USANA Health Sciences(USNA) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a decline in sales and brand partner productivity leading up to the global convention in August, but recent activity has shown improvement [4][7] - An increase in inventories was noted, attributed to new product introductions and investments in inventory locations for tariff mitigation [8] - The company expects to incur a one-time charge of $4.7 million in the fourth quarter due to a global cost reduction process [12] Business Line Data and Key Metrics Changes - Hiya Health experienced a 26% year-to-date sales growth despite challenges in the third quarter, with significant progress in integration initiatives [9] - RiseBar reported record third quarter net sales, with year-to-date net sales increasing by 169% [10][11] - The company is investing additional resources in Hiya Health and RiseBar to capitalize on current momentum and drive long-term growth [11] Market Data and Key Metrics Changes - The Americas and Europe regions performed relatively better than other regions, partly due to the performance of RiseBar [23] - The direct selling business has struggled over the past few years, but recent enhancements in offerings are expected to improve performance [34] Company Strategy and Development Direction - The company is focused on a comprehensive commercial strategy that includes an enhanced compensation plan, product innovation, and improved tools for brand partners [4][6] - Diversification is a key part of the company's strategy, with ongoing growth in Hiya Health and RiseBar [13][38] - The company plans to continue investing in its commercial strategy and explore M&A opportunities to expand its portfolio [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential of the direct selling business and the diversification strategy [13] - The company is optimistic about the future, citing renewed excitement and engagement from brand partners following the compensation plan enhancements [7][20] - The broader industry has faced challenges, but there is a positive outlook due to increasing consumer awareness of the importance of supplements [34][51] Other Important Information - The company has initiated a global cost reduction process, including right-sizing its workforce to prioritize strategic goals [11][12] - Management is focused on improving operational efficiencies and margins through in-house manufacturing capabilities for Hiya Health products [10][31] Q&A Session Summary Question: Can you walk us through the trajectory of your business trends from July through October? - Management noted promising trends from the new compensation plan launched in July, with increased engagement and excitement among brand partners [18][19] Question: Why did the Americas and Europe region perform better? - The performance was attributed to the global convention and the contribution from RiseBar, which has seen improved sales [23] Question: What incentives are planned for the fourth quarter? - The company plans to provide strategic incentives for brand partners, which will likely carry over into early 2026 [24] Question: What are the reasons for the decline in Hiya Health's active customer count? - Management acknowledged challenges due to changes in Meta's algorithms but remains confident in Hiya's growth potential [25] Question: What are the expected annualized operating cost savings from the right-sizing process? - Management indicated that it is early in the process and will provide more details in February [27] Question: Are there opportunities for further DTC acquisitions? - The company is committed to diversification and will explore M&A opportunities to strengthen its portfolio [38]