Linda Bolton-Weiser So I'm not sure I'm understanding. So the China promotion that was better than expected occurred in the second quarter and that high gross margin business. So that helps the gross margin. Is that what you're trying to say? Doug Hekking Yes, that's what I'm saying. Linda Bolton-Weiser Okay. So then maybe going forward, we should be a little a little lower in our expectation maybe for gross margin. Doug Hekking Yes. Yes. I think you saw something is probably a little bit better than what w ...

Financial Data and Key Metrics Changes - The company reported solid first quarter results, modestly ahead of expectations, with stabilization in active customer counts and sequential quarter net sales growth [6][7] - The company raised the lower end of its net sales and earnings per share guidance for the full year [6] - Inventory levels ended the first quarter at $68 million, down $2 million from the fourth quarter and down $29 million year-over-year [15] Business Line Data and Key Metrics Changes - The demand for health and wellness products increased significantly in China, contributing approximately $12 million to net sales in the first quarter [7] - Annual price increases were announced in many markets, leading to an estimated $13 million increase in customer purchasing ahead of these increases [8] Market Data and Key Metrics Changes - The global operating environment remains dynamic, with ongoing inflationary pressures impacting customer purchasing decisions [7] - The company experienced a meaningful increase in demand for health products in China following a government shift in COVID policy [7] Company Strategy and Development Direction - The company is focusing on returning to live meetings and events globally, which are seen as critical for generating excitement and momentum [9] - Plans to open a new market later in the year were mentioned, with optimism about long-term growth opportunities [10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by inflation but expressed confidence in the company's ability to execute its growth strategy [7] - The management team is optimistic about the future, especially following successful in-person events in China [29] Other Important Information - A transition in the CEO role was announced, with Jim Brown set to become the new CEO effective July 1 [11][12] - The company is implementing a slightly higher price adjustment this year to manage elevated materials and supply chain costs [14] Q&A Session Summary Question: Inquiry about gross margin and transportation costs - Management explained that the primary decline in transportation costs was due to reduced air shipping, with stabilization in ocean cargo [19] Question: Future cost expectations - Management indicated that raw material costs have stabilized, with a 7% to 9% increase noted [19] Question: Price increases and pre-buying effects - Management noted that the majority of pre-buying occurred in markets like China and Korea, with smaller markets expected to have less impact [26] Question: Plans for acquisitions - The strategy is to keep acquired companies separate while leveraging synergies, such as manufacturing efficiencies [33][34] Question: New market launch expenses - Management confirmed that expenses related to the new market launch will ramp up as the opening approaches [36] Question: U.S. market performance and price increases - Management is monitoring customer response to price increases and is working closely with the sales team to gauge appetite [39]

Financial Performance - In 2022, USANA Health Sciences generated $998.6 million in net sales and had approximately 490,000 active Customers worldwide[21] - Mainland China accounted for approximately 45.4% of net sales and 45.9% of active Customers[21] - In 2022, net sales outside of the United States represented approximately 89.4% of consolidated net sales, highlighting the company's international presence[41] - The Auto Order subscription program generated 65% of product sales volume for the year ended December 31, 2022, offering a 10% price discount[81] - Product returns were approximately 0.7% of net sales in 2022, indicating strong customer satisfaction[84] - No single Associate or Preferred Customer accounted for 10% or more of net sales in the last three fiscal years, indicating a diversified customer base[85] - 89.4% of the company's total net sales for the year ended December 31, 2022, were generated outside the United States, making it vulnerable to currency fluctuations[186] Growth Strategy - The company plans to execute a global growth strategy in 2023, focusing on increasing active Customers through digital commerce initiatives and market-specific promotional strategies[24] - In 2022, USANA completed the acquisition of two companies, Rise Bar and Oola Global, LLC, to leverage their expertise for growth[33] - The company plans to invest in research and development to roll out new science-based products in 2023 and beyond[29] - USANA aims to enhance its digital capabilities and customer experience through initiatives like an Affiliate program launched in January 2023[26] - The company is optimistic about long-term growth in China despite recent challenges, with plans for market-specific strategies and in-person events in 2023[30] Research and Development - USANA's product sales breakdown for 2022 shows that Nutritionals accounted for 70%, Essentials/CellSentials for 17%, Foods for 7%, and Personal Care and Skincare for 5%[35] - USANA's R&D efforts focus on high-quality, science-based products, with ongoing research supporting proprietary technologies like InCelligence[42] - In fiscal years 2022, 2021, and 2020, the company spent $11.6 million, $11.1 million, and $10.6 million on product R&D activities, respectively, indicating a consistent investment in research and development[47] - BabyCare's R&D efforts include collaborations with universities and clinical studies to evaluate product efficacy, enhancing product quality[72] - The company has established partnerships with various universities and research institutes globally to advance knowledge in applied human nutrition, with plans to accelerate clinical studies in the coming years[45] Manufacturing and Quality Control - The company conducts manufacturing and quality control operations for approximately 65% of its products in-house, with a significant manufacturing facility expansion completed in 2019[49] - The company plans to increase the proportion of personal care and skincare products manufactured in-house, reducing reliance on third-party suppliers, which currently account for approximately 35% of product sales[54] - The company maintains in-house microbiology and analytical chemistry labs for quality control, testing for biological and chemical contamination, and ensuring compliance with internal specifications[55] - The company’s Salt Lake City manufacturing facilities are registered with multiple regulatory agencies, ensuring compliance with Good Manufacturing Practices (GMPs) and other quality standards[51] - BabyCare's in-house manufacturing accounts for approximately 65% of product sales, providing a competitive advantage in quality control and production reliability[73] Regulatory Compliance and Challenges - The company engages in ongoing dialogue with government officials to navigate regulatory challenges in China[69] - The Chinese government has increased scrutiny of the direct selling industry, impacting the company's operations and regulatory compliance[106] - The company has obtained direct selling licenses in Beijing, Jiangsu, Shaanxi, and Tianjin, but requires additional licenses for further expansion in China[108] - The Chinese government has suspended the application review process for direct selling licenses since 2019, impacting BabyCare's ability to grow[178] - Regulatory compliance is critical, as failure to meet FDA requirements could lead to product withdrawals or fines, adversely affecting marketability[189] Employee and Corporate Culture - The company had approximately 1,900 employees across 23 countries, with 46% in the United States and 28% in China, and 58% of the workforce being female[124] - The company has a commitment to diversity, equity, and inclusion, with initiatives such as the Women in Leadership Program and mentorship programs[126] - The company has established a wellness program that includes free nutritional products and access to on-site health services for employees[132] - The company is focused on sustainability, with a strategy centered on products, people, and planet, and aims to fortify these pillars for meaningful progress[121] - The company has not experienced work stoppages due to labor disputes and maintains a good relationship with its employees[125] Legal and Regulatory Risks - The company faces potential legal obligations regarding the classification of Associates, which could lead to increased costs and liabilities if they are deemed employees[162] - The company is subject to various anti-corruption laws, and any violations could result in severe penalties and adversely affect its reputation and operations[208] - Changes in tax laws and regulations could materially affect the company's effective tax rate and financial condition[210] - The company faces risks related to maintaining effective internal controls, which are necessary for reliable financial reporting[212] - Legal actions against the company by former Associates could harm its business, although such litigation is typically routine and not materially impactful[203] Cybersecurity and Data Management - The company relies on information technology for operations and reporting, with significant amounts of data, including personally identifiable information (PII), stored in data centers and cloud systems[217] - Data breaches could lead to significant losses, including damage to reputation, increased cyber insurance premiums, and loss of customer confidence[219] - Cybersecurity measures are continuously improved, but the company remains vulnerable to persistent attacks, including viruses and ransomware[218] - The company faces potential legal liabilities from affected individuals or business partners due to data breaches[219] - Regulatory compliance is critical for the secure collection and storage of data, impacting business strategy[219]

USANA Health Sciences, Inc. (NYSE:USNA) Q4 2022 Earnings Conference Call February 8, 2023 11:00 AM ET Company Participants Andrew Masuda - Investor Relations Kevin Guest - Chairman and Chief Executive Officer Jim Brown - President Doug Hekking - Chief Financial Officer Brent Neidig - Chief Officer and Managing Director, China Conference Call Participants Linda Bolton-Weiser - D.A. Davidson Susan Anderson - Canaccord Genuity Ivan Feinseth - Tigress Financial Partners Operator Good day and welcome to today’s ...

Financial Data and Key Metrics Changes - The company reported US$29 million of operating cash flow in the third quarter, indicating a healthy cash generation despite challenges [6] - The adjusted fiscal 2022 outlook reflects anticipated continued COVID-related inflationary and economic challenges [6][8] Business Line Data and Key Metrics Changes - The Southeast Asia region experienced significant challenges due to reliance on in-person activities, which were impacted by COVID and inflationary pressures [12] - The company had a large promotion in the second quarter that was not repeated in the third quarter, affecting sequential performance [12] Market Data and Key Metrics Changes - Mainland China performed better than projected, while other parts of Asia, particularly Southeast Asia, showed weakness [12] - The company is seeing stabilization in customer counts, particularly in Southeast Asia, but continues to face challenges in the region [13][19] Company Strategy and Development Direction - The company is implementing short-term initiatives to generate business momentum, including new incentives and increased communication with associate leaders [7] - Long-term health and growth remain the primary focus, with confidence in the execution of strategic initiatives to return to sustainable growth [8] Management Comments on Operating Environment and Future Outlook - Management acknowledged a challenging operating environment due to COVID-related disruptions and inflationary pressures [6] - The expectation is that costs will remain high through mid-2023, with no significant decreases anticipated in raw material costs [15] Other Important Information - Inventory at the end of the quarter was US$73 million, with a strategic focus on managing inventory levels to avoid disrupting customer experience [17] - The company is currently in its planning cycle and will provide more visibility on growth expectations in February [19] Q&A Session Summary Question: Performance in Mainland China and other parts of Asia - Management noted that Mainland China performed better than expected, while Southeast Asia faced challenges due to reliance on in-person activities and inflationary pressures [12][13] Question: Future sales growth in China - Management indicated that the environment in China remains tough, with expectations of similar short-term numbers but ongoing investments for long-term traction [14] Question: Input costs and stabilization - Management characterized input costs as stabilizing, with high logistics costs still impacting margins [15][16] Question: Inventory levels - Inventory was reported at US$73 million, with ongoing management to align inventory with current revenue run rates [17] Question: Visibility on organic sales growth - Management stated that they are currently assessing the situation and will provide more insights in February regarding expectations for organic sales growth [19]

USANA Health Sciences, Inc. (NYSE:USNA) Q2 2022 Earnings Conference Call July 27, 2022 11:00 AM ET Company Participants Andrew Masuda - Director, IR Kevin Guest - CEO & Chairman Jim Brown - President Doug Hekking - CFO Brent Neidig - Chief Officer & MD, China Walter Noot - COO Conference Call Participants Chris Neamonitis - Jefferies Doug Lane - Lane Research Linda Bolton Weiser - D.A. Davidson Operator Good day and welcome to USANA Health Sciences' Second Quarter Conference Call. Today's conference is bein ...

USANA Health Sciences, Inc. (NYSE:USNA) Q1 2022 Results Conference Call April 27, 2022 11:00 AM ET Company Participants Andrew Masuda - Director of Investor Relations Kevin Guest - Chairman and Chief Executive Officer Doug Hekking - Chief Financial Officer Brent Neidig - Chief Officer and Managing Director of China Jim Brown - President Conference Call Participants Chris Neamonitis - Jefferies Doug Lane - Lane Research Linda Bolton Weiser - D.A. Davidson Operator Good day and welcome to USANA Health Science ...

USANA Health Sciences, Inc. (NYSE:USNA) Q4 2021 Earnings Conference Call February 9, 2022 11:00 AM ET Company Participants Patrique Richards - Executive Director, Investor Relations and Business Development Kevin Guest - Chairman and Chief Executive Officer Doug Hekking - Chief Financial Officer Brent Neidig - Chief Officer and Managing Director of China Conference Call Participants Steph Wissink - Jefferies Doug Lane - Lane Research Disclaimer*: This transcript is designed to be used alongside the freely a ...

USANA Health Sciences, Inc. (NYSE:USNA) Q3 2021 Earnings Conference Call October 27, 2021 11:00 AM ET Company Participants Patrique Richards - Executive Director, IR & Business Development Kevin Guest - Chairman & CEO Douglas Hekking - CFO Jim Brown - President Conference Call Participants Douglas Lane - Lane Research Operator Good day, and welcome to the USANA Health Sciences Third Quarter Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. P ...

Financial Data and Key Metrics Changes - The company reported record net sales, earnings, and active customers with double-digit year-over-year sales growth in each region [7][10] - The sales program contributed significantly to the results, but management expects a deceleration in growth in the second half of the year [14][15] Business Line Data and Key Metrics Changes - The active nutrition line is showing strong initial performance, with plans for further rollout and product enhancements [39][42] - The company is focusing on expanding its product offerings beyond traditional nutritional vitamins to include lifestyle products [45][47] Market Data and Key Metrics Changes - The company is experiencing varied impacts from COVID-19 across different markets, with supply chain challenges noted [19][20] - Inventory levels have increased to approximately $90 million as the company prepares for potential supply chain disruptions [21] Company Strategy and Development Direction - The long-term growth strategy centers on customer growth and engagement, improving technology, and pursuing international expansion [10][11] - The company is investing in digital tools and enhancing customer experience, particularly in the Chinese market [33][38] Management Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by COVID-19 and inflationary pressures on material costs, which may impact gross margins [23][24] - The company remains confident in its ability to manage these challenges and deliver another record year [11][24] Other Important Information - Capital expenditures for the year are expected to be in the range of $10 million to $15 million, with some delays due to supply chain issues [27] - The company is enhancing its logistics to ensure product availability in key markets [25][26] Q&A Session Summary Question: Concerns about deceleration in sales growth - Management explained that the strong sales growth was primarily driven by a short-term sales program, and a similar pattern is expected as seen in previous years [14][15][16] Question: Impact of COVID-19 on business - Management noted that the impact varies by market, with some experiencing lockdowns and others not, but overall supply chain management has been effective [19][20] Question: Update on the China shopping app - The app has been well-received, but its growth is part of a long-term strategy rather than a short-term boost [32][33] Question: Active Nutrition line performance - Initial results exceeded expectations, with plans for further product introductions and enhancements [50][54] Question: Feedback from associates on product preferences - Associates are requesting more options, particularly in bars, and the company is responding by expanding its product line [53][54]