NewAge, Inc.

Greetings. Welcome to New Age Incorporated's first quarter 2021 earnings conference call. At this time, all participants are in a list of notes. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone pad. Please note this conference is being recorded. I will now turn your conference over to Riley Timmer. Thank you. You may begin.

Thank you, operator. Good morning, and thank you for joining New Age's first quarter financial results investor conference call. I'm Riley Timmer, the global head of investor relations for New Age, and I'm pleased to be with you all today. On today's call, we have Brett Willis, our chief executive officer, and Mark Wilson, our group president. Now, I remind everyone that this conference call may contain certain forward-looking statements reflecting management's current expectations regarding future results of operations, economic performance, financial condition, and achievements of the company. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainty. Factors that could cause these results to differ materially are set forth in our annual report on Form 10-K and 10-2 filed with the SEC. Any forward-looking statements that we may make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP measures is included in today's earnings press release, which is available on our website at newage.com. Also, the transcript of today's conference call will be available on our website within the investor section at www.newage.com. Now I'll turn the call over to Brent Willis, our CEO.

Thanks, Riley. We completed our first full quarter as a newly combined company following the merger between RX, Mirinda, Zenoa, Limu, Mavi, and New Age in the end of the year, and the results were better than expected. It's great to get a fast start to the year, and we have. with $125 million in revenue for the quarter, and importantly, our second profitable quarter in a row in EBITDA in what is still our smallest seasonal quarter of the year. Now, driving organic growth, integrating major organizations, building new common cultures, capturing synergies to drive further accretive value for shareholders while continuing to bring in additional accretive acquisitions is actually It's not that easy to all get right, but we have some experience with acquisition integration. We focus on what matters, we drive sales, and we have our model and processes down, and it is working quite well. Getting double-digit growth in the first quarter of the year and us being together has exceeded our internal expectations. Now that we've reached our initial scale, And now that our convergence and synergy capture is well underway, both the top and bottom lines are beginning to produce the intended results. Honestly, we are in the strongest position we have been in our short four and a half year history since I've had the honor of being part of our company. Sometimes things may not be always as clear to those that are not in the trenches with us every day, but those patient investors that have stayed with us from a short time ago where we were, you know, frankly trading at 19 cents on the OTC, actually not trading on the OTC pinks, those are what patient investors that have stayed with us have done quite well. But of all the things that we're gonna share with investors today, I hope you take away these three things that we believe are the keys to success and why we believe New Age is so attractive going forward. Number one, we are building differentiated brands, and we have the science and pipeline of IP to win with them in the future. We have an on-trend direct-to-consumer route to market that every CPG company is looking how to do, and we're the ones that have the system. And number three, we have the social selling network of over 400,000 exclusive brand partners and customers. This team of influencers is our fundamental source of competitive advantage because what investors may not realize is that friends and family recos and your social feed are the largest drivers of purchase these days. It is not TV advertising or merchandising at the point of sale. like virtually all legacy CPG companies are structured to do and are still doing because that's what they know. But believe me, they are all trying to figure out how to become more direct and do what we do and get what we have today. That's what we all have today, what we all own, and our pathway forward looks excellent. I am pleased with how things are going and our first quarter results. Our first full quarter reported results as a combined company with Oryx and our other partners, but the second quarter in a row with positive EBITDA. The accelerated organic growth we are seeing from the merger is very encouraging and has us on pace to exceed our expectations. The convergence of our companies is on pace to deliver even more cost synergies. than anticipated, resulting in better than expected bottom line results throughout 2021. And the strengthening of our organizational capabilities and management team is providing us the runway to do even more. Now, with that, let me turn it over to Mark Wilson to take a few minutes to give you some insight into what is happening with us operationally. Mark?

Hey, thanks, Brent. As our group president at New Age, my focus continues to be on directing our global sales strategy and developing the leadership of our markets, both the employees and hundreds of thousands of brand partners and our customers around the globe. This quarter, as a combined company, we experienced some strong sales and growth and actually incremental margin capture as we were strategically integrating and converging the two large organizations and the other companies that we've been integrating this last year. This is a huge deal. And we're pleased with this growth and the trend that we are currently seeing with double-digit organic growth that is significantly outpacing the CPG industry. In addition to leading our global sales team, I also have been overseeing the convergence integration of our companies. From the outset of working with Brent, we both knew it was critical that we delivered the committed cost energy that we committed to our shareholders. We knew it was critical for there to be as little disruption as possible to our brand partners' businesses. We also knew that it was critical that our core values remain unchanged and that it was critical we further strengthen our partnership with the field throughout the integration and convergence. We had a few things going for us to come to merger that really helped. We were completely aligned at the top. I think second, we had a compensation plan at Oryx that is very unique with multiple patent spending that allowed us for a successful integration without changing our brand partner's business structure. And third, we had a pretty robust system that enabled our important compliance with the new age side. Adding to that, finally, fourth, we're a very strong foundational public company structure and the upside that everybody wants to be part of. All of these unique attributes are competitive advantages for us, but huge hurdles for virtually everyone else in our industry, which makes it doing what we're doing such a large scale, I think, very disruptive. I can tell you that nothing's ever perfect, but the passion, the energy, the belief, the enthusiasm, I would say, with our global partners is probably the most important of our markets, and it's never been stronger, hence the double-digit growth you're seeing in sales. On the operating side of the convergence, our emphasis continues to be reducing SDMA through human resource reductions, eliminating market redundancies and overall operational improvements to both organizations. We are taking this approach region by region, and it goes without saying that certain regions, based on size and cost of doing business, are more profitable than others. We've identified a number of redundancies and continue to do so, which we believe will lead to even greater overall cost reductions. For example, in Europe, we have several smaller markets that have had sales levels that do not warrant having an office. We are eliminating these offices and centralizing our operations to one market that can support many. This will yield cost savings as we go forward in 2021. We continue to see our most significant opportunities for sales growth and convergence cost reductions in Europe, the Americas, and to a lesser, the greater China and Japan, where we expect further cost savings to be realized in the back half of 2021. Latin America, especially Mexico, is a big upside. And across all our markets globally, new brand partners are joining our organization at a record pace. We are excited to help them build legacy businesses now as part of the new age. Our focus and strategy operationally continues to be the following. First, develop a leading presence in increasing our market share in our core markets of Western Europe, the Americas, Japan, and greater China. For example, we are nearly in the completion of the definitive agreement to acquire Alive and in Japan, which we believe will build an additional market share in that region. In Europe, we're seeing accelerated sales growth. It's triple digit, even in some markets like Italy and France, for example. New products, social selling tools, a huge increase in the number of brand partners and customers joining New Age are all contributing to this growth. Second, we will selectively invest in high-potential emerging markets where we believe we can be competent in our core markets, in the core markets. And I think developing us to achieve overall sales profitability goals is fundamental. Most recently, we opened Columbia to expand our presence in emerging region of Latin America and and have been working on registering and building out our infrastructure in the southern cone of Africa, with product introductions and business expansion envisioned for later this summer. And third, we have the discipline to either downsize or eliminate the markets that don't fit our performance objectives, or fitting our current growth strategy, like the number of export markets we've already eliminated in Eastern Europe and other geographies that do not have potential to scale. Let me now highlight a few of the major accomplishments in our first quarter. We continue to experience outstanding organic growth in a number of our regions. Performing last year for the full year, we did right at $500 million in net revenue. So, to deliver more than $125 million in the first quarter, our smallest quarter of the year was, as Brent said at the outset, above our internal expectations. Brent is previously guided to high single-digit and low double-digit revenue growth, which we are very confident we can meet or even exceed the guidance. Oftentimes with mergers, you can see a little bit of a softening in sales. However, this is key to us. It's been the opposite for us in sales, and it's actually accelerating, and the leaders from other companies joining us for even bigger opportunities for new agents. Let me share some of the key drivers in the quarterly geographically. Europe, in addition to now being our largest region, comprise just over 30% of our total revenue in the quarter. Europe is also our fastest growing region. Year-over-year sales in this region are up over 100%. Yep, it's triple-digit organic growth. Our success is being driven by strong leadership and growth of the number of customers and brand partners, primarily in France, Italy, and Spain. Our strategy to help our brand partners become influencers, utilizing the social selling and technology, is resonating well in this region. They create very simple but effective systems and programs to attract and retain these customers. And this has proven to be duplicatable and has driven this amazing brand partner leadership throughout this region. Looking at greater China, this is one place where social selling and technology approach, similar to Europe, will translate over time to growth. For example, we're implementing live streaming to help move forward a market that historically relied on face-to-face relationship-based selling approach. The business and approaches are changing rapidly in China, and we have strong leadership in that region to address those opportunities. With the combined strength of the Tahitian-owned brand and the encouraging responsiveness to several new product introductions, we see greater China to be a growth region during 2021. building on sequential growth that we saw in quarter one versus the previous quarter. In Japan, we're seeing a very stable business on the Noni Marinda side, growth in Zenoa there. And on the RX side of the business in Japan, we are focusing our efforts on building a customer and e-commerce subscriber side of the business. With the recent announcement of an impending acquisition of Alivan, we expect to add an additional $20 million in annual revenue and to add to our profitability. They bring strong leadership at both corporate level and in the field. They have excellent government relationships and have a unique portfolio of healthy products that we believe will add very nicely to our current new age offering. Looking at the Americas, we're seeing solid growth led by U.S., Canada, and Mexico. The level of engagement and motivation among the leaders is at an all-time high. And that one's really exciting for me because most companies in our industry struggle in the Americas. We are seeing large teams join New Age as they are excited about the new and descriptive opportunity. They are actually joining all of us to see New Age as a fast-growing company focused on digital selling and the social experiences with this digital relationship we're all experiencing now. Look, the what, the where, the how the consumers buy the products, it's all changed for us. They buy online, and this is what we do now as consumers. They are influenced by friends and family and their social feed. This is what we do also. They increasingly choose health products, and that's what we sell. And they want those products delivered to their homes. We're also doing this every day across more than 50 countries around the world. This is key. This is why we're working to help our investors understand why we're so on trend with our business model and what an opportunity it is going forward, an opportunity we plan to take advantage of worldwide. The credit for our success really, really has to go to our brand partners and their leadership. Unleashing them is our biggest competitive advantage. We are actually attracting some of the finest people from healthcare professionals in Mexico to branding and social experts to social selling experts throughout Europe. These people actually are very diverse, but they share one common goal, which is being the best. As Brent said in the beginning, we're actually starting to put the pedal to the metal and the strategy of differentiating health brands. driven through this disruptive direct-to-consumer route to market, utilizing a global armory of social selling, tech-enabled brand partners. It's the drive, activity, and efforts of these Impassioned Brand Partners that is leading the way. And with that, I'm going to turn it back over to Brent.

Mark, thank you so much. And thanks to all the brand partners and our teams around the world. You are all doing just an amazing job. Our financial performance in the quarter is fairly detailedly laid out in our press release and our 10Q filing, so let me just hit a few of the highlights. Hitting $125 million in revenue in our smallest quarter of the year is a good start. 70% gross margin is also okay, and we are confident we can improve on this over time. We grew our gross margin by five full points versus Q1 last year, whilst virtually doubling our sales. And we see even more improvement in both improved gross margin and lower SG&A going forward. Positive EBITDA of $2.9 million is also okay and, frankly, would have been even better without the one-time severance charges of $1.4 million, but still our second quarter of positive EBITDA. I'm sure investors know. But for abundant clarity, the derivative impact on net income is a technical calculation and non-cash entry, all associated with valuation of the RX acquisition stock consideration value that goes away once final consideration is provided. Now switching to the balance sheet, we've got 102 million in cash and a tremendously positive current ratio with total assets of $466 million. Now, Mark hit some of our operational highlights a few minutes ago, and I just want to say I have worked with some of the biggest and best companies in the world at Kraft, Coca-Cola, and AB InBev. And I would put Mark and his team from Cam to Ian to Rick to Carlos to David to Ichim to to some of our brand partners like John Wadsworth, Greg Tedros, Shannon, Todd, Aaron, Ginger, Dr. Pena, Luce, Vinny, Paolo. I mean, these folks are just outstanding and so dedicated, so motivated. They are all that good. And having an aligned team and the best people is an absolute key to success. Let me now share some insight into where we are headed and updates to our strategy and outlook. We don't argue that we have not achieved success yet. We agree. But we are on our way. Some of our patient investors have been with us that have been with us from the beginning know that we have gone from zero to half a billion in less than five years, and we are not looking back. Now, our premise From inception, the math that we did to create the company was that, number one, consumers were fundamentally shifting in purchase behavior toward health and wellness. Number two, that traditional retail and similar routes to market were being disintermediated. And number three, that CPG competitors would have a very difficult challenge in shifting. Against that premise, we formulated a strategy of developing a portfolio of healthy products and brands that we would then drive through a disruptive, or as it sits today, a direct route to market. And our premise was prescient. And the three tenets of our math are even more true today than they were when New Age was created. In fairness, we have expanded from initially just healthy beverages to a broader portfolio of healthy products because we can and our partners and consumers want it. Our channel focus has also become much more focused, evolving from traditional retail to a social selling base direct to home and e-commerce. Frankly, as the economics in traditional retail soured for smaller brands and companies, we believe that our timely strategic move to rapidly focus and add resources to our direct route to market model in anticipation of an environment all around us that was also rapidly changing is the definition of battlefield maneuverability. It demonstrates perseverance and commitment to mission accomplishment regardless of obstacles. Still the same situation assessment, still the same strategy of healthy brand differentiation, but now even more focused channel-wise with an expanded portfolio and more robust pipeline and now Frankly, just putting the pedal to the metal on this strategy. So going forward, we are going to continue to invest in this strategy. Differentiated healthy brands driven through a direct-to-consumer route to market, supported by a global team of brand partners, enabled with leading social selling tech. It is that direct. It's that simple. It's that straightforward to comprehend. And it should be fairly straightforward to also financially model. We are putting in place the right infrastructure to become a multibillion-dollar direct-to-consumer company. We have a stated goal to become the leading social selling and distribution company, and we are building the brands, strengthening our direct route to market, and we are enabling our hundreds of thousands of brand partners with leading social selling tools. We believe we have the market threat to the people, the systems, and everything we need, and the benefit to shareholders of all these capabilities Wrapped up in a larger-scale enterprise is superior, sustainable, profitable organic growth and disproportionate EBITDA margin acceleration. We do see further upside in organic growth from new brand partners joining us, social tech expansion, and from further rollout of new products and leverage of what we see as a very robust pipeline in R&D and our labs. Deanna Lapson leads our R&D team as our chief product officer. She too, in our view, is another one of those best in the world. And the pipeline of intellectual property and breakthrough science and new products coming out of her group is going to drive huge growth for our company and huge value for shareholders. We are investing in these areas and confident in their return for our investors. Now, we also intend to deploy capital very judiciously in acquisitions that will be immediately accretive to shareholders, even before synergy capture, which we have proven we know how to do. We have an attractive cash balance and balance sheet. And because of our strengthening in these areas, alongside with our scale and positive EBITDA, we are now in a position to significantly strengthen and improve our debt facilities in a debt environment that appears to be very attractive right now. Now of the major acquisition opportunities available to the company, and there are many, and in those choices and in those opportunities, we intend to use as much of our cash balance and debt at attractive rates to facilitate those. The cash flow from intended acquisitions will far and away meet the needs of those facilities, as most of the targets in this industry are completely unlevered. In this way, we'll minimize dilution and the use of equity going forward. In slightly longer term, we intend to use our capital for share buybacks, but this is not likely to happen until after 2021. Now, before I turn the call back to the operator to facilitate, the Q&A session, I would like to just summarize with our key areas of focus for the remainder of 2021. Number one, we will continue to empower our existing leaders and brand partners, as well as to attract new leaders and provide them with industry-leading programs, social selling tech, and approaches. Investing in social selling tech and building upon our internal resource is paramount for our success. With this, our goal and the end result of this is to create hundreds of thousands of impassioned micro-influencers around the world and build out our database of hundreds of millions of consumers. Number two, we will continue to build out our portfolio of functionally differentiated products and brands that focus on three areas where we believe we have competitive advantage. health and wellness, healthy appearance, and nutritional performance and weight management. Number three, we will further build out our internal organizational capabilities and create a culture of doing well by doing good that is performance-oriented and metric-driven. Number four, we will improve our net income margins through convergent benefits and reducing our overall cost of goods sold and SG&A expense. The model is proven, and we will continue to grow and gain scale and can leverage these two line items to further improve our profitability. And finally, number five, we will selectively pursue external growth within our core markets and within our core categories. Acquisitions that are instantly cash flow positive and EBITDA additive pre-synergies funded, as we mentioned, mostly through debt and our cash. We have a cap structure and acquisition headroom that gives us the flexibility to seek out targets to bring on incremental scale and profitability. These opportunities exist and could be bolt-ons to our direct-to-consumer route to market. These would add additional brand partners and products, and many of these targets have the capability to operate independently with limited integration requirements and complexities, frankly, very similar to how we grew so quickly at AB InBev. But at the same time, we will continue to look for targets that strengthen our capabilities, especially in the areas of social selling. Given our distribution system capabilities and all of our brand partners on a global scale and increasing numbers of brand partners, if we can enable them and provide a bigger group with social selling tech. This will provide a disproportionate advantage for our shareholders. So we're going to take advantage of what we see as a very attractive set of opportunities in front of us. And we know, we just know we have the right direct to consumer business model. An increasingly strong management team that we expect to be adding to with a new chief financial officer coming up here in the near future. And we have the portfolio of healthy products that we keep adding to also, the execution capabilities that we keep strengthening that will give us our advantage to capture our fair share of this opportunity, deliver superior return for our shareholders, our brand partners, and all of the value-added associates at New Age. And with that, I'd like to open it up to questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for a participant using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question is from Aaron Gray with Alliance Global Partners. Please proceed.

Good morning. This is Andrew Bond on the line for Aaron Gray. Thank you for taking our questions. First question is on China. Hey, good morning. Could you provide some additional color on China, and how do you feel growth trends are faring over the next 12 to 18 months, given we've seen a little bit of volatility in the market over the past year and a half?

Yeah, I'll give you a quick headline, but the first thing I'd say is, boy, we've just got outstanding leadership at the region and the market level there. And, you know, we're bringing the companies together, and that's always complicated from a compensation system. But we've got outstanding management and outstanding brand partners, and that is a key to success. It's complicated in China in an environment and industry that is rapidly shifting towards new channels, live streaming, e-commerce, and other ways of doing business, shifting from the traditional kind of belly-to-belly and relationship sales-based approach to much more social and You know, with the endemic, used to be called a pandemic, but with the endemic, boy, that really makes it difficult for us to be over there and interact with our key leaders that, frankly, we need and we're used to, but it limits our progress. But it is a very rapidly changing market. And overall... I think our China business, when you add the two together, is up 74%, but organically, we haven't yet seen the growth, even though we saw good sequential growth Q4 to Q1. That's real progress in the right direction, but we do see it as a growth region for us this year, but it's really, really complicated. Mark is on it on a day-to-day basis as, you know, one of our, you know, future CEO candidates, Ian Chandler is on there, is on it like crazy. He's our region president there. So, Mark, what other insight, you know, would you provide aside from my top-line summary?

Yeah, I think that's great. I think the other thing I would add to it is as we see China evolving and changing with the pandemic, they were one that was hit fairly hard with this. because of their traditional face-to-face kind of selling approach. Ian has been working on a plan and that will be rolled out. It's already in process right now in this quarter, but throughout the rest of the year, and that's why I said that I think we'll see some good things throughout the year as we start to roll out a more acceptable social selling platform, live streaming, some other, we have some other things in play as far as social selling to introduce them through WeChat and other opportunities, the way they're used to doing business, but to give them a new platform, so to speak, to be able to do business. And our leaders are responding to that well. as well as some of the new technology and product development that we've been working on year-round, pushing some of these markets a little further with some exciting new launches as the, I'd say, next six to 12 months. So we're pretty excited about China, but we don't have the growth that we've been having in Europe right now, which is great to be a stable company throughout the world. But you'll see that go.

Yeah, like I said, Andrew, you know, technically we're up 74%. That's reported in the Q, but it doesn't really tell the full story. Organically, you are up quarter to quarter sequentially. That's a very good result, but still down if you really looked on a pro forma basis versus prior year. And that's in part because of all of the transitions. And as Mark said, offset by Europe, the Americas, pretty stable business in Japan. So, you know, that is the benefit of the global business. Sometimes some regions are up, sometimes some regions are down. But we do see China as a big growth opportunity.

And Brent, even traditional business, if they're coming out of the pandemic, I think you're going to see a strengthening just naturally with that as well. Because as things open up more to the market, open up more to people traveling in and visiting, those will all be factors to help us grow that market.

100%.

Great. That's great, Kelly. Thank you, Brent and Mark, for that. Maybe just speaking to EBITDA margin expansion now with two quarters of profitability, how should we think about the EBITDA margin profile in the near term, and where do you believe you could reach over the next few years? Thank you.

Yeah, it is really a target, and I am personally – focused on that as a specific metric to the board of directors and to shareholders. And we think that's important for driving value in the equity is driving the EBITDA margin. And as we expand out our social selling tools and become the kind of social selling enterprise we want to be, we'll get the multiples too on that to reflect the global trends and the position that we have to address those global trends in where, how, and what consumers buy. So long-term, as we get more scale, within our strategic plan period, we are confident that we can get to above a 15% EBITDA margin. And the key to that is having that incremental scale and reducing SG&A as a percentage of total sales. That's where the real leverage on the P&L is. I also think that we can progress our gross margin from 70% to closer to 75% within our strategic plan period, and that will also drop directly to the bottom line. But I think the key is we've tried to intimate. Look, we've got the infrastructure. We've got the people. We have the systems and the processes and the dashboards. We get to see sales on an hourly basis. in every single market in which we operate around the world. That is just unheard of and gives us the visibility and flexibility to really maneuver the business like we talked about. I think we have everything we already need, and frankly, maybe even a little bit too overinvested in certain functions or certain markets like Mark talked about that we want to optimize. Those are more tweaking, I would say. as we further bring this together and add in new companies that, frankly, really want to join the fold. But the key is driving EBITDA margin. It is what we are focused on. And going forward, driving cash flow and net income margins. So you'll start to see improving progress on that for us going forward, not just EBITDA or adjusted EBITDA. I'd say the long-term target is above 15%. We will not get there this year, but we will concede. We expect quarter to quarter for every six months and on a four-year basis for sure significant EBITDA margin improvement.

Brent, could I add also the convergence that we're in the middle of, I still see huge opportunity as being in charge of that. We have many opportunities. as if you think about we have not completely converged our IT, our financials, all of these things. As those come together, we're going to get additional leverage through this convergence. And that is going to add some beautiful numbers there, as well as we're addressing markets that have not been profitable. And I have a whole team working on that to make sure that throughout the year that they either become profitable or we eliminate those areas that are not, unless it is a strategic growth market for us. So that in and of itself will help. And then, quite frankly, if it's not accretive to sales and profitability, we won't do it. We're just We're disciplining ourselves and our teams to make sure that we are focused on improving that number every quarter.

Great. That's great detail. Thank you both. I'll pass it along and hop back in the queue.

Thanks, Andrew.

As a reminder, this is R1 on our telephone keypad if you would like to ask a question. Our next question is from Mike Rundell. with Northland Securities. Please proceed.

Hey, thanks, guys. My first question, and maybe it's for Mark. Mark, could you maybe describe some of the key features of your social media tools? And sort of secondly, I'm kind of curious, how penetrated are those? Maybe by country, like are you a third of the way there, two thirds of the way there. It would be kind of, I'd appreciate knowing a little bit more. Thank you.

Sure. Yeah. So great question. We are, in my opinion, still just in the infancy of where we're at. I would say Europe is much more developed. We have tools where we have smart links, and a smart link allows someone to to sell or position a specific product or brand right to their consumer through social selling. So this allows them to target maybe one of our Lucien products with the skin care or one of our nutritional products through Nutrify or through Merinda. And so that element is one of the reasons Europe is growing at the pace they are because our consumers, Our brand partners there really understand how to effectively integrate and use the social selling tools to get the results. We just launched some support tools there where we've got apps that are launching and rolling out that give them not only information, give them feedback on what's working, what's not. allowed them to access a digital asset management tool which basically shows them different social tools, videos, photos, et cetera, what is more effective, what is not working. And, in fact, we've just started rolling out some data with them that will give them more real-time information as to what's working. So throughout this year, we're going to continue to evolve that. We've been rolling that out in phases. that piece will continue to add to elements to their effectiveness so that they get not only real-time feedback, but they can see what's working and what's not working in their campaigns. Now, these are probably more serious, experienced social sellers that have come, love our brands, and say this is an incredible opportunity because they have the expertise. Our goal and objective this year is to teach everyone how to do this, all of our brand partners, making it simple for them to have access to these tools They not only have access, know what's working and what's not, so they can start, so to speak, you know, with phase one of how to get involved in social selling. Because we see this as our brand partners each have hundreds of contacts and waves of influence that they can impact as well. So I would say we're just getting started. That's what I was commenting about with China. I think they're a little behind this, and that's why Ian's been working to bring that up to pace, and I think you're going to see some exciting things there. We also will be announcing some strategic partnerships with others. tools that will continue to make it even easier in the social selling aspect that are quite unique and actually quite exciting to not only our brands, but to allow us to expand that portfolio for our customer base very easily. I would give us throughout the year, that would be something I would stay tuned on. Once we hit the convergence, we're planned on July 3rd to converge both groups together with the exception of Japan and China, which we're taking a little longer time on. But the Americas, Europe, Latin America will all be converged here coming up in July. When that happens, you'll see a whole new array of simpler, easy-to-use access, what I call one-hand ordering, one-hand enrollment-type activity tools to make it even easier for them to do business with us. And that's probably been a part where we've not been as competitive, so we've invested a lot of time and effort, as Brent said, and we talked about previously on IT, making sure that we're up to speed on this as well.

And, Mark, are you able to quantify for an average rep what this can do for their business or even extrapolate that for new age?

Yes. As moving forward, some of these tools, we teamed up with a company called VIRB. The ERB that is an access tool in the industry that allows them the real-time information so they can start to see what's transitioning to sales versus what's being, you know, unsuccessful. And I think by adding those tools and helping them with this, that will even be just better, right? It will just improve their results. They'll see, oh, this campaign is working more effectively. This one is not working. I need to make some changes as well as we're actually introducing this next quarter to some trainings where we're getting these experts on to train others in their teams and others in other teams on how to make an impactful social selling campaign. Because there's an art to this as well. And we want to simplify that process.

Got it. I will tell you too, Mike, just to jump in, Mike, I will tell you too, I mean, you know, as... I think you know we're very performance-oriented, metric-driven. Every single person in the company has their own target-setting worksheet. And each one of our regions has as 20% of their bonus target for the year the rollout of these new social selling tools. So we have everybody focused on it because their bonus depends on it. You know, the translation of rolling out this leading social selling tech and increasing our abilities is consistent organic growth on the top line. And, frankly, it's very attractive financially from a margin standpoint delivering to the bottom line also, right? So that's how it translates to the P&L.

Great. Anything? Thoughts on timing for the Alivan acquisition? And then maybe any new products to call out that can kind of move the needle in the next year or two?

Yeah. We kind of don't. Go ahead, Mark.

You're all right. Go ahead. I'll follow up.

I kind of don't want to answer the second question on the new products because we think that we've got, and we've just uncovered new science, over the past month that we think is is not just going to move the needle but really be kind of three standard deviation step function change for the industry uh we just it's so big we think some of the science we're not sure what to do with it and who we should partner with to get even more credibility on the efficacy of what we've uncovered that's the second answer to the question Alive and we think is going to be any day. But frankly, we have to be disciplined as a public company to do the due diligence. Golden Week had slowed us down a little bit there in Japan, translations and those kinds of things from contractually to Japanese, all those things take time. So we have been measured in terms of our timing to bring this in. We believe it to be imminent, but we thought it was imminent before, and it still is. But we don't see any issues at this point in terms of that coming into the fold, and we think it's very attractive for shareholders. Mark, I know you're on both of these things also, and I'd love to share your perspective on both Alive and what's going to move the needle for us going forward. Yes. I would agree with Brent. They do take time.

You know, if you look back on the RX acquisition as we came together with the merger, it took time, and it just does. And Alizen, we're still very excited about, and we still believe that's a great opportunity for us as we come together on that piece. And there's still some work to be done, but I think that can happen fairly quickly. And there are a lot of opportunities. That's the exciting thing. As you heard Brent talk about, there are some really exciting opportunities for where people were wondering, well, why are you guys building cash? Why are you doing these things? We have some really exciting opportunities throughout the year that are going to come forward as we pick and choose the very best of these. And so I would say stay tuned. That one's coming. The second piece, wow, yeah, we have some pretty exciting things. We've launched our probiotics. It's doing really well. Some other products, but The innovation and the ability through our research and development team, now that we've come together and we get into scale, this is one of those advantages. Deanna Latham and her team have done an amazing job of really looking at some innovation that our leaders were seeking and looking for. And some of those will happen this year and some will happen probably, I would anticipate, early next year. But they are all great. all great, great additions to our brand portfolio that will not just be a Me Too product, but will actually be great additions to our competitive advantages moving forward. Got it.

Hey, I was asking, guys, I was asking a little bit more about the children's multivitamin or the sunscreen product that you guys announced recently. Any comment on how those have been received?

Very well. In fact, both of those. We're trying to get through regulatory on the sunscreen because obviously that's highly regulated as an industry out there. And so with the unique formula that we came together with, so we're still working on that. Also a timing issue of when is the best time to launch a sunscreen in a market. But that's been well received. And the children's vitamins has been something we've had in China for several years here. but now have just started to launch that throughout some of our other markets. And we allow our leaders to kind of help us decide what the priorities are. So this is one of those products that they've been seeking and wanting, especially here in North America and Europe, several of our markets. And so we're excited about that as well. That's a nice addition to our products and services because it complements the nutrition line we already have for an age demographic we didn't have or for a specific thing like the sunscreen. But what Brent's referring to also when we talk about new technology, there's some exciting new things that I think will move the needle.

Perfect. Thanks, guys.

We have reached the end of our question and answer session. I would like to turn the conference back over to management for closing comments.

Thank you very much. And Mike and Erin, thank you very much for the outstanding questions. As usual, we really appreciate you guys, and you do a superb job. You know, I would say, look, we're happy with the quarter. We're happy with the top and bottom line performance. It's only going to get better from here as we capture more synergies and continue to focus on what matters. And going forward, we've tried to give you the roadmap of what is going to deliver even more performance. New products and the science behind those new products is potentially very, very breakthrough. The new social selling tools. First, the stuff that we're doing, we call it our Italy model, rolling out those things, and some other new things that will just put us on kind of nuclear overdrive. The finance and the debt things that we're doing that will give us even more room to do bigger things that we think will be virtually instantly accretive for shareholders. New changes on the management side and strengthening at the CFO level, which we also think to be imminent. and new acquisition opportunities, not just closing Aliven, which is coming around the corner, but other opportunities that would give us the scale that have the end result of increased scale, increased numbers of brand partners, increased social selling capabilities, and increased free cash flow, and increased EBITDA margin as you can reduce your SG&As or percentage of net sales. All progress on all five of those things is what you can expect from us going forward. while we are consistently delivering, increasing EBITDA margin, and frankly, going forward, providing investors more visibility on our metrics so they can get even more insight into the company, both in terms of our direct route to market metrics, our numbers of brand partners, our e-commerce conversion rates and trends there, and our numbers of subscribers and trends in subscribers, you know, typical e-commerce and social selling metrics that we think it's important to give investors going forward. So more visibility, I would say, in addition to driving progress on those five fronts. But with that, I want to thank everybody for joining us today and hope everybody has a great week. Thank you.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.