Q1 2021 Medifast Inc Earnings Call
Good day and welcome to the Medifast first quarter 2021 earnings conference call all participants will be in a listen only mode.
So do you need assistance, please signal conference specialists by pressing the Starkey followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone to withdraw your question. Please press Star then too. Please note. This event is being recorded I would not like to turn the conference over to read Anderson Investor Relations. Please go ahead.
Good afternoon, and welcome to Medifast first quarter 2021 earnings conference call on the call with me today or dance yard Chairman and Chief Executive Officer, and Jim Maloney, Chief Financial Officer by now everyone should have access to the earnings release for the period ended March 31 2021.
They went out this afternoon at approximately four O five P. M. Eastern time, if you have not received this release is available on the Investor Relations portion of Medifast website at Www Dot Medifast, Inc. Dot Com. This call is being webcast in a replay will be available on the company's web site.
Before we begin we would like to remind everyone does it prepared remarks contains forward looking statements and management may make additional forward looking statements in response to your questions. The words believe expect anticipate and other similar expressions generally identify forward looking statements. These statements do not guarantee future performer.
And therefore undue reliance should not be placed on them.
Actual results could differ materially from those projected in any forward looking statements Medifast assumes no obligation to update any forward looking projections. There may be made in today's release or call. All of the forward looking statements contained herein speak only as of the date of this call and with that I would like to turn the call over to Medifast.
Chairman and Chief Executive Officer Dance yard.
Thank you read and good afternoon to everyone. Thank you for taking time to be with US today on the call with me today is Jim Maloney, our Chief Financial Officer.
I'm going to provide a brief overview of our first quarter and then Jim will run through our financial results in more detail. Following her prepared remarks, we will open up the call to take your questions.
We're proud to report a strong start 2021 with revenue growth of 91 per cent to nearly $341 million, reflecting continued momentum and independent after their coach gross as well as solid gains and coach productivity the.
The number of active earning up to be a coach's exceeded 52000 in the first quarter, an increase of 61 per cent over last year and up 19 per cent sequentially.
Revenue per active earning after via coach hit new a new record of $6454 in the first quarter, an increase of 21 per cent over last year and up nine per cent sequentially.
The accelerating growth, we're seeing in new coaches and and per coach productivity is a demonstration of the strength and differentiation of our coach based model and the residents of a new field led coach training approach that is being rolled across all geographies.
This new approach better Leverages, social media and communication technology platforms to engage prospective clients support new clients and support new coaches.
Moving forward or continued investment in digital tools and in our new fully integrated mobile apps for use in the field will enable deeper connections between coaches and clients will also creating efficiencies that allow after via coaches to support a greater number of clients.
<unk>, we remain confident in our ability to drive long term sustainable growth and deliver on our mission to offer the world lifelong transformation one healthy happened at this time.
You're mad for health and wellness products and services, it's clearly strong right now with a particularly high addressable market for approaches that leverage healthy habit building over dieting or other weight loss approaches.
Or unique coach based model continues to provide a clinically proven solution, especially to those for whom diets have failed and for those who desire a holistic approach to optimizing their overall health and wellbeing.
Our clients century approach frees up coaches to focus on finding a supporting new clients and creates a more relentless focus on helping people achieve their health goals, rather than recruiting salespeople or managing cash in inventory.
[noise] operationally, we continue to focus on enhancing the scalability of our infrastructure as well as optimizing his performance.
We were executing on a series of initiatives to support our repeatable business with them as an engine for consistent long term growth.
From a supply chain perspective, we continue to optimize and expand capacity by increasing our network of co manufacturers.
We anticipate our work in this space will enable us to manage the man throughout 2021 and expect it to give us $2 billion of manufacturing capacity with the most of this increased capacity in place in the second quarter.
Similarly, we're scaling our distribution network through expansion within our current facilities and building on existing three P. L relationships and partnerships to establish a distribution capacities the tracks with our manufacturing capacity with most of the distribution capacity increase in place by the end of the third quarter.
Technology is another key area of focus as we build on our investment over the past five years and drive innovation through the development of a digital ecosystem of products designed help after via coaches leverage their time and talents sufficiently to serve clients.
Our innovation lab in Utah has been instrumental in advancing our use of technology to drive growth and efficiency using agile processes to quickly build modify and improve digital products that make a real difference.
By giving coaches more tools to help them manage and engage with clients as well as giving clients easy to access mill planning tools as they embark on the optimal weight five and one plan, we were helping create better outcomes for all.
During the first quarter, we offered limited promotions and did not repeat the incremental promotions and programs from last year.
Similarly in the second quarter, we do not plan to offer any of the incremental promotions, we executed last year Mister.
This decision has been driven by the continued strength of new field led training programs and the resulting high levels of coach client engagement and new client acquisition.
This is yet another demonstration of the clear delineation between after the and traditional direct sales or <unk>.
Direct to consumer businesses.
Our business is built on the foundation of empowering coaches to serve clients by teaching them healthy habits through our habits of health system.
We are empowering a community focused on health and wellness not a distribution centric recruitment network or an advertising or promotion centric online selling model.
And that community focuses on healthy transformation of individual clients above all else.
Growth is driven by the effectiveness of the approach and that's a testament to the work of after via coaches and the water off to be a team.
One of the key moments for our in person education with our after via coaches is our annual convention.
The in person gathering was cancelled and 2020 due to the global pandemic, but our virtual off to you via together live was extremely successful in bringing together the community in a meaningful way.
We've decided to move forward with our in person convention in 2021.
And we are confident in our ability to manage health and safety protocols in compliance with C. D C guidelines.
Tickets went on sale in the second quarter and quickly sold out.
And as a result, we anticipate having just over 12000 attendees at the event, which will take place at the end of July.
The speed at which the convention sold out is another clear indicator of the importance of health and wellness to people right now, especially in light of the pandemic we.
We recently announced the result of a consumer study designs to understand nutritional priorities and challenges.
The study surveyed over 1400 adults in the United States and found that although 84% of people are prioritizing healthy eating.
Is much more or more important than they did last time.
Many are facing challenges in doing so despite recognizing its importance.
Nearly nine out of 10 survey respondents report the nutrition is important to them. However, 56 per cent say, it's difficult to eat healthy, especially at home.
In fact over half of all respondents agreed that being at home more often during the pandemic is enabled them to snack Moore and or eat less healthy foods and reported the top factor preventing them from healthy eating healthy more often is often their inability to resist cravings.
Education also plays a vital role in overcoming difficulty around eating healthy with nearly half of all you us adults, saying that learning how to establish healthy habits and or learning more about healthy nutrition would allow them to make healthier food choices.
Our business trends continue to show strength, and we have a high degree of confidence in the outlook, including our ability to drive consistent but sustainable growth.
The investment highlights from Medifast remain the same.
First we were targeting a large and growing market.
And the U S weight loss is over a 20 billion dollar business growing it in approximately six per cent a year.
Over 70 per cent of the U S population is overweight or obese.
Growing at two per cent of year.
Moreover, the pandemic is amplified consumers focus on health and wellness.
The second area.
We have a proven solution.
Clinical studies clearly demonstrated the efficacy of a coach supported approach for weight loss success.
Hour after via coaches take a holistic view of health and wellness and are supported by proprietary still that training programs and tools that help them optimize outcomes for each individual client.
Third.
We have build a strong platform with a team that is flexible and agile providing significant capacity for growth.
We've been investing in our infrastructure to support a $2 billion plus business.
Finally, we have a strong financial position and have demonstrated commitment to stockholder value during the first quarter, we announced the.
More than 25 per cent increase in our quarterly dividend and repurchase shares and ended the period with over $200 million in cash and no interest bearing debt.
Before I turn the call over to Jim I want to share some comments on a corporate social responsibility.
Over the past year urgent social and environmental challenges have required companies to re imagine their corporate social responsibility strategy and prioritize what the impact they will have on future generations.
[noise] Medifast commitment lifelong transformation is not just a result of the work are off the vehicle just do but a result of our active support of the communities in which we live and work.
Medifast philanthropic program healthy habits, raw empowers generations through education and access to healthy habits. In 2021, we will continue to work with our non-profit partner no credit Kid hungry to provide access to health and nutrition as one in four children could face hunger this year because of COVID-19 pandemic.
At the business well is there a Baltimore business headquarters, we're collaborating with living living classroom foundation to renovate their kitchen to create space, where students receive hands on education about healthy nutrition create critical healthy habits that can last a lifetime.
Although we were just in the early stages of the project. Our team is also developing a kid friendly carribean curriculum based on the habits of health.
The goal is to provide students with the knowledge skills and attitudes that will assist them in making informed decisions and creating healthy habits.
We were dedicated dedicated to bring what are independent after via coaches do every day to underserved communities.
Let me now turn the call over to Jim Maloney, who will walk you through the financial results gym.
Thank you Dan good afternoon, everyone.
Revenue in the first quarter of 2021 increased 99 per cent to $347 million from $178.5 million in the first quarter of 2020, reflecting.
Continued growth in the number of active earning off the via coaches and higher per coach productivity, which resulted from more clients participating in our optimal weight five and one <unk>.
We achieved and other.
Record quarter of act averting off the vehicle, which is ending the quarter with 52500.
This represents 61 per cent growth as compared to 32006 hundred coaches in the same period last year and an 18.8 per cent increase from the end of the fourth quarter of 2020.
Average revenue per active earning off the via coach for the quarter set a new record at 6454 compared to 5333 for the first quarter of 2020.
Previous high was $6329 and the third quarter of 2000.
20.
Increase in the productivity per active earning after via coach for the quarter was driven by an increase in both the number clients supported by each coach as well as an increase in average clients then.
As Dan discussed the growth, we're seeing in new coaches Indian coach productivity because of the new approach it better Leverages field led coach training with social media and communication technology platforms. During the first quarter, we offered limited incentives and promotions cause this.
Some with the prior year after via branded products represented 88.9 per cent of our consumable unit sold in the first quarter up from 79 per cent in the prior year period.
Consistent with business and brand strategy.
The company decided to sunset the Medifast branded product line by the end of the second quarter of 2021.
Gross profit for the first quarter of 2021 increased 83.8 per cent, two $248.5 million compared to $135.2 million and the prior year period.
Gross profit as a percentage of revenue was seventy-three per cent down 280 basis points compared to 75.8 per cent in the first quarter of 2020.
A decrease in gross profit as a percentage of revenue was due to the acceleration of demand in off to view branded products that led to the increase in the companies use of co manufacturers and the increase need to provide expedited shipments.
Of our products to keep the customer experience at acceptable levels in advance for fulfillment capacity being.
Being fully on line.
Both of these items increased cost.
Additionally, gross profit as a percentage of revenue decrease do too.
Inventory write offs related to the sunset of Medifast branded product line.
With the anticipated acceleration in demand of off the via branded products.
We expect pressure on gross margin in Q2 2021 as.
As we project the need to continue expedited shipments as we add additional distribution capacity over the next several months. Additionally throughout 2021, we plan to continue to use a higher level of co manufacturers in response to anticipated future demand to protect our own.
Overall profit margins in the short term, we will continue to focus and manage our costs well investing in supply chain and technology for our long term growth objectives.
We believe gross profit margin as a percentage of revenue will improve in the longer term as we enhance our distribution network reduce free costs by shortening shipping lanes and gain productivity improvements in our manufacturing processes as.
As we scalar business over the next 12 months.
S. G N a for the first quarter of 2021 increased $84 million $295.7 million compared to $111.7 million for the first quarter of 2020.
The increase was primarily due to higher off the via commissions expense increased salary and benefits related expenses for employees.
<unk> increase credit card fees, <unk>, resulting from higher sales.
S G and a as a percentage of revenue decreased 510 basis points year over year 257.5 per cent first is 62.6 per cent in the first quarter of 2020.
Income from operations increased $29.3 million to $52.8 million from $23.5 million and the prior year period, primarily as a result of increase gross profit.
Partially offset by increased SG&A expenses.
Income from operations as a percentage of revenue was 15.5 per cent.
For the quarter, an increase of 230 basis points from the year ago period.
The effective tax rate was 22.3 per cent for the first quarter of 2021 compared to 21.8 per cent in last year's first quarter.
Net income in the first quarter of 2021 was $41.1 million or $3.46 per diluted chair.
Just on approximately 11.9 million shares of common stock standing.
This compares to net income of $18.5 million or $1.56 per diluted chair based on approximately 11.8 million shares of common stock outstanding for the same period in the prior year.
Our balance sheet remains very strong with cash cash equivalents and investment securities $212.9 million as of March 31st 2021, compared to $174.5 million at December 31st 2020.
The company remains free of interest bearing debt and believes it is well positioned to execute it's gross strategy.
On April 13th 2021, we entered into 125 million dollar line of credit it strengthens our financial position by providing additional liquidity and flexibility.
Let me spend some additional time talking about capital allocation.
We've consistently taken a balanced approach to allocate allocating capital first prioritizing internal gross needs such as capital expenditures to expand capacity in.
In addition are strong financial performance over the past several years has driven significant free cash flow gross and we've typically returned more than 60 per cent of this annually to stockholders through dividends in stock repurchases.
We expect to continue with this approach in the future. However, the mix is likely going to shift to higher levels of stock repurchases simply because the dividend has increased significantly to a point, where the yield is very attractive relative to peers.
Or a broader market averages.
That and in the first quarter, we spent $7.5 million buying back our stock.
There are approximately 2.3 million chairs remaining under our current stock repurchase authorization. So you should expect to see repurchase activity continue in the future.
On March 18th our board of directors declared a quarterly cash dividend of $16.9 million or $1.42 per share.
Which is payable on may 6th two stockholders a record on March 30th 2021.
We've increased our quarterly dividend right by over 25 per cent in the past year.
Which should in which you should interpret as a sign of confidence in our outlook for the future.
Regarding our capital investment to support growth over the next 24 months, we expect that our capital expenditures will be higher than other years to expand our technology and supply chain capabilities.
Now turning to our guidance.
We believe we are in a much better position to provide guidance than we were over the past four quarters. So with that for the full year 2021, we expect revenue in the range of $1.4 billion to $1.475 billion and diluted E. P S to be in the room.
<unk> of $12.69 to $14.14.
Our guidance also assumes a twenty-three 224 per cent effective tax rate.
As discussed we are expecting pressure on gross margin in Q2 2021, as we anticipate the need to continue expedited shipments as we add additional distribution capacity over the next several months. Additionally, we will continue to use a higher level of co manufacturers.
In the coming months due to the accelerated demand and after via branded products.
Finally, as Dan discussed in Q3 this year, we're planning for a return of an in person convention.
The convention costs will be recorded in Q3 2021.
In closing first quarter results were strong and we remain confident in our business model and are well positioned to capitalize on the opportunities that lie ahead with that let.
Let me turn the call over for questions operator.
We will now begin the question and answer session to ask a question you a press diet than one on your Touchtone phone.
If you're using a speaker phone please pick up your handset before pressing the keys.
If it anytime you question has been addressed and you would like to withdraw your question. Please press Star then too.
At this time, we'll pause momentarily to assemble roster.
My first question.
Comes from Doug Lane with Lane Research. Please go ahead.
Yeah, Hi, good afternoon everybody.
Uhm day, and I have to say the the the return to gross hear happened a lot quicker than certainly I was anticipating but <unk>. The question is you know I haven't seen these kind of gross before it the second half a 2018, it's really almost type of gross in my mind and.
You know there were there were some issues following that period of hyper growth with your infrastructure that I know you've managed.
Manage through and you've talked about added capacity, you've talked about expanded distribution, but what what can you. How can you assure us that they both just isn't too fast here that you've got the infrastructure and the management wherewithal to manage through it at these kind of rates.
Yeah, Doug Thanks for the question I think if you if you go back to.
Two years to 2018, we were in the midst of a lot of investments, which was which which we have continued to to make a priority. Both on the technology side and for the last several years also on the supply chain side. So we're in a good position two.
<unk> have systems that skill with our growth.
On.
And every aspect of our business so our technology skills.
Based on the cloud it's easily expandable uhm, we have a significant network of total manufacturers and of three P O partnerships.
We have partners, who help us with our.
Clients support and services and withdraw their on a significant amount of talent to help us manage as we as we move forward. So uhm.
Uhm, we we believe that we have our operations and our operational plan and infrastructure in place and ready to deliver not just for 2021, but well beyond 2021.
Okay fair enough and and you certainly have seen those changes I have to say I know you didn't talk about international much and given the the the rapid growth in the U S. It's obviously still and probably going to be for awhile, a small part of your business, but it's important I think long.
Terms you can you just give us an update on Hong Kong and Singapore and is there any any thought of expanding beyond those markets in the foreseeable future.
Sure I mean, it is you know and you said this in the past we don't we don't break out the numbers by market. So those those numbers.
We reported include Hong Kong and Singapore. Your your right to remain less than 10 per cent of our overall revenue base, which we state is our threshold for when we will start Ah reporting those but the Asia Pacific markets meeting those those to Hong Kong, Singapore have continue to develop and.
And grow <unk>, we think is consistent with what we should expect going forward and and you know as we continue to refine and add all the capability that will continue to to focus on we're building an expandable model that will allow us to go into all areas of.
The world ultimately that have the same health calendar and the challenges that we're talking we're talking about if you remember dog we we.
We opened up a distribution center in Hong Kong to to provide better service and we did that last year as well as opening up a call centers in Columbia and in the Philippines. So those are two great. Examples of the infrastructure that we're building not just to support the U S. Gross.
To your earlier question, but also to some <unk> other longterm growth abroad.
Okay, great. That's good color thanks, Dan.
<unk>.
Our next question comes from Linda Bolton laser with D. A Davidson. Please go ahead.
Hi, so congratulations on such strong grow with him. So I guess I was curious if you could quantify some of the impacts on gross margin in the corner at least uhm the inventory right off could you could you quantify that and maybe the expedited shipping uhm item.
Sure This is Jim.
<unk> so the the.
The medical met a fast branded products right off was was approximately 70 basis points in the corner.
And the expedited shipment was about 30 basis points.
In the corner.
There was you know.
Uhm.
You know so the the.
The premium shipments were about a million dollars and the the right off was approximately.
Two and a half million dollars.
Okay, great. Thank you and then.
You know your your coach growth is spectacular and you talked about some of the reasons that is in productivity is really rising again to can you talk about how you think about productivity Uhm I know you all let's say kind of when you're modeling it just assume it stays black going forward, but it might be actually.
<unk> another spirit of gross is there any natural ceiling to productivity per couch or how do you. How do you think about that you know really long term in terms of the maximum possibility of productivity.
Yeah. This is this is download it thanks for asking the question I I think the.
We look at the things that we do that we would characterize as innovative or innovation and the support of our coaches uhm as things that have.
Great upward pressure or no upward lift uhm to productivity. So in the case of this this <unk>. This last several quarters, what you can see as a a.
A training protocol or a program that's being initiated across all geographies that leverages technology and some more efficient ways. So think about that is increasing the number of client.
That can be attracted to after the by a symbol single coach largely leveraging communication tools and.
Social media platforms and as well as.
Training.
Approach that allows each coach to train more effectively and more efficiently new coaches and that's using mainly.
Large communication technologies like zoom platform, Uhm and apply a more efficient way of Green and then in training larger number of new coaches. So those are the two kind of accelerators that you're seeing in the current we also in the current quarter and and last same.
Is two orders prior to.
You know in terms of the future and this quarter. We just launched our first to ask I've been talking about this for.
Quite a while but we lost an app for clients, which primarily goes them the ability to access.
Tools to help them with their healthy eating. So this is a recipe database and ways to help them deliver on that that leaning Greenville, so fundamental to uhm learning that habit habit of healthy eating. So we believe that's gonna help coaches support.
It's more clients and then equally important is what we're calling our after via connect.
Which also lost in the second quarter and that's.
Access to uhm metrics and some additional functionality to allow coaches to support more clients by making the their time more efficient. So those are some kind of future looking.
Kind of upward supporting uhm productivity tools that <unk> that we've just launched so again the rest of our answer is kind of the same we don't we don't try to project forward. This is innovation and investment for US and then we watch very closely uhm at what's working and.
And how to improve it and as we have done that for over the last five years I've seen productivity.
<unk> pretty consistently uhm year over year increase and to your point with now achieved a new high points and <unk> <unk> in essence, we're also uhm watching technologies that have not yet reflected in the post productivity number.
Okay and.
And then sort of it is where kind of progressing through the different phases of the pandemic here I know that.
There's been some belief out there that direct sellers have benefited from people staying at home and having more time to spend on things like coaching other people, but yeah. You said that it's really some of your company specific drivers and I guess seeing this high gross and a point when the pandemic is when we're starting to reopen kind of kind of proves.
They had a little do you have any update in terms of your belief about what's going on relative to the pandemic in terms of how sustainable. This this strong coach gross is you know even when we get more reopened.
Yeah, I mean, you you've been following is there for you know the.
Since with implement of this this coach centric model and started refocusing entire company's efforts around building a supporting coaches.
So it is you know our our gross you know started you know well in advance of the pandemic. We grew 66 per cent and 2018 42 per cent in 2019, and then the pandemic here 31 per cent.
You know now we're starting off this this new year with a significant growth.
We we believe that uhm, there hasn't been a lot of benefit to us from the pandemic.
But what we do see is that the addressable market that we focus on is very significant.
20 billion dollar market.
And then in is reflective of the challenges that we've been focusing on for the last five years, which is over two thirds of Americans uhm are either overweight or obese. Most of those have tried dieting and have failed to doing it and.
But most of those are interested still in having support and and creating a health transformation and what we're really saying is a is that our coach centric model is resonating against that very large population and you know we've done the research too.
Recognize that that same dynamic goes well beyond our country's so we believe we have you know many years of of opportunity by focusing on that addressable and growing market.
Thanks, and then I don't know, if you've heard or seen but uhm, but beach body will be coming public through a merger with us back here in a couple of months or so and they're they're planning on really investing pretty heavily to drive gross and having actually negative EBITDA in 2021, just so.
Do you do you feel that you know as a direct seller of kind of wellness and I know, it's a different kind of product and everything but do you think that could be a threat to U as they really ramp up and try to go for kind of a land grab a market share.
Yeah, I'm not in a great position to comment on other companies what I, what I can say is that our approach in terms of how we use coaches to be at the center over a model supported by our products.
And and supported by our community is very unique and I haven't seen anyone else, who is is doing that or who was.
Who's able to do that although I have to say there are plenty of companies out there who are uhm from trying to focus on the health and wellness space. So we'll continue to do what we do best and Uhm, you'll continue our investment in our operational infrastructure.
And you know we believe that were highly differentiated.
Even you know among the direct selling community or the direct to consumer community in terms of what how our coaches work with clients and the fact that our coaches uhm are for the most part.
Uhm previously clients and then we're very so we're very we're very client uhm centric our focus company that uses coaches to to service those client. So I think there's a lot of differentiation between us and other companies were out there you know trying to force.
On the in the same area. So we we feel confident in our future.
Okay, Great and then last one for me Tim do you have a operating cash flow number in capex in the quarter.
Sure so.
Yeah, the operating cash flow.
Is.
So net cash flow provided by operating activities is $65.3 million.
And.
Capex spend was 4.6 million.
In the corner.
And do you have a projection for capex for the ear since you said, you're gonna spend a little bit more.
Yeah at this point, we're we're not gonna be providing guidance on that other than saying it's gonna be.
Hire as we invest in our.
Film and capabilities and our technology. This year, so it will be higher but we weren't gonna be providing items at this point in time.
Okay. Thank you very much.
Instead of things.
As a reminder, if you have a question. Please press Star then one.
Our next question comes from Sebastian Barbell with Jeffries. Please go ahead.
Hi team. Thanks for taking my question and congrats on the quarter.
Done My first question I was wondering if you could come in on the general market dynamics and come to Mister Penn City to lose weight I know, obviously, you got in price ongoing momentum.
And in in coming quarters, but it is it your sense of the dining season. This year is extending beyond historical standard <unk> you know medifast that is.
<unk> meaningfully outperforming the the industry.
Yeah.
Thanks for the best friends that question Uhm, what you know what we believe is we're very focused on being a solution for people who aren't looking for diets or another diet, but are looking for health and wellness.
And I think what we what we see is that along with January being the traditional diet. Susan. It's also the time when people start setting goals and somebody of those are health and wellness goals. So let's say that we're we believe there is a.
A move away from kind of traditional dieting, which is why it's harder and harder to kind of impact by taking that approach.
But there's a move towards health and wellness solutions.
And so you know further we believe that that you know our approach to offering that health and wellness by teaching healthy habits. The first one being healthy eating which results in weight loss is you know a alive and very healthy and in terms of you know the number of people if you will.
Who are looking for that solution and and so you know we we we believe that we stand out in terms of our ability to deliver effectively on on that need. So we'll we'll never do well with people who were looking for a die.
It because that's that's.
Or our program goes beyond weight loss and it's not about just reducing your eating it's about learning a new habit. So we think that we think we're radically the furniture, which again I think we'll talk about this in the past which is why.
Our.
You're from a revenue standpoint doesn't have queue wanted typically is the biggest well if you want is for us since <unk> adopted this model and focus on the coach centric approach Q1, Uhm is not the biggest quarter of the year our queue for is bigger than our.
Q1. So this just happens to be when we when we kick off of the year and so a strong Q1 is traditionally translated into a strong your for US which is I think reflected in the guidance that the gym kind of called out earlier.
Got it and can you talk to Jim can you talk to your gross trance two eight and could you too I think the past two to three earrings cold you mentioned that the that day, so much with the first month of the court.
I'm, sorry could you could you repeat that way you <unk>, yeah, just from the Bill.
Oh, sorry I was.
Was wondering if you could comment too.
Gross strength to date and cute too.
Oh yeah.
Yeah, I mean, <unk> you know the.
The gross trends.
No.
In the.
What I'll call the month of April.
With were included in the annual guidance.
You know, we're basically when we think it's.
Very important like sort of like what we did with the.
In person convention that were calling out when we see in a a large expenditure or.
Or something that we think that helps helps you model.
Will call those out we're basically going to.
Be staying with you know for your guidance.
You know I would I would say is you know the full your guidance you know reflects you know our confidence.
In the future.
And.
You know and the other thing to take a look at is what we did recently with the dividend and that.
It should provide you some confidence also.
Okay, and then you you mentioned you recently laundry coercion kind facing apps.
Do you think that there is an opportunity to monetize please.
Yeah, that's something that with ask ourselves and thought about <unk> would require us to to make some changes on our side, but the reality is we think that the opportunity is much more important.
Terms of getting offering this as tools for clients and coaches in this day focused on what we do best from a you know revenue standpoint, which is largely tied to <unk>.
<unk>.
Food support that we sell so yeah, we considered it we have decided at this point that we won't do it but again largely because we want to have these apps available to as many coaches and appliances possible.
And we feel like we will benefit the long run by by having that maximizing our penetration by not creating any barriers using those.
Got it and the last one from me.
You know, we get gross come from the outpacing Yo Yo longterm target.
I was wondering if you could provide some color as to when you could expect yeah, just delayed shipping <unk> to come down and then put your products.
To be put available that day.
<unk>.
Yeah, I mean, that's that's part of the reason I gave a little bit of additional color on I think <unk> I think you actually set up a asked the the question last time.
Whether the relief in the supply chain would be a straight line uhm or whether it would come earlier. So you know my comments earlier, the manufacturing capacity four $2 billion will be achieved in the next two months.
And the the fulfillment capacity four $2 billion will follow shortly after that.
So we haven't had we'll co manufacturing and additional.
Fulfillment support coming on line as recently as this week and so we're we're seeing that provide a greater capacity, but you know within.
<unk>. So we feel confident that we're heading in the right direction, but we're not kind of a complete yet as you can as you're pointing out we we still have some <unk>.
Some longer shipping than our typical for us that's we're doing all the right things to make sure that that's not a long term issue and that is just as a short term had one for us.
Alright, Thank you can do that too.
Thank you.
This concludes that question and answer session I would like to turn the conference back over to Dan Chard C E O for any closing remarks.
Well I'd like to conclude by thanking everyone on the call for joining US as you can you can see we have a lot of enthusiasm and belief as we as we look forward to the rest of 2021.
Special Thanks to each of our investors uhm for their confidence in both our model and our future and also a big thanks to our after via coaches from now number above 50000 across our free geographies and that's I don't think lost on on any.
Of them or on you that that's been a goal of ours for the last two and a half years to to achieve that 50000 Uhm marks. So thank you and look for too reporting our next quarter and a few months here. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.