USNA - Earnings call transcript Q2 2020 | USANA Health Sciences, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the USANA Health Sciences' Second Quarter Conference Call. Today's conference is being recorded. At this time, I'd 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 and you Thank We appreciate our morning discuss us all quarter. joining second this to you Today's being at call accessed conference is directly can webcast from be and our website ir.usana.com. broadcast live via replay Shortly following be on our will the website. available a call,

should as closed, questions. factors commentary, quarter well remarks for and SEC. Jim disclosures, Kevin this executives. Chief be the with Officer, Doug our with the by We'll considered hear operations materially of company. the I'm conjunction such data make that regarding Guest; document website. risks the forward-looking scope could our now Kevin regarding call uncertainties Those you from or Board, and the results caution as most statements for reminder, XXXX before statements. events of the to Examples filings the Financial call, Brown; statements and magnitude, include our financial market future cause business, the CEO well brief our statements duration conference to that and on financial from course other Hekking; involve outlook after a in of fiscal financial management these this we and in our Yesterday results posted actual morning as those and these differ of results. projected uncertainty As opening management as the performance future second the pandemic statements recent in risk impact outlook during We strategies to will forward-looking of announced our of related perhaps Chairman and the company's joined specific results COVID-XX results President, our including and contained year our

Kevin Guest

Good morning quarter. review joining second thank to and us our for you

proven we've and results these our reflect months, adaptive several efforts. nimble to be and past these Over

they working customer from expect. have are and level quickly adjusted providing service great same home of experience customers with Our the employees and come have to our to

long-term USANA. our continue committed surprisingly, social for quality of provided They products such are associates more growth ours. other tools who health our growth We also technology based leveraging on initiatives on resourceful. to looking and USANA executing reach Not customers high to are remain and as media extremely many and the to wellness focus by are

We quarter. several customer also in promotions expect generate growth to momentum deployed during continue year. that we successful back the promotions the These in of additional the half helped

of of attended. virtual live Convention. also large a successfully host part first all And we year, We hosted the Each are that [ph] Asia-Pacific camaraderie and our well several events culture USANA.

While we event the are have of break disappointed the with tradition and we the year, feedback from attendants attendees. pleased positive to received this were

to virtual XXXX live the leveraging to events repurpose While in we even resources reach resuming look the in events of future, are we forward most audience. our making the larger and

Before opening year. for and our the the call back the outlook for questions, expectations of I'll comment briefly half on

continue our manufacturing the and will our our foreseeable operating adapting many our plan to employees safety wellness While new and continue the to and continue operating that we The employees, procedures Accordingly, as around we positioned the an that we of associates arise cannot operating home of under evolving priorities COVID-XX a employees result believe challenges ourselves reflect from those world well continue health, to for we've work pandemic, all work priorities. of our ongoing top the and our to of shipping and anticipate might customers remain will with recognize to future. will environment.

as particularly business. in current solid and support to cadence noted our momentum, an third of momentum are raising the on we earnings quarter the plan the promotions well quarter. in to this our As release, increased guidance incentives reflect We full-year as in second the

align to structure cost flexibility our to manage changing to a performance with environment. our to and adapt sales continue financial to ensure We

in am for will continue I the investing XXXX of our and strategies. beyond. open remainder that, questions. the of growth business lines growth ask place will we With term to Overall, long in Additionally, USANA's now the strength I we in for the operator underlying strategies the confident have and please

Operator

Thank will you. from At we [Operator Instructions] questions. the this Jefferies. of question time, floor first Steph open comes for Our Wissink

Steph Wissink

everyone. Hi, thank you. Good morning,

we'd unpack We like with questions or have few to we'd to you. unpack a themes like

to sounds it First, just stepping QX. on the and QX with promotions going up, be those starting comments like incentives, you're to

QX just in both So felt and should effective side like in then promotions result you can thinking incrementality for you contextualize be and on the a those from anticipation promotions? if benefit a of the then QX, your incentives? we about I'm accelerated us terms those wondering momentum, you And in cost of help much of saw as how what

Doug Hekking

We've lot this propositions a similar in XXXX XXXX. those had Stephanie, Yes Doug. we is of pricing modestly promotion those the many on in success we ran product types of better that of Year-on-year XXXX and opportunities, things second quarter value ran. and we both of

the good promotion a QX into and runs the and got new so we're traction that we're optimistic second about. quarter, good that we there some that end introduced of results seeing promotion Towards some pretty pretty

as million $X in that so $XX the between million range. a somewhere to that and promotion whole, And quarter, added probably

-- really and environment of COVID of half Going calendar part that it in the a -- of the the big the was to quarter, of in with the it's matter the the year, really focus first the a third focus. the really adapting really forward entirety

of quarter back many to so third that items got And of the have. pushed many our markets calendar the

Fourth lot promotions we is from than on promotions, quarter. of see landing QX third kind of so third expect and in a a that the quarter quarter. decent the pretty seen so lighter that lift lot in we've And a you'll those

the We expecting but third solid on a haven't we're quarter. commented quarter,

Steph Wissink

really Okay. helpful. That's

for that second got half QX. new back out of should executed we in that maybe things recoupment been developing of a the first the some in bit have of the So thinking half or versus of those would promotions about in the be shift pushed in half, the just year, lift promotions you as this a some

Doug Hekking

Yes, the promotion QX from calendar appetite wasn't of sales some on that to really at end our had started we run. that was we team the about something

the and far. of little so I based think are how relative that that and a to so performing we're, incremental outline results upon plan bit is good they And so some our far, initial there we're seeing one

Kevin Guest

And just another this is comment, Kevin.

us promotions, these look keep business at our to growing. of being tied base the help is momentum we connected and connected customer As some us help promotions and much very stay building these and to our

getting business This gives environment, unique having it's used venue and to meetings. in a sales force, so customers different be to successful. gathering speak and together So connected and and to proven we're to our independent owners stay this those those us in to very

Steph Wissink

up And incremental it P&L, to Doug, largely show or those incentive factor the also does we those in promotions are into gross where going should lines? in margin map associate your

Doug Hekking

little bit a see both. of You'll

so of can of in but And we discount just little the that see little from the can the bit lift and half operating sales, guidance a you we're probably year, released expecting top see end we'll from margin back bit well. tell the you as a of a

nothing a bit is pressure, both, a front, you'll So too incentives really in offering. a see bit gross it also the and little in distorted little balanced bit you'll little but see across a margin

Steph Wissink

Strategy just delayed want second China. improvement was And it some other the it's you parts seems topic for Okay. were had half? we there, just in look market to the the relative diagnostically at of bit, so about at that talk anticipating you've then you to maybe look success us help and but bit a We China little like China Asia, a could back

Kevin Guest

on the really have that more sit, looking is procedures. that to and we of or coming moved to handful and Yes, be year year specials promotions year. already our But in the back another go doing up our from normal things the and offerings where usually one And of we offices they China open direction September all one four year have it's of in interesting market that still we're one throughout in -- thing products we're up meetings national of an COVID-XX of have to into with it's but a are remaining a China China, China. of really product operating they the they're limitations is then offered this this and through going half five meeting, we November online and We've the to event.

expecting momentum to we're well. that great as So around have

I from economic market, kind bit we the of that the is had outlook, last forward China. Stephanie and environment The deteriorated see and little that XXX-day other then year in COVID think into you the review of you hearing rolls are the a thing kind

what of Hong you think now, bit for optimistic been on little seeing grew a of going there so in that We're has see with we, year, X% growth the the Kong environment with China companies and the China region, Greater the know been of many just on. business we're what might consumers currency. their in constant And just with now, see doing guarded activity drag, the Really I the but spend. we're in see back seeing half in still what's at we lot China you some under a scenario a you about right more tough

real kind China And at so the the that Greater was, when story brought was you that down. look region, it that of

Steph Wissink

been then think have think through help And the I the cycle in about well macroeconomic you through and terms a just several give growth more environment of a chance lower Because about seen a how over or fairly change competitive the as of wanted as you've your helpful. last maybe you has to growth bit a value last robust just really price value might the in the that's how one growth back macro? wanted Okay, you to into no business environment. competitive or very of us expansion equation to talk years the on your think

Doug Hekking

our from standpoint, been we've executing. You what so we've focused know been on

think pressure, We how that meaningful proposition that's really approach your that have -- that's they I sure that is the making how customers and and we ever-present we thought competitive something and context really process our is there. right not seen value but value in perceive

be overly part our as adjustments pressing I need we And just evaluation response. ongoing immediate be and an to our is forward, move an there don't think so of that but will

basic think our part is place. of I it process have that we just in

Steph Wissink

from Thank all That's you us. very much. Great.

Kevin Guest

Thanks, Stephanie.

Operator

question comes Lane Doug from of next Our Lane Research.

Doug Lane

wanted about this Lake everybody. meetings the convention talk morning I annual to good to going City you in Salt talk you a if big deal. ask convention is virtual hi, or your these and for with plans could Yes, year

how convention the have or approaching SG&A you are in spending in going is how you reflected specifically? And quarter? be that So for to third

Kevin Guest

perspective log person. we're who be a a VIP will bringing people to And will putting who will we'll approach but as the convention, still just in actually taking have our several all have entertainment And a is we and similar specials, will the out. What and information launches, lift, that some still -- we'll momentum who where from we're then have participation, will our far we'll be and numbers that nice who have sessions that recognition very similar the attend of our the is would have in we some product and general format. to we open we're content what still presentations Asia-Pacific to segments a virtual have we'll leaders Convention, still virtual. It to very do saw took there setting than special in trainers it we So rightsizing up will the and we training participants it see will we'll it virtually we're we Convention. executive public, will on, have doing we're good have performers, will have some have as Asia-Pacific from be access work so and be we good type attended and greater management have

up again modules modules, -- few access that format. friendly So very very it and it perspective, of the be sign attend different be will but speeches you that and be presented training user few live aren't to as will they have in you, long, There'll aren't most what be a to will and long, from as it's meaningful is virtual. all as pre-recorded the trainings portions it's can and

rolling with person. continue there that and again of do have But entertainment, but national segments be expectations again changed events. Q&A, will on would It SG&A, there be just is some a to in are people It comment be past. as we of on our these so cost our we everybody of some watching is it than City. content come a all But will of having our the are years your to going virtually. have convention those to performance virtual versus being normally cost done because less savings savings will similar. are expensive as it yes, just format participating to relates very the And we we're multiples activities. to it as a We and is still And in in just launches into than Lake will Salt obviously promotional do some product promotions, to times would, actually screen it

Doug Lane

this forward? it's about here, makes the these really think the here, that global to assuming days early but No, thinking re-enter Kevin post you've and change know conventions been be going through we a But pulled does you conventions way sense. and here, having COVID I just forward the Asia-Pacific world, yet of

Kevin Guest

to experience. Certainly we from learn need this

will I world we in person, the is can technology an those there what think sort person, come meeting of actually to when in can to can who think travel vision into around event. my how meet that because hybrid learning to through is move we afford in some leverage we're but I we to power

that will a And how and be leverage and to And think will events. we it our so opportunity experience we hybrid. do I

from on to and type to of do greater think our more an in events. heavily a do We rely off typically They continue form events perspective, all little that where to will might might technology more we well. We virtual our lot convention then perspective, go national be the a focus as more utilize I a but do markets we in in-person limited. from in expect spend the and and market, there kick in-person technology more every I money us on return global of of events

Doug Lane

and because second quarter China And your but the the quarter? then there in the first currency in helpful. bigger the here, Chinese New not in in whether first quarter seasonality having should the than and Kong Hong or Doug, in comparable dollars than the know China, you Year. normal would be gears currency there's confirm quarter local second a shifting the Okay, higher involved absolute that's And or I is back sales, first can it sales to business, of that the assume of or Taiwan lower was because in number China quarter was I

Doug Hekking

this now up you, for I'm pulling Yes, just Doug.

Doug Lane

I'm think at pardon I what -- getting me.

Doug Hekking

about China was down X% sequentially.

Doug Lane

which sort normal goes that on So is of counter to my thinking, seasonality.

quarter lower improvement, So quarter first the promotions the I sequentially your the on that in that wondered or a was successful particularly changed actual quarter result in because wouldn't there in in ground what an it lower in was were change with the sales? resulted the sequential second first you

Doug Hekking

Yes, did -- narrative that promotion if we first our you quarter. the was first in China recall in was quarter, successful in the have pretty a

look have to back discrete you these when I quarters period at think factor that go in. and of lot And so a you

-- is stuff. promotional the is primary I the difference the think

organic now. seems I run right rate just think consistent pretty our

Doug Lane

yes, XXX-day So the we step period, is, you of back the had driving to stabilization at down heading review with year. what into but last definitely saw I'm year half

if I just make that you would So the you it another but something applicable. stabilization step sounds characterization, to still on not there consider want that's going else down, like driving there's sure will

Doug Hekking

new to this Yes, is information new Yes. no in China there event no or point. at about talk

Doug Lane

Okay, thank you.

Operator

Ivan Partners. Our question next of Tigress from comes Feinseth Financial

Ivan Feinseth

you. another quarter. on Congratulations great Thank

give the So me do of And they are? quarter, these How some type what measure how promotions can of work? within their when you impact? you mentioned idea you promotions the

Doug Hekking

to would ago, have years of talked many and till more that five towards us ran that and -- more Ivan, you've promotions the so customers incentive based if pretty promotion. and product new more more acquiring we were heavily towards on you seen Yes, sales

is proposition or what lion's China lot things So count, you're offering little this limited as year. a do products these value products heavier more to far a been share you of having the free. this the on play new a and on we seeing for calendar offering get introducing started regular the of we a if running many of that that basis. the buy product we've bit period time just And as a share going product And with for they that's are product probably robust really

And so direction. we additive, in think the take is time think that's the I moving attraction. that it's it going But to going right be to on

Ivan Feinseth

categories that? product products quarter? most your successful see helping the And environment was how What pandemic like did current or this you

Doug Hekking

products kind of China to and that it it get out, initial and getting received did and the what than right -- and have into designed calendar, little But Yes, pretty strong, things level are about higher reaction kind of not well some, they and that. seen go introduced the China was but has horizon coming it after some future on near out. levels. a are I on continue [Indiscernible] of to they to think was, okay, as the perform provide we a because into implications about but different further back here support, of don't of well. really the that back still COVID just similar very the historical we've from too traction bit -- offerings and product come launches, excited some immunity product at seems horizon product, of introduced collagen the specifics been some a go to be on

Kevin Guest

like the in Doug and for of a Yes, China remainder around world. that the roadmap said we XXXX have

markets the a past as well worked all of in we've on Active most year to line launches throughout in products that in convention as them XXXX We Nutrition our our and go August markets talked or be for of going Americas about launched to that are now they'll at going being future. Nutrition or call the as foods Active lines in XXXX in the have the that in Europe have is we're and

So launch the years. we are of product about next really strategy for couple excited that

Ivan Feinseth

product any experience enough, that products for chain you throughout if supply you could Did the well everything was or your that supported of selling demand it sold quarter? more or out robust run shortages have was had more you

Kevin Guest

have stock-outs, have supply this gotten is just had, And that general able well as we've where We period of we we that chain chain, issue. Doug but that been our amount of had that in with them. promotions first high really products that some quarter, that really a some COVID control. the the to we association time on. Right it and chain, we've we've time some extremely under strength talked immunity When some numbers everything In with that's be and what saw an about of hasn't going from the supply short an will we but had last with manage have now well. of been supply short was

Ivan Feinseth

products So excess which in has think amount of of for collagen the for part has was collagen. using that what sanitizer, pandemic depletion collagen alcohol, product hand the in by? or causes of the a cause was of that the you do people the demand, driven example, you demand like demand the was the think Do

Kevin Guest

who associates to it's the launch have just it. and I product, of Yes, When try a our a existing demand. want customers lot new normal think preferred we we

time. a see at we normalizes it the beginning then So over spike and

saw that excitement the general collagen rate Then a on the levels. with a good really run because that. of we seeing we're think product I in

Doug Hekking

general, to I of knowledge, Ivan, selling from that been just just sanitizers, heard least it attributes points think received. some replace my linking in At I anybody product collagen that haven't I very And the it. hand of well are think the to

Ivan Feinseth

some detail thought Okay. push, or of and And included? you this your an process. give us out, can How that products Nutrition overview envision out, you like will rolling Active just the be line product coming

Doug Hekking

markets. would our little to look going goes There's it's a Mexico to going We're Zealand goes of that. or everything always that beginning at that the the point we're line it, roll be Nutrition, support We're comes on other we with along with that it and regulatory food looking to just ability the that powdered few an sure probably it the to mean, have delays in now then large get to extremely we give have have to that for our Active in. in at Australia, smooth. concentrating and a or great the year have registration a we when regulatory environment when environment give online to you being future first drinks, replacements. you the sure deal for tougher round along a to can quarter And out can foods replacements, rollouts there product major expansion with then products, color of really countries you else foreseeable it and bars support, to comes of make when then Right just it we're also first in more at of going that two recipes New existing I of offering smooth, bit make have and products And are I a rolling meal keep it and to some of that line. the more in to Canada, those this type products goes products, the the of at markets. and the make an some Yes, rollout products food time, that US, going some out the with look at line. to a

those things to around trying important. categories support that very the extremely that launched more system community strong foods other have and with we've we're going think I that seen type the they've is build more support time, is biggest line companies this a to all programs, that difference

more new areas an plus So have that be bars as line. to we'll support new drinks, to well going the as all of the that's one enhancement, powder formula

Kevin Guest

going we The this really view be worry there. not stuff us for in-house of when third-party to all batch the past, would the fact some to and which in is stuff. gives that sizes, some of the more the a I small ability lot be add now, responsive And in about

So excited that we just I is offering. -- see and about -- And you'll of holistic that's has it so to like forward. said, of that it kind real think we're much expand think I grow more it's And going Jim a positive. really a very potential and think

it's what that think as bit get with great I we a than enter in more the So a footprint have breadth we to little ready space past.

Ivan Feinseth

And since you for have are integrate them say, a Active large number line? of are in athletes marketing that to, Nutrition ambassadors. brand are let's or going the kind your of How -- you effort product

Kevin Guest

that we'll Yes, have. you I a like as same look do all if with literally, athletes life offering you'd be work the their But talking to think athletes use and it or from video at, will we them group. we have world. the this out very I line as influencers these about support the the love we great to a have as the XXXX also athletes well around you recipes them you in other can with that We'll a and healthy product say, we mean for over affects things

for amount a it's program. -- huge use us it's ones in to specific of So opportunity the huge

Ivan Feinseth

on Congratulations great forward another events to look and quarter. the I Well, products. again Okay. new upcoming

Kevin Guest

Thanks.

Operator

have we further time this at And questions in queue. no

over like Richards. Pat I'd turn to to it Mr. So back

Patrique Richards

call. conference Well, for questions participation thank today's you for on your and your

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

Operator

and today's gentleman. Thank This teleconference. concludes you, ladies

now may disconnect. You

USANA Health Sciences (USNA) 22 Jul 202020 Q2 Earnings call transcript