USANA Health Sciences, Inc.

Ladies and gentlemen, and welcome to USANA Health Sciences' fourth quarter conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Patrick Richards, Executive Director of Investor Relations and Business Development. Please go ahead. Thank you. Good morning.

We appreciate you joining us to review our fourth quarter and full year 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 2022. as well as uncertainty related to the magnitude, scope, and duration of 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'm joined this morning by our CEO and Chairman of the Board, Kevin Guest, our president, Jim Brown, our chief financial officer, Doug Hacking, as well as the other members of our executive team. Yesterday, after the market closed, we announced our fourth quarter results and posted our management commentary document on the company's website. We'll now hear brief remarks from Kevin before opening the call for questions.

Thank you, Pat, and good morning, everyone. We appreciate you joining us to review our fourth quarter and full year results, as well as our initial outlook for 2022. 2021 marked a year of solid performance in what remains a dynamic operating environment. For the full year, we grew net sales by 5%. However, as the COVID-19 pandemic has evolved over the last two plus years, we've learned that its impact to our business is not linear. This was evident in our fourth quarter results, where lockdowns and disruptions to our operating environment pressured our financial performance. We continue to manage the business with sustainable long-term growth in mind, and in 2021 we made meaningful progress on several strategic initiatives. Technology investment remains a focal point, and last year we made several improvements and enhancements to our digital tool offerings, including rollout of a product recommendation tool, introducing customized and branded website creation tools, and releasing the first version of our native shopping app in China. These enhancements provide our customers with an excellent shopping experience, and we believe this will help drive customer acquisition. Additionally, we maintain an unwavering focus on product innovation, and our scientists and product specialists made progress on our long-term product development roadmap. We've also transitioned more manufacturing to our foods facility in Salt Lake City and we expect to see product and financial benefits in the coming years as we focus on leveraging our investment in this facility. As we embark on USANA's 30th anniversary this year, we will continue to strategically invest in the business with investments focused on our digital transformation initiatives, product innovation, growing our business in China, and pursuing business development opportunities all with the objective of growing our active customer counts. We are excited to resume hosting in-person events this year in markets where it is safe and where we are permitted to do so. We are currently planning to celebrate USANA's 30th anniversary by hosting a hybrid virtual in-person event in Salt Lake City, and we are also planning to host an in-person event in China in the back half of the year. We continue to believe that in-person events are both important and additive to driving excitement and momentum within our sales force. Additionally, we plan to run short-term sales programs across several of our markets throughout the year to suit the needs of individual markets. Before turning the call over for questions, I'd like to briefly discuss our fiscal 2022 outlook. We are cautiously optimistic on a return to normalcy as some of our markets currently remain severely impacted by COVID-related lockdowns, while other markets are seeing signs of reopening. As such, our net sales and diluted earnings per share guidance carry a wider than normal range. We anticipate that net sales will accelerate throughout the year. We also expect some pressure on our operating margin relative to historical performance, which reflects inflationary pressures on key areas of our business, strategic investments in our digital infrastructure, and increased travel and event related costs. In closing, we are confident our strategies will enable us to become even more positioned to drive future growth. With that, I'll now ask the operator to please open the line for questions.