Q4 2023 LifeVantage Corporation Earnings Call

August 28, 2023

Unknown Executive: Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference, called to discuss LifeVantage's fourth quarter and full fiscal year 2023 results. At this time, all participants on a listen-only mode. I would like to inform you that LifeVantage intends to file a proxy statement and related proxy materials with the SEC in connection with its fiscal year 2024 annual meeting of stockholders. And in connection therewith, its directors and certain of its executive officers, are participants in the solicitation of proxies from our stockholders in connection with such annual meetings.

Unknown Executive: Stockholders of LifeVantage are strongly encouraged to read such proxy statement and all other related materials filed with the SEC carefully. And in their entirety when they become available, as they will contain important information about the fiscal year 2024 annual meeting of stockholders, including the identity of the participants in the solicitation and their direct or indirect interest by security holdings or otherwise.

Unknown Executive: At this time, we would like to make no further comment on our upcoming annual meeting or any matters or circumstances related to it.

Reed Anderson: Hosting today's conference will be Reed Anderson with ICR. As a reminder, today's conference is being recorded.

Reed Anderson: And now I would like to turn a conference over to Mr. Anderson. Please go ahead. Thank you.

Reed Anderson: Good afternoon and welcome to LifeVantage Corporation's conference call to discuss results for the fourth quarter in full fiscal year 2023.

Reed Anderson: On the call today from LifeVantage, Mr. Peregrimarchs are Steve Fife, President and Chief Executive Officer, and Carl Array, Chief Financial Officer. By now, everyone should have access to the earnings release, which went out this afternoon in approximately 405 pm eastern time. If you have not received the release, it is available on the investor relations portion of LifeVantage's website at www.lifevantage.com. This call is being webcast and a replay will be available on the company's website.

Reed Anderson: 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 questions. These statements do not guarantee future performance and therefore undo reliance should not be placed upon them. These statements are based on current expectations of the company's management and involvement here at risks and uncertainties, including those identified in the risk factor section of LifeVantage's most recently filed forms 10K and 10K.

Reed Anderson: Please note that during today's call, we will discuss non-gap financial measures, including results on an adjusted basis. Management believes these financial measures can facilitate a more complete analysis and greater transparency into LifeVantage's ongoing results of operations, particularly when comparing underlying operating results from period to period. We've included a reconciliation of these non-gap measures with today's release. This call also contains time-sensitive information that is accurate only as of the date of this live broadcast, August 28, 2023. LifeVantage assumes no obligation to update any forward-looking projection that is made in today's release or call.

Steven Fife: Now I will turn the call over to Steve Fife, the president and chief executive officer, LifeVantage. Thanks, Reed, and good afternoon, everyone. Thank you for joining us today. We are very pleased with our fourth-quarter results, reflecting strong momentum across our business as the key initiatives that underpin our LV360 transformation continue to gain traction. Total revenue in the fourth-quarter increased 6.4 percent year over year to $54.2 million. Exceeding our guidance was up 7.8 percent on a currency neutral basis.

Steven Fife: Driven by 17.9 percent growth in the America's regions and continues to reflect higher average revenue per account due to strong demand for our ability in the fourth quarter. Reflecting our discipline approach to cost management alongside progress with our strategic LV360 initiatives. Fourth quarter adjusted EBITDA increased 179 percent year over year to $4.8 million. And our adjusted EBITDA margin was 8.9 percent up 550 basis points versus our year earlier. And finally, concurrent with our earnings release and reflecting our excellent marketplace momentum, strong balance sheet, and free cash flow.

Steven Fife: In addition to our quarterly cash dividend of 3.5 cents per common share, we also announced a special one-time cash dividend of 40 cents per share, which will be in the aggregate amount approximately $5 million. Both of these dividends will be paid on September 22nd to shareholders of record on September 8th. This underscores our long-standing commitment to driving value for shareholders. We will cover this in more detail later in our prepared remarks.

Steven Fife: As a reminder, just under two years ago, we set out to change the trajectory of life-anage. Starting with a complete refreshment of our senior executive team, we dove deep into our people, business model, programs, and tools, and concluded several elements of our business were ripe for enhancement, in line with our efforts to realize our vision for the company and maximize value creation for our shareholders. LV360 is the result that work. It is the holistic comprehensive strategic plan that is stimulating sustainable growth, enhancing profitability, and improving shareholder returns.

Steven Fife: The strong results we delivered in Q4 are a function of success in transforming and connecting experiences for both consultants and customers. From the products we offer to the way we compensate entrepreneurs to the senior leadership team, to enhancing the board of directors, and everything in between. We are excited about the benefits we are already seeing from the work done to date, and we believe the results to come for the remainder of this fiscal year and beyond will further confirm that we are building a stronger, more sustainable business that will deliver superior returns to our share.

Steven Fife: In addition to the people, program, and product improvements, LB360 included getting clear on our brand and what makes us unique. Our position on that, we are the activation company. Our products go beyond supplementation and simply bridging nutritional gaps to restoring processes you are born with and enjoyed in your youth. Activation has been part of life-anage from the very beginning. Protandom NRF2 activates your body's antioxidant production, keeping oxidative stress and balance. And if we could activate that pathway, what else could we help your body do?

Steven Fife: It is a question we asked ourselves when formulating our award-winning, wildly successful, true science liquid collagen, which amongst its other benefits helps activate your body's own production of this all-important protein. Liquid collagen continues to be the top performing product and a key factor in driving revenue growth in the US. Customer penetration was 26.9% in Q4, up from 26% in Q3 and 24% in Q2. Approximately $12.9 million or 24% of our global Q4 revenue was attributable to liquid collagen plus the healthy glow essential stack, which bundles liquid collagen and protandom NRF2 sanitizer.

Steven Fife: Reorder rates have also remained very high, with second month levels tracking at 77% compared to 70% in Q3. The initial international launch of liquid collagen, which began in March in Australia and New Zealand and Japan, has continued to ramp steadily. Q4 revenue for the product in these markets came in at $2.9 million, significantly outperforming forecast in those markets. Given the continued strength of liquid collagen in the US, we remained very optimistic for the longer-term potential in the international markets.

Steven Fife: Overholes to our consultant and customer experience were also at the core of LV360. Key initiatives in this area include our new Evolved Compensation Plan, as well as our unique customer loyalty program, Reward Circle, both of which have been designed to grow our active base of consultant and customers, while driving enrollment and retention. We also launched digital enhancement initiatives as part of LV360 to provide consultants with the insights and understanding they need to take their business to the next height.

Steven Fife: Also, on the customer side, finding the right products, understanding what makes them different, and feeling connected with our growing community through touch points like social media is more seamless than ever before. Phase 1 of LV360, including Evolved and Reward Circle, went into effect on March 1st in the US, Japan, Australia, and New Zealand. These markets are already benefiting from the program, as evidenced by our improving revenue and profitability, and will continue to benefit from a robust optimization plan throughout fiscal 2024.

Steven Fife: Our Q4 results reflect early progress with consultant engagement, a new product launch, as well as incentives and promotions. But most importantly is the fundamental change in our compensation plan, designed to put more focus on consultant and customer enrollments, retention, repeat purchase and product company loyalties, coupled with expanded tools, programs and opportunities for our consultants to build a more sustainable business.

Steven Fife: Q4 was also spent prepping for our virtual International Activate 2023 event held in July. This kickoff to our fiscal year featured a 75-minute global package that included the launch of many optimization initiatives designed to support consultant businesses, including the launch of Evolve Perks. Our new consultant recognition program, a new consultant communication hub, a new enrollment pack, and are all in to San Antonio Run with opportunity events and trainings designed to build momentum to our global convention in October.

Steven Fife: Markets with both Liquid College and Protand and NRF2 also received information on a new patent pending study showing the positive synergistic benefits of these two activators. In summary, we had another very solid quarter and had significant momentum across our business with numerous tailwinds that should continue to positively impact our results. In fiscal 2024, we expect overall top-line growth, with the America Regions continuing to lead with trends in international markets starting to benefit from the recent expansion of key growth initiatives.

Steven Fife: Profitability should also continue to show improvement and adjusted EBITDA margins are firmly on track to reach our stated long-term target of low double digits within the next 12 to 24 months. From a capital allocation standpoint, we remain steadfast in our long-standing commitment to balance internal growth investments with returning excess capital to shareholders in the form of stock buybacks and dividends. The LV360 transformation we initiated approximately 24 months ago required a temporary shift in prioritization of internal investments versus buybacks to ensure we had the right people, processes, and platforms to support significant future growth.

Steven Fife: Since its inception, we have invested over $3.8 million on this transformational initiative. Now as our results are improving, in large part due to these strategic investments, we are well positioned to return additional capital to shareholders. And we have taken significant action in this regard with the approval of a special dividend and resumption of our buyback in Q4. When it comes to returning capital to our shareholders, our record has been decisively pro-shareholder.

Steven Fife: Over the past three years, we have used $21.6 million approximately 70% of our operating cash flow to repurchase our stock, reducing shares outstanding by 17.7% net of addition. In addition, we have instituted quarterly dividend in the 4th quarter of fiscal 2022, which was subsequently increased by 16.7% to 3.5% per share in the 3rd quarter of fiscal 23. Since the dividend was first implemented through the end of fiscal year 2023, we have returned another $1.9 million to shareholders.

Steven Fife: Our latest results demonstrate the success of LV360, a 24-month endeavor to transform LifeVantage, and we are confident in the direction, trajectory, and future of our business. With a talented leadership team that is closely aligned, a deep pipeline of unique products, as well as a highly engaged base of consultants and customers, we are well positioned to deliver significant future growth in revenues and profits while driving incremental value for shareholders.

Carl Aure: Now, let me turn the call over to Carl to review our 4th quarter financial results. Carl? Thank you, Steve, and good afternoon, everyone. Let me walk you through our 4th quarter financial results. Please note that I will be discussing our non-GAP adjusted results. You can refer to the GAP to non-GAP reconciliations in today's press release for additional details. 4th quarter revenue was 54.2 million, up 6.4% on a year-over-year basis, and up 0.9% from the 3rd quarter.

Carl Aure: This represents our 5th consecutive quarter of sequential quarter-over-quarter revenue growth. 4 in currency fluctuations negatively impacted revenue by 0.6 million in the 4th quarter. Excluding the negative impact of foreign currency fluctuations, 4th quarter revenue was up 3.9 million or approximately 7.8% compared to the prior year period. Revenue in the America's region increased 17.9% to 39.8 million in the quarter, including an 18.6% increase in the United States as compared to the prior year period.

Carl Aure: This increase was primarily driven by the early success of the LB360 initiatives in higher average revenue per account from the continued success of our true science liquid college and product. Revenue in our Asia-Pacific and Europe region decreased 16% to 14.5 million driven by an 18% decrease in total active accounts and the negative impacts from foreign currency exchange rate fluctuations. Excluding the negative impact from currency fluctuations, 4th quarter revenue in our Asia-Pacific and Europe region was down 3.9%.

Carl Aure: The foreign currency impact continues to be driven by fluctuations in Japan, accounting for 0.5 million of the impact. Adjusting for this impact, Japan delivered 7.7% growth on a constant currency basis in the quarter driven by the successful launch of NAD earlier this year and true science liquid college in March. Gross margin was 79.6% in the 4th quarter compared to 81.7% in the prior year period. The decrease in gross margin was primarily due to increased shipping expenses, higher inventory obsolescence, as well as shifts in geographic and product salesman.

Carl Aure: We are continuing to look for cost savings opportunities across our supply chain to offset the negative impact of inflationary pressures we have experienced over this past year. Commission's an incentive expense in the fourth quarter decreased $1 million year over year. As a percentage of revenue, Commission's an incentive expense decreased 480 basis points to 43.3% versus one year ago levels, which was a result of the timing and magnitude of various promotional and incentive programs.

Carl Aure: Non-GAP adjusted SGNA expense was essentially flat at $16.7 million versus $16.6 million in the prior year quarter and was down 180 basis points as a percentage of revenue to 30.8%. Adjusted non-GAP operating income was $3 million compared with adjusted operating income of 0.5 million in the prior year periods. Adjusted non-GAP net income was 2.2 million or 17 cents per fully diluted share in the fourth quarter compared to adjusted net income of 0.2 million or 1 cent per fully diluted share in the comparable period last year.

Carl Aure: We recorded tax expense of 0.6 million in the fourth quarter of 2023 and 0.4 million in the prior year period. For fiscal year 2023, our annual effective tax rate was 36.5%. Adjusted EBITDA for the fourth quarter was 4.8 million or 8.9% of revenues compared to 1.7 million and 3.4% in the same period a year ago. Please note that all of the adjustments from GAP to non-GAP I discussed today are reconciled in our earnings press release issue this afternoon.

Carl Aure: We ended the fourth quarter in a strong financial position with 21.6 million of cash and no debt. We also continue to maintain $5 million of availability under our revolving line of credit. Capital expenditures totaled 0.5 million in the fourth quarter. Total capital expenditure for fiscal 2023 was 3.1 million. We will continue to focus on our capital allocation strategy in order to maximize shareholder value. During the fourth quarter we used 0.8 million dollars in cash to repurchase approximately 173,000 common shares under our share repurchase authorization.

Carl Aure: As of June 30, 2023, there is 26.9 million remaining under our stock repurchase authorization. As previously announced on June 13, the company's Board of Directors approved an extension to the previously authorized stock repurchase program extending it until December 31 of 2026. Additionally, the company announced that it authorized a pre-arranged stock trading plan for purposes of repurchasing a limited number of shares of the company's common stock in FY2024 in accordance with the guideline specified under rule 10B5-1 of this Securities and Exchange Act of 1934.

Carl Aure: We also announced a quarterly cash dividend of 3.5 cents per share of common stock or approximately 0.4 million in the aggregate. Finally, as Steve mentioned, today we also announced a special one-time cash dividend of 40 cents per common share or approximately 0.5 million dollars in the aggregate. Both of these dividends will be paid on September 22nd to shareholders of record on September 8th.

Carl Aure: Turning to our fiscal 2024 outlook, we anticipate our fiscal 2024 revenue will be in the range of 216 million to 226 million, adjusted non-GAP EBITDA in the range of 16 million to 18 million, with adjusted non-GAP earnings per share in the range of 52 cents to 62 cents per share. For fiscal 2024, we expect our annual effective tax rate to be approximately 28 percent. Included in our fiscal 2024 guidance is over $2 million of non-recurring expenses relating to an expiring sponsorship agreement and costs associated with the rollout of LV360 to our remaining markets, which will not be incurred in future years. As Steve mentioned earlier, we are committed to improving our adjusted EBITDA margin and believe we are on track to reach our long-term targets of low double digits.

Steven Fife: And with that, let me turn the call back to Steve for closing remarks. Thanks, Carl, and thank you for joining us today. In closing, I want to take this opportunity to thank all of our employees for their hard work and dedication as well as our outstanding independent consultants and loyal customers.

Steven Fife: Our latest results demonstrate the power of our platform and competitive advantage of our model to help individuals build businesses on their own terms. With a proven committed leadership team, amazing lineup of unique products, highly engaged consultant base, and strong balance sheet, we are very well positioned to deliver significant growth, improve profitability, and drive meaningful value for shareholders. Thank you. Ladies and gentlemen, this does include today's teleconference. Thank you for your participation.

Unknown Executive: You may disconnect your lines at this time and have a wonderful day.

[music].

Okay.

Speaker 1: Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss LifeVantage's fourth quarter and full fiscal year 2023 results.

Good day, ladies and gentlemen, thank you for standing by welcome to today's conference call to discuss Lifevantage as fourth quarter and full fiscal year 2023 results at.

At this time all participants are in a listen only mode.

Speaker 1: I would like to inform you that LifeVantage intends to file a proxy statement and related proxy materials with the SEC in connection with its Fiscal Year 2024 Annual Meeting of Stockholders and in connection therewith its directors and certain of its executive officers are participants in the solicitation of proxies from our stockholders in connection with such annual meetings.

I would like to inform you that life vantage intends to file a proxy statement and related proxy materials with the SEC in connection with its fiscal year 2024 annual meeting of stockholders and in connection therewith, its directors and certain of its executive officers are participants in the sone.

The station of proxies from our stockholders in connection with such annual meetings.

Speaker 1: Suckholders of LifeVantage are strongly encouraged to read such proxy statements and all other related materials filed with the SEC carefully and in their...

Holders of Lifevantage are strongly encouraged to read such proxy statement and all other related materials filed with the SEC carefully and in there.

Speaker 1: entirety when they become available as they will contain important information about the fiscal year 2024 annual meeting of stockholders.

Entirety, when they become available as they will contain important information about the fiscal year 2024 annual meeting of stockholders.

Speaker 1: including the identity of the participants in the solicitation and their direct or indirect interests by security holdings or otherwise.

Including the identity of the participants in the solicitation and their direct or indirect interests by security holdings or otherwise.

Speaker 1: At this time, we would like to make no further comments on our upcoming Annual Meeting or any matters or circumstances related to it.

At this time, we'd like to make no further comments on our upcoming annual meeting or any matters or circumstances related to it.

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

Hosting today's conference will be Reid Anderson with ICR as.

As a reminder, today's conference is being recorded.

And now I'd like to turn the conference over to Mr. Anderson.

Please go ahead.

Speaker 2: Thank you. Good afternoon and welcome to LifeVantage Corporation's conference call to discuss results for the fourth quarter in full fiscal year 2023.

Good afternoon, and welcome to Lifevantage Corporation's conference call to discuss results for the fourth quarter and full fiscal year 2023.

Speaker 2: On the call today from LifeVantage, with the pair of remarks are Steve V, President and Chief Executive Officer, and Carl Array, Chief Financial Officer. By now, everyone should have access to the earnings release, which went out this afternoon in approximately 405 PM Eastern time.

On the call today from Lifevantage with prepared remarks are Steve Fife, President and Chief Executive Officer, and Carl Ray Chief Financial Officer by now everyone should have access to the earnings release, which went out. This afternoon at approximately 405 P. M. Eastern time, if you've not received the release, it's available on the Investor relations portion of life vintages.

Speaker 2: If you have not received the release, is available on the Investor Relations portion of LifeVanages website at www.lifevanish.com.

Site at Www Dot Lifevantage dotcom it's.

Speaker 2: It's called being webcast and a replay will be available on the company's website.

This call is being webcast and a replay will be available on the company's website.

Speaker 2: Before we begin, we would like to remind everyone that our prepared remarks contain full-relooking statements and management may make additional forward-looking statements in response to your question.

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 questions.

Speaker 2: These statements do not guarantee future performance, and therefore undue reliance should not be placed upon them.

Statements do not guarantee future performance and therefore undue reliance should not be placed upon them. These.

Speaker 2: These statements are based on current expectations of the company's management and involvement here at risk and uncertainties, including those identified in the risk factor section of life-vantage is most recently filed forms 10K and 10Q. Please note that during today's call, we will discuss non- GAAP financial measures, including results on the adjusted base.

These 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 Lifevantage as most recently filed forms 10-K and 10-Q. 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.

Speaker 2: Management believes these financial measures can facilitate a more complete analysis and greater transparency into LifeVantage's ongoing results of operations, particularly when comparing underlying operating results from period to period.

Can facilitate a more complete analysis and greater transparency into life vintages ongoing results of operations, particularly when comparing underlying operating results from period to period.

Speaker 2: It included a reconciliation of these non-GAAP measures with today's relief.

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

Speaker 2: This call also contains time-sensitive information that is accurate only as of the date of this live broadcast, August 28, 2023. LifeVantage assumes no obligation to update any forward-looking projection that is made in today's release or call. Now I will turn the call over to Steve Fife, the president and chief executive officer, LifeVantage.

This call also contains time sensitive information that is accurate only as of the date of this live broadcast August 28 2023.

Vantage assumes no obligation to update any forward looking projection that is made in todays release or call now I will turn the call over to Steve Fife, President and Chief Executive Officer Lifevantage. Thanks.

Speaker 3: Thanks, Reid, and good afternoon, everyone. Thank you for joining us today.

Thanks, Reed and good afternoon, everyone. Thank you for joining us today.

Speaker 3: We are very pleased with our fourth quarter results, reflecting strong momentum across our business, as the key initiatives that underpin our LV360 transformation continue to gain traction.

We are very pleased with our fourth quarter results, reflecting strong momentum across our business as the key initiatives that underpin our Lv 360 transformation continues to gain traction.

Speaker 3: Total revenue in the fourth quarter increased 6.4 percent year over year to $54.2 million. Exceeding our guidance and was up 7.8 percent on a currency neutral basis.

Total revenue in the fourth quarter increased six 4% year over year to $54 $2 million exceeding our guidance and was up seven 8% on a currency neutral basis.

Speaker 3: Driven by 17.9% growth in the America's regions and continues to reflect higher average revenue per account due to strong demand for our true science liquid college and product.

Even by 17, 9% growth in the Americas regions and continues to reflect higher average revenue per account due to strong demand for our true science liquid collagen product.

Speaker 3: We also delivered a sharp improvement in profitability in the fourth.

We also delivered a sharp improvement in profitability in the fourth quarter, reflecting our disciplined approach to cost management alongside progress with our strategic it'll be 360 initiative.

Speaker 3: Reflecting our disciplined plan approach to cost management alongside progress with our strategic LV360 initiative.

Speaker 3: Fourth quarter adjusted the EBITDA increased 179% year over year to $4.8 million.

Fourth quarter, adjusted EBITDA increased to 179% year over year to $4 $8 million and our adjusted EBITDA margin was eight 9% up 550 basis point versus our year earlier, and finally concurrent with our earnings release and reflecting our.

Speaker 3: And our adjusted EBITDA margin was 8.9% up 550 basis point.

Speaker 3: versus our year earlier. And finally, concurrent with our earnings release and reflecting our excellent marketplace momentum, strong balance sheet and free cash flow, in addition to our quarterly cash dividend of three and a half cents per common share, we also announced a special one-time cash dividend, a 40 cents per share.

Excellent marketplace momentum strong balance sheet and free cash flow. In addition to our quarterly cash dividend of three and a half cents per common share. We also announced a special onetime cash dividend dividend of 40 <unk> per share.

Speaker 3: which will be in the aggregate amount approximately $5 million.

Which will be in the aggregate amount approximately $5 million Boe.

Speaker 3: Both of these dividends will be paid on September 22nd to shareholders of record on September 8th.

Both of these dividends will be paid on September 20 to shareholders of record on September eight.

Speaker 3: This underscores our long standing commitment to driving value for shareholders. We will cover this in more detail later in our prepared remarks.

This underscores our long standing commitment to driving value for shareholders. We will cover this in more detail later in our prepared remarks.

Speaker 3: As a reminder, just under two years ago, we set out to change the trajectory of LifeVantage. Starting with a complete refreshment of our senior executive team, we dove deep into our people, business model, programs, and tools, and concluded several elements of our business were ripe for enhancement in line with our efforts to realize our vision for the company and maximize value creation for our shareholders. LV360 is the root of our business model.

As a reminder, just under two years ago, we set out to change the trajectory of Lifevantage.

Starting with a complete refreshment of our senior executive team, we dove deep into our people business model programs and tools and concluded several elements of our business were ripe for enhancement in line with our efforts to realize our vision for the company and maximize value creation for our shareholders.

L. D 360 is a result of that work.

Speaker 3: It is the holistic comprehensive strategic plan that is stimulating sustainable growth, enhancing profitability, and improving shareholder return.

This is a holistic comprehensive strategic plan.

Stimulating sustainable growth enhancing profitability and improving shareholder returns.

Speaker 3: The strong results we delivered in Q4 are a function of success in transforming and connecting experiences for both consultants and customers.

The strong results. We delivered in Q4 are a function of success and transforming and connecting experiences for both consultants and customers.

Speaker 3: From the products we offer to the way we compensate entrepreneurs, to the senior leadership team, to enhancing the board of directors and everything in between. We are excited about the benefits. We are already seen from the work done to date, and we believe the results to come for the remainder of this fiscal year and beyond will further confirm that we are building a stronger, more sustainable business that will deliver superior returns to our share.

From the products, we offer to the way you would compensate entrepreneurs to the senior leadership team to enhancing the board of directors and everything in between we are excited about the benefits. We are already seeing from the work done to date and we believe the results to come for the remainder of this fiscal year and beyond we will further.

Confirm that we are building a stronger more sustainable business that will deliver superior returns to our shareholders.

Speaker 3: In addition to the People Program and Product Improvements, LV360 included getting clear on our brand and what makes us unique.

In addition to the people program and product improvements L. B 360 included getting clearer on our brand and what makes us unique.

Speaker 3: Our position on that, we are the activation company. Our products go beyond supplementation and simply bridging nutritional gaps to restoring processes you were born with and enjoyed in your youth. Activation has been part of LifeVantage from the very beginning. Protandim-NRF2 activates your body's anti-oxygen production, keeping oxidative stress in balance.

Our position on that we are the activation company our products go beyond supplementation and simply bridging nutritional gaps to restoring processes you were born with and enjoyed in your youth activation. That's been part of Lifevantage from the very beginning pro tandem N R F.

To activate your bodies anti oxygen production, keeping oxidative stress imbalance.

Speaker 3: And if we could activate that pathway, what else could we help your body do?

And if we could activate that pathway what else could we help your body do.

Speaker 3: It is a question we ask ourselves when formulating our award winning wildly successful true science liquid college.

It is a question we asked ourselves when formulating our award winning wildly successful true science liquid collagen, which amongst other benefits helps activate your body's own production of this all important proteins.

Speaker 3: which amongst its other benefits helps activate your body's own production of this all-important protein.

Speaker 3: Liquid collagen continues to be the top performing product and a key factor in driving revenue growth in the US.

Collagen continues to be the top performing product and a key factor in driving revenue growth in the U S customer penetration was 26, 9% in Q4 up from 26% in Q3 and 24% in Q2.

Speaker 3: Customer penetration was 26.9% in Q4, up from 26% in Q3 and 24% in Q2.

Speaker 3: Approximately $12.9 million or 24% of our global Q4 revenue was attributable to liquid collagen plus the healthy, low essential stack, which bundles liquid collagen and weight unland

Approximately $12 $9 million or 24% of our global Q4 revenue was attributable to liquid collagen plus the healthy glow essential stack, which bundles liquid collagen and protein them in our F. Two synergize or.

Speaker 3: Reorder rates have also remained very high, with second month levels tracking at 77% compared to 70% in Q3.

Reorder rates have also remained very high with second month levels tracking at 77% compared to 70% in Q3.

Speaker 3: The initial international launch of Liquid College in, which began in March in Australia, New Zealand and Japan, has continued to ramp steadily.

The initial international launch of liquid collagen, which began in March in Australia, and New Zealand and Japan has continued to ramp steadily Q4 revenue for the product in these markets came in at $2 $9 million significantly outperforming forecast in those markets.

Speaker 3: Q4 revenue for the product in these markets came in at $2.9 million. Significantly outperforming forecast in those markets.

Speaker 3: Given the continued strength of Liquid College and in the US, we remain very optimistic for the longer-term potential in the international market.

Given the continued strength of liquid college and in the U S. We remain very optimistic for the longer term potential in the international markets.

Speaker 3: Overholes to our consultant customer experience were also at the core of LV36.

Overhauls to our consultant customer experience. We're also at the core of L. E 360.

Speaker 3: Key initiatives in this area include our new Evolve Compensation Plan, as well as our unique customer loyalty program, Reward Cirque.

Key initiatives in this area include our new evolved compensation plan as well as our unique customer loyalty program rewards circle, both of which have been designed to grow our active base of consultants and customers, while driving enrollments and retention.

Speaker 3: Both of which have been designed to grow our active base of consultants and customers while driving enrollment and retention.

Speaker 3: We also launched digital enhancement initiatives as part of LV360 to provide consultants with the insights and understanding they need to take their business to the next high.

We also launched digital enhancement initiatives as part of <unk> 360 to provide consultants with the insights and understanding they need to take their business to the next height.

Speaker 3: Also, on the customer side, finding the right products, understanding what makes them different, and feeling connected with our growing community through touch points like social media is more seamless and everable.

Also the cost on the customer side, finding the right products understanding what makes them different and feeling connected with our growing community through touch points like social media is more seamless than ever before.

Speaker 3: Phase one of LV-360, including the valve and the reward circle, went into effect on March 1st.

Phase one of all the $3 60, including evolve and reward circle went into effect on March 1st.

Speaker 3: in the US, Japan, Australia, and New Zealand. These markets are already benefiting from the program, as evidenced by our improving revenue and profitability, and will continue to benefit from a robust optimization plan throughout fiscal 2024.

In the U S, Japan, Australia, and New Zealand. These markets are already benefiting from the program as evidenced by our improving revenue and profitability and we will continue to benefit from a robust optimization plan throughout fiscal 2024.

Speaker 3: Our Q4 results reflect early progress with consultant engagement, a new product launch, as well as incentive and promotion.

Our Q4 results reflect early progress with consultant engagement, a new product launch as well as incentives and promotions, but most importantly is the fundamental change in our compensation plan designed to put more focus on consultant and customer enrollments and retention.

Speaker 3: But most importantly is the fundamental change in our compensation plan designed to put more focus on consultant and customer enrollments, retention, repeat purchase, and product company loyalties, coupled with expanded tools, programs, and opportunities for our consultants to build a more sustainable

Repeat purchase and product company loyalties, coupled with expanded tools programs and opportunities for our consultants to build a more sustainable business.

Speaker 3: Q4 was also spent prepping for our virtual international activate 2023 event held in July .

Q4 was all since then prepping for our virtual international activate 2023 event held in July.

Speaker 3: This kickoff to our fiscal year featured a 75-minute global package that included the launch of many optimization initiatives designed to support consultant business.

This kickoff to the to our fiscal year featured a 75 minute global package that included the launch of mini optimization initiatives designed to support consultant businesses.

Speaker 3: including the launch of Evolve Perks, our new consultant recognition program, a new consultant communication hub.

Including the launch of evolve perks, our new consultant recognition program, a new consultant communication hub.

New enrollment pack and our all in to San Antonio run with opportunity events and trainings designed to build momentum to our global convention in October .

Speaker 3: and are all in to San Antonio Run with opportunity events and trainings designed to build momentum to our global convention in October .

Speaker 3: Markets with both liquid collagen and protand and NRF 2 also receive information.

Markets with both liquid collagen and protein and protein than our F to also receive information on a new patent pending study showing a positive synergistic benefits of these two activators.

Speaker 3: on a new patent pending study showing the positives, synergistic benefits of these two activates.

Speaker 3: In summary, we had another very solid quarter and have significant momentum across our business with numerous tailwinds that should continue to positively impact our results. In fiscal 2024, we expect overall top-line growth.

In summary, we had another very solid quarter and have significant momentum across our business with numerous tailwind that should continue to positively impact our results in fiscal 'twenty 'twenty four we expect overall topline growth with.

Speaker 3: With the America Regions continuing to lead with trends in international markets starting to benefit from the recent expansion of key growth initiatives.

With the America regions, continuing to lead with trends in the international market starting to benefit from the reach recent expansion of key growth initiatives.

Speaker 3: Profitability should also continue to show improvement and adjusted EBITDA margins are firmly on track to reach our stated long-term target of low double digits within the next 12 to 24 months.

Profitability should also continue to show improvement in adjusted EBITDA margins are firmly on track to reach our stated long term target of low double digits within the next 12 to 24 months.

Speaker 3: From a capital allocation standpoint, we remain steadfast in our long-standing commitment to balance internal growth investments with returning excess capital to shareholders in the form of stock buybacks and dividends.

From a capital allocation standpoint, we remain steadfast in our long standing commitment to balance internal growth investments with returning excess capital to shareholders in the form of stock buybacks and dividends.

Speaker 3: The LV360 transformation we initiated approximately 24 months ago, required a temporary shift in prioritization of internal investments versus buybacks. To ensure we had the right people, processes and platforms to support significant future growth. Since its inception, we have invested over $3.8 million on this transformational initiative.

The L. Three's 60 transformation initiatives initiated in approximately 24 months ago required a temporary shift in prioritization of internal investments versus buybacks to ensure we had the right people processes and platforms to support significant future growth since its inception.

We have invested over $3 $8 million on this transfer transformational initiative now as our results are improving and large part due to these strategic investments we are well positioned to return additional capital to shareholders and we have taken significant action in this regard.

Speaker 3: Now as our results are improving, in large part due to these strategic investments.

Speaker 3: We are well positioned to return additional capital to shareholders. And we have taken significant action in this regard with the approval of a special dividend and resumption of our buyback in Q4.

With the approval of a special dividend and resumption of our buyback in Q4.

Speaker 3: When it comes to returning capital to our shareholders, our record has been decisively pro-shareholder. Over the past three years, we have used $21.6 million, approximately 70% of our operating cash flow to repurchase our stock, reducing shares outstanding by 17.7% net of addition.

When it comes to returning capital to our shareholders. Our record has been decisively pro shareholder over the past three years, we have used $21 $6 million approximately 70% of our operating cash flow to repurchase our stock reducing shares outstanding by 17.7 person.

<unk> net of additions.

Speaker 3: In addition, we have instituted quarterly dividend in the fourth quarter of fiscal 2022, which was subsequently increased by 16.7% to 3.5 cents per share in the third quarter of fiscal 23.

In addition, we had instituted a quarterly dividend in the fourth quarter of fiscal 2022.

Which was subsequently increased by 16, 7% to three and a half cents per share in the third quarter of fiscal 'twenty three.

Speaker 3: Since the dividend was first implemented through the end of fiscal year 2023, we have returned another $1.9 million to shareholders.

Since the dividend was first implemented through the end of fiscal year 2023, we have returned another $1 $9 million to shareholders.

Speaker 3: Our latest results demonstrate the success of LV36.

Our latest results demonstrate the success of all these 360, a 24 month endeavor to transform Lifevantage and we are confident in the direction trajectory and future of our business.

Speaker 3: 24 month endeavor to transform life and we are confident in the direction, trajectory, and future of our business.

Speaker 3: with a talented leadership team that is closely aligned, a deep pipeline of unique products,

With a talented leadership team that is closely aligned a deep pipeline of unique products.

Speaker 3: as well as a highly engaged base of consultants and customers.

As well as our highly engaged base of consultants and customers.

Speaker 3: We are well positioned to deliver significant future growth in revenues and profits while driving incremental value for shareholders.

We are well positioned to deliver significant future growth in revenues and profits, while driving incremental value for shareholders.

Speaker 3: Now let me turn the call over to Carl to review our fourth quarter financial results. Carl?

Now, let me turn the call over to Carl to review, our fourth quarter financial results Carl.

Speaker 4: Thank you, Steve, and good afternoon, everyone. Let me walk you through our fourth quarter financial results. Please note that I will be discussing our non-GAP-adjusted results. You can refer to the GAP to non-GAP reconciliation in today's press release for additional details.

Thank you, Steve and good afternoon, everyone. Let me walk you through our fourth quarter financial results. 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.

Speaker 4: Fourth quarter revenue, which 54.2 million, up 6.4% on a year-over-year basis, and up 0.9% from the third quarter. This represents our fifth consecutive quarter of sequential quarter-over-quarter revenue growth.

Fourth quarter revenue was $54 2 million up six 4% on a year over year basis, and up 9% from the third quarter. This represents our fifth consecutive quarter of sequential quarter over quarter revenue growth foreign currency fluctuations negatively impacted revenue by <unk> 6 million in the fourth quarter.

Speaker 4: Form currency fluctuations negatively impacted revenue by 0.6 million in the fourth quarter. Excluding the negative impact of form currency fluctuations, fourth quarter revenue was up 3.9 million or approximately 7.8% compared to the prior year period.

<unk> the negative impact of foreign currency fluctuations fourth quarter revenue was up $3 9 million or approximately seven 8% compared to the prior year period.

Speaker 4: Revenue in the America's region increased 17.9% to 39.8 million in the quarter, including an 18.6% increase in the United States as compared to the prior year period.

Revenue in the Americas region increased 17, 9% to $39 8 million in the quarter, including an 18, 6% increase in the United States as compared to the prior year period.

Unknown Executive: Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference, called to discuss LifeVantage's fourth quarter and full fiscal year 2023 results. At this time, all participants on a listen-only mode. I would like to inform you that LifeVantage intends to file a proxy statement and related proxy materials with the SEC in connection with its fiscal year 2024 annual meeting of stockholders. And in connection therewith, its directors and certain of its executive officers are participants in the solicitation of proxies from our stockholders in connection with such annual meetings.

Speaker 4: This increase was primarily driven by the early success of the LB360 initiatives in higher average revenue per account from the continued success of our true science liquid college and product.

This increase was primarily driven by the early success of the L. P 360 initiatives and higher average revenue per account from the continued success of our true science liquid collagen product.

Unknown Executive: Stockholders of LifeVantage are strongly encouraged to read such proxy statement and all other related materials filed with the SEC carefully. And in their entirety when they become available as they will contain important information about the fiscal year 2024 annual meeting of stockholders, including the identity of the participants in the solicitation and their direct or indirect interest by security holdings or otherwise. At this time, we would like to make no further comment on our upcoming annual meeting or any matters or circumstances related to it.

Speaker 4: Revenue in our Asia-Pacific and Europe region decreased 16% to 14.5 million driven by an 18% decrease in total active accounts and the negative impacts from foreign currency exchange rate fluctuations.

Revenue in our Asia Pacific and Europe region decreased 16% to $14 5 million driven by an 18% decrease in total active accounts and the negative impacts from foreign currency exchange rate fluctuations.

Speaker 4: excluding the negative impact from currency fluctuations, fourth quarter revenue in our Asia-Pacific and Europe region was down 3.9%. The foreign currency impact continues to be driven by fluctuations in Japan, accounting for 0.5 million of the impact.

Excluding the negative impact from currency fluctuations fourth quarter revenue in our Asia Pacific and Europe region was down three 9%.

The foreign currency impact continues to be driven by fluctuations in Japan accounting for <unk> 5 million of the impact adjusting for this impact Japan delivered seven 7% growth on a constant currency basis in the quarter driven by the successful launch of <unk> earlier, this year and true science liquid College and.

Speaker 4: to pan delivered 7.7% growth on a constant currency basis.

Speaker 4: driven by the successful launch of NAD earlier this year in true science, liquid collagen, and mart.

In March.

Speaker 4: Gross margin was 79.6% in the fourth quarter, compared to 81.7% in the prior year period. The decrease in gross margin was primarily due to increase shipping expenses, higher inventory obsolescence, as well as shifts in geographic and product salesmen.

Gross margin was 79, 6% in the fourth quarter compared to 81, 7% in the prior year period. The decrease in gross margin was primarily due to increased shipping expenses higher inventory obsolescence as well as shifts in geographic and product sales mix, we are continuing to look for cost.

Reed Anderson: Hosting today's conference will be read Anderson with ICR. As a reminder, today's conference is being recorded.

Speaker 4: We are continuing to look for cost savings opportunities across our supply chain to offset the negative impact of inflationary pressures we have experienced over this past year.

Savings opportunities across our supply chain to offset the negative impact of inflationary pressures, we have experienced over this past year.

Reed Anderson: And now I'd like to turn a conference over to Mr. Anderson. Please go ahead. Thank you.

Speaker 4: Commissions and incentive expense in the fourth quarter decreased $1 million year over year. As a percentage of revenue, commissions and incentive expense decreased 480 basis points to 43.3% versus one year ago levels, which was a result of the timing and magnitude of various promotional and incentive programs.

Commissions and incentive expense in the fourth quarter decreased $1 million year over year as a percentage of revenue commissions and incentive expense decreased 480 basis points to 43, 3% versus one year ago levels, which was a result of the timing and magnitude of various promotional and <unk>.

Reed Anderson: Good afternoon and welcome to LifeVantage Corporation's conference call to discuss results for the fourth quarter and full fiscal year 2023. On the call today from LifeVantage, with the pair of remarks are Steve V, President and Chief Executive Officer, and Carl Array, Chief Financial Officer. By now, everyone should have access to the earnings release, which went out this afternoon in approximately 405 pm Eastern time. If you have not received the release, it is available on the Investor Relations portion of LifeVantage's website at www.

Reed Anderson: LifeVantage.com. This call is being webcast and a replay will be available on the company's website. 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 questions. These statements do not guarantee future performance, and therefore undue reliance should not be placed upon them. These statements are based on current expectations of the company's management and involvement here at risks and uncertainties, including those identified in the risk factor section of LifeVantage's most recently filed forms 10K and 10Q.

<unk> of programs.

Speaker 4: Non-GAP adjusted SGNA expense was essentially flat at 16.7 million versus 16.6 million in the prior year quarter and was down 180 basis points as a percentage of revenue to 30.8%.

non-GAAP adjusted SG&A expense was essentially flat at $16 7 million versus $16 6 million in the prior year quarter and was down 180 basis points as a percentage of revenue to 38%.

Speaker 4: Adjusted non-gap operating income was $3 million compared with adjusted operating income of .5 million in the prior year period.

Adjusted non-GAAP operating income was $3 million compared with adjusted operating income of <unk> 5 million in the prior year periods.

Speaker 4: Adjusted non-gap net income was 2.2 million or 17 cents per fully diluted share in the fourth quarter compared to adjusted net income of 0.2 million or 1 cent per fully diluted share in the comparable period last year.

Adjusted non-GAAP net income was $2 2 million or <unk> 17 per fully diluted share in the fourth quarter compared to adjusted net income of <unk> 2 million or <unk> per fully diluted share in the comparable period last year.

Speaker 4: We recorded tax expense of 0.6M in the 4th quarter of 2023 and 0.4M in the prior year period. For fiscal year 2023, our annual effective tax rate was 36.5%.

We recorded tax expense of <unk> 6 million in the fourth quarter of 2023, and <unk> 4 million in the prior year period for.

For fiscal year 2023, our annual effective tax rate was 36, 5%.

Speaker 4: Adjusted EBITDA for the fourth quarter was 4.8 million, or 8.9% of revenues compared to 1.7 million and 3.4% in the same period a year ago.

Adjusted EBITDA for the fourth quarter was $4 8 million or eight 9% of revenues compared to $1 7 million and three 4% in the same period a year ago.

Speaker 4: Please note that all of the adjustments from GAP to non-GAP I discussed today are reconfelled and 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 we.

Speaker 4: We ended the fourth quarter in a strong financial position, with 21.6 million of cash and no debt. We also continue to maintain $5 million of availability under our revolving line of credit.

We ended the fourth quarter in a strong financial position with 21 6 million of cash and no debt.

Steven Fife: Now I will turn the call over to Steve Fife, the president, and chief executive officer, LifeVantage. Thanks, Reed, and good afternoon, everyone. Thank you for joining us today. We are very pleased with our fourth-quarter results, reflecting strong momentum across our business, as the key initiatives that underpin our LV360 transformation continue to gain traction. Total revenue in the fourth quarter increased 6.4 percent year over year to $54.2 million. Exceeding our guidance, it was up 7.8 percent on a currency neutral basis.

We also continue to maintain $5 million of availability under our revolving line of credit.

Speaker 4: Capital expenditures totaled 0.5 million in the fourth quarter. Total capital expenditures for fiscal 2023 was 3.1 million.

Capital expenditures totaled <unk> 5 million in the fourth quarter total capital expenditures for fiscal 2023 was $3 1 million.

Speaker 4: We will continue to focus on our capital allocation strategy in order to maximize shareholder value. During the fourth quarter, we use $0.8 million in cash to repurchase approximately 173,000 common shares under our share repurchase authorization. As of June 30th, 2023, there is 26.9 million remaining under our stock repurchase authorization.

We will continue to focus on our capital allocation strategy in order to maximize shareholder value during the fourth quarter, we used $8 million in cash to repurchase approximately 173000 common shares under our share repurchase authorization as.

As of June 32023, there was $26 9 million remaining under our stock repurchase authorization.

Steven Fife: Driven by 17.9 percent growth in the America's regions and continues to reflect higher average revenue per account due to strong demand for our true science liquid college and product. We also delivered a sharp improvement in profitability in the fourth quarter, reflecting our disciplined approach to cost management alongside progress with our strategic LV360 initiatives. Fourth quarter adjusted EBITDA increased 179 percent year over year to $4.8 million. And our adjusted EBITDA margin was 8.9 percent, up 550 basis point versus our year earlier.

Speaker 4: As previously announced on June 13th, the company's Board of Directors approved an extension to the previously authorized Stock Repurchase Program, extending it until December 31st of 2026.

As previously announced on June 13th the company's board of Directors approved an extension to the previously authorized stock repurchase program extending it until December 31 2026.

Speaker 4: Additionally, the company announced that it authorized a pre-arranged stock trading plan for purposes of repurchasing a limited number of shares of the company's common stock in FY 2024. In accordance with the guideline specified under Rule 10B5-1 of this Charities and Exchange Act of 1934.

Additionally, the company announced that it authorized a prearranged stock trading plan for purposes of repurchasing a limited number of shares of the company's common stock in FY 2024 in accordance with the guidelines specified under rule <unk> one of the Securities and Exchange Act of $19 34.

Speaker 4: We also announced a quarterly cash dividend of 3.5 cents per share of common stock, or approximately 0.4 million in the aggregate.

We also announced a quarterly cash dividend of three and a half cents per share of common stock or approximately <unk> 4 million in the aggregate.

Steven Fife: And finally, concurrent with our earnings release and reflecting our excellent marketplace momentum, strong balance sheet, and free cash flow, in addition to our quarterly cash dividend of three and a half cents per common share, we also announced a special one-time cash dividend of 40 cents per share, which will be in the aggregate amount approximately $5 million. Both of these dividends will be paid on September 22nd to shareholders of record on September 8th.

Speaker 4: Finally, as Steve mentioned, today we also announced a special one-time cash dividend of 40 cents per common share or approximately $5 million in the ex.

Finally, as Steve mentioned today, we also announced a special onetime cash dividend of <unk> 40 per common share or approximately $5 million in the aggregate.

Speaker 4: Both of these dividends will be paid on September 22nd to shareholders of record on September 8th.

Both of these dividends will be paid on September 20 <unk>.

To shareholders of record on September eight.

Speaker 4: Turning to our fiscal 2024 outlook, we anticipate our fiscal 2024 revenue will be in the range of 216 million to 226 million, adjusted non-GAP EBITDA in the range of 16 million to 18 million, with adjusted non-GAP earnings per share in the range of 52 cents to 62 cents per share.

Turning to our fiscal 2024 outlook, we anticipate our fiscal 2020 for revenue will be in the range of $216 million to 226 million adjusted non-GAAP EBITDA in the range of 16 million to 18 million with adjusted non-GAAP earnings per share in the range of 52.

Steven Fife: This underscores our long-standing commitment to driving value for shareholders. We will cover this in more detail later in our prepared remarks. As a reminder, just under two years ago, we set out to change the trajectory of life-and-age. Starting with a complete refreshment of our senior executive team, we dove deep into our people, business model, programs and tools, and concluded several elements of our business were ripe enhancement in line with our efforts to realize our vision for the company and maximize value creation for our shareholders.

To <unk> 62 per share for.

Speaker 4: For fiscal 2024, we expect our annual effective tax rate to be approximately 28%.

For fiscal 2024, we expect our annual effective tax rate to be approximately 28%.

Speaker 4: Included in our fiscal 2024 guidance is over $2 million of non-recurring expenses relating to an expiring sponsorship agreement and costs associated with the rollout of LV360 to our remaining markets, which will not be incurred in future years. As Steve mentioned earlier, we are committed to improving our adjustity but on margin and believe we are on track to reach our long-term targets of low-double digits.

Included in our fiscal 2024 guidance is over $2 million of nonrecurring expenses relating to expiring sponsorship agreement and costs associated with the rollout of Lv 360 to our remaining markets, which will not be incurred in future years as Steve mentioned earlier, we are committed to improve.

Our adjusted EBITDA margin and believe we are on track to reach our long term targets of low double digits and with that let me turn the call back to Steve for closing remarks.

Steven Fife: LV360 is the result that work. It is the holistic comprehensive strategic plan that is stimulating sustainable growth, enhancing profitability, and improving shareholder returns. The strong results we delivered in Q4 are a function of success in transforming and connecting experiences for both consultants and customers. From the products we offer to the way we compensate entrepreneurs to the senior leadership team to enhancing the board of directors and everything in between. We are excited about the benefits we are already seeing from the work done to date, and we believe the results to come for the remainder of this fiscal year and beyond will further confirm that we are building a stronger, more sustainable business that will deliver superior returns to our share.

Speaker 4: And with that, let me turn the call back to Steve for closing remarks.

Speaker 3: Thanks, Carl, and thank you for joining us today. In closing, I want to take this opportunity to thank all of our employees for their hard work and dedication, as well as our outstanding independent consultants and loyal customers.

Thanks, Carl and thank you for joining us today in closing I want to take this opportunity to thank all of our employees for their hard work and dedication as well as our outstanding independent consultants and loyal customers.

Speaker 3: Our latest results demonstrate the power of our platform and competitive advantage of our model to help individuals build businesses on their own terms. With a proven committed leadership team, amazing lineup of unique products, highly engaged,

Our latest results demonstrate the power of our platform and competitive advantage.

Of our model to help individuals' build businesses on their own terms with a proven committed leadership team amazing lineup of unique products.

<unk> engaged consultant base.

Speaker 3: and strong balance sheet, we are very well positioned to deliver significant growth, improve profitability, and drive meaningful value for shareholders.

And strong balance sheet, we are very well positioned to deliver significant growth improve profitability and drive meaningful value for shareholders.

Steven Fife: In addition to the people, program, and product improvements, LB360 included getting clear on our brand and what makes us unique. Our position on that, we are the activation company. Our products go beyond supplementation and simply bridging nutritional gaps to restoring processes you were born with and enjoyed in your youth. Activation has been part of lifeVantage from the very beginning. Protandom NRF2 activates your body's antioxidant production, keeping oxidative stress and balance. And if we could activate that pathway, what else could we help your body do?

Yeah.

Speaker 1: Ladies and gentlemen, this does include today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

Steven Fife: It is a question we asked ourselves when formulating our award winning wildly successful true science liquid collagen, which amongst its other benefits helps activate your body's own production of this all important protein. Liquid collagen continues to be the top performing product and a key factor in driving revenue growth in the U.S. Customer penetration was 26.9% in Q4, up from 26% in Q3 and 24% in Q2. Approximately $12.9 million or 24% of our global Q4 revenue was attributable to liquid collagen plus the healthy glow essential stack, which bundles liquid collagen and Protandom NRF2 sanitizer.

Steven Fife: Reorder rates have also remained very high, with second month levels tracking at 77% compared to 70% in Q3. The initial international launch of liquid collagen, which began in March in Australia and New Zealand and Japan has continued to ramp steadily. Q4 revenue for the product in these markets came in at $2.9 million, significantly outperforming forecast in those markets. Given the continued strength of liquid collagen in the U.S., we remain very optimistic for the longer-term potential in the international markets.

Steven Fife: Overall, to our consultant customer experience, we're also at the core of LV360. Key initiatives in this area include our new Evolved Compensation Plan, as well as our unique customer loyalty program, Reward Circle, both of which have been designed to grow our active base of consultants and customers while driving enrollment and retention. We also launched Digital Enhancement Initiatives as part of LV360 to provide consultants with the insights and understanding they need to take their business to the next height.

Steven Fife: Also, on the customer side, finding the right products, understanding what makes them different, and feeling connected with our growing community through touch points like social media is more seamless than ever before. Phase one of LV360, including Evolved and Reward Circle, went into effect on March 1st in the U.S., Japan, Australia, and New Zealand. These markets are already benefiting from the program, as evidenced by our improving revenue and profitability. And we'll continue to benefit from a robust optimization plan throughout fiscal 2024.

Steven Fife: Our Q4 results reflect early progress with consultant engagement, a new product launch, as well as incentive and promotions. But most importantly is the fundamental change in our compensation plan designed to put more focus on consultant and customer enrollments, retention, repeat purchase, and product company loyalties, coupled with expanded tools, programs, and opportunities for our consultants to build a more sustainable business. Q4 was also spent prepping for our virtual International Activate 2023 event held in July.

Steven Fife: This kickoff to our fiscal year featured a 75-minute global package that included the launch of many optimization initiatives designed to support consultant businesses, including the launch of Evolve Perks, our new consultant recognition program, a new consultant communication hub, a new enrollment pack, and are all in to San Antonio Run with opportunity events and trainings designed to build momentum to our global convention in October. Markets with both Liquid College and Protand and NRF2 also received information on a new patent pending study showing the positive synergistic benefits of these two activators.

Steven Fife: In summary, we had another very solid quarter and had significant momentum across our business with numerous tailwinds that should continue to positively impact our results. In fiscal 2024, we expect overall top-line growth with the America regions continuing to lead with trends in international markets starting to benefit from the recent expansion of key growth initiatives. Profitability should also continue to show improvement and adjusted EBITDA margins are firmly on track to reach our stated long-term target of low double digits within the next 12 to 24 months.

Steven Fife: From a capital allocation standpoint, we remain steadfast in our long-standing commitment to balance internal growth investments with returning the excess capital to shareholders in the form of stock buybacks and dividends. The LV360 transformation we initiated approximately 24 months ago required a temporary shift in prioritization of internal investments versus buybacks to ensure we had the right people processes and platforms to support significant future growth. Since its inception, we have invested over $3.8 million on this transformational initiative.

Steven Fife: Now as our results are improving, in large part due to these strategic investments, we are well positioned to return additional capital to shareholders. And we have taken significant action in this regard with the approval of a special dividend and resumption of our buyback in Q4. When it comes to returning capital to our shareholders, our record has been decisively pro-shareholder. Over the past three years, we have used $21.6 million approximately 70% of our operating cash flow to repurchase our stock, reducing shares outstanding by 17.7% net of addition.

Steven Fife: In addition, we have instituted quarterly dividend in the fourth quarter of fiscal 2022, which was subsequently increased by 16.7 percent to three and a half cents per share in the third quarter of fiscal 23. Since the dividend was first implemented, through the end of fiscal year 2023, we have returned another $1.9 million to shareholders. Our latest results demonstrate the success of LV360, a 24-month endeavor to transform lifeVantage, and we are confident in the direction, trajectory, and future of our business.

Steven Fife: With a talented leadership team that is closely aligned, a deep pipeline of unique products, as well as a highly engaged base of consultants and customers, we are well positioned to deliver significant future growth in revenues and profits while driving incremental value for shareholders.

Carl Aure: Now, let me turn the call over to Carl to review our fourth quarter financial results. Carl? Thank you, Steve, and good afternoon everyone.

Carl Aure: Let me walk you through our fourth quarter financial results. Please note that I will be discussing our non-GAP adjusted results. You can refer to the GAP to non-GAP reconciliations in today's press release for additional details. Fourth quarter revenue was $54.2 million, up 6.4 percent on a year-over-year basis, and up 0.9 percent from the third quarter. This represents our fifth consecutive quarter of sequential quarter-over-quarter revenue growth. Form currency fluctuations negatively impacted revenue by 0.6 million in the fourth quarter.

Carl Aure: Excluding the negative impact of foreign currency fluctuations, fourth quarter revenue was up 3.9 million or approximately 7.8 percent compared to the prior year period. Revenue in the America's region increased 17.9 percent to 39.8 million in the quarter, including an 18.6 percent increase in the states as compared to the prior year period. This increase was primarily driven by the early success of the LB360 initiatives in higher average revenue per account from the continued success of our true science liquid college and product.

Carl Aure: Revenue in our Asia-Pacific and Europe region decreased 16 percent to 14.5 million driven by an 18 percent decrease in total active accounts and the negative impacts from foreign currency exchange rate fluctuations. Excluding the negative impact from currency fluctuations, fourth quarter revenue in our Asia-Pacific and Europe region was down 3.9 percent. The foreign currency impact continues to be driven by fluctuations in Japan, accounting for 0.5 million of the impact. Adjusting for this impact, Japan delivered 7.7 percent growth on a constant currency basis in the quarter, driven by the successful launch of NAD earlier this year in true science liquid college in March.

Carl Aure: Gross margin was 79.6 percent in the fourth quarter compared to 81.7 percent in the prior year period. The decrease in gross margin was primarily due to increased shipping expenses, higher inventory obsolescence, as well as shifts in geographic and product salesmen. We are continuing to look for cost savings opportunities across our supply chain to offset the negative impact of inflationary pressures we have experienced over this past year. Commission's an incentive expense in the fourth quarter decreased $1 million year over year.

Carl Aure: As a percentage of revenue, Commission's an incentive expense decreased 480 basis points to 43.3% versus one year ago levels, which was a result of the timing and magnitude of various promotional and incentive programs. Non-GAP adjusted SGNA expense was essentially flat at $16.7 million versus $16.6 million in the prior year quarter and was down 180 basis points as a percentage of revenue to 30.8%. Adjusted non-GAP operating income was $3 million compared with adjusted operating income of .5 million in the prior year periods.

Carl Aure: Adjusted non-GAP net income was 2.2 million or 17 cents per fully diluted share in the fourth quarter compared to adjusted net income of .2 million or 1 cent per fully diluted share in the comparable period last year. We recorded tax expense of .6 million in the fourth quarter of 2023 and .4 million in the prior year period. For fiscal year 2023, our annual effective tax rate was 36.5%. Adjusted EBITDA for the fourth quarter was 4.8 million or 8.9% of revenues compared to 1.7 million and 3.4% in the same period a year ago.

Carl Aure: Please note that all of the adjustments from GAP to non-GAP I discussed today are reconciled in our earnings press release issue this afternoon. We ended the fourth quarter in a strong financial position with $21.6 million of cash and no debt. We also continue to maintain $5 million of availability under our revolving line of credit. Capital expenditures totaled .5 million in the fourth quarter. Total capital expenditures for fiscal 2023 was 3.1 million.

Carl Aure: We will continue to focus on our capital allocation strategy in order to maximize shareholder value. During the fourth quarter, we used .8 million dollars in cash to repurchase approximately 173,000 common shares under our share repurchase authorization. As of June 30, 2023, there is 26.9 million remaining under our stock repurchase authorization. As previously announced on June 13, the company's Board of Directors approved an extension to the previously authorized stock repurchase program, extending it until December 31, 2026.

Carl Aure: Additionally, the company announced that it authorized a pre-arranged stock trading plan for purposes of repurchasing a limited number of shares of the company's common stock in FY2024 in accordance with the guidelines specified under rule 10B5-1 of this Securities and Exchange Act of 1934. We also announced a quarterly cash dividend of 3.5 cents per share of common stock, or approximately .4 million in the aggregate. Finally, as Steve mentioned, today we also announced a special one-time cash dividend of 40 cents per common share, or approximately $5 million in the ex. Both of these dividends will be paid on September 22nd to shareholders of record on September 8th.

Steven Fife: And with that, let me turn the call back to Steve for closing remarks. Thanks, Carl, and thank you for joining us today.

Steven Fife: In closing, I want to take this opportunity to thank all of our employees for their hard work and dedication, as well as our outstanding independent consultants and loyal customers. Our latest results demonstrate the power of our platform and competitive advantage of our model to help individuals build businesses on their own terms, with a proven committed leadership team, amazing lineup of unique products, highly engaged consultant-based, and strong balance sheet. We are very well positioned to deliver significant roads, improve profitability, and drive meaningful value for shareholders.

Unknown Executive: Thank you.

Unknown Executive: Ladies and gentlemen, this does include today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

Q4 2023 LifeVantage Corporation Earnings Call

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