LFVN - Earnings call transcript Q3 2020

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Operator

Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss LifeVantage's Third Fiscal Quarter of 2020 Financial Results. At this time, all participants are in 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. be Winkle will ICR. conference today's Scott with Van Hosting

recorded. conference As today's being a reminder, is

And like sir. I Van now would Winkle. to conference Please Mr. over go ahead, to turn the

Scott Van Winkle

LifeVantage Thank afternoon, results the quarter you, third call XXXX. and to for good of to Corporation's welcome discuss conference

Darren Chief On Financial today are with Officer; Executive prepared LifeVantage call Chief and Officer. the remarks from Jensen, Steve Fife,

which should X:XX went access earnings Time. out p.m. afternoon everyone to have now, release, By approximately this at Eastern the

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

management on your the remind including and in like involve not begin, Before are may most that questions. them. we additional and to These everyone upon XX-Q statements response recently reliance do based in filed undue identified those forward-looking performance, These risks of statements current section future prepared inherent Risk not Forms the guarantee remarks be of expectations XX-K. Factors statements to our we'd LifeVantage's and management should and make therefore, placed contain and statements, company's uncertainties, forward-looking

transparency of operating measures, comparing today's included these LifeVantage's will when call, We've greater release. note period Management Please during ongoing reconciliation that on particularly discuss including non-GAAP results from with operations, underlying an these measures into non-GAAP we complete today's to can and more a analysis financial financial results of believes basis. adjusted results period. measures facilitate a

May to may release any made date of is that assumes forward-looking projections no contains today's of obligation This accurate update time-sensitive information LifeVantage call this in call. broadcast, live XXXX. as this XX, or be that only also

CEO, I turn to call will company's Jensen. the the Darren over Now,

Darren Jensen

XXXX quarter COVID-XX. Thank today staying in of I appreciate our the financial U.S. markets battles during amid our international environment third joining all all and pleased world are the are us you afternoon Overall, good for and we and time. results. safe hope with as unprecedented you, fiscal everyone. performance are well challenging you this We our a Scott,

the maintain case prior in compared relatively with adjusted to profit growth EBITDA together as strong operating were each year and to quarter, During consistent in period. we able revenue the

a quarter. total we and As active uncertain see result these times customers to in disruption and business of declines both with on pressure the our distributors third our accounts during activities, incremental did

markets disruptions event centers of elimination Some service the include recruiting to to closure recruit is in where of Japan of activities in business and several schedule, to our allowed. person difficulty meetings, impacts in not cyber

by even our start of support the NAD sizes. make which our LifeVantage impact to We Protandim account driven our product markets. order it have Protandim promotion continued schedule year across new free in consistent also a incremental kit growth, join with and In to contributed we revenue of new disruptions increased we Synergizer initiated Tri-Synergizer the April, to challenges prior were these a easier further launch November, growth. able global rollout and to hold bundle to seen Despite to favorable average customer the

change enrollments markets of the received. and well saw positive impacts supporting in April, free U.S. available shipping non-subscription Variations of our saw our been increasing our our we We and subscription our prior further our enrollments consumers in our shipping program have now of loyalty. to more many January, have impact also in quarter, launch of distributor shipping introduced free during subscription and on been and the Free into than monthly model month new is international program the In favorable the average a doubling year. distributor from our price the

remain committed transition. our and ongoing see positive accomplished field veterans to are by attracting leadership We continue to in direct-selling in Carpet enhancing program activity Red who our

it of to goal continue build further with easy building as to to also business a simplify We plan at to for is LifeVantage drive making Uber. it

leverage our has in technology Our building earlier been our enhancing and to platforms. investments key focus

We which distributors has important to tools improve rely even increasingly app, as our to LifeVantage more continue value upon our businesses. their time this compelling online operate to they during

In that sales. addition, successfully content playbook, in library our to being early March, online drive we launched is utilized

meetings virtual plan, all transitioned is us our participation that to and allows into we accelerated pay and regional successfully if value trainings our launched and capacity. rapidly to We holding have we events meetings and our provide exceeding to payments compensation our which training Today, expectations daily opportunity opportunity weekly with are needed expand of distributors. robust to

compensation to demand We our international customer of plan on during plan XXXX. update and driving enhance focusing June also

Now on we and the current in COVID to it walk situation at an regards update addressing we're how LifeVantage. through

a on attention First chain. health been strong and well our and as customers and has foremost, ensuring the our employees, of supply as distributors safety

we guidelines following continue effectively ensure rely deliver We our products of all can and global recommended to our safely have markets. been across the safety customers that to on

of efforts our to adapt to to staff remotely all proud and and thrive of XXX% working environment. very our the of transitioned have We in are employees of current the

all our and Our open is very supply with operational. in and markets adequate good shape chain of inventory are

with seamlessly our closely support working logistic production to also and customer demand. partners are We

financial media our this tools inherent seen opportunity provide our to as accelerated distributors, meetings, it enhanced With businesses use distributors are most and to the impact time during video distributors in and to remotely. during continue LifeVantage cycle we'll the business support incremental model. we our the interest LifeVantage commission income to in-person renewed of payment social we app run their conduct And utilizing recent in the the support to unparalleled of conferencing. monthly To our easy inability help have have burdens

of the contingencies environment. continue event measures social and extended the have plans also we'll in necessary developed distancing adjust and We the to to any

for planned fourth which We been continue to quarter. preparations with the had to move forward Singapore, open

of we’ll now global and restrictions, social both launch. given look to the distancing opening its schedule market when we to time effectively support delay at a travel However, and opening the more its decided can we've

and uncertain we of monitor will health keep family very the environment the safety As we forefront at decisions. and and time, this thoughts our LifeVantage navigate our of the

on opportunity incremental heath nutrigenomic while proprietary focus today's the income us pandemic. with distributors for well very in position Our our products, providing global unprecedented

Our business model is resilient.

have significant balance and cash We strong sheet a with no debt.

chain supply secure. Our is

to Our online transitioned distributors have activities.

to to Our our outlook ability cost, remain employees both remotely messaging under to conditions. challenging low very are and to adjusted marketing a I successfully but in not only consumers’ for have needs we business and and working enter opportunities. easy long-term confident our short-term our reflect thrive survive,

turn let to to over Steve through run financial results. that, it me Steve? With the

Steve Fife

Darren, and you, Thank good afternoon everyone.

to walk Despite quarter EBITDA report Let our you we through stable results. situation, revenue growth. current global strong and me are third proud the

As our our will noted, results. non-GAAP I adjusted is be that Darren business well model positioned just note discussing today's Please in environment. challenging

GAAP the non-GAAP to today's press refer release can details. You to in for additional reconciliations

year-over-year of active greater market performance year-over-year. the to region quarter of in Third Zealand, in COVID-XX. modestly Asia/Pacific partially accounts to Asia continued in of China number Revenue revenue in as The size. Americas revenue in $XX.X was increased a New impact $XX.X strong of and decline in Tri-Synergizer to the and fiscal and order Australia while of $XX third the change $XX.X million, a result offset contributed increase offset and the our basis the up the partially third Protandim Protandim of and reflected all Growth from million Japan positive completed Synergizer quarter decline launches XXXX. continued which a bundle NAD million, the during Americas the by by on million price quarter reflected our in accounts, declined X.X% active weakening in and consistent Pacific Europe with all Europe X.X% the

implemented was XXXX; and margin XX.X% in the quarter increase points and in XX.X%. year-over-year obsolescence due decrease handling be activity inventory in percent the XXX our timing product of Carpet margin targets. mix. long-term year-over-year to our period. year well in our with as as Gross of line geographic programs Gross to impact as The was compared price XX.X% driven to January margin February and decreased sales program. well and changes basis prior initial to to and Red the expenses lower incentive for as accruals gross continues our as revenue costs a of current by Commissions in The promotional the changes incentive is

Red reminder, the and quarter timing incentive will a fluctuate magnitude of rate in programs expenditures. as As and incentive Carpet on commission based the expenses fluctuation to inherent the and well as promotions quarter

XX.X% commission the third performance. quarter continue SG&A fairly revenue prior with and as percent of XX.X% expenses period. incentive our compared consistent XX%, around target to to be a to Adjusted in year was We

compensation third-party Adjusted million X.X% employee other and in service expense to professional our partially $X.X new of was has of associated $X.X related adjusted decreases percent technology and in with of increased software by a decrease reflects in in period. providers. compared operating SG&A increased revenue or prior The or million, associated revenue, X% primarily in revenue placed as been year the income offset expense with investment that depreciation expenses, expenses

XX% $X.XX $X.X share, diluted tax year the Adjusted income million was of during by prior net expect year as adjusted XX% $X.XX year to per to full compared higher XX% rate our tax was rate net prior The million, increased now in current between in diluted share fully which the XXXX. XX.X% non-GAAP non-GAAP income the XX.X% year. compared in rate or decline fiscal from driven full be period, the to tax for $X fully or a period. of to We to our per

earnings million term the of credit. I we under financial expect during XXXX. prior and to for the also million, of cash release of of line our third ended non-GAAP our all increased from to fiscal for EBITDA for year as our to quarter a the of $X press compared million full to strong adjustments fiscal this our note today that as the quarter On XX.X% we period. between $XX.X and a a tax with with maintain that discussed We quarter will million reconciled rate no XX% XX.X% $X.X loan afternoon. issued continue GAAP to in the we basis, of position availability the the the third compared in year GAAP XX% GAAP are year XXXX, Adjusted to repaid $X Please rate be revolving balance debt

primarily quarter of prior in in third the operating cash year flow we decline generated $X.X to working XXXX, The cash in of investments period. During compared million from $X.X operations incremental million capital. reflects the fiscal

During we CapEx level incremental to lower to continue investments as of moderated. modestly have the LifeVantage in our fiscal compared fiscal app anticipate a XXXX, XXXX

repurchase authorization. in our under shares during $X common XXX,XXX repurchase million Additionally, we use share cash approximately quarter the to

As the company’s million under million of March available repurchase XXst, there share remained X.X $XX authorization.

are evaluating we situation, COVID-XX our near-term evolving buyback the Given strategy.

fiscal our challenging below XXXX guidance our adjusted range, are to Turning be prior the reflecting adjusted anticipate more and for reiterating fiscal environment net XXXX income and revenue our both EBITDA guidance modestly outlook, we customers. new now attracting for to our

continue in the to share anticipate and to We the the million. adjusted in below range EBITDA revenue $X.XX of of to of $XXX non-GAAP non-GAAP with $XXX $XX modestly million $XX per range to million million earnings range $X.XX

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

Operator

the We'll you. conducting be Thank question-and-answer session. you. Thank [Operator Instructions] now

Company. first from your Bill Sutherland Benchmark line questions. question Please Our of proceed is with the with

Bill Sutherland

and Hey, guys. thanks, hey

Darren Jensen

Bill. Hi,

Bill Sutherland

direction? feel the thinking quarter? Is wrong are the sequentially of in of it what kind you as are this kind in things far to you cadence Or you? moving I steady guidance, of the pretty – as the wondered about

Darren Jensen

and and you. that looking are with coming it which thank found is Bill, metric, from we enrollments. earlier of enrollment in the the important have at into lower us third of to time May. continued into month what progressed the – was number a that that When I'm Darren. the quarter, was in our Well, we new the the look the an quarter of at This And month quarter people months on March business. for And seems as is best

that a for indication good at to an appears be sign if us. So that least that's

now, right that it's now, right seeing what understanding fluid reasonable. Now, appears but pretty it environment a we're

Bill Sutherland

to And encouraging. make took seems you've in from away person impactful. to mean That's et really this had is – bit now meetings, that’s be get a to cetera, traction that it pivot and

Darren Jensen

– for. were capabilities We'd day into when Yes. that people out making online, were distributor as was up a we fact, matter act within a period on conferencing three our made pivot thousand events and jumped leadership and move decision set we for fact, only a it. immediately to meetings time. first were of as And the Zoom we our for when had the a set maxed held some on of the met up Zoom. simultaneously We've had made we And our online, to with matter we been that able

So people to had X,XXX attend. of to would to number out we that handling expand begin that the

Bill Sutherland

Wow.

Darren Jensen

Yes, field so they up good. seem is to pick it up. picking The pretty

Bill Sutherland

thinking at – least unemployment how I'm macro quarter? numbers recruiting you here impacting going fourth immediately. about down, not and then obviously as coming the look us up And about think what you the and the enrollment that and past Tell your

Darren Jensen

of to entrepreneurial look have micro wellness As that uniquely type opportunity nutrition, this sharply well so companies it, social product distancing during today's point. strong believe at companies also of time relationship during And have provide environment and especially customer, are portfolio, I proactive at to rising that a consumer the unemployment. that are the that who are focusing are more of positioned some especially opportunity people that I direct a on then companies a in companies with when business time offer many also

I three So opportunity. LifeVantage positioned these for really think future characteristics

Bill Sutherland

Have of you glimmer to mean seen happen. what makes of are any as sense you glimmer – me. said to being starting it that And I –

Darren Jensen

And at sense of joining glimmering, are approaching people people that of people the that we looking people as the look beginning our business, as at entrepreneurial unemployment, the interested activity. our know a had on United shift. mix Well, in they're you before are that are product an message XX instance about as in, States coming interesting people six message. weeks, speaking more is typically of type the the for we've – the in were people about But to that with the it's over last in million we're go

a So we're are people within the in. that mix are shifting what of given even interested seeing messages and

out them translate finding bring typically, in. good customers to because into growth they're So, distributors business more

So I sign. think that's a good

Bill Sutherland

of lot a makes sense. It Yes.

Steve Fife

customer And the in this given I of that maybe any XX% add XX:XX, customers. distributors, is customers. distributors, to is month was XX% XX% distributor Steve. maybe enrollment of Bill, about ratio that are that, to And just on historically, kind are in April XX% so number

pandemic that Darren's out our with in been that messaging think have people might income impacted messaging is for there that I and well that our to point, are alternative perhaps as as the So resonating time, them. be at sources adversely of by point looking this

standpoint. we've point it's looked data one that's trends historical Now, but good month, a pretty at our for us that from when

Bill Sutherland

product Okay. last Thanks. you'd then as looking allocation? for next as fiscal thinking me you be preliminarily about And the as just capital and into new year, what are roadmap far

Darren Jensen

I'll address new area. roadmap the product

break that launch. into We the driving that of our somewhat most been recent product With taken of the aspect using were entrepreneurial the rolling out major current a so the company, that really really driving of field culture Protandim towards business, towards Synergizer, shifting our the in circumstances. the messaging – by we're the really process is NAD as that has more messaging overshadowed it's in of and

the address return and begin begins of talk the want this And think of a an give do somewhat, to important I and message next that the sure I'm then, from of our to into of fiscal to consumers. question? you company that of other we all next marketing deeper Steve, we're as more the change our to more But we'll product soon as if situation going year. of the as in what of standpoint quarter, So half culture to use we'll driving idea

Steve Fife

standpoint that in to heavy lot their with our our operations return continue company we've any a continue buyback us to a at lifting heavy cash think of our a we a From it capital shareholders. via of to where from of to enhancements moderation app opportunities the invest generate best the the in the the on opportunities CapEx standpoint, is in look But cash utilize to of lot our as make just behind and we'll a provides or that. done a way does from other hopefully that either expect apps. development We'll lifting with we associated Yes. do we

Bill Sutherland

for Got and taking questions. quarter it. Good the thanks

Darren Jensen

you, Thank Bill.

Steve Fife

now I Bill. you. Thank it, Yes, appreciate

Operator

of Private question. is the Jim question a your Please line next Our proceed Investor. Galloway, from with

Jim Galloway

organized like well you quite Congratulations. handle are this looks guys to It COVID-XX.

Darren Jensen

Thanks, Jim.

Jim Galloway

a of including last spending and been quarter million stock quarter every money lot this We've buybacks. $X on

very the surprised to I see to into Can me was So thoughts? some March filed S-X million. XXth on raise $XX you potentially give insight your

Steve Fife

a like It provides we a to and act if feel opportunity just if Yes, shelf were but company. good as you that company, do needs under an I We just be place. the know, or in corporate as that it's presents good just ability for immediate governance have phones the there's currently quickly the S-X us have board any guess could that for not for set itself governance Jim, an S-X, with it's to us. that good a use a covered

Jim Galloway

Understand. you. Thank

Operator

Thank time, closing Jensen you. to the for remarks. call I'll At this turn Darren

Darren Jensen

Thank you today. joining for us

far about this doing next hope all We able our and our hard safe year a we're our products call. results healthy pleased look this employees, are We distributors and so and on the deliver the stay you LifeVantage forward in time. Have our to chain day. are you great to ensure updating world to uncertain during and supply work

Operator

you This Thank today's everyone. will conclude conference.

time. this for at Thank participation. lines your disconnect may You you your

LifeVantage (LFVN) 5 May 202020 Q3 Earnings call transcript