Good day, ladies and gentlemen, thank you for standing by. Welcome to today's conference call to discuss LifeVantage's Second Fiscal Quarter of 2021 Financial Results. At this time, all participants are in a listen-only mode.

Following the formal remarks, we will conduct a question-and-answer session and instructions will be provided at that time for you to queue up. Hosting today's conference will be Reed Anderson with ICR. As a reminder, today's conference is being recorded. I would now like to turn the conference over to Mr. Anderson..

Thank you. Good afternoon and welcome to LifeVantage Corporation's conference call to discuss results for the second fiscal quarter of 2021.

On the call today from LifeVantage with prepared remarks are Garry Mauro, Chairman of the company's Board of Directors; Steve Fife, Chief Executive Officer and Chief Financial Officer; and Justin Rose, Chief Sales and Marketing Officer.

By now everyone should have access to the earnings release, which went out this afternoon approximately, 4:05 PM Eastern Time. I would also call your attention to a separate press release that followed the earnings release and announced the appointment of Steve Fife as CEO.

If you have not received the releases, they are 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 as well..

Thanks, Reed. Good afternoon everyone and thank you for joining us today. I'm thrilled to be able to introduce Steve Fife as our newly appointed Chief Executive Officer, who will also be assuming the position of President and will join the Board of Directors.

As many of you know, Steve took on the Interim CEO role in September in addition to his responsibilities as Chief Financial Officer. He has done an outstanding job guiding the company through this period of transition. Steve Joined LifeVantage as CFO in 2017 and his leadership has been a critical factor in our success.

He has a wealth of experience and is passionate about our business, and driving value for all our stakeholders. Please join me in wishing him the best. Now, I'll turn the call over to Steve..

Thanks, Gary, and good afternoon, everyone. Thank you for joining us today. I am honored and humbled by this appointment. I appreciate the support the distributors, customers and employees have provided over the past five months, and I look forward to leading the LifeVantage team and the opportunities that lie ahead for this great company.

With me today is Justin Rose, our Chief Sales and Marketing Officer, who will join me with prepared remarks before we turn the call over for Q&A..

Thanks, Steve, and by the way congratulations, super excited for you and even more excited for LifeVantage. As Steve mentioned, we held a successful convention in October reaching an estimated 20,000 participants from over 18 countries.

At convention, we saw a strong response to the launch of limited time expanded flavor offerings of the AXIO product line and the new Platinum Enrollment Pack, as well as strong adoption of our new I.T.T distributor system, which stands for Invite Tool Team.

It's a digital tool aimed at standardizing, educating, training of new customers and distributors.

During the quarter, we also saw positive results of promotions launched including Operation 25 I.T.T in which we challenged participants to test the I.T.T system by contacting a minimum of 25 people using the new digital tool during the month of November, as well as our friends and family share distinct program , it's a program which allows customers to earn per share in their LifeVantage experience without necessarily having to become a distributor.

Additionally, we launched an enrollment pool, which has been met with a lot of excitement, the pool paid down an additional 5% of all new enrollments volumes that people who earn a share in the pool.

To earn a share, the distributor must have enrolled at least five people, customers or distributors in the month with a combined 500 points of new volume or approximately $550 in revenue; they can earn multiple shares if they double or triple that requirement.

As we look forward to the second half of the fiscal year, we remained steadfast on our focus on key drivers for growth, enrollment, retention and average revenue per account or ARPA. Our new I.T.T distributor system should provide a tailwind for enrollments.

The program was launched in October with great energy and strengthened alignment throughout our field leadership organization. Building on this momentum, we've created a virtual training program called Success Mastery.

Participants in this new program meet each Saturday virtually allowing our top leaders the opportunity to teach and train our field on key topics that foster education.

Our efforts to improve retention should benefit from these new technology tools, we have partnered with an AI company that specializes in retention creating a program that assist our leaders in identifying and intervening before a customer or distributor might churn.

We are currently in the testing phase running different initiatives that will help target the key factors aimed at retaining these accounts..

Thank you, Justin. Before I review the financials, I want to share a few thoughts articulating LifeVantage's strong competitive position and my optimism for the future. Our business is firmly aligned with consumers increase emphasis on taking better care of themselves and living healthier lives.

We have a broad portfolio of high-quality innovative products proven to help optimize health and improved performance at all stages of life. As Justin just discussed, our field is energized and we are well positioned with approximately 70% of our sales generated on subscription providing stability in revenue during times of volatility.

We continued to weather the current storm of this pandemic with all of you. We remained focused on educating and delivering products for a healthier life to a population that has never been more aware of the importance of their health.

We move into the second half of fiscal 2021 with a continued focus on the key metrics that drive our business as well as innovation to further enhance our product offering and expand our reach, to that end, we are very excited to announce the pending launch of the new daily wellness supplement formulated to provide daily support to keep the immune system healthy and strong.

This new product is designed with busy and active people in mind to give the extra immune support needed to address daily stressors and physical wear and tear on the body in addition to the seasonal challenges we face. With that, let me walk you through our second quarter results.

Please note that I will be discussing our non-GAAP adjusted results, you can refer to the GAAP to non-GAAP reconciliation in today's press release for additional details.

Second-quarter revenue was $59 million down 3.6% on a year-over-year basis, revenue in the Americas declined 5.4% to $41.9 million largely - due to - comparing to a pre-COVID quarter, which was also the highest revenue quarter in the company's history..

Thank you. We will now be conducting a question-and-answer session. Thank you. Our first question comes from Doug Lane with Lane Research. Please proceed with your question..

All right, thank you. Good afternoon everybody and congratulations Steve on the new position or I guess the permanent new position since you've already been Interim CEO..

Thanks, Doug..

Yes, you're welcome.

Can you talk a little bit about the virtual convention this year and how that played out versus expectations? And what your learnings are from October and how they might apply to your 2021 convention?.

Yes, I am going to let Justin take the first stab at that..

Yes, thanks, Doug. We actually were pleasantly surprised, especially with the turn out the number of registered attendees and the number of events that took place for viewerships. However, we did see a decrease in the product launch that was associated with the convention that was virtual this year compared to last fiscal year.

A difference of about $2 million, we - we're about $2 million less than revenue; and I would assume a little bit of that had to do of not having people in actual seats and being present. So, but overall very pleased with the number of attendees and the number of eyeballs that we were able to attract..

Yes. And I would just add on to that. We've recorded all of that and not only did we - do we think we had over 20,000 that listened live, that it was also available for - I think it was 30 days or 45 days afterwards; so that they could jump back on if they missed anything and still have access to that.

So, I thought our reach was much greater than we've had in other in-person conventions..

So how does that change or impact your outlook for what you're going to do? I know it's early days and the environment is still fluid but from where we sit today, how does that impact - what you're going to do in October of this year?.

Yes, I think in October - we have a upbeat academy that is scheduled in March. So just in a couple of months or - and, we - that will be a virtual event and we're still kind of evaluating what happens in October.

But I think we learned that we can be really effective with our reach on virtual events but it's really difficult, at least after our first one, to replicate the elements of recognition and just the camaraderie of the LifeVantage community when we're doing it remotely, the power of being together is really tangible.

And so, I think going forward, whenever the new normal is out there; I could see that we'll have virtual events and we'll have in-person events. Just to be able to leverage especially that tower being together..

That makes sense. And then, putting your CFO hat back on for a minute. What are the priorities of free cash flow? I guess from your commentary, I would assume stock buyback is moving to the top, and then you have a certain level of CapEx, but no real CapEx bubble, if you will, coming down the pike.

What about acquisitions and dividends?.

Yes, you're right. We had a healthy buyback during the quarter, we repurchased $4 million during Q2 and I think that will continue to be a priority for us, especially where our stock is right now; we think that it's undervalued. CapEx will be a little higher this year because of cost associated with moving into our new office space..

Right..

And I think as we've talked about before, we are being more acquisitive in looking at opportunities, we haven't found anything yet that is the right fit for us, but if the right opportunity were to come along, we would clearly use our cash.

And as you know, we have a shelf in place as well for $75 million that we would utilize for the right opportunity..

Okay, fair enough. Thank you..

All right, thanks, Doug..

Thank you, our next question comes from Jim Galloway, Private Investor. Please proceed with your question..

Steve, congratulations on becoming the CEO and good luck..

Thanks, Jim..

Couple of different questions. First one is, I think you're doing a great job virtually, but we're still losing customers and distributors.

Do you see any forecast as to a cessation of that and maybe some growth?.

Yes. Hi, Jim, this is Justin Rose. So yes, we actually, we saw an increase in the second quarter in enrollment almost 20% increase there, and we expect that to continue throughout Q3 and Q4.

And we're really basing that list of the new I.T.T system that's been put in place where I think people are very much now learning the system training on the system each Saturday on the success mastery calls and really putting it into practice. So, we do expect that to continue to increase..

Good. My other question relates to R&D and studies on our products. I remember the good old days where we had a number of universities analyze the Nrf2 in the Protandim. I don't know if we have any studies going on right now that you can relate to.

And I'm concerned that the new wellness product has some independent research behind it, because there are just so many wellness products out there.

I want to make sure that this really is one that the distributors can back up scientifically?.

Yes. So just touching on the wellness product first, it is - there is a hero agreement sorry ingredient in this product that is very well researched. I think you and others will find a very compelling product when it's launched. It will be available to distributors here in a few weeks and then to customers about a month after that.

And so, having science-based products is kind of core to LifeVantage and we continue to both look at ingredients, as well as the combination of our products together.

If you recall when we launched our Protandim NAD Synergizer just over a year ago now, we have done studies of it as well as in combination with our Nrf2, Nrf1 products and the combination of those three is really what led us to position and brand the Tri Synergizer to bring all of that benefit together from a science standpoint and I also believe that over the last year or two there has been additional studies, and research on our Nrf2 products.

So I think we are sitting now at over 30, I think it's 32 separate independent studies on Nrf2 itself..

Anyway of getting some publicity of that out into the general population?.

Yes, we all of those are published on Pub , and we do our part to try to get that out into the public domain..

Okay. Well, keep up the good work..

All right. Thanks, Jim..

Thank you. There are no more questions at this time. I would like to turn the call back over to CEO, Steve Fife, for any closing comments..

Thank you. And thank you, everyone, for joining our call today. In closing, I just want to take the opportunity to thank all of our employees for their hard work and dedication every day, as well as our outstanding team of distributors.

We remain confident in our business model, and are focused on delivering the LifeVantage products our customers depend on. We hope you all stay safe and healthy, and look forward to updating you on our next call. Have a great day..

Thank you for your participation. This concludes today's call. You may disconnect your lines at this time, and have a great day..