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spk_0: the day ladies and gentlemen thank you for standing by welcome to today's conference call to discuss lifevantage his first quarter fiscal twenty twenty two results at the sign all participants are and and listen only mode following the former remarks we will to duck the question and answer session instructions will be provided at that time for you to queue up post will be read anderson with i see are as reminder to these conferences been recorded and now i would like to turn the culprits over to mr anderson please go ahead sir thank you good afternoon and welcome to lifevantage corporations conference call to discuss results for the first quarter of fiscal two thousand twenty two on the call today from lifevantage with prepared remarks are steve vice chief executive officer justin rose chief sales and marketing officer and carl henri
spk_1: chief financial officer by now everyone should have access to the earnings release it went out this afternoon approximately four or five pm eastern time
spk_0: view of not receive the release it is available on investor relations portion of life images website at www that lifevantage dot com
spk_1: his is being webcast the replay will be available on the company's website as well
spk_0: before we begin would like to remind everyone that are prepared remarks came forward looking statements to management may make additional forward looking statements from response your questions he statements do not guarantee future performance therefore underlines should not be placed upon them his statements are based on current expectations of the company's management and evolve inherent risks and uncertainties including those identified in the risk factor section of life and just most recently filed forms and k intent you
spk_1: please note the during today's call will discuss non gaps financial measures including results on an adjusted basis management believes these financial measures can facilitate a more complete analysis and greater transparency to life vantages ongoing results of operations are typically when comparing underlying operating results from period period with
spk_0: quoted a reconciliation of these non gaap measures with today's release is call also contains time sensitive information is accurate only as of the date of the sly broadcast november fourth two thousand and twenty one life energy assumes no obligation to update any phone looking projection it may be made in today's release or call die will turn the call honesty vice chief executive officer of like manage
spk_2: thanks raid it's and good afternoon everyone thank you for joining us today with me is justin rose or chief sales and marketing officer and pero our race or newly appointed chief financial officer who will join me with prepared remarks to for return to call over for q and eight first quarter results are in line with our expectations and we made further progress on t initiative around care products engagement and activation revenues or fifty three point two million or down two point nine percent year over year and on a sequential basis we maintain high levels of profitability with adjusted ebitda a five point eight million or ten point nine percent of revenue more either adjusted earnings per share or twenty three cents put in as firmly on track with the annual guidance we introduce coming out of the fourth quarter we continue to believe that the steps we have been taking to really excel rate rose through focusing on our corporate tandem and i have to send a dji sir stronger alignment between corporate and are distributors laboratory digital tools a new product innovation will start to drive increases in a number of toll active accounts over the next several quarters what a level of in person activities is nowhere near what it was pre covered which has continued to impact or results friends are definitely moving in the right direction which should bode well for results as we move and calendar twenty twenty two a recent global convention was a huge success with in person attendance exceeding fifteen hundred participants plus we estimate another ten thousand participated virtually from approximately fifteen different countries this was our first major event and over eighteen month with large in person attendance something we believe it's critical to our focus on we accelerated growth over the next year moreover leading up to the convention there were multiple smaller meetings were distributors customers and process next typically and groups of fifty to one hundred and fifty gathered to learn more about like their niche products as well as how to effectively develop and grow their businesses consistent with our comments over the past few calls or entire organization it's highly energize and firmly have aligned around our renewed focus on for tandem and or up to send a or as our core foundational product and key point of differentiation leveraging digital tools and technologies to drive growth by helping distributors be more efficient and targeting and servicing customers remains a key area of focus usage rates for our distributor app continue trending favorably and we are seeing solid progress with our most product of cohorts who are using the tool to manage and grow their businesses engage with prospect country members and easily access important information around corporate announcements and promotions we've also continued to expand our senior leadership team with the addition of cup carl houry who joined us as chief financial officer last week carl is a highly experienced proven leader with a strategic mindset factors that will be instrumental as we start to express accelerate growth over the next year cause deep financial expertise along with extensive experience and direct selling an international operations providing the background and set to lead all aspects of finance accounting tax and treasury at like sandwich over the past couple of quarters you've heard of talk about a renewed focus around our core products which are backed by over thirty independent research studies are proven effective at mitigating the impact of oxidative stress on the body we've also an expanding our efforts to partner with other establish leaders and health and wellness and recently announced a five year donation commitment to the linus pauling institute at oregon state university to support the institute's mission of promoting optimal hell true cutting edge nutrition research and trusted public outreach this partner shep offers the potential to collaborate with their micro nutrient information center and leverage the power of third party research as well as engaging with researchers at the institute allowing us to be uniquely positioned around the latest innovations in the area of nutrients
spk_3: bio chemicals and human health
spk_2: in conjunction with that donation doctor brian dixon or senior vice president of research and development or joined the directors circle at l p i an advisory board the provide strategic advice to the director of the institute and it's director of development now let me turn the call over to justin rose or to sales and marketing officer to discuss a recent activities
spk_4: thank you steve and it's a pleasure to speak with every one the day we continue to focus on leveraging digital tools and technology that help our distributors drive growth and manage their businesses more efficiently let me start with comments on the proprietary like manage out which is designed to promote and reward t behaviors proven to drive engagement and has continued to gain traction with our distributors the app was recently updated to support prospect been through popular social media channels including facebook instagram and tick tock
spk_2: the number of distributed to use the app daily has more than doubled in the last twelve months and one a distributor shares a cart with a potential consumer through the gap an average of twenty seven percent of those potential consumers end up purchasing a product and of these new consumers eighty percent of of the orders result in subscribe
spk_4: options which is approximately ten percent higher in our historical average our data analysis rebels that distributors who frequently put in the time and effort in the their business and use the app regularly aren't two to three times more and commissions and have two to three times more consumer enrollment than those distributors not use in the out
spk_5: at our global convention last month we introduced and innovative product called i see bright a unique soft shell supplement with lou team the advanced and omega threes and other nutrients devise a support i'd brain hell it provides essential nutrients for healthy eyes and vision that may be missing from a person's
spk_4: normal diet these nutrients support healthy retina by storing bachelor pigment which is important for filtering out the high energy blue light that frequently as associated with i fatigue and dry eyes a growing body of research is also finding that these nutrients can help support brain help to one study found that taking supplements with blue team the as a
spk_0: for six months reduce the billion of i fatigue and those with high levels of exposure to digital devices and research has also shown that these nutrient supplement may also help people see more clearly in low light after been exposed to glare so it can also help vision when driving at night for most of us work now about daily almost nonstop interaction on our computer and while we're not on our computer was scrolling through our phones or some other type of digital device according to some estimates adult spent about half of their waking hours looking at screens whether to in the sun or the globe our digital devices all the lies that
spk_4: we take him everyday can leave people's eyes feeling fatigued and strained during the day overtime too much exposure can wear them down
spk_0: it's easy to focus on heart health muscle health and even brain now but it's easy to lose sight of idol our eyes or how we focus and proceed the world their the gateway to our memories i help support matches vision but also brain and sleep patterns
spk_4: the pandemic has increased what has already been a high exposure to screens and excess blue light we're excited about the solution the see bright provides for our customers for this over exposure and the been benefit it provides to their idol we believe that the demand for proper i help and supplementation will continue to increase as the use of screens and digital devices also continue to rise as steve mentioned earlier and consistent with our comments on the past few calls we are firmly aligned around our renewed focus on or tandem in order to center driver
spk_0: as part of that effort and in conjunction with our new solution focus product categorisation we recently about the series of new activation stacks we define and activation stack of the bundle of products that are grouped together to provide a targeted solution to the and consumer at the center of each stack is protein them in
spk_4: aria to a because prepare them is the heart of an activated lifevantage lifestyle the goal of these new stacks to take the guesswork out of which products a distributor would recommend to a customer or prospect the stack empowers the distributor asked the following question if you could get a little extra support for your health and one or two areas what would make the biggest difference in your life at this time after listening to the answer the distributor will make a recommendation based on their health needs and interests stats are positioned to address a specific need or concern of the consumer such as heart health got health i hell energy amused support focus weight management more we're confident that this renewed focus on for tandem in our f to energize or with the added value of solution minded stacks will both energizer distributor base and give them the added tools provide a more customize and targeted solution to their consumers at our go global convention we announced a new consumer on board retention program that we're rolling out the all new customers and distributors we're started in the us and will quickly move the program to additional markets the focus of the program is long term consumer retention by building relationships we do this in three phases first
spk_0: we we reinforce invalidate the consumers decision to say yes to like mean it's products second we strive for the second month product order with incentives and reminders to the consumer on the benefits of subscription
spk_4: and finally we nurture relationship with the new consumer with a welcome mean experience right from the enrollment with like manage the primary touch points for the program or email the physical package we shipped to the consumer and overtime we will expand our consumer touch points through text messaging to sms messenger or and other digital channels the program was very well received by the distributors who attended our global convention and we are confident that it's the right level of engagement and a lines are work better with distributor base allowing them to focus on consumer acquisition while we support them with a stronger presence on consumer retention finally the plan launch for the philippines which we highlighted on the fourth quarter call has pre launched earlier this week in his plan to officially launched by the end of november we continue to see great energy and excitement from not only our leadership in that region but from a leaders around the world that wanna participate in this new market opening and we build
spk_2: the this is another important milestone on our path to re accelerate growth now let me turn the call over the coral to run you through the first quarter financial results thank you justin before go over the financials in more detail let me first say how excited i am to join lifevantage i've spent much my career in the direct showing industry focused on health and wellness lifevantage is truly recognized for having one of the most unique product on the market and has an outstanding platform to support future significant growth now onto the first quarter results please note that i will be discussing or non gap adjusted results you can refer to the gap to non gap reconciliation in today's press release for additional details first quarter revenue was fifty three point two million down two point nine percent on a year over year basis revenue in the americas declined five point eight percent compared to the per year period to thirty six point four million driven by a nine point four decreased and total active accounts partially offset by higher revenues per account stemming from new product launches and lt else revenue and our asia pacific and europe region was sixteen point eight million representing an increase of three point nine percent compared to the prior year period and reflecting and eight point nine percent increase in total active accounts we experience strong double digit growth in australia new zealand as well as greater china while revenues in japan decrease five point six percent in each case as compared to the prior year period japan revenues were negatively impacted by four point five percent during the quarter due to foreign currency exchange rate fluctuations in on a constant currency basis revenues and japan decrease by one point one percent revenues from japan continue to be negatively impacted by restrictions around in person beatings due to the pandemic gross margin with eighty two point three percent in the first quarter compared to eighty two point nine percent of compared to the prior year period the sixty basis point decreasing gross margin was due to increase inventory obsolescence expenses higher costs for shipping and shift and geographic and product sales max commissions an incentive expenses as a percentage of revenue decrease by one hundred and fifty basis points year over year to forty five point three percent reflecting changes in the timing and magnitude of promotional activities adjusted sg and a expenses increased point six million year over year to fifteen point three million as a percentage of revenue be adjusted as genie expense ratio was twenty eight point eight percent or two hundred basis points higher than a year earlier due to increases in marketing travel and event expenses reflecting investments and future growth adjusted operating income was four point four million or eight point two percent of revenue compared with five point one million or nine point three percent of revenue from the prior year period adjusted net income was three point one million or twenty three cents per fully diluted share compared to three point six million or twenty five cents per fully diluted share for the prior year period the company's effective tax rate was twenty five point two percent and the first quarter of fiscal twenty twenty two compared to twenty six point eight percent in the prior year period for fiscal year twenty twenty two we expect our effective tax rate will be approximately twenty six percent adjusted ebitda for the first quarter was five point eight million a decrease of point nine million from the prior year period
spk_6: adjusted ebitda margin was ten point nine percent in the first quarter of fiscal twenty twenty two compared to twelve point three percent in the same period a year ago
spk_2: please note that all of the adjustments from gap to non gaap by discuss today are reconciled and our earnings press release issued this afternoon we ended the first quarter in a strong financial position with nineteen point nine million of cash and no debt and we continue to maintain five million of availability under are revolving line of credit we use three point five million in cash during the first quarter to repurchase approximately four hundred and sixty thousand common shares under our share repurchase authorization as of september thirtieth twenty twenty one there remains eight million available under the authorization we expect to continue to be active with our share repurchase efforts in the future capital expenditures total point four million in the first quarter and we anticipate total capital expenditures for fiscal twenty twenty two to be approximately two point five million turning to our fiscal twenty twenty two outward we continue to anticipate or fiscal twenty twenty two revenue to be in the range of two hundred and twenty five million to two hundred and thirty five million and adjusted non gap iba dog in the range of twenty two million to twenty four million with adjusted non gaap earnings in the rain just eighty three cents to eighty seven cents per share and what that potter and the call back over to steve thanks colony and just and in summary we continue to make progress on t initiatives and are encouraged by recent friends and activity and engagement with our top distributors consumers interest and health and wellness is as strong as ever and we have a broad portfolio of high quality innovative products proven to help optimize health and improved performance at all stages supplies in addition we offer an incredible opportunity for individuals to earn supplemental income through their business building efforts or corporate team and distributor leadership are aligned or financial condition of solid with a strong cash position and profitability and we remain committed to drive in value for all stakeholders lastly i want to reiterate our enthusiasm for the upcoming launch and the philippines as the favorable dynamics in this market are creating tremendous excitement
spk_0: with our global leaders who want to participate in this new compelling opportunity now let me turn the call back to the operator to facilitate questions operator we will now begin question and answer session to ask me questions you may press star than one on the telephone keypad if you're using a speakerphone please pick up your handset before pressing the keys if at any time question is when addressed and you would like to withdraw your question please press star than to again to ask me questions in the press star than one at this time will pause momentarily to assemble our roster
spk_7: the first question comes from dog lane with lane research please go ahead
spk_8: yes i did afternoon everybody
spk_4: of is just try to think through the remaining three quarters of the fiscal year here on
spk_9: and
spk_2: try to get a feel for would be no but what would impact any given quarter and so first thing obviously it's philippines this corner or from a geographic expansion standpoint are there any other new geography is that you're fighting to enter this fiscal year
spk_6: ah the steve i don
spk_7: actually yes that film philippines for sure and has has launched we're looking at one other country that might come in towards the very end of the year but i would doubt that it would have of material
spk_8: impact on our civil twenty two results
spk_10: okay that's how form and i would move them to live events now that they're back on on the table here are you mention your global convention or any other sizable wider than for the remainder of this fiscal year
spk_7: yeah a dog this adjust and our our next big event will be in the us in february we'll be doing an elite academy which we are expected to do probably pretty similar to what we did in our global to mention maybe a little bit less since it's up north america specific but each market also
spk_10: well as individual events going on as the the world starts opening up a little that so we will see smaller gatherings i'm in some of our international markets as well now the elite academy going to be shifting hundred people as well as one less
spk_0: we were actually
spk_10: building and out they will be i've read than so we're building that out to be about two thousand and person and then we're hoping to get anywhere from two to three thousand or mind as well
spk_11: and the other the new stacks that you're launching are there any particular one that's going to generate outsized excitement of ours you think about arm and which core of might got be if there is
spk_2: the up with yeah yeah that i'd i'd say you know we we launched a new product
spk_9: at that convention told i see bright
spk_12: and they're nice that stack with created a staff around it i think you'll start to see momentum we're we're really excited about the reception that we've had with that product launch and
spk_13: you know as as justin said we got a lot of said he i had he'd right now in society with everything we're doing online
spk_14: and i'm so so we expected that that
spk_8: low will be added or driver for us
spk_4: okay so that's already
spk_7: been rolled out said okay climate science and then arm
spk_2: turning to the of i mean you have very high gross margins and even though they were down there are down that much so you know in an inflationary world his position as well as i will be anybody but can you give us will update or what you think about pricing taking place you have you taken pricey arm which would he think about palm using place and offset some of his passions
spk_9: yeah we've we've talked a little bit internally or about that you know we were we were fortunate i'd say it back you know was at the very beginning of cold colder too
spk_15: to to sure up our supply chain we we probably purchased falling i mean at the time maybe even well ahead of where we thought we should be but we wanted to be conservative so we we lock in prices on a lot of our major raw materials eighteen months to years ago
spk_7: and so we're not we're not feeling the squeeze from a rostam point but obviously like everyone else the the supply chain around the delivery logistics fees were getting hit with and you will continue to monitor that to see if we have the to do some price modifications the right now
spk_2: now our comfortable where we are
spk_4: i'm it's been a while since we've been in the situation but how much greater flexibility the think you have one of the impediments to taking place and grid sincere
spk_2: well you know our our our products with we think are competitively priced right now but as if in a bar if we feel if we feel a lot of pressure on our margins and and you saw you know what we've we were down by five hundred basis points
spk_8: ah fifty basis points in our margin or if we if we if we continue to see that margin pressure pressure whoa whoa look at it
spk_7: but that right now believe we think we can manage it through just our cost management
spk_10: okay fair enough on did you do a those margins so the i really want to talk about the and justin is the distributor cap or in the us which is it down double digits now for two cores and just down for four corners or what what kind of that which are you making stop the decline spared and and start growing did the should be account in the united states
spk_16: yeah we we have a a couple things that we're really focused on you know we've we've really been focused on our promotional calendar out with the consumer with the in consumer the customer and i'll you're going to see a little bit more engagement with the encouraging are filled to bring in the
spk_17: jupiter's as well so we we are we we've been working on focusing on distributor robots now work up quite a while of the last i can get six to nine months and we feel like that is going to be key to getting things ready accelerated from a growth stay employed so we will continue to put the gas on
spk_18: apply i'd the say i mean
spk_13: when when we talked a little bit also a just about you know how outfitted all and an important art or global convention was
spk_10: the and on the i mean not not just symbolically but the the feeling of people finally getting back together we we did a number of we call them road to convention in person meeting
spk_2: and and those were really powerful ah i'm in that it just started to
spk_11: give people an opportunity that that wanted to the to get out and to kind of reengage with their peers and and you know the community of about like the age and and we are we we do
spk_2: monthly we home life bad vantage academies so there's of these are training are both both an opportunity meeting for new prospects as well as the training for existing distributors ah i'm and those are taking place and five different cities now i think on a on a monthly the basis and arm and then we're also continuing with in person mediums in a road to croatia croatia or next incentive trail
spk_8: so we're in a qualification period now that runs through june and these meetings are distributor lab you know corporate is there at a to kind of support but it's the the distributors that are actually taking the reins and getting out and and and and organizing and invite
spk_3: in and bring in and you know people within their teams are within the geographic location so it's sad you know distributors are starting to get back into activity
spk_19: well that's true you haven't had lived events for over a year yourself the u s e that in february so she she definitely help right that's right that's right okay and you know i or for me
spk_20: we're a company that i think you know still still built around and and his his arm you know benefits from those live in them specially from the distributors
spk_0: yeah makes sense either call for me thank you thanks though again if you have a question please press star than one
spk_2: this concludes our question and answer session i would like to turn the conference back over to steal five on a closing remarks thank you operator and and thank you for joining us today and clothing i'd like to take this opportunity to thank all of our employees for there are work and dedication and as well as are outstanding team of distributors and loyal customers
spk_0: we remain confident in our business model in are focused on delivering the life and it's products or customers depend on
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