LFVN - Earnings call transcript Q2 2022

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Operator

00:02 Good day, ladies and gentlemen. Thank you for standing by. Welcome to today’s conference call to discuss LifeVantage’s Second Quarter Fiscal 2022 Results. At this time, all participants are in a listen-only mode.

Following the formal remarks, we will conduct a question-and-answer session. today’s be Hosting ICR. Anderson XX:XX Instructions] conference Reed will with [Operator

to go a being to would over is today’s turn Anderson. XX:XX conference As conference I recorded. reminder, sir. ahead, And now, the Mr. Please like

Reed Anderson

to XX:XX call Corporation’s second of to and the conference fiscal for LifeVantage XXXX. Thank results afternoon, you. quarter Good welcome discuss

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

you available no XX:XX and from with of it financial everyone is LifeVantage’s may reconciliation on results contain over measures as well. period. the If Steve a accurate we of financial is XX:XX available that period today’s XX:XX portion results www.lifevantage.com. the of these remarks time-sensitive forward-looking be Executive we facilitate at statements, to and Relations the results call company’s or this we can when including remind call This website, Investor today’s obligation not measures, will to made have may Before would like website being We’ve Now, information that additional XX:XX date received Fife, comparing be on non-GAAP begin, into contains prepared will release, our management non-GAAP of webcast, the assumes replay an included make your statements more of of are and based most not risks in update expectations to them. to X, February including recently inherent statements these be today’s XX-Q. These response should LifeVantage’s in that uncertainties, in the on XX-K also Risk identified greater Chief company’s Please of release. underlying XX:XX basis. XXXX. the of questions. Forms forward-looking complete those placed any reliance Officer discuss and operations, transparency guarantee ongoing statements do future on I that section and undue and during believes These LifeVantage. involve forward-looking upon only therefore, measures performance, Factors management not note filed current will analysis a to a LifeVantage adjusted turn This Management projection as call, is live broadcast, release the the call operating particularly and LifeVantage’s call.

Steve Fife

for Q&A. activities, the unexpected slowed about of everyone. prepared last our will On is in-person about call down this our Thank XX:XX With were news afternoon, remarks joining with earnings me we past optimistic Aure, has variant you us significantly expansion Omicron XX:XX activities Thanks, we join Carl me turn the before Reed who Officer, Financial quarter. and and today. the good call, for our more Chief over

We expect to this fiscal see XXXX throughout on. point improvements and from calendar

initial to expectations have expectations, on factors. impact Carl our the outlook. will our our Second extended of update However, XX:XX results largely than somewhat. quarter full-year were lower attributable been COVID-related dampened you

company positioning $XX we've made and areas $X.X delays, year-over-year disappointing, this quarters, Revenues several and cash. our maintained Over to detail. with in and the we Despite balance of on unexpected products, growth value customer still focused on accelerating revenue $XX.X pushed encountered a which While delivered Philippines EBITDA the million over strong significant People, XX:XX million experience. start sheet three decline, of long-term into were of example, recent for adjusted Our been primary effectively past creation. down million January. outline basis. X.X% more further strategic for key XX:XX we I'll which launch, XX.X% sequential on initial initiatives, several progress and

of champion to vision at team executive ensuring individuals since for new Digital my XX:XX grow innovative We Marketing of taking product a focuses level. recently strategic has been will a company of company sales I'm where an passion, such business team fans, will the that has come working marketing marketing, and customer of teams. of joined individuals a helped privately information teams primary these through you rest digital along has Chief with to is You analysis, becoming past thrilled infrastructure XX:XX successful next bring depth marketer update period the to that together having Officer Our incredible an CEO a for an application by the and our Chief data technology. branding, initiatives for XX:XX product people complementary with and with and teams, [ph] the and the to and to build effect that a provide business, value digital security LifeVantage. better, team, highly vendors and also to and Boyster] products Julie laser year. creative global Officer of hired many technology, Both led safer. a Chief the experiential thrives on be [Julie make and growth direct suppliers the the as weight of frontend and heart XX:XX using meaningful organizations developing quality and are content growing product backend over business quarter. talented Digital accelerate create health infrastructure building interaction. transformation. building growth faster the memorable digital ecosystem XX:XX He she held strong IT the and people. to One of background creating it and She at oversee a Both the Now, our on champion together the every transformation organization to in group passionate XX:XX of history is products, experiences, loyalty proven raving assurance, driven XX:XX an surrounded development, management, new drive in At are research businesses teams product in business expertise and me and and in run team. management let large, management through and development, incredible every Officer. with our hyper that developing which company will outcomes revenue of and driving and be Julie of the the annual million technology a $XXX instrumental brand passion marketing, oversee focused transformational campaigns. skills, integrations and leading

promotion, as our NrfX the designed stack, of Finally, our These XX:XX it and holiday global packs, global health. our we we number incentive You've convention health in Plum, limited including to of excitement core to trip holidays sales our Croatian a offers merchandise. of Several At activation a also retreat wanting each paired benefit brought and distributors. center to ever New were launch website immune with health. time also XX:XX ring and touch the packed and incentives, two product Spiced it's talk life. Including support stacks flavors on promotions, The points. past Year and the and about we essential of the giftable XX:XX such delivers October, supplement spurred enrolling and Peppermint common Protandim their new health elite our with buy IC experience amongst December heard digital Stick. across our NrfX of October, us with projects in over LifeVantage customer couple Protandim address the easier make been. In is the focus launched all the a XX:XX a brand with Bright, on to and quarters nutrients, addition efforts to than along seasonal e-commerce site product, improve we refocusing redesign continue in brain to the gut to the improvements convention, launched of various experiences. of U.S. anyone antioxidants, and our shopping validated make launched carotenoids At Axio, concerns

global to changes. also has site updated Zealand been New the match

post has and leadership a share entrepreneurs with plan globe team tremendous currently. power products, and designed the and way Internally, lives a consumers an date. brand We given and insight incentivizes health across this in evolving being the whose way known with compensation paths stakeholders digital and us platform view We and also wellness engaged LifeVantage year tremendous foundation evolution provides our XX:XX providing inclusive have to creates want around end to rolled of agile selling than purchase addressable of edify, it day grow. much In all Our more. and out coming and tools the and a simply our to vibrant to a to platform we've to broader to we want loyalty a as areas understands multiple amplify an outcomes to of evolution thriving to your products. the body’s Protandim drive natural love. surrounding want educate, to that that brand processes around and and back vision products We we center durable businesses towards for customers they quality company, consumers incentivize our possible XX:XX and and to customers the activation be satisfaction, and into message direct for a impact company friction the wellness level with globe support through all we've market. high have engagement. in driven keep future aimed more done tools, distributors, our and been lives health been the empower continue model XX:XX as laid supports rooted a the of standpoint, does has XX:XX with most past From to want addition is this strong worldwide sharing that a a that repeat The premium in growth that campaign that at innovation LifeVantage’s both these growth. to of to at the products our customers. that the experiences calling approach technology into products opportunity loyal positioning of wellness the business key XX:XX the our XXX holistic best the puts them coupled products very continued health deep of immersive a experience, that momentum customer our consistent encourage recognizable NrfX lead legacy around using much and activate drives can distributors be wellness much life. best XX:XX larger positively to that meaning high more the having taking foundation a story. and we're them lineup is advance digital strong people, We paramount impact future and as to eliminates Importantly, delivers broad XX:XX the known that XX:XX will our healthy We be and reach Leaning a team for than broader

LifeVantage Our market with our and leadership products, aligned to are our and board including to at existing of next and fully It's new with additional brand a overall businesses to see and XX:XX us this we'll moving strategy, new to on additive company go we using time are themes to over awareness team growth paradigm worldwide. start very will expect tactics share you incentive the and and significantly details and accelerate distributors updates the reach exciting that our customers performance. improve quarters, be aggressively broader to couple

with distributors. customers strong base and of foundation a is loyal large Our established

let over financial me Chief In call drive us results. enable the addition, Officer review solid quarter to we appropriate that for Now, resources have financial Aure, second to will our Financial to deploy our Carl growth. future turn to the position XX:XX a

Carl Aure

XX:XX non-GAAP I results. that note will adjusted our discussing Thank Steve. you, Please be

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

year-over-year quarter. down a was on revenue the from first million, XX.X X.X% Second basis quarter XX.X% sequentially and

Foreign rates XX.X quarter. to currency year XX% declined by fluctuations prior by total X.X% in to XX:XX million, accounts. million, Revenue the strong total in hosting challenges China. negatively in increase $X the experienced Europe Asia aided active XX.X%, million reflecting by compared an impacted our driven ongoing XX:XX to Revenue Australia, decrease to in revenue in the a Americas second double-digit Thailand, accounts, active region period in-person XX.X and X.X% We in meetings. Pacific growth increased and

obsolescence X.X inventory of margin was the year However, XX:XX Japan, quarter, shipping increased XX.X% gross revenue declined prior Commissions mix. in slightly revenues expenses decrease offset period. expenses, was increased shifts by constant a the by second attributable along expense, in partially in quarter compared in and X.X%. this impact margin year-over-year. million The with geographic to product which and in increases lower sales in and in currency. Gross negative Japan currency the was in XX.X% was On second due warehouse foreign the incentive to to basis, XX:XX

XX.X%, incentive ago adjusted expenses commissions programs. quarter. up compared to and As levels promotional of year year the basis million changes XX:XX magnitude flat, points timing versus incentive relatively attributable revenue, expense percentage prior in of approximately to X.X rose XXX and was to a and Non-GAAP SG&A the primarily

However, the in increased million to XX.X%. due XX:XX ratio net income the lower to per expense period. year to per tax to in The items million We forward revenues, quarter quarter, or $X.XX diluted due XX% in the relating adjusted Adjusted compared taxes income. positive XX:XX fully million share current income income of $X.XX was benefit of a Adjusted was million of million earlier. X.X expense or quarter, a the year. in to second diluted share SG&A impact recorded to the X.X operating compared last benefit tax second primarily year X.X a tax with X.X X.X of in period on recorded prior million compared fully net the the is adjusted comparable X.X from discrete

are million no Despite adjustments position with XXXX, release compared the same facing discussed to expect Please the for afternoon. EBITDA second reconciled effective financial our tax and that to I debt. the quarter today million X.X% maintained year strong or challenges, XX:XX the fiscal from we XX:XX our press revenues, ending of cash be earnings approximately all we million unexpected issued XX%. ago. XX.X X.X X.X For non-GAAP rate or XX.X% quarter of Adjusted GAAP of note our will was in period a in year this

the We also authorization. X.X repurchase XXX,XXX repurchase $X under quarter used availability revolving continue second our shares share approximately of to maintain XX:XX our during to common of of in credit. million We line cash million under

active Due XXXX for fiscal than expected the versus guidance for under totaled X.X Turning our to million to for As to EBITDA the our the of are of million. million repurchase to expect range to XX:XX in to to $XXX XXXX, million to range $XX quarter, share continue there back in the that, compared with in XXXX to our second to non-GAAP expenditures $XX the per be to guidance XX:XX and are range we expected to million in we Revenues million to expenditures to We in $X.XX $X.XX per $XXX million XX:XX $XXX the non-GAAP of be million $XX is of million, the compared $XXX be be share. of adjusted our prior reducing fiscal the X.X future. outlook. available to of million, $XX fiscal Adjusted call be efforts XX And prior anticipate I'll our capital $X.XX total guidance December the remains prior to quarter. following. of earnings authorization, XXXX XX:XX are with now to our and $X.XX to the million. Steve. share, turn outlook approximately XXXX X lower results in fiscal second expected Capital expected

Steve Fife

despite our energized our committed team to growth. highly recently, and unexpected transform on challenges strategies executing to the In summary, key and business remains XX:XX reaccelerate

portfolio including foundation a supported of large of innovative global distributors. by strong, Our is base the high unique quality products

XX:XX solid of goals. are XX:XX is and firmly profitable the facilitate So Q&A. which consumers health to we'll scalable turn Finally, condition with over model. to cash that, All financial their significant our a call position aligned Operator? wellness the and with achieve operator helping with

Operator

you. [Operator Thank XX:XX you. Instructions] Thank

of question. first Doug Research. Our with from comes Please proceed Lane question Lane your

Doug Lane

know but Couple sales region the XX% other Excuse the to me. would thought deceleration weak, the where me it Good actually well a in-person numbers were have Americas in heading to I out might from trends, since down starting been of hi. and stand and recent one it has interventions first start everybody. have that's the way Yes, that XX:XX I was was, you're afternoon again.

in during the So, you little the can saw bit quarter a you maybe more what color on U.S. specifically? put

Steve Fife

this is Steve. Yes, XX:XX Doug,

So, that. was a few were the contributing basis, U.S. to right, I down. a There you're mean on factors year-over-year

was this was, that event quarter, benefit of as that. year trending of modest as promotions you base up and the but others account, aware, during industry the in distributor XX:XX we First year. think we're higher recent out were year, that energy of a exploring had of picking bigger bringing occurred think terms was some customer the a that coming down, had decrease on of actions had prior also our some last acquisition in the that of we as adversely We where affected taken we us. experienced what Omicron energy focus impact quarter, why And we've had timing as a well in those with retention. the consistent just us then participation, part year events industry are we've an last in and because help the seeing company drove and effective prior in per decrease significant additional base. promotions as a I in is XX:XX we most nearly in of our much the not the we as or revenue fairly it with half year-over-year about that average customer to people developed I the decrease of over the and It's discuss the And

Doug Lane

Was XX:XX it, could you and was quarter-wide between change any a or there of sort patterns October, notice in just that November, December phenomenon?

Steve Fife

quarter-wide, December little say versus October. I'd bit a XX:XX in pickup was – of It

positive So, flat. movement, fairly bit a of little was but it

is strive – QX. that flat, we our flat relatively not were The that we to but other be thing

So, erosion to QX continued there wasn't really QX. from

Doug Lane

jump you lot a it mean, you sales, really have is sales some good the the of a decline moving lower as this And point? percent but there's hitting because line cost costs SG&A, a is or of there sales, inflation is fixed that Okay. base, in SG&A I mentioned component there Carl, in XX:XX in at to of

Carl Aure

of There's are Doug. couple that in that SG&A. a items increase Yes, XX:XX contributing to

the were One in is hybrid SG&A quarter. hybrid particular it had also And cost the the legal was here digital-only cost to added a This component relating online-only the we bit additional then of year event. or in this the here them higher area prior just solely event second just or October. some Comparing primarily that of there quarter. was of to period global convention one incremental it an in-person increased where other that the event here little was an in and the in was really a expenses, XX:XX

those really the that two overall, So, factors increase contributing are SG&A that side.

Doug Lane

Okay. XX:XX moved makes the the Philippines, quantify of That what of December way the opening quarter delaying of the out the is you and quarter because into March then of mentioned there any sales, of sense. And kind of to amount that?

Steve Fife

there is. Yes, XX:XX

As were approximately deferred, far as total $XXX,XXX. the that sales it's

of revenue until approximately So, deferred shipped. that there are product that of January when – we was $XXX,XXX received, were the that ultimately orders was

Doug Lane

Got it. XX:XX

would, Okay. lower really were expected, to and the sales you And perform understand is coming That's to months margins than quarters lower six quarter doesn't ago? they but then were the seem to June your than March outlook that What your much. helpful. continue can in, confidence help three with changed as us and expected maybe thought that have

Carl Aure

I quarters now. what in been Doug several Well, for things it XX:XX is, think putting place is we've

distributor-led XX:XX on many off activities. kicks new and to it's in-person focused also Our meetings the that actually place well taking been today activities, anticipates We distributors. and of by put is of that return building us by in place off have promotion received some our business that activities forecast building are clearly a

the ability to all our believe Philippines we've distributors significant that's of our see that import they've products optimistic getting positive for been XX:XX We in anticipate so, very us, reception second drive less in and in half during hiccups we'll has with those that year. growth received cautiously and products, have stayed return. to Philippines now that the And had going some I the fairly despite that clearance also we're

Doug Lane

helpful. you. XX:XX Okay, that's Thank

Steve Fife

Doug. Thanks, XX:XX

Operator

XX:XX Thank you.

with your Private Our Galloway, Please from question. next question Investor. is proceed Jim

Unidentified Analyst

organized please? and past, a in different in me happen generate States the many business XX:XX qualified. charismatic that good events Thank and What corporate of can the momentum actively you have how of the sales to the XX some It [ph], we seems a are the Pro leaders] XX they're you. give with used is [Pro that like of staff working recap United doing and well to group

Carl Aure

I engaged XX:XX Yes. all – are individuals LifeVantage they but than We to basis. is of trainings out group road have also calls] leaders week. thanks. call someone academies. have the that not groups them. across different as active of who XX a Jim new training many They is their of are They top people They're very leaders, these our the distributor would being business. [coaching only monthly do on company. a organization, individuals, engaged – company, say with and in their leading active, XX:XX the they the Pro in in mentoring on in them the a are We throughout are [ph]

we've and about leaders So, LifeVantage passionate haven’t care And we offer of cohesive LifeVantage products. group that a and people what deeply that to yet. billions about heard have got the our are of

Unidentified Analyst

there please? the XX:XX [drumming XX’s business, beating that up] and of Can you [ph] Pro number bushes quantify that's out

Carl Aure

Yes. XX:XX

disclose not that we have something on That's disclosed We not in public that. records. our

Unidentified Analyst

that used XX:XX list the to all We time.

Carl Aure

have we in disclosed don't I haven't since I know not records. here. what before, our that's happened XX:XX public but Well, been

Unidentified Analyst

XX:XX Okay. Well, thank you.

Carl Aure

All right. Jim. XX:XX Thanks

Steve Fife

you. Thank Yes. XX:XX

Operator

this comments. There Fife Thank time. to for XX:XX are I back would Steven to questions at no floor further you. the closing turn like over any

Steve Fife

our as Thanks take thank and a updating We on. team joining all our I Paul, hope hard and look and on delivering customers safe to customers. opportunity the are distributors are want for thanks We the healthy you remain us depend call. In day. and products our Have focused great well next confident all business for forward model loyal and today. in dedication, LifeVantage on to you and our employees work, outstanding of to XX:XX as of their our closing,

Operator

today's This call. conference XX:XX concludes

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

LifeVantage (LFVN) 1 Feb 222022 Q2 Earnings call transcript