USANA Health Sciences, Inc.

Good day and welcome to today's USANA Health Sciences third quarter earnings conference call. Throughout today's recorded presentation, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. You may register for questions at any time by pressing star 1 on your telephone keypad. And now, I'd like to hand the call over to Andrew Masuda. Please go ahead, sir.

Thank you, Sergey, and good morning, everyone. We appreciate you joining us to review our third 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 Hecking, our Chief Commercial Officer, Brent Neidig, as well as other executives. Yesterday, after the market closed, we announced our third 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. Third quarter net sales fell modestly short of our internal expectations as the operating environment in many of our key markets remain challenging. Notably, our China market experienced a more challenging environment in the third quarter than what we experienced during the first six months of the year. Although we increased active customer accounts by 7% year-over-year in this important market, our net sales declined by 4% due to a decrease in average spend. We anticipate a continued challenging operating environment through the remainder of the year. We're planning to increase promotional activity in the fourth quarter to support and build momentum in our businesses. Our updated fiscal 2024 guidance incorporates these elements. We continue to focus and execute on the strategic initiatives previously communicated. Although these initiatives have not yet meaningfully manifested themselves in our operating results, we believe they are instrumental to laying the foundation for future growth and are confident that they will drive long-term customer and revenue growth. Let me share with you a few items. First, we continue to prioritize engaging with our associate sales leaders. who are vital to bringing in new customers to the USANA family. During the third quarter, we hosted a successful America and Europe convention in Las Vegas, and this was one of the best conventions we've had in terms of feedback from our associates. Training, development, and recognition were key focus areas at this event, with an emphasis on actionable initiatives to help our sales leaders grow their business. Feedback has been positive, and leaders are actively adopting these new initiatives. Thanks to the collaborative efforts of our sales, marketing, and research and development teams, we launched our first set of products under our new commercial team structure, Celebi resurfacing serum and whey protein isolate. Both products were launched in the US and Canada and will be available in other markets over the next couple of quarters. These product launches are illustrative of the early stages of our product innovation strategy. which includes increasing the cadence of new and upgraded high-quality, relevant, and premium products. Additionally, I'm encouraged by the increased agility that allowed us to bring these products to market. We have an exciting pipeline of additional products across our product categories currently in development with plans to be introduced throughout next year. I'll close by saying that I am utmost confident in our team to execute our strategy to return USANA to longer-term growth. With that, I'll now ask the operator to please open the lines for questions.