USANA Health Sciences, Inc. (NYSE:USNA) Q4 2022 Earnings Call Transcript February 8, 2023
Operator: Good day and welcome to today’s USANA Health Sciences Fourth Quarter Earnings Conference Call. This meeting is being recorded. At this time, I’d like to hand the call over to Andrew Masuda. Please go ahead, sir.
Andrew Masuda: Thank you and good morning, everyone. We appreciate you joining us to review our fourth quarter and year end results. Today’s conference call is being broadcast live via webcast and can be accessed directly from our website at ir.usana.com. Shortly following the call, a replay will be available on our website. As a reminder, during the course of this conference call, management will make forward-looking statements regarding future events or the future financial performance of our company. Those statements involve risks and uncertainties that could cause actual results to differ perhaps materially from the results projected in such forward-looking statements. Examples of these statements include those regarding our strategies and outlook for fiscal year 2023 as well as uncertainty related to the impact of the COVID-19 pandemic to our business, operations and financial results.
We caution you that these statements should be considered in conjunction with disclosures, including specific risk factors and financial data contained in our most recent filings with the SEC. I am joined by our CEO and Chairman of the Board, Kevin Guest; our President, Jim Brown; our Chief Financial Officer, Doug Hekking as well as other executives. Yesterday, after the market closed, we announced our fourth quarter and fiscal 2022 results and posted our management commentary document on the company’s website. We will now hear brief remarks from Kevin and Jim before opening the call for questions.
Kevin Guest: Thank you, Andrew and good morning everyone. We appreciate you joining us. USANA reported fourth quarter and fiscal 2022 results that were largely in line with our preliminary results announced on January 5. Fiscal 2022 presented a challenging operating environment for USANA. As with many companies, global inflationary pressure continued to negatively impact our materials and supply chain costs as well as our consumers’ purchasing behavior across several key markets. In particular, the operating environment in Mainland China continues to be difficult to navigate. During the final two weeks of fiscal 2022, we saw an increase in demand for certain of our products following the Chinese government’s unexpected easing of its COVID-19 policy.
While we are encouraged by this increase in demand, it is still too early to forecast long-term consumer demand in this critical market, particularly given the seasonality we experienced during the Chinese New Year holiday, which recently ended. That said, we anticipate that we will begin to see more normalized a more normalized operating environment in China during 2023 and remain confident in our long-term growth opportunity in this key market. Notwithstanding the challenges we have seen in China and many of our other markets, USANA’s business has remained financially and operationally strong and is strategically positioned for future growth. Importantly, the company’s focus on health and wellness has never been more relevant as consumers around the world are more focused on their well-being now more than ever.
walterericsy/Shutterstock.com
We made progress throughout the year on several strategic initiatives, including various digital commerce initiatives to support our business, new market expansion, the launch of our affiliate program in select markets and the completion of 2 acquisitions. As we begin 2023, our top priority remains generating long-term sustainable growth in active customers. While our associates did well in adjusting to a virtual selling environment, it’s become more and more evident that in-person meetings and events are an invaluable catalyst to building relationships and generating excitement and positive momentum in our business. Consequently, one of our key priorities this year is to return to live sales meetings and events where possible. We have planned events in South Korea and Macau, China in the first half of the year with attendance at each event expected to be very strong, particularly given the absence of these events over the last several years.
Additional strategies for this year include offering new incentive opportunities for our sales force increasing our readiness for new market expansion, growing the two companies we acquired in 2022 and evaluating additional acquisition opportunities. I’d like to now turn the call over to USANA’s President, Jim Brown, for his comments on our key 2023 operational strategies.
Jim Brown: Thank you, Kevin and good morning everyone. Although generating customer engagement and growth is our top priority in 2023, we are also focused on cost and margin management. In particular, we will concentrate on strategically managing inventory, adjusting our sales promotion strategy to emphasize more local and regional offerings and fewer global offerings, implementing price adjustments to mitigate our increased cost structure and the current operating environment and capturing other operational efficiencies throughout our worldwide business. As a reminder, we made a strategic decision 2 years ago to build inventory levels to mitigate supply chain and stock out risks. As the supply chain has become more stabilized, the risk in this regard is lower, and we have meaningfully reduced inventory.
We will, however, continue to closely manage and monitor our inventory to ensure we’re able to deliver the best possible customer experience in a cost efficient manner. In closing, we are optimistic that the successful execution of all of our strategies will allow us to build sequentially on our fourth quarter results in 2023 and position USANA to return to year-over-year growth in 2024. With that, I’ll now ask the operator to please open the lines for questions.
See also 12 Top Performing Dividend Stocks in January and 12 Top Performing Consumer Staples Stocks in January.
To continue reading the Q&A session, please click here.