Q2 2022 LifeVantage Corp Earnings Call

Speaker 1: Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss LifeVantage's second quarter fiscal 2022 results. At this time, all participants are in a listen-only mode.

Good day, ladies and gentlemen, thank you for standing by welcome to today's conference call to discuss Lifevantage second quarter fiscal 2022 results at this time all participants are in a listen only mode.

Speaker 1: Following the formal remarks, we will conduct a question and answer session. Instructions will be provided at that time.

Following the formal remarks, we will conduct a question and answer session and instructions will be provided at that time for you to queue up.

Speaker 1: Hosting today's conference will be Reed Anderson with ICR. As a reminder, today's conference is being recorded. And now I would like to turn the conference over to Mr. Anderson.

Hosting today's conference will be Reed Anderson with ICR as a reminder, today's conference is being recorded and now I would like to turn the conference over to Mr. Anderson. Please go ahead Sir.

Speaker 2: Thank you. Good afternoon and welcome to LifeVantage Corporation's conference call to discuss results for the second quarter of fiscal 2022. On the call today from LifeVantage with prepared remarks, our Steve Fife Chief Executive Officer, and Carl Aurey Chief Financial Officer. By now, everyone should have access to the earnings release, which went out this afternoon in approximately four or five PM Eastern time.

Thank you good afternoon, and welcome to Lifevantage Corporation's conference call to discuss results for the second quarter of fiscal 2022 on the call today from Lifevantage with prepared remarks are Steve Fife, Chief Executive Officer, and Carl I'll Ray Chief Financial Officer by now everyone should have access to the earnings release.

Which went out this afternoon at approximately four O five P M eastern time.

Speaker 2: If you have not received the release, it is available on the Investor Relations portion of LifeVantage's website at www.lifevantage.com. Just call us being webcast, and the replay will be available on the company's website as well. Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements, and management may make additional forward-looking statements in response to your question.

Do you have not received the release it is available on the Investor Relations portion of Lifevantage. Its website at Www Lifevantage Dot Com. This call is being webcast and a replay will be available on the company's website as well before we begin we would like to remind everyone that prepared remarks contain forward looking statements and management may make additional.

All forward looking statements in response to your questions. These statements do not guarantee future performance and therefore undue reliance should not be placed upon them.

Speaker 2: These statements do not guarantee future performance and therefore, under-reliance should not be placed upon them. These statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the risk factor section of like-to-entges most recently filed forms 10K and 10Q.

Statements are based on current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the risk factors section of like that just most recently filed forms 10-K and 10-Q.

Speaker 2: Please note that during today's call, we will discuss non- GAAP financial measures in putting results on an adjusted basis. Management believes these financial measures can facilitate a more complete analysis and greater transparency into life-ventages on-going results of operations, particularly when comparing underlying operating results from period to period.

Please note that during today's call, we will discuss non-GAAP financial measures, including results on an adjusted basis management believes these financial measures can facilitate a more complete analysis and greater transparency into lifevantage as ongoing results of operations, particularly when comparing underlying operating results from period to period.

Speaker 2: We've included a reconciliation of these non-GAAP measures with today's release.

We've included a reconciliation of these non-GAAP measures with today's release.

Speaker 2: call also contains time-sensitive information that is accurate only as of the date of this live broadcast, February 1, 2020.

I'll also contains time sensitive information that is accurate only as of the date of this live broadcast February <unk> 2020 to life.

Speaker 2: My fan just assumes no obligation to update any forward looking projection that may be made in today's release or call. Now it will turn the call over to Steve Feif, the Chief Executive Officer of LifeFan.

<unk> assumes no obligation to update any forward looking projections that may be made in today's release or call.

Now I will turn the call over to Steve Fife, Chief Executive Officer of Lifevantage.

Speaker 3: Thanks Reid and good afternoon everyone. Thank you for joining us today. With me is Carl Aurey, our chief financial officer, who will join me with prepare-gare marks before we turn the call over for Q&A.

Thanks, Reed and good afternoon, everyone. Thank you for joining us today with me as Karl already our Chief Financial Officer, who will join me with prepared remarks before we turn the call over for Q&A.

Speaker 3: On our last earnings call, we were more optimistic about the expansion of in-person activities. But news about the Omicron variant has significantly and unexpectedly slowed down our activities as past quarter.

On our last earnings call, we were more optimistic about the expansion of in person activities, but news about the omicron variant has significantly and unexpectedly.

Load down our activities this past quarter.

Speaker 3: We expect to see improvements throughout fiscal and calendar 2022 from this point on. However, our initial expectations have been dampened some.

We expect to see improvements throughout fiscal and calendar 2022 from this point on however, our initial expectations had been dampened somewhat Karl will update you on our full year outlook.

Speaker 3: Carl will update you on our full year outlook.

Second quarter results were lower than our expectations largely attributable to the extended impact of Covid related factors.

Speaker 3: Second quarter results were lower than our expectations, largely attributable to the extended impact of COVID-related factor.

Speaker 3: Our recent Philippines launch, for example, encountered unexpected delays, which effectively pushed initial revenue into January .

Our recent Philippines launch for example encountered unexpected delays, which effectively push initial revenue into January .

Speaker 3: While disappointing, we made further progress on several key strategic initiatives, which I'll outline.

While disappointing we made further progress on several key strategic initiatives.

I'll outline in more detail.

Speaker 3: Revenants at $52.2 million were down 11.6% year over year, and 1.9% on a sequential base.

Revenues at $52.2 million were down 11.6% year over year, and one 9% on a sequential basis.

Speaker 3: Despite this decline, we still delivered $1.9 million of adjusted EBITDA and maintained our strong balance sheet with over $20 million of cash.

Despite this decline, we still delivered $1.9 million adjusted EBITA.

We maintained our strong balance sheet with over $20 million of cash.

Speaker 3: Over the past several quarters we've been focused on three primary areas to start positioning the company for accelerating growth and significant long-term value creation.

Over the past several quarters, we've been focused on three primary areas to start positioning the company for accelerating growth and significant long term value creation.

Speaker 3: people, products, and customer experience.

People products and customer experience.

Speaker 3: One of my primary focuses since becoming the CEO has been to build an executive team with the skills, passion, and vision to accelerate growth at life and age.

One of my primary focuses since becoming the CEO has been to build an executive team with the skills passion and vision to accelerate growth at Lifevantage.

Speaker 3: We recently hired Julie Boyster as Chief Marketing Officer, along with a new Chief Digital Officer.

We recently hired Julie boys stir as Chief marketing officer, along with a new Chief Digital officer.

Speaker 3: Both individuals bring an incredible depth of expertise that will be instrumental in driving the transformation of our business and taking it to the next level.

Both individuals bring an incredible depth of expertise will be instrumental in driving the transformation of our business and taking it to the next level.

Speaker 3: Julie is a strategic marketer and brand champion with a passion for growing organizations using innovative products, memorable branding, meaningful customer experiences, and data driven campaigns.

Julie isn't strategic marketer and brand champion with a passion for growing organizations using innovative products memorable branding meaningful customer experiences and data driven campaigns.

Speaker 3: She has a proven background in direct sales, having led the product marketing and digital teams for a large privately held health and weight management company, where she helped grow that organization to over $500 million in annual revenue and champion the company through a period of hyper growth and digital transformation.

She has a proven background in direct sales, having led the product marketing and digital teams for a large privately held health and weight management company, where she helped grow that organization to over $500 million in annual revenue.

And champion the company through a period of hyper growth and digital transformation.

Speaker 3: Julie will oversee the product marketing, research and development, experiential marketing, creative and content team.

Julie will oversee the product marketing research and development.

Very NGL marketing creative and content teams, ensuring the team is laser focused on developing rating product fans and building loyalty at every interaction.

Speaker 3: ensuring the team is laser focused on developing raving product fans and building loyalty at every interaction.

Speaker 3: Our new Chief Digital Officer has a history of leading transformational infrastructure, application, and information security initiatives, and global technology integrations that make businesses run better, faster, and safe.

Our new Chief Digital Officer has a history of leading transformational infrastructure application and information security initiatives and global technology integrations that make businesses run better faster and safer.

Speaker 3: He thrives on building and developing teams and creating an ecosystem of vendors and suppliers that come together to drive business value and outcomes through technology.

He thrives on building and developing teams and creating an ecosystem of vendors and suppliers that come together to drive business value and outcomes through technology.

Speaker 3: He will oversee digital technology, back-end and front-end development, quality assurance, business analysis, product management, and IT infrastructure team.

He will oversee digital technology.

And in front end development quality assurance business analysis product management and it infrastructure teams.

Speaker 3: Both these individuals are highly complimentary to the rest of our team, many of which also joined the company in the past year.

Both of these individuals are highly complementary to the rest of Archie.

Many of which also joined the company in the past year.

Speaker 3: I'm thrilled to be surrounded by such an incredible group of talented people.

I'm thrilled to be surrounded by such an incredible group of talented people.

Speaker 3: At the heart of every successful business are passionate people working together to create a strong, effective management team.

At the heart of every successful business, our passionate people working together to create a strong effect of management team.

Speaker 3: Now let me provide you with a product update for the quarter.

Now, let me provide you with a products update for the quarter.

Speaker 3: You've heard us talk about refocusing on our core product, Protandom NRF 2, over the past couple of quarters. And at Global Convention in October , we launched product activation stacks designed to address common health concerns such as gut and immune health.

You've heard us talk about refocusing on our core product pro tandem and RF too over the past couple of quarters and our global Convention in October we launched product activation stacks designed to address common health concerns such as gut and immune health.

Speaker 3: At the center of each stack is ProTandem NRF2 and the essential health benefit it delivers to anyone wanting to make improvements in their life.

At the center of each stack is pro tandem and RF too and the essential health benefit it delivers to anyone wanting to make improvement in their life.

Speaker 3: At our global convention, we also launched ICBRITE, a supplement packed with antioxidants, nutrients, and carotenoids validated to support eye

At our global Convention, we also launched IC bright a supplement packed with anti oxidants nutrients and pro rata Lloyd's.

Consolidated to support by and brain health. The holidays brought the addition of two new seasonal flavors of axial Spice Plumb and Peppermint stick. These limited time offers or paired with a number of holiday promotions giftable packs and merchandise.

Speaker 3: The holidays brought the addition of two new seasonal flavors of axial, spice plum and peppermint stick. These limited time offers were paired with a number of holiday promotions, giftable packs and merchants.

Speaker 3: Several sales in Sennav, including a ring in the New Year promotion, the December elite retreat, and launch of our Croatian Sennav trip also spurred excitement amongst our distributors.

Several sales incentives, including a ring in the new year promotion the December elite retreat and launch of our Croatian incentive trip also spurred excitement amongst our distributors.

Speaker 3: Finally, we continue to focus our efforts on the customer experience across all touchpoints.

Finally, we continue to focus our efforts on the customer experience across all touch points.

Speaker 3: including projects to improve the website along with various digital brand experiences.

Including projects to improve the website along with the various digital world brand experiences.

Speaker 3: In October , we launched a redesign of our USC Carmer site to make shopping and enrolling with life and age easier than it's ever been.

In October we launched a redesign of our U S e-commerce site to make shopping and enrolling with lifevantage easier than it's ever been.

Speaker 3: New Zealand's site has also been updated to match the global changes.

New Zealand site has also been updated to match the global changes.

Speaker 3: Our digital team also rolled out a 120-day post-purchase campaign designed to educate, edify, and encourage continued loyalty with LifeVantage in our products.

Our digital team also rolled out 120 day post purchase campaign designed to educate edify and encourage continued loyalty with lifevantage and our products.

Speaker 3: The evolution of our health and wellness platform is aimed at providing an immersive approach that puts the customer at the center, surrounding them with products, people, tools, and experiences that lead to the premium satisfaction.

The evolution of our health and wellness platform is aimed at providing an immersive approach that puts the customer at the center surrounding them with products people tools and experiences that lead to the premium satisfaction.

Speaker 3: Eliminates friction and drives high level of repeat engaged.

Eliminates friction and drives high level of repeat engagement.

Speaker 3: Importantly, we're taking a holistic view that provides customers and distributors, all stakeholders with the best possible outcomes to drive consistent momentum across our health and wellness platform, to keep them engaged and coming back to the world.

Importantly, we're taking a holistic view that provides customers and distributors all stakeholders with the best possible outcomes to drive consistent momentum across our health and wellness platform to keep them engaged and coming back for more.

Speaker 3: Leaning into Prepandum NRF2 and these key areas this past year has given us a tremendous insight into our future growth.

Leaning into preparing them on our F. Two and these key areas. This past year has given us a tremendous insight into our future growth.

Speaker 3: We want to be known worldwide as a brand that delivers wellness through products that activate your body's natural processes and empower a healthy, vibrant life.

We want to be known worldwide as a brand that delivers wellness through products that activate your body's natural processes, and then power a healthy vibrant life.

Speaker 3: We have a strong line up of products that have laid that foundation and will continue to be paramount as we advance innovation around our activation stores.

We have a strong lineup of products that have laid that foundation and will continue to be paramount as we advance innovation around our activation story.

Speaker 3: We want to be known as having the very best compensation plan that both supports thriving businesses and incentivizes distributors and customers for simply sharing the products they love.

We want to be known as having the very best compensation plan that both supports thriving businesses and incentivize as distributors and customers for simply sharing the products They love.

Speaker 3: We want to impact the lives of consumers around the globe in a much broader way than we've done today.

We want to impact the lives of consumers around the globe in a much broader way than we've done to date.

In addition to broad and deep experience life Vantages leadership team understands the power of our legacy and a tremendous opportunity for using technology and digital tools to amplify our message to reach a much larger addressable market.

Speaker 3: In addition to broad and deep experience, life-sanages leadership team understands the power of our legacy and the tremendous opportunity for using technology and digital tools to amplify our message to reach a much larger, addressable mark.

Speaker 3: We all share the future vision of a company whose strong foundation rooted in high quality health and wellness products coupled with a recognizable durable brand can positively impact the lives of consumers around the globe in a much broader way than it does currently.

We all share the future vision of our company, whose strong foundation rooted in high quality health and wellness products, coupled with a recognizable durable brand can positively impact the lives of consumers.

Around the globe in a much broader way than it does currently.

Speaker 3: Internally, we've been calling this an evolution towards being the and company.

Internally, we've been calling this an evolution towards being the and company.

Speaker 3: meaning that we want to support growth-driven entrepreneurs and incentivize our most loyal customer.

And in that we want to support.

Growth driven entrepreneurs and incentivize our most loyal customers.

Speaker 3: From a positioning standpoint, the direct selling business has been evolving to a model that is more agile, more inclusive, and creates multiple paths to grow.

From a positioning standpoint, the direct selling business has been evolving to a model that is more agile more inclusive and creates multiple paths to grow.

Speaker 3: Our leadership team and board are fully aligned with including this new paradigm and you will start to see us moving aggressively to improve our brand awareness with new products, go to market strategy.

Our leadership team and board are fully aligned with including this new paradigm and you will start to see us moving aggressively to improve our brand awareness with new products go to market strategy.

Speaker 3: and incentive updates that are significantly additive to our distributors existing businesses and our overall

And incentive updates that are significantly additive to our distributors existing businesses and our overall <unk>.

Company performance.

It's a very exciting time at Lifevantage and over the next couple of quarters, we expect to share additional details on the broader themes and tactics will be using to accelerate growth and reach customers worldwide. Our foundation is strong with a large established base of loyal customers into <unk>.

Speaker 3: It's a very exciting time at LifeFanage. And over the next couple of quarters, we expect to share additional details on the broader themes and tactics we'll be using to accelerate growth and reach customers worldwide. Our foundation is strong with a large established base of loyal customers and distributors.

Strip centers in.

Speaker 3: In addition, we have a solid financial position that will enable us to deploy the appropriate resources to drive for future growth.

In addition, we have a solid financial position that will enable us to deploy the appropriate resources to drive for future growth.

Speaker 3: Now let me turn the call over to Carl Oury, our Chief Financial Officer, to review our second quarter financial results.

Now, let me turn the call over to Carl I'll Ray, Our Chief Financial Officer to review, our second quarter financial results.

Speaker 3: Thank you, Steve. Please note that I will be discussing our non-GAAP adjusted results. You can refer to the GAAP to non-GAAP reconciliations in today's press release for additional details.

Thank you Steve. Please note that I'll be discussing our non-GAAP adjusted results you can refer to the GAAP to non-GAAP reconciliations in today's press release for additional details SEC.

Speaker 4: Second quarter revenue was $52.2 million down 11.6% on a year-over-year basis and 1.9% sequentially from the first quarter. Foreign currency fluctuations negatively impacted revenue by $1 million in the second quarter.

Second quarter revenue was $52 2 million down 11, 6% on a year over year basis, and one 9% sequentially from the first quarter.

Foreign currency fluctuations negatively impacted revenue by $1 million in the second quarter rare.

Speaker 4: Revenue in the Americas declined 17.1% compared to the prior year period to $34.7 million, driven by an 11% decrease in total active accounts, reflecting ongoing challenges to hosting in-person meetings.

Revenue in the Americas declined 17, 1% compared to the prior year period to $34 7 million driven by an 11% decrease in total active accounts, reflecting ongoing challenges to hosting in person meetings.

Speaker 4: Revenue in our Asia-Pacific and Europe region increased 2.1% to $17.5 million, aided by a 6.4% increase in total active accounts. We experienced strong double-digit growth rates in Australia, Thailand, and China, however this was partially offset by lower revenue in Japan, which was attributable to the negative impact of foreign currency.

Revenue in our Asia Pacific and Europe region increased 2.1% to $17 5 million aided by a six 4% increase in total active accounts, we experienced strong double digit growth rates in Australia, Thailand, and China. However, this was partially offset by lower revenue in Japan, which was a.

Tribute to the negative impact of foreign currency on a constant currency basis revenues in Japan increased slightly by <unk>, 1%.

Speaker 4: On a constant currency basis, revenues in Japan increase slightly by 0.1%.

Speaker 4: Gross margin was 81.5% in the second quarter compared to 82.7% in the prior year period.

Gross margin was 81, 5% in the second quarter compared to 82, 7% in the prior year period.

The decrease in gross margin was due to increased inventory obsolescence expenses increases in shipping and warehouse expense along with shifts in geographic and product sales mix.

Commissions and incentive expenses in the second quarter declined 1.7 million year over year as a percentage of revenue commissions and incentive expenses rose 280 basis points versus year ago levels to 48, 8% primarily attributable to changes in the timing and magnitude.

Promotional and incentive programs.

non-GAAP adjusted SG&A expense was relatively flat up approximately <unk> 1 million compared to the prior year quarter.

However, due to lower revenues the adjusted SG&A expense ratio increased to 32% from 28, 1%.

Speaker 4: Adjusted operating income was $0.3 million compared with $5.1 million in the prior year period.

Adjusted operating income was point $3 million compared with $5 1 million in the prior year period.

Speaker 4: Adjusted net income was 0.6 million or 5 cents per fully diluted share in the second quarter, compared to adjusted net income of 3.6 million or 25 cents per fully diluted share in the comparable period last year.

Adjusted net income was <unk> 6 million or five cents per fully diluted share in the second quarter compared to adjusted net income of $3 6 million or <unk> 25 per fully diluted share in the comparable period last year.

Speaker 4: We recorded a tax benefit of $0.6 million in the second quarter compared to a tax expense of $1.8 million a year earlier. The tax benefit recorded in the current quarter is primarily due to the positive impact of discrete items relating to taxes on foreign income.

We recorded a tax benefit of <unk> 6 million in the second quarter compared to a tax expense of $1 8 million a year earlier.

The tax benefit recorded in the current quarter is primarily due to the positive impact of discrete items relating to taxes on foreign income for.

Speaker 4: For fiscal year 2022, we expect our effective tax rate will be approximately 22%.

For fiscal year 2022, we expect our effective tax rate will be approximately 22%.

Adjusted EBITDA for the second quarter was $1 9 million or three 6% of revenues compared to $6 7 million or 11, 4% in the same period a year ago.

Speaker 4: Adjusted EBITDA for the second quarter was 1.9 million or 3.6% of revenues compared to 6.7 million or 11.4% in the same period a year ago.

Speaker 4: Please note that all of the adjustments from GAAP to non-GAAP I discussed today are reconciled in our earnings press release issued this afternoon.

Please note that all of the adjustments from GAAP to non-GAAP I discussed today are reconciled in our earnings press release issued this afternoon.

Speaker 4: Despite facing unexpected challenges, we maintained our strong financial position, ending the quarter with $20.2 million of cash and no debt. We also continue to maintain $5 million of availability under our revolving line of credit.

Despite facing unexpected challenges, we maintained our strong financial position ending the quarter with $20 2 million of cash and no debt. We also continue to maintain $5 million of availability under our revolving line of credit.

Speaker 4: We used $3.2 million in cash during the second quarter to repurchase approximately 454,000 of common shares under our share repurchase authorization.

We used $3 2 million in cash during the second quarter to repurchase approximately 454000 of common shares under our share repurchase authorization.

Speaker 4: As of December 31st, 2021, there remains 4.9 million available under the authorization, and we expect to continue to be active with our share repurchase efforts in the future.

As of December 31, 2021, there remains $4 9 million available under the authorization and we expect to continue to be active with our share repurchase efforts in the future.

Speaker 4: Capital expenditures totaled $0.5 million in the second quarter. We anticipate total capital expenditures for fiscal 2022 to be approximately $2 million.

Capital expenditures totaled <unk> 5 million in the second quarter, we anticipate total capital expenditures for fiscal 2022 to be approximately $2 million.

Turning to our fiscal 2022 outlook due to the lower than expected results in the second quarter, we are reducing our outlook for fiscal 2022 to the following revs.

Speaker 4: Turning to our fiscal 2022 outlook, due to the lower-than-expected results in the second quarter, we are reducing our outlook for fiscal 2022 to the following. Revenues for fiscal 2022 are now expected to be in the range of $212 million to $220 million, versus our prior guidance of $225 million to $235 million.

Revenues for fiscal 2022 are now expected to be in the range of $212 million to $220 million versus our prior guidance of 225 million to $235 million.

Speaker 4: Adjusted non-gab EBITDA is expected to be in the range of 18 million to 20 million compared to our prior guidance of 22 million to 24 million. And adjusted non-gab earnings are expected to be in the range of 67 cents to 71 cents per share compared to our prior guidance of 83 cents to 87 cents per share. And with that.

Adjusted non-GAAP EBITDA is expected to be in the range of 18 million to $20 million compared to our prior guidance of 22 million to $24 million and adjusted non-GAAP earnings are expected to be in the range of 67 to.

271 per share compared to our prior guidance of 83 to 87 per share.

And with that I'll turn the call back to Steve.

In summary, despite unexpected challenges recently, our team remains highly energized and committed to executing on the key strategies.

Speaker 3: In summary, despite unexpected challenges recently, our team remains highly energized and committed to executing on the key strategies to transform our business and re-accelerate growth.

To transform our business and Reaccelerate growth our foundation is strong, including a unique portfolio of high quality innovative products supported by a large global base of distributors all of which are firmly aligned with helping consumers achieve.

Speaker 3: Our foundation is strong, including a unique portfolio of high quality, innovative products supported by a large global base of distributors.

Speaker 3: all of which are firmly aligned with helping consumers achieve their health and wellness goals.

Their health and wellness goals finally, our financial condition is solid with a significant cash position and profitable scalable model.

Speaker 3: Finally, our financial condition is solid with a significant cash position and profitable scalable model.

Yeah.

Speaker 3: So with that, we'll turn the call over to the operator to facilitate Q&A operator.

So with that we'll turn the call over to the operator to facilitate Q&A operator.

Thank you we will now be conducting a question and answer session.

Speaker 1: If you would like to ask you a question, please press star one on your telephone keypad. A confirmation to unwindicate the airline has been the question

I'd like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate their lineup and the question Kipp.

Speaker 1: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions.

Press Star two if he would like to remove your question from the queue.

Participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

One moment, please while we poll for questions.

Speaker 1: Thank you. Our first question comes from Doug Lane with Lane Research. Please proceed with your question.

Thank you. Our first question comes from Doug Lane with Lane Research. Please proceed with your question.

Speaker 5: Yes, hi. Excuse me. Good afternoon, everybody. A couple of numbers that stand out to me was, well, the first one was the Americas region where the sales were down 17%. And I know it had been weak, but that's a deceleration from recent trends. And actually, I would have thought it might start heading in the other way since you're starting to have in-person conventions again. So can you maybe put a little bit more color on what you saw during the quarter in the U.S. specifically?

Yeah, Hi, excuse me good afternoon everybody.

Couple of numbers that stand out to me was.

Well the first one was the Americas region, where sales were down 17% and I know it had been weak, but that's a deceleration from recent trends and actually I would've thought it might start heading the other way since youre starting to have in person conventions again. So can you maybe put a little bit more color on what you saw during the quarter in the U S.

Specifically.

Speaker 3: Yeah, Dr. Steve. So, I mean, on a year over a year basis, your right, the US was down. We, you know, there were a few contributing factors to that.

Yeah, Doug This is Steve so I mean, not on a year over year basis Youre right. The U S is down we.

There were a few contributing factors to that first was just the events that we had.

Speaker 3: First was just the events that we had. We're not nearly as effective in this most recent quarter, participation as well as the energy coming out was down. I think the timing of all the crime and the picking up of that adversely effective.

We're not nearly as effective in this most recent quarter.

Participation as well as the energy coming out was was down I think you know the the timing of omni crown and the picking off of that adversely affected us. We also had an.

Speaker 3: We also, you know, had an impact, prior year event, or prior year quarter, we had fairly significant promotions that occurred during that, and it drove a much higher average revenue per account.

And impact.

Higher year event or a prior year quarter, we had fairly significant promotions that occur.

During that and it drove a much higher average revenue per account.

Speaker 3: About about half of the decrease that we experience year-over-year was because of the benefit of those promotions last year And then and then as as you know, you're you are aware We've had we've had a modest decrease in our distributor base over the last year But a a bigger deep decrease in our customer base

About about half of the decrease that we experienced year over year was because of the benefit of those promotions last year.

And then and then as as you know you are aware we've had we've had a modest decrease in our distributor base over the last year, but a bigger decrease in our customer base.

Speaker 3: It's in part, you know, consistent with what we're seeing with others in the industry where we think the industry is trending and why we've taken some of the actions that I discussed in terms of exploring and developed, bringing in some people to help us as we focus additional energy as a company on the customer acquisition and retention.

It's in part you know consistent with what we're seeing with others in the industry, where we think the industry is trending and and why we've we've taken some of the actions that I discussed in terms of exploring and developed bringing in some people to help us as we as we focus.

Additional wind energy as a company on on the customer acquisition and retention.

Yeah.

Speaker 5: Was there any change in patterns between October , November and December that you could notice? Or was it just sort of a core wide phenomenon?

Was there any.

Change in patterns between October November and December .

Good notice or was it just sort of a corridor wide phenomenon.

Speaker 3: It was, it was quarter wide, I'd say a little bit of pickup in December versus October . So a little bit of positive movement, but it was fairly flat.

It was it was quarter wide I'd say, a little bit of pick up in December versus versus October so I'm, a little bit of positive movement, but it was fairly flat.

Speaker 3: You know, the other thing is that, you know, we were, you know, not that we strive to be flat, but relatively flat with our Q1.

The other thing is that you know we were you know not.

Not that we strive to be flat, but relatively flat with our Q1.

Speaker 3: So there wasn't continued erosion really from Q1 to Q2.

So there wasn't there wasn't continued erosion really from Q1 to Q2.

Okay and moving to SG&A.

Speaker 5: OK, and moving to SG&A.

Speaker 5: Carl, the jump in the percent of sales, as you mentioned, there is a decline in sales, you have a lower sales base, but I mean, is it really because there's a lot of fixed cost in SGNA or is there some component of cost inflation to hitting that line at this point?

Yeah, but they're big.

Big jump in the percent of sales you mentioned there is a decline in sales you have a lower sales base, but I mean is it really because there's a lot of fixed cost and SG&A or is there some component of cost inflation that hitting that line at this point.

Yeah, just a couple of there's a couple of items that are contributing to that increase in SG&A. One of them is just relating to the increased cost of the in person event or the hybrid component of the global Convention we had in October .

Speaker 4: Yeah, just a couple of items that are contributing to that increase in SGA. One of them is just relating to the increased cost of the in-person event or the hybrid component of the global convention we had in October .

Speaker 4: Comparing that to the prior year period where it was solely an online only or a digital only event. This one here was a hybrid event and it was at an incremental cost here in the second quarter. And then also there was some additional, just other SG&A expenses primarily in the legal area that were really a little bit higher here in this particular quarter. So overall, those were really the two contributing factors that increased that SG&A.

Comparing that to the prior year period, where it was solely a an online only or a digital only event. This one here was a hybrid event and it was an at an incremental cost here and here in the second quarter and then also there was some additional just other SG&A expenses primarily in the legal.

Area that we're really I'm, a little bit higher here in this particular quarter. So overall those are really the two contributing factors that that increase that SG&A side.

Speaker 5: Okay, that makes sense. And then you mentioned the delaying of the opening of the Philippines. Is there any way to quantify what a amount of sales kind of moved out of the December quarter and into the March quarter because of that?

Okay that makes sense and then you mentioned the delaying of the opening of the Philippines is there any way to quantify what amount of sales kind of moved out of the December quarter and into the March quarter because of that.

Speaker 4: Yeah, there is. As far as the total sales that were deferred, it's approximately $700,000. So there was $700,000 approximately of revenue that are up orders that we received that were deferred until January when the product was ultimately shipped. Got it. Okay.

Yeah, there is as far as the the total sales that were deferred it was it's approximately $700000. So there was $700000 approximately of revenue that are up orders that we received that were deferred until January when the product was ultimately ship.

Got it Okay. That's helpful and then.

Speaker 5: Help us understand with the quarter coming in, you know, margins were lower than expected and sales were lower than expected, but really your outlook doesn't seem to have changed that much. What gives you confidence that the March and June quarters can continue to perform as you thought they would, you know, maybe three or six months ago?

Help us understand with the quarter coming in.

Margins were lower than expected and sales were lower than expected, but really your outlook doesn't seem to have changed that much but what gives you confidence that the March and June quarters, continuing to perform as you thought they would you know maybe three to six months ago.

Speaker 3: Well, I think what it is is, you know, we've been putting things in place for several quarters now. You know, that, that, you know, our forecast clearly anticipates some return to the in-person meetings and us building off of the activities that are taking place by distributor-load activities.

Well I think what it is is as you know we we've been putting things in place for several quarters now you know the the you know our our forecast clearly anticipate some return.

Two the in person meetings and building off of the activities that are taking place by distributor led activities.

Speaker 3: We also have put in place a new promotion that actually kicks off today that is focused on business building activity.

We also have put in place a new promotion that actually.

Kicks off today that is focused on business building activities and and it's been received well by many of our distributors.

Speaker 3: And it's been received well by many of our distributors. And so we're cautiously optimistic that that's going to drive return. We also believe that the reception that we've had in the Philippines has been very positive. And despite some hiccups and getting last clearance,

And so we you know we're we're cautiously optimistic that that's going to drive a return. We also we also believe that you know that the reception that we've had in the Philippines.

<unk> has been very positive and despite.

Some hiccups and get any less clearance.

Speaker 3: for our ability to import products. Those distributors have stayed with us. They've now all received products. And I anticipate that we'll see a fairly significant growth in the Philippines during this.

Four for our ability to import products.

Those distributors have stayed with us they've now all received products and I anticipate that we'll see.

Fairly significant growth in the Philippines during the during the second half of our year.

Speaker 6: Okay, that's helpful. Thank you.

Okay. That's helpful. Thank you.

Alright, Thanks, Dara Thanks, Doug.

Speaker 1: Thank you. Our next question is from Jim Galloway, private investor. Please proceed with your question.

Thank you. Our next question is from Jim Galloway Private Investor. Please proceed with your question.

Thank you.

Speaker 1: it seems like the corporate staff is well organized and qualified. What used to happen

It seems like the corporate staff is well organized and qualified.

What used to happen in the past.

Speaker 7: to generate good sales and momentum with a charismatic group of pro-ten leaders. Can you give me a recap of how many pro-tenes in the United States we have that are actively working to business and some of the different events that they're doing, please?

To generate good sales and momentum was a charismatic group of pro 10 leaders can you give me a recap of how many proteins in the United States. We have that are actively working to business and some of the different events that they're doing place.

Speaker 3: Yeah, yeah, Jim, thanks. We do have a group of our top leaders, distributors leaders in the company. I would say that they are all engaged. And being engaged as a pro-ten is different than someone who is new to the business.

Yeah, Yeah, Joan Thanks, We you know we we do have a group of of our our top leaders distributor leaders in the company I would say that they are all engaged.

And being engaged as as a protest and it is different than someone who is new to the to the to the business. They are active in mentoring our people in there not only in their organization, but also across.

Speaker 3: They are active in mentoring people and not only in their organization, but also across the company. Many of these individuals are leading trainings on a monthly basis. We call them Life-Panage Academy.

The.

The company.

Many of these these individuals are our leading trainings on a monthly basis, we call them Lifevantage academies.

Speaker 3: They're out on the road with groups of individuals.

They're out on the road you know with with groups of individuals training them. They they have they are very active on coaching calls you know throughout the week. So you know we've got we've got a cohesive group of leaders that.

Speaker 3: training them. They have, they are very active on coaching calls, you know, throughout the week. So, you know, we've got a cohesive group of leaders that care deeply and are passionate about life and age and our products and what we have to offer, you know, the billions of people that haven't heard around about life and age yet.

Care deeply and are passionate about lifevantage in our products and and what we have to offer you know the the billions of people that haven't heard of round about lifevantage yet.

Speaker 3: Can you quantify that number of protins that's beating the bushes out there and drumming up business, please? Yeah, we have not disclosed that. That's not something that we disclose in our public records. We used to list them.

Can you quantify that number of proteins, that's beating the bushes out there drumming up business boys yeah.

Yeah.

We have not disclosed that that's not something.

Something that we disclose in our public records, we used to list that all the time.

Speaker 1: Well, we haven't since I've been here. I don't know what happened before, but that's not disclosed in our public record.

Well, we we haven't since I've been here I don't know what happened before but that's that's not disclosed public records.

Okay, well thank you.

Speaker 6: Okay, well thank you. All right, next jump. Yep, thank you.

Alright, Thanks, John Thank you.

Speaker 1: Thank you. There are no further questions. A good time. I would like to turn the floor back over to Steven flight for any closing comments.

Thank you there are no further questions at this time I would like to turn the floor back over to Stephen funk for any closing comments.

Speaker 3: Thanks Paul and thank you for joining us today in closing. I want to take the opportunity to thank all of our employees for their hard work and dedication as well as our outstanding team of distributors and loyal customers. We remain confident in our business model and our focus on delivering the life-anaged products, our customers depend on.

And thanks, Paul and thank you for joining us today in closing.

I want to take the opportunity to thank all of our employees for their hard work and dedication as well as our outstanding team of distributors and loyal customers. We remain confident in our business model and our focus on delivering the lifevantage products our customers depend on.

Speaker 3: We hope you are all safe and healthy and look forward to updating you on our next call. Have a great day.

We hope you are all safe and healthy and look forward to updating you on our next call have a great day.

Speaker 1: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.

This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.