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USANA HEALTH SCIENCES INC (USNA)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 net sales were $213.6M, up 7% sequentially, with adjusted diluted EPS $0.64 (+14% q/q) despite GAAP diluted EPS declining to $0.23 due to Hiya acquisition-related costs; management said results were “above internal expectations” and highlighted strong Americas & Europe momentum .
  • FY 2025 outlook introduces non-GAAP metrics post-Hiya: consolidated net sales $920M–$1.0B, adjusted diluted EPS $2.35–$3.00, adjusted EBITDA $107M–$123M; guidance reflects USANA $775M–$840M (≈$30M FX headwind), Hiya $145M–$160M, and a 53-week year .
  • Mix and accounting reclass drove margin optics: gross margin rose 110 bps to 82.0% (≈$1.8M costs reclassified from cost of sales to SG&A); SG&A rose 790 bps y/y to 34.4% (incl. $8.2M Hiya transaction costs), while associate incentives were 43.8% (+40 bps y/y) .
  • Regional trends: Americas & Europe up 11% q/q (Canada/US incentive programs), Greater China +10% q/q, while North Asia fell y/y and q/q amid macro weakness; Hiya contributed ≈$2M to Q4 sales given <1 week of ownership .
  • Near-term catalysts: continued aggressive promotions, strategic incentive program roll-out in H2 2025, >20 product launches/reformulations (including skincare), and August Global Convention in Salt Lake City; capex guided to ~1–1.5% of sales, potential debt retire midyear and measured share repurchases to offset dilution .

What Went Well and What Went Wrong

  • What Went Well

    • “USANA delivered fourth quarter results above our internal expectations, highlighted by 7% sequential net sales growth,” with strong Americas & Europe performance and consolidated cash generation .
    • Sequential improvement: Net sales +7%, adjusted EPS +14%, Greater China +10% q/q; U.S. +16% q/q driven by tailored promotions and incentive programs .
    • Strategic progress: Acquisition of 78.8% of Hiya (highly cash-generative DTC children’s wellness brand) with 2025 growth priorities and synergy opportunities; plan for >20 product launches/reformulations and August Global Convention .

  • What Went Wrong

    • Y/Y decline persisted: Q4 net sales -3%, adjusted EBITDA -21%, active customers -6%; North Asia notably weak (-25% y/y) amid macro pressure .
    • GAAP profitability compressed: diluted EPS $0.23 (-74% y/y) as SG&A rose 790 bps y/y (incl. $8.2M Hiya transaction costs), offsetting gross margin uplift from cost reclassification .
    • Elevated tax rate and FX headwinds: FY 2024 ETR 44.9%; FY 2025 outlook embeds 41.5%–45% ETR and ≈$30M FX drag; tariffs could further pressure costs (not yet reflected) .

Financial Results

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Millions)$212.9 $200.2 $213.6
Diluted EPS ($USD)$0.54 $0.56 $0.23
Adjusted Diluted EPS ($USD)n/a$0.56 $0.64
Gross Margin %81.1% 80.4% 82.0%
SG&A % of Sales30.2% 30.6% 34.4%
Associate Incentives % of Sales42.5% 42.0% 43.8%
Adjusted EBITDA ($USD Millions)n/a$24.6 $25.5
USANA Active Customers (000s)468 452 454

Segment/Region Net Sales

RegionQ2 2024Q3 2024Q4 2024
Greater China ($USD Millions)$115.5 $102.3 $112.6
North Asia ($USD Millions)$19.7 $20.5 $16.5
Southeast Asia Pacific ($USD Millions)$35.4 $37.3 $38.1
Asia Pacific Total ($USD Millions)$170.6 $160.1 $167.2
Americas & Europe ($USD Millions)$42.2 $40.2 $44.5
Hiya ($USD Millions)n/an/a$2.0
Consolidated Total ($USD Millions)$212.9 $200.2 $213.6

KPIs – Active Customers

KPIQ2 2024Q3 2024Q4 2024
Asia Pacific Active Customers (000s)369 360 361
Greater China Active Customers (000s)250 243 246
North Asia Active Customers (000s)42 41 38
Southeast Asia Pacific Active Customers (000s)77 76 77
Americas & Europe Active Customers (000s)99 92 93
Total USANA Active Customers (000s)468 452 454

Notes and drivers:

  • Margin optics: Q4 GM +110 bps to 82.0% partly from reclassifying ~$1.8M of activities from cost of sales to SG&A; SG&A +790 bps y/y (ex-Hiya transaction costs, SG&A would be 30.5%) .
  • Hiya impact: ~$2M revenue in Q4; acquisition closed Dec 23, 2024, so contribution minimal in period .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Net SalesFY 2024$850–$880M (Q2) ~$850M (Q3 target) Narrowed to point estimate
Diluted EPSFY 2024$2.40–$2.55 (Q2) ~$2.45 (Q3 target) Narrowed to point estimate
Consolidated Net SalesFY 2025n/a$920M–$1.0B New
Diluted EPS (GAAP)FY 2025n/a$1.50–$2.20 New
Adjusted Diluted EPS (non-GAAP)FY 2025n/a$2.35–$3.00 New
Adjusted EBITDA (non-GAAP)FY 2025n/a$107M–$123M New
USANA Net SalesFY 2025n/a$775M–$840M (incl. ≈$30M FX headwind) New
Hiya Net SalesFY 2025n/a$145M–$160M (+29% to +42% y/y) New
Effective Tax RateFY 2025n/a41.5%–45.0% New
Diluted Share CountFY 2025n/a19.1M New
Fiscal CalendarFY 2025n/a53-week year (vs 52 in 2024) New
Capital ExpendituresFY 2025n/a~1%–1.5% of sales (call) New
TariffsFY 2025n/aPotential increased costs from proposed tariffs not reflected Disclosure update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Promotional cadence and incentivesQ2: Fewer promotions; plan more robust H2 calendar . Q3: Las Vegas convention; tailored offerings emerging .Aggressive promotions to continue; strategic incentive program roll-out in H2 2025; U.S./Canada to maintain cadence .Improving momentum in Americas & Europe
Product innovation cadenceQ2/Q3: Increased cadence; launched Celavive Resurfacing Serum and Whey Protein Isolate .>20 launches/reformulations planned across 2025; CSO appointed; Global Convention in August .Accelerating
Asia Pacific macroQ2/Q3: Consumer sentiment cautious; FX and spend per customer headwinds .Greater China +10% q/q on promotions; macro still challenging; North Asia weak .Mixed: sequential better, y/y pressure
Hiya acquisition & synergyQ3: Evaluating M&A; no Hiya yet .Hiya $112M FY24 revenue; 2025 growth +29–42%; step-up, integration costs, inventory write-off; measured synergy rollout (ops/IT) .Positive, near-term GAAP headwinds
FX and tariffsQ2: FX drag ($20M FY24) . Q3: FX drag moderated ($11M) .FY25 outlook embeds ~$30M FX headwind; potential tariffs not yet included .Renewed headwind
Brand messaging & commercial orgQ2/Q3: Commercial team reorg; Associate-first approach .Consolidated Product/Opportunity/Brand teams; tailored offerings fueling results .Structural execution underway
India marketQ2: Early build; positive reception .13 months since launch; growing from small base .Early-stage growth

Management Commentary

  • “USANA delivered fourth quarter results above our internal expectations, highlighted by 7% sequential net sales growth.” – Jim Brown, President & CEO .
  • “We are introducing our consolidated fiscal 2025 outlook… providing estimates for Adjusted diluted EPS and Adjusted EBITDA… our outlook does not currently reflect the potential increased costs of proposed tariffs.” – Doug Hekking, CFO .
  • “Hiya is a growing, highly cash generative, direct-to-consumer children’s wellness brand… positioned to deliver long-term sustainable growth.” – Jim Brown .
  • “Gross margin increased 110 basis points… attributable in great part to a change in cost attribution related to the reorganization of the commercial team.” – Management Commentary .

Q&A Highlights

  • Promotions/incentives: Management expects aggressive promotional cadence to continue across markets; strategic incentive enhancements to roll out globally in H2 2025, likely elevating associate incentives, balanced by value proposition changes .
  • Regional outlook: Tailored offerings expected to drive momentum; China team to “hold serve” with potential improvement; North Asia remains challenged by local macro .
  • Hiya guidance and integration: FY25 Hiya net sales guided $145M–$160M (+29–42% y/y) with temporary profitability impacts during heavy customer acquisition months; minimal channel expansion in guidance; measured integration to avoid disrupting the business .
  • Balance sheet/capital allocation: ~$182M year-end cash; plan to add ~$50–$60M; carryover $23M debt targeted for retirement by midyear; likely share repurchases to offset equity comp dilution; capex ~1–1.5% of sales .
  • Business model: Commitment to direct selling; tweaks to attract gig-economy sellers (upfront bonuses/enhancements), not a shift to affiliate-only model .

Estimates Context

  • Wall Street consensus vs reported: S&P Global consensus data was unavailable at time of retrieval; therefore, we cannot definitively assess Q4 2024 revenue or EPS beats/misses versus Street expectations. Values would normally be retrieved from S&P Global (Capital IQ).
  • Implication: In absence of consensus, focus turns to sequential momentum (+7% net sales, +14% adjusted EPS) and 2025 guidance ranges to gauge estimate revision risk .
    Values from S&P Global unavailable at time of request.

Key Takeaways for Investors

  • Sequential momentum is real: consolidated net sales +7% q/q and adjusted EPS +14% q/q, led by Americas & Europe incentives and Greater China promotions; watch for continued cadence in H1 and strategic incentive rollout in H2 2025 .
  • Near-term GAAP headwinds likely: integration and transaction costs, inventory step-up, intangible amortization will pressure GAAP EPS, while adjusted metrics provide cleaner run-rate view post-Hiya .
  • FX/tariffs risk skew: FY25 embeds ≈$30M FX drag and notes potential tariff costs not yet reflected—estimate dispersion may widen; hedge and pricing actions are key to monitor .
  • Product cadence and brand execution matter: >20 launches/reformulations and August Global Convention are catalysts; early wins in skincare and tailored offerings could drive active customer growth and mix .
  • Regional bifurcation persists: U.S./Canada show incentive-driven resilience; Greater China improving sequentially but macro cautions remain; North Asia softness likely continues near term .
  • Capital deployment: Expect disciplined repurchases to offset dilution, low capex intensity (~1–1.5% of sales), and potential debt retirement by midyear, preserving balance sheet flexibility .
  • Monitor adjusted vs GAAP narrative: Street should anchor on adjusted EPS/EBITDA for cross-period comparability post-Hiya, while tracking non-GAAP add-backs and their sunset pace .