USANA Health Sciences, Inc. (USNA)

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USANA Health Sciences (USNA)

Q3 2012 Earnings Call

October 24, 2012 11:00 am ET

Executives

Patrique Richards

David A. Wentz - Chief Executive Officer

G. Douglas Hekking - Chief Financial Officer

Analysts

Timothy S. Ramey - D.A. Davidson & Co., Research Division

Frank A. Camma - Sidoti & Company, LLC

Rommel T. Dionisio - Wedbush Securities Inc., Research Division

Scott Van Winkle - Canaccord Genuity, Research Division

Presentation

Operator

Ladies and gentlemen, good morning, and welcome to the USANA Health Sciences Third Quarter Earnings Conference Call held on the 24th of October, 2012. [Operator Instructions] I would now like to hand the conference over to Patrique Richards. Please go ahead, sir.

Patrique Richards

Good morning, everyone, we appreciate you joining us this morning to review our third quarter results. Today's conference call is being broadcast live via webcast and can be accessed directly from our website at www.usanahealthsciences.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 our 2012 strategies for our North America region, Greater China region and other markets, as well as our updated outlook for 2012. We caution you that these statements should be considered in conjunction with the disclosures, including specific risk factors and financial data contained in our most recent filings with the SEC.

I'm joined this morning by Dave Wentz, our Chief Executive Officer; and Doug Hekking, our Chief Financial Officer. We'll hear first from Dave, who will discuss our business strategies during the quarter, as well as our strategies moving forward. We will then hear from Doug, he will discuss our financial results and 2012 updated financial outlook. I will now like to turn the call over to Dave.

David A. Wentz

Thanks, Pat, and good morning, everyone. For the third straight quarter, USANA has achieved record results. In the third quarter, we generated 15% top line growth and 41% net earnings growth. These results were driven by momentum in our underlying normal course of business, which continues to build in most of our markets worldwide. I believe that this momentum is an indication that strategies we have put in place are working to grow our business.

The highlight of the quarter was certainly our international convention, where we held our 20th anniversary celebration with our associate sales force . At this event, we had record associate attendance, record convention sales and a world class line up of speakers and events. The most significant part of the convention was the unveiling of our personalization strategy, which focuses on our customer and their unique experience with us.

To launch the strategy at convention, we announced that our personalized MyHealthPak product will be made available to our markets around world. We've introduced 2 new applications that are designed to help our Associates customize USANA products and business opportunity for their potential customers. And we unveiled a fresh new look and message for our company and its products.

You may have heard that we also gave a free iPad to every distributorship at convention. The iPad was in part a gift for our Associates' dedication to USANA, but more importantly, the iPad giveaway was a great way to introduce the technology and apps that support our new personalization strategy to our Associates and I will explain why in a moment.

First, I want to discuss the expansion of our MyHealthPak product to our countries -- to other countries because I truly believe our personalization strategy starts with this product. MyHealthPak is our premier supplement pack that allows our customers to create their own personalized combination of USANA supplements in a convenient to-go package. Our customers great these customized pack online by selecting the supplements they want in our easy-to-use interactive application. After they have customized their MyHealthPak, our state-of-the-art production line assembles their personalized product pack in conveniently daily to-go packs with their name printed on the box and each individual a.m. and p.m. sachet. Until now, MyHealthPak has only been available in the U.S. and Canada, where it has become a key part of our business and our message as a company.

The availability of this important product in our Asia-Pacific region is significant, not only to our customers there but to us here at USANA as well. Our Asia Pacific region represents about 62% of our total sales, and I'm excited about the potential of MyHealthPak in this region.

In addition to expanding MyHealthPak's availability, we've introduced 2 exciting new apps at the convention that promote personalization. These apps, which were launched in beta version are our proprietary True Health Assessment and True Health Companion, and they're designed for use on iPads and other platforms throughout the web. This is one reason we gave away free iPads at our 20th anniversary celebration.

The True Health Assessment is a short interactive questionnaire for our Associates to evaluate their health need and the needs of their customers. However, the True Health Assessment is not your typical questionnaire. This questionnaire uses minimal written text and instead provides graphical -- graphic intensive images to gather information. Customers respond to the images through an interactive drag-and-drop point-and-click process. The app is very intuitive and asks you about lifestyle, daily activities, eating habits, health goals and more. After you respond to the apps questions, it gives you a list of your top health risk areas, a customized lifestyle plan and a personalized nutrition program. It's intended to be a roadmap to health and wellness for our customers.

Read the rest of this transcript for free on seekingalpha.com