USNA - Earnings call transcript Q4 2018 | USANA Health Sciences, Inc.

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Operator

Good day and welcome to the USANA Health Sciences’ Fourth Quarter Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Patrique Richards. Please go ahead, sir.

Patrique Richards

morning. Good joining to you quarter our this results. us appreciate review morning fourth We is via broadcast be conference being Today’s call live from website accessed our webcast at ir.usana.com. directly can and available call, replay the website. following Shortly will be on a our

Examples cause this statements As will call, Doug uncertainties involve events after executives Financial quarter the posted risks We make statements. these Officer, as specific results outlook our results should projected that to course of those the our in factors contained Jim our performance Operating statements could SEC. these risk differ in our on Company’s perhaps data future management Brown; management market from regarding future regarding and forward-looking conference include financial a actual materially for Statements CEO, and our results by the the reminder, website. such the fiscal or with caution Chief we the room. statements fourth Chief including most filings joined and of the Guest; financial during commentary in this strategies other announced and I’m morning results in considered year be of Forward-Looking XXXX. Officer, Company. our here that Those document close, Kevin our outlook and with conjunction Hekking; as and well recent President disclosures Yesterday, you

opening Kevin, call from We questions. remarks before the will hear first brief for

Kevin Guest

continued by our during net four the sales joining dollar and generated to results. fourth sales local all grew more five full-year more and quarter Nearly notwithstanding markets of of Thank by strong you morning. you strengthening growth than U.S. our review USANA Patrique. XX%. Good and sequentially. of quarter fourth grew XX%, markets year-over-year thank growth the than us the additional both And in currency generated for results, our markets worldwide

the for above strong be quarter. and came Our XX% also very to continue margin operating in

our our As noted for we between exceptional. for Accordingly, stakeholders. the is XX.X% previously, operating a year the all fourth were and equitable whole, XX%. margin is and results our target Which of as believe for quarter

For grew our record sales of net in of the XX.X% year consecutive XXth sales. full-year XXXX, resulting

results earnings were net share history delivered of in Our we Company. the bottom highest impressive earnings equally as per line the and the

X% Importantly, our base year active customer a grew ago. from

global our Beyond our the meaningful year, throughout and launch of initiatives skincare accomplished our European completion our markets, Celavive we key new of infrastructure. several including financial four performance, the of IT line, the the new in improvements opening

business in world. positioned stronger our a the XXXX, overall continued customer our around better result, and for In experience growth we is continue As the will future. enhancing

include USANA efforts to Our customers value regard income the in enhancing this through proposition and products opportunity. offer best-in-class our will we

only as shareable but to that living will will share that prospect experience USANA will regard, continue not as healthy products will USANA is provide well in new our excellent XXXX, aim for experience products also we deliver category introduce which new include that nutrition, an superior ensure an Our to through customers. In our fit improve to updated customer shop, existing customer category. improve ability demonstratable, customers media. product easily and and To These through we social technology. that focused, products continue into our overall our enhanced to line be also

are simple, a enhancements Our positioned and mobile the made of I these the several last are have we as ensure to technology efforts this regard, on is over continue years. in result our delivering to strides shareable. we believe

a the something markets. developing we customer markets strategy are European Finally, single efforts sub demographics the different needs targeting we in XXXX market, growing XXXX, our four focused new on within in includes our This addressing our existing opening after markets. and call of

broaden our loyalty markets, select We and and which offerings will our initiatives customers. trial for particularly the offer compensation also in and incentives to U.S., plan salesforce in

these With the record now earnings XXXX another for questions. of our in to overall open please and we revenue, expect experiencing operator the to lines strength be will are that, year ask I business, the we active initiatives and customers. With

Operator

taking And instructions] question first from Research Ramey. we sir. go at our [Operator ahead will Please be today [Pivotal Tim Group].

Timothy Ramey

to know So over I the you I EBIT guidance. on you follow-up wanted to about said did you being, this think that time. on target earn I just said what EBIT and XX.X% XX%

does promotions? does similarly reflected mean don't that play currency for a really sure I associates see sales like it that growth what , does rate, in a more So more mean I'm XXXX, although than will role. expected spending that means higher

Doug Hekking

this Tim Doug. Yes, is

thing. outlined of the many that be talked think U.S. about millions investing initiatives an in I particular in kind and Kevin be would immediate be will document. out the and return in the in initiatives dollars see MCRO area those year we to the trickled of going probably those throughout you not the of these is

are existing that towards time had back that. think that as the the experience putting are and important product Jim we and chime to market a for ones things some innovation at and that but noted have enhancements region Also And lagging go of on that little looking technology are particularly and correlated, and it's are very that probably in bit. Kevin markets, we have for our pipeline growth and back so product we have whole. focusing are existing really the market things fuller these in You for been focusing Those the of very customer each areas introductions a but and resources here, we really… a growth do MCRO, about quite what on excited we of

Kevin Guest

us change issue time for these the how to build expect as as doing continue and expect our upon This overall do have direct XX it want as take How growth, people news on relates see record are good we growth outlook is years business, to business model. it to we The year effect and they with in a we to an environment of timing overall Yes. how and interact but relates initiatives it for the expect that sales. as to a our to companies. really to

So that positive we but not return. extremely forward, at we immediate expect strategy and as this are be is we why an look are will is are in that we place, where

Jim Brown

say I of just it's standpoint. approach would a philosophical also more from our

keep We consistently and have at evaluated invested what to the right kind our top-line over amounts double-digit go and internally. in of is go back we constant back approach operations the currency and earnings years growing just so return is from have back it's been and rate that to the

Timothy Ramey

product Kevin if you know of exactly I healthy sounds Right. don’t That what good. line idea and you on touched is. said that the this

are You you probably can the will us an approaching? you what idea be exactly say won't it what of but categories of sort is, that give

Kevin Guest

broaden the we store, as you if we strategy but how traditional it be store can supplement product nutritional independent owning they of behind still they inventory to provider. a think fact their offering health business our of the would aligned outside them Well you supplements, in would that nutritional a owners, and is, if are think the our that were have with

new It's through technology their vitamins, is difficult talk really strategy independent with business customer area for is And help an immediate instance current and attract pill, about grow so to to social is customers from not reaction, immediate that we products a to for not leverage a allowing effect to products you there easily opportunity cause our to because so offering take are owners base broader we move speak, strategy can media there a and perspective. shareable really want the where and customer an the the business. so to an and social our media into

Timothy Ramey

expecting Should thinking that quarter, Okay we you or that and I clarify, mid that kind you a XQ. softer is of could a be wonder that is you just if quarter? single-digit mentioned were down

Doug Hekking

not Tim, going been we'll you see clip be I to that growth seeing. Yes, have modest the think it's but

think of it's a I matter calendar. timing our of of really global more

different We promotional with of year, have and be out incentive the like we that. coming is of first will the quarter throughout variety but products really a offerings activity,

seeing start that QX, up pick we'll our the see that in throughout years you so and And is anticipation. really accelerates

Timothy Ramey

Thanks Doug.

Operator

from go And Doug we Lane, ahead. take Lane our next question will Research. Please

Douglas Lane

picking are does of Will products? the everybody. going that launches look play convention What half like of the morning, conjunction living up just be quarters second new the more will here, the out. the be calendar any your seasonality good to how of with or or that? timing for launch healthy on the it ahead the I'm in Hi, of in

Doug Hekking

April convention. Pacific a of based actual Asia a into the up familiar become a third going distributor to limited have our we coming that and in products, a couple a launch we quarter the on with base but place that launch the have to and category few of fit in let will our do at convention offer, international products and the of time aware So take are opportunity

Douglas Lane

Okay. to to are structure. Got at with investments than associated incentives. tweaking it. sounds talking clarify SG&A And on the that to look about Is good just like more anything It do are you the investments a margin way it?

Kevin Guest

part an that great statement. is in Yes accurate

Douglas Lane

and Okay. And outlook along the for an a have XXXX? number you initial for CapEx Doug XXXX same front,

Doug Hekking

me give you let Yes, those.

key talk back did Jim you will So that initiatives strategic maybe I more launching $XX what our we about in to of asked our like is of model question, for trying about XXXX that to go around. get million. XXXX $XX.X We here our do arms shows And some and let about would XXXX. kind maybe I in and

Jim Brown

investments world, continue facilities looking In we of those. XXXX strategy IT upgrading around we within at capital, XXXX, investments we will had had also the our the same some and in with

stay of one some investments as game food itself beverage growth. powder as well our we to we is bars. And about the line as our equipment some our talk products in in vertical internal, year when well investments our into then have as XXXX our integration, are of at China bringing We looking this with of ahead

here, have it at always and We over more control issues are USANA. facility from a have feel we that we when the and that chain going had supply we to years historically a start we internalize here bring

Douglas Lane

CapEx that it balance you my big you in think helpful a and jump in generate free your is flow a the cash I the are as cash right, is XX But if sheet here. even in math That lot is. bucks CapEx jump over share is Okay. with on a of

So cash there? go strategy over can free your the maximize what flow is the use to for and you how just return of

Doug Hekking

the the at a production kind food in-house kind looking Jim kind walked side and taking So kind of historical of price on of you you through context the it. we saw about are looking as price I what up and are excited for in think bringing is great in-house just of manufacturing deal dollars and just of we

That it. one develop investments in are about think our that areas other back area. continue we out excited is salesforce our key, I product and in that sit development China. really customers are are to technology and and Ongoing infrastructure the and go

on we is are of that start obviously but to much we site, and focus on these close are So that excess One it's the the this around to sitting nothing more kind active of even long-term start that we more are actively we opportunities real looking or in world. different key point, if organic and that that with There imminent the good this something lead are locations is, And at we are business in locations then side. being areas we branch cash. things through facilities, evaluating these a kind Do development buying off is we piece those we that evaluating of do see going Doug are at strategic Is or point. be some that trading back then estate? going as some investment? much of we go there

be think of I period, foreseeable range. the year been in will past have XX share of that tranche, program, we tool five, that free probably look used the at would buyback we for the that three, about the cash primary last over XX% flow in and the somewhere future kind our historical

Douglas Lane

helpful. Okay. and is that Thanks Doug,

Operator

from Camma, Please We will go ahead Frank sir. Sidoti. our next take question from

Frank Camma

the Thanks brand. manufacture guys. American just first way whether seen I is taking you and morning on Obviously seen down view slow feel about do China. questions. you a truly are companies Good obviously I'm a maybe wondering they say known some USANA Can question there, that because not. trying as for you the not or My an consumers, some to is since whether it's brand? get for not, there really just that that. over just was well just

Doug Hekking

even one brand country, as an American yes. to you it for in be China. is company see though product as strength. answer American perceived in said, The Like brand we an do They American of and us our asset is the the the manufacture

Frank Camma

thought said given I not Well, wars a the you be disadvantage impact case, but Okay. obviously your that be short-term, but have initially companies might that that some will, on having trade any would if the company.

The that you talk other you care. the product new have on the some rates about history personal Can is on question now reorder line?

Doug Hekking

know Frank, - other that from is similar kind have going you the that Yes, products. it’s of we

hoping stickiness. little we think more I are for a bit

anticipating. what months think cycle, more sporadic bit be the I in usage that so it be three, are than it we problem, month a two packaging we giving them. be it could is commodities the what are could four finding little are is could provided it’s months, not The and we a

about out have I have some we it excited a think I learned and lot. really there who we are think definitely ambassadors

had math that a But of I close. the have are a whole, follow excitement have we deal offerings We product seen of a on form think pretty we great some in with. as

around You of the know, year-end we that run just talked about came and right of sales below X% in end by sales of at rate we XX% the about year. hitting of a

Frank Camma

really that products Okay, lead right it though, much that? these. to am specifically exploration, - that inventory I mean and problem out some lead the did of a since see these I talked about called inventory the you I assuming don't short some the you a because build, mean, of I of did care. personal to I'm don't about have has but

Doug Hekking

Yes, a that sale our lift products. relatable inventory you reason longer right. the of the have offering. are you The directly product in are And seeing we exploration in exactly is to of

as and in a China third-party cycle of enough now of outside to back are markets bit little inventory to a have to get that of was. go us acquired kind a We what we allow buffer using to and produce demand used right the we

forward. back go So inventory we of in kind going through expect would sell being as that that to down brought and and see we XXXX

Frank Camma

input question been beyond the definitely healthy covering on of living years, tight more seems questions have a And very obviously Okay. you products this year, is you it from Last because, last a given strategy expand willing have like portfolio couple the it when little you had even that. - go you, historically getting management what in you products, said to me positive. really I or seems Can you just are from is which of right. about are salesforce like a your think sort to you to like? that is going further, strategy a But, talk that change, bit directional of that how it

you about that could down talk what led path? just So you

Kevin Guest

is change. Yes, it a strategy definitely

it day] happening and products are I that what at alternatives who the broader other is any part, billion, But store, growth product then long-term alternatives, a had expect But to this a (Ph) around you supplement broadening the historically nutritional that And happening into interact base launched that our and customer departments call second of one right If a if already as current consuming. health of providing And given companies could USANA product look from perspective, sustained world, have on the we about products. would to are almost entire and you a [Flintstones that as now at appeal related strategy of our but part stay USANA customers is a healthier in healthier is When the we offering see still and for there a what we health like over the and you to But marketplace, believe is providing companies, and as whole here, all it are people. of my lanes guess ago, a company. in how first a they is looked are strategy is we them none are vitamins we now walk have within devoted industry industry. by years the with vitamin has. XX the offering. limit $X Amazon application product those

an ability on. is becoming have the as years the and more more edge to cloudy move so differentiation the And and

And would to product be our thinking advance with many us, see forward just current a years we are stuck we so as company provided if for in offering. we where

we to question part your yes, and listening to the to base, So answer initial base. is, been are your the lobbying our of customer for have really us they expand

direct And we industry. active doing aware and then marketplace very are research lastly, being as in Secondly, with space outside of in outside is the companies. what an are happening selling the we

by or believe we headed so paving are a that where future path the this we changing strategy. And is

Frank Camma

I agree. great. is That Thanks.

Operator

[Operator Instructions] Tigress from we'll Ivan Please Partners. time our next question Feinseth sir. take Financial ahead this At from go

Ivan Feinseth

my My where interest in or feedback China, for or congratulations Thank the initial you. first another from nutritional most year. record Thank agents questions on in you are taking seeing products? skincare let’s you question say and your on either customers from

Kevin Guest

there I’m have skincare our new and the foundation nutritional is launch a years been is versus for just products sure very with which and if two I'm us and front correct China. only and I products the or so products. and month The a week the a nutritional in in don’t but wrong. maybe certainly nutritional me me, for it's supplements, of confident to is the the around everywhere number world - consistent

Doug Hekking

It’s nutrition ahead in China.

just to just, as try mind, e-product launched in net our quarter in line fourth Now well. we sales keep we the

Kevin Guest

Yes.

Ivan Feinseth

big amongst at least that skin other overall from be companies. think consumers there been Chinese about I similar feedback a But and interest has to seems products care

congratulation. So

are us give going what of could what I you are idea that some healthy products product successful of type to think in there? kind your you or be product Can included launch. line. be new taking In a initiatives this living of

Kevin Guest

is really it a name into healthy perspective. what specifics going the Without living from implies

the believe of within issues we as of the that is have team part One routine and homes. to applying or ourselves greatest toxins our that science our we that notion daily are we our believes of

And that very improving have - provide from and so if perspective some others we that have the and eliminate a stories we to healthy implies far healthy be what significant healthy name products. - But category are going alternatives products toxicity we can and think to key alternative. be as offering offer about as will as and will help what really simply told, a living, differentiators

Ivan Feinseth

You are probiotics. and say focusing prebiotics on, going let's to be

Kevin Guest

a and R&D biome offering. area and us of Certainly strategy product be for is of the focus whole will major part micro the that

we As biome, think probiotic things. of about micro the prebiotic is all which side

the So is answer to that yes.

Ivan Feinseth

Okay. your marketing spend. what to of idea be. are some Then upcoming us on the is your you CapEx focus Can in give going

Doug Hekking

own Yes, a out for call talked foods on equipment lot earlier go spend plants facility bars and of of and we is bit and greens. make back it little our a about Jim currently fitting Ivan in the so can

So other big part of ahead lot that a the stuff Jim. Go maintenance is it a more of of is CapEx. and a

Jim Brown

No, again them - marketing CapEx. have go mean but Yes, of a the Ivan. I - mentioned ahead you lot

Ivan Feinseth

say agents brand type let’s you to mean of marketing. for like the example, things support what I that awareness, like like your or and technology type more is that. of direct spend supporting what like say consumer Yes, to to When is technology or agents this marketing

Jim Brown

So, on of both those. yes

make as some all able go purchase a again at that Amazon roll notification. And technology would CapEx are technology focus. and will we have had the sharing quick very concept our a our athletes our our a to as who we can can or Again, lot this marketing more type look easy. be sale and with marketing capital marketing what make want more that say with is sure from share we the our strategy the again that more year. social when other you with well then path to of spend our really And we aspect a down with that through the we that technology of it and people next path and so makes investments And of a like CapEx spend, one customer we into same going path as to living customers our earlier Kevin us that continue So healthy at social in easily, help or at are well technology are that our we said look from down looking our down as past sharing. social will when spend and year products

Kevin Guest

of we success The athlete products. to utilize where things a be our world for that class side area Yes. us as Olympic really continues of athletes, a have company athletes significant

and can even that to are to at as utilizing opportunities relates our path going look where expand products. We our down athlete continue base we it

Ivan Feinseth

skincare at looking line, focused looks any the products? Are then much Celavive it pretty of you Okay, women. product considering on type men's

Kevin Guest

And you is, perspective even our of approaches skincare. are not the as broadening from products social current Certainly men to user has that men. to it our experience and out products marketing marketing come products the a using new women. very as this relates a as shaving well in sharing relevant to to are are So yes, we these when appealing with include and reach

makers income target Our they female a are the a demographic generally and decision base disposable perspective. in spending money the market from family and is

we right to and continuing are skincare. out is that working And with of chute, market with so now but the our men to

Ivan Feinseth

or your how users And for agents enrollment to directly behalf WeChat customers agents or that system. is does on and enroll on of then This work?

Kevin Guest

much live their lives. with They for Eventually WeChat all they products, platform, of instance, above. pretty they order the interact China, In companies.

the vision that, functionality to it's we where platform. entire our are fully yes, will But WeChat stepping that to they so have developed. be be business the WeChat And able run through we when going is into their exactly isn't

Doug Hekking

well well be to to just themselves for around of would our as our other able being purchasing. the as Again, be very a the being that up it easily not countries as world sign but customer instead enrollment them the based WeChat, focused as is intent associate

make we about XXXX used have the talked reflect be phases platform XXXX but multiple for into and initially, like pretty it this China enrollment to to on throughout base WeChat much everything. we in So have

Ivan Feinseth

again. of I offline. Okay, very look other Congratulations and lot but forward I good. thanks questions, a have to speaking

Operator

And we a take question Please Group. Research go now from will Ramey sir. of ahead, Tim follow-up Pivotal

Timothy Ramey

so much. Thanks

I answer. Just a think the know clarification, I but

guidance Is future that share You not correct? is are does sure repurchase fluctuated. beyond any imply been what already

Doug Hekking

offset equity to being of enough by kind equity the company implies issued the comp its It programs. through

Timothy Ramey

Right, okay. repurchases. But not necessarily discretionary

Doug Hekking

Correct.

Timothy Ramey

That you. is it. Thank

Doug Hekking

Thanks.

Kevin Guest

Tim. Thanks

Operator

And Richards questions there the back at would turn time. the for are Mr. like additional or over further queue this any to no in conference I to closing remarks.

Patrique Richards

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

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

Operator

this you your today's And for concludes call. Thank participation.

disconnect. now may You

USANA Health Sciences (USNA) 6 Feb 192018 Q4 Earnings call transcript