John Mills - Partner, ICR, INC. Doug Robinson - President and CEO Dave Colbert - Chief Financial Officer.

Mitch Pinheiro - Imperial Cap Matt Schwarz - Maze Investments Alec Jaslow - Midtown Partners Steven Martin - Slater.

Good day and welcome to the LifeVantage Fourth Quarter Fiscal Year 2014 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to John Mills. Please go ahead..

Thank you. Good afternoon, ladies and gentlemen, and welcome to Lifevantage Corporation’s fiscal fourth quarter 2014 conference call. On the call today from LifeVantage are Doug Robinson, President and Chief Executive Officer; and Dave Colbert, Chief Financial Officer.

By now everyone should have access to the earnings release which went out this afternoon at approximately 4PM Eastern Time. If you have not received the release, it is available on the Investor Relations portion of LifeVantage’s website at lifevantage.com. This call is being webcast and a replay will be available on the company’s website as well.

Before we begin, we’d like to remind everyone that the 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 management and involve inherent risks and uncertainties including those identified in the Risk Factors section of LifeVantage’s most recently filed 10-K.

These risk factors contain a more detailed discussion of the factors that could cause actual results to differ materially from those projected in any forward-looking statements. This call also contains time-sensitive information that is accurate only as of the date of this live broadcast, September 10, 2014.

LifeVantage assumes no obligation to update any forward-looking projection that may be made in today’s release or call. Based on the number of participants on today’s call, during the Q&A session we ask that you please limit the number of your questions to three. Now, I will turn the call over to the company’s President and CEO, Mr. Doug Robinson..

Thanks, John, and good afternoon everyone. We finished fiscal 2014 on a strong note. We grew revenue to record levels in both the third and fourth quarters and for the full fiscal year. We continue to make important strategic investments to ensure we increase our topline growth in fiscal 2015.

As we expect revenue to grow in fiscal 2015, we also expect to improve margins and grow the bottom line. In fact, we project our earnings per share to increase by approximately 40% to 60% in fiscal 2015. The transformation of this company over the past 12 months has been extremely exciting.

The energy and commitment of our distributors and employees is remarkable. Our future is incredibly bright. We believe the culmination of the investments we've made and will continue to make in our business will again drive record results in fiscal 2015.

Across all functional areas in all regions of our company, we've been working with a sense of urgency to reignite growth. In the fourth quarter, we grew revenue by approximately 9% to $56 million. This is the highest quarterly revenue level in the company's history.

The growth was driven by 12% higher revenue in North America, reversing a trend of revenue softness in this region during the first nine months of the fiscal year. This growth was slightly offset by Japan's results during the quarter. We have plans in place to improve the results of our Japanese operations, plans that I will discuss in a few moments.

We were also successful in leveraging our G&A expenses while still making important investments in sales and marketing, product development and geographic initiatives. The growth strategies and revenue drivers put into place during fiscal 2014 will remain our focus throughout fiscal year 2015.

We believe the strategies and our collective focus have us well positioned for improving growth and profitability. Before diving into fiscal 2015, I’d like to briefly touch on five key achievements throughout fiscal 2014. First in November, we hired our new Chief Sales Officer, Dave Phelps.

Dave has our distributor base and field advisory boards focused on delivering our products to people around the world. He and his team have made a significant impact on our sales and marketing organization as demonstrated by our recent sales uplift in North America in our impactful skin care regimen launch.

Second, we also invested in brand awareness through our Jersey-Front Partnership with Real Salt Lake, one of Major League Soccer's preeminent teams. Actual data shows the recent nationally televised game with our logo and name reached nearly 300,000 households in the U.S.

Keep in mind Major League Soccer is played in cities like LA, Dallas, Chicago and New York to name but a few. Also we’ve seen a 34% increase in new visitors coming to lifevantage.com due to our partnership with Real Salt Lake. This has proven to be a solid business building opportunity for our distributors.

Overtime we believe that this marketing investment will enhance our credibility and brand awareness ultimately having a meaningful impact on our business. Third, we dramatically strengthened our research and development team with the hiring of our new Chief Science Officer, Dr. Shawn Talbott.

Since joining us eight months ago, Shawn has revamped our R&D team and put into place the strategic roadmap for new product introductions. This team continues to work diligently on further product innovation with the goal of expanding our product portfolio to help our customer's feel, look and perform better.

In addition to Shawn's R&D efforts, he's traveled the globe, participating in numerous events to educate our distributors on existing and new products. He’s also created a tremendous volume of marketing content through radio interviews, TEDTalks and product specific marketing materials. Fourth, we launched our new TrueScience Skin Care Regimen.

These products leverage our significant research on Nrf2. The regimen went through extensive third-party clinical evaluations. The results showed that these products reduce the visible signs of aging and skin damage caused by oxidative stress. And my last example, we expanded our international footprint.

Our launch into Canada and our soft launch into the Philippines as well as the launch of Hong Kong in the previous year has solidified our decision to further invest in our sales and marketing resources in these areas. We’re proud of our achievements and successes in fiscal 2014.

The fiscal 2015 will focus on increasing revenue through three strategic growth initiatives.

These strategic initiatives include one, new product innovation in order to make people feel, look and perform better; two, investing in and strengthening our sales and marketing efforts in order to expand our distributor base; and three, strengthening and expanding our global geographic reach.

Let me delve further into each of these three initiatives. Just five months ago, we launched our TrueScience Skin Care Regimen in keeping with our science-backed product development strategy.

We’ve been very happy with the results and sales of these new products designed to further our foothold on Nrf2 research, and keeping with our strategy to offer scientifically-backed products that help our distributors to feel, look and perform better. We are excited to launch a new energy drink product line in October.

These energy products will appeal to our current customer base but also have the benefit of expanding into the millennial market, a group estimated at 80 million strong in the U.S. alone. This is a demographic that we’ve not actively pursued in the past. We anticipate rolling these products out to our other markets throughout the fiscal year.

Last week we completed an energy product preview with our U.S. distributors that resulted in approximately 6000 introductory units sold in just one hour.

Our second initiative is investing and strengthening our sales and marketing efforts through additional investments in social media, mobile technology, customer retention, training tools, and targeted events in order to expand our distributor base. One such example starts tonight in Las Vegas.

We are hosting a 3-day training event gear towards expanding our distributor reach to millennials and young entrepreneurs with our new product lines and strategies. The third part of our fiscal 2015 strategy is strengthening existing markets and expanding our geographic reach while improving the platforms of our recently launched countries.

We still have room to grow in our existing markets and will have ongoing initiatives to focus on building belief, awareness, and credibility. Specifically, in fiscal 2015, we plan to invest additional resources in Japan, Hong Kong, and the Philippines. We are seeing positive trends in North America.

In addition, we are also seeing growth in some of our Asia Pacific markets, specifically Hong Kong and the Philippines. However, the growth in these markets was partially offset by continued distractions in Japan. Inclusive of the negative foreign currency impact, Japan revenue contracted by 11% during the fiscal year.

We have and will continue to take proactive and aggressive steps in this market. Since our last call one of the aggressive steps we’ve taken was to remove two of our distributor leaders in Japan. While we believe this action will ultimately promote unity among our Japanese distributors, we believe this unity will take time to achieve.

At the end of the fourth quarter we appointed Jeff Bean as our new Managing Director in Japan. Jeff brings 15 years of network marketing experience to Lifevantage. He knows the Japan market extremely well and has experience and success with revitalizations in this region.

Over the course of the next three to six months, we will be taking additional steps to promote unity and return Japan to growth.

These include things like introducing additional marketing tools and materials, reconstituting Japan’s field advisory board, partnering with the public relations firm, Edelman, to increase public relations and social media outreach to promote awareness, increase excitement and credibility.

We will be holding an Elite Academy in February where our new energy products will be introduced. And finally we are going to be increasing focus and involvement from our U.S. distributor leaders in Japan. We can use these efforts as a positive foundation for our distributors to growth their businesses.

In summary, we made important operational and financial strides in fiscal 2014. As we enter fiscal 2015, we are excited about our overall positive momentum. Our distributors are excited about the direction of our company and are prepared to make 2015 another record year for Lifevantage.

Our continued investments in and tactical execution of our three growth strategies and the additional focus on Japan will result in stronger marketing programs for our distributors and a deeper pipeline of product offerings for the coming years. We believe our efforts will increase our topline and improve our profitability.

Now I would like to turn the call over to Dave Colbert to discuss our financial results in more detail..

Thank you, Doug. Good afternoon, everyone. As Doug mentioned, in the fourth fiscal quarter of 2014, we recorded the highest quarterly revenue in the company’s history. For the fourth quarter ended June 30, we reported revenue of $56 million, an increase of 9% compared to the same period in the prior year.

Revenue reflects an increase of 12% in the Americas, coupled with the slight increase of 1% in the Asia Pacific region. Revenue for the quarter was negatively impacted $600,000 or 1% by foreign currency fluctuation.

An important component of our revenue and a critical metric related to maintaining the strength of our business is our recurring revenue or autoship revenue. This autoship revenue for the full year was 57% of overall revenue compared to 52% in the prior year. By now you should have seen our income statement.

To add transparency to our cost structure we changed the format. We now classify non-manufacturing expenses into two line items.

One line is distributor commission and incentives and the second is a combination of sales and marketing, general and administrative, research and development, and depreciation, which are now combined into one SG&A expense line.

Commission and incentives for the fourth quarter of 2014 was 48% of revenue compared to 53% of revenue in the same period last year. Commission and incentives as a percent of revenue is higher in the prior year period due to $1.6 million of one-time expenses associated with the launch of the MyLifeVenture sales program.

SG&A expenses for the fourth quarter of 2014 improved to 27% of revenue compared to 32% of revenue in the same period last year. Prior year SG&A was impacted by $1.7 million due to a one-time retirement expense.

Prior year operating income included the previously mentioned $3.3 million of one-time expenses incurred in the fourth fiscal quarter of 2013. Net income for the fourth quarter of 2014 was $2.4 million or $0.02 per diluted share. This compares to a slight net loss in the fourth quarter of 2013 including the previously discussed one-time expenses.

Turning briefly to fiscal 2014 full year results, revenue increased approximately 3% to $214 million. The Americas region finished strong with revenue growing year over year by 6%. U.S. contributed 4% of that growth.

Canada’s revenue nearly tripled during the year, complementing this positive growth trend in the Americas with 93% growth in our Asia Pacific countries, excluding Japan. Our number one revenue headwind is Japan. In fiscal 2014, Japan revenue declined 11% on a year-over-year basis.

This includes $9.8 million of unfavorable FX impact due to the devaluation of the yen. Operating income for fiscal year 2014 was $19.5 million compared to operating income of $12.1 million in the prior year. Fiscal year 2013 operating income included approximately $8.3 million of one-time expenses.

Net income for fiscal year 2014 was $11.4 million or $0.10 per diluted share compared to $7.6 million or $0.06 per diluted share in the prior year, including the prior year one-time cost.

Turning to our cash flow and balance sheet, we generated $12.1 million of cash from operations in fiscal year 2014 compared to $10.7 million in fiscal year 2013, an increase of 13%. Our cash and cash equivalents as of June 30 were $20.4 million.

In addition to these operational achievements, we also utilized our strong balance sheet and operational cash flow to reduce our debt by $16 million and return $46.2 million to shareholders in the form of share repurchases representing 19.6 million shares. Now I would like to turn our attention and talk about our fiscal 2015 guidance.

We expect to generate revenue in the range of $225 million to $235 million for the year representing a 5% to 10% increase. We expect our quarterly results in fiscal year 2015 to follow a normal seasonality in our business with the first quarter being the softest quarter of the year.

In fiscal 2015, our investments will primarily be directed toward our growth initiatives, specifically toward product development, sales and marketing, and geographic support, including our revitalization initiatives in Japan.

We believe our gross margins will be in the range of 85% to 86% and operating margins in the range of 11% to 12%, earnings per diluted share are expected to be in the range of $0.14 to $0.16, which is a 40% to 60% increase compared to fiscal 2014, our earnings per diluted shares based on an estimated 107 million diluted shares and a 34% effective tax rate.

We expect CapEx to be approximately $4 million to $5 million. We continually evaluate the best uses of our cash. Taking into account our working capital requirements, a new product, and global expansion initiatives, we recognize and understand the importance of continued debt reduction.

And at our current stock price, we will utilize our excess cash flow for continued stock repurchases and debt repayment in fiscal 2015. We look forward to updating you on our progress throughout this year. At this point I’ll turn the call back over to Doug..

Thanks, Dave. As you’ve heard from both my remarks and Dave’s, we’re excited about 2015. We’ll be returning to topline growth while leveraging our bottomline and increasing earnings per share by 40% to 60%. We’ll continue to bring new scientifically validated products to market that help our customers feel, look and perform better.

We’ll continue to emphasize our sales and marketing efforts to help our distributors be more successful. And lastly, we’ll expand our geographic region to further penetrate the markets we’re currently in. And with that, operator, I'd like to open the call up for questions..

(Operator Instructions) And we’ll now take our next question or our first question from Mitch Pinheiro from Imperial Cap. Please go ahead..

Hey, good afternoon..

Good afternoon, Mitch..

So I want to ask couple of questions around the fiscal ‘15 guidance.

If you look at your 5% to 10% revenue growth, how would you see that breaking down in terms of either driven by sort of new product or through the existing sort of customer base, plus distributor growth? How would you break that out?.

Hey, Mitch. I would look at it this way. As we talk, we have the headwinds in Japan. So I would consider Japan to be contracting slightly, but with the U.S. growth that we saw in the fourth quarter, the strength going forward, I see U.S. growth, plus the new product, the energy product going forward.

So without giving specifics because we don't provide guidance specific product or country wise, I would break it out again with growth in the U.S. contraction slightly in Japan and energy product going forward..

Okay. And so in the U.S. in the fourth quarter, the active independent distributor was up 2%. Do you see that accelerating? I mean, I think, base to get to your 5% to 10% and obviously, with Japan being the headwind, we’ll have to see that number accelerate from here.

Is that the right way to think about it?.

Yeah. We would expect to see that to accelerate. We’ve seen a floor if you will or bottoming in the U.S. and an upward trajectory on active distributors and active PCs in the U.S. So I would expect to see that going forward..

Okay. And then one more question around this guidance was just that, I noticed in the fourth quarter your sort of revenue per customer was up pretty strong.

And I was wondering what drove the strength, particularly in the Americas?.

Yeah. The price point of the new skincare regimen is higher than the Protandim or TrueScience sold as an individual model. So the regimen is a series of four products and that price point is about a $160, $165 for the regimen, which is higher than what we've had in the past. So that’s what’s driving the increase..

And so should we see that same type of level for fiscal ’15?.

I wouldn’t see it quite as high as what we saw in the fourth quarter, but I do expect to see it up higher relative to the full year average..

Okay. And then just last question again on fiscal ’15. So 11% to 12% EBIT growth is a pretty big jump. Where is that? And I know you're investing in the new product development. You have sales and marketing initiatives. You have Japan supporting your geographic growth.

So where are you getting the leverage here that would take -- get about a 200 bps increase?.

Exactly. We’re seeing it primarily in controlling our G&A expenses on a year-over-year basis. And we’ve also talked about this in the past. Our R&D expenses, although they’re going to be flat on a year-over-year basis, we’re getting more for our R&D dollars today than we did historically.

So even though R&D is also going to be flat on a year-over-year basis, we’re getting more done, more product launches, more studies done, etcetera, and that’s really the great leadership of Shawn Talbott that we’re seeing in G&A and R&D..

Okay.

And then just -- so one more thing just on the energy drink, could you describe like what it's going to be the characteristics and maybe that how it’s going to be sold, size or six packs?.

This is Doug. And I’m going to hate to do this to you, but I’m going to differ a couple weeks out when we actually launch this product in Long Beach. Love to have you there at our Lead Academy. But these privates kind of soft launch that we did just a few days ago was a tremendous success as I said earlier in my prepared remarks.

6000 units sold in just about one hour. Huge excitement around this, but we’re purposely -- and I'm sure you get this, purposely holding back on the real launch for our Elite Academy coming up in a couple of weeks. So long-winded way of saying, stay tuned, we’re going to have a lot of information out in this product. We’re incredibly excited about it.

It is and you can always come to expect this from us, our products will always be scientifically validated the real deal if you will.

And we think that market, the energy drink market is an absolutely huge market, not just for millennial but for people of all ages that are looking for the healthy alternative to maybe the drinks that are out there today..

Okay. Well, fair enough. Thank you..

Thanks very much, Mitch. Look forward to seeing you next week..

And we’ll now take our next question from Matt Schwarz from Maze Investments..

Hey, guys.

How are you?.

Very good..

First, I want to talk a little bit about the gross margins, so that -- I believe you said 85% to 86% range. That’s a little bit higher than you had over the past few years.

Is that due to mix with the skincare line being higher price point and higher gross margin?.

No, it’s primarily due, Matt, to cost reduction initiatives that we’re rolling through our operations group, that’s going to directly impact that cost of sales line. So we’re working hard to reduce manufacturing costs, reduce sourcing of raw materials, and also reduce our shipping costs.

So it's really a handful of initiatives that we've put into place over the last four to six months..

Okay. Got you. And my second question is, if you achieve that approximately $0.15 in earnings. Can you give us a sense of approximately how much free cash flow the company would generate at that type of level? I know you’ve talked about some of the investment you hope to make.

I wasn't sure what would be considered CapEx versus running through the income statement?.

Yeah. Without to much detail because we don't really talk about EBITDA too much but we would be in excess of $30 million EBITDA..

EBITDA, okay..

Yeah..

What did your CapEx approximately run this past year?.

We were around $2 million there about..

Okay, got it. Thanks. And it looks like in the guidance you guys assumed 107 million shares. I believe that's above where you finished this past quarter.

So I assume that no buyback assumed in the guidance?.

Well, we do. The fourth quarter was about 106 million. There is a handful of variables that go into figuring of the full year weighted average. We are going to continue buying back. We did announce that $4 million buyback that take place this calendar year through December 31st as what we’re authorized.

So that’s happening and we are buying back but we’re also issuing shares as well throughout the year. So there's a lot of pluses and minus. Plus you also have the stock price assumptions when you start calculating your treasury method. And so what’s in and what’s out from a dilutive calculation, so there's a number of variables.

So 107 is really the best estimate that we have at the present time..

Okay. I know you bought back a lot of stock this past year. Do you still have kind of a rough share account target in mind that you hope to achieve? I know you’ve been really working that number down over the past couple years..

Yeah. And we’ll continue that. We’ve stated publicly. We’d like to be in that 70 million to 80 million share count range. It’s not going to happen overnight, which is also what we’ve said and we’ll just keep working towards that level..

Okay. Great. Best of luck. Thank you..

Thanks, Matt..

And we’ll take our next question from Alec Jaslow from Midtown Partners..

Hey, guys. Thanks for taking the question..

Absolutely..

Just in terms of the delta and the revenue guidance, is there -- how should we think about what will be the difference in whether its 5% to 10%.

Could you help us like mark through your thought process?.

I’m not. Could you clarify just a little bit more on what you mean, Alec..

Sure. I’m just or I think about is it more about how well you execute with millennial in the U.S. or more about how you stabilize Japan? Its revenue or – yeah, that’s really try to understand…..

So Alec, this is Doug. Yes to all of the above. Well, we got the -- obviously, even if you go back just a few months in launching our skin care regiment, that’s a huge product category that we have yet to fully realize.

And so we’ve got our focus from a marketing and sales standpoint there that we’re very optimistic about but we’ll watch that play out throughout the year. We’ve got this new energy product and product line that we’re about ready to launch officially here in a few weeks.

And as I said in my earlier remarks, the millennials, a whole new demographic that we as a company, frankly haven’t been focused on before. And just here in the U.S. alone there is 80 million millennial, so lots of upside on products, certainly lots of upside on every country that we’re in.

You flat out, we’ll not hear us talk about market penetration or saturation for probably years to come because we’re such a young company in the countries that we’re in. But we’re working hard to further penetrate those markets.

And as we said quite specifically and Dave called it out very specifically our biggest and most significant headwind as we speak is Japan. So we are doing so much to mitigate the distractions in Japan amongst our distributor leaders so that they can be focused primarily on continuing to grow the business.

You add all those things up and that’s what really formulated our opinions around the revenue guidance in really that range. I hope that answers your question..

Yes, definitely.

And in terms of our -- in terms of investment in the Asia Pacific region, is there a possibility there could be a new country launch or do you envision most of 2015 to be just investing in the areas you already at?.

I think it’s very fair to anticipate that in the two regions that we have infrastructure in the Americas and Asia Pacific since we have our corporate headquarters here in the U.S. and our Asia Pacific headquarters in Japan and Tokyo that we would look for future country expansion in one or both of those regions.

There are a number of good markets in both of those regions that lend themselves very well to our distribution model of network marketing. But as I said in my prepared remarks, we are very focused in on the countries that we are already in to further penetrate down to get Japan back on track if you will.

But coincident with that, we are always looking at other countries as well to move into properly..

Are you first testing out the energy drinks in the U.S.

and then considering it in the international countries or maybe you could talk about the forward looking what you plan on doing for the energy drinks?.

Yes, absolutely. And as I said earlier, our official launch of the energy line will be here in Long Beach, California in just a few weeks, couldn’t be more excited about that. That is primarily focused on the United States. And then in February of 2015, we will be doing the same thing in launching our energy line in Japan as well..

Okay.

And then what would it -- would it require additional time for the Asia Pacific region, I mean the other countries like Hong Kong and the Philippines?.

Right. We’ve got -- every time we take our products, all of our products into various different countries and regions, as I am sure you can appreciate there are regulatory requirements to meet marketing materials, getting the market ready for the products with the proper lead time etcetera, etcetera.

So we are absolutely committed to taking our products in all the markets that we are in, because we think they are -- we know they are scientifically validated, we know there is markets for them, and we know they really hit on that feel, look and perform better category.

So yes, that’s clearly our strategy is to bring all of our products to all of our markets..

Okay. No longer -- no other questions, thanks..

(Operator Instructions) And we will take our next question from Steven Martin from Slater..

Hi, guys.

Just going back on the buyback, can you tell us how much of the $4 million you’ve used, and therefore, how much you have left to use?.

Yeah, Steve, we put that $4 million into a 10b5-1 program with certain parameters and then it’s on autopilot. And so we leave that on a confidential basis going forward.

So suffice to say, it’s still open and it’s still ongoing and when it closes and if we do decide to do something, we’ll let you know in addition to what we’re doing now, we’ll let you know..

Okay. The interest expense didn’t go down as much as I thought.

When did you actually make the payment on the debt?.

We made $12 million lump sum in June, early June..

Okay. And that’s why because we didn’t really see much impact on interest expense in the June quarter..

Yeah, right. We received all the authorizations that we needed for the share repurchase and the accelerated principal payment of that side as we did make that payment in June, early June..

Okay. And you have $4.8 million quarterly payment due this quarter.

When is that expected to be made or has it already been made?.

Repeat that, the fourth ….

I’m sorry, $1.2 million, yeah, it’s $1.2 million a quarter..

Yeah, it’s $1.2 million a quarter and it’s made at the end of the quarter. So it will be at the end of this month for our first fiscal quarter of 2015..

Okay.

And with the cash you’ve got on hand and the cash flow you’ve got coming in, where do you stand on making anymore of those payments early or any more additional lump sum payments?.

Yeah. We do have some covenant requirements associated with the debt. We’re not close to any sort of violation thereof but there are some liquidity requirements. So we do want to keep nice comfort zone above those minimum liquidity requirements.

That said we’re always discussing between the management team and our Board of Directors when is the right time. We made a fairly aggressive and large lump sum payment in June $12 million. In April before that, we did another $1.8 million, almost $2 million additional principal payments. So we've been fairly aggressive up at this point.

When we look out, it’s a fine balance, Steve, between working capital needs, product development, expanding, supporting. As Dough mentioned, we’re investing in Hong Kong and the Philippines. We’re investing in new offices, new office buildouts in those country. So we have to just watch our capital, our cash needs and allocate it accordingly.

But we will keep that front centered in our mind..

All right. Because you guys have done a great job of holding, your inventories are basically flat on our sales increase. Your payables everything, the balance sheet management has been great.

And I would expect that it would allow you a fair amount of excess liquidity?.

Yes, we are pleased with where the balance sheet ended up for the fiscal year. You can see from our 2015 guidance going forward that it’s just going to get stronger..

Okay. Looking at your guidance, you guided with the range of revenues in the range of operating margin.

Should we assume that the operating margin of 11 to 12 you sort of linear with the sales from to $2.25 to $2.35 or they not necessarily linked like that?.

You could look at it on linear basis..

Okay.

And if you were to exceed the high end of that, the $2.35, should we expect that that linear relationship might continue?.

Yes..

All right. Thank you very much. Looking forward to seeing you guys next week..

Great. Thanks Steve..

Thanks Steve..

We will take our next question from Mitch Pinheiro from Imperial Capital..

Hi. Follow-up.

Doug, are you providing historicals for your new operating expense line items?.

I guess, I’m trying to figure out what you are asking Mitch.

So we provide in our Qs, our recent Qs, are you talking about the breakout?.

Yeah..

We used to do it between sales, marketing, G&A, R&D?.

R&D, yeah..

Yeah, if you look at the 10-K -- if you look at the 10-K, we’ve adjusted all the historical financials to align with our new format..

Okay. So in the quarter -- how about for the first quarter of ‘15? Will we see the first quarter of….

Yeah. We haven’t done anything obviously for the first quarter of ‘15. We haven't and we didn't break down the new format look historically by quarter..

Yeah..

If you look at the Ks on an annual basis..

Okay. So we won't really know last year's breakdown in the first quarter until you report your fiscal ‘15.

Is that right?.

That’s correct. But it’s safe to say if you use some of the same projections of how it used to be and then breakout the percent, the commission and incentives as a percent of revenue on the sales and marketing..

Yeah..

Where that line item was embedded in..

Okay..

You’ll be able to break it our fairly easily..

Okay. That’s helpful. Thank you..

Thanks Mitch..

And this concludes the question-and-answer session. I would now like to turn the call to Doug Robinson for closing comments..

Well thank you and thank you everyone for joining us on today's call. As a reminder, we’ll be attending the Imperial Capital conference in New York next week. Hope to see some of you there as well as additional investor events in the coming months.

Again thanks all for your participation in today's call and most importantly your support to LifeVantage..

And this does conclude today's conference. Thank you for your participation..