USNA - Earnings call transcript Q1 2022 | USANA Health Sciences, Inc.

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Operator

Good day and welcome to USANA Health Sciences' First Quarter Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Andrew Masuda, Director of Investor Relations. Please go ahead, sir.

Andrew Masuda

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

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

Kevin Guest

across We sequentially EPS you, solid challenges USANA Thank our during face and key quarter challenges, both and quarter first good to diluted markets. grew results. sales review net of these first results delivered continued everyone. several the Despite appreciate you in us morning, joining quarter. Andrew,

results markets. operating quarter first several regions for across key and varied the Our

performed For the example, promotional Southeast our the Nonetheless, results offset were U.S. in Conversely, expectations. market holiday, Asia-Pacific and the to key through New during worldwide in expectations. than sales and Lunar generated some sales efforts our softer seasonality despite expected generated offerings. and operating modestly above growth after of the Year year-over-year range markets internal results

strategic markets. the quarter, We overall strategic our make resumed the of active progress rollout continue to through to our made several of certain investments. on initiatives. During And we enhancements the digital nutrition line XXXX we experience customer across

I'll future. With we closing, position of operator not that, seen, challenging of for in experienced generate parts and important execution the In remain transparency has will individuals other weeks long-term China these Beijing. changing on operating that in have the impact current open anticipate to supporting some continue we adapt and sustainable growth to global XXXX the the ask and successful in conditions into become and will we uncertain market we we remain are to point, business. our given restrictions the Regardless, that this to in implementing and increase whether in will city-wide restrictions and circumstances, do accompanying and we've began our confident restrictions, have these other questions. negative Chinese results associates, to committed outlook our lines lowered the strategies to the reflect China, our now coming this downs disruptions lock in government of At fiscal all environment environment. customers Nevertheless, to key has China in due continue ever recently areas in business. to Beijing to lockdowns, please deliver the more momentum to and businesses. USANA the to our the of As the and escalation unpredictable this COVID-XX Shanghai employees

Operator

Chris Jefferies. We'll to Neamonitis Instructions] at go first [Operator

Chris Neamonitis

and Wanted China Pacific. to ask about Asia

the So restrictions, extreme quarter, So progressed with Year maybe about right? maybe you can starting China. month talk market maybe just market? how in you digital Still of and us despite that to the some improvement uptake more in how sequential Are month? New about think the by pressures? of external support Or seeing customers those offsetting able maybe more that help you're some

Brent Neidig

an and Brent. was primarily a And We half the little of I in quarter. started March. think initiatives we to uptake this that in see we due a is February And sluggish January. out of rolled Hey, latter the the did that in lot

optimistic challenging effort the that the able deliver for the very So there we to We're with the are that the results given it's challenging very and were circumstances to we pleased that see throughout made despite that circumstances. country. especially

Chris Neamonitis

mentioned on could trends I And macro be some but to accounts and fatigue, us specifically the there. you're Malaysia then unpack on hanging for maybe you the Philippines? Asia Pacific, COVID in you customer in know seeing

are kind event we sort in point clearing be So to there through the move you year? as would seeing And of of it any you what relates productivity or is as markets? to hearing to those able

Doug Hekking

Yeah, and two I really. different think have you stories

momentum been to working, Philippines a coming to good similar working been get what go direction. they've think challenging diligently back in very the the think in and move and off I turned I a is China, year really to they've

little had And of a in bit sequential saw But I I of out been the the cadence Lunar Malaysia timing between and were and is little one their promotions, the in. there. this which and markets, Year-on-year, of think able that of work kind two see on to flattening time really a is do and of Malaysia, we our year-over-year bit many the some time a saw we of more first the to some had we see it go first better markets. we're top to got really Year the banked it's is starting -- a families quarters. and few that, of what in In sequentially. New folks little think bit performance we comps promotions during dynamic on performing basis you a

little a bit last as on. on year. saw packs progress period they strong and I year the that we from some surrounded during these think, go factors, and Year And Chinese that back New of typically resonating a so we of expect I saw think a maybe that's time, that quite we dip high as we did host promotional what to So not the see still as goes market incredibly but are and deeper

Chris Neamonitis

just just me, last for it. input cost then Got on trends. one And

pressure new guidance maybe implies, of But to the think maybe I stepped-up on materials. since a flagged last that's X% quarter of couple you about ago. X% months

us how think how is about the thinking that should that could baskets? Are you in So we year. if those evolves you maybe through stability any And about be seeing sort relative it? trend of help

Doug Hekking

time Well, passed. that updated hasn't there time because been we last the much have that's

still are I market think are and something as the in sell. definitely we watching group, kind finish with but and operations same of and that range are we oriented go we we'll that our have, we back it's bringing it, raws

more progresses. time. add the that so, it's And report recent so much to this we on year, just there not now, reported that because definitely as when But the at year right is to there we'll

Operator

We Lane, will Doug to go Lane next Research.

Your go line is open. Please ahead.

Doug Lane

everybody. morning Good

year? for any remainder what's your the price you increases have front, increases inflation the or for the of price plan enacted On

Doug Hekking

have We of great have, each deal and we the of spent individual with a time markets.

on with team not that. approach moderate met being we have and tried forward-leaning and back have an We kind too go take executive and to of a

they the of end appropriate are gross seeing the we enacted. comparison felt But late was quarter, quarter, of price to towards to So these most in given margin, first that mid and of kind the some pressures relatively of were small of and changes go take. kind inflationary back the attack were to our we

on So a percent you're full of wasn't But X%, on definitely the in that basis, reflected X.X% range for that. some quarter. somewhere that weighted

Doug Lane

most And been stable. looking XX Is the have associate the last gross range. margin out basis your of your operating cost pretty seeing think SG&A. of have you on been your you took of reduction little assumption, couple sales bit been a or and de-leveraging basis because anticipate of just the your the Really point quarters? of pressure margin than points the further goods more de-leveraging SG&A incentives And XX in your pressure has at that I you reduction, on do

Doug Hekking

loss first I think on are kind we we pressure on I quarter elevated But little producing. what the definitely you seen de-leveraging have of materials the cost line, in performance leverage in was and comparison there, of an the bit expectation, think clearly in sales was kind a relative year-on-year least on that back of the at margin that see lot and are seeing a really the go bulk where year-on-years the lost on the that QX. that's of just -- operating could the sales you of

Doug Lane

your reduction, expecting. And sales because people definitely. number it the Okay. were Yeah, again looks in quarter what the first be like on sales

obviously the as you of is not And quarter to But in second in growth, bulk much of mentioned revenue means, anticipate the half is because going second, China. reduction the hit before. reduction And so, and you that, second that third quarter. fourth really lockdowns but the still the as the

Doug Hekking

quarter every this last of timing we we you say short market some last that Yeah. had quarter at second program I when wouldn't that. and year, in program, of we the the spaced out. events, data look is ran second There of year, have term

So, markets. year offering the you through of see more this distributed

different time little the in having markets, second one when it's kind not I go environment, run COVID through elevated the in maybe there's as And reasonably saw go time, China, saw of I bit same the up a past and little and we just how But bit kind some second of there, was this bit like of back and think but -- of this, we little that something challenging is we performed I environment. back the more of than well to China. a a years, we I quarter. but a it's what hoping more a wrapping And we're back that they've first time government It's think went government whole, see -- you'll our and opportune Really handled this. bigger So wasn't it big situation of part it as the kind seen initial sequentially I response bit an kind that performance so, and the think already are good we from a What visibility, we've to go that in And been Doug, as quarter. of in what progress saw the COVID. little in think get far underway. think has

new have some Brent’s we're kind main pretty done of digital really the has that so responding that just plan, a adapt is to seeing guidance the assets team that and in great new in softening the the the be in-house of us in we And allows we're think I of reason job, active you've our studio from environment. some unknowns to some But think I I environment. in seen think

Doug Lane

impacting is out get sell your products And your your it more ability to to or products customers? ability to

Doug Hekking

time, bump towards small a I revenue. period Well, of had first for in really think the in a deferred quarter, we

I think, because shutdowns delivered and get Shanghai and particularly of go to the some lockdowns of trying back and to products there.

some compliance, had. date stay try that to get some staying products, touch just definitely But in product trying and been find out. there this, back but standing. we're in government to productive to get manufacture has government as going we've delivery so with good We've do to positions to relative in been been able the to ways products, of And we disruption

Doug Lane

previous you in call see you that? just or you're that the have in half. an event made China waiting And a on to second that to in planning still mentioned Have lastly, call were person you on yet, on the

Brent Neidig

just we decided given the for had. to uncertainty, Nanjing a we event. it planned in the event We decided change to that Doug, Yes, to we hybrid September, initially go

Studio. we already have Media house Doug in mentioned, as an So

gatherings plan on So that asset leverage content the the small quality in-person studio from throughout workshops country. some distributed more throughout going our and produce branches and we're and high to

off Just really environment, if unreasonable we event I magnitude. current at think an would given I think that weren't the able it's to be pull in-person actually

Operator

next [Operator Weiser will Instructions] Bolton We go Linda Davidson. D.A. at to

Linda Bolton Weiser

was down Europe I U.S., the constant just up currency. Americas it was think think And region, I So was – in yet which think about and I about X% the X%. I curious

more kind a was so little or parts in So in I'm region? of big that offset just give just the the of other that wondering, decline can you color on the region the the growth U.S.

Doug Hekking

we bigger modest competitive in through I is has Mexico we there had -- some softening and a saw issues The Mexico our had market for in stuff. challenge is the primary some great But market, is catalyst kind going Canada, which think and us. of some

them Mexico so yes, was and we're performance for And quarter a But year-over-year, we've been actively think tougher supporting them. I optimistic.

Linda Bolton Weiser

about correctly? now, And down seeing then the little of revenue has sequential a Am I reported mean, thinking and I the revenue. the quarter from you Thinking know when fourth guidance to gave quarter quarter. talked same the way you had that for in be bit I results, of that kind I'm sequentially first second in of

Doug Hekking

expected revenue steps go have, some on do think but great basis, QX. to I to going we're in expecting be to quarter forward a are and talking some deal don't of it's we typically but performance on don't well, kind take a progress. Yeah, back we to incremental we see dramatic, of quarter

Linda Bolton Weiser

mean So dollars? you in level sequential revenue

Doug Hekking

Correct.

Linda Bolton Weiser

saw then just sheet. like, And to the cash amount to a your reason the like that? or I that that repatriation you Is of small added just debt what for Okay. related balance was

Doug Hekking

Yeah, it's timing. just

time in the I dictate. operations our We go on did quarter, of roughly time things activity just as think little different a first to the bit $XX in buyback we’ll line, do million. from

annual is really a so capital or paying inventory And or some it that bonuses. of with and of of matter buying timing comes

And sometimes the and so on in quarter over. we'll is that float and it's before out periodically

there's And but really was the layover, residual of a nature that. sometimes small that

Operator

turn the or any back other questions for additional And with comments. no closing I'll holding, conference

Andrew Masuda

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

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

Operator

ladies that today's call. And thank We and conclude gentlemen, for participation. your will you

You this may time. disconnect at

USANA Health Sciences (USNA) 27 Apr 222022 Q1 Earnings call transcript