USANA Health Sciences (USNA) 23 Oct 242024 Q3 Earnings call transcript

Good day, and welcome to today's USANA Health Sciences Third Quarter Earnings Conference Call.

While today's recorded presentation, all participants will be in a listen-only mode. [Operator Instructions] And now I'd like to hand the call over to Andrew Masuda. Please go ahead, sir.

Thank you, Serge, and good morning, everyone. us our joining results. Quarter you appreciate to Third review XXXX We conference live from accessed ir.usana.com. broadcast is our webcast at Today's being be via call and can website directly our replay be a call, the following available Shortly on website. will

As a this management performance or make will of events course our statements future future conference regarding call, forward-looking the during reminder, the of financial company.

statements. statements the that environment operations and to our differ Those those results financial results in strategies statements for actual projected involve and these uncertainty and world, could fiscal as risks cause to Examples such regarding our year operating results. forward-looking and the economic the include well materially from of related uncertainties outlook around perhaps as XXXX

considered risk most joined including Financial in conjunction Officer, well We as Hekking; Jim you SEC. other with and caution with Neidig CEO, our factors as Chief in our our financial Brown; be specific data recent contained filings our President executives. I'm the Chief that these by should Brent Doug and disclosures, Officer, Commercial statements

questions. before and the market hear Yesterday, results third brief quarter We'll document our from company's management announced commentary remarks Jim our the closed, on for now we call the after posted website. opening

Thank you, good everyone. Andrew, and morning,

quarter market fell China quarter what experienced many the we operating a year. of months our challenging Third environment than sales of modestly our first internal X more net in in challenging. experienced remain our of short expectations third the Notably, the as during key the environment markets

We year. promotional support planning declined by and of to decrease in to by business. through challenging market, increased this net the quarter customer in anticipate sales activity We're important the operating continued a counts fourth remainder we environment in due momentum increase year-over-year a build the active our to in Although average spend. X% X% our

these XXXX fiscal updated incorporates guidance elements. Our

and communicated. focus the strategic execute to continue We on initiatives previously

drive are they our confident themselves have and believe results, foundation for future growth. long-term the and yet growth operating meaningfully we instrumental revenue initiatives not they to manifested customer these are will in laying Although that

few share Let me items. with you a

continue First, vital who engaging new to USANA our sales leaders we associate customers to to bringing family. are prioritize the in with

quarter, and convention was a American one Europe the of this successful third feedback conventions associates. Vegas, in we've terms Las the in hosted we best During from our of had

development, event. With emphasis these on and leaders areas adopting our this initiatives has leaders and actively positive Training, actionable Feedback to were key recognition their grow are at focus sales business. help been initiatives. new an

markets research other our efforts in in the Whey and development couple of Both the under collaborative teams. thanks and structure. Celavive our set U.S. were available products and We Isolate. Protein first and will commercial marketing the Second, quarters. our be to Serum launched sales, Canada Resurfacing next products of new team and launched of over

launches premium our new which innovation product includes the illustrative and increasing of products. relevant strategy These are product cadence upgraded high-quality, of early and stages the of

I'm to agility to market. encouraged the that us by allowed products bring Additionally, increased these

categories product to an the the to team our ask in of year. to our introduced next that, questions. additional confident with operator be we to am execute saying for exciting I by open return strategy throughout have growth. now our to our close across in currently We pipeline have that -- development lines I'll With USANA most products plans I'll longer-term please

Anthony first Sidoti. comes Fidelity Our from from question Lebiedzinski [Operator Instructions]

the I Vegas convention. guys So about the guess coming talked you feedback of out first Las positive

some you're inputs benefits you and how But to you a of couple of far on start when quickly in mean, getting, the be could as tangible those share I as just those. think can see touched maybe and details maybe that can more you if also from feedback put that? I

that take I'll This question. Anthony. is Brent. Thanks,

of an this trust know, initiative and the that is I to important momentum this convention forward we've and that's is tried from leaders. did with you rebuilding derives leaders. and one go XXXX with that in important, momentum And most As our our in think business sales between in company the the trust sales things very we that

at company positive feedback and when it their is the that in we they feel that were that line systems and The received is we with So the we the into direction. tools that have products. on also taken we account new They for. the right that create the feedback hoping is feel they what presented convention input were

excited momentum grow. are that to the of like of into momentum future. we continue mechanism, takes the over feedback but grow, said, of extremely And that So to we've that that And we it heard first part and I QX QX to phase. the through course expect is year, expect next for for they time this

in would hire be terms then about, you've more you that you to to that, help reason of the do development perhaps to need this? you'll guess I what do And been this main Okay. ensure the And product mean process talked people guys able think faster I for new that continues?

teams more I that to internally able solve than quickly needed. primarily sit The are that thing is we we problems product together that, process restructured to. and We've used created way did works. more people don't development that that they're they cross-functional the think

product between now and team collaboration team. our research tighter the and development a There's

there's just feedback have rapidly ever increased that's that So going more we our implement more on. much quickly able markets. to before. than we're communication And taking from We're

that's result mentioned product comments, made process. within we've Jim been this this XXXX. all a his opening that's as improvement in development very pipeline product a got of robust And for So prepared really

Doug. this point. is What Anthony, right is on saying And Brent is Yes.

generate and and areas to optimistic, I definitely the to resourced to this Jim's think both leadership. things we're new to Right some but pretty is Brent's a invest think If team, willing thing the those return. structure go think looking and leadership from now, commercial for is committed we're see other gain do. from need efficiency that think we something invest a for we in we I but more back

the those just of you as then just of concerned to the far those in And you than are and new as and past will -- SKUs that. products. what share Maybe products looking timing typically markets? Understood. as far pipeline new all speak those on more are as as just any far the done some introduce Can be in you have markets? if details in follow-up it as whether is Or more a only you to could your --

still very marketplace. are That's product competitive and initially existing our to is majority placing compelling of the where that to Sure. have our development ensure we The existing in the approaching that we products way ensure compelling. is new lineup we're the is are product effort that very

So would next of part rollout be significant upgrades that products. for are year first existing the to the some our

slowly to QX to pick in up in the see QX very QX speed expect that and year as and by. goes start You'll

In of roll given product intention a of regulatory those terms go our process product to begin products just the environment rollout to quarters a the process, is as to the States easiest always first, launch market. that the each -- to in United globe. a bring by, the out throughout But that will takes it's it

goes that product development its through. it process has own China

is may roll globally. we'll -- those start the the markets. that slightly when we differ to from it rest the products out of But So necessary, intention for now,

Jim. is And this

bit more. Just a little

the the a with looking We the team, SKU But will life cycle. whole beginning. the little see increased they're count bit at product product at

some. aren't discontinuing as time, SKUs the well and we'll be probably that over So performing evaluating some of

globe would I leaders the across local the say And Brent opportunities field engagement done has and with that more product for as different has the regional his offerings team and well.

something consideration. into that's taken so that's And

That makes sense.

others. it I last question Okay. to guess And then on I my before pass

part SG&A your expenses. was So of guess, lower I advertising reduced

I your guess, any of first, reduced you how that think secondly, how So XQ advertising -- beyond perhaps you I advertising should do for XQ we do about on sales? guess, that? impact think sort and had And

Yes.

away the a demonstrating think weren't catalyst much just here just that certain I activities moving from of primary return. is

promotions, constantly the go ad form of we're we'll that's spend, things think at. to I in stimulate looking to those and things look back to continue repurpose are incentives, whether

few in not just shown from effective. think particular, what have a just that that you saw be I were things to away moving

a of luck. All makes sense. best lot right, of the That

from our And from question Instructions] next comes Bolton-Weiser Davidson. Linda [Operator

the So as you wondering, incentive gross the I expense more up affect Or that was both? associate line? pick does or affect the maybe activity, does more that promotional margin

Yes. And chime types Brent can run too, of we and but different promotions in incentives. here,

people value to they on initiative by designed behavior, are getting to Others specifically drive rewarding people towards more the are introduce. new customers towards generated sales product. exposed to short-term more Some

see a little bit you of so both. And

that. go to have probably to engagement in on with really sales we new short I trying I think would back to the least up continue and support be that's we'll field piece probably say, think new go at see will a the of modeled. and generated And have customers payout I more the some back of in we've follow and term, increase what you'll heavier

fourth so, guidance revised bit. fourth like mean, structure? the about just that's would terms for margin EPS impacting in so seemed there be year that implied, had the More going the explain margins, the Maybe can on quarter estimate spending? then the fourth the something expectations in Or promotional a the margins And else the my it to quarter. on that quite the increased is I cost Okay. things the Is particular for of quarter? I that for in reduce what you

lower little and quarter, our about. There just results, you anticipated. during actually give just a I'll I'll motion Yes, of what but get give expected profile you was some what bit have would With things in it's we EPS color. third you what EPS third talked of QX that quarter higher we margin we we said in than and didn't are and bit a the kind little

really and higher expect would we to a into on creating support continue engagement. field line incentive the of the and step high work as this I levels spend some on

protein, products, And your is customers that. Okay. whey are specifically for taking just just new that that GLP-X curious I'm about designed then on the drugs?

amongst be isn't on don't large Linda, for protein many But Whey very that it existing It premium it's out product. that there, are diet. Isolate could just clean people the general, profile just sufficient used especially a in intention that in main very because in it's, our base. get a for that Protein their Brent. and distributor particular there's market drugs capacity That GLP-X that's

we reason So that's brought primarily that market. why to the

a then your Okay. is curious, of not X products these beauty the A little kind right? traditionally necessarily in scale. I'm bit supplements, new that your in serum, curious I'm a why So serum, correct? product And like guess it's a I other product, is beauty of areas? product Why is area nutritional that line which more a -- more strength are and different of kind

Well, call a and our one product. convention come that Americas product and come nutritionals Complete, called product at that's market did and Europe that sleep market. is a We in specifically didn't that actually is to did to category, that per is that out se, but Rest the

exactly far by our category. We've X and is most right. and Nutritionals popular categories. way You're got largest

products just many you that to ready our we continue also at on to of time introductions our of that line, focused Celavive line. bring the the market. at our This the one was are store category in have brunt When the to to product new for upgrades be happened skin products we maintain position going in ensure to be care XXXX, nutritionals premium space. which that look But and to

a Okay. And down, the at fairly free then Board, strong. your it about It's but least you flow allocation with discussed it's cash frequently year. thoughts. your come know but capital million still has I $XX curious I'm

to share something kind or to build And so need back intent of like I to do go guess, balance the What's see just to maybe your in that? is up? what your cash trigger? you let order repurchase

issue. Linda, I alluded first meeting, an talked mean, -- about hour Board every literally, meeting, to half you Yes. this. quarter we of this is the the This

of stuff other make road Board, the short-term is. totality along we with that being thinking and things trying too And cash Jim's sure down reviewing different the that is works in doing so have figuring and of not the what this and out use to looking we're that direction there best the the

to put The the find and a Jim to we to generate to is way Board direction return. work need a that from

active looking fundamentally, And priority all organic We've investing the opportunities say are side. in in That would our still that. I business. would second orders very different so be one. business development we the of been get at the

and stuff, are this And share that and redistributing we other excess is as then we through repurchase. when have of look we at things don't cash that potential, done what see there some we've

priority. So and areas those our remain focus of

do my with Okay. just question to has China. And last then

You stimulus release because economy. much. something consumer activities think don't these Chinese affect But is that stimulate want government guess, really there or said, I didn't I in you that the would to they activity mean to business doing press I all the your the try the know, and things

mean, are I as help a just a structural I stimulus market? or hopeless how largest them you like then Like? And guess? in feel such what government secular China, the you for planning issue won't you saying in your it's will, issue? If are future that it being there's

Brent is This here. Yes.

customers and approach within and measures something incentivize well. I a think China. China take it's that development certainly to to as our something we're we see, optimistic that or stimulus stimulus That's that in distributors seeing see extremely the growth and want government that's to economic want

what the current market, shoring we up local is that's provincial done, showing think directed mentioned governments. a primarily opening was the been banks been believe in and that the and stimulus it's I remarks towards stock branches,

sign China people change a So over over and efforts. in there I up short our their the talk that direct comments shore been term. the came in positive about economic my that's of team government But that don't impact help customers China, a it and to our is knowing see is to that is starts this previously, to we the anecdotes particular support in to momentum, that Anthony to willingness going we've the out, from psyche from the when hearing consumers' that spend in and stimulus that

And and continue up consumers currently it's we that where believe our average customer we're change So go see as will we spend sentiment in to will should optimistic continue. that, does, that per it at. of that that, China, from the

XXXX. than Our so in greater far the customer year throughout acquisition has been

Our well. has count active as customer increased

that starts positive thing So those are us. soon the up, that as economic should We spend indicators. very as all positive a faith now pick match just and count, be then believe customer to for will

here feedback Yes. And over We I with a they from their Brent Chinese talked I I the all respond talks in bit time. -- us you'd different. better would hear say, and the there States and the to understand. it view eyes different consumers -- we Linda, little then the little the group is consumer and And a think mean, helping behave than what see

growth said to So positive they directly spot things. to is consumer I with what go Brent is on we've now could there can individual government continue right I has think the economy some to and things related that think do support of the to at intent think there. support is And -- Chinese what response a go the are and and China. communicated, least to the in I starting those government spend None back

and just got So itself trigger business. we're I back as in that the a the of that think initial But there. we response go measures, to and catalyst optimistic the is doesn't

with luck everything. good Well, Okay.

questions Masuda appears further It this, back you, hand I'd are With remarks. Instructions] there any closing additional this over at [Operator for to sir. to or to Over time. call the like Andrew no

Thank you for participation and today's for questions on conference your your call.

you XXX-XXXX. questions, Investor contact If (XXX) free please remaining have Relations feel to any at

disconnect. Ladies call. Thank now gentlemen, may you you. Thank conference today's you participation. for and concludes your This