Lifevantage Corporation

Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss LifeVantage's fourth fiscal quarter of 2021 financial results. At this time, all participants are in a listen-only mode. Following the formal remarks, we will conduct a question and answer session. Instructions will be provided at that time for you to queue up. Hosting today's conference will be Reed Anderson with ICR. As a reminder, Today's conference is being recorded. And now I'd like to turn the conference over to Mr. Anderson. Please go ahead, sir.

Thank you. Good afternoon and welcome to LifeVantage Corporation's conference call to discuss results for the fourth fiscal quarter of 2021. On the call today from LifeVantage with prepared remarks are Steve Fife, Chief Executive Officer and Chief Financial Officer, and Justin Rose, Chief Sales and Marketing Officer. By now, everyone should have access to the earnings release, which went out this afternoon at approximately 4.05 p.m. Eastern Time. If you have not received the release, it is available on the investor relations portion of LifeVantage's website at www.lifevantage.com. This call is being webcast, and a replay will be available on the company's website as well. Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your questions. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the risk factor section of LifeVantage's most recently filed forms 10-K and 10-Q. Please note that during today's call, we will discuss non-GAAP financial measures, including results on an adjusted basis. Management believes these financial measures can facilitate a more complete analysis and greater transparency into LifeVantage's ongoing results of operations, particularly when comparing underlying operating results from period to period. We've included a reconciliation of these non-GAAP measures with today's release. This call also contains time-sensitive information that is accurate only as of the date of this live broadcast, August 19, 2021. LifeVantage assumes no obligation to update any forward-looking projection that may be made in today's release or call. Now, I will turn the call over to Steve Fife, the Chief Executive Officer and Chief Financial Officer of LifeVantage.

Thanks, Reid, and good afternoon, everyone. Thank you for joining us today. With me today is Justin Rose, our Chief Sales and Marketing Officer, who will join me with prepared remarks before we turn the call over for Q&A. We are pleased with our fourth quarter results, which showed solid year-over-year earnings growth. We had a 6% sequential improvement in revenue as the momentum that started back in February and March continued to gradually build in the fourth quarter. Fourth quarter adjusted earnings per share of 31 cents increased 11% on a year-over-year basis, and we're up 55% sequentially from Q3. In the fourth quarter, we generated revenue of $54.8 million, representing an 8% decline relative to the prior year period due to the year-over-year reduction in the number of distributors. Importantly, we experienced sequential growth in total active accounts, reflecting efforts to drive distributor engagement and increased retention. As we've discussed previously, the lack of in-person interactions due to COVID-19 has been a significant factor negatively impacting our performance over the past year. Accordingly, the gradual return of in-person activities over the past several months has coincided with the positive early indicators we are seeing in several areas, which Justin will touch on in more detail. Our emphasis on refocusing our messaging and sales efforts around ProTandem NRF2, which I shared with you on the third quarter call, is resonating positively across the organization, especially with our leading distributors. The steps we've taken to increase alignment between our management team and top distributors are also helping to drive distributor engagement. Finally, we are improving our messaging and expanding our suite of technology tools to make it easier for our distributors to service existing customers while optimizing their marketing and conversions around prospects. We are encouraged with the adoption and results we are starting to see by the utilization of our distributor app. The app has been designed as a distributor tool that acts as a digital assistant, helping the distributors manage prospects in the recruitment funnel, connect with and stay up to date on all corporate announcements, initiatives, and promotions, engage with and lead their teams, and manage and grow their business with sales reports, trackers, and teams, and customer management. The app has been developed to make business building simple for both new and existing network marketers by presenting them with key business activities and data in a timely manner. During the month of June and July, distributors shared over 27,000 curated product recommendations via the app with their prospects, which resulted in 3,326 orders, a 12% conversion rate. And 85% of those orders included a new subscription, which exceeds our average subscription creation on enrollment orders. In addition to higher productivity for the distributor, the app is now providing leadership with insight into distributor activity, what is working, what is not, and what can be optimized and trained on with the entire distributor base. In the next few months, we will be adding the following key features to the app. One, predictive functionality that will alert distributors to customers and distributors that are at risk of churning with specific actions the distributor should take to prevent the attrition. Two, new features that simplify the sharing of information and content across social media. Three, We will add tools to support a new Axios sampling strategy that Justin will touch on briefly. And four, we will continue to roll out the app to international markets, including the Philippines, which we will expect to launch in fiscal Q2. In advance of our latest Elite Academy event, we held a meeting with approximately 200 key leaders and focused on recognition and setting expectations. Our distributors take a prominent role in these pre-event meetings and their high level of excitement was indicative of the feedback we've been receiving in response to our key initiatives. Of particular note was the increased confidence many leaders exhibited around their ability to leverage our renewed emphasis on core principles to accelerate growth in their individual businesses. We've also been making progress building out our corporate leadership team. In March, Alyssa Neufeld was appointed General Counsel and Corporate Secretary. Alyssa's background in the industry and experience in business and legal roles has been instrumental in strengthening our partnership with key distributors and sharpening our messaging around communicating our story. In May, Matt Cooley was appointed our Chief Operating Officer. His 20 plus years of experience encompass key operations and technology leadership roles. He is playing a big role in our international growth efforts and optimization. In addition, Matt's technology background has been most helpful as we continue ramping up the use of our digital tools to drive engagement and enhance the experience for distributors and customers. LifeVantage's products are uniquely differentiated and backed by over 30 independent research studies from leading institutions around the world. Health and wellness remains key areas of focus for consumers globally, and the adverse effects of oxidative stress are well understood. We believe that our refocus on the proven efficacy of our core products in addressing These issues, along with improved messaging, puts us in a strong position to resume growth in fiscal 2022. Before I turn to a discussion of the fourth quarter results, let me turn the call over to Justin Rose, our Chief Sales and Marketing Officer, to discuss our recent activities.