USANA Health Sciences Inc (USNA) 2008 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the USANA Health Sciences' Second Quarter Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (OPERATOR INSTRUCTIONS)

As a reminder, this conference is being recorded today, Wednesday, July 23rd of 2008.

At this time, I would like to turn our presentation over to our host of the conference, Riley Timmer. Please go ahead, sir.

Thanks, Andrew.

Good morning, everyone. We appreciate you joining us to review our final second quarter results. As a reminder, today's conference call is being broadcast live via webcast and can be accessed directly from our website at www.UsanaHealthSciences.com. A replay will be available on our website shortly following this call.

Before I turn the call over to Gil, I remind you that 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 our actual results to differ, perhaps materially, from the projected results -- results projected in those forward-looking statements. We caution you that these statements should be considered in conjunction with the disclosures, including the specific risk factors and financial data contained in our most recent filings with the SEC.

Also during this call, management will discuss non-GAAP information. We provide non-GAAP measures to assist investors in understanding our operating performance.

I'll now turn the call over to Gil Fuller, our Executive Vice President and CFO.

Thanks, Riley, and good morning. Welcome, everyone.

I'm pleased to be joined by Mark Wilson, our newly promoted Executive Vice President of North America Operations -- you will hear from him shortly; Dr. Tim Wood, Executive Vice President of Research and Development; and Jeff Yates, who is our Vice President of Finance and a new member of the management team.

Unfortunately, Dave Wentz and Fred Cooper were both unable to participate in this morning's call. They're not here today, as we moved the originally planned call back one week, and prior commitments had been made which could not be changed.

Before discussing our financial results, we'll make a brief statement about the recently terminated tender offer. As you know, the tender offer group withdrew their final offer on July15. Everything the Company is permitted to discuss at this point has previously been disclosed in the securities filings submitted by the Company and the tender group. As such, we will not discuss or respond to questions regarding the tender offer on this call. Rather, the focus of this call will be to update you on our results of operations and business for the recently completed quarter.

We completed the second quarter with what I believe were very solid numbers for USANA. First quarter of this year was met with a few unexpected challenges, and our business slowed. In the second quarter, however, net sales were stronger than what we originally expected and came in above our initial guidance expectations.

We reported net sales of $109.2 million, an increase of 1.5% compared with $107.5 million reported in the second quarter of 2007. The slight year-over-year increase in net sales for the second quarter of 2008 was primarily the result of effective promotional incentive programs offered to our associates during the quarter, as well as benefits from changes in foreign currency, which added about $4.7 million.

Looking at our sales results compared to the first quarter of 2008, we reported a solid increase of nearly $8 million. This sequential quarter growth was driven by an improvement in all but two of our 13 markets. Mark will talk about some of the drivers of this growth in his remarks.

Earnings per share from continuing operations in the second quarter of 2008 were $0.62, a decrease of about 6.1% compared with $0.66 per share in the second quarter of 2007. On a sequential quarter basis, however, earnings per share increased by about 35%.

Let's now go through our operating results and talk about the major line items on the second quarter statement of earnings.

Gross margins in the second quarter of 2008 increased by 90 basis points to 80%, compared to the second quarter of last year. This year-over-year improvement can be attributed to currency benefits on the sale of locally produced inventory in our international markets, as well as leveraged gain on fixed costs within cost of goods sold. These improvements were partially offset by increasing transportation costs. The balance of 2008, we expect gross margins to range between 79.5% and 80%.

Associate and incentive expense in the second quarter of 2008 was 41.8% of sales compared with 40.2% in the second quarter of last year. This increase of 160 basis points is due to a higher payout rate of base commission plan commissions -- base compensation plan commissions, as well as an increase in the amount paid for contests and promotions.

As was discussed in our call last quarter, we have some design enhancements to our compensation plan that will take up incentives as a percent of net sales in the future. We believe that associate incentives going forward will be between 42% and 42.5% of sales.

Selling, general, and administrative expenses increased relative to net sales to 23% during the second quarter of 2008, compared with 21% in the second quarter of the prior year. The year-over-year increase in SG&A was due primarily to the following factors -- an increase of $1.4 million in wage-related expenses; an increase of $680,000 related to the expansion of our facilities; increased spending of $410,000 on associate support activities; and legal and other professional fees of $790,000 related to the tender offer process. I would just note here on this point that these are non-recurring expenses, which accounted for a reduction in EPS of about $0.03 in the quarter. We expect that the third quarter will also have some expenses relating to the tender offer, though we expect that those amounts will be much smaller than they were in the second quarter.

On a consecutive quarter basis, SG&A expenses as a percent of sales decreased by 240 basis points. In absolute dollars, SG&A was lower by about $650,000. We made a stringent effort during the second quarter to reduce our corporate spending and cut back in areas that did not have a direct impact on driving top-line growth. We also know that our business model benefits from leverage when we grow sales. You will no doubt -- we will no doubt continue to focus on efforts on accelerating top-line growth.

Income taxes decreased to 36.2% of earnings from continuing operations before income taxes for the second quarter of 2008, compared with 37.9% for the same quarter in 2007. This decrease can primarily be attributed to an increase in tax benefits from the deduction for qualified production activities and a decrease in nondeductible expenses.

Let's now review the balance sheet.

Cash at the end of the second quarter was $9.98 million, compared with $12.9 million at the year-end 2007.

Capital expenditures for the quarter totaled about $5.5 million. CapEx this quarter was primarily related to the completion of our new facilities in Salt Lake City and efforts to finish our building project in Australia.

It is worthy to note that we have nearly completed these large expansion projects and expect that CapEx beginning in the third quarter will return to its normal run rate of approximately $2 million to $3 million per quarter.

During the second quarter, we made a significant pay-down on our revolving line of credit, decreasing the balance from $28 million to $9.8 million.

As noted in our press release yesterday, we are making a change to our guidance practice and will no longer be providing guidance on a quarter-by-quarter basis. We will, however, continue to provide annual guidance, and we will make updates to this periodically. We're making this change to assist management in taking a deeper focus on the longer-term prospects of our business.

As was announced this morning, we made some significant changes to our corporate structure. I speak for Dave when I say that we have one of the finest leadership teams in the industry.

Also announced in the press release is my planned retirement for September 1. I'm excited to take on a new role within the Company as a member of the Board and to help Jeff in his transition to Chief Financial Officer. I hope to add value to USANA for a number of years to come.

In conjunction with our corporate reorganization, the compensation committee increased base salaries and issued significant equity grants that vest over five years. These grants will replace annual grants that the committee would otherwise issue during that time. These increases in cash and equity compensation will reduce earnings per share for the last half of 2008 by about $0.12. The committee believes that doing this will increase shareholder value over the long term by retaining and motivating key management personnel.

I will now comment on our guidance.

Based on our current business trends, we believe that net sales for the full year 2008 will be between $435 million and $445 million. We anticipate that earnings per share for 2008 will be between $2.30 and $2.36.

I'll now turn the time over to Mark Wilson.

Good morning, everyone. We're pleased to see the results this quarter that came in stronger than we expected.

Sales in North America, while down year over year, were up on a consecutive quarter basis by 5.9%. Sales in the U.S. improved 4.1% from the first quarter, following three consecutive quarters of declines. We believe this is a positive trend and a sign in our U.S. business that it is beginning to regain its momentum.

Also adding to North America was an 8.9% year-over-year increase in Mexico, which hit a high watermark for sales in the second quarter.

We were also very pleased that our second largest market, Canada, increased by 5.1% compared with the first quarter. This is a market with strong associate leadership, and we are optimistic that this market can continue to see growth.

The recent feedback from our associate leaders in North America is that the noise created by the misinformation which appeared in the mass media during 2007 is beginning to subside. We believe this to be the case, as well, and we are seeing very positive trends in a number of associates who are advancing in the ranks. Rank advancements show that our associates -- our active associates are growing and building their home-based businesses.

As for our Asia-Pacific regions, they continued on their consistently strong pace for sales. Leading their growth in this region was Hong Kong, which was up 44.9% over the second quarter last year, and Malaysia, which increased 28.7% over the prior year's second quarter.

There are two main factors that we believe were key contributors to our improved overall sales results.

First of all, we returned to the tried-and-tested promotions that reward our associates who were actively growing their business. As was mentioned on our first quarter conference call, we launched a new global promotion on March 29 called the Pacesetter and Platinum Pacesetter promotion. Additionally, on April 26, we launched the Millionaire Challenge. This promotion gives associates the opportunity to win a portion of a $1 million pool, with two grand prizes of $0.25 million each. This promotion is set to expire just prior to our international convention, which kicks off August 27, where we will announce the winners and celebrate with them. We are -- we have been pleased with the results of these promotions and the momentum they have provided us in aiding to the top-line growth.

Secondly, we are insuring that our partnership with the field remains strong and becomes even stronger. In early May, we brought in to Salt Lake City our top 25 income earners to discuss the issues and concerns that they were faced with on a daily basis and where we can improve operationally. This meeting was very beneficial in understanding what motivates our associates and what we can do to better support them in meeting their goals. This strong partnership with our active associates is imperative to us making USANA a successful company, and we are providing them with the tools and resources they need to build a successful and residual home-based business.

And in the third quarter, we will be holding our International Convention here in Salt Lake City. We are very excited about this event as it is the showcase event, where we spend four days training, motivating, celebrating, and recognizing with our associates for their tireless efforts. This year, we have several exciting new announcements planned that we believe will have a meaningful, positive impact on the growth and the trajectory of our business. We keep these announcements a little bit of a surprise, so I can't tip my hat as to what's going to take place, but I will tell you that we are anxiously looking forward to this year's convention.

Our management team, employees, and associates remain committed and determined to growing this company. We are 100% committed to the mission of USANA, namely, providing the highest quality health products and financially rewarding opportunities.

With that, I'm going to turn the call back over to the operator to facilitate our question-and-answer session.

Thank you, sir. (OPERATOR INSTRUCTIONS)

Our first question will come from the line of Simeon Gutman with Goldman Sachs. Please go ahead.

First, a question for Mark. What can you do to ensure that the incentives being implemented are creating permanence in the business, and is there anything that you can point to today that says it's already happening?

A great question, Simeon. Yes, in fact, the incentives and the enhancements we're working on are geared towards long-term stability and growth. We've done a number of promotions that have been quick tests, so to speak, and what we've learned from those is we've been able to kind of ascertain which ones work and which ones maybe are short-term growth but really don't build to the long-term business. From those, we are able to develop some very exciting things that we'll come out with at convention. I can't really say too much about it, but we're looking forward to this, and we're anticipating some positive momentum. As you can see, in our second quarter, we're already starting to move that direction.

And how quickly do you think the U.S. portion, how can that business -- how quickly can that business resume growing on a year-over-year basis? And, I guess, aside from convention, what are some of the measures that you think might get you there?

Well, I think primarily, as we mentioned, by bringing in our top leaders and sitting down with them and discussing the areas where we needed to improve in recognition and enhancements to helping them grow the business, we think that this kind of noise out in the media is starting to subside, as we talked about.

The momentum can come back. It is a big wheel. Obviously, it's our biggest market, and there's a lot of maturity to that, but we are seeing some trends already in the rank advancements, as we mentioned, and some positive indications. I think convention will be a great indicator of kind of our future and leading us into the end of the third quarter and the fourth quarter.

Simeon, this is Gil. Let me just add a little bit more color to that. One of the things to keep in mind -- and we did have, of course, consecutive quarter growth in the U.S. in all of our markets except our two smallest -- but the comps versus -- you know, second quarter this year versus last year are very tough.

We had a promotion a year ago in the second quarter of 2007 that was unusually successful, as Mark alluded to. It was one of those that had kind of a short term -- a relatively short term but a large bang, and we've taken what we've learned from that experience and are building it into the things that are going to be announced here at convention. So we think it's turned, and we're looking forward to the things that will be announced.

Okay. And then, second, with respect to the compensation changes, what was the more important driver behind them? I guess if you have to rank them between retention and motivation, was there something more important? I know the loss of an executive in the Asia-Pacific region; was there something on the retention side that this was motivated for?

You're talking now executive compensation changes?

Yes, I mean or the $0.12 additional for the rest of the year.

Yes, this was a matter that the comp committee had been working on for some time. If you've looked at our [proximate trails] and seeing the base salaries that are disclosed there, I think you'd quickly see that our salaries, on average -- and generally, we're kind of on the first quartile or even in some cases below first quartile kind of compensation -- and so this move was made to update that and get us into competitive compensation.

I think one of the things that we found when we lost Bradford is that because of USANA's success, there were frequent calls coming in from headhunters and others, and I'm not sure exactly what caused Bradford to go. But, clearly, there were some adjustments that were appropriate to be made, and the comp committee studied this out and went ahead and made these changes.

And of the increased compensation, what percentage is cash versus equity?

Out of the $0.12, it's about $0.03 cash compensation, about $0.09 equity.

Okay. And then of that equity, I'm guessing a chunk of it is options. Do you know -- I mean are there strike prices attached to those that you can talk --

It's mostly SARs --

Okay.

-- and the comp committee met on -- I believe this decision was made on Monday, and that price, strike price, was 26.06, I believe. And keep in mind, Simeon, these are five-year grants.

Right.

So that rather than doing annual grants, the committee felt like larger one-time grants that would vest over five years would be the way to keep and attract and motivate and so forth the management team.

Okay. And then, lastly, how does Dave's role change with the title change? I don't know, more strategic? Less day to day?

Yes, he will clearly -- and Mark will have some color on this, too -- he'll clearly focus on the more strategic issues, and along with our founder and chairman, he'll take up kind of the visionary flag-waving, if I could say it that way. And the day to day, the managing the field and so forth will clearly drop down more directly on Fred and Mark and others --

[Debra] and others?

-- [Debra Woo] and others. And so I think this is a good thing.

Okay, thanks.

Thank you. Our next question will come from the line of Tim Ramey with D.A. Davidson. Please go ahead.

Good morning. Gil, as a follow-on there, you're a young man. Why step away from this battle just now when it starts to get interesting?

Well, I'm not exactly stepping away completely, Tim. At 67.5, you hate to overstay your welcome, also, you know. But certainly, USANA's such a great company, and I'm so pleased that the -- Dr. Wentz had asked me to join the board upon my retirement and also asked if I would stick around for a while as a strategist, but I think they'd like to see me stay on the board for some time. So I don't look at it as stepping away from the battle. I look at it as an opportunity to continue to have some input. I can help our new CFO come September 1, Jeff Yates, as he transitions into the role, and so just a little different angle for me, but I'll be here taking the tough questions from you, Tim.

Well, I hope I can speak for the Street in saying thanks for all your terrific work, and you have been an effective and outstanding CFO for the Company.

Thank you, Tim.

Thanks.

Thank you. Our next question will come from the line of Doug Lane with Jefferies and Company. Please go ahead.

Yes, hi. Good morning, everybody.

Morning, Doug.

Morning, Doug.

Gil, can you talk about stock buyback? Was there any done during the quarter? And now with your debt down, I guess, back really to a net cash balance sheet, what's your outlook for use of free cash going forward?

Well, there are a number of things that are coming together here that I think will be attractive to be active in the buyback program.

First of all, we did not make any purchases during the quarter with the -- actually, we haven't done any this year, but with the TO out there and a number of issues going on, we were not able to do any buybacks even though at times, of course, we felt the stock was way undervalued. It's still undervalued, in our view. There's an authorization outstanding for about $50 million that's available for us. Our cash flows seem to be accelerating now once again. We have the major expansion projects now virtually behind us. The third quarter will still have some finish-up work on our two big ones. So I think I'd be surprised if the board didn't direct us to be quite active out there.

Okay. Makes sense. Any contemplation of a dividend?

You know, the dividend question comes up from time to time, and the board considers it from time to time. And one of the things that we hear about, well, you can't buy back stock forever. Soon your float becomes such that it would be difficult to attract the kind of investors that we'd like to attract. So it's something (that) gets talked about all the time, Doug, and I guess I would just say at this point there's no decision to do it. It doesn't mean there wouldn't be in the future, but at this point, no decision at this point. We've got that buyback authorization out there. But it certainly is something that's reviewed regularly by the board.

Okay. And shifting gears to SG&A, you mentioned it was down sequentially on an absolute dollar basis, and given the cuts that you've made and where you are today, is that trend good for the next couple of quarters, as well?

You know, we, of course, with these compensation changes that are effective beginning here in the third quarter that we just talked about, you're going to see some pressure there. We hope to relieve that pressure by seeing the top line take off on us with the things that are going to be announced and happening at the convention.

Okay.

So we're going to look at it as basically steady with some increases related to the organizational changes that were made, and general increases, I think most people are -- most companies are facing, but we certainly want to manage that as closely as we can.

As you know, Doug, the leverage in our model is just so outstanding. As we get the top line moving, we're not overly concerned about SG&A, but we move quickly if we need to, as you saw going from the first quarter to the second quarter.

And on the top line, you mentioned new initiatives coming at convention. Have you talked about any additional geographies to move into over the next year, maybe the rest of '08 or 2009?

We have talked about some new geographies, and I think it's been a while since we've opened a new market. Those things are always under discussion, and that's certainly a possibility. The timing of that, wouldn't want to say, I can't say, but we're certainly looking at new markets on a regular basis, and we have some that we would like to open. So wouldn't be surprised to see that come along before too terribly long. Timing is just a question. The process, we're getting products registered. Since we have such high quality -- what I characterize, I guess, generally in statement is potent products, this process does take some time, so we don't want to preannounce anything until we make sure all of our ducks are in a row.

Well, can we assume then that --

(Inaudible) that Mark or Tim?

I think it was well stated.

Can we assume then that this process is underway in some form or fashion in markets other than China?

Yes, we can.

Okay. Fair enough. Thanks.

Thank you. Our next question comes from the line of Mimi Noel with Sidoti and Company. Please go ahead.

Good morning.

Morning, Mimi.

Gil, if you would first address, and I dialed in late -- sorry if I missed it -- but cash from operations in the quarter?

Yes, we had EBITDA of about $17.5 million, about 16% of sales, a nice gain on a sequential quarter basis. We paid down our line of credit by, gee, about -- we went to about $20 million nearly.

(Inaudible).

20 -- so, let's see, 28 million down to 9 million, so, yes. So we did that. We saw CapEx grow at about $5.5 million, and we saw a little bit of increase in inventory as we prepare for convention, but we had a great quarter cash flow-wise, generating about -- in terms of cash from operations, 16.1 million --

Okay.

-- and EBITDA of 17.5. So, anyway, good strong quarter.

Okay, okay. And then, secondly, and again, I apologize if I missed this detail, in considering the accounting treatment of the newly added compensation, I mean if you're at a 12% drag in the second half of the year, on an annualized basis, are you looking at $0.24?

That'd be about the right way to look at it. Now, don't forget that out of that $0.12 in the last half of the year, 9 of that was equity, and it's non-cash.

Okay.

Do you remember --

But that would still mean that, at least for the next five years as you amortize it, that's going to be an ongoing expense?

Be ongoing, but as I said earlier, I think that we fully expect that our top-line growth will take care of this because operating leverage would -- yes, but it is a noncash item with regards to the equity piece of the $0.12 or the 20 (inaudible - technical difficulty) --

Sure.

-- if you want to look at an annualized basis.

Okay. And what --

And, Mimi, just also, in case you missed it, this was a -- these were larger one-time grants so that there won't be annual grants going forward as a general rule. Of course, if we add a new team member or something, there could be some grants. But as a general rule, it's not likely to be annual grants. That's the concept now. Things could change, of course.

Okay. And in what positions does this change in compensation generally address?

It addressed the senior -- primarily the senior management level positions, the highest level, and with some trickle-down to the next level, although we have on the SARs -- we call them equity compensation, the stock appreciation rights -- that went down to, I'd characterize, maybe four levels to what I'd call the executive director. Clearly, the senior men are president, executive vice presidents, vice presidents, and executive directors.

Okay, okay. And then the last question I had, and maybe the response has to be shared by everybody, but given Dr. Wentz's letter to the Company of, I guess, a month or two ago now that started off -- initiated the tender offer, there seems to be not a culture of cooperation with Wall Street. And to that extent, what kind of -- what do you plan to do to rebuild relationships that have perhaps been stressed by what's transpired in the last month, month-and-a-half?

Well, you've known us for a while, Mimi, and you know that we're pretty open in our communications. We plan to continue to communicate with the Street. You have to remember Dr. Wentz is a scientist. That's what he is, his heart and soul.

Okay.

And he appreciates Wall Street, but it's not something he really likes to interact with. It's just not his thing. He's a scientist. But the rest of us here and the management team, we'd certainly want to be available --

Okay.

-- for phone calls and discussions and presentations, and we plan to be communicating.

Okay. Thank you.

Come on out to convention.

Yes. Well, Mimi has been.

I do every year.

Yes, she's -- you'll like this one.

All right. Thank you for the invitation.

Thank you. We'll move to the next question from the line of Rommel Dionisio with Wedbush Morgan. Please go ahead.

Hi. Good morning, everyone. In your Q1 pre-announcement, you talked about the impact of a sluggish economy on your U.S. business, and I wonder if you could just give us an update (inaudible) economic commissions have probably only worsened since then. (Inaudible) consumer spending's down, but are you seeing a pick-up in recruiting because of the tough economy, as well?

Yes, we're seeing a positive trend, as we talked about. I think when you first start into the recession, there's a little bit of hesitancy and people pull back. We're starting to see people come forward a little more, looking for an opportunity in a home-based business. And traditionally, our industry thrives during this type of a period, and we're very optimistic as to what we can accomplish with some of the things we have planned to take advantage of this.

Okay. And let me just add to Tim's comments the same. Gil, it's been a real pleasure to work with you all these years, and I think we're really glad to hear that you'll continue to do so going forward. Thanks.

Yes, thank you, Rommel.

Thank you. Our next question will come from the line of [Dietrich Bosch] from Canaccord Adams. Please go ahead.

Actually, it's [Dietrich Bosch], and just a -- most of my questions have --

Good morning, Dietrich, and we know that.

Okay. Thank you, Gil, and congratulations, by the way.

I'm just trying to get a sense, some more color, on the U.S. market. It would be helpful if you could give us some color on how the performance progressed during the quarter. Did you see any type of sequential uptick month to month, or perhaps was there an acceleration at the tail-end?

You know, I'll jump in first and then let Gil comment on this or Riley. But certainly, we did see an uptick from first quarter. As we progressed through second quarter, we've seen a lot of energy. As I mentioned, the rank advancements, which is the individual is actually increasing their businesses, especially in our leadership roles, have made some substantial strides there. So we're seeing a positive growth. These contests that we've been doing have been very effective in getting individuals back out and working. And I think, as we mentioned, the noise that was out there, folks are finally working through this and learning how to do their business around it. And, actually, as it's subsiding, they're finding that they can get out and really start building their business again. So we're seeing some very positive things. We saw some strong meetings towards the end of second quarter and some activities.

Just a little bit of color to that, Dietrich, is that I think Mark, he mentioned you had a contest, a Platinum Pacesetter contest, and that was fairly -- was that mid-quarter or early quarter? I've kind of forgotten now.

Early.

Early quarter. And that got us off to a good start. And then followed that on with a large promotion where people (who) achieved certain things could participate in a large bonus pool, and that seemed to carry it on. And so we've been pleased. It started good, and it stayed steady and strong.

I think it also helped with the communication. This is a relationship business, and working with our top leaders, bringing them in, was a great way for us to see them face to face across the table for several days and address any of their concerns and issues and make sure that we're moving forward, making sure they're excited about the opportunity and everything that's happening. And so while we've had a few distractions and I think people are back on track and really looking forward, we're seeing some very positive trends.

Okay, thanks. That's helpful. And I know you don't want to tip your hat too much about the convention, but can we expect any significant new products or new selling tools?

Well, I tell you, you just ought to come out and see, and you'll --

Tim, can you bait him a little bit? Now, be careful, Tim. We have Dr. Wood here, Dietrich.

I don't think we've ever had a convention where we didn't launch a new product. So come to the convention and find out for yourself firsthand.

I would say that they're -- just one tip on this -- you're going to see business and product, and that's something you're going to see very strong showing at convention.

Yes, sometimes our conventions have been focused either maybe perhaps more on the products or perhaps more on business, and this, we think, is going to be exciting on -- it's going to be a strong one-two punch is our belief.

Sounds good. Thanks, guys.

Thank you. Management, at this time, we have no additional questions in the queue, and I'll turn the conference back to you at this time for any closing remarks.

Well, thank you for your questions. We continue to remain confident in the future outlook of USANA and the investment opportunity we provide.

If you do have any remaining questions, please feel free to contact us at Investor.Relations@US.USANA.com, or call Riley Timmer, Executive Director of Finance, at 801-954-7922.

We appreciate your interest in USANA, and thank you again for joining us this morning on the call.

Thank you, management.

Ladies and gentlemen, at this time, we will conclude today's teleconference. We do thank you for your participation on the program. At this time, you may now disconnect, and thank you for using ACT Teleconferencing. Please have a wonderful day.