USANA Health Sciences, Inc.

Hello and welcome to the USANA Health Sciences second quarter earnings call. My name is Jess and I'll be your coordinator for today's event. Please note this call is being recorded and for the duration of the call your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star 1 on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero and you'll be connected to an operator. I will now hand over to your host, Andrew Masuda, to begin today's call. Thank you.

Thank you, Jess, and good morning, everyone. We appreciate you joining us to review our second quarter 2024 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'm joined by our President and CEO, Jim Brown, our Chief Financial Officer, Doug Hacking, our Chief Commercial Officer, Brent Neidig, as well as other executives. Yesterday, after the market closed, we announced our second quarter results and posted our management commentary document on 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. During the second quarter, we saw continued macroeconomic pressure in several of our key markets, which continue to impact our associates' productivity and consumer spending. We continue to take action to strategically address these challenges. including making USANA's overall value proposition more attractive. Our strategy includes restructuring our commercial team to better drive our initiatives, heightening our focus on product innovation, increasing our efforts to engage our sales leaders with an associate-first approach, expanding into India, and continuing to pursue M&A activities. These strategic initiatives are a meaningful undertaking and are focused on driving long-term performance. This effort will be a multi-year endeavor and will take time to fully realize the rewards of these efforts. Before providing a few highlights from the quarter, I'd like to provide an overview on the restructuring of our commercial team. Over the past several months, we have reorganized our sales, marketing, and communications departments into one commercial team to better position us to execute our customer growth strategy. A significant part of this strategy is centered on our ability to deliver three fundamental things to our sales force. best in class products, a simple message that highlights the benefits of these products, and an income opportunity that is simple, rewarding, and worthy of our associates' time and effort. Accordingly, our new commercial team is comprised of three core global teams, product, opportunity, and brand, as well as our regional and local business units. Our global teams are designed to do the following. The product team is responsible for ensuring that we bring innovative, best-in-class nutritional products to the market. Accordingly, this team is focused on increasing our market share and driving customer growth, with science remaining at the core of our business. The opportunity team is focused on delivering a rewarding compensation plan with an associate-first approach offering for both part-time and full-time entrepreneurs. The brand team will deliver USANA's story and brand framework, which will align all company messaging, both internally and externally, improving messaging's effectiveness, and bolstering our global reputation. I believe the collective output of the new commercial team will better position USANA to make these fundamental deliveries to our sales force and position USANA to achieve long-term customer growth. Now on to some strategic highlights for the quarter. I recently returned from India after spending a week in our offices in Gurgaon with our local leadership team and sales force. While I was there, I saw the energy and excitement for USANA's brand and products with our sales force and customers. Our local leadership team, led by Regional Vice President and Managing Director, Bunit Madan, continues to attract high-quality leaders, and we remain very excited about the long-term potential that this important market presents. As we have consistently communicated, sales contributions from this important opportunity is currently small. We plan to consistently and systematically build this market over the next several years. We also strengthen our leadership team across the company during the second quarter. Dr. Catherine Armstrong joined USANA as our new executive vice president of R&D. Dr. Armstrong received her Ph.D. in biochemistry from Notre Dame and is a seasoned scientific leader with 17 years of experience in consumer products, direct selling, and consulting. She brings a wealth of knowledge, technical prowess, and extensive expertise in product development and innovation. Dr. Armstrong will be instrumental in helping lead USANA's product development and innovative initiatives. Peter Wong has been promoted to Global Vice President and General Manager of China. Peter joined USANA Baby Care in January of 2022. Since then, he has been instrumental in driving a transformation with our China sales business. He worked closely with the team to successfully launch China's Healthy Family Strategy, which is focused on ensuring China's continued growth over the next several years. He has played a pivotal role in driving sales, building close relationships with sales leaders, optimizing our business model, creating innovative growth strategies, and developing our organization. I'm truly excited about Peter's future contributions, as well as his dedication, enthusiasm, and leadership in this important market. I'll close by saying that we operate our business with a focus on building sustainable long-term success in the form of customer growth. I'm confident that successful execution of this strategy will position USANA to return to growth. With that, I'll now ask the operator to please open the lines for questions.