USANA Health Sciences, Inc.

Good day and welcome to today's USANA Health Science first quarter ERNX call. This meeting is being recorded. At this time, I'd like to hand the call over to Andrew Masuda. Please go ahead, sir.

Thank you and good morning, everyone. 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 be making 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 economic and operating environment around the world. our 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 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 market closed, we announced our first quarter results and posted our management commentary document to the company's website. We'll now hear brief remarks from Kevin and Jim before opening the call for questions.

Thank you, Andrew, and good morning, everyone. We appreciate you joining us. We're pleased to report solid first quarter results, which were modestly ahead of our expectations. The team did an excellent job of executing market specific initiatives, which included various in-person events, promotions, and the launch of our new affiliate program in certain markets. As a result, we continue to see stabilization in active customer counts and sequential quarter net sales growth. Accordingly, we have raised the lower end of our net sales and earnings per share guidance for the full year. The global operating environment for our business remains dynamic, as ongoing inflationary pressures worldwide continue to meaningfully impact the purchasing decisions of our customers. Despite these challenges, demand for health and wellness products continues to proliferate, and we remain well-positioned to execute our growth strategy. As we mentioned in our previous call, we saw a meaningful increase in demand for our health products in China during the fourth quarter following the government shift in COVID policy. This demand carried over to the first few weeks of the first quarter and added approximately $12 million to net sales. Note that this is a temporary lift in net sales and had a comparable lift in our active customer counts as well. Toward the end of the first quarter, we announced annual price increases in many of our markets and customer purchasing increased by an estimated $13 million ahead of these increases. While we have historically seen a trend of increased purchasing ahead of price increases, the amount was higher than anticipated. Separate from these events, our business continues to show signs of further stabilization in the first quarter. As we discussed with you in February, we are making a strategic effort to return to live meetings around the world where possible and are off to a great start. We held several meetings and events in the first quarter, and following the end of the quarter, we held our China National Sales Meeting in Macau. This is our first large-scale event in this region in three years, and we are pleased to host nearly 10,000 associates in attendance. The associate engagement we have seen and the feedback that we've received from these meetings and events has been excellent. Gathering and collaborating in person is critical to our business as it generates excitement, momentum, and renews trust with our sales force. We have events planned for each of our regions throughout the remainder of the year, and we remain optimistic that these will generate future growth. Notably, we continue to make progress on preparing to open a new market later this year. We plan to announce this new market at our Asia Pacific Convention in South Korea next week. Although this market will not open until later this year, we are optimistic about the long-term growth opportunities it will present and, most importantly, the opportunity it brings to introduce USANA's world-class health products to a new country, culture, and demographic. While we can't discuss the specifics of this market today, we look forward to making this announcement live in South Korea next week. Stay tuned and watch for a press release with this announcement. Before turning the call over to USANA's president, Jim Brown, I'd like to comment on our plans for succession in the CEO role. In early February, we announced my plans to transition to the role of Executive Chairman, effective July 1st. With this transition, Jim will be named CEO of the company, and I speak for myself and the entire board when I say that USANA has full confidence in Jim and his leadership and ability to curate active customers. It has been my great privilege to be part of USANA for over 30 years and to serve as CEO for the last eight years. and chairman of the board since 2020. It's been extremely satisfying to play a part in advancing USANA's position as one of the foremost leaders in health and wellness. I look forward to continually to be deeply involved in USANA's strategy and mission in this new role. I want to express that I am not retiring. I'm just shifting strategic roles. I also want to express my sincere appreciation for and confidence in Jim as USANA's CEO, as well as USANA's extraordinary management team, employees, and associates. With that, I'll turn the time over to Jim, USANA's future CEO.