Q1 2020 Earnings Call
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Ladies and gentlemen, this is the operator Denise conference is scheduled to begin moving haven't really.
We'll define your line is again, there will be pretty simple and thank you for your patience City school in France is scheduled to begin moving their money until define your rights will again be things simple. Thank you for your patience.
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[laughter]. Good morning, My name is Henry and I will be your conference operator today at this time I would like to welcome everyone to the new wage never just corporation 2021st quarter earnings call. All lines have been please a need to prevent any background noise. There will be a question and answer session. If he would like.
That's a question German define seem to be press hard into number one on your telephone keypad. If you would like to withdraw your question pressed accounts.
Now I would like to trying to covert software for a first presenter Mr. Scott Van Winkle, you may begin to conference [laughter] and thanks for joining new age beverage corporations, 2021st quarter financial results Investor Conference call.
I called Wheelhouse, Brent was Chief Executive Officer, Julie I don't recall, Chief Marketing Officer, and Greg Davis, Chief Financial Officer, I like to remind everyone that this conference call may contain certain forward looking statements regarding managements current expectations regarding future results of operations economic performance financial condition energy.
Company.
Forward looking statements specifically those concerning future performance are subject to certain risk and uncertainties.
Factors that could call. These results could differ materially are set forth in our annual report on form 10-K, and our quarterly report on form 10-Q filed with the FTC any forward looking statements that we make in this call are based on assumptions as of today and we undertake no obligation donation to update these days as a result, the new information or future events. During this.
Call, we may present, both GAAP and non-GAAP financial measures reconciliation of GAAP to non-GAAP measures is included in todays earnings press release, which is available on our website and new age dotcom.
The transcript of today's conference call will be available in the company's website with any investor section at Www Dot New age Dotcom I'd now like turn the call over to Brett Willis Chief Executive Officer Brent.
Thank you everyone for joining us on the call.
Hi.
I'd like to start off today bye.
Thinking all of our associates at new age in more than 60 countries around the world for there.
Decisive actions and responsiveness that led to an excellent first quarter their leadership.
Personal choice.
Step up to drive change.
And take action significantly contribute to our performance.
Our performance that we believe compares very favorably.
Versus our peer group.
But even with that performance at the same time.
Like a lot of other folks we have been significantly affected by Covidien 18.
Just a subset of those impacts include.
Sales and distribution to on premise in foodservice outlets in North America, they're down more than 70%.
Many retailers have curve curtailed any new product initiatives in store merchandising has been virtually impossible.
And in our Nnone by New age segment, our ability to hold in percent or group conferences.
And conduct peer to peer selling as we did for literally that past 20 years has been dramatically changed.
But despite the negative impacts the organization has responded decisively.
In response to the new operating environment by driving incremental sales of our immunity strengthening products such as enhanced sell defense and Tahitia Nnone dues.
Rapidly expanding of our E commerce and social selling tools.
And other initiatives, resulting in overall excellent growth worldwide.
As you might imagine in my role and Lucky enough to talk with a lot of other Ceos and also get the council of a pretty incredible and highly diligent board of directors at new age.
Here's here's my take.
Most of my thought with Ceos companies are really struggling.
But in that context, all seem to be more short term focused.
All are cutting expenses and all our guarding cash.
Many of them expect to continue to struggle because of their business models or sectors to which they are exposed.
They've just been fundamentally impacted at least in the short term and quite possibly in the long term.
Gary Burnison who's the CEO of Korn ferry put it well I thought when when he said in a matter of days.
Organizations have had to make.
Survive.
Everywhere the circuit breakers had been tripped.
Now, it's the big reset to thrive.
All companies will need to think an act like startup.
By re imagining their future [noise].
If they don't their competition will.
Why.
Because in the next two years, we will see more change than we've seen in the last 20.
What a great opportunity for new age we are startup that less than.
What a great opportunity for new age we are startup that less than four years old a scale start up but a startup nonetheless.
And my take is the fast will eat the big and speed and maneuverability on the battlefield will be of tantamount important.
For those companies that will be successful going forward.
And new age, we're using our speed and agility that thinking to act like the startup we are positioned ourselves to it to succeed in this uncertain market, but let's face. It we were prepared to your framework to me and we built what we call our platform for growth.
That platform is number one a portfolio of healthy functional brand driven through number two.
And Omnichannel route to market.
As a result, we now have 80% of our revenue ordered and fulfilled online and 80% delivered direct to consumers homes.
Through that system, we drive our healthy products portfolio, including two products, our Tahitian nnone and enhance our defense.
That directly strengthen consumers immunity.
I can't envision a better business system.
Sales and distribution model and brand and product portfolio to address the challenges of today's in business environment.
An environment that will likely pervade our lives for at least the next couple of years.
Now on top of that business model, we've invested in and built the leadership team and sales and marketing teams to execute the model.
75% of our leadership team is new in about the past 12 months and virtually 100% of the sales and marketing team is new and the past three to four months.
We believe it is because of the people.
Coupled with the processes, we have in place the systems, we have implemented into visibility information dashboards that we now see daily and the metric driven performance oriented culture that is in process. These are the reasons that we are seeing the results on the business no one sees this.
His work behind the scene, but it is that work. It is that work behind the scenes that is key to superior sustainable and profitable organic growth.
We have the right business model with our direct to consumer approach.
For the period now and in front of us.
The right products, especially our immunity ones.
And the upright right approach with speed and maneuverability that frankly put new age in a competitively advantaged position and on top of that we now have the team.
And the execution capabilities to drive our platform I cannot envision a better position to be in the one we are in right now and it is working.
And to talk about how it is work so far in the first quarter. Let me please pass it over to Greg Greg.
Thank you Brent and good morning to everyone.
For the first quarter ended March 31st 2020, net revenues reached 63.7 million compared to 58.3 in that first quarter of 2019, an increase of 5.4 million or 9.2%.
Typically our first and fourth quarters, our smallest seasonally and are similar in size. So the fact that we were also 4.5 million ahead of Q4 is in there was principally China, Japan and Europe in our no need by new wage direct selling.
And our DSD system also.
Had their best first quarter in its history with double digit growth.
Per brand standpoint, our sales of Nnone.
Come honor and enhance sell defense contributed to growth.
We significantly increased our immunity benefits messaging and launched some key new products within our core brand franchises.
And those are proving to be effective as Julie will reference a bit later on the call.
As Brent mentioned, we have had even better results had it not been for the impact of Cobot 19.
We have felt the impact around the world in all aspects of the business.
Like most other companies, we expect these impacts and disruptions to continue.
Gross profit was 41.5 million or 65.2% of net sales.
In Q1, 2019, we hit 66.2 million.
In Q2.
That went down to 62.7% in Q3, 57.7% in Q4 to 54.3%.
We are pleased by the 11 percentage point improvement in gross margin versus Q4 2019.
It is a welcome step in the right direction, which was driven by product mix improvements channel mix improvements in geography, and geography mix improvements.
As soon a in the first quarter of 2020.
As a percentage of sales increased 200 basis points compared to the first quarter of 2019 as a result of a number of investments made to upgrade and build out our platform, including ex including upgrading external auditors to Deloitte.
Strengthening the quality of our insurance programs and insurance providers.
Upgrading legal support to Vagary drinker, and Greenberg Traurig and important investments in the board of directors and leadership team as Brent mentioned in his initial comments.
Net loss was 11.6 million or negative 14 cents per share.
The increase in net loss was significantly impacted by a gain on.
Sale of property in the first quarter of last year.
As well as increased as seen a as previously discussed.
Adjusted EBITDA was negative 7.1 million compared to a gain of 3.9 million in Q1 of last year.
Reflective of those investments and the impact of the gain on the sale of property in Q1 2019.
Importantly, though as referenced in our 10-Q after the end of the quarter, we took a number of actions.
Reduce as you know that are expected to positively impact our bottom line between five and $7 million on a full year basis.
Shifting to the balance sheet.
We continue to have is strong financial position and at clean capital structure.
We ended the first quarter of 2020 with 27.5 million in cash.
After satisfying important tax obligations of 14.1 million in Japan.
Paying 10.1 million against the East West Bank credit facility, and putting 15.1 million in restricted cash.
As a part first 2020, we had working capital of $17 million and have now met all the covenant obligations of our credit facility with East West Bank through December 31st point 20.
I would like also briefly discuss the impacts and challenges associated with Covance 19, and touch on some of the actions that we have taken in some of the actions we expect to undertake.
During the first quarter, we had a significant negative impact on our Foodservices sales in North America.
And were contained in providing in store merchandising support and overall selling into retail partners.
In our Nnone by New age segment, we were significantly disrupted in our ability to do peer to peer selling or conduct business meetings around the world as we have done since the inception of the business.
Many of the regions in countries in which we operate like Latin America in Indonesia for example.
Had been growing double digits during 2019, but had declines in Q1 directly as a result of the lockdown in their respective territories.
In total across the business, we estimate the negative impact from cobot 19 to be as much as 10% of total revenue.
We offset these negatives by all the activities we implemented to result in a positive 9.2% growth for the quarter.
Also without the current challenging situation our results most likely would have even been better.
The support we got from the U.S. government in April was timely in very helpful.
To partially offset the impact of cobot 19, and maintain our workforce.
Without it I believe that we would have had a significant reduction in our workforce.
The payroll production program funds.
Directly saved jobs and lots of them.
We received $6.9 million under the payroll protection program.
And here are the facts number one we met all the requirements of the Sta PPP loan program.
Number two we applied quickly.
Accurately and were granted the funds and number three.
We did not circumvent skirt quibble or do anything even remotely trickly or and toward to receive the funds.
We qualified we were granted the funds and we use the funds as intended.
And it has saved jobs.
Now looking forward into Q2.
We see a similar negative impact related to cobot 19.
China is almost back to normal operations, but Japan, Taiwan Korea, Indonesia, Vietnam, virtually all of Latin America, and the U.S. across all divisions are still challenge in conducting normal operations.
Despite the negative I agree with Brent that our business model. Our route to market are healthy product portfolio, our specific immunity products and our direct sales to consumers and direct delivery to consumer homes.
Couldnt be more opportune.
We have seen strong trends in the business and continued to see them in the month of April.
So with that we have a positive outlook on Q2.
I will now turn the call over to Julie our Chief Marketing Officer Julie.
Thanks, Greg Good morning, everybody.
I have a little more than 100 days in with the farm and I want to share a few perspective talk about what's driving our growth in the midst of one of the greatest marketing and leadership opportunity.
Never experience like Korea.
I've worked with some of the world, that's something from Procter and Gamble Johnson and Johnson.
So you're right Dan.
Let me tell you. This is a company that Matt Yeah.
And now it's an understatement.
I love to see it's a great seat, but even for me it's taken can get yeah.
I joined because of our omni channel strategy, which I have a lot of experience and and then I personally like at its a highly differentiating strategy and I wanted to make new age the bad in the world added.
Within this type of systems, our brands are highly under developed under leveraged untapped and their potential.
This is what I do I think given freedom to build out the entire marketing.
Develop and drive those brands and let me tell you, but we havent sandals.
Uh huh.
Hi, either current dampening effect, which may be with us for some period of time as an incredible marketing communications challenge.
Any contact we have significantly accelerated our social.
Yes.
Focused on messaging.
These systems strengthening property.
Hey.
He was our product.
Tony and enhance sub.
Many of you know these two products have a company patent.
Research study in human trials behind so frankly, all we're doing getting the word out bring us back.
We've also expanded the distribution sell defense to Amazon, including Amazon Prime.
Right you shared our overall numbers are at 9.2% in Q1.
Which as he mentioned it like 19% in current environment, but the negative impact on our revenue.
Driving our growth has been our focus on core product and immunity focus messaging, which is really resonating with consumers.
But the other driver has been a lunch at some of our new product.
Exactly.
The spansion abnormal but college in.
The launch of Nnone, let's see BP in Japan.
The launch of came on in shape, our intermittent fasting program and further expansion market Oh hang on skincare line are collectively having a tremendous effect.
Not only are these product innovation nexsan within consumer, but there are tracking new leader for our network independent soda fountain, and importantly, attracting a younger leader so let me make opportunity.
And it you might expect we are just getting started it.
Yes, the launch and one of the initiative I meant provide us a lot of confidence on are you two outlet and as Brent mentioned, we have daily visibility on all the other drivers of our revenue so our perspectives on our growth and expected performance are informed by the fact and the correlated driver about.
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We are not stopping building on our unity. So yes, we are expanding on anything that.
And we are launching in the shop, which are also said before any day international retail channel detail and our ecommerce site.
These get tested in a key markets pilot, ensuring that we get the tool kit right before launching globally thereafter.
The feedback we've received from seamless and later on this product. Unlike anything we've seen before giving us confidence on their impact in the second part of here.
Beyond that we're also upgrading or more like overhauling transforming all of our social and digital properties.
<unk>.
You've probably seen in you know anyway dotcom web site that will get one level. It is infinitely more consumer friendly than before we overhauled our social presence on Instagram and other relevant site and arming our leader so assets full screen like they've never had before and we're just getting.
Starting on them.
Our increase in social media presence, coupled with significant expansion of internal social selling screening and new tools at our sales associates.
Underpinning all of them new products in Michigan.
They'll give our sales leader is the ability to work for digitally power it anytime anywhere mobile world, we all that.
Answer weren't virtually no matter, where the direct impact that.
We're building our brand category platform for long term success.
Right. So I would probably stop there before I share to many of the insight into what's happening, but I'd summarize with that.
So far so good a little more than 100 days and.
Right and it's Dave I know, you're working in resonating very timely and new social and digital selling so we're providing a leading food grant funding our ability from a new product, we're launching worldwide our debt I think on.
Thank you Brent.
Thank you Julie and a great job honestly and keep up the great work between you and all of your team into joy to be working with them and to keep up the speed or keep putting to put on the gas.
On all of the initial.
I'd like to share for.
Final point before we open it up to questions.
First.
Please understand what we are intending to communicate.
The effects of Kogut 19 are real and pervasive.
They have dramatically negatively affected us in North America and worldwide.
We're just taking quick and decisive actions and choosing to lead.
And find opportunities and pivoting quickly while others are lamenting how tough for difficult they're hard to situation if that doesn't help.
And I would say, it's not just at the top it's it every single level in our company in every division and every corner of the globe, where individuals at all levels of the company are stepping up.
Totally.
0.2.
Please also note that first and foremost we have worked very hard to ensure the safety of our associates.
The continuity of production at our supply chain.
And the and interrupted superior service to our customers.
Safety is our top priority.
At this time.
And it is the driving force behind every division or every decision.
We're protecting our associates with not only safety measures in our facilities in operations.
But supporting them with free supplies of our annuity juice and enhance sell defense.
We have cancelled all in person meetings and accelerated our virtual efforts in online tools, we do see zoom and teams calls all day and all night, starting with Europe and the more in the morning, the Americas mid day in Asia markets at night, All day everyday.
We have moved all nonproduction employees to working from home and if implemented social distancing an increased safety measures in all production facilities and distribution operations in all operations around the world.
0.3.
We don't talk about it because we're not here for the credit for for the clapping hands.
But im also very proud of so many of our markets around the world that have donated self defense and nnone to hospitals and frontline workers in first responders.
Our donations continued not because we want the credit.
But because our immunity products really work and we want to make a difference.
It is our associates continued dedication to our mission.
To inspire and educate the planet to live healthy that frankly.
Inspires me.
Drives our business forward.
As they dedicate themselves and sacrifice to provide the healthy products.
That the world needs now more than ever.
I want to genuinely thank each and every one of them and their families for their self with commitment.
In support of our mission and for choosing to make a difference for their fellow man at a time when it is needed simos.
And point for Greg talked about the SGN a in expense reduction actions that we have already taken.
Additionally, we made the commitment that we would divest some of our older smaller brands that we started with.
And we are following through on that commitment.
We have formally begun that divestment process and have engaged to support.
One of the leading investment banking groups in the country to support the process.
We like the brands, we just have too many other bigger more profitable opportunities in front of us.
Give those brands to support and investment that they need and deserve.
So all those actions are in keeping with what some of the best in class firms are doing well.
Reducing any non contributing expenses.
Focusing on shorter term profitable revenue driving activities and protecting cash.
In closing operationally I'm very pleased with our fast start to the year.
Especially in the context of the global business disruption.
And equally pleased with how April is performed.
And how Q2 look so far.
None of the results are an accident and they shouldn't be a surprise to anyone.
As I mentioned at the outset up my comment we've built the platform and frankly it is taken time.
And a lot of hard work and frankly, some arrows from some smaller retail investors that.
Just don't understand or haven't done the work to understand what is in progress here.
Our institutional investors really understand that they've done the work, which is broadly why they have been increasing their positions, but now it is just about leveraging this platform in driving more growth.
Which will have the effect of lower SDN as a percent of revenue on the net on the income statement, we have the brand portfolio. The immunity specific products the distribution system and a one of one unique omni channel route to market as of this morning, we had a team of 277000.
370 dedicated independent product consultants.
That frankly, they need the income in this challenging environment that develops us now and they are all fully dedicated and committed to growing together with the company.
We have been building new age to become a major scale company in the future.
And that's why we have made the investments and the support partners with the Lloyd March Fakery Drinker green brick traffic and others that are simply put best in the world.
We have made the investments in the leadership and commercial teams and when I think can't help but appreciate the strength and quality of colleagues like stay Vanderveen, our COO, who is on the last investor call or Julie who you heard from today and a whole list of others. They are impressive.
And they're here and joined to create something special.
They are the reason, we are up 9.2% over and above a negative 10% impact from coded and because of them.
And the leadership focus of all of our associates worldwide by Q2 looks equally as strong and with that I'd like to pass it back to the operator and open up the question.
Operator.
At this time I would like to remind everyone in order to ask the question, perhaps target into number one on your telephone keypad.
Press Star one does that number one on your telephone keypad.
We'll pause for just a moment to compile dishes any roster.
Okay.
Again prestart into number one in your telephone keypad.
[noise] right, we have of questioning here.
Mr. Aaron Gray.
Let's now open.
Good morning enough congrats on the quarter, it's a great to see the momentum both on the top line and the margin profile. So the company sequentially.
I think there.
So you're not going it's great to hear the call out of China is a market of strength during the quarter on your prepared remarks, you know can you talk about some of the underlying drivers there as we come off 2019, when a market you know based on regulatory hurdles. I mean, we also you know sell on volatility in that market last year. So just curious if you you know.
See these trends continue in the quarter <unk>, whether or not you feel like you know there's going to Rebase, where you feel like the market is gonna be able to rebound you know now under long term. Thank you.
Yeah, Great question area, China is critical to our future and we see the drivers of our growth with new people joining our system.
A greater revenue per person.
And and strengthening at different levels people doing more or people that are involved with their system.
Doing more and being much more active and last year, there was plenty of disruption.
A lot of companies, we talked to in China indirect selling in other industries are still very disruptive, but you know in that context, you can say boy, it's really complicated or whatever where you can take action. So I really pleased with the organization there and we've probably.
I have 150 people in China across operations in 10 major cities, but sales to over 300 cities.
Around the country, so we're pretty pervasive across all provinces and.
The the discipline that were taken on the entire company is now translating to the same disciplines with which we operate in a in China. So not only are we seeing new people joining the system in the context of other struggling.
We're kind of creating that olive branch in holding it out to others for us to to thrive in the context. When others are so I was you know kind of one piece, but we're also expanding the portfolio. There. We launched came on a or skincare line, which is really popular these days here in a in China.
In Asia Pacific overall, so that was really the first time, we had expanded the portfolio in ever in China.
And and more to come in terms of new products and new packaging formats going forward.
We've also significantly increased our we chat communication and we chat activities, which you know if you're not playing in online and E Commerce and social these days between we chat T mall and others.
The whole business is moving in that direction. So.
That you know kind of the first reason short term, we're seeing the results in China, but long term. If you think about the next I hate to put it kind of 10 years the level of consumer spending in China as a percentage of GDP is about half of that.
Of North America, or or Western Europe.
So you're going to see a lot of investments from the Chinese government with in the country to promote consumerism in consumer spending so.
For those reasons.
Coupled with you know those macroeconomic reasons, coupled with the that people and the team and the organization and the portfolio. We have now and are building and the evolution to be much more social in ecommerce driven those those are things give us a lot of confidence for for China for the year.
Unlike last year that was out of our circuit, we control a lot fewer disruptions.
Okay, great. Thanks for that kind of Super helpful. And then you know you made a couple of comments just in terms of how you're pleased with April and you know to Q quarter to date, because any incremental color you could provide in terms of relative what you're seeing nice sequential growth. We saw once you will see fourq to you, but obviously there's still.
A lot of uncertainty around co bid.
So just anywhere to help benchmark in terms of how best to think about you know to Q I mean on revenue trends going forward. Thank you.
Yeah.
Yeah, honestly and I think it would be.
Imprudent.
To kind of provide any real specific guidance on a full year basis, because they are just too many unknowns out there and when we talk about the disruptions that we've had here to four.
Yes, we just don't know how the external situation outside of our consistent control is going to affect us.
We saw very good April and we see very good trends in May and June.
And what's different about the company now I talk about doing all this hard work behind the scenes that typically goes I noticed that entrepreneurial companies never really do.
But you know I see on a day to day basis, we all see the leadership team sees everybody sees the correlated drivers of performance, we see the revenue throughput.
The amount of purchases by person the and the the number of people bit of purchase within the past month three months six month 12 month, new people joining the system subscriber levels, we have data.
Like Crazy now in every single market around the world and the information and the and kind of executive dashboards and visibility. So we know what to do with that we can take action and provide influence or incremental focus where we need to.
So because of those things.
Yes, we have the visibility it's almost like putting a manufacturing line in statistical control. We've got that results in more statistical control, which sounds really bizarre, but that's how our belief is your run or you need a world class.
Multinational so we've got those things in place it gives us the visibility and ultimately the execution on the sales initiatives in the new products the Julie talked about.
And then just the building out of our system and the frankly evolving over the system with a much more virtual and social selling model. We're trying to lead the overall industry in that in because others have kind of done things in a certain way for 20 plus years, we haven't were news so.
We can adapt as new approaches and use speed is a competitive advantage.
Thanks, I appreciate that and get certainly appreciate you know Weiss digital long term to see where sales are gone, but could you see the near term momentum.
Just one more question you know on my side, and then I'll pass it on.
Just in terms of gross margins you know saw nice uptick sequentially. So how best to think about the gross margin profiles. The next couple of quarters and then just in terms of the timing of $5 million to $7 million and the restructuring program you know when that flows through the piano. Thank you.
Hi, This is Greg for the gross margin, we're very pleased with where we came in this quarter. It in base, we see this trend continuing.
Being right around the same level and the biggest drivers to that will be.
The amount of business, we get through our and only by new age segment, because that does have a much higher gross margin than our retail brands segment. So.
So basically so far through April things seem to be strong there. We think that should continue through through through the rest of this year.
And then with the cost savings this was something we we implemented here.
In April.
And in early April, but typically you don't really see a lot of the cost savings for a couple of months.
So then we'd really see it.
Being.
More evident once you get at the second half 2000, 2020, and that's when you'll start to see the full effect of this.
Great. Thanks, Congrats again on the corner and best of luck.
Okay. Thanks Aaron.
Your next question comes from somebody buying.
Your line is now open.
Hello, David Okay.
Thank you don't do you guys are well high.
First Brent or Greg could you bifurcate.
Segmented EBITDA generation in and in one Q. I guess I'm, particularly interested if no any by new age or you know the gross margins. There was it close to breakeven as a standalone trying to understand the.
That element.
Yeah with the gross margin or you will see with denoted by new age we generated.
39.6 million.
In gross profit.
From that division, which is definitely.
The largest division doing almost or little bit above 50 million in total sales.
Compared to the new age segment that at about 13.6 million in sales.
And generated gross profit of almost $2 million are 1.9 million.
Okay. If you if you translate that Dave and the EBITDA.
Last year without the investments that we made into brands. We would have delivered a 5 million in EBITDA. Okay. So that is a good correlated number on EBITDA for just a the know any by new age Division and I think in the first quarter you see very similar to that.
No any by new age offset by the investments in the brands Division and like I said, we've made the commitment to divest that we've already started the process.
And that should help but you know when you.
When you don't bifurcate the numbers because we'll have a lot less of that brand stuff that negligibly in Texas on the revenue side, because it's not a big piece of the revenue, but it is a big negative piece on the EBITDA. So you'll continue to see positive from the Nnone by New age segment at the EBITDA level like we did last year.
With a lot less offsets and because there's just not going to be investing in those smaller brands at the level like you did before correct.
Okay perfect.
Maybe Julie I mean, you spoke to the drivers around the positive IVC grows in one Q.
Could we get a sense as to what kind of growth was seen you know year over year was it driven by region was driven by China was a broad base and then Brent you had mentioned revenue for IVC dollars up and I'm just trying to if there's any sort of growth data points around that that'd be great as well.
What I would say it inspite of the very challenging environment across all of our region. During the period as a lot of areas outside the United States, where his first for hardware, we had very measured results and growth across a wide array of our market outlets.
Particularly encouraged by the growth in North America, as well and growth in our.
Our European markets tend not be Lawler Asian markets people incumbent had to greater impact. So it's very broad based across many pipeline right now.
Okay, Yeah, inpatient and I can throw in there with a.
With the China, we saw it being up more than 14%.
For the first quarter of 2020 compared to first quarter of 2019.
And what North America, we also saw some up pretty good growth there as well.
And in what Japan, or it group for the first time since we have Oh, India.
No we buy new age business, and we really taken that trend and really start to a turnaround I mean, it grew just slightly but is still grew and and since I was the first time, we've seen that we're very pleased with it.
Yeah.
You're right that I'm sorry.
I was just going to give you more color.
Details days I'm looking at our dashboard right now so I think I mentioned, we had 2200 70 something thousand as of this morning. So as of right now 648, A. and here in Denver, we have 277469.
Which is about 20000 pick out China out of the mix, but it's about 20000 or roughly 8% above prior year.
And as of this month versus the prior month with the number of people that are really making a bunch of money into our system is increased 8.25%, but that number of people is up about 30% year to date. So you know and for the May.
First 11 days and made versus April up another 8.25%.
Some just and I can get that on any single country and our average order size is $221.17 for each one of the subscribers.
So you know you can see we've got the data and we can see it and cut it anyway. We anyway, we want that gives us that you know just that confidence and visibility on the business every single day.
That's fantastic Okay, and then just last one if I could just a follow up on the yeah Twoq guidance question I understand you're not offering full year guy, but it sounds like you have some visibility through June and Greg spoke you spoke to Twoq guidance is for like a positive outlook, where are you speaking to net revenue versus one Q.
Versus the year before or any way, we should read into that comment or was it just sort of like trends are good.
Trinza good base, who we do see see positive through April.
We're both the prior year as well as compared to Q1.
And we're speaking to net revenue correct.
Correct.
Awesome, Okay. Thank you so much.
Thanks.
Thanks, Dave.
Your next question comes from sort of Mike Grondahl, Sorry. Your line is now open.
Yes, Thank you guys and congrats on the progress, especially on the marketing side.
Two quick questions could you kind of highlight the five to 7 million in cost savings kind of what that was driven by.
And secondly, Greg it sounded like in your prepared remarks, you would said that youd satisfied everything for east West. So is the ATM issuance kind of off the table now for the rest of year or what's an update on what you need to do there.
But first with the five to a $7 million you know we.
Really looked throughout the entire world to a C, which which of our markets. We're operating the most effectively we are we did have a few markets outside of the U.S. data we looked at said.
No long term it just doesn't make sense for sustained in these markets.
So that we pulled out there because.
There were a basin loss leaders like Russia. For example, it just doesn't make sense to continue to invest to the level. We were in Russia or you know like a couple markets in Latin America, just completely on lock down and we can serve as quit say Venezuela in Colombia.
Sister or adjacent markets for us is having the full infrastructures are those kinds of places like with had before so.
We looked at that across the board markets brands et cetera for every single Penny every single investment to to make sure. It was working for us versus different ways to manage handle those countries correct and and then besides that we also looked at a.
All of our external a use of a consultants.
In different firms and really tried to cut that back and make sure. We're just really doing the things that are going to create revenue here during the near term and and focus and focus.
On that and then throughout the entire world, we did make some a reduction expressions of our born.
Our offices of certain personnel where.
We felt like.
We could do things more efficiently going forward. So that's the five to seven and that's the five to seven.
Million dollar number on a annualized basis. So so that's not on the east West Bank loan.
We did have a covenant, where we needed to generate at least $15 million.
Have a equity funding by June Thirtyth, and we have not met that covenant.
And the next cover it does not come up until December 31st. So then we will soon we will analyze during.
The next a basic eight nine months.
Exactly the best way to erase those funds, but just like Brent said, we're going to continue to move fast ACH and find different different opportunities and by doing that.
I think we will be able to meet that covenant very easily.
Got it good and then maybe just lastly, any timeline on the sales the selected brands kinda, what's the expectation.
You know when we look at where we.
We went out we've hired a banker.
Basic things are moving forward, but right now probably the best timeline that it could give you would be sometime during the summer.
So so we're focused on.
Getting it done quickly, but want to do it at at the best a hospital benefit to our current shareholders.
Well you and you can tell my could spread here that that will positively that may be an understatement impact the p. It now.
Those are conscious conscious choices to make those investments before but now we just like I said, we just got too many good there and very high profitable opportunities in front of us and so.
Consistent with what I see a lot of my colleagues in other companies doing is you got to guard your cash you got a which hopefully everybody can see we're doing.
And.
You need to focus on those things that are really more delivering in the short term and unfortunately, not taking such a long term perspective to the business and unfortunately that has the effect of it sort of as brands, but Fortunately for investors in the short term that we'll have the very positive effect on the or the Companys bottom line.
Great. Thank you.
Thank you Mike.
We have reached the end of the question answer session. Mr Branch analysts. Please continue.
Thank you everybody for joining the call I mean, we've got a lot of because hopefully you can see good people now driving a very opportune business model good products dedicated people around the world and frankly, we're seeing people maybe because they need the income.
<unk>, Yeah unemployment has been affected so many places around the world that you know were nice option for them and you know against that context, you know, we're providing three social media and other online social training to anybody that wants it.
Whether they become part of our system or not so you know we're excited about all aspects of the business.
As certain bright spots in the retail side of the business in North America lot of bright spots in our direct store distribution business, it's really been negatively impacted by cobot, a in North America right around the world just people stepping up in choosing to lead but Oh, we like what we see in Q2.
Two and thereafter, and we're going to keep at it thanks, everybody for joining the call today.
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