USNA - Earnings call 3 2023 | USANA Health Sciences, Inc.

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Operator

Hello, and welcome to USANA Health Sciences Third Quarter Earnings Call. My name is Valeria, and I'll be your coordinator for today's event. [Operator Instructions]

I will now hand you over to your host, Mr. Andrew Masuda to begin today's conference.

Andrew Masuda

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

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

Jim Brown

good you, and Andrew, Thank morning, everyone.

behavior many The economic operating environment impact of challenging our the environment on to quarter. an face third continue a We markets. is having in consumer during

quarter and decision is to associates. The most XXXX. lower in-person attract it prior third was balance of the finding customers the when promotional our engage and Our and of and activity find to promotions the part incentives, quarter the full compared the appropriate strategy challenging during year. our as to force both was sales cadence This events of new delivered for quarter of more

an strength cash underlying in to confident continue remain our balance in and than results. the these quarter going changes the softer-than-expected cash over the experience these ultimately challenges, Notwithstanding contributed during changes third currency million to growth and We generated impact and of of our debt. $XX these unfavorable sheet potential business quarter rates no with from from million was remains factors flow of our $XXX and greater strong a forward. We operating anticipated. the impact Collectively, foreign we

reengagement Our of around opportunities of India, few our key initiatives for incentive and opportunities commerce explain into leaders a our expanding briefly initiatives. I'll sales our progress digital strategic include on acquisition upon of pursuing initiatives. associate the our force, expansion our additional these new world, business

a our year. and are have to and we momentum several significant leaders the Salt on to and recognition will and personal quarter, reengage our new to which over planned to on These a key events these products. We impact regions markets next growth. drive be component to live believe those specific to continue areas customer sales generate tailored events have ultimately is in our City level, offered around convention launch efforts in-person the associate a several and by also and During Europe with leaders Americas we and training continued the where Lake world highlighted

to continue towards in operations officially India. commencing progress We make

for we a and our opportunity. and complicated launch to date market market an is targeting about prior remain are incredibly year-end, business. this this We Notably, large excited

India initial anticipate time. modest contribution opening, will to sales growing approach to over intentional will from will on and be operating We that sustainable and long-term Our continue centered but in be be India the grow growth.

and footprint We to presents high meaningful to we the providing and business, market for launch further expectation a it have geographical once operations. this opportunity look on officially future updates base. market this customer diversify forward long-term We our

focus factors continue control team on execute and the to we will on can Our our strategies.

to Before like line the of structure adjustments opening announce for to our the some management team. recent questions, I'd

on reorganized as management some I growth role working our took which the talented unified amongst ensure active strengths President capitalizing of be and they executing to on on as I our team of organization. in As to CEO, our continues top that goal, are many and responsibilities efficiently customer possible

this has role in as now globally of Brent experience sales Brent Director executing the his responsibility in customer the of will of and he oversee First, China. expertise growth. Commercial and assumed sales Neidig pivotal Managing shaping Chief growth and With and has role our played teams with strategies area, Officer. a market, driving largest marketing

ask catalyst and scientific at have and our health sustainable and Second, be Noot's the excellence USANA's objectives confident research these lines growth. With vision execute key Officer initiatives and return strategic employees believe management excellence operator Chief business. quality better our Rob open wellness to USANA and entire and globally team please our Walter amazing for our long-term changes team to USANA. I'm on Dr. for questions. Sinnott's position as across Walter to department. for future development include that long-term experience will Operating focuses we I'll will the to efficiency, complement innovation here that, operational in and the and position and to a expanded oversees now operational the role will profitability Walter's and

Operator

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

Anthony Lebiedzinski

for when at were I look local I example, a sequentially first, up said So Malaysia, the you due to sales that in results guess, promotion.

maybe hear get products? find activity? outlook step up of maybe we first. but to Or kind XQ, that should in in So that be love you environment I high-level will XQ? think promotions with your beyond current that thoughts that to able do the you do looking thoughts your given that promotional mind, to would to on to you're need about your to buy I know more for how customers

Jim Brown

back to things get kind situation and talking side and and get promotional felt exciting promotions and based not company the the away over it customer still from grow customers COVID combat end we sales little we is did buy grow get point expects hit when we gaining from time, what to had the more motivate and families promotions and the customers, some. in we're and wallet But bigger specifically make consumers go expecting product to that of in to a next on easier lot about and and those were active did bit to actually things at years. that we X more away little to a million I'd looking add product again, a that last do do family to the Yes. more want the that over that. We're We'll we to at incentives promotions backed or the promotions a make our those the to so that we time. We that and we our a want and year it share. to want over do healthiest continue earth to just gotten field that field heavier become, to to the few

Anthony Lebiedzinski

Got you.

about And more a meetings. of in-person you Okay. with talked then your associate reengagement

leaders, shared strategy for associate shaping the that So with you're main I you year? the have are thinking as guess next takeaways with in your mean how some I they conversations your what to of about

Jim Brown

about talk have events. Yes. those. We major we Again,

We have Pacific Asia convention.

well And events strategy. other as the We large. Americas convention events. to and have many China a then China our And market that of so we as is because have is Europe part share

like get our can we use -- introduce times, A challenges or better. We we listening the products. also may it we as and sales hear to their about offering and the to what to saying, you're a of events do that make those to use product that it's from but what sure we're make out and combat lot information stuff trying to to continue new force be changes. make much and our lot just great can competitive it compensation that how field opportunities, line competition But there understanding associates, and a an plan, we'll out, normal we of those motivation get is training

One to over the on felt that we what the been make everything that's our call a and years, what to want we concentrated us company environment. wants products, to the company of you from that we've that is what last into. And difference, we come year of little harder the one and USANA that tell messages both it's that the goes compensation, the that, the has philanthropy, with COVID bit that someone had USANA of join, on things makes to story in the

programs sharing out, customers build share and that a we last So get the our through training years the X.X the affiliates give over message to our really story the even programs aids, family. make loyalty and sure had associates, and strategy can

G. Hekking

Yes.

I members the executives, these to -- of opportunity relationship smaller they other about, a Jim build The of said thing, here have just it Jim really regular Brent the get basis, included mean and talked that and great communication. you on with associate of many gives leader been management, traveling a groups, really situations lines them often sales and Anthony, the and in open the

and go be us to know environment can and open they're [ seeing. them out, responsive we ] reaching have an back what really let So fill

Jim Brown

Yes.

company part Europe leaders what from incentive do some We myself team and management those of as that we Brent doing a them. we to could that be trip better sure training each big starting an a week. as well that make of is as meetings in and have And this the service literally of will China with to understand

Anthony Lebiedzinski

Understood.

expand also some I other you program. the then fairly about talked share have And with that? observations perhaps a looking a Can little you to bit opportunities. new to new are And you Okay. countries? affiliate incentive know that you

G. Hekking

launched learning still markets I we're where we've mode in the it. the in think

definitely I open. think we're

different I of about different of larger heard some think opportunities markets there. markets bit little exploring from in the we've requests our a

make we're new customers associate engage tell to down and the it's continue to and really incentive that So push and going to reward real road. introduce on sure go to and we're that aligning associates and story a out that that base the be something new

something it's work go some going still there's to and is but we we're something still monitoring, do. that add can definitely it So forward, and our to think success back

Anthony Lebiedzinski

Got it.

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

plenty a have with obviously, sheet cash. So you balance of strong

outlook you well think know as And quarter. we buy about I your should in So did shares the for back how some acquisitions?

And acquisitions, you're still looking maybe talk that? you repurchases? should looking at you -- assume if just are So what could then share whether we about additional

G. Hekking

Yes.

We evaluating to just opportunities. a go tough back there. continue be It's and alignment active find to good really in

looking up that amp on will of shareholders to a of ongoing that we're basis. really kind part at be return our So some producing strategies, an these to opportunities regular of that

a give whole of don't As forward we on share lot far as commentary buyback, typically, that.

I back I outside we'll think we'll a short have be the buying regular grants. offset shares Board think of I in the at and think minimum the just of there, go dilutive the impact basis. a term, And reality a with on it's discussion we'll to equity

Operator

question is Linda Bolton-Weiser from Davidson. D.A. from Our next

Linda Bolton-Weiser

Hello.

was first little question the So small just my a on question financials.

this that been I other it's actually income. have has line other positive. income You been expense believe

now million I'm line more projecting number why XXXX? that what think like I positive a been XXXX. reflects clarify in for it's just $X and Can you

G. Hekking

there. given balance that's primarily things a the but There's sheet kind in we're the there, interest that's our of catalyst. of just contributor other and our holding, primary cash And It's strength position few the income. the primary and

Linda Bolton-Weiser

Okay.

fairly far -- right the still that as high as cash a rates higher, then continue would -- positive think. be or balance Is be keep would a line to there? I So thinking item, pretty you and if be healthy interest

G. Hekking

activity the Yes. With that assumption, think that's assumption. investment I a future, unforeseen in near fair and no

Linda Bolton-Weiser

was -- I current wondering the sales Got And bit customers guess or local X% But about you. I you were little guess talked promotion the -- Malaysia, Okay. currency the the customers because just were I down there. X%. a then active with but year-over-year, local up

was that the less something So like they're customer were up. down, but customers Is buying wondering per I'm revenue why that? just the or

G. Hekking

things. We're seeing Yes. of couple a

great are currency, as stimulates basket that little but and also seeing I kind activity seeing kind of indicated a the the We've on currency, at now are consumer teams one, we're you introductory in right on the a his that seeing sometimes the promotional in But leadership pressure really of look spending and we're heavy bit think, that hard, economic And relative working with as I to of think inflation. team we engagement. got constant environment it's impact comments, Jim globally market. size. smaller

Linda Bolton-Weiser

Okay.

is down. It like estimates except becoming that a there just really the like last down like down, a conservative is the today, particular actually my different I your get actually I'm numbers China. about quarter, is it my raising just stock real remember I trying -- mean, to a tone getting seem think the mean just outlook, were the that for and seems then really was maybe things my the with thing things so why can quarter, reason you weakness. this because for my speculation much more worse I region? Or Greater regions there is change. pinpoint seems It Like consumer all something environment? I

what So a going you give can on just think what's the more on you consumer there? little color

G. Hekking

but pretty bit of honesty, pressure from continuity with verbally coming many more the on is think feeling the I that think seen hear in a I some Well, there little kind other areas pinch it all And we of putting consumers there. group. back something the are good spend of we've

always look result promotion sequentially. periods like a and to sequentially we've the at promotion definitely in think comparable small had and prior I it have find looked I the to cadence promotional you as and of positive Jim had said, years Malaysia, that there balance go there. the as and of sequentially some trying things we're right did that. But to we back that relative said, a

think I customer so do it's and to activity. type But back trying that sustainable to committed to it growth. additive of go we're

think more some think legs have definitely factor. And run maybe that that the in and as short to not bit run the to out And so a hoped of saw bit in those always trying a And things the it are I far but according it. go had we and there. lifting in to as don't back the some we plays I But hanging maybe little base a we're the plan. of anticipation little we and going year had lift things earlier a on term, of keep rate, that I testing we're we'd think

I think of and things go these we of see we and back just level do organic just like of forward. as that sales lift to us some kind propel

still of think he's out we're well. activities globally, of and kind sales know some to see And there. that down team taking things. leadership see new so And appointment with marketing talking now, Brent we'll oversee going I as coming the some different and with we'll his forward-leaning I different

Jim Brown

just marketing and this Yes. a realignment on which I some and Jim. for the minute mentioned and ago optimistic have definitely It's about aligned when efficiency. a we is it to mean, organization, his with excellence sales Walter about I'm is future the to as well and going operational XXXX. as more I talk going big impact. have

and we'll other from those markets top just working India the well. throughout the efficient modest the being coming or done regional to markets opening opportunities to it's open, that next list grow year priority there's other the more market, the be going Indian have And be talking and projects around to done. We getting as but we're those about I know XX year. more India get it we're and in aligned on an in exciting year, is world

think to we're see a And XXXX the is I excited. in up good think and So growth XXXX. team I set

Linda Bolton-Weiser

in it the Okay. sequential might Is like what it encouraging year goes mean strengthens starts so year it picturing Like you're have weaker of as we be now, see then that an XXXX, goes I kind improvement like it optimistic it -- outlook. where out? that on. in the sounds something a you Would as maybe? and is maybe that out

G. Hekking

I we think the look out maybe that we for definitely have. year. February Chinese now. have essence, to for we the holiday comments in But impactful be you'll that's us And would has have New future for an which -- expectations. that to general outlook XXXX from you grown on some And our really with the quarter, in mean that's expectation at I and initial some first the for as come Year, you're Obviously, us. base build Yes.

Linda Bolton-Weiser

because then follow right little well do And really, really really would ask about growing a doing actually, their I strongest India India now. bit And Herbalife. like just there. more They're Okay. finally, I market well, to is

it's more direct found So traditional so that go is vibrant there good other makes is market, environment -- are that companies the for attractive a direct a something more there sellers But going for in about models, it hard their selling to have makes it often Or you India that it does companies seem after to talk market of seems. kind it penetrate navigate easier and to businesses? market next? for business than it like you yet although there, can why

Jim Brown

Yes. on other our be it and there. it. start and go we business companies of when when are it than easy. actually think pull we There's sellers from have a of of it's is direct everything interest a be we that of don't a working asked are easier catalyst it. more to lot business go registrations are off. But is amount is a a out markets, excited interest of India in? is market. India And that than going success different and doing a we goes because of us But us, some We're selling, that in model to market have up didn't to things any we business been to going of to because a there have think do go it population to a direct about on. logistics for we help that's prepared. market and going from market I more to types the a of India year types size and than thought of the it comes set always and definitely push, done. We're A other it. some operations It's markets when registration makes out have companies sense have we've that large are India that We market. complex It's into any now, they get to great in that the and into large the was that's the in all complicated it's had

G. Hekking

also we confidence say team management there that of have in. we a that would great really I have a strong deal

just China effort experience, which heavy a as to that been China, hope market. be is And India the there a effort market, support to so learning we heavy, be rewards going into went heavy it's we as is well. will

Linda Bolton-Weiser

And do that what look new that market would be expansion you think would another maybe at for your you XXXX? in timing further? opening Or

Jim Brown

an into starts have and market have our getting selling welcome we those in a list. active Historically, India and of X be into go It's a that's being reflection can be have to But markets. quick. years a market and and to India is the 'XX we our with population, about doubt literally, after than other of pool And we've company, evaluating find like right, tougher looking years. to and XXth when now. back, if team other This we and in we do direct after have it. It we be a a to them that will little that bit we do markets that and a bigger large to get used the efforts states market markets market into it we markets, more complex future. well. I the would some go gone the But it open X.X will over X.X department from

the start efforts all the can something top go My it because the evaluate have then complexity strong and into continue our in be be business. guess to strong wouldn't push X, India only XXXX to we have and and We up and to resources is a a of we'll in future.

Operator

question is from from next Doug Lane Tower Our Water Research.

Douglas Lane

China India do India mentioned. here. stand India big more to internally successful from as as for in for long USANA? even will for as be than as big terrifically Herbalife on it you twice as Staying take India is days. fact, Yes. where has you been And China How think these Linda

G. Hekking

the structure entering and we and some it's opening point. we're with we're quite think see build different way I be some confident and in to market framework be way very, is going hope definitely very Jim? I very think of bit build, fashion And to the it, different. really we and a the a different it just there it's but because optimistic we're think regulatory we're methodical go -- start a back market. We're I pursuing the more about momentum. the going expect progress, of a just to but systematic But

Jim Brown

Yes, just some more information.

did those company with through as base it we USANA. XXXX speed It's there. of modest, that called customers. don't China. We that and was Just to quickly grow but to interest. remember a an and of, India, it And quickly still their acquisition, the our growing it that have actually to continues there even was arm how was lot Babycare start and of operate of off grow organizations increased China can what that we all in a though to opened about That's in have had teams in a starts that how

Douglas Lane

makes sense. China And be That to under enough. pressure. talking about continues we're China. Fair

down down recent XX% just . X%. -- It's which since China WFDSA been the came it's their is again was with numbers in the XXXX, XXXX, think more in than peak. I out down

geopolitical You probably still ago there. doing us the for years China might maybe today but when bit that, where sit outlook seemed read like than update a Can down your you X And better tensions or since XX% about it be different little you entirely just an you're you on XXXX. picture? versus on more

G. Hekking

we'll that color of question there, team close the it. person. been so manage his market and give Brent can answer that. got the who's qualified we in to let kind just so Doug, handle incredibly Yes, He's someone on Brent to leadership

Brent Neidig

difficult in with a at market, operating looked COVID. we've been agree Doug, environment, step I has X back But in years years growth question. taken is and growth of it's have confident the us potential. We especially next the strategy the opportunity great in that ahead. a still as place offer and you China strategy, that it -- its during the incredibly right had coming a we believe will the and we're long-term year

tricky. we've challenging, those India like to history, but yes, through able our types is of we overcome is very be, shown been a So challenges, It's just that still growth the believe -- I there environment opportunity long-term we're will and believe there. we've

within If -- some and space, you is at look direct still growing are are peers the there who very our future. very, likely selling for of we our believe that, that possible and

Douglas Lane

think -- growth the you XXXX. mean, in you Do I mentioned

had quarter I of there? local decent the third sense we're currency think you a fairly a in you near bottom do that have here XXXX, quarter

Brent Neidig

difficult very always future. And I that's guiding currently. the our on pleased was the future. It's it's have with to is year way. had. our very Hindsight way the into they're we teams -- us ever have current sales team in is August mean, leadership But we leadership and the currently that I And as and really indicator there. believe know. is our team And the who leading And there we've look strongest leaders incredibly really and a and sales I'm always optimistic at dedicated going that excitement earlier the that our in I force best right Yes, propel well. we that to just as we the

I know point this growth, bottom, sure that or space. building from won't year-over-year as believe sequential in for start to we're we growth our at but see terms our So the a I like good of said, I

Operator

Tigress last Our Ivan is question Feinseth Financial Partners. from from

Ivan Feinseth

to What and need how with supplement So the thoughts people's with reducing adoption of appetite, and the market? going significant protein for your nutrition that intake. that going target you're potentially maybe a drugs expected to products there's GLP be to are and specific

G. Hekking

Yes.

news I especially of the latest of area. given kind think in that and round

a that's think Ivan. good I observation,

the message that I who weight. think had, go think pursuing are I but to it's back many and same avenue lose we've that

I how it of think I And that foundation of help really paramount they a mindset. themselves. And and differentiation important the a remains important becomes, And reminding nutrition I forward. of really care of nutrition an is think Jim concern kind still ] health. part is is take if going story how as overall of said, a think building their that's people it [

Jim Brown

and And of our given line, products. it's forward with interested is take in opportunity, potentially it's those and we need had better move just here. They to discussion our significant nutrients will Board same the less with of to who's eating not of Yes. people literally the the size that you're our it's understand into foods our it. and But balance in couple last to right, I an that We of overall good and in high-quality And think their vitamins days Hopefully, thing. were take. it a effects reason system. get the

Ivan Feinseth

your to their lot nutrients. dramatically to their take they as because you the cut they're this, key companies doctors of as you who nutrition to food long this Well, monitoring therefore, patients supplement patients going going are is there if partner and or an opportunity to for out need sadly, to recommending with back intake, even your they're a associates and cut

the to of -- protein is One muscle loss, increased counter help side effects protein intake obviously, supposed that.

undergo advisory care, of nutritional very this are -- it, patients of using be So there part important the need this. to, some component going but of is I advisory as the of process overall to under nutritional that level they're the to doctor's going think,

Jim Brown

have counter with our you. in that who and would and/or sales do Yes. doctors, at No, happen more this your we agree and there I need it would force that and sell would contacts premium education is magazines a people say at. doctors out be strategy help we effects. Honestly, great that be our people to look we area, to but into has effects that I again will put on And something again, to need have people avenue move with go thing trying get at through looking that the supplementation health and to understand that talking together exactly seek you high-quality see and USANA. you're about, that what should out haven't better hopefully it's But to other products will and other avenues a the we huge will those

Ivan Feinseth

And targeted to people group that do part process your address your thought is of products using creating you think drugs of specifically? a these

Jim Brown

that. Yes, for we the the different population could develop it and there to sell can. something ages ability, And out specifically have specific we we like we itself, for combat that have and kits

So again, and it's a capability. great we have that idea,

should we that. at So look

Operator

further questions. no are There

So you today's host your I'll to hand to conclude back conference.

Andrew Masuda

your thanks, for Thank for participation your and questions Valeria, everyone, today's call. and you, on conference

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

Operator

you today's call. for joining Thank

may now You disconnect.

USANA Health Sciences (USNA) 25 Oct 232023 Q3 Earnings call transcript