Full Press Release Details
Conference Call Transcript
LFVN - Q4 2011 Lifevantage Corp Earnings Conference Call
Event Date/Time: Sep 28, 2011
Sep 28, 2011 / 08:30PM GMT, LFVN.PK - Q4 2011 Lifevantage Corp Earnings Conference Call
CORPORATE PARTICIPANTS
IRC - Corporate Communications
Corporation - President and CEO
LifeVantage Corporation - CFO
LifeVantage Corporation - President of LifeVantage Network
CONFERENCE CALL PARTICIPANTS
Bolt Capital - Analyst
Next View Capital - Analyst
Galloway Enterprises, Inc. - Analyst
Good day, ladies and gentlemen. Thank you for standing by. Welcome to today s LifeVantage fourth-quarter 2011 earnings conference call. At this time
all participants are in a listen-only mode. Following the formal remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up.
Hosting today s conference will be John Mills with ICR. As a reminder, today s conference is being recorded. And now I would like to turn the conference over to Mr. Mills. Please go ahead,
John Mills - IRC - Corporate Communications
Good afternoon, ladies and gentlemen, and welcome to LifeVantage s fiscal fourth-quarter 2011 conference call. I am with ICR, the largest independent financial communications firm in North America with offices in New York, Connecticut, Boston,
Los Angeles, San Francisco and Beijing, China. My team is solely focused on healthy living and healthcare companies and we will be supporting LifeVantage s management team and Director of Investor Relations and their Investor Relations efforts.
On the call today from LifeVantage are Doug Robinson, Chief Executive Officer, Carrie McQueen, Chief Financial Officer, as well as David
Brown, President of LifeVantage Network. By now, everyone should have access to the earnings release which went out this afternoon at approximately 4 PM Eastern time. If you ve 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
Sep 28, 2011 / 08:30PM GMT, LFVN.PK - Q4 2011 Lifevantage Corp Earnings Conference Call
Before we begin, we would 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 management and involve inherent risks and uncertainties including those identified in the Risk
Factors section of LifeVantage s most recently filed 10-Q and 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. LifeVantage assumes no obligation to update any forward-looking projections that may be made in today s release or call.
with that, I would like to turn the call over to the Company s CEO, Mr. Doug Robinson. Go ahead, Doug.
Doug Robinson - LifeVantage
Corporation - President and CEO
Thanks, John. Good afternoon, everyone, and welcome to our fiscal fourth-quarter 2011
conference call. On today s call, I will provide some highlights of our record fourth-quarter results. Then I will provide a general update on our business and highlight growth initiatives for fiscal 2012 and beyond. And then Carrie McQueen
will follow the financial results for the fourth quarter and full fiscal year 2011 in more detail and provide our outlook for the full-year fiscal 2012. I will provide some closing remarks and we will open up the call for questions that Carrie,
David, and I will field.
First, let me refer to our financial overview. We finished fiscal 2011 on a very strong note as we generated record
results for both revenue and operating income. For the fourth quarter of fiscal 2011, we achieved net revenue of approximately $15 million which is a 241% increase compared with the same period last year, and an increase of 50% on a sequential basis
compared with the third fiscal quarter ended March 31, 2011.
For the fourth quarter, we generated approximately $2 million in operating
income compared to a loss of approximately $290,000 for the same period last year. This is the fourth consecutive quarter we ve achieved positive operating income, a streak we re very proud of and we re confident that will continue.
Also, we generated approximately $2.2 million in operating cash flow for the fourth fiscal quarter.
Turning briefly to our full-year results, in fiscal 2011 we generated net revenue of $38.9 million, an increase of 238% compared to fiscal 2010. Our
operating income for fiscal 2011 was $3.7 million, an $11 million positive swing from an operating loss of $7.3 million last year. Our financial performance in fiscal 2011 and guidance for fiscal 2012 underscores the expanding awareness of our
products and the strong pipeline of businesses we are building. We continue to benefit from new independently published studies that outline the efficacy of Protandim and further bolster the science behind it.
We are also are benefiting from a rapidly increasing number of studies about the Nrf2 molecule, the biochemical messenger that is activated by Protandim.
Approximately 600 studies per year are being conducted about Nrf2, which is double the rate of just three years ago.
For those of you that
are new to our business, let me provide a brief overview of the science behind our product offerings, Protandim and TrueScience. Protandim is a dietary supplement that is comprised of a unique patented blend of naturally occurring plant compounds.
We believe what makes Protandim so powerful and important to our health is its ability to activate the Nrf2 molecule, known as the master regulator of the antioxidant response in the molecule that controls the set of genes sometimes referred to as
Protandim has been demonstrated to activate the Nrf2 molecule which helps our bodies combat what is known as oxidative
stress. Oxidative stress is cellular and tissue damage caused by chemically reactive oxygen radicals formed as a natural consequence of cellular metabolism. This type of damage to your body cells by free radicals is believed to be the root cause at
the cellular level of aging and many age-related diseases.
Diseases linked to oxidative stress include Parkinson s disease, heart
failure, cardiovascular disease, myocardial infarction, Alzheimer s disease, schizophrenia, bipolar disorder, chronic fatigue system syndrome and cancer, to name but a few.
Our bodies already contain the information for how to effectively combat stressful situations, such as oxidative stress and chronic inflammation. That information is stored in our genes. The secret lies
in being able to instruct cells regarding the implementation of that information. This is what Protandim has been shown to do through the activation of the Nrf2 molecule.
Sep 28, 2011 / 08:30PM GMT, LFVN.PK - Q4 2011 Lifevantage Corp Earnings Conference Call
The final point about Protandim that is worth highlighting is that it is free of any substances banned
by such organizations as the International Olympic Committee, the NCAA and the NFL.
LifeVantage TrueScience is the first product we created
for expansion into a family of products that remains focused on attacking oxidative stress internally and externally. LifeVantage TrueScience anti-aging cream is a unique, scientifically based skin care products formulated to protect the skin from
factors that contribute to aging and unhealthy skin.
LifeVantage TrueScience contains similar ingredients to those found in Protandim. It has
been formulated to improve skin tone and coloring, it diminishes the appearance of fine lines and wrinkles, and provides a vibrant healthy appearance.
LifeVantage TrueScience is also designed to improve skin texture and pigmentation while increasing moisture.
Awareness and understanding about Protandim and LifeVantage TrueScience is expanding in consumer markets as well as among medical professionals. However, while we are certainly very proud of our strong
growth in fiscal 2011, we believe we ve only begun to realize their potential. Looking toward fiscal 2012 and beyond, we re committed to taking the necessary steps to ensure that we have the right infrastructure and resources in place for
long-term sustainable growth.
We are now at an important time in the maturation of LifeVantage. In past years, we were focused on survival
and operating in the leanest manner possible. As we make the shift from being a young small company in its development phase to a rapidly growing medium-sized company, we believe it is prudent to make key investments in both our operating expenses
and capital expenditures to ensure that we can capitalize on the robust opportunities ahead of us.
In order to position ourselves to execute
on key growth initiatives, we will be proactive in both our strategic planning and tactical execution. Importantly, we will also maintain a nimble mind set and make adjustments with respect to timing and other factors, if necessary. While we will be
investing in our growth, we will continue to be mindful of our operating income and focus on continuing to improve our financial performance, including higher operating margins in fiscal 2012 compared to fiscal 2011.
One key area of investment will be our personnel growth and development. As many of you have seen, in June we announced that we strengthened our
management team with the appointment of Dr. Joe McCord, renowned scientist, codiscoverer of superoxide dismutase and a pioneer in the area of free radical biology, as our Chief Science Officer.
While Dr. McCord has been involved with LifeVantage for years, his increased involvement with the Company will be extremely beneficial as we work
towards expanding the understanding of our products to existing and potential new customers. We also announced the reappointment of Dr. Brooks Hybertson, a nationally recognized oxidative stress researcher, to our Scientific Advisory Board.
Under the leadership of Doctors McCord and Hybertson, we will be supporting new research and development studies. The increased daily
involvement of both doctors will be important as we work on expanding our product portfolio with complementary products.
strategically investing in human resources in other departments to ensure we have the appropriate resources to handle our growing business in areas such as finance, marketing and sales. As we expand our team, we will be mindful of maintaining the
appropriate corporate culture and efficient infrastructure. As an example we recently retained ICR and hired an internal Director of Investor Relations to help facilitate growing shareholder interest.
Another key area of investment in fiscal 2012 will be our sales initiative. Under David Brown s leadership, we ve had great success within our
network marketing operations in the past year. In April, we had over 2,000 distributors attend our inaugural global network marketing convention, and in July we held a quarterly Elite Academy that over 2,500 distributors attended.
The strong attendance at both of these events underscores the interest and enthusiasm about our products from a growing number of people. And we
anticipate that our distributor events will increase significantly in size next year.
In order to help our distributors build their
businesses, we are implementing several strategies that serve as the basis for our sales initiatives during fiscal 2012. First, we refined our distributor training in sales meetings strategy. We know that regular sales meetings and trainings build
momentum and growth throughout the distributor base. We know that sales presentations translate directly to new enrollment revenue and ongoing monthly autoship revenue.
Sep 28, 2011 / 08:30PM GMT, LFVN.PK - Q4 2011 Lifevantage Corp Earnings Conference Call
Last year, we focused on responding to areas of the country which had the greatest concentration of
distributors and on helping our top distributors attain their current elite ranks. This year, we will be increasingly focusing on building our mid-level ranks and working with them to advance in rank until achieving an elite rank status. In doing
this, we will develop a larger middle class of distributors who are building large sales organizations and receiving significant monthly commission checks.
This will create more distributor leaders in our distributor base and help even more distributors achieve the financial success they are striving for.
Second, we are increasing the number of training events we conduct. Each month we are adding more locations for our premier schools and Super Saturdays.
These monthly meetings are sponsored by LifeVantage but hosted and conducted by elite level distributors. They provide valuable hands-on training by those who have already achieved significant success with the Company and serve to motivate and spur
the growth in distributors in every location in which they are held.
We ve also added a CD audio training series to our Vantage Packs
and made them available in monthly autoship orders. So distributors can review information given at Elite Academies and other events wherever and whenever they would prefer.