Q1 2021 Newage Inc Earnings Call
[music].
Greetings and welcome to new age incorporated first quarter, 2020 one.
So at this time all participants are in a listen only mode.
A question and answer session will follow the formal presentation.
Lets you require operator assistance during the conference. Please press Star Zero on your telephone keypad. Please note. This conference is being recorded I will now turn your conference over to O'reilly Timur. Thank you you may begin.
Thank you operator, good morning, and thank you for joining new agents first quarter financial results.
Investor Conference call.
Tim on 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 Brent 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 uncertainties.
Factors that could cause these results to differ materially are set forth on our annual report on form 10-K, and 10-Q 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 new age Dot Com also the transcript of todays conference call will be available on our website within the investors section at Www.
<unk> got new age Dot Com now I will 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 Miranda's no remove maybe a 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 the $125 million in revenue for the quarter.
And importantly, our second profitable quarter in a row and 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 rain, 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 on.
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 OTT actually not trading on the OTC pinks those on what patient investors that have stayed with us have done quite well.
But of all the things that we're going to 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 companies looking how to do and we are the ones that have the system and new.
Three we have the social selling network of over 400000 and 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 Records.
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.
How would it 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 books Excellence I am pleased with how things are going in our first quarter results. Our first full quarter reported results as a combined company with Rx and our other partners, but the second quarter in a row with Pas.
Net of EBITDA the.
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.
The end 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 on hundreds of thousands of brand partners and our customers around the globe.
And this quarter as a combined company, we experienced some strong sales and growth and actually incremental margin capture as we were strategically integrating new converge. 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 trends that we're currently seen 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 and integration of our companies.
From the outset of working with Brent we built new it was critical that we delivered the committed cost synergies that we've committed to our shareholders. We knew it was critical for there to be a little disruption as possible to our brand partners businesses and we also knew that it was critical that our core values remain unchanged and that it was critical we further.
And our partnership with the field throughout the integration and convergence.
We had a few things going for us to come to the merger that really helped first we were completely aligned at the top I think second we had a compensation plan that our exit is very unique with multiple patents pending that allowed us for a successful integration without changing our brand partners business structure and.
And third we had a pretty robust system that enabled and are important compliance with the new age side, adding to that finally force, we're 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.
<unk> for virtually everyone else in our industry, which makes it doing what were doing such a large scale I think very disruptive.
I can tell you that nothing's ever perfect.
But the passion the energy to believe enthusiasm I would say it 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 SG&A 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 us.
Others, we have identified a number of redundancies and continues 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 have an office. We are eliminating these offices and centralizing their 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 in 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're excited to help them build legacy businesses now as part of new age on.
Our focus and strategy operationally continues to be the following.
First develop a leading presence and increasing our market share in our core markets of Western Europe, The Americas, Japan and greater China.
For example, we are nearly in completion of the definitive agreement to acquire alive and in Japan, which we will which we believe will build in 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 joined new age are all contributing to this growth second we will selectively invest in high potential emerging markets, where we believe we can be confident in our core markets in our core markets and I think developing us to achieve overall sales profitability goals is fundamental.
Most recently, we opened Colombia to expand our presence in emerging region of Latin America and have been working on registering in building out our infrastructure in the southern cone of Africa with product introductions and business expansion envision 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.
Let me now highlight a few of our major accomplishments in our first quarter.
We continue to experience outstanding organic growth in a number of our regions performed the last year for the full year, we did right at $500 million in net revenue.
So it did deliver more than 125 million on the first quarter, our smallest quarter of the year was as Brent said at the outset above our internal expectations and as previously guided to high single digit low double digit revenue growth, which we're very confident we can meet or even exceed the guidance often times 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 opportunity for new age.
Let me share some of the key drivers in the quarterly geography geographically Europe. In addition to now being our largest region comprised 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% yet its triple digit organic growth.
Our success has been driven by strong leadership and growth in 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 duplicated Bowl and is driven this amazing brand partner leadership throughout this.
<unk>.
Looking at greater China. This is one place where social selling and technology approach similar to Europe will translate over time to grow 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 <unk> brand and the encouraging responsiveness to several new product introductions, we see greater China to be 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 non new Marin beside growth in vanilla, there and on the Rx side of the business in Japan, we are focusing our efforts on building a customer in e-commerce subscriber side of the business.
With the recent announcement of the pending acquisition of alive, and we expect to add an additional $20 million in annual revenue and to add to our profitability. He brings 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 cash.
New age offering.
Looking at the Americas, we are seeing solid growth led by U S, Canada, and Mexico the level of engagement motivation. Among leaders is on 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 joined new age and they are excited about the new.
New and disruptive opportunity they are actually joining all of us to seed 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 and it's all change for us They buy online and this is what we do know as consumers. They are influenced by friends and family and their social feeds. This is what we do also.
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.
And 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 Nims are our biggest competitive advantage. We are actually attracting some of the finest people from health care professionals in Mexico to branding and social experts through social selling experts throughout Europe.
These people actually are very diverse but they share one common goal, which has been the best as Brent said in the beginning we're actually starting to put the pedal to the metal on a strategy to differentiate health brands driven through this disruptive directed consumer route to market utilizing our global on me of social selling tech enabled.
<unk> partners, it's the drive activity and efforts of these and passion 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 of 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 detailed Lee laid out in our press release and our 10-Q filing. So let me just hit a few of the highlights hitting a $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 overtime.
We grew our gross margin by five four 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 onetime 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 and.
<unk> is a technical calculation and noncash entry all associated with valuation of the Rx acquisition stock consideration value that goes away when final consideration is provided.
Now switching to the balance sheet, we've got a 102 million in cash and a tremendously positive current ratio with total assets of $466 million net.
On the market some of our operational highlights a few minutes ago and.
Hi.
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 Chem.
T E N to Rick to Carlos to David to each of them to to some of our brand partners by John Wadsworth, Greg Tedrow, Shannon Todd Air Ginger.
Doctor paying yet loose Venene Paolo I mean, these folks are just outstanding and so dedicated so motivated they are all of 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.
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've 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 the number one.
Consumers, we're fundamentally shifting and purchase behavior toward health and wellness number two that traditional retail.
And similar routes to market, we're being dis intermediate it and number three that CPG competitors would have a very difficult challenge and 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 it sits as it sits today a direct route to market.
And our premise was pressure.
And the three tenants 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 and traditional retail soured for smaller brands and companies we believe.
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 rigs.
<unk> list of obstacles still the same situation assessment. So 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.
Going forward, we're 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.
Comprehend.
And it should be fairly straightforward to also financially model, we're 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 a 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 breath of the people the systems and everything we need and the benefit to shareholders of all of these capabilities wrapped up in a larger scale enterprise is superior sustainable profitable organic growth and.
Disproportionate EBITDA margin acceleration we.
We do see further upside inorganic growth from new brand partners, joining us social tech expansion and for and from further rollout of new products and leverage of what we see as a very robust pipeline in R&D in our labs, Deanna lapse and leads our R&D team as our chief product officer, she too and.
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 <unk>.
Investors.
And 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.
It appears to be very attractive right now.
However, the major acquisition opportunities available to the company and there are many.
And.
And in those choices and in those opportunities we intend to use it.
As much of our cash balance and debt at attractive rates to facilitate those.
Cash flow from intended acquisitions will far in a way meet the needs of those facilities as most of the targets in this industry are completely unlevered and this way, we will minimize dilution and the use of equity going forward and 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 tack on approaches investing in social selling tech and building upon our internal resource is paramount for Essex.
SaaS 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 nutrition performance and weight management number three.
We'll further build out our internal organizational capabilities and create a culture of doing well by doing good that its performance oriented and metric driven.
Number four we will improve our net income margins through convergent benefit 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.
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.
<unk> 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 scaling 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 facing system capabilities in 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 tax 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 and increasingly strong management team that we expect to be adding to with our new chief financial <unk>.
Share 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 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 one on your telephone keypad income.
From Asia tell indicate your line is on the question Q.
You May press star two if he would like to remove your question from the queue and.
And for participants using speaker equipment, it may be necessary to pick up on your handset before pressing the star keys, one moment, while we poll for questions.
Okay.
Our first question is from Aaron Grey with Alliance Global Partners. Please proceed.
Good morning. This is Andrew bond on the line for Erinn, great. Thank you for taking our questions.
First question is on China, Hey, Good morning can you provide some additional color on China and how do you feel growth trends are carrying over the next 12 to 18 months, given we've seen a little bit of volatility in the market over the past year on a half.
Yes, 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 where we.
We're bringing the companies together and that's always complicated from a compensation system, but we've got outstanding.
Management, and an outstanding brand partners and that is a key to success.
It's complicated in China in an environment, an industry that is rapidly shifting towards new channels live streaming.
E Commerce.
Other ways of doing business shifting from the traditional kind of belly to belly and relationship safe sales based approach to much more social and.
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 per se, but organically, we're not we haven't yet seen the growth even though we got 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 one of our future CEO candidates Ian Ian Channel. There is on there is on it like crazy He's our region President there so mark what other insight would you <unk>.
<unk> decided from my top line summary.
Yes, I think it's great I think the other thing I would add to it is as we see China evolving and changing with the pandemic. They will one that was hit fairly hard with this because of their traditional face to face selling approach.
Ian has been working on a plan and net will be rolled out its 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 as we start to rollout a more.
Acceptable social selling platform live streaming from 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 a new platform so to speak to be able to do business and our leaders are responding to that well as well on.
Some of the new technology and product development that we've been working on year to around pushing some of these markets a little further.
With some some exciting new launches as the I'd say next six to 12 months or 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.
Yes.
And Andrew technically were 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 at 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 that is the benefit of the global business, sometimes some regions are up sometimes operations are down, but we do see China as a big growth opportunity.
And Brent even traditional business as they're coming out of the pandemic, yes, I think youre going to see it strengthening just naturally with that as well because as things open up more to the market open up more to people traveling and visiting those will all be.
Factors to help us grow that market.
100%.
Great that's great color, 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.
Yes, it is really a target and I am personally.
The focus on that as a specific metric to the board of directors and to shareholders and we think thats 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 will get.
Multiples too on that to reflect the global trends in the position that we have to address those global trends and 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 net 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.
And that will also dropped directly to the bottom line, but I think the key is as we've tried to intimate look we have 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.
<unk> in every single market in which we operate around the world that is just on the heard of and gives us the visibility there.
<unk> ability and flexibility to really maneuver the business like we talked about so I think we have everything we are rating need and frankly, maybe even a little bit too.
Oh over invested in certain functions or certain markets like mark talked about that we want to optimize but those are more tweaking I would say.
As we further bring this together and add in new companies that frankly really wanted joined the fold, but the key is.
It's driving EBITDA margin. It is what we're focused on and going forward driving cash flow and net income margin. So you'll start to see.
Improving progress on that force going forward that just not just the EBITDA or adjusted EBITDA. So I'd say the long term target is.
Is.
Above 15%, we will not get there this year, but we will see we expect quarter to quarter, where every six months and on a full year basis for share significant EBITDA margin improvement.
Brent could I add also.
The convergence at the we're in the Middle Love.
I still see huge opportunity has been in charge of that we have many opportunities as is if you think about we have not completely converged our I T. 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 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 that in and of itself will help and then.
Frankly, if it's not accretive to sales and profitability, we won't do it. We're just we're disciplined and ourselves and our teams to make sure that we are focused on on improving that number every quarter.
Great that's great detail. Thank you I'll pass it along and hop back in the queue.
Thanks, Andrew.
Yes.
As a reminder, this.
On our cash on the keypad, if he would like to ask a question.
Our next question is from Mike Grondahl 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 am kind of curious how penetrated are those maybe by country like are you a <unk>.
Third of the way there two thirds of the way there.
It would be kind of.
I appreciate knowing a little bit more.
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 in our smart linker allows someone to to sell or position a specific product or brand right to their consumer through social selling so this low.
<unk> them to target, maybe one of our Lucy on products with the skincare or one of our nutritional products through neutral by or through Miranda and so that that element is one of the reasons Europe is growing at the pace they are because on.
Our brand partners that 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 allow.
<unk> 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 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 and we've been rolling that out in phases that piece will continue to add elements to their effectiveness. So that they get not only real time feedback, but they can see what's working on what's not working in their campaigns and 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, but not only have access no what's working and what's not so they can start so to <unk>.
Speak.
With phase one of how to get involved in social on because we see this as our brand partners.
Each had hundreds of contacts and waves of info on chip 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 there.
We're a little behind this and Thats why <unk> been working to bring that up to pace and I think youre going to see some exciting things. There. We're also will be announcing some some strategic some strategic partnerships with others tools that will continue to make it even easier in the social selling aspect that are quite unique to and actually quite a.
Exciting to not only our brands, but to allow us to expand debt portfolio for our customer base very easily so.
I would give us throughout the year that would be something that would I would stay tuned on once we hit the convergence were planned on July 3rd to converge both groups together with the exception of Japan, and China, which were taken a little longer time on but the Americas Europe Latin America will all be converged here coming up in July.
When that happens youll see a whole new array of simpler easy to use access what I call, one and 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 Brett.
<unk> said and we've talked about previously on.
Making sure that we're up to speed on this as well.
And Mark are you able to quantify for an average rep.
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 bird.
<unk> debt is as an access tool on the industry that allows them. The real time information. So they can start to see whats whats transitioning to sales versus what's been unsuccessful.
Successful and I think by adding those tools on 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's not working I need to make some changes as well as we're actually introducing this next quarter. Some trainings, where we're getting these experts on to <unk>.
Train others in their teens and others and other teams on how to make.
Make him an impactful social selling campaign, because there's an art to this as well and we want to simplify that process.
Got it Mike.
Jeff and Mike I will tell you too I mean.
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 are have everybody for.
On it because their bonus bonus depends on it but the translation.
Rolling out this leading social selling tech and increasing our abilities is.
Consistent organic growth from the top line.
And frankly, it's a 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.
Any thoughts on timing for the Eliza acquisition.
And then maybe any new products to call out that can kind of move the needle in the next year or two.
Yes, we can.
Go ahead Mark.
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 been covered new science over the past months that we think is is.
Not just going to move the needle, but really the kind of three standard deviation step function change for the industry.
It's so big we think some of the science that 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 the question alive and we think is going to be any any day, but frankly, we have to be disciplined as a public company to do the due diligence.
<unk>.
Golden week had slowed us down a little bit there in Japan translations and those kinds of things.
In from contractually to Japanese all of those things take time. So we have been measured in terms of timing too to bring this in but.
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 in and we think it is very attractive for for shareholders. Mark I know you are on both of these things also adequate debt.
Share your perspective on both alive and.
And what's going to move the needle for us going forward.
Yeah.
I would agree with Brent the day, they do take time.
If you look back on the Rx acquisition as we came together with the merger it took time and it just does and alive and we're still very excited about and we still believe that's a great opportunity for us as we come to together on that piece and there is still some work to be done, but I think that can happen fairly quickly.
And there are a lot of opportunity. That's the exciting thing is you've heard Brent talked about there are some really exciting opportunities where people were wondering well why you know why are you guys building cash why are you doing new things, we have some really exciting opportunities throughout the year that are going to come forward as we pick and choose the very <unk>.
Best of these and so I would say stay tuned that one that was coming the second piece.
Yeah, we have some pretty exciting things we've launched our probiotics is doing really well some other products, but the innovation and the ability through our research and development team now that we've come together.
When you get into scale. This is one of those advantages.
On <unk> and her team have done an amazing job of really looking at some innovation that our leaders, where we're 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 all great great additions to our brand portfolio.
Leo debt will not just be me too products, but will actually be great additions to our competitive advantages moving forward.
Yes.
Yep Yep.
Hey, I was asking guidance.
I was asking a little bit more about the children's multivitamin or the sunscreen products that you guys announced recently, yeah any comment on how those have been received.
Very well in fact both of those.
We're trying to get to regulatory on the skin or the sunscreen, because obviously, that's highly regulated as an industry out there and so with a unique formula that we came together with so we're still working on that also a timing issue of when when is the best time to launch a sunscreen and our markets.
But that's been well received and the children's vitamins has been something we 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 had been seeking and wanting especially here in north American.
In 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 and nutrition line, we already have for an age demographic, we didn't have or from a specific thing like the some strength, but what <unk>, referring to also when we talk about new technology. There is some exciting new things that I think will move the new.
So.
Perfect. Thanks, guys.
Okay.
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 Aaron. Thank you very much for the outstanding questions. As is usual, we really appreciate you guys and you do a superb job.
I'd say.
But 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.
And going forward.
Tried to give you the road map 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.
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 financing the debt things that we're doing that will give us even more.
Room to do bigger things that we think will be virtually.
Virtually instantly accretive for shareholders, new changes on the management side and strengthening at the CFO level, which we also think to be eminent and new acquisition opportunities not just closing alive, and 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.
<unk> increased free cash flow and increased EBITDA margin as you can reduce your SG&A as a percentage of net net sales on 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 or numbers of brand partners.
Our e-commerce conversion rates and trends there.
And our numbers of subscribers and trends in subscribers and a 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 friends on both.
I want to thank everybody for joining us today and hope everybody has a great week.
Thank you. This does conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.
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Sure.
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Right.
Yeah.
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Okay.