USANA Health Sciences, Inc.

Hello and welcome to USANA Health Sciences fourth quarter and fiscal year 2023 earnings call. My name is Melissa and I will be your coordinator for today's event. Please note this conference is being recorded and for the duration of the call, your lines will be in a listen only mode. However, you will have the opportunity to ask questions at the end of the presentation. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I'll now turn the call over to Andrew Masuda. Please go ahead.

Thank you, Melissa, and good morning, everyone. We appreciate you joining us to review our fourth quarter and fiscal year 2023 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 2024, 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 am joined by our President and CEO, Jim Brown, our Chief Financial Officer, Doug Hecking, as well as other executives. Yesterday, after the market closed, we announced our fourth quarter and fiscal year results and posted our management commentary document to the company's website. We'll now hear brief remarks from Jim before opening the call for questions.

Thank you, Andrew, and good morning, everyone. USANA delivered fourth-quarter operating results that exceeded our expectations as our sales force responded positively to an incentive offering in several of our key markets. Notably, our greater China region delivered double-digit sequential growth in active customers. We are pleased with our year end results and the adoption of this incentive, particularly because the operating environment in many of our markets in 2023 was challenging as inflation and other economic factors adversely impacted consumer behavior and our ability to generate top line momentum. Despite this environment, we delivered fourth quarter net sales and diluted ETFs above expectations. We ended the year with $330 million in cash and essentially debt-free as we continued to generate strong free cash flow. We officially launched operations in India, the company's 25th global market, at the end of fiscal 2023, which is a significant milestone for USANA following years of preparation. And we continue to make meaningful progress on several strategic initiatives that are foundational for USANA's future growth. We begin fiscal 2024 with renewed focus on executing our global growth strategy, which is generating consistent active customer growth. The initiatives that drive this strategy include increasing engagement with our associate leaders to accelerate associate and customer growth, enhancing our incentive opportunities for our sales leaders that are actively generating customer and sales growth, building and expanding our operations in India, product innovation and development, and pursuing additional acquisition opportunities. I'll briefly provide additional details on our initiative to increase engagement with our associate leaders. While 2023 was a year of re-engaging with our associate leaders in a live setting, in 2024 we'll be doubling down on engaging, training, and educating our associates with a focus on growing active associates globally. While overall customer growth is always our goal, we recognize that our business model relies upon our independent distributors to market and sell our products. For this reason, we are renewing our focus on associate growth in 2024. USANA offers best-in-class nutritional supplements, and this year we'll be collaborating with our associates to help them effectively communicate this product differentiation message. Additionally, we plan to roll out more updates to our existing digital tools, which will help our associates with the necessary onboarding, training, communication, and marketing resources essential for growing and managing their business. In closing, USANA remains well-positioned for long-term success in the global health and wellness market. I'm confident that our successful execution of our strategies will expand our business and drive sustainable long-term growth in net sales and earnings. With that, I'll now ask the operator to please open the lines for questions.