USNA - Earnings call transcript Q3 2019 | USANA Health Sciences, Inc.

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Operator

Good day and welcome to the USANA Health Sciences' Third Quarter Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Mr. Patrique Richards, Executive Director of Investor Relations and Business Development. Please go ahead, sir.

Patrique Richards

morning. Good joining to you quarter our this results. us appreciate review morning third 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

the cause this perhaps statements As will projected call, uncertainties involve results events the risks make course of materially, performance could future management future regarding and conference financial forward-looking a actual statements our such the differ, statements. reminder, or during from results of to forward-looking company. in that Those

most Examples strategies conjunction of SEC. these year caution regarding contained specific these recent statements statements include our and disclosures, that with and XXXX. filings those our factors with you in fiscal outlook data risk for the considered including should be financial We in

CEO, room morning as company's the as Yesterday Hekking; results, Kevin our this website. Officer, Chief management on our the President, well market and our results we joined our by outlook commentary, in the Jim today. Financial document here Guest; third Brown; I'm quarter announced and Doug posted closed, after other Executives our

now brief We'll before from opening hear Kevin for call the remarks questions.

Kevin Guest

and thank joining us. you for morning Good

of USANA quarter a was several fronts. on The successful quarter third XXXX for

basis. efforts quarter were a sales on sales net down modest Although net growth both sequential quarter year-over-year during basis, on helped several the in generate customers us and a active

generates Annual a held we year our Convention event Global excitement lot not of in City. and always August, In disappoint. Lake did Salt This this

of attendance. products event, also and the introduced that the in several training new thousands business to recognition and we we at offer incentives Beyond customers

reengage the contributed and and we throughout to generate momentum our for meaningfully see our the of to our quarter. in positive associates quarter to promotions incentives and that offerings pleased offered part efforts the We business. to results our These are customers respond were positively

monitor consumer health to continue products. sentiment In China, towards we actively

customer a pleased response promotion sales we quarter. challenging in Although incentive environment in to a offered see third that we continue product consumer to the China, we strong were to experience during a China

by these throughout return we results to promotions sentiment right key market. over offering continue generate that momentum strategic coming The indicate to to to consumer growth quarters place improves strategies plan as the incentives time. us China to We in the generated this have in

Additionally, a hosting nearly China we by XX,XXX Annual Sales our which in once will national At we preview in again Macau. plan our this are in November, of for attended our XXXX. China attendees event, customers offer will be Meeting

our for Before for currency In from opening fiscal of that the on outlook call impact on quarter. the quarter, XXXX. $XX approximately the rates exchange second our a briefly earnings fourth release we to sales comment for net indicated questions, I'll expected negative million we

net exchange negative million greater previously on As noted in quarter our sales XXXX. we that rates earnings now believe approximately release, than be million estimated due $XX impact to will currency the third or $XX for

a our new have As this reflect range to guidance we sales result, narrowed expectation.

long-term while will investments align growth generate momentum markets. in performance making continue we working spending sales drive continue business the with our necessary we and and Finally, all to the across to expectations,

quarter, fourth promotions offering plan we the During to and incentives. continue

and While originally confident strength we finish that year remain the in this not expect we our the year-over-year has year anticipated, of included overall the business growth strong. to

operator will please line that, to open With ask the the now questions. I for

Operator

Instructions] [Operator you. Thank

Research. ahead. our Lane with Lane first go from take Please will question We Doug

Douglas Lane

you associate do the the have surprised The active I count to morning June and that out Associates, the full wondered think decelerated wanted thing and everybody. and Preferred China account, your hi customer the a what that ask review Yes, from good September in region the still that, I from June, XXX-day you in down can Customers in about heading ticked sticks to period. active sequentially north is that from now that again? away And your if you quarter you're start count number getting

Doug Hekking

Doug, really I would say it doesn't surprise.

trying very there back go go and for consumer folks, customers infuse to challenging. momentum so I catch-up product trying think and get it's little aggressive of playing been from it's back bit hard now our in the here, sentiment. to a it's even some and It's been us, referring who out benefits

as Kevin see time I and continue And we take continue think and different to and But to remarks, back back time and go prepared to initiatives ally there. back stimulate that's go go promotions go going lessening the it's and to here. will and be our back, market that mentioned we to go incentives and and some return in back his do stabilize.

there it see but return And be firm and some get we going to to going playing is of increases. a we'll in we're kind to time. role that active to where take is Our belief levels regular having have

Douglas Lane

and promotions mentioned expect that of Or there in we you to fourth there? Do quarter? more third the change sales of going be quarter sort then in a these is tactic incentives products in the

Doug Hekking

we've stuff than you a would we -- throughout typically the basis regular bit promotions on, things and we history. company's going was see. quarter what a little have larger had in fair, sales we third different on and be these To the What have these impact did contests and

type additive activities at active fourth market. had they definitely we are and the anticipating quarter. to to QX do lift think and going not we we're but same QX sales do, that from the in important of So, We're we're the

Douglas Lane

lower still, margin operating margins, the right just if to And in it looking to improved range? XX% Are Doug, that targets Is term outside quarter. gears your you've Okay. will, we resized, shifting at sequentially From like levels. the XX% in the longer range? certainly on sales the you looks

Doug Hekking

longer I Yes, now term think that's the for thing.

challenge. that's current I sales bit a think with of level, a

in back specifically, think as pursue keep some future. we've go given the of we're to the we that strategies mentioned, want to of consistently I going kind longer-term and investing

margin line I return, pick a sales think that along we'll little and way. see back we as the go So, operating up

Douglas Lane

of down here. on as margins, because much shift? gross second the mix quarter margin what's going the but line? still in out quarter. shift second the the China? year-over-year was that in down Or in on that as it for little not again the the coming a bit of Is mix quarter, more a It's And gross of in Is third

Doug Hekking

role. to Yes, definitely, on of some and primary mix are nature a there. plays and played gross sales Those also role a role. some currency margin little costs The pressure. a more the bit does market leverage than contributors a really mix play fixed But cost are of

Douglas Lane

up you got, I good. on on third we only two? the And and you pretty the quarter Okay, lastly buyback, go then your $XX going the is sometime buyback? Can quarter the in or see just on, picked that's forward, heavily up over next view remaining guess, comment what should authorization on And million the you it authorization.

Doug Hekking

on it. come I more won't gives Yes, here. did authorization the heavily Board comment up in as until It probably not recent meetings

do Directors, those active and to or coordinated see what think with is offset Board along and and equity we'll of back with And company. to the the sense be maybe I will back buy dialogued Kevin Jim. things the until think go extent management opportunity of be will makes the shares what of program. impact to that's I it we the And we

Douglas Lane

Okay, that's great. Thanks everybody.

Operator

Wissink Please Thank question you. go We'll take with Stephanie Jefferies. our ahead. from next

Stephanie Wissink

morning Thanks. everyone. Good

have two questions. We

us sense on question earlier give Doug's to effective that relates a in can just to what using you're tools China, wondering first you rate market seeing if help improve sales. of that the The somewhat you're of

of improvement a bit the it like you looks at there. quarter-to-quarter progression, see did looking Just

And how then on the more using that manage promotions incentive this bit you that of of growth particularly coming sales about much that that how is Or marketing building really and you infusion a stimulate out period, of the is overall China? can to temporary referenced, programs little in sales to much a talk you. into of new Thank higher kit you're sales?

Kevin Guest

Yes.

In this technology, devices look simple, we interact at be our we to as deal work through for company. investment in relates doing and have to WeChat it especially in China, is activity and to very Kevin. able what we're to ability with a are investing, way and why the their customers easy and a large mobile So, we made as access the and

great saw experience for involved to well are be and as those want perspective. as And that so shopping from you a making from WeChat a we mobile deeper, who progress a and

of where an And acumen and have we rest to we the and but we as in the specifically. world, focused. And well China as area activity been our growing so continue China presence greatly, see our that's in technology are technology

long-term perspective. participate As we think a is customer our acquisition anticipate and it from of that type and are that this we part hoping long-term promotion and encouraging to promotions a behavior not from then, be USANA is long-term hit-and-run perspective, about

acquisition, And incentives directed and long-term so a not our short-term. promotions customer and as a are acquisition customer

did well customer in count positive do would seeing we question. the But active at product results very be promotions the incremental some that last focused our as received on once that type promotions we're customer quarter. that China. our increasing strategically, get was in are And believe they our we that we to count numbers referred that Now, grow were we active sales,

Stephanie Wissink

Great. you. Thank

Operator

you. Thank

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

Frank Camma

good guys. Hey morning

Doug Hekking

Frank. morning Good

Frank Camma

about talk your get of you in do sales kind what you Can convention Macau? bump from

Doug Hekking

positioned tax year. -- over think I them, at haven't set sold we And a we bit last we talk before Last can historically, little Frank, products We from event way we product the there. there. learned that year,

in we year product in sales. think sales $X.X I roughly generated last million

that be million this $X.X to We year. $X to the expect million somewhere in

one of back it -- we them through have, they over in and environment stuff. think they there not to And going specifically go it challenging challenges the made are I made back because we're Mainland, right is to just for think now, bring back back to trying Macau get -- I and products the challenging we've

for be think We at attendees our that that want to headwinds to of I consumers having. very are our and trying and So, mindful things them. looking don't create we're experience differently

after So, kind we'll of where but we've some that we'll follow-up have the event, anyway. couple years work in on activities market that of and then type last been that's stuff

Frank Camma

the a can give us government it's on incrementally, you sound review the It little more what and the what just that entails? tell looking environment. that doesn't disrupting there? you I is -- second disrupting release like detail in for can really you commentary the Okay. guess, in But China mentioned this just And and

Joshua Foukas

Yes, Frank, Josh. this so is

review So, anticipated the follow-on or by look-back industry. the was review

in by And the business. really it we've the off again really our catch didn't or and for product so surprise. here from government focusing the duration which health of And scope foods gone as so the the review, us peers of focus. It's the is communications on far the direct what aspect Chinese

to request government the to get a the initial brought direct the initial a changes the whether understanding the advertising outside advertising, of industry. how greater look-back government effectiveness that in And have and also a are products companies sales review. the quite health It's to of up honestly, about companies review, within implemented

this that point, And We'll the in we're anything the we're so various cooperate government on the in release, year. also, we and seen just lead have following request And saw at had not We've this or government. point, of the any you're the we meetings correct earlier impact in not in negative media from asked or mentioned this to do. provinces. counsel we the to restrictions

Frank Camma

are What part Mainland you. have it I or out in was one might have you on can Hong figure geographically I that a -- trying small days, And that But sales at impact to your Okay. obviously altogether? of out it on mean it's basically time. stalled these Kong? there? I'm to is essentially or the just geography like adjacencies? comment all what fairly there you seeing spread at Does big know

Doug Hekking

But that real issues whole. with the reality a Kong not there, from large as are But haven't of, that is now. the years Hong in right news seen, great couple of for Hong the underway. you've of deal the all they're last is us we kind over right a growth market a seen geopolitical Kong

And hanging in so of it's there. kind

they've think given and kind that job. I I -- of decent think a surround pretty done the environment it,

Frank Camma

South out continue Korea be sales South us tell Okay. mean represents how My impressive. extremely Korea -- final just the is of of roughly? numbers now of question much I a Can to you portion

Doug Hekking

the you of talking Are just mix?

Frank Camma

years. total like it Yes, the be just the it last Korea now, revenue. of it South over does well, your must -- of growth size decent seems percentage they're given rate a sales Like couple

Doug Hekking

X% below just It's for quarter. last the

the picking USANA alluded having to, up that a shares down within market upward you an is with whole to that we've talked group well thus trajectory the and As out, kind as Korea due flatting circumstances of of about, being companies.

Frank Camma

I must I -- until U.S., later. guess bigger that that's disclose market, won't right? be can but-- I single it's mean I imply your country But second-largest mean you that I the I guess than mean

Doug Hekking

frame be I It'll think look the time at. in you it on future. depends which there not-too-distant probably

Frank Camma

Right.

Fair Okay. Thank you. enough.

Doug Hekking

Thanks Frank.

Operator

you. Thank

question Ivan Please from final Our Partners. ahead. Tigress Feinseth comes Financial today with go

Ivan Feinseth

Thank reaction progress nice and to the you. great a Congratulations on the stock.

Doug Hekking

Ivan. Thanks

Kevin Guest

Thanks Ivan.

Ivan Feinseth

as I disappointed? questions are of product me been have a new far Somewhat What clients? of introductions. and associates has what Can give things recent than some from expected? idea better some as couple the you the your uptake doing

Kevin Guest

excited Yes, that which if product, upon out we outstanding doing. how we're we called -- sold is cognitive, of board, forecast you the that our it's is well enhance product traditional it's We're product. the CopaPrime. launched it, product recommend Chinese And based a we brain one CopaPrime expectation and just across everything it, exceeding try It's had. that been about when and product medicines well performing type really have sales you I'd an on we

a launched how product it products care, and also interaction probiotic launched, are that interacts. especially, performing below the the of is for we prime products care We that selling But social do oral believe because oral that social some we expectation.

night, And gives the bad on in it -- there several bacteria at work you unfriendly are morning. things that work to the go you it probiotics take and the -- breath

which is CopaPrime there's So, a world, Chinese the up as into and handle for on breath you aspect versus and good new us good yes, is medicine in in product we bad it well. next and as will the a that product new somewhat year. wake launch traditional very social we with a the can But performing breath which focus so there, campaign is far a

Ivan Feinseth

That interesting. on sounds very Congratulations that.

line, has Now, the that how been how and performing? about skincare Celavive

Kevin Guest

performing okay. Skincare been line has and our Celavive

parts skincare relates will launch regional for We to world have issues some will XXXX line products we we than that it at needs the various that new some others. the believe that different have address enhance as and of

that more expand so we we can line regionally to looking are so And our skincare conscious. be

For that's resonates. example; instance, a component, of but not things, in at where States a in the has something side that prefer that an type United they that's Asia, whitening product all

And in see and so percentage advancements our be of it to XXXX. a making we are larger skincare hope in sales

Ivan Feinseth

Again questions. Okay. I appreciate congratulations. the

Doug Hekking

Ivan. Thanks

Kevin Guest

Ivan. Thanks

Operator

Richards. turn to over session. now Thank like I now concludes you. question-and-answer This the would to conference the Mr. Pat

Patrique Richards

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

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

Operator

call. thank great lines has gentlemen, Please your and call Ladies The you for joining today's have a day. conference now and disconnect concluded.

USANA Health Sciences (USNA) 23 Oct 192019 Q3 Earnings call transcript