Greetings and welcome to the USANA Health Sciences conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Andrew Masuda. Thank you, and you may begin. Thank you, and good afternoon, everyone. We appreciate you joining us to review our acquisition of Hiya Health. 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 Hiya Health's business, management, management team, products, operations, strategies, financial results, and projections for 2025. 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 several members of the USANA management team. Present on today's call are Jim Brown, President and CEO, Doug Hekking, Chief Financial Officer, Walter Noot, Chief Operating Officer, Josh Foukas, Chief Legal Officer, and Brent Neidig, Chief Commercial Officer. Also joining us this afternoon from Hiya are Darren Litt, Co-Founder and CEO, and Adam Gilman, Co-Founder, President, and Chief Operating Officer. Today, we announced USANA's acquisition of Hiya Health and posted a supplemental investor presentation on USANA's IR website. We'll take you through that presentation during our remarks today. We'll now hear from Jim and other executives as they walk us through the presentation before opening the call for questions. Thank you, Andrew, and good afternoon, everyone. Today is a landmark day for USANA as we announce the acquisition of Hiya Health, a disruptive, high-growth, leading direct-to-consumer brand specializing in high-quality children's health and wellness products. This strategic move positions USANA to become an immediate leader in the expanding children's health and wellness market while focusing on and investing in key initiatives that will drive long-term growth in our core direct sales business. Importantly, Darren and Adam will continue in their current role and lead Hiya through its next chapter of growth. Hiya is a natural fit for USANA for several reasons. First, since our inception, USANA's vision has been to create the healthiest family on earth. Hiya fits perfectly into the vision by providing best-in-class products for the fast-growing children's nutrition and wellness categories. We believe this fills a gap in the demographics we currently serve and fulfills the USANA vision by providing nutrients to children during their most crucial years of development. This acquisition also strengthens USANA's financial profile. Hiya is a young but high-growth company that offers a compelling subscription model with attractive margins, profitability, and strong cash flow generation. Hiya's domestic profitability diversifies USANA's geographic sales mix and is anticipated to lower USANA's consolidated effective tax rate and create a more tax-efficient structure. Furthermore, Hiya has more than 200,000 customers in the direct-to-consumer channel, with plans to expand into other online marketplaces and select retail partners. These additional sales channels will allow USANA to reach a broader audience of health-conscious consumers, increase the enterprise's overall customer base, and ultimately accelerate the company's ability to deliver long-term growth. Hiya's net sales increased 50% during the last 12-month period ending September 30th of 2024, over sales in the same last 12-month period during fiscal year 2023. Hiya anticipates net sales growth approaching 30% in 2025. In summary, Hiya is a growing, profitable direct-to-consumer brand with an experienced management team and a compelling subscription-based model that will deliver what we believe is positioned to deliver long-term sustainable growth. The acquisition provides several key benefits to USANA, which we will discuss as we move through today's presentation. At its core, the acquisition of Hiya spotlights USANA's commitment to accelerate and magnify our vision of being the healthiest family on earth. USANA has built its reputation by developing and producing the highest-quality, science-backed vitamins, supplements, nutrition, and personal care products. Hiya has taken a similar approach to the children's health and wellness market by creating better-for-you products. Hiya's 200,000+ customers immediately increased our customer base by more than 40%. Additionally, we believe that the larger customer base will be an important source of consumer insights that will enhance our ability to discover and develop innovative new products for both the USANA and Hiya brands, giving us a competitive advantage. Through the Hiya brand, we are in a leadership position within the emerging children's wellness category. This is an important acquisition that adds strength and diversity to an already strong product portfolio and accelerates our ability to leverage the strengths of both companies. USANA's Chief Operating Officer, Walter Noot, oversees our M&A department. I'll now turn the time over to him to introduce the Hiya management team. Thanks, Jim. Having a strong management team, that was a major consideration for us during this acquisition, and we expect the Hiya team to be able to continue to run as a decentralized unit for us. Darren and Adam, they've delivered amazing sales over the last few years, and we have full confidence that they'll continue to grow Hiya the way they have. We plan to work actively with that team for the next several years to identify synergies to grow the overall consolidated business. These things include USANA's manufacturing capabilities, our product and research and development, international expansion, customer behavior and data mining, and marketing expertise. The Hiya management team will continue focusing and executing on its growth strategy, which Darren and Adam will discuss in more detail. With that, I'll just introduce Darren and Adam and ask them to provide background details on the company. This includes Hiya's business model and growth strategy, as well as some industry trends. Thank you, Walter. I appreciate you inviting me to today's call and allowing me to share our vision for Hiya. Today is an exciting chapter for Hiya, and we are thrilled to join the USANA family. As parents ourselves, my co-founder Adam and I felt deeply that when it came to children's nutrition, many products were lacking high-quality ingredients and often seemed to be more candy than healthy. So we set out on a mission to develop a clean-label children's brand focused on honest ingredients and ingredient transparency. We consulted with a variety of experts, including pediatricians, nutritionists, scientists, and of course, parents and kids, to formulate a high-quality children's vitamin with no added sugar, no synthetic dyes, and no gummy additives. At the same time, we also pioneered the idea of a kid's experience, which is an engaging product experience that helps teach kids that being healthy does not have to be boring. To be specific, when a parent orders from Hiya, their first order includes a refillable bottle that kids personalize with stickers we send. Then every month thereafter, we send monthly games to help keep kids engaged. The result is kids get excited for Hiya, and parents get excited about Hiya's high-quality ingredients. Overall, our clean-label products, combined with this engaging product experience, have been key success factors for us. Notably, we've been able to capitalize on a movement that's been around for a while. As you can see here, consumer preferences for better-for-you products, they continue to evolve and remain top of mind. The diagram on the right, you'll see the recent proliferation of better-for-you brands across the categories of food and beverage, hygiene, and personal care. As you can see, Hiya is capitalizing on the intersection of better-for-you brands with children's health and wellness. To provide some additional context on the evolution of children's health, years ago, we saw the first generation of children's vitamins. These were chewable tablets that often included unnecessary ingredients such as artificial sweeteners, synthetic dyes, and unnecessary fillers. Then we saw a demographic shift towards gummy vitamins. Yet many of these gummies, they were full of sugar. They included additives that could contribute to cavities. And unfortunately, they helped teach kids that vitamins should resemble candy. Today, we see Hiya as the next generation of children's health. Our products are expertly formulated with essential nutrients kids need. At the same time, they're free from added sugar, gummy fillers, and synthetic dyes. Next, we highlight Hiya's diversified marketing strategy. It's driven in large part by marketing initiatives that amplify our core value propositions. As a company, we look closely at a variety of data points to make data-driven decisions about which potential families are most likely to buy our products. And we buy ads across a number of marketing platforms, including Meta, Google, podcasts, and more, all to ensure our advertising dollars are placed in a way to maximize return on ad spend. Currently, our business model, it's 100% subscription-based, meaning 100% of customers have at least one monthly subscription offered exclusively at hiyahealth.com. This website serves as our brand's digital storefront, where first-time customers discover the brand and subscribers return to explore other products. This subscription model provides steady revenue, builds customer loyalty, creates cost efficiencies, and provides added operational benefits, making it a win-win for both Hiya and for our families. Although Hiya is relatively young, these past few years, we've experienced robust growth. Our key drivers of success have been a combination of a new, better-for-you product that has truly resonated with parents across the country, an attractive subscription model, and an effective marketing strategy. As we end the year, we expect to be well over $100 million in net revenue and over $20 million in Adjusted EBITDA. I speak for the team when I say that we are extremely proud of the success we've had in serving more than 200,000 customers. We believe this is only the beginning. And with our new partnership with USANA, we look forward to having an impact on more children and more families across the U.S. and around the world. With that in mind, I'd like to pass this over to my co-founder, Adam, who's going to share some of our upcoming growth initiatives. Thank you, Darren. I'd like to share a high-level overview of our growth initiatives. Hiya has a vision to become a leading, better-for-you children's brand. First, our product innovation framework is designed to fuel future growth by broadening market penetration in existing categories, developing new product categories, and exploring untapped opportunities, all supported by our strong quality and design principles. We continually survey and talk to our customers to understand their evolving needs and preferences. For example, we recently launched our daily greens and superfoods. This was based on customer feedback, and it's quickly become one of our best-selling products. Hiya plans to launch several new products over the next few years, thereby expanding its product portfolio across key need states and forms. Additionally, we will continue to invest in brand-building initiatives that will strengthen our direct-to-consumer model. We see many untapped customer acquisition and retention tools that will further optimize our D2C model to drive improved sales. Furthermore, we are working to expand brand partnerships and are currently in collaboration with select leading children's entertainment brands to help broaden and enhance our kids' experience offering. Second, we also see an untapped opportunity for Hiya to expand in-store and via other online marketplaces where families frequently shop. The children's vitamin set at retail is ripe for disruption, and retailers are desperately looking for new brands. So we see a unique opportunity for Hiya to bring an exciting new offering to the assortment that drives store traffic and category growth. Expanding into new sales channels will also allow Hiya access to a broader base of customers that is actively shopping for their family's wellness products in-store versus online. Third, we see significant potential for marketing expansion internationally. Doing so is a longer-term initiative, yet we are glad to have a partner like USANA, which can lend us their expertise in international expansion and help us efficiently navigate and execute on our plans to take Hiya to the world. Overall, we are confident and excited that the successful execution of our strategies will enable Hiya to further strengthen its position and solidify our place as a leading brand in the children's health and wellness market. With this acquisition, we are positioned to hit the ground running in the new year and look forward to delivering strong results in 2025. Thanks, Adam. After hearing Darren and Adam, I hope you can see how excited we are and how confident we are in this business and why we did this acquisition. In addition to what they've just shared, independent market data shows that the children's health and wellness category is forecasted to grow substantially. Children's health and wellness is an attractive category, and the acquisition of Hiya immediately puts us in an excellent strategic position at the perfect time. Hiya's better-for-you products, along with Hiya's kids' experience, is proving to be the winning combination for this category. We're excited about our new partnership as we attract more health-conscious consumers around the world. Thanks, Walter, Darren, and Adam. With all of this in mind, I want to be clear that USANA remains committed to its core direct sales business. We will continue to focus on, invest in, and grow this side of the business with all of our effort and focus that has made USANA successful for over 30-plus years. I'm also encouraged by the addition of Hiya's business that diversifies our revenue stream and sales channels, as profitability creates new possibilities for synergies and product innovation. I'll now ask Doug Hekking, USANA's Chief Financial Officer, to walk us through an overview of the transaction structure. Thanks, Jim, and good afternoon. As noted in the material provided, USANA acquired a 78.8% ownership stake in Hiya for $205 million. This deal structure contains a put-call feature that creates a path for USANA to acquire the remaining roll over equity based upon a pre-negotiated valuation scale relative to Hiya's future financial performance. The transaction, along with the transaction costs and working capital needs, was funded through $200 million in cash reserves, with the balance coming from USANA's existing credit facility. Although we have not reflected potential synergies in the numbers we have provided, the combined net sales of USANA and Hiya for the last 12 months totaled more than $960 million. We plan to provide more color at the time of our Q4 and fiscal year 24 reporting in mid-February when we issue our fiscal year 2025 guidance for the combined entity. We believe the acquisition of Hiya Health will add strength to USANA's top line and cash flow generation while building on its existing customer base. It also provides USANA with increased diversification in three notable areas: customer demographic, sales channel, and geographic sales mix. To summarize, the acquisition of Hiya Health bolsters USANA's overall financial profile and allows us to continue to invest in our core direct sales business, demonstrating our disciplined approach to capital allocation. Illustratively, Hiya Health's domestic footprint and strong profitability provide the path to reducing USANA's effective tax rate and support a more tax-efficient structure moving forward. Thanks, Doug. In closing, I'd like to express my confidence in this acquisition. It offers a level of revenue diversification, broadens our growth opportunities, opens the door for additional product innovation, aligns with our vision of health and wellness, and presents long-term synergistic opportunities. I'm excited to welcome Hiya to the USANA family and strongly believe today's acquisition will deliver value for all stakeholders. With that, I'll now ask the operator to please open the lines for questions. Thank you. We will now be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up their handset before pressing the star keys. One moment, please, while we pull for questions. Our first question comes from the line of Doug Lane with Water Tower Research. Please proceed with your question. Yes. Hi, everybody. Excuse me. Doug, I know in the press release you said that the acquisition is expected to be immediately accretive to 2025 Adjusted EBITDA. Can you tell us whether or not you think it'll be accretive to EPS? Yeah. We definitely think it will be, Doug. Right now, because we haven't finished the purchase price allocation and some of the variables that go in there, it's just kind of being, I guess, more cautious upfront. Yeah. With the delivery of the EBITDA they're going to drive, we should definitely see something. It's just the magnitude of it. So I think we'll just update in February as we get better visibility there. Okay. That makes sense. And then there's a couple of things going on here from a product mix. You mentioned it, the channel geography, all that kind of thing. So it seems to me that with 90% of your sales overseas and 100% of Hiya domestic, that the logical thing is to see Hiya distributed overseas through your international associate and preferred customer program. So is that the way you see it? And how long do you think it'll be before you can start to market Hiya overseas through your channels? Yeah, Doug, this is Jim. Yeah, we see that potential opportunity as well. One of the things that we want to make sure over at least the first year is that we're giving support to Hiya to both Darren and Adam, and they can continue to run the company according to their strategic plans. And immediately, that's not in their plans. Now, they do look at Canada as an operation. That's not overseas, but that is expanding geographic footprint. And that will happen probably in 2025. They're working on registrations and getting that process ready to be available. But we see the same way. I mean, we see the opportunity as USANA being a partner that has great experience and registration and understanding of international markets. And we want to help them move down that path. But again, the one thing we want to make sure as a company, USANA and Hiya together, is that we're helping each other go down their strategic plans as well as ours. And we don't want to push too fast if that's not what has been planned for in the immediate timeframe. Yeah. Doug, this is the other Doug. Just a little bit of flavor there. I think as we looked at the material as we interacted and negotiated with the Hiya team, they had longer-term plans on the international side. I think as they got to know us and understood kind of how we did business, I think those plans maybe expand. I think open their eyes to maybe moving that timeline up a little bit. But as Jim said, we want to do this in a very thoughtful, productive, and additive way. And so that's how we'll proceed. Okay. That makes sense. So then I'll flip it over here where only 10% of your business is in the U.S. And so actually, in the combined company, it'll be a little bit more Hiya than USANA in the U.S. and through two distinct sales channels. So what's the cross-pollination there? How much Hiya do you think goes through the associate and preferred customers, and how much of USANA goes through direct-to-consumer e-commerce? Yeah, Doug. Jim again. That's a possibility, but that's not something that we immediately want. One of the things that we're extremely excited about is the Hiya brand itself. They are well-known in the marketplace. And I really don't see bringing in a USANA-branded product into theirs. Now, there's going to be collaboration from an R&D formulation to make great products for both of us. But having those brands go Hiya into USANA and USANA into Hiya really isn't on the footprint right now or the plan. Of course, that could change as we look at it. But what's interesting and what's great about Hiya is Darren and Adam. We acquired them as well. And they're excellent executives with a strategic plan. And again, like we just talked about, we want to make sure that we're helping them along their strategic plan because we talked about 30% growth in 2025, and they have measures for the years after that without even looking at cross-pollinating. So if that comes up, we would do it. But I think the brand's being specific in the channels that they're in right now is how we'll go in the future. Okay. That's helpful. Thanks, Jim. Thanks, guys. Yep. Thanks, Doug. Thank you. Our next question comes from the line of Anthony Lebiedzinski with Sidoti & Company. Please proceed with your question. Good evening, gentlemen. This is Andrew DeAngelis on for Anthony this evening. Just can you talk a little bit about the sourcing of this transaction? It's a very interesting deal. Are you referring to where kind of the initial introduction was made, Andrew? Yeah, exactly. How this kind of deal came to fruition? Yeah. I think really over the last three years, we've been far more open to evaluating opportunities that are more non-organic and looking at this stuff. So we're constantly evaluating opportunities. And this is just something that was introduced by one of the bankers out there. And it's just, I think, very similar to when we went into baby care in China. It's just a great fit, very similar philosophies, and the same commitment towards health and wellness. And so it just made a great deal of sense to kind of push down that path and evaluate what it was. And I think, as you heard Jim saying, you've heard Walter talk about, as we got to know Darren and Adam and the great management team they had there, it just seemed to start making a lot more sense as we kind of progressed through the conversations. Yeah. When we looked at companies and we've looked at hundreds of companies where our M&A department has been really busy for years basically narrowing out or weeding out companies that don't fit what we wanted. And we wanted to find a company that stands on its own, that is growing, that has great management, that's making a profit, and would be in the wellness business. And this was just a perfect combination. It's a great partnership. So I guess it's finding that needle in the haystack, but we did it. And we're very excited about what this is going to bring to USANA. Yeah. It definitely seems like a very strong fit. Can you talk about the quantifiable synergies at all that you're thinking about over the next 12, 24 months? Yeah. I mean, one thing that we did, and you say quantifiable, but one of the things that we did when we were looking at the business is all of the returns and analysis that came into play was with no synergies, right? We wanted it to be a standalone business that was running on its own and profitable. Now, there's plenty of synergies. You look at manufacturing. We have the ability to manufacture most of their products. We could ship their products. There are synergies when it comes to formulation and R&D. There's other synergies into just how the products are marketed and how they're sold. My guess is that over time, the first thing that we would do as a synergy is bring in manufacturing. It makes sense, and we do it well. But again, when we evaluated the business opportunity, it was done really without looking at synergies. That's just icing on the cake. Yeah, Andrew. This is Doug. I'd probably chime in. And as we got to know Hiya, it's a very efficient company, very low capital intensity. And so as you look at kind of their operational footprint and what they have, they have expert people in certain areas, but they don't have a bunch of overlap in some of the things you typically see with the deal structure to go back and deal with it. So our intent is to go back and have that team as constituted to really drive this forward. And as Jim articulated, I think there's a host of opportunities that we'll work together to identify and see what makes sense and really kind of lean into those efforts. Thank you. It does sound like the complementary geographic footprint of the business will lend to some quantifiable tax benefits for you. Have you been able to look into that at all? And can we set any expectations around tax rate going forward? Yeah. I think I'm going to punt that to the February call. Some of that's going to be some of that will be dependent on how some of this transaction gets allocated, and we're going through that process right now, and as we get that and we kind of update the forecast, we'll give more of a look at tax, and we definitely see some benefit there. It's just the magnitude of that moving forward. That's great, guys. Thank you. Thank you. Thank you. Our next question comes from the line of Ivan Feinseth with Tigress Financial Partners. Please proceed with your question. Congratulations on the acquisition, and thanks for taking my call. Some of the questions I had have been answered. But what do you think, one, within the child healthcare, child nutrition area, do you think that there are other products that you could co-develop or areas to target? And then overall, in your acquisition strategy, what other market segments or demographic segments do you envision or think about adding to your portfolio as well through acquisitions like this? Hi, this is Darren from Hiya. So when it comes to our product portfolio, when we first launched Hiya, we just had our kids' daily multivitamin. But our vision was to own kind of the kids' health and wellness space. So we've since released five additional products. We just released what's called Kids Daily Greens and Superfoods, which is a powder that you add to milk, makes tasty chocolate milk. It's been a huge hit for us. And our vision is to kind of continue releasing products that align with that mission of going across the kids' category in health and wellness. When we think about kids, the second part of your question, we consider kids to be kind of that 0 to 18-year-old market. We've been focused primarily on the 2- 11 market. We think there's opportunity really to kind of own the younger and older. That's something that we'll be focused on in the coming time ahead. Yeah. From USANA's standpoint, we only have a couple of products that are in that range. There's just opportunities to learn with Hiya and develop some products over time. Again, like I stated earlier, we already have a strategic plan outlined for our products through all our markets. We want to make sure that it fits into that plan. It's not something we're going to rush into, but it is an opportunity. And then in light of the change in administration and the focus on making America healthy, what kind of opportunities do you see both for USANA going forward and for Hiya and USANA together? Where do you think that you could really benefit from, hopefully, the positive upcoming changes that we should see? Yeah. I don't know from USANA and Hiya if we would change any of our strategy for that, but it's great to have that as helping us with our opportunity. We actually looked at it. One of the things that has helped our China market go down the path is they had a very healthy 2030 program, and it was the government trying to push knowledge, education, and health onto its citizens, and I think this is the same thing. The more people can be educated about what their body needs, it's just going to help both Hiya and USANA be successful, so we're excited about it. And then as you're an active lifestyle brand, there's sadly that there are a lot of young kids who may be drinking a lot of these energy drinks that are really not good for them, but maybe there's a market for I don't want to call it sports nutrition, but for the higher-end demographic of your 0-18 range for Hiya, you think there are opportunities for product development in that area? This is Darren again. We are focused on creating as many products as we can to kind of fulfill that mission. So when you mention products that have kind of questionable ingredients that align with our vision for Hiya, we look for products where there are additives, sugar, something that's kind of wrong with the market. And we've tried to make the best product that we can. So we will be thinking about products across all different types of categories in health and wellness. Yeah. Ivan, this is Doug. I would also say really fundamental to both companies. I think both companies have always operated and formulated really relative to where you see some of what this administration's talked to relative to health and wellness. And I think we're well aligned to go back and take advantage of some of those movements and capitalize on it. But I think we've already fit in those pockets with how we conduct ourselves. And we saw many of those same attributes from the Hiya team, which we're excited about. Great speaking with you as always. Congratulations, Darren, to join the USANA team. I wish everybody happy holidays. Thanks, Ivan. Thank you. See you, Ivan. Thank you. And as a reminder, if anyone has any questions, you may press star one on your telephone keypad to join the Q&A question. Our next question comes from the line again with Anthony Lebiedzinski with Sidoti & Company. Please proceed with your question. Yeah. I just wanted to follow up. Darren, are you prepared to share any metrics around your subscription base relative to growth, retention? At this point in time, like Doug has said, that February will release some more numbers about 2025 and the expectations. We'll have more information at that point in time. Okay. And, just, are you firmly committed to the subscription model at this point in time? Is that going to be 100% of the business composition for the foreseeable future? That's been our business model up to this point. We love the subscription model. As I talked about earlier, there's a ton of benefits to it. That said, as we grow the business, we're always open to adjusting the model where necessary. We don't have any immediate plans. Thank you. Thanks, Andrew. Thank you. We have reached the end of the question and answer session. I'll now turn the call back over to Andrew Masuda for 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. This does conclude today's teleconference. And you may disconnect your lines at this time. We thank you for your participation.