• Net Sales Growth: 7% sequential increase in the fourth quarter.
• Adjusted Diluted EPS: Increased by 14% in the fourth quarter.
• US Market Sales Growth: 16% sequential increase in net sales.
• Australia and New Zealand Sales Growth: Combined net sales grew 9% year over year.
• Hiya Health Acquisition: Acquired 78.8% ownership for $205 million.
• Hiya Health Revenue: Generated $112 million in fiscal 2024.
• Hiya Health Adjusted EBITDA Margin: Over 20% in fiscal 2024.

• Warning! GuruFocus has detected 2 Warning Signs with USNA.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Usana Health Sciences Inc (NYSE:USNA) reported a solid fourth quarter with net sales growing 7% sequentially and adjusted diluted EPS increasing by 14%.
• The acquisition of a 78.8% ownership stake in Hiya Health positions Usana as a leader in the expanding children's health and wellness market.
• Usana's reorganization of its R&D and commercial teams has led to faster and more efficient product development and market differentiation.
• The company plans to launch over 20 new products and product reformulations globally in 2025, enhancing its product offerings.
• Usana's strategic enhancements to its associate incentive offerings are expected to modernize sales incentives and improve pay for performance.

Negative Points

• The contribution of Hiya Health to Usana's consolidated 2024 results was minimal due to the late acquisition in the fourth quarter.
• Usana faces challenges in certain regions, such as China, where the operating environment remains tough.
• SG&A expenses as a percentage of sales came in higher than expected, partly due to the commercial team reorganization.
• The integration of Hiya Health may incur short-term costs and potential disruptions in profitability due to customer acquisition expenses.
• Usana's balance sheet has been impacted by the Hiya acquisition, resulting in no stock buybacks and a slight increase in debt.

Q & A Highlights

Q: What's driving the year-over-year sales gains in the US, Australia, and New Zealand? Is it primarily due to increased promotional activity? A: G Hekking, CFO: Leaders in these markets have been thinking outside the box and trying new approaches, which have shown traction. This creative approach has provided insights for future strategies. Brent Neidig, Chief Officer and Managing Director of China: The commercial team restructure and enhanced associate engagement have empowered regions to create tailored offerings, resulting in significant new associate acquisition and retention.

Q: Can the successful strategies in the US and Canada be replicated in other markets? A: Brent Neidig, Chief Officer and Managing Director of China: Yes, the intention is to replicate these strategies globally. Adjustments to the incentive structure will be rolled out in the back half of the year, helping associates understand key objectives and guiding them through their early journey.

Q: How should we think about expected sales performance by region in 2025? A: G Hekking, CFO: Recent trends are expected to continue, with some regions showing progress. China remains a significant part of the equation, and despite a tough environment, the team there is expected to perform well. Tailored offerings in other markets are anticipated to generate momentum and enthusiasm.

Q: How is the Hiya acquisition performing compared to expectations, and are there plans to integrate their manufacturing onto USANA's platform? A: Walter Noot, COO: The Hiya acquisition is going well, with great management and operational advantages. There are plans to integrate supply chain and manufacturing processes gradually to avoid disrupting Hiya's business. Jim Brown, CEO: Opportunities will be rolled out at a slower pace to ensure Hiya's strategic plans for 2025 are not disrupted.

Q: What are the expectations for capital spending in 2025, and are there any significant changes to the business model? A: G Hekking, CFO: Capital spending is expected to be in line with past levels, around 1% to 1.5% of sales. Jim Brown, CEO: The company is committed to the direct selling channel and is making tweaks to the model to attract more people, especially those interested in the gig economy, without moving away from the core business model.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.