Usana Stock | Strong Third Quarter Growth

 

USANA Health Sciences, Inc. recently held its third-quarter conference call to discuss the third-quarter earnings and projections for the remainder of the fiscal year. It’s important to note that some of these projections may change, as the year has seen pivots dealing with economic uncertainty during the COVID-19 pandemic. However, the current results are showing a high demand for the product and record growth.

The company manufactures and develops nutritional supplements, as well as personal care items and foods. Their products are sold to associates across the globe, including the US, Canada, Australia, Asia, and Europe. Products are available through preferred customers in many countries throughout the world.

USANA reported strong results and show record earnings per share. There are a number of factors driving the current trends. They reported a record number of active customers for the third quarter and sales approaching $300 million. There is a strong demand for nutritional products currently and Usana initiated incentive programs that performed very well.

USANA’s CEO, Kevin G. Guest, discussed the Americas and Europe Convention, as well as the China National Sales Meeting that both were held during the third quarter. Due to COVID-19 precautions, both conventions were held virtually. This new method actually allowed Usana to reach a larger audience than the previous events allowed. The virtual meetings were well received and they were carefully planned to help further the company culture, though in-person meetings were not a viable option. They also gave the company a great deal of experience that they expect to be able to leverage for future events. Overall, though, these meetings were a resounding success.

Usana Pivots for Growth

The events of 2020 were tumultuous. Many companies scrambled to shift their business models in the face of a pandemic and great uncertainty worldwide. 

“All things considered, our 2020 results have been excellent during these unprecedented times, and I’m confident in the strength that we saw in this underlying business. We look forward to delivering further growth in 2021,” Kevin G. Guest.

The third quarter was exceptionally successful for the company, especially with the overall economic uncertainty. The company put in place new strategies and propelled higher demand for Usana’s nutritional products. There was both customer and sales growth in the quarter and Usana leveraged new incentives and promotions which reaped marked ROI.

During the third quarter, USANA moved its events strategy to a virtual model. They took the annual Americas and Europe Convention and the China National Sales Meeting both online rather than canceling the events due to social distancing and pandemic restrictions. This proved to be a winning strategy. It allowed Usana an even more robust attendance than they had in many of their previous events, which were all in-person. 

During the third quarter, USANA saw net sales increase by 14.5% year-over-year. They had a record 650,000 active customers, which was a 16.5% increase. Usana’s diluted earnings per share also increased by 32.1%. Overall, the company raised the full-year 2020 Net Sales and earnings per share.

Although 2020 meant an abrupt change in strategies and business processes, the management and sales teams have continuously adapted to the challenging and changing environment. They have modified the way they handle large and small operations and their pivot has been met with growth and success. Usana looks forward to a strong performance as they finish the 2020 year, and they project more growth as they head into 2021. 

USANA ended the third quarter with no debt and $278.4 million. They didn’t need to repurchase any shares of common stock during the third quarter and there was about $73 million in the current share repurchase authorization.

According to the CFO, Doug Hekking, “In light of our third-quarter results and our expectations for the fourth quarter, we are raising our net sales and EPS guidance.”

Hekking went on to summarize that Usana expected to produce similar results through the remainder of the year. They expect the year to finish strong based on the third quarter momentum, even though they did not have the same incentive offerings to propel more growth in the fourth quarter. They also expect to see continued growth in 2021. The company will focus on long-term growth strategies. This plan depends on their ability to research and launch investment opportunities as they present themselves and maintaining flexibility financially. 

As we move toward the finish of the year and the start of 2021, the possible implications of the current pandemic and its impact on economic markets mean that there is a need to continually re-evaluate decisions strategy for more agility to meet challenges.

Moving into 2021

As the company closes out the year, USANA is planning growth for the 2021 year. If 2020 has taught the world anything, it’s that you need to be prepared to move to meet demand and needs that change. Usana recognizes that their predictions for the coming year may have a higher probability of needing to be assessed constantly moving forward. Closures, associate needs, and various social distancing measures will be part of the environment as we move forward but it’s uncertain to what degree currently.

The virtual meetings in 2020 were a resounding success. While the company does look forward to holding in-person meetings again, they are currently leaning toward making the annual events virtual for the coming 2021 year, as well. Usana will postpone that decision until the first half of 2021, because there may be significant movement in travel and other restrictions in the interim. There is a substantial amount of planning that goes into the events. There does need to be some lead time on a firm decision, either way, in order to save the overhead that would go into launching in-person events. The major benefit to this situation is the fact that the virtual meetings were so successful in 2020. That success can be built upon with the next meetings and it’s possible that Usana may use this technology in the future for maximum reach and attendance.

In 2020, USANA saw an increase in sales in the nutritional products that are designed to support immune function. They expect to see continued benefits in those products. There have been areas that were more active than others. Usana will be rolling out new products in the fourth quarter which they plan to cross-market. Overall, there has been excellent morale across the sales team. They’ve provided positive feedback on the new incentives that Usana has been testing through the third quarter. These new initiatives saw some marked results and will likely continue in the upcoming year.

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