Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's Conference Call to discuss LifeVantage's First Fiscal Quarter of 2020 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. Instructions will be provided at that time for you to queue up. Hosting today's conference will be Scott Van Winkle with ICR. As a reminder, today's conference is being recorded. And I would now like to turn the conference over to Mr. Van Winkle. Please go ahead, sir.

Thank you. Good afternoon, and welcome to LifeVantage Corporation's conference call to discuss results for the first fiscal quarter of 2020. On the call from LifeVantage with prepared remarks are Darren Jensen, CEO; and Steve Fife, Chief Financial Officer. By now, everyone should have access to the earnings release, which we announced this afternoon at approximately 4:05 p.m. 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 as well. 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 involve inherent risks and uncertainties, including those identified in the Risk Factors section of LifeVantage's most recently filed Forms 10-Q and 10-K. 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 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-GAAP measures with today's release. This call also contains time-sensitive information that is accurate only as of the date of this live broadcast, October 30, 2019. LifeVantage assumes no obligation to update any forward-looking projection that may be made in today's release or call. Now I will turn the call over to the company's CEO, Darren Jensen.

Thank you, Scott, and good afternoon, everyone. It's a pleasure to be with you again today to discuss our first quarter fiscal 2020 results. During the quarter we are intensely focused on preparing to the launch of our most significant new product in recent years; Protandim and NAD Synergizer. This revolutionary product is the first addition to our flagship Protandim line since 2016 and we're very pleased with the initial sales that consumer response, which is meeting our robust expectations and to date is shaping up as one of the strongest product launches. We're the early days of the launch, but anticipate that October could be among the best sales month in our history. And we will continue to focus on building this product across our global footprint. Before I discuss our progress with Protandim NAD Synergizer, let me recap the first quarter activity, which again were largely focused on preparation for this important launch. Our year-over-year revenue growth continued during the quarter as we generated 1% increase, which significant mark the improvement in margins, adjusted EBITDA and net income. The revenue growth reflected strong year-over-year gains in Asia-Pacific and Europe which increased 10.4% including 10% growth in Japan. In September, we held a highly successful Japan convention where we saw strong activity ahead of the event, as well as increased sales and improved distributor engagement and customer demand. Revenues in the Americas decreased 2.2% on a year-over-year basis as a result of the timing of activities in our Red Carpet program, as well as our focus on previewing and training our field on Protandim NAD Synergizer ahead of the October launch. We made good progress on our 2020 initiatives during the first quarter, with a primary focus on our initiative to become masters of biohacking subscription. This initiative is…

Thank you, Darren and good afternoon everyone. I am pleased to report our first quarter results. We generated another quarter of positive year-over-year revenue growth, while delivering significant improvements in profitability. We remain confident and the momentum we have built and we plan to build upon this further as fiscal 2020 progresses. 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 detail. First quarter revenue was $56.2 million representing a 1.1% increase year-over-year. Revenue in the Americas decreased 2.2% to $40.2 million, while revenue in Asia-Pacific and Europe increased 10.4% to $16 million all year-over-year. Growth in the Asia Pacific and Europe region reflected continued strong performance across Asia-Pacific including strong growth in Japan of 10%. The modest decline in the Americas reflected our level of activity in preparation for the launch of Protandim NAD Synergizer, as well as lower Red Carpet activity which can fluctuate quarter. This also impacted the number of active distributors and customer accounts during the quarter. The impact of this change was partially offset by an increase in both our distributor and customer average order sizes. In addition, our year-over-year retention rates were consistent. Our gross margin was 83.7% compared to 83.5% in the prior year. The modest increase in gross margin was driven by lower inventory obsolescence and handling costs as well as changes to our geographic and product sales mix. Commissions and incentive expenses as a percent of revenue decreased 235 basis points year-over-year to 47.6%. The year-over-year decrease is due to the timing of accruals for incentive and promotional programs, as well as the current quarter level of activity in our Red Carpet program. Just as a reminder, the commission incentive expense rate will fluctuate…

At this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Doug Lane from Lane Research. Please proceed with your questions.

Hi. Good afternoon everybody.

Hi, Doug.

Hi. Just looking at the first quarter, really come in at least right in line with I was expecting. And your tone is very positive on the early days of new Protandim products. So, just wondering what we're looking for here going forward is this new product sold in monthly supply, so we're waiting to see what sort of what the reorder pace is here. I just wondering why you wouldn't raise guidance or you just think it’s too early?

Well, Doug, thank you. That's actually very good question. We launch the NAD products right at the beginning of October, so we're still within our first month of selling the product. Initially, it appears to be very well, doing actually very well. And part of what we had explained in our earlier statements, what has been good about it is that we investing quite a bit in testing and in other programs and part of the testing that came back showed a tremendous synergistic effect between the Protandim NAD, Protandim Nrf2 and Nrf1 product when use in conjunction with each other. And that's why we're seeing what we believed a lower capitalization rate, because now there's a powerful story to show that all three should be used at the same time. So we've created packages of those three products together called Tri Synergizer, and the initial outlook seems to be very positive on those. And as we continue to watch the development of this line and these packages obviously just like what we did last year will begin to adjust our guidance if needed throughout the year earlier.

So, I mean, if – you saw a lot in early October which is when you launched it. So, I guess you won't really begin to see the reorder pace for a couple of weeks now. So that makes sense. I get that. Did I hear you right that these three new products are going to be launch in Japan in the second half of the year?

What I mentioned about Japan was war efforts on -- are on right now is taking our Nrf2 product and adjusting the size. A lot of our consumer testing out there has indicated that the Japan prefers a smaller tablet size. So we're adjusting size of that product so they will have greater appeal to the consumer. That will be the first thing that goes out into Japan. We're right now evaluating the formulation of our NAD product and beginning and developing the rollout for global. So we'll be announcing that in future call.

Okay. Got it. Thanks. Now Steve, I'm looking at the margins which actually came in better than I was looking for. You've had 200 basis points of operating expansion on 1% growth in sale. So I'm wondering if we start to the impact of the new products drive, accelerated sales growth then shouldn't we get at least that kind of margin expansion going forward. I mean, there is some build in leverage here. Isn't there?

There is and we fully expect that. I think our guidance, if you just take the midpoint of our annual guidance which would be a $240 million and the EBITDA associated with that at $21 million where that would be roughly a 6% revenue growth and 15% EBITDA growth.

Correct.

So we fully anticipate leverage coming from our revenue growth. And that revenue growth will be driven through the adoption of NAD and as well as well as continued success in our Red Carpet program.

Right, of course now, you mentioned free shipping, I think this is – I don't know, if I heard this before. Is that – what could be the impact on margins do you think with the move to free shipping here?

We believe that how we're structuring this. There'll actually be a minimal impact to margins.

Okay, okay good. Last week and again I don't want dealt on the tax rate with regard to so much going on operationally, but with the 28% tax rate in the first quarter, I'm little surprise it just picking between 19% to 22% for the full year. I guess, you're telling me you can help me on the quarters, but what's the logic behind that? Why wouldn't you just eat the 28% and say 19% to 22% for the remaining three quarters?

Well, if we're only that simple. We – I'd state – I ask you to look at our last year quarterly tax rate, Doug, when you know last year in our Q1 we reported roughly a 22%, Q2 was a negative 103% tax rate and then Q3 was 17% and Q4 was 29%. And so that's what – I mean, that's the magnitude of fluctuation that we're talking about. And I think at the end of the year we're still fairly confident around that range of 19% to 22%, but it will fluctuate rather dramatically in Q2 and then again back in Q3 as we look forward kind of some similar magnitude, maybe not quite as big to what we saw last year.

Okay. Fair enough. Thanks guys.

Thanks, Doug.

[Operator Instructions] Our next question comes from Yurion [ph] Hoffman of Robeco. Please proceed with your question.

Hi. Good afternoon gentlemen. Last year you had a very strong launch in Taiwan. This quarter like greater China sales were somewhat weaker. Can you just elaborate a little bit from a greater China region?

Yes, sure. Thank you. The greater China region's been a very interesting area. I'm sure for those of you that are watching the channel. Initially there was a 100-day review that the Chinese government was making in Mainland, which affected many of our other members within our channel. But due to our e-commerce while going in there was very little affect on us. We're seeing some effect at least within Hong Kong and Mainland China has been with the riots that are occurring in Hong Kong and I think that has been widespread across all businesses within Hong Kong in that area. But with Taiwan, Taiwan has been a bright star for us out there. It is still in the earlier days of growth of that market. And as we develop more leaders there, the way that the Taiwanese leaders work are more in sprints and so as we bring on more and more leaders, I think we'll get more a stabilization in the revenue from month-to-month basis within Taiwan. So, really what we're seeing within Greater China is very positive when it comes to Taiwan. Right now as with most businesses, most of the world we're just watching the events that are occurring in Hong Kong and our urge about to everyone that hopefully there is a resolution at some point in the near future. Thank you.

Thank you.

We have reached the end of the question and answer session. I will now turn the back over Darren for any closing remarks.

All right. Well, thank you everyone for joining us today. We're excited about the launch of Protandim NAD Synergizer and our early results following the launch. We look forward to what fiscal 2020 has in store and updating you on our next call. Have a great day. Thank you.

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