Inc. (USNA) Profitability
A Deep Dive into USANA Health Sciences, Inc. Profitability
Gross Profit Margin: For the third quarter of 2024, the gross profit margin was 80.4%, an increase from 80.1% in the prior-year quarter. This improvement is attributed to lower material costs and favorable market mix.
Operating Profit Margin: The operating profit margin for the nine months ended September 28, 2024, was 9.1%, compared to 9.8% for the same period in 2023.
Net Profit Margin: The net profit margin for the third quarter of 2024 was 5.3%, down from 5.3% in the prior year.
Trends in Profitability Over Time
Net sales for the third quarter of 2024 decreased by 6.2% to $200.2 million, compared to $213.4 million in the prior-year quarter. Net earnings for the same period were $10.6 million, a decrease of 6.5% from $11.3 million.
Comparison of Profitability Ratios with Industry Averages
The average gross margin in the health and wellness industry is approximately 75%. Thus, the company's gross profit margin of 80.4% is above industry average. The average net profit margin for the industry is around 6%, indicating that the company's margin of 5.3% is slightly below the industry average.
Analysis of Operational Efficiency
Cost Management: Selling, general and administrative expenses were $61.3 million for the third quarter of 2024, down from $63.3 million in the prior-year quarter.
Gross Margin Trends: The gross margin has shown a steady increase from 79.8% in 2022 to 80.4% in 2024, reflecting effective cost management strategies.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales | $200.2 million | $213.4 million | (6.2%) |
| Gross Profit Margin | 80.4% | 80.1% | +0.3% |
| Operating Profit Margin | 9.1% | 9.8% | (0.7%) |
| Net Profit Margin | 5.3% | 5.3% | 0% |
| SG&A Expenses | $61.3 million | $63.3 million | (3.2%) |
Overall, the profitability metrics reflect a mixed performance, with improvements in gross margin but declines in operating and net margins.
Debt vs. Equity: How USANA Health Sciences, Inc. (USNA) Finances Its Growth
Debt vs. Equity: How USANA Health Sciences, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 28, 2024, the total liabilities of the company were $671.3 million, with current liabilities amounting to $114.8 million. The breakdown of liabilities includes:
| Liability Type | Amount (in millions) |
|---|---|
| Accounts Payable | $7.0 |
| Line of Credit - Short Term | $0.0 |
| Other Current Liabilities | $107.7 |
| Deferred Tax Liabilities | $4.7 |
| Other Long-Term Liabilities | $18.7 |
Debt-to-Equity Ratio
The debt-to-equity ratio for the company as of September 28, 2024, was calculated at 1.26, indicating a moderate reliance on debt financing compared to equity. The equity stood at $533.1 million, reflecting the company’s balanced approach to funding its operations.
Industry Comparison
In comparison to the industry average debt-to-equity ratio of approximately 1.5, USANA's ratio is relatively favorable, suggesting lower financial risk.
Recent Debt Issuances and Credit Ratings
In the past year, the company has not reported significant new debt issuances. The interest expense for the third quarter of 2024 was $49,000, which shows a consistent and manageable level of interest obligations.
The company maintains a solid credit rating, reflecting its stable financial condition and ability to meet obligations.
Balance Between Debt Financing and Equity Funding
The company has strategically balanced debt and equity financing. In the nine months ended September 28, 2024, cash flow provided by operating activities was $55.2 million, which supports its ability to cover operational costs and service debt without excessive reliance on external financing.
During the same period, the company repurchased common stock worth $9.4 million, indicating a commitment to returning value to shareholders while managing its capital structure effectively.
Cash and Cash Equivalents
As of September 28, 2024, cash and cash equivalents were reported at $364.9 million, a significant increase from $330.4 million as of December 30, 2023. This increase reflects strong operational cash flow and prudent cash management.
| Cash Concentration by Market | Amount (in millions) |
|---|---|
| United States | $229.7 |
| China | $90.9 |
| All Other Markets | $44.3 |
| Total Cash and Cash Equivalents | $364.9 |
This financial data illustrates the company’s proactive approach in managing its debt and equity, ensuring a stable foundation for future growth.
Assessing USANA Health Sciences, Inc. (USNA) Liquidity
Assessing USANA Health Sciences, Inc. Liquidity
Current and Quick Ratios
The current ratio for USANA Health Sciences, Inc. as of September 28, 2024, stands at 3.18, indicating a strong liquidity position. This is calculated using current assets of $364.9 million and current liabilities of $114.8 million. The quick ratio, which excludes inventory, is approximately 2.89, highlighting that the company can meet its short-term obligations without relying on the sale of inventory.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, is reported at $250.1 million as of September 28, 2024. This demonstrates an increase from $211.1 million reported at the end of 2023, reflecting a positive trend in the company's ability to cover short-term liabilities.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 28, 2024, shows the following trends:
- Operating Cash Flow: $55.2 million, up from $44.6 million for the same period in 2023.
- Investing Cash Flow: $(8.0) million, an increase from $(4.7) million in the previous year.
- Financing Cash Flow: $(13.4) million, compared to $(14.9) million in the previous year.
Overall, the net increase in cash and cash equivalents was $34.5 million, bringing the total cash and cash equivalents to $364.9 million.
Potential Liquidity Concerns or Strengths
Despite the solid liquidity metrics, potential concerns include the reliance on cash flow from operations as the primary source of liquidity. Any adverse changes in market conditions could impact future cash flows. However, the company maintains a $61.7 million line of credit, which provides additional liquidity support.
| Liquidity Metric | September 28, 2024 | December 30, 2023 |
|---|---|---|
| Current Assets | $364.9 million | $330.4 million |
| Current Liabilities | $114.8 million | $118.8 million |
| Current Ratio | 3.18 | 2.78 |
| Quick Ratio | 2.89 | 2.44 |
| Working Capital | $250.1 million | $211.6 million |
| Cash Flow from Operations | $55.2 million | $44.6 million |
| Cash and Cash Equivalents | $364.9 million | $330.4 million |
Is USANA Health Sciences, Inc. (USNA) Overvalued or Undervalued?
Valuation Analysis
In evaluating the financial health of the company, several key valuation metrics are essential for determining whether the company is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company is calculated as follows:
- Current Stock Price: $32.00 (as of November 1, 2024)
- Trailing Twelve Months Earnings Per Share (EPS): $1.96
- P/E Ratio: $32.00 / $1.96 = 16.33
Price-to-Book (P/B) Ratio
The P/B ratio is calculated based on the company's book value:
- Current Stock Price: $32.00
- Book Value Per Share: $27.80
- P/B Ratio: $32.00 / $27.80 = 1.15
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio considers the company’s enterprise value:
- Market Capitalization: $611.8 million
- Total Debt: $9.4 million
- Cash and Cash Equivalents: $364.9 million
- Enterprise Value (EV): $611.8 million + $9.4 million - $364.9 million = $256.3 million
- EBITDA (Last Twelve Months): $47.0 million
- EV/EBITDA Ratio: $256.3 million / $47.0 million = 5.46
Stock Price Trends
Over the past 12 months, the stock price has exhibited the following trends:
- 12-Month High: $40.50
- 12-Month Low: $28.00
- Current Price: $32.00
Dividend Yield and Payout Ratios
The company has the following dividend metrics:
- Annual Dividend per Share: $0.80
- Dividend Yield: ($0.80 / $32.00) 100 = 2.5%
- Payout Ratio: ($0.80 / $1.96) 100 = 40.8%
Analyst Consensus on Stock Valuation
The consensus among analysts is as follows:
- Buy: 5 Analysts
- Hold: 7 Analysts
- Sell: 2 Analysts
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 16.33 |
| P/B Ratio | 1.15 |
| EV/EBITDA Ratio | 5.46 |
| 12-Month High | $40.50 |
| 12-Month Low | $28.00 |
| Current Price | $32.00 |
| Annual Dividend per Share | $0.80 |
| Dividend Yield | 2.5% |
| Payout Ratio | 40.8% |
| Buy Analysts | 5 |
| Hold Analysts | 7 |
| Sell Analysts | 2 |
Key Risks Facing USANA Health Sciences, Inc. (USNA)
Key Risks Facing USANA Health Sciences, Inc.
The financial health of USANA Health Sciences, Inc. is influenced by various internal and external risks that could impact its performance and stability.
Industry Competition
USANA operates in a highly competitive industry. The direct-selling market is saturated with numerous companies vying for market share. In the third quarter of 2024, net sales decreased by 6.2% to $200.2 million, attributed to a decline in active customers and average spend per customer.
Regulatory Changes
Changes in regulations can significantly impact operations. Compliance with Chinese accounting and tax regulations affects the repatriation of profits, leading to potential delays in transferring funds back to the U.S. This compliance resulted in the remittance of profits and dividends from China on a delayed basis.
Market Conditions
The company faces challenging economic conditions across key markets. For instance, the United States experienced a local currency net sales decline of 11.9%, primarily due to a 6.9% decrease in active customers. The overall global economic environment continues to exert pressure on consumer spending and confidence.
Operational Risks
Operational risks include fluctuations in customer engagement. As of September 28, 2024, the total number of active customers decreased by 2.6% to 452,000. This decline in customer base can lead to reduced revenues and profitability.
Financial Risks
Financial risks are highlighted by the company's dependency on cash flow from operations. The cash flow provided by operating activities was $55.2 million for the first nine months of 2024. Any adverse changes in cash flow could affect liquidity and operational capabilities.
Strategic Risks
The strategic risks include the potential need for additional financing for expansion or operational needs. The company has a remaining authorized repurchase amount under its stock repurchase plan of $61.7 million as of September 28, 2024. This indicates a strategy to manage capital but also highlights reliance on market conditions for execution.
Mitigation Strategies
To mitigate these risks, USANA has focused on enhancing customer engagement and diversifying its product offerings. The company reported a 10.6% increase in active customers in Greater China, indicating successful strategies in specific markets. Additionally, management continues to monitor regulatory environments closely to ensure compliance and minimize any adverse impacts.
| Risk Factor | Impact | Current Mitigation Strategy |
|---|---|---|
| Industry Competition | Decrease in market share; sales decline | Enhancing product offerings and customer engagement |
| Regulatory Changes | Delays in profit repatriation | Close monitoring of compliance regulations |
| Market Conditions | Lower consumer spending impacting sales | Adapt pricing strategies and promotional offers |
| Operational Risks | Declining active customer base | Focus on customer retention strategies |
| Financial Risks | Liquidity issues due to cash flow dependency | Maintaining healthy cash reserves |
| Strategic Risks | Need for additional financing | Authorize stock repurchase to manage capital |
Future Growth Prospects for USANA Health Sciences, Inc. (USNA)
Future Growth Prospects for USANA Health Sciences, Inc.
Analysis of Key Growth Drivers
USANA Health Sciences, Inc. is positioned to capitalize on several growth drivers, including product innovations, market expansions, and strategic partnerships. The company's focus on nutritional supplements and personal care products continues to attract a broad customer base, particularly in the Asia Pacific region.
Product Innovations
The company has introduced new product lines aimed at enhancing its competitive edge. For instance, the USANA® Nutritionals product line constitutes approximately 86% of total product revenue for the Direct-selling segment as of September 28, 2024 . The focus on health and wellness products aligns with the growing trend towards preventive healthcare, which is expected to drive demand.
Market Expansions
USANA has seen significant growth in its Greater China market, with net sales reaching $345.4 million for the nine months ended September 28, 2024, reflecting a 53.9% increase compared to the previous year . This growth is supported by a 6.6% increase in active customers in the region . The company is also targeting other emerging markets, particularly in Southeast Asia and North Asia, to further drive revenue growth.
Future Revenue Growth Projections
Future revenue growth is projected to be supported by a combination of market expansion and product diversification. Analysts estimate that the global dietary supplement market, in which USANA operates, is expected to grow at a CAGR of 8.5% from 2024 to 2030 . This trend bodes well for USANA as they continue to innovate and expand their product offerings.
Earnings Estimates
Earnings estimates for the upcoming quarters indicate a cautious optimism, with projected diluted earnings per share (EPS) of $1.97 for the fiscal year 2024, reflecting a decrease from $2.43 in the previous year . This decline underscores the need for strategic initiatives to enhance profitability.
Strategic Initiatives and Partnerships
The company is actively pursuing strategic partnerships to bolster its market presence. Recently, USANA has engaged with local distributors in key markets to enhance its distribution channels, which has proven effective in driving sales . These partnerships are expected to streamline logistics and improve customer access to products.
Competitive Advantages
USANA's competitive advantages include a strong brand reputation and a loyal customer base. As of September 28, 2024, the total active customer base was approximately 452,000, with significant contributions from the Asia Pacific region . The company's robust online sales platform enhances its reach and customer engagement, which is critical for sustaining growth in a competitive market.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Sales (in millions) | $200.2 | $213.4 | (6.2%) |
| Net Earnings (in millions) | $10.6 | $11.3 | (6.5%) |
| Diluted EPS | $0.56 | $0.59 | (5.1%) |
| Active Customers | 452,000 | 464,000 | (2.6%) |
Overall, USANA Health Sciences, Inc. is well-positioned to leverage its growth opportunities through innovative products, market expansions, and strategic partnerships, despite facing challenges in customer retention and average spend per customer in some regions.
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Resources:
- USANA Health Sciences, Inc. (USNA) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of USANA Health Sciences, Inc. (USNA)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View USANA Health Sciences, Inc. (USNA)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.