USNA - Earnings call transcript Q2 2024 | USANA Health Sciences, Inc.

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Operator

Hello, and welcome to the USANA Health Sciences Second Quarter Earnings Call. My name is Jess, and I'll be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions]. I will now hand over to your host, Andrew Masuda to begin today's call. Thank you.

Andrew Masuda

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

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

Jim Brown

everyone. Thank you, morning, Andrew, and good

productivity continued of several to saw which second markets quarter, and we our spending. in the pressure During consumer macroeconomic impact our associates' key continued

proposition USANA's address including making to more to these continue overall take action strategically attractive. We challenges, value

on approach, increasing better efforts first restructuring includes realize team with rewards commercial into driving are long-term innovation, to a multiyear strategic engage will our heightening fully strategy India Our focus will efforts. M&A an continuing be a to these meaningful our on associate and performance. initiatives product endeavor the These expanding undertaking effort of are leaders and drive to our sales activities. our to initiatives, This focused and pursue time take our

a providing restructuring commercial team. overview our provide the an few quarter, Before highlights the I'd of to on like from

an units. of the business Over our strategy. months, into and brand, our of of better X communications comprised we opportunity global associates' highlights part have that simple income new customer sales commercial is several rewarding the worthy marketing A as product, our position to local products, and significant teams, things our growth past centered team sales, to reorganized deliver to is core commercial execute X and force, and regional this effort. Accordingly, products fundamental departments that a X time and our message us is ability on strategy to simple, these as team our benefits and our well opportunity of best-in-class

on company deliveries to and USANA collective team the sales science the is believe offering output to rewarding with these Accordingly, and and of messagings achieve framework position messaging, brand team our part-time improving global better will position force fundamental the Our to growth The remaining team that increasing our is innovative effectiveness internally share commercial story our customer brand this market which global ensuring both our at to entrepreneurs. for and externally, business. The approach full-time for products team USANA's team focused deliver delivering with driving to plan opportunity focused long-term first responsible customer is are make of will bolstering and nutritional best-in-class will I designed The teams bring the product do the reputation. we new both growth. USANA on market. following. associate and core an compensation all align a

quarter. the our for force. highlights week strategic India some leadership sales Gurgaon in local in returned I with and spending to from our team recently on a offices after Now

I saw excitement brand and was and I While force the for with energy there, customers. USANA's our and sales products

by Madan, and Vice we leadership continues that President Manning Regional high-quality team excited long-term Director, leaders, this market attract Puneet presents. and to Our remain the about led important local potential very

As contribution we have sales currently small. is this consistently communicated, important from opportunity

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Operator

[Operator from from first Instructions]. & our Sidoti question Anthony Co. comes of Lebiedzinski the And line

Anthony Lebiedzinski

I job mean, XQ think of explaining I So did press pretty commentary. guys a in your and overall, management good the results you release the

of most you focus forward-looking I'll topics. that the of questions at to first, the of wanted on the just call. So my follow-up, on things I one Jim, said beginning But

you're think means then about what I should have in is And more proposition of make attractive. of terms to expand you things couple One that? the other a that questions. that, that pricing? to looking how we do on just of value Can Or

Jim Brown

XX and to and general. value how in When our you bolts field that and the with supply into and stated as Yes. continue opportunity in adding our I other be and are specific it as for company. those to down want to ads get nuts course, price path. talk as proposition, that's as the of stay about and consumption products. But products. those on to we've But last and well can family want science-based we we USANA. want customers down for opportunity. a then in We it we rewards our years, how the can had always comes as But at comments, than to associates how more the on the their premium products look just products there have of need the value a a to team, to continue, a community, where associates And that opening will we'll great priced I products, be have depend We

G. Hekking

is that this Doug. is we the mentioned. in here. Jim differentiation have that value lot we proposition, of the the products of A at as in the it, innovation Anthony, just Yes. the chime Maybe also look horizon conveying

So in things there's of a that host there. go

of this innovation And down probably understands of differentiation just making adjustments. great a you as the and consumer product addition value-add path perceive on sure in should horizon. the true price It's deal of so to a our the pushing products not a

Anthony Lebiedzinski

Got you.

Okay.

I understanding follow-up of that. product a And so side. just to better a innovation wanted on just the get

on frame focus bring you when think look on market. of so to to what's out looking to I idea products, an you're as your at new when now So process, the guys average, time more typical product innovation you guess the

the simple that. question, a that the what's going is And to what it's making? for expectation simple understanding not you're a of with that It know a now? changes forward maybe answer get So -- just I better be wanted but might you,

Jim Brown

with Yes. I over about the get it cross-functional and cycle with restructuring, systems do simple answer. talked or They catalyst internally of innovation far lines gone those it think year's and care will testing the that that looking the able teams well. to made restructuring to decision stuff as path focus product the be it longer, not some to a X we're teams that. the we've happy with and from and do and But have quicker. it's life foods. we've ownership. a as be should takes about really skin a in and done. nutritionals, course, teams And X our decision new able and restructure together to the product as have science, product, within more get It's of product and one reasons get initial not the a in X.X to that's will done of on at ingredients be we years everything with years to entire time. And that We go team just They're a down help else, But to the

Anthony Lebiedzinski

you. Got

restructuring became was after soon this completed, you Jim, So I believe, CEO.

you time as this? some benefits So see for reasonable to it's do guys play that frame it next to I out? Or by know think -- what's will but you take tangible to going could something we year? as longer a for time, far like take see from

Brent Neidig

Brent question. here. that I'll Anthony, it's take

some As of just satisfactory a And historically, develop Jim for instances us. that's upwards takes not years to in mentioned, X product. it

from we've with to accelerate takes restructure, So the been able time ideation it commercialization. to this

As Jim's repeatedly scientific based mentioned, science and takes time. we're

recently, quick time. market as it's continue need meeting changing, More as we're on scientific that to differentiated catch we've in point improvement on has possible the dramatic we make to to is where want from internally. for to always to to place We're through the going a the push commercialization the commercialization especially is market take bring we XX% products, going our a that taken takes internally, we research time it where product reductions XX%, aspect see transformation product or through time the that's that market. to improvements us as X up that that a it months, the could all at, still as So to play process quick premium be ensure to once expect, is intensive. But science to ideation come which most our because seen process, hard to and trying not we we believe

we'll improvements. see So

have more that We're We additional are happy to here going going soon planning products which some products and upgrades be are about. in many to launched to that this year, XXXX. new we're market come

going see we're time. over So to of starting and the the to already get quicker restructure, it's fruits only

G. Hekking

would I responsibility. Brent Anthony, had Walter -- assumed And on both of took chime the Jim mantle Yes. additional in, and as CEO Neidig Noot

Brent a bulk structure as places meeting really changes year the something at. that. part in the been have people And right and of the right it's of more the trying so And been recent good everybody of with actual back than of last that's go assess back the where half the to in was

the structure got think place. in And you've so I

but alignment, want I kind to kind -- correct a that. think have understanding right of timing the a I of of it's just of you just

Brent Neidig

really to team size, structure. to made was changes the past quarter significant really we It this Yes. the when

accelerate improvements to within and it's dramatic only a So going just over we've quarter, made time.

Anthony Lebiedzinski

there. the to more a great then talked And about gears. release know I guys just the little acquisitions switching strategy your commentary, and you That's hear. in bit

that that's you -- as the far that have, light are could that about As stock be potential to talk price? guys of what acquisitions to as as as -- then share you buybacks, as you how can current in the thinking speak far pipeline, far and

Walter Noot

Noot. for -- So Walter is this

companies talking a our our And a got very mean that to we very, good to have we've We've acquisitions, full that sure busy. we've been make want pipeline. really for issue is So companies. acquire been I cash we that biggest return. biggest

-- banks vetting lot so And a with companies. our our time we spend why and of that's

right think bit little things now. up opening I a are

companies If that in the to more right available. generally And there's there a more opportunities seems market, you now. huge just becoming look list I said, and at be are like

excited. So we're very

Jim Brown

businesses. that manage where a And management opportunity looking just team We're the go just going something and stay will when run then a opportunities, other and long-term and in we're at selling Yes. you're one on and trying thing, it. of something looking to down not business those we from too, at very path strong want it

to to bring businesses Ours the is strategy of on great structure. a long-term be USANA part

G. Hekking

And similar conversations and discussion on really Yes. this the Doug. with I'll of that capital very had allocation It's is the on is a lot in capital the past. leads This allocation -- these Anthony, Jim where broader follow about of kind we're narrative. at. Board a we've

at as And evaluating currently given a different evaluating in that of the any many this and we're evaluating so we're repurchase our that context we're is number in opportunities other time, stuff. Share of evaluating of things arsenal, definitely well. but

Board some and is we of it on spend it. time every So with a amount quarter discussion the

far really near as as We any updated. And at point don't term. plans have so get this immediate future comments in we'll you

Operator

next line from from the of comes Davidson. Your Linda Bolton-Weiser question D.A.

Linda Bolton-Weiser

So quarter? it like the by region guess first China prior with of away little sort was second year of promotions, last quarter. comparison. Is but none ran I went a growth what like growth in an the it I performance encouraged in color against, was that just China. some And happened quarter, think rather I kind then you in curious, seems even Mainland in quarter more promotions the it the on easier the was I the Maybe there.

G. Hekking

Brent historically end out who is periods, promotional has just Doug. both because that for brief first that us. We and we going of kind had the response bit. China prior those go I'm softer cadence. that more something kind respond stuff to a think had market and Linda, of we've what of expect calendar to then the But let let our I'll and had going to had context, market during said promotion quarter, this kind far we insight a little of that's back you and a I give would and a prominent at said called key I'm QX more the quarter year here, of you Brent I of gave respond. sequential that

Brent Neidig

softness primarily that the two-pronged. certainly really I results, there Linda, a was and was think in

promotional First calendar and have. was foremost the the cadence that we of

Now what to quickly, if you upside. the it we those but on market? try are the to necessarily according can needs have on effects a than out to market too in need, then too target, ground damaging space them really, more hit things And long the not fast, term revenue positive pile the

you have for people the so their at issue. that in of I strengthening pay is solutions news premium think there promotional we they And the to one certainly softness to in solve that within to why are the right So look that the proposition certainly though the reasons value economic that of our calendar that is now. softness, continue seeing need still is the I even going that willing are life. was market we're heard the then there And think headwinds economic and second that's an part

the better striving within through choose noise the can people will to what USANA we that and continue So marketplace, we're towards. that's cut

G. Hekking

Linda, brought Wang. I And forefront. and to kind of would Yes. We're there this of excited and over elevation about Peter say, Brent's the the also management really team the

broader allows Brent I think that team to a operate sense. really in solid

as there well. the structure quite we're excited about So team

Linda Bolton-Weiser

there Europe the the call kind then actually something And projection. different a better? Okay. of made America's it, sort of of better performance you I quite Can than side and there out bit the opposite guess on did that our and region

G. Hekking

Yes.

team think environment. has think, would Canada nice call some been with a sense. has continued good effort I in really of pleased done progress addressing we've job. a job, and done I I particularly think the the it's out, current in a The the I at just really sequential Canada,

I so traction leaning -- from into it. kind a... more And we're of getting think Brent, a some

Brent Neidig

some aggressively market, they've take and hold in and to Yes. with in both think, our reengaging here leaders, that develop I going really, Americas in is pleased Europe Associate we're key We're we're about that Canada We're many And local strategy our Americas. that And half we this really First we're going year. starting the positive next after Vegas. that's strategy here into taking really been to and the have to be that to excited launching initiatives really parlay starting place and about. leadership going excited momentum that's month in our convention and that in second the Las of

trajectory long-term optimistic market. the in we're the So of

Linda Bolton-Weiser

And to with is gross pretty is stable despite margin your stable making you Okay. then What really declines gross the maintain it it's that the had regard are margin? I I'm line? projected. what -- gross margin on seemingly. to the managing much curious how in came and just top Like sales that -- actually

G. Hekking

of softer lot Yes. equation. go we've costs, operating One, that relative things seeing I top us. to line. had bit little mean currency and a some a nonvariable a there's host of against things pressure rates The we're into are the

you those into all So things said. go what

dynamically look a also environment. the we've gross robust make team you bigger of share team has a improvements kind in We China do If bit the up margins. managing operations a good at But They of see seen the job some little there. procurement overall. China,

as with top line. of things. There's there really to of a little mix And bit variety a working on have what is a internal few factors bit, factors good think improved little a keep do softness it a up currency, prices a bit combination securing has we've We relative see of we there some outcomes So of dynamic a risk and there. the then seen from I well. favorable just in as on to just little efforts China picked gross margins

Linda Bolton-Weiser

one how seeing on anything been hear bigger that's need them you help talking just more? and like that I've can to direct times of is programs to a basis. their thing I more a want about as sell much you selling Or the more that is guess, not training really go training is business just that actually focus relevant to on to think companies over downlines, initiatives. the lot the know And day-to-day their I Okay. don't it you there something as in with then the business? years -- better distributors how what there a and training, your about product Is well

Brent Neidig

Brent our speaking you're it's ears. here, music Linda, to and

really it the go on that how long that that there, things is of you a training. "success," of massive message is for part think to a is sellers head on an First we're which time into working big the reducing and opportunity. out of that or our one really really Associate part effectiveness hit their provide that only have. is they ability our compensation it to and I part prospects providing associate of proposition rewarding the a for And portray and takes one we value It's to find not it success to the the plays strategy,

up the a continue you in needs time. period training time, person gate. certain order we out So takes on of package in provide the training That's a our prospects. training that once person how journey, figure resources message the then of our in self to way to can commercial their they certification change out associate figure their education, for objectives the be of to brand to successful a out in compelling their all the a short, along sellers. And become best short and that customers as to themselves present so that sole products, opportunity whole concise can mentioned, they compelling create concise a one very a is very I that is primary all for their trying really resources has focus can team's of need material much best Jim deliver the team compelling, our And would been on to information right of so our over would say new in their new go we how

Operator

of the from Water The line from next comes Tower Lane Doug question Research.

Douglas Lane

sales be on guidance half obviously half maybe X think some into is drill second we an to in close expect, in second looking trend. to revised and somewhere math, can things the to trying looking mid-single flat improvement half Just at like sort my of down your down is back to trends digits, I'd first is to -- the from I which the just the

first So the what the drives you second to that trends will improve believe half? the in versus half

G. Hekking

here. Yes. Doug, is alternative ego Doug, alter the this your

commercial executing I think of of kind of Jim the a what there. great Brent with what kind team talked is deal about

And pipeline, in the outlined product we in things initiatives. those of we strategic the innovation, of some is kind the see really key what

given any to get this One and is And of really option associate have go go and a I think we loud first engagement has Brent and is them tones them direct to the business. team talk in coming and that of part done take kind the critical out really the back COVID. just of out we effort things back with and heard to engage about and our with this and

And think the thing. so I me, to #X that's

different kind overwhelm and to picture? I timing things some them planned just smart. is it of part and in we But a a and -- of -- want Jim, kind of cadence add and to else have baked value we not anything things see the We them. it's as one strategy. we broader be want think promotional do additive, a that approach Brent that said, are of are big but activity, or the of to

Jim Brown

and support to -- products. a more in strategy world didn't biggest that's mean the find distributor-first consumers about, a talk of do tools our our training. associate our spend and it's one Doug on to that, getting is and and cadence continue that strategy lot talked about time third train the alignment just but it's the of to of be successful. Yes. and like distributor We across fourth them getting that quarter. But GMs some and the the I it's to promotions, on that just probably jobs Linda really address we're our there the going --

Douglas Lane

And Okay. want X.X%. That's according again, the what, X.X%, thing operating my where second the to not your Jim. have, sales first half revised much the margin on was, And the you you I very operating helpful, numbers, is range, despite guess but shortfall. I margin to focus

second back to you wondered going I the still the X%. it's to is or operating into although margin sales be in below why half, improving so And lower second And trends, be just down versus the possibly half in the despite going half? the first

G. Hekking

it dynamic. into our infrastructure to think We've in just strategic balance go Jim adding line, really a allows the value stuff. I strength his future. would same we've leverage say been sheet that and lean costs of and in other think that doing softer continue of And grow this Yes, we At and is time, into some loss just remarks, the the the opening some us the going in that investing initiatives paring the We've definitely invest I efforts and help in outlined in that don't lean have top to we seen selective will deem we'll and company. things as forward back and costs. back the infrastructure things, the been mentality

Douglas Lane

sense. that mean I makes Okay.

on XX% hopefully, know just commentary, in low If your the your after of couple XXs, -- being trends last but improve. I these here up you into last up shot And will about just the you tax your upper the now talked forever and rate I thing investment XXs. and rate, I the get and years sales tax in range the -- just it,

different about that's So that today USANA just higher what rate? is driving tax

G. Hekking

the sits. a income of dynamics that I standpoint book think the just tax thing. primary where That's from

many And other of some on here. I sales our strategic we're domestic had investments where at in the think of overhead and still currency here initiatives are happening dynamics. I the with operating U.S. creates of these alone where just U.S., leverage and currency those concentration is in stuff. and the think softness And the our years several adjustments, some the we've concentration of in

fix And we're there's longer think be sure things I the real decisions we're there's good but nothing long of at to for of kind here, going term. I that. make health quick term looking some opportunity a think to to the company making

Douglas Lane

I years, back just in Well, do there into something term guidance I Or mean, X. are the the XXs the next get next here directionally, XXs? not the in for stay but near you in can year year you're to giving know to or out we is

G. Hekking

go as roll what leadership is and of Walter us and initiatives Jim's we Well, these back and much strategic Brent to. and execute directing

top capital allocate some I as different that And that see line stuff to we'll of look really looks help will well. out. think that we just how of have to the on momentum opportunities, some impact as may an

Operator

We in the currently Instructions]. queue. have no questions [Operator

in questions no further queue. have We the

So I will the to over any turn call back for your hosts closing remarks.

Unknown Executive

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

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

Operator

joining Thank today's for you call.

lines. your disconnect now may You

USANA Health Sciences (USNA) 24 Jul 242024 Q2 Earnings call transcript