USANA Health Sciences Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Anthony Lebiedzinski - Fidelaity Sidoti - Analyst : Good morning and thank you for taking the questions. So I guess first you guys talked about the positive feedback coming out of the Las Vegas convention. I think you touched on a couple of those. But maybe if you could just maybe share more details and also as far as the feedback that you're getting, I mean, how quickly can some of those inputs be put in and when you can start to see tangible benefits from that?

Question: Anthony Lebiedzinski - Fidelaity Sidoti - Analyst : Thank you for that, Brent. Okay. And then in terms of the faster new product development process that you guys talked about, I guess what would be the main reason for that, that you've been able to do this? And I mean do you think you'll need to hire perhaps more people to help ensure this continues?

Question: Anthony Lebiedzinski - Fidelaity Sidoti - Analyst : Understood. And then as far as the -- just a follow-up on the pipeline of new products. Can you share any more details as far as timing and whether -- is it more SKUs than what you typically have done in the past as far as those are concerned and will those be in all markets? Or are you just looking to introduce those new products in only some of your markets? Maybe if you could just speak to that.

Question: Anthony Lebiedzinski - Fidelaity Sidoti - Analyst : That makes sense. Okay. And then I guess my last question before I pass it on to others. So I guess, part of your lower SG&A was reduced advertising expenses. So first, I guess, do you think that perhaps reduced advertising had any sort of impact on your 3Q sales? And I guess, secondly, how do you -- how should we think about advertising for 4Q and beyond that?

Question: Anthony Lebiedzinski - Fidelaity Sidoti - Analyst : That makes a lot of sense. That makes a lot of sense. All right, the best of luck.

Question: Linda Bolton Weiser - DA Davidson - Analyst : Yes hii, So I was wondering, as you pick up the promotional activity, does that affect more the associate incentive expense line? Or does that affect the gross margin more or maybe both? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 3:00PM, USNA.N - Q3 2024 USANA Health Sciences Inc Earnings Call

Question: Linda Bolton Weiser - DA Davidson - Analyst : Okay. And then the revised guidance for the year in terms of the EPS for the fourth quarter that's implied, I mean, I had to reduce my estimate quite a bit. More so, it seemed like on the margins, so what would be the particular things impacting margins in the fourth quarter? Is that just that increased promotional spending? Or is there something else going on in the cost structure? Maybe you can explain that about the margin expectations for the fourth quarter.

Question: Linda Bolton Weiser - DA Davidson - Analyst : Okay. And then just on your new products, the whey protein, is that specifically designed for customers that are taking GLP-1 drugs? I'm just curious about that.

Question: Linda Bolton Weiser - DA Davidson - Analyst : Okay. And then I'm curious, the other product is a beauty serum, I guess it's a beauty product, right? A serum, is that correct? So I'm kind of curious like why not a new product in nutritional supplements, which is more traditionally your line -- your area more of strength and scale. Why necessarily these two products that are in kind of a little bit different areas? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 23, 2024 / 3:00PM, USNA.N - Q3 2024 USANA Health Sciences Inc Earnings Call

Question: Linda Bolton Weiser - DA Davidson - Analyst : Okay. And then I'm curious about your capital allocation thoughts. I know you discussed it frequently with the Board, but your free cash flow has come down, but it's still fairly strong. It's at least $50 million a year. And so is your intent to just kind of let your cash balance build up? What's the trigger? I guess, what do you need to see in order to maybe go back to share repurchase or something like that?

Question: Linda Bolton Weiser - DA Davidson - Analyst : Okay. And then my last question just has to do with China. You said, I guess, in the press release or something that you didn't think the stimulus activities there would really affect your business all that much. But I don't know, I mean the Chinese government is doing these things because they want to try to stimulate consumer activity and the economy. I mean, are you just saying you feel like it's hopeless or there's such a secular issue in China, a structural issue? If government stimulus won't help them then what will, I guess? And how are you planning for that in the future as it being your largest market? Like?

Question: Linda Bolton Weiser - DA Davidson - Analyst : Okay. Well, thanks for that and good luck with everything.