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Water Tower Hour Recap

CEO Steve Fife and CFO Carl Aure recently joined us on the Water Tower Hour podcast to discuss LFVN’s recent Global Kickoff virtual event. Those interested can listen to this podcast on Apple Podcasts, Google Podcasts, Spotify, or on our website. Links accessible in our full report. LifeVantage (LFVN: NASDAQ; $6.59; $85MM Mkt Cap) 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. LFVN activates financial, social, and community wellness by using a direct selling model to offer its premium-quality supplements, energy, and skincare products through a connected network of independent consultants around the globe. A new senior management team has been installed since current CEO Steve Fife assumed that role on a permanent basis in February 2021, culminating in the important launch of the company’s LV360 strategic initiatives in March 2023. LFVN is financially very strong with no debt and $1.38 per share of cash on its balance sheet. It has an asset-light business model, so typically more than 100% of net income is converted to free cash flow. The company initiated a regular dividend of $0.12 per share annually in May 2022 and raised it to $0.14 per share in June 2023. It also paid a special dividend of $0.40 per share in September 2023. The Global Kickoff is an annual event held in January designed to help consultants set goals for the year and exchange ideas. While it was a virtual event, there were hundreds of consultants who hosted watch parties to help give it an in-person vibe. This year’s theme is “Rise ERA”, where consultants build upon the foundations set last year to help take their businesses to new heights. ERA stands for Enroll, Retain, and Advance, which Fife noted was very well-received since it really comes back to the core fundamentals of direct selling. Consultants can earn incentives implemented for Rise ERA that are outside the usual compensation plan. However, Aure pointed out that while these are incremental incentives, they are simply replacing the MVP incentive program from last year, so there should not be an impact on the overall commissions & incentives line as a percentage of sales in the P&L this year. Also, as part of the Global Kickoff, Phase 2 of the company’s LV360 strategic initiatives were highlighted. Phase 2 kicked off in Mexico, Canada, and Europe on February 1, 2024. Fife was happy to report that the systems transition that was needed to implement LV360 in the Phase 2 markets went off without a hitch earlier this month. LV360 includes an updated compensation plan and customer loyalty program. LV360 is now fully operational after a transition period in the Phase 1 markets of the US, Japan, Australia, and New Zealand. New product activity remains robust, led by Liquid Collagen. Management believes that the key to Liquid Collagen’s success is the synergistic benefit from combining it with LifeVantage’s flagship product, Protandim Nrf2, the company’s original product that still accounts for more than 50% of sales. STATISTICS