LFVN - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, thank you for standing by. And welcome to today's conference call to discuss LifeVantage's second quarter fiscal 2018 financial results. At this time, all participants are in a listen-only mode.

Following the formal remarks, we will conduct a question-and-answer session and instructions will be provided at that time for you to queue up. Hosting today's conference will be Scott Van Winkle with ICR.

conference recorded. today's reminder, a is being As And over to would like the conference to turn Mr. now, I Van Winkle. Please go ahead, sir.

Scott Van Winkle

second discuss Thank you, LifeVantage for to to gentlemen. and fiscal the results Melinda. Good Corporation's afternoon, conference ladies quarter XXXX. of Welcome call

Eastern with have from Chief and earnings up that accessed Time. Chief to call Fife, are By Officer. this Officer; remarks approximately went LifeVantage the the Darren prepared afternoon X.XX On now Steve Financial today Jensen, Executive everyone PM at should release

not www.lifevantage.com. did the a it’s is you on release, If have portion release well. available webcast; available received Relations the Investor of being as company’s replay be on This the will LifeVantage’s website at call

accurate be today's the forward-looking to of assumes only call projections comparing and analysis we'd when on we forward-looking X, no Company's of these like to expectations questions. greater particularly financial not transparency any are in therefore additional based as in reconciliation statements This also These basis. including filed measures obligation of release ongoing period. this to your begin, operating non-GAAP release. Management that including XXXX. response forward-looking complete of time-sensitive upon LifeVantage's statements date We've should adjusted during February reliance a prepared and contains those that XX-K. note period today's statements today's an may to operations, most call. in be future more Before performance statements discuss and Forms placed guarantee Risk and a that may them. do management with measures, can undue not is These LifeVantage the on that involve we'll call, into results make everyone identified our believes remind results Factors non-GAAP remarks these Please recently facilitate company’s, information current inherent risks included and uncertainties, XX-Q financial or results made from measures of LifeVantage's management the live contain update underlying broadcast, and as

like Now the to to over CEO, I Jensen. call would Darren turn the Company's

Darren Jensen

everyone. the Thank join making and on we’re and I’m fiscal on pleased good results share you, initiatives. update our Scott, second our today progress you quarter and you afternoon to XXXX

During $XX.X the we quarter, in sequential generated representing year-over-year second revenue, increases. both million and

we’ve to we Although pleased green confidence begun shoots significant with P&L. trends us seen our yet, very opportunity the to our on initiatives give These have see yet materialize of have I’m growth Japan. early indicators we They not undertaken. sequential continued initiatives. have solid from materialize the in the in

the on made you leadership team sales recall year As several in and the have focused Japan may we enhancements to over last around offering. have our turning product and

as currency year-over-year customers the local and management work field the up and During confident in and distributors continued management the as our was place, of products of we leadership; and Japan the new market quarter management is XX.X% to largest second reengaged in our have have team. support dedicated well our in revenue market. I’m alignment right between and I’m our and have Japan we in that team launch second appreciated good distributors

our update initiatives. on Turning an to

achieved some continue quarter progress the during make second early We each to the in quarter. against and milestones third recent

and three on initiatives increasing distributor order geographical focused goals, acquisition are key Our expansion, size. average and customer

China formerly launched report expansion test pleased in I’m efforts, we support commercial to Mainland Xst. China concluded business February that model very to our our and our geographical on new First, of have

deployed model model, of can third-party trend utilizing this a through not powered China. you imagine selling selling a Recall e-commerce with for the are social excited we innovative growth and marketers. on that that social model the believe platform by direct launch As are in we is we in-country a e-commerce and is and but an rather

be and of marketers outside the refer become compensated to these can distributors nationals social Chinese Our China training for marketers. of then social

customer infrastructure March can these public regional the in limiting new looking expand Based markets, there distributors the late us drive leverage additional program. impact marketing. have additional interest in announce This reporting for program our need purchase could Real our quarters. at of business the a opportunity the their use cautiously as and and global out a countries. coming the forward supporting We Salt to participate to to this we our support new allow to use success strategies is initiative consumption company. early markets markets such where field on home We are initially and number an our look a only. designed is new to where believe to model investment development low marketing to and To can whereby to as to Lake. support personal optimistic we barriers on this warehouses allow enter their leveraging acquire model business preferred expect as our the existing in relationships rolling builds. to relation in to seen direct, markets and our planned and plan we customer we investments across We have on as leadership market this launch We of with its customer can very countries seven of of acquisition, customers on expand very outside model, new where Further inherent are to this evaluate traditional This international customers, leverage the acquisition company customer directly it are will these about business that to for early this this plan geographical future company program. is network we potential sponsorship markets products and new to expansion cost and acquisition future over

referrals way the customers new them our innovative customer new through only to and average distributor come our initiatives, access leadership that can and be we program or to are strategy Carpet products force. of on our products. is assigned for Furthering will order our by simply order continue identifying customers these to these to and lifevantage.com new directly Carpet are will support. attract to transition distributors build aspect such Today, increased provide new acquisition sourced shop This experienced to distributors for an platform. Red a up key opening there potential in customers program. be will easier A consumers After from LifeVantage us. leaders to the to Red who is We is order, new customer our drive product size. designed directly attract our to LifeVantage distributor to initial ongoing

Packets, packets NRFX, Vitality of launched our and and launch As stack average This we of that improved couple products for phase Stack our the had protocol Vitality a future use XXX,XXX and event we to increasing our our become the ProBio cybercast affordability. sales Vitality mix. combining via Protandim Stack four launch used we stacks and across we in Packets The while of biohacking this ago, company, to release plan support order where second was held views. Omega+ culture the weeks size products. The include a ease daily and creating further completes Vitality announced will diversifying the are the into of primary Stack we Protandim Stack our NrfX,

launch Vitality the at continue next will Elite Academy We week. our Indianapolis Stack in

this We a to expect we to the of initial conversion order launch. our build see building volume stack upon as cyber

for market. we’ve field, been our biohacking our culture made our position the developing core nutrigenomic unique story our products also building is becoming good progress and the distributors and have competencies We underlying in is existing customers. and message and Biohacking the with supporting leveraging

edge we’re and development on recent edge across have Vitality nutrigenomic launch in movement. the assets product leveraging are We are field focusing to so is promote marketing of component this growing story. it and our to leading trend, story this marketing the media a on of additional and solutions, providing material on this; Stack the this communications key supporting The and of

to for them distributors is customers, new onboard learning artificial results. will custom to and it distributors, our customers. To initiatives trends new integrating will and them. into our leadership all to year intelligence up, machine top pioneer complete support rollout platform I’m as app LifeVantage developed it begin ways digital in this forward March. a on designed week to initiatives platform LifeVantage against finding to our turn our for Next next through us over assist and the expect phase pleased sum the rolling the mid run in Steve? impact field customers financial out The of This key achievements tailor aspects is new with that, our Steve goal the we that the platform interact of new with let and communications new and to these with seeing customer revenue our year acquisition to of simplify our progresses. actions With look to me distributors and our

Steve Fife

Darren you, Thank good everyone. and afternoon

to reduced expenses variance This of basis sales was $X.X million percentage XX.X% prior compared large from a margin product year. quarter and basis increase SG&A year XX.X% quarter the of second year. adjusted up was and product Americas to sales income were compared revenue free On was quarter Adjusted $X.X On Commissions This a cost of to and was a the an X.X% timing million in X.X% at last This as to expenses sequential in quarter percentage to income continue decline in ago. from a X%, increase in the million during year prior reflects reductions. Revenue million a and revenue as gross decreased a including our On X.X% basis consistent a support increased geographic Pacific X.X% XX.X% while the remain ago. efforts $XX.X the with percentage X%. increased representing all our adjusted associated Second promotions extent expenses to prior Europe shipping were $X.X for decline million to is corporate the year. sales and year. second obsolete prior of a decreased quarter-to-quarter. in while compensation a million to a million, relates a evolution $X.X Operating $X.X the EBITDA million and as year-over-year. Pacific for XX.X% the an and in year-over-year operating in in in and XX.X% $XX.X was XX% incentive second products. function $XX.X in year. to revenue the compared reached of from general expenses increase. Americas inventory fiscal million a relatively $X.X compared the SG&A non-GAAP of Asia of related XX.X% to XX.X% mix, non-GAAP revenue increase Japan down impact XX.X% to incentive Asia the the of sequential a The Europe compared XXXX bundling

As will you public their results, quarter financial many December and U.S. deferred other taking a adjustment have companies seen one-time be see of non-cash of liabilities. assets will or re-measurement tax many report companies as

December. result $X.X the of new during into second of federal our, quarter. non-cash the one-time tax expense deferred rates signed tax corporate revaluation As assets booked million we a a in our Accordingly,

rate Additionally, tax earnings favorably $X.XX. corporate we anticipate approximately non-GAAP that adjusted XXXX our share the impact per fiscal recently lower by enacted will

consistent diluted quarter per year. basis income adjusted share share million quarter an GAAP was On million the $X.X consistent is of prior the second Second income fully net a diluted or basis was which fully on net prior adjusted year. non-GAAP $X.XX $X.X with with per $X.XX

adjustments these spelled of press release. in out All our earnings are

sheet, cash ended a represents net which $XX.X we during quarter million the $X.X cash XXXX fiscal increase of of quarter. with million balance second the in $X.X and to million the debt, Turning of

into markets. a was of launches million support million product there sequential lines from product current including inventory Vitality and global $XX.X anticipated our the As to new $XX.X Stacks in increase to introduction existing

the quarter, invested cash million we from generated operations second capital of $X.X expenditures. $X.X million in and During

With upgrades that our to systems and anticipate guidance. our core XXXX, For to $X support to in the business investments technology fiscal year let CapEx including fiscal XXXX transformation me million we our digital turn support to our continued to efforts. range of

of earnings non-GAAP guidance impact to timing our we now, first XXXX. share adjusted revenue we fiscal for initiatives, half the the per $X.XX are reiterating the our $X.XX revenue year Based half guidance prior of guidance are on during We of This at success generating revenue of fiscal or now second year. $XXX revenue of end range our the early in million. be expect to about forecast assumes the some China and the lower

out. new full given we are early the of difficult Darren As noted, business which in forecast especially are is China, the market days to launch we our model rolling a in

encountered have and enthusiasm optimistic. we we around interest so are However, cautiously the opportunity,

however year impact the our are is remain guidance expect, initiatives the even a we takes The transformational of we As in growth. have would previously, of confident impact XXXX. timing course we initiatives to revenue to if discussed than revenue are drive predict, of a place the EPS challenge these of initiatives with confident longer and we for we these in fiscal in

Now turn questions. call the operator let the Operator? me to to the facilitate back

Operator

[Operator you. go to Thank Steven with Instructions] Slater. we Martin And will

Steven Martin

Hi guys.

Darren Jensen

Steven. Hello

Steven Martin

ago. asked you a ago, on right problems you’ve know same of you should when are new than at I still got are ask million you revenue? registration to more of the launched I expect is half revenue a which basis. you’ve on question year you Japan comment guidance direction Tell year-over-year basis you’ve a yet And products, before the roughly sequential to company that guess said me is or going you’ve year-over-year flat. in I we low a and those gotten countries, going sort have end the going And the forgetting $XXX new China I’m do passed had heading to and launched all year sort of of

Darren Jensen

our do course look and helping Steve. offset been you impact right flat say taking, been having that our the I you that somewhat challenges we’ve been other we’re of you, when initial we’ve in have at would that the that revenue some mean it now, that initiatives I having of Thank business. to see

because some to we’re seeing the there given on launch where trial Mexico, our competition thought we length be our impacted China, For commercial be. in instance it behind would sales we level. it that we’re In where behind we’re of we the wanted little

in transition. leaders So in considerably also of availability on Carpet unforecastable are market really difficult, based has program an Red been with that that’s forecasting rather the that our

forecast. challenge this is, So to been a as also

Additionally, quickly ramp what not Germany as did quite we were as anticipating.

of taking wanted, us retention So we really really initiatives that this lot helping not we’re the in size. especially slightly but some the been to improvement been our and we’ve that to some of the, grow increased been basket where of have what’s year-over-year, a seeing have extent

of I Carpet that in spots Vitality are good to see million and know of conservative others when mean efforts tide that’s we as launch off our happening of our you we China Stacks. and lot our between going saying into So, said are But well some low Red a recent as things some and towards into as there get to really, coming $XXX program and next offsetting to now side that we the end. it, with the the being couple quarters, we’re we’re as

Steven Martin

a or going distributors that Okay, not in independent are least active down Americas that is to you was and reverse the when is be flat year-over-year, possibility? at

Darren Jensen

the Well that the from challenge been there of the would one sure say experiencing impact it’s one for in has our where and I as of part grow why well always a as still is from possibility focus that’s some our as to number that changes we to of additional important an were made customers last is changes review year. and main compensation also drive distributors. of multiple has some that to that within that FTC were the impact in plan distributors made well it, But that we’ve behind were that customers. on we’ve think come had there I required also the made changes as also that by over, changes our made the

is offset lot distributors I it levels focus retention we until being we direction are, though can’t continue are we number on our wanted by in say to moving to driving go. and on that it efforts increased of So, tremendously that that of But we a up those have. this get focused our will the

Steven Martin

customers in going just distributors So, a customer? you China preferred and is are be active are you to preferred going independent have have going everyone to to or

Darren Jensen

e-commerce is opportunity. operate call In China a it we cross-border basis we what -- retail that on a we

per our customers through them attract what and order influencers sell platform. in So we products are Web se purchase do go drive we any a to the out China and And partner we then a site not partner that product. with to there work have distributors in because social

necessarily them. not of you that distributors think it's So way classical in the

Steven Martin

Right. three China business if to is I at How your in look be the going tables.

to is and independent active revenues, up going there? preferred distributors Okay, active customers. show China Where

Darren Jensen

So in is the directly the short product term, be Steve, from China. to going the shipped U.S. to in customers

revenue. So initially included it America's -- in will U.S. be

that direct we be of grows it's as not like business business material more the and breaking a that segment As separate will LifeVantage. a rest it it's becomes different selling a out business,

a standpoint business that be more core out. operating there becomes rest that our out breaking the as Again, different geographic as model. are to model we'll well of material and break a And down terms from business some be to our that just in disclosures. if margins that both from in going accompanies of P&L So It's we'll the differences income. that

Steven Martin

Okay.

me Let question. more one ask

job sort low SG&A XX.X -- You low or number to from was is of good good guess good Can forward? a going XX that of a use your a I controlling very about down and XX.X, I a that is in modeling did -- number.

Steve Fife

of event in in one an history higher coming The have that reasonable. costs this when expenses have did elite our them, It's those had we last through that We In quarters. is we SG&A quarter. Orlando. have academy an November, Yes. influence thing we

in an week. We have Indianapolis next event

where that little that's lower in higher rate a are that. a in be probably and but So than quarters quarters events there events should where reasonable maybe there aren't

Steven Martin

the for year? Gross was little of balance you What one. quarter. this down that a of why we it last one expect explained And should profit, the

Steve Fife

mix that But mix. as A of lot that anticipating of product I increase revenue increase and that's the rest predicated our in geographic year. at during year. to the I'm going Yes. the slightly look half upon is our forecast the our I of going slightly that's second to expect of

Steven Martin

Okay.

Darren Jensen

Thanks Steve.

Operator

go DNS Dave Investments. Manovich, next will to We

Dave Manovich

Hello this to everyone afternoon.

Darren Jensen

Hey, how are you doing Dave?

Steve Fife

Hi, Dave.

Dave Manovich

side on be calls, We're the these so other -- Good. table of be it this will time of now fun. one the the first in for will

Darren Jensen

Welcome.

Dave Manovich

be geographic expensive Let with that me of and with growth the questions, to dovetail have for we leadership States. our have a Real the lot that as in number are the continuing about that be with sponsorship also, in of to previous the initiative And building into of of up or continue growth into to Mexico no on Europe with that been isn't appears his of also effort don't in question that and America because Japan new and had looking the to geographic when regard into bit find the into that Certainly U.S. the has on focus safe that regard regard I that one Lake, is the business and focus Darren is certainly why? how that LifeVantage you it certainly asked individuals were little distributors that Real Americas. on bringing that that going virtually the looking growth areas initially impact, that its coupled of outside to And it's Is expanding the the sponsorship red statement? Salt of Are that we now last there at and caller a distributors sponsorship, regard comment through I that of -- you've placed member years you Lake geographic carpet that's that the that we're distributors. a questions our to of that's have the focus U.S. positively had fair on particularly United so goes impact is no Real your light it focus been the by there that's can U.S. considering think the articulated with impact And flat you is, with the Lake there. continuing that substantial that focus a that very of to effort with expense when I program the and new that instrumental that Salt the so the deal Board in at think development say if a placed kind with that of outside good authorized that Salt we was China a we large is

Steve Fife

evaluating all, or year last And indirect as could Hi, the company. so relationship Lake. our with well RSL real through what been guess and Salt we is with that enhance we've retain do feel in that we as spent independent benefit through evalue this at and Salt but the Real increase quarter, went -- Real through with Dave. relationship but This the Steve. we that to over our us. benefits I we to good received as financial a really further far Lake on last LifeVantage opportunity of when partners They've came both particular, a as looking last first a both that And time and/or fair survey do benefits we And an to to the direct comes company to of the amount activate relationship. like discussion relationship. have that benefit quarter

site to primary And primary purchase one dominant or Real. one where advantage in of on the is to here One has. a of about want up -- of in of a of that presence cities MLS all advertising Front who it kind Wasatch kind opportunities the a is, our a relationship Clearly we the that has pool in major the It's have we take our where Utah. program teams. company Web of also view presence primary customer with the But, focus is all that tool be product. customers of the we will that to of the Darren talked opening -- points

And from that's season, the you can return the through we'll shareholders this some in And I'll a if to our We that the last we think additional we've get done work next decision feel relates over tell that make continue and we relationship. of at we a as like clearly interest getting believe of enhance that not financial And re-evaluate benefit so quarter. relationship the that further end that we that. relationship. it to of best the we're that

Dave Manovich

Because well that what timeframe are over of other don't other plus expensive more stadiums of to with utilize the a just, sort outside that over be that XX neighborhood initiatives the U.S. generating dollars. particularly have it that on five period of that any the growth in like a Yes. place geographic will is spend as that I million we we money heard year is is the relatively then the revenue And the that for impactful Real Lake? to Jersey and then Salt just

Darren Jensen

Dave, this is Darren.

Obviously, evaluate is made we and relatively impact. sales as maximum and marketing it at That where it the our looking this the getting change been spend and at for United As ongoing different and all that's you while. focus customers importance the of where additional been States has year distributors how flat made where also And of to were on a company. we've beginning we're you about know to our mean talking a of ours a I driving has that concern dollars. the

or As had low a through had up a completely to Steve traffic challenge Lake for pool as in years a we sign Web because purchase where the previous to -- very Real we a program Salt out into requirement we with with distributor. was pointed was, there a conversion were rate direct advertisements we them make customer

into customers. any convert advertising that turn couldn't we new power that and of typically So

those dollar and determining our business leadership customers have know is the make first the can them of customers into and within run field that we then first at the allowing on the conversion company and been milestones negotiations their with in the for our higher directly one engagement those Web in a most retention discussions the distributor we productivity our So those and as with their important as orders bring distributors distributor the our business that we look company so much to rate in back it We they've of us. site, call because drive collect having principle. dollar distributors, we from

So this engaging big to have testing a it and whether year running during that not that's program RSL that we as this focus the we're of be going we we or ours been where season are and that's to it's believe effective. that

really it is very year important us that in pushes that a should relationship and United both acquisition the leveraging be. for way this especially the States customer So on

Dave Manovich

just of that Okay. all where we spoken In to gains would the give that time investment directly closing feedback that you myself That suggest continued. of marketing and made I'd evaluation would that I be our the that their the get I be and you the I would investors shareholders from revenue no with do and opinion some others on to. spoke say shareholders agree are that I've your spend talking in particular sponsorship this endeavor. being Jersey of one would late see

Darren Jensen

luckily while them speak have had actually opportunity on Dave. outbound call. Well, to thank this with And little the of over we you, last thousands

a been strategy concerns very So especially those we've sound and it's it's and do our something majority agree able vast say I with would that the strategy. that explain we would to

So feedback. your for thank you

Operator

Private will And go to Weisenberger] next we [ph], Investor. [Eric

Unidentified Analyst

anything give had you I at Web I Vitality when it's because and Vitality a Yes. find just I that? us specifically looked Stack. pricing really the some how question And that Could available couldn't the on it's about site of and delivered Stack?

Darren Jensen

for bottles $XXX. come forms would it That it weeks this, bottles which of States in ago in launched is you and packet. Actually a United priced supply. that's monthly is just months with where ago is is $XXX. comes in individual packed about a individual couple two individual at Eric. form where one that And the three in it that launched gives the we The new one Thanks we product product

related price that? questions was the -- to that's other what other was the So the what

Unidentified Analyst

any that No, and just preferreds was those price couldn't I it's assume I find and available prices now it. pay? the will

Darren Jensen

Yes. preferred you. thank right. well the distributors Well, as that All prices pay. Those as our customers are

Unidentified Analyst

Thank you.

Operator

Jensen Darren to for would our concludes And like additional now question-and-answer that any closing I or turn to over remarks. session. it

Darren Jensen

I everyone for us about excitement all hope our we having today. transformation you at share you the Thank are LifeVantage. joining

have our better look you our the We excellent wonderful initiatives, against to future. company We positioning updating forward progress made on day. the fiscal XXXX for and call have a next

Operator

for does that us. We today's you conclude thank call. all And joining conference

LifeVantage (LFVN) 7 Feb 182017 Q4 Earnings call transcript