Good day, ladies and gentlemen, and welcome to USANA Health Sciences' Q4 conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Patrique Richards, Executive Director of Investor Relations and Business Development. Please go ahead. Thank you. Good morning. We appreciate you joining us to review our Q4 and full year 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 2022, as well as uncertainty related to the magnitude, scope, and duration of the impact of the COVID-19 pandemic to our business, 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 this morning by our CEO and Chairman of the Board, Kevin Guest, our President, Jim Brown, our Chief Financial Officer, Doug Hekking, as well as the other members of our executive team. Yesterday, after the market closed, we announced our Q4 results and posted our management commentary document on the company's website. We'll now hear brief remarks from Kevin before opening the call for questions. Thank you, Pat, and good morning, everyone. We appreciate you joining us to review our Q4 and full year results, as well as our initial outlook for 2022. 2021 marked a year of solid performance in what remains a dynamic operating environment. For the full year, we grew net sales by 5%. However, as the COVID-19 pandemic has evolved over the last two-plus years, we've learned that its impact to our business is not linear. This is evident in our Q4 results, where lockdowns and disruptions to our operating environment pressured our financial performance. We continue to manage the business with sustainable long-term growth in mind. In 2021, we made meaningful progress on several strategic initiatives. Technology investment remains a focal point, and last year, we made several improvements and enhancements to our digital tool offerings, including rollout of a product recommendation tool, introducing customized and branded website creation tools, and releasing the first version of our native shopping app in China. These enhancements provide our customers with an excellent shopping experience, and we believe this will help drive customer acquisition. Additionally, we maintain an unwavering focus on product innovation, and our scientists and product specialists made progress on our long-term product development roadmap. We've also transitioned more manufacturing to our foods facility in Salt Lake City, and we expect to see product and financial benefits in the coming years as we focus on leveraging our investment in this facility. As we embark on USANA's thirtieth anniversary this year, we will continue to strategically invest in the business, with investments focused on our digital transformation initiatives, product innovation, growing our business in China, and pursuing business development opportunities, all with the objective of growing our active customer counts. We are excited to resume hosting in-person events this year in markets where it is safe and where we are permitted to do so. We are currently planning to celebrate USANA's thirtieth anniversary by hosting a hybrid virtual in-person event in Salt Lake City, and we're also planning to host an in-person event in China in the back half of the year. We continue to believe that in-person events are both important and additive to driving excitement and momentum within our sales force. Additionally, we plan to run short-term sales programs across several of our markets throughout the year to suit the needs of individual markets. Before turning the call over for questions, I'd like to briefly discuss our fiscal 2022 outlook. We are cautiously optimistic on a return to normalcy, as some of our markets currently remain severely impacted by COVID-related lockdowns, while other markets are seeing signs of reopening. As such, our net sales and diluted earnings per share guidance carry a wider than normal range. We anticipate that net sales will accelerate throughout the year. We also expect some pressure on our operating margin relative to historical performance, which reflects inflationary pressures on key areas of our business, strategic investments in our digital infrastructure, and increased travel and event-related costs. In closing, we are confident our strategies will enable us to become even more positioned to drive future growth. With that, I'll now ask the operator to please open the line for questions. Thank you. Ladies and gentlemen, if you'd like to ask a question, you may do so by pressing star one on your telephone keypad. Please make sure the mute function on your phone is turned off so the signal can be read by our equipment. Star one for questions. We'll pause a moment to assemble the phone queue. We'll take our first question from Stephanie Wissink with Jefferies. Please go ahead. Thank you. Good day, everyone. We have a few questions, if we could. The first is just on your remarks on the call today regarding the sales acceleration through the year. It's a two-part question. One, if you can just give us some sense of magnitude, kind of the starting point to the ending point as you've contemplated in your guidance, and then just remind us if there are any unusual comparison effects to the prior years, recognizing 2021 was a somewhat unusual year as the year played out. Yeah. Stephanie, this is Doug, and so I appreciate your question. The ramp up during the year has to do with some of the holiday period you see, right now we're in Chinese New Year. It's tough to get a whole lot done during that period of time. Then the timing of some of these test programs and promotional activity that we have planned throughout the year. As I'm sure you're aware, what we did in 2020 was in the Q3, pretty heavy promotional period with every market happening at the same time. That happened in the Q2 of 2021. That'll be a little bit more spread out and kind of ramp with expected significance throughout the year, really kind of culminate in the Q3. That is, you know, kind of hopefully kind of captures both those things is that we'll see a build and I'd imagine we'll see the Q1, you know, at or modestly above sequentially and then kind of build from there. Okay. That's really helpful, Doug. My second question is related to your comments on cost inputs. If you can just give us a sense of your cost basket, what's the most heavily identified in the basket, where you're seeing the most pressure, and if you have or do you plan to take price and at what magnitude to offset some of the pressure? Yeah, I mean, relative to the product itself, and you really have all the inputs that are flowing in there. You have materials far and away are the biggest cost pressure right now. There's a little bit of a risk profile there as we've got bids from our suppliers, but we don't even have a secured price throughout the year, so there's a little bit unknown, and I think they're just kind of dealing with their uncertainty as well, and so we're seeing some definitive pressure there. In markets outside mainland China, we're seeing somewhere in that 5%-7% range is pressure on material costs. Wages, I think definitively we've seen wages across the board, not only in the production environment, but throughout the organization just with this environment we've kind of come into, and it's not just domestic. We're seeing it in the other markets as well. Some of the overhead and some of the transportation costs continue to go back and give pressure. We're hoping to start seeing some of the transportation costs and just the magnitude that we've been paying above historic levels start abating in the back half of the year. I think some of these other things we see is a little bit more persistent throughout the year. Okay. Have you taken price yet, or do you intend to? If you can give us a sense of, you know, is 5%-7% kind of a blended average cost increase, or are you seeing costing higher than that and you're gonna price into that higher level of cost? Yeah. We've spent a lot of time with this. We've talked with our sales leadership, our markets, kind of direction from Kevin and Jim, and really trying to take a pretty thoughtful, pragmatic approach. Yes, we will have a price adjustment, but it's modest. As we expect some of these things to start abating, then we'll adjust accordingly. That'll typically happen end of Q1, first to Q2, and it really varies by market, but it should be relatively modest in price adjustment. I think we're trying to balance a bunch of things there, but. Okay. Last question is just on some of the tests that you've been running to activate your associate network, and I think you mentioned too, to drive customer count. Can you give us just some sense of early learnings from those tests? Anything that you found to be successful that you expect to deploy more widely in 2022? Thank you. Yeah, Stephanie, we're fortunate to have David Mulham, who heads up our sales around the world with the exception of mainland China, and then Brent Neidig in here. Maybe I'll let those gentlemen talk on that since they're present today. It's probably you can hear it right from the horse's mouth. Good morning. We've run a number of tests in the back end of 2021, and I think what we've seen as a result of that is a higher level of engagement, not just through the rewards process, but certainly from the experiences that we've been able and the solutions that we've been able to deliver through those programs. Definitely a stickier process with our customers and a longer tail in terms of their purchasing over a series of cycles. Brent, from a time perspective, anything else to? Yeah. I'll just speak briefly to the short term sales incentives that we've ran over the last couple of years. We've certainly had several learnings from both of those events. We've really heavily analyzed the types of individuals that are being attracted by those incentives, and what their tail looks like once they come into the business. So we have made some adjustments for forward-looking promotions to accommodate the types of individuals that those incentives are attracting. We hope to have, you know, continual improvements to those results as we move forward. Yeah. I think Stephanie, from our perspective, and we've been pretty open about this. I think you saw that in the program we ran in 2020. We had a little bit of catalyst to the business. I think particularly just kind of given the fact we're just getting into the COVID-19 environment there. You know, what we probably didn't fully appreciate at the time is we had some companion efforts going on at the same time that were pretty additive to that. Those were not present in what we did in 2021. The sales team have designed and architected what we're gonna be doing this year to have more similarities to 2020 and a few more enhancements from what we've learned. Okay, that's really helpful. If I could toss one more in. Just noticing that China sales on a quarter-over-quarter basis or sequential basis actually did show some improvement. Do you attribute that to some of these companion driven coincident driving promotions, or is that something that maybe is more structural and fundamental, and we've kind of seen the bottom of that market in terms of performance? Yes, Stephanie, this is Brent. It's an interesting observation. We're very optimistic about the signs that we're seeing coming out of China. I'm very optimistic for 2022. I think to your question, though, it's difficult to know. I think that there are some structural improvements that we've made over the last couple of years, and we're starting to see the fruits of those labors. Our digital enhancements and improvements that we're making to the shopping experience have certainly improved things. We're also very excited about new leadership that's come on board with new ideas and they have the ability to really help turn around momentum that's been somewhat lackluster over the last several years. I think all of those things compiled together quite optimistic about the direction we're gonna be going in China. Yeah. Stephanie, this is Doug. I'd probably add on. In our Q4 results, you know, we had a little softer than what we expected just because we had to push some of these events out that we had planned in the market. Our national sales meeting, which we had deferred, we had to cancel it for the period. Other product related promotions, you know, in reference to that event, got pushed down and had limited impact because of that. I think Brent's comments are appropriate, but I think even in light of, you know, we had to go back and push some sales things out and had to go back and postpone it, just kind of adapting to the environment. That's very helpful. Thank you. Encouraging as well. I'll jump back in queue. Thanks, everyone. Thank you, Stephanie. As a reminder, star one for questions. We'll go next to Doug Lane with Lane Research. Please go ahead. Yes. Hi, good morning, everybody. On the cost front, you know, I get the cost inflation in shipping and materials and what have you, but can you talk a little bit more about the associate incentives? They were up 110 basis points in the quarter. Is that gonna be a pressure point next year or this year as well? No, I think it's in check. I think, Doug, in all honesty, I think in comparison, yes, on a year-over-year basis, that's the math. I think the Q4 of last year was lower than what we typically see. I think the level that we had, you know, as far as what we're reporting here is, I think, roughly in line kinda with what you'll see for the year, in 2021, you'll see in 2022. I think it just happened that last year we were just a little bit lighter as we scrambled and a bunch of the events and travel and some of this other stuff got postponed. We had a little bit of pickup in the Q4 last year that we didn't have this year. Okay, fair enough. Can we talk a little bit more about your convention this year? It's the 30th anniversary. It sounds like it's gonna be perhaps a little bit more of an event than typically in the past. I know you mentioned it's a hybrid event, but that'll include an in-person component, obviously. Is there going to be any kind of special promotions run during or ahead of that? Any kind of special new product activity we should look for? Just any kind of more color on what you think the impact of the convention will be this year. Well, Doug, this is Kevin. You know, we rely heavily on our events, as it relates to momentum in the business, and we're excited at the prospect of being able to get together. Being our thirtieth anniversary also is an opportunity for us to generate excitement around the world. We are going to plan for the worst and hope for the best, meaning we're going to do a simultaneous virtual event while we're doing a live event. We've never really seen anything like this before. We're excited about the technology we're gonna use and the interaction to make it as personal of an event globally. We expect, you know, we're going to have several thousand people here in Salt Lake City in attendance, but we expect tens of thousands of people globally to participate virtually in this event. In relation to your question about promotions, we will have some promotions that are tied to our 30th anniversary, tied to some new products that we've been wanting and hoping and waiting to launch that are in the queue. It's not going to be an overwhelming product launch and/or sales promotion period as it relates directly to the convention because we are trying to have that happen throughout the year, not just in one event. Also thinking about the fact that there is a possibility that the event could be limited just because of unexpected COVID issues. We're not relying on that event for certain product launches and/or promotions. Okay, that makes sense. Thanks, Kevin. Just one last thing, with all these lockdowns and what have you. You know, you mentioned in your commentary that the Philippines was down 52% in local currency, which is a big number. Does that imply that there could be some significant bounce backs as we come out of this COVID, or do you think that's kind of a permanent reset of the sales level there? I think we're gonna have to build from there. It's not gonna go back and bounce back overnight. You have a market that's very densely populated, and in many cases, this market was doing a great deal of in-person transaction. I mean, probably one of the higher of all our markets of doing things in office. That shut off, you know, essentially overnight. And that environment has really gone through a great deal. Yeah, I think we'll make progress. The team is, I can tell you, is working hard day and night, as committed as ever, but it's gonna take some time. I think they're anticipating to make some progress this year, but it's not jumping right back to where it was in 2020. Okay, fair enough. Thank you. Thanks, Doug. Star one for questions. We'll pause a moment to assemble the queue. It appears we have no further questions at this time. I'd like to turn it back to your presenters for any additional or closing remarks. Thank you for your questions and for your participation on today's conference call. If you have any remaining questions, please feel free to contact investor relations at 801-954-7210. Thank you. Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.