LFVN - Earnings call transcript Q4 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 Fourth Quarter and Full Year Fiscal 2020 Financial Results. At this time, all participants are in a listen-only mode. [Operator Instructions] Hosting today’s conference call will be Scott Van Winkle with ICR.

call 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

fiscal the Thank you. call quarter for conference LifeVantage to and fourth Good afternoon to and discuss welcome year XXXX. Corporation’s results

this the p.m. to are Jensen, remarks which the Fife, Financial earnings Chief with everyone Eastern now, out Steve Darren Officer. and release, today By LifeVantage afternoon Officer should On X:XX call Chief prepared Time. at from approximately Executive have went access

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

Factors operating on may of your the will financial remind Risk do that underlying like Before reliance today’s we non-GAAP future Management remarks results we the and greater would from LifeVantage’s those a to Forms questions. including not basis. transparency these of begin, current not measures note statements comparing more period believes that should section our XX-Q. be in in LifeVantage’s therefore everyone we placed particularly company’s during call, filed on in most operations, ongoing discuss measures financial XX-K facilitate an risks the response uncertainties, can additional identified and adjusted and results recently These make complete when analysis results period. of Please management forward-looking and inherent guarantee statements them. based to expectations contain statements to involve management and performance prepared forward-looking are undue These upon and including statements

live today’s date measures of obligation in to contains or call is information We no accurate forward-looking that XX, any only assumes this release have LifeVantage time-sensitive non-GAAP the with release. projection today’s This a broadcast, XXXX. also included of update made reconciliation that maybe as of August these call.

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

Darren Jensen

hope I well good safe afternoon during are Scott staying healthy you, you everyone. and and doing are Thank and time. all unprecedented this

faced pandemic, fiscal Americas people active in increase distributors making suited turning during time throughout fourth resulting ever quarter nimble we and offering Europe ways been and year-over-year ended The business year we calendar have growing have growth and revenue in uncertainty we to We are tools. During of ideally growth the testament XX.X% quickly global have digital changing year fiscal both this very the investments is a COVID-XX in adapted our and full from proprietary number healthy the of the year. respectively X.X% in their We full to More income for record make have to the strength fiscal improved alternative of enrollments and and full revenue. is we X.X% are the this and independent of year both the challenges on finishing X.X% regions and business environment. technology the EBITDA fiscal and entrepreneurial basis model XXXX, our a or for for year. financial supplement our and distributors with generated the with XXXX product model, and Asia-Pacific pleased the consistently with and remained new robust respectively how but

their on world health. the in focus increasingly consumers resonating are Our is around nutrigenomics when time a also on focused

organization’s Our quickly to ability consumer tools, digital technology media rising and distributors through driving to environment pandemic. presented very which pleased with and their our leveraging leading social by entire adapt with I is am messages the are the interest. these COVID-XX

fourth and we quarter, results progressed as in finished the the during While early quarter the of and strong. the initially pandemic our the recovered effects growth dragged third quarter

continue in effectively work to model. work-from-home a employees Our

and technology their utilizing successfully are distributors media Our businesses. grow social to

a of ensuring are suppliers products. third-party our and secure steady remains supply chain supply Our

travel the proactively events, of our in part savings in During incentives by drive which from growth and promotions had hold. distributor expense redirecting some quarter, local fourth be on and put we invested to to

promotion, program a April, $XX supporting for start was driver Switch a new value month Our activities This distributors, of then our LifeVantage. was by the and utilization Carpet in direct experienced our through professionals of our during enhanced quarter. growth. to free June, and followed is Flip a May the Red kit promotion enrollment which program, We successful on also accelerated attracting focused revenue build with the further which enrollments and selling were with

importance technology quickly supporting to focus the addition connect chain and the to tools supply the of and our them. our turned that and distributors, our In valued customers

created the Before and growth team and app infrastructure. to of advanced digital our our technology development digital new the mobile pandemic, a we have recruited continue

as for team transformational strategic we hit, will technology the of that long how after accelerated marketing this our roadmap and and thinking current use the the their that team, technology be along soon started our As efforts, our digital of have created pandemic. new pandemic rethinking ways about efforts business entire with adoption

Our New seen direct with business market growth year, of of past model, volatility external reoccurring geographical distancing challenges our requirements We in to saw social during and months. in several given external recruiting. over and times revenue subscription, limitations continued strength the on Japan limits selling our revenue quarter as particular Taiwan, growth are disruption the and continued provides of XX% where in both and during regions the on sales the we Zealand fourth and have despite cyber this in fiscal Australia

look towards drive to fiscal are forward. current business As we while our uncertainty, and ability XXXX, we in the forward environment the provides adapt confident

are that attrition, the net score. enrollments, per revenue metrics promoter drive remain average We key on account including and business, and focused operating our effectively virtually

technology, tools promotions anticipating into foundation these the propel and future. entrances and drive XXXX. digital we further footprint new market to new continue and the build will product support the fiscal through in expansion further our as launches We to growth We innovation. during of our product are our long-term metrics anticipate investments plan new key our We upon that of in company global

launch year expect make year announcements Malaysia in and We to this market as to progresses. new and Singapore coming additional the

LifeVantage each company to every that one for and these thank and depend want continued Finally, focus team to our their products during the of customers our delivering I difficult on. our times, commitment members

the run these it of the continue turn confident business in passion and only our our employees to to survive, results. are Steve? financial and our not adaptability let model, Steve during to base that, the We commitment With but of to through thrive me uncertain over times. distributor

Steve Fife

you, good and Thank everyone. Darren afternoon

walk Let our through you me quarter fourth results.

quarter, record with are to highest our solid revenue EBITDA quarterly achieving second We report proud the another period. during

well-positioned environment, strength the changing business of I our which is note are will that results. we discussing model. discussed, adjusted this ever Darren highlighting non-GAAP our As Please in be

Asia-Pacific and both reflected continued despite year-over-year. number social today’s performance Growth Americas the growth with press to for You media and million, the GAAP in $XX.X can prohibit X.X% while quarter in grew additional Japan local and million million, non-GAAP cyber of $XX.X in X.X% revenue reconciliation to to to regulations, Revenue Europe by revenue and Fourth refer X.X% We strong positive accounts, on Europe up increase region which in were in active a increased New Australia X.X% encouraged basis. release Asia-Pacific was the in details. a in recruitment. the Zealand. year-over-year $XX.X Taiwan,

COVID-XX. in the shutdown flat, XX.X% worth geographic is Gross Americas it increase XXX by Additionally, as to expenses from and to Synergizer the in during continue growth and increased very costs, our margin our well positive per XX.X% in due as quarter benefit our driven third inventory year-over-year and with incentive their programs The it program. a response was by the increase market Commissions reflected for was of long-term to carpet in XX.X%. margin in is change to and lower These and The changes as increased promotional price Europe holding that and in with to to change its in performance launches compared product completed in the The our sales along strong mix. percent the incentives quickly investments average revenue our be to noting points target. and year-over-year revenue increased basis price Gross offset Protandim period. gross discussed, was margins launch NAD while prior-year handling bundle. Darren Protandim is the Tri-Synergizer contributed as own the line continued to investments U.S. growth red of response partially the obsolescence our account.

XX.X% adjusted on share in XX.X% compensation, as new was in per million to the of red $X.X was prior-year prior decreases million during As that revenue quarter offset increased inherent share a as in net as as a reminder, income due operating a cancellation compared or promotions well events The million XX.X% million for in $X.X and year. will associated decrease processing percent investment in period, the to result incentive the in negatively tax in Adjusted increase a fully as of XX.X% of compared commissions have $X.XX XX.X% both prior-year to and including the of our incentive increased employee quarter to of and of income current based prior-year net technology income in fluctuation to Adjusted or expenses expense or assets was during service of with Adjusted and incentive period. XX.X% as partially revenue the from as reflects was card percent the program, was cash event compared fees diluted period. expense compensation-related placed the a magnitude per rate decreased SG&A fully to and diluted This by impacted with depreciation The higher $X.X COVID-XX. year. SG&A been revenues due $X.X primarily expenditures. stock expense period. carpet $X.XX timing increase with the the revenue rate well the or fluctuate by revenue changes expenses upon credit increased from

expect rate quarterly moderate be be full fiscal although our should year approximately there still fluctuation. will our the and relative XXXX, We XX% the some will for that to years, prior fluctuations quarter-to-quarter tax

due earnings XX% XXXX the our release are in income to in We vesting and our million in quarter. fiscal million fourth we increased to benefits prior-year all from and tax X-point non-GAAP repaid cash period. that the represents quarter ended note to debt equity fourth afternoon. increase an the GAAP of $X.X from today term reduced Our increased of position the tax this during as from the for pre-tax with million XXXX. for issued financial third of a compared press strong discuss anticipated the no balance XXXX Adjusted during rate record fiscal I our EBITDA $X.X $XX.X reconciled quarter adjustments rate loan a Please to X.X%

repurchase to revolving common approximately XXX,XXX million $X.X maintain million continue under $X authorization. We cash repurchase credits. fiscal availability In of used to share addition, we our our XXXX of of under shares line stock during of

As on business our our share million of available employees will there and XXXX, building We occupying approximately repurchase development remains new out share we capital to provide our Lehi, over to during branding $XX be in space months X $X.X XXXX, of million our to from company’s meeting January anticipate which expenditure CapEx effort. support anticipate distributors primarily $X Utah. in anticipate which in a invested repurchase and our incorporating June authorization with efforts. space fiscal learnings new support XX, have in work-from-home configured the office and last million and We We office spent million $X.X better under fiscal be XXXX the of active plan.

in investing In of tools. are addition, development and we further digital technologies

non-GAAP in $XXX in $XX to $XX million, range million million we and to outlook, million, to adjusted $X.XX growth. from impact Turning in fiscal in revenue $X.XX. range year-over-year to the of year-over-year expect earnings EBITDA the $XXX earnings-per-share generate tax the our to adjusted XX% of our non-GAAP On basis, with XXXX to has anticipated effective on $X.XX per share rate the XX% range increase a our negative of

operation. is in non-GAAP Given to the the a company’s company’s results indicator adjusted rate, fluctuation believe the from better we continue tax EBITDA of

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

Operator

Please proceed Instructions] comes Doug Our Research. your of question. with first the with question Lane line [Operator from Lane

Doug Lane

Steve, to is going increase? XX%, on cash your jump rate, tax everybody. be a XX% or to non-cash afternoon, big in rate, from good the is Hi, Yes. the tax an that that increase

Steve Fife

It cash, an in will Doug. increase be

Doug Lane

some in quarter growth you thank the And to It Darren, sort you. up ended second started sales cadence it progressed of can about quarter? weak you the Okay, out seems stronger, magnitude from the us of could the but through and me in April of June? April give talk how

Darren Jensen

of in the terms Thank to progressively revenue, you, you hear in each you. stronger. month It’s Doug, at for enrollments it even question. – month look terms or when Each from good was

went. it’s from month at from so on, strengthened year we almost if So even looking January, are as January starting we full calendar as the each that

So for month. last month month June was fiscal so the year, is increasing each an of us, exceptionally good which the

Doug Lane

And quarter continued has specifics, – into that getting that so in June into that carried strength over but into just too first into directionally, Without the fiscal the seen the you quarter quarter of third far? is third ‘XX? have

Darren Jensen

know first us into quarter, it’s on us. I with July, of going our don’t we that it’s particularly – we month, a commenting months are our seasonally softer for summer typically one but

I So July would month. our a base of is don’t field. I on lot within that anything just know There excitement particularly

Doug Lane

more is the looking coming projecting growth, quarter, the number then factor the in that the an – my I my sales just No, out it’s of at of a environment. June number, is have that also in strength it’s you Darren. it’s quarter while. I fair than distributor just which But was the are for for And enough, you June And your am distributor a number, really sense such just same are that. unusual in more good I XXXX. biggest with which model

leadership to pretty seem good you traction as getting well. on your So, be

So more positive these want little to I something are. bit think trends if see there’s sustainable how on and here just a you going

Darren Jensen

we from consistent reported. Well, mentioned, are guidance the just what just that that with we it seems it would think indicate – I you as gave, we fairly

that barring throw guidance So us, COVID at curve to in our we the feel And we confident gave. pretty confident may ability just balls in plan. major are our deliver we

Doug Lane

Okay.

Steve Fife

Of course.

Doug Lane

Okay.

Steve. Sorry, go ahead,

Steve Fife

what was more – people products interested I of to where opportunity were the kind going our the was of Yes, that the than beginning became model. them in to no, in just pandemic se, attractive we thing, a add at they clearly business per whole shift much the was saw

to and think candidly new advantage bode growth look successful promotions for well distributor those to the very we base think the going that’s – in speed it’s get the bringing start future we and that to in during we we really start so as And interest. We took QX, I few customer a to as wins. up us distributors of had which saw

customer And so enrollment that in saw cautiously the that the growth we’re optimistic excited we convert and distributor growth, that future. we’re from about will to it

Doug Lane

offering opportunity products on health I your nutrition global color. here and versus you my during good opportunity that’s next the anticipating No, also was then crisis, a question the income portfolio, income product your have well. as

fair? your like that balanced two. is sounds it approach So, between the Is

Darren Jensen

So Traditionally always It depends looking really are led with this Darren. have product that, – Doug being they – a historically, approached how our when for or are really our we what the by distributors. message. on customers with is on

messaging and notice of we – there. our based within on in of been a demand. company, and the and a the in company. we And – third a customer people the that the business interested moderate I back fourth has think And are in economy products just having see you side very just starting in always that’s between quarter we being as are think What more to I because did it are strong skew toward the shifting more shifting recently, challenges product. the in late saw that in we of quarter, the still

of business minds move where that circumstances been time. the we and would the we on over here people’s depending just I always probably back think over historically it’s product. are, have will that shifting to I imagine And between So day but and product,

Doug Lane

Thanks, Darren. Okay.

Darren Jensen

you. Thank

Operator

Please Private question. proceed from the Instructions] of your with [Operator Jim comes Our Galloway, Investor. line question next

Unidentified Analyst

so handled the pandemic impressed on results. am with Congratulations how you I far. have your

Darren Jensen

Thanks, Jim.

Unidentified Analyst

all? the demographics the customers our And your the to now, hope one and in are that’s the customers a age-wise? XXX,XXX is people appreciate listening curious. affecting lost all. but makeup income app in change we versus discussion of Americas XX,XXX. have that see using I And and and product I to how the of of last things on there Is distributors Just

Darren Jensen

hear Yes. Well, from good thanks, It’s Jim. to you.

consistency as realize that into that it we content it were fourth to of I – important. when our glad quarter, focusing quarter, was I’m beginning some on joining managing didn’t in third either had social look the mix on the become as being and I of driven second our activities to third as over our customers, that actually so comes the time we quarter people think focus online. that, we used And or because at year distributors it short-term we decline of a in took the going to last the was moving as due media company that our to

So be – interested recruitment unemployment it. to given, a just shift or but seen rate, that has efforts Typically, just I we our as mix that customers, in much the impact declines distributors in and third minor time during more all People there in was that’s believe in customers we business we finished begin and we being been the of have so and of believe an on more are that demand. Doug, or customers an new to tend of come bring bottom consumer really that numbers that up due more before some messaging COVID-XX, quarter I the that with to to I coming so seen due the product because due us. aspect for increasing out interest in sharply mentioned in. saw knew we of efforts make time, the consistent in were fourth and it comes message for that to in there since to would January. saw those the that recruitment, it And when then we have to

people business the customers of on you kind as an short has lot know, that the more are in but think, on Now, aspect number a focusing bring impact more of term, of customers. distributors because it, I of

we – coming Convention program So see on, that expect are distributors our coming business. over expansion be including have customer that we or going further as with Steve of the our more will we to we are we additional Cyber October Cyber introducing our moved in, had Doug, support mentioned that of Convention Convention, customers at customer going which and in our to referral will a Global into a more announcing numbers, to further be to impact drive believe

Unidentified Analyst

program That’s years. wonderful. program I’ve been talking and retention referral to about for customer guys a you

so are there to great. collage right So they of there have many youngsters that’s get are are But out and to not and now hope able one. that a out career

And so are focusing a our or opportunity, business? them better is on a or way attract the we youths, to anything more there into

Darren Jensen

looking I believe saying, you now. right it attracting, the driven like that that they being events by for jobs by there – the ways think coming and of are environment is I college and tougher much a is of out were always it’s much of of day,

huge people naturally, see little more think it’s would category. seen and is in Protandim, bit begin are and being a been move this I the to that topically demographic applied our shift our in, younger. hold What our movement look for overall direct LifeVantage, ingestible more number, product coming from a believe but wellness. selling that I products and true at have more business. I at that From a a So wellness one. interested not is just really I you’ll getting people seeing that’s we towards our standpoint, we direction, has who or from in a And think the When it more I look away join younger products, of a of

things open gigs. I side gig kind the and more Uber, picking think economy to are to that Grubhub, like of the up younger generations

been think I the So has think change nature accelerated I the the economy, of in by COVID. just which

have a the a at online you a lot cyberly, of Now side home anymore. not foreign or from people business is concept running of home, working and concept a business

I people see younger skew that will that to we think wide naturally will industry apply LifeVantage believe So to also. and I a

Unidentified Analyst

up Keep you. Thank work. the good

Darren Jensen

Jim. Thanks,

Steve Fife

Thanks, Jim.

Operator

over back would any turn This to the Mr. session. remarks. floor question-and-answer our Jensen concludes to And for I like closing

Darren Jensen

thank for you us today. to I joining want

results who all employees, deliver products of able day, our depend we are look supply everyone. XXXX our We in We are them. to Have healthy, upon to with you the work stay on to and continue our hard fiscal times unprecedented pleased LifeVantage to safe and to our ensure and distributors these call. chain our great hope next updating a customers forward and you during

Operator

concludes This teleconference. today’s

Thank day. now disconnect may wonderful participation. you your You your Have time. this lines at a for

LifeVantage (LFVN) 18 Aug 202020 Q4 Earnings call transcript