Welcome to today's Fireside Chat with LifeVantage Corporation. I'm your host, Doug Lane. I'm the Head of Consumer Products at Water Tower Research. Today I'm joined by Steve Fife, President and CEO at LifeVantage, and Carl Aure, the CFO. So welcome, Steve and Carl. Thanks, Doug. Thanks, Doug. As you may be familiar, LifeVantage is a world leader in using nutrigenomics to activate a healthy body, mind, and mood with science-backed products that include unique combinations of naturally occurring compounds. The company activates financial, social, and community wellness by using a direct-selling business model to offer its premium-quality supplements, energy, and skincare products through a connected network of independent consultants around the globe. The company's Safe Harbor statements can be found in the Events and Presentations section on its Investor Relations website. So let's get started. Steve and Carl, congratulations on the launch of the new MindBody GLP-1 System. I was in Kansas City a few weeks ago for the launch, and you could feel the excitement in the room. For investors who may be new to LifeVantage, maybe take a few minutes to describe what the product is, how it was rolled out, and then where we stand today as far as getting the product back in stock. Yeah. Yeah, thanks, Doug. And it was a great event. You know, it feels a little bit like a culmination of a number of things that have come together. And when I, I guess for those of you who aren't familiar with LifeVantage at all, we've been around for about 15 years as a publicly traded company on the Nasdaq. We do about $200 million in revenue and a market cap of around $180 million. And our products are nutrigenomics, so the natural-based activation products. That's kind of our differentiator, is that we activate at a cellular level different aspects of our bodies to perform the way they were meant to perform or did perform back when we were all much younger. And this GLP-1 product that we launched just kind of builds upon that science that we have. It's a product that was in development for well over a year, and it activates the L cells in our body, which are found down in the lower intestine and the colon area. And those cells are responsible for the production of the GLP-1 hormone. GLP-1 is a hormone that has a couple of different responsibilities in our bodies, but one of them is the balancing of blood sugar. And the other is really the communicator, really, between your gut and your brain. And so it tells, it's responsible for telling your brain when you're full, basically, in simplistic terms. And the more active, the more GLP-1 that you have in your body, the stronger that communication is. And so we, you know, like I said, started developing this product over a year ago. In the July timeframe, we had results from in vitro testing that we had done that were super encouraging. And so we announced to our field in that timeframe that we were going to be launching a weight management product at an event that we were holding in Kansas City in October. And then, as we, you know, between July and August, or sorry, November, we started to train our field on what GLP-1 is. We were simultaneously conducting a 12-week independent human clinical study. And we also brought in 55 of our consultants to experience the product kind of on a pre-launch basis so that they could take before pictures, during pictures for about a two-month period of time and kind of build an experience with our product. And then we started to, you know, educate our field on the product itself, on LifeVantage's solution to GLP-1. That all came together at the end of September where our human clinical results were published or internally published, I should say, but were completed. Those before and after pictures came together. The field was educated. And based on the results that I'll talk about just in a second, we filed a patent as well. And so this is now a pending patent product. It takes, as you know, almost two years now to get a patent issued. But we're really happy that the results from the human clinical allow us to be in a position where we could patent it. And these early results from the clinicals, you know, were amazing. The clinicals showed an increase of GLP-1 production by 140%, reduction of visceral fat by up to 27%, and that's the fat around our internal organs, and then up to 5% loss in overall fat. When you, you know, those individually are pretty amazing, but then when you stack those up with the fact that none of the participants who lost weight lost any muscle mass, it was, you know, a surprise and a pleasant surprise for us. You know, that was measured through a body scan, again, during this clinical period. Then there were also some qualitative-type results of a decrease in sugar cravings, decrease in the portion of food being eaten. So that all coupled together, and, you know, again, was the basis for this patent that we filed. When we launched this product in Kansas City, we had about 1,500 people in attendance. As you said, the excitement was palpable. It was because of how we handled this announcement. You know, the product is amazing. We had people there that could provide their experience with the product, and then the results are, you know, kind of stand on their own, and we ended up selling out all of our initial inventory in 13 days. We thought that was going to last a few months, and so we are in a backorder situation, and since the end of October, our operations team has done a phenomenal job working with our contract manufacturers as well as our raw material suppliers to put us in a position where just in a couple of weeks, middle of early December, we'll be back in stock and we'll be shipping again, so that kind of gets you current with where we are. We reported in our September quarter-end earnings call, which took place at the end of October, that October was a record bookings month in the company's history by 20% greater than anything we'd experienced before, and I'm happy to say, although not at that same initial pace, our bookings continue to remain above our trailing 12-month average, you know, even though we don't have product that we can ship, so people are continuing to place orders with us despite us not having inventory. If I'm putting an order now, I should expect shipment probably by mid-December before the holidays, you think? Yeah, I hope so. You know, it depends a little bit on just how much backlog we have. But we expect our third order to come in around the 20th of December. So by the end of December, for sure, we expect it to be caught up there. Now, how does MindBody compare with Liquid Collagen? That was launched, I guess, about two and a half years ago and did move the needle in the U.S. within a couple of quarters. So how would you stack MindBody up against Liquid Collagen? Yeah, well, the inventory that we had, the initial inventory for Liquid Collagen, which we sold out on. I think it was two or three months we sold out that inventory. We had five times the number of units for MindBody that we did Liquid Collagen. And we sold it out in 13 days. So the demand was much greater than our Liquid Collagen launch, which, like you said, it was a great launch for us as well. Well, I guess that brings me to my next question, Carl. You didn't raise your forecast when you reported in the end of October, and you had this successful launch. So I guess, you know, if I was in your shoes, I'd probably do the same because it's early days. But it shouldn't be more than a couple quarter-lag between the launch and when it really moves the needle if it's even that this time. Yeah, no, that's right. Yeah, and you're right. I mean, when we announced at the end of October there, we were really only, we had two weeks of the history. We saw the phenomenal success associated with it. But just there was still a lot of uncertainty for us as Steve was talking about the supply chain issues. And, you know, so we did point to the upper end of our guidance. But as we come out, when we release Q2 at the end of, you know, the end of January, early February timeframe, we're going to have a lot more insight as to where we stand. You know, we'll know, have a much better insight onto where we stand from a supply chain perspective. We'll see how revenue has continued through Q2, and we'll be in a much better position to be able to address that and really be able to talk about what the impact MB will be for us going forward. I know you don't have any numbers, but just on the recruiting side of things, because of the excitement of the consultants, have you seen recruitments tick up as well as the product sales? Yeah, you know, again, in our call at the end of October, we said that the recruitments for October were five times our TTM, you know, on a weekly basis, and again, it hasn't continued at that same pace, but it's still above our TTM. If I'm not mistaken, this was just a U.S. launch as far as wide distribution. I mean, U.S. is 70% or better of your company. It's a big market, obviously. But then you have the rest of the world. Maybe an update on what your plan is for the rest of the world with MindBody. Yeah, yeah. So it's a great question. And you're right. It was only in the U.S. And that, you know, two or three-month launch period that I described that we went through with in the U.S. from that group of 55 people that were on the product, we are starting to institute and we'll follow that same pattern as, you know, educating people about GLP-1, educating them on our product, having those people on, you know, creating before and after pictures. And that is kicking off now in different countries. We expect to be launching in most of our countries, international countries, in the March-April timeframe. There are a couple of countries that have longer lead times just from a regulatory product registration standpoint. So I think there's one in June and then one we don't expect to have until October or November of next year. But most of our other international countries, including Japan, which is our number two country, will be launched in that March-April timeframe, following the same pattern of what we did in the U.S. Right, where you build up that excitement and that anticipation, which turned out to be very successful, and again, it's less than 30% of your business. But let's talk a little bit about the international markets because it's been tough, particularly in the Asia markets, and you're not alone. I get it. I follow other direct sellers, and a lot of people are struggling out there just with the macros, but what is LifeVantage doing to try to get those numbers heading in the right direction? Yeah, you know, I totally agree. It's been tough for the last year or so in our international markets. And we've made, you know, some changes within the employee base. And we've been fortunate to attract some new leaders. But, you know, that framework around MB and why, you know, I believe that this is going to be a catalyst to reengage and bring people in our international markets back into LifeVantage, but also ignite a new growth segment, just like we did saw in the U.S. You know, LifeVantage is not a well-known company in the big scheme of things. But we have a very, very passionate following of consultants and customers. And what this product is doing for us is it's opening up the white space of people that are attracted to GLP-1. And they might not know LifeVantage at all. But as they, you know, talk to people and understand, you know, the value of our product and get on it and start, you know, seeing results, I believe that's going to be a big hook, if you will, for them to be exposed then to our collagen product, to our Nrf2 product, which still represents over 50% of our revenue today, and to our other suite of products. So it will be, you know, kind of a pull into other products that LifeVantage offers. And I think that's true in our international markets. I think that's true in the U.S. as well, because we're going to be opening up a demographic of people looking for weight management that we haven't played in before. So, excuse me. So, I mean, it's an exciting opportunity for us. Yeah, I know. I mean, LifeVantage was built on the Nrf2, which is nutrigenomics, but for antioxidants. Imagine if you can apply nutrigenomics to something as tangible as weight loss, which is demonstrable. So I think it is a good story for what you guys do. Now, before I let you go, Carl, can we talk about margins for a little bit? That's been a good story for the last couple of years. Certainly, if the top line's been coming in a little bit short, the margins have been making up for that. What do you think, where do you think we head from here? Is that story pretty much back on track? In other words, are margins where they're pretty much going to be, and now we pivot to a top line story or just a little bit of update there? Sure. Yeah, no, I can give an update there. And yeah, we've been really focused on improving profitability overall. And if you look at, you know, where we finished up in FY 2024, we had a pretty good improvement over where we've been in the prior couple of fiscal years. And we continue to focus on EBITDA margin and improvements there. And we anticipate, you know, as we rolled out here in Q1, we continue to see improved profitability despite the top line headwinds. And so we, you know, our long-term target is to really get back to that double-digit EBITDA level, which, you know, we believe that we're very close to getting back on track. So I think we're going to continue to see some improvement there, as well as, you know, I think things will hopefully accelerate a bit when we can get back to the top line growth. Overall, I think we're optimistic about where we are and we're positioned well going forward. Yeah. Yeah. You know, Doug, our gross margins are around 80%. And part of the decline over the last couple of years at the gross margin level really was kind of increasing costs, supply chain costs, let's say, that, you know, I think everyone in the world was experiencing coming in COVID and coming out of COVID. But also our collagen product, as successful as it is, it is a little dilutive to that average margin. When our MindBody, our GLP-1 product, is actually accretive to that 80% margin. And so I expect that to be a lift, right, as that product starts to gain traction and becomes a bigger portion of our overall revenue. Now, I'll say that in the short term, you know, we are going to experience some incremental shipping and expediting costs, especially in Q2, because of trying to get this inventory built up as quickly as we can. But longer term, the product should be accretive to our overall profitability. And as Carl said, put us in a position where we can get back up to that low double-digit EBITDA. No, that makes a lot of sense because Liquid Collagen was our glass bottle and a liquid, whereas you're back now to supplements and traditional delivery systems, shakes, and caplets. So that's helpful. That's very insightful. So let's talk about what's on tap for 2025. I think you have a global convention this year. Can you give us a little background? Where is it? Who attends? And what can we expect from news coming out of the global convention? Yeah, it's going to be towards the end of April. I think it's April 24th and 25th. It will be held in Salt Lake City, Utah, near where we're headquartered. And we expect a fairly high participation from our international markets. It will be good too. We've had one global convention post-COVID, but it was fairly close and it was predominantly U.S. participants. But we already know because of the excitement around the company right now that, you know, I expect there's going to be a very good turnout from our international markets. The other thing, you know, and they'll be excited because it will be the official launch of MindBody. We'll be celebrating that for the international markets. We haven't really spoken about this, but, you know, we've been going through a rollout of an improved and enhanced compensation plan for our consultants. And the last piece of that, there's four or five of our international countries that will be going live on that at the beginning of March. And there will be a celebration of our Evolve Compensation Plan because every country that we do business in will be on the same plan after a couple of years of hard work and design. But there will probably be a few other, you know, announcements that we share at that point in time, but we'll keep it under wraps for now. We can't give away all of our secrets yet. No. He got enough going on anyway. So you can save it for April. Hey guys, thanks a lot for joining us. We're running out of time here. So I think I'll just leave it there. Steve and Carl, we appreciate it. Awesome. Thanks, Doug. Appreciate your time. Thanks, Doug. Appreciate it. Have a great day. Please note that the views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research LLC and are provided for informational purposes only. This fireside chat may not be distributed or reproduced without the written consent of Water Tower Research and should not be considered research nor recommendation. WTR is an investor relations firm, not a licensed broker, broker-dealer, market maker, investment bank, underwriter, or investment advisor. Additional disclaimers can be found at Water.