USANA Health Sciences, Inc.

Stand by, we're about to begin. Good day and welcome to the USANA Health Sciences first quarter conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Andrew Masuda, Director of Investor Relations. Please go ahead, sir.

Good morning. We appreciate you joining us to review our first quarter 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 our 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 am joined by our CEO and Chairman of the Board, Kevin Guest, our President, Jim Brown, our Chief Financial Officer, Doug Hecking, as well as other executives. Yesterday, after the market closed, we announced our first quarter results and posted our management commentary document on the company's website. We'll now hear a brief remark from Kevin before opening up the call for questions.

Thank you, Andrew, and good morning everyone. We appreciate you joining us to review our first quarter results. USANA delivered solid first quarter results in the face of continued challenges across several key markets. Despite these challenges, both net sales and diluted EPS grew sequentially during the quarter. Our operating results for the first quarter varied across several key regions and markets. For example, The U.S. market generated year-over-year sales growth and performed modestly above our expectations. Conversely, some key markets in Southeast Asia Pacific generated softer-than-expected results during and after the Lunar New Year holiday, despite our efforts to offset the seasonality through promotional offerings. Nonetheless, worldwide sales and operating results were in the range of internal expectations. During the quarter, we made progress on several of our 2022 strategic initiatives. We resumed the rollout of our active nutrition line across certain markets, and we continued to make enhancements to the overall customer experience through strategic digital investments. As we all have seen, the operating environment in China has become more challenging and unpredictable due to the escalation of COVID-19 and the accompanying lockdowns. restrictions and other disruptions to individuals and businesses. Shanghai has experienced citywide lockdowns and the Chinese government recently began implementing restrictions in parts of Beijing. At this point, we do not have transparency into whether these restrictions will continue to increase in the coming weeks in Beijing and other areas of China that are important to our business. Nevertheless, given the current circumstances, we anticipate some negative impact on our results in China, and we've lowered our fiscal 2022 outlook to reflect this uncertain environment. Regardless, we remain committed to supporting our associates, customers, and employees in this key market and will continue to adapt to these ever-changing conditions to generate momentum in the business. In closing, we remain confident that the successful execution of our global strategies will position USANA to deliver long-term sustainable growth in the future. With that, I'll now ask the operator to please open the lines for questions.