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everyone. Thank you for joining us for this session of the WTR Insights Conference featuring LifeVantage, ticker symbol LFVN. I'm Linda Bolton-Weiser, Managing Director, Consumer Research here at Watertower Research, and I'll be your host today. We're pleased to be joined by CEO Terrence Moorhead and CFO Carl Ory. Welcome both and thank you for being here. Absolutely. Good to see you. Yeah, thanks, Linda. So before we begin, please note that LifeVantage's Safe Harbor statements can be found in the Investor section of the company's website. We'll aim to address investor questions submitted during today's conversation or in the Management Series report that will follow. Please enter your questions in the chat. Investors interested in scheduling a meeting with LifeVvantage can indicate that interest within the conference portal. So now that we've got that housekeeping items taken care of, let's jump right into our fireside chat. So, Terrence, you've been CEO of LifeVantage for only a matter of weeks, but you've already identified three priorities that you're going to focus on in turning around the business. Your first priority is to strengthen the LifeVvantage brand. What do you see as the brand's differentiating features and how can the messaging be improved? Yeah, you know, LifeVantage is actually, it's a very different company than most other supplement companies on the marketplace today. And I think the focus of most other supplement companies is to try and give you more ingredients and address the deficiencies in your body from aging or whatever it might be, or in your health, by giving you more nutrients, more formulas, more products, more stuff. And LifeVantage is actually the opposite of that. We're exactly the opposite of that, as a matter of fact, where what we do is we actually help your body do what it's supposed to do by giving you ingredients that allow your body to, for example, produce collagen. So instead of just supplementing your diet with collagen, we actually give you kind of ingredients that then help your body produce more collagen. In the case of antioxidants or some of these other products that are out there where they're just giving you kind to take more and more antioxidants, Your body is actually very adept at protecting itself from free radicals, from pollutants in the environment, from microplastics, et cetera. And so our product, Protandim NRF2, actually is capable of helping kind of turn on your body and allowing it to kind of release, activate the pathways that will allow your body's natural defenses to protect itself. So it really is quite remarkable technology. It's a completely different approach to managing your health. And it's truly a competitive advantage for us, we believe. okay that sounds good um so terence your second priority that you've outlined is to build a more relevant consumer proposition um do you have any initial impressions of what needs adjusting is it the positioning of the products in the marketplace the packaging the pricing um in particular what's your initial read on the company's flagship product pro tandem Yeah. Protandim is a remarkable product. When I came on board, you hear people talking about how everyone in America should be taking this incredible pill. And it's actually true. It's this idea of cellular defense is really fundamental or foundational to your health, right? Healthy cells lead to a healthy body. Healthy body leads to a happy lifestyle. So So Protandim, NRF2, the activator, it really does promote healthy cells through cellular defense. Our NRF1 product is all about cellular energy, activating your mitochondria. And then our NAD product that's kind of under that same Protandip flagship really is all about longevity. and, again, three incredible products that I just think aren't, we're not maximizing the language behind it. So some of it, Linda, is how we talk about those products. They truly are next-generation science in each one of their respective categories. And I don't think we're using the, we'RE not promoting them to the great extent that we can. They'RE all clinically proven to do what we say they're supposed to do. So having actual clinical proof is a big deal. I don't think we're promoting that enough. We're not talking about that enough to consumers. And in many instances, we're the number one product in those categories. And again, we're not promoting that either. So I think on many levels, when you talk about both improving our branding and improving kind of our relevance to consumers, I think messaging comes into play, upgrading our packaging, certainly comes into play. Making sure that we are messaging in places where consumers, in a manner that consumers kind of can resonate with consumers, but also in places where consumers are looking for this type of information will be critically important. That's something that we haven't done in the past also. I think our presence on social, our presence in terms of, you know, kind of digital ad placements hasn't been very strong, hasn't been kind of relevant. So I think there are a number of different touch points that really do define and will define what it means to be relevant to consumers. We do need to sharpen our pencils and work on price point. And some of that will be, you know, kind of just making sure that we're in those right price categories. And in certain areas, we might have to do some reformulation or repackaging so that we can maintain our very high margins and strong margin position but there's a there are a tremendous number of opportunities that we can do again and I think that that first point of of getting the branding right but also getting consumer relevance you know kind of right are are largely inter interconnected but but each has their own kind of domain that they that we need to focus on Okay. That makes sense. So Terrence, your third priority is to improve operational efficiency and profitability. So I've seen that your gross margin at the company is actually really quite high. It's nearly 80%, but your SG&A expense ratio has ballooned to 32% of revenue and your EBITDA margin did decline quite a bit in FY26. So what progress have you made so far in developing a plan to improve profitability? And how soon can we expect to see some of those results flowing into the income statement? Yeah, you know, I'll start here and then I'll let Carl chime in. We've done a fair amount of work, I think, looking at, well, let me go back to the kind of the source of the issue. You know, from a top line standpoint, you know, we've seen some deterioration in our top line over the last 12 to 18 months. So I think that's one of the things that's contributed to us losing some ground as it relates to our operating margins and EBITDA margin efficiency. We just lost some scale. So obviously, we need to fight back on that. That starts with helping to maintaining and strengthening our gross margins. So I think there's some supply chain work that we can do to make sure that those historically high 80%-ish gross margins can stay that high. But then going beyond that, we need to look at our organizational structure. We need to look at how our go-to-market economics also. So we've started looking at just how we're structured, how we interface with our field organization, how frequently we interface with them. There are a lot of tools and technology today that I don't think we're maximizing, both in terms of outreach to our sales team. And one of the things we've talked about, for example, is frequency of contact with our sales force is important, but maybe once or twice a year isn't enough. And in a technologically driven world, there's no reason why two times a year can't actually turn into 12 times a year or 20 times a years. And so more frequency, but through different types of contact and the economics of that would work wildly in our favor. So that's something that we're going to be looking at, again, in a world where contact with your sales organization does matter, but how you do that also matters and the economics ofthat matter. So, you know, we're looking at that. I think we're looking at the structure of our organization. You know, there's a lot I think we can do, again, leveraging technology, automation, AI that we're not doing today. My goal isn't to necessarily just have a smaller organization, but to have a smarter and more powerful organization. And, you know, kind of the tech that's available to us can get us there. So, and I don't know, Carl, if you have anything to, I don'T know if I took up all the oxygen in the conversation here, but, you KNOW, if there are any other things that you'd like to add to that. Yeah, sure. No, I think you hit the high points for sure. But as you mentioned, number one for us is we need to make sure that we're maintaining and getting back above that 80% gross margin line. And I do think there's some initiatives that we'RE working on. We'RE looking at our logistics in particular, and I think there'S some pickup or some items that WE'RE looking at there. And then on the SG&A spend, you know, Terrence was right. I mean, we had, we definitely lost a little bit on the top line there, and we weren't able to right-size quite as quickly as we wanted to. But if you actually look at the numbers in SG&A, as you know, revenue was down a fair amount year over year, but we took almost $10 million of costs out of the SG&E line. So we were able to reduce SG&H by about 15%, not quite enough to offset the full decline. So he definitely took some action, but as Terrence mentioned, we're looking at everything now. And I do think there's other opportunities to dig into the SG & A line, leveraging the efficiencies and the technology. And there's definitely, we're looking at it now and we'll be working on that over the coming months. So I do believe that we'll be able to make some progress in that respect. I think the key though, Linda, is, you know, again, I said, you know, our goal isn't to just get smaller in terms of SG&As, to get smarter. But more importantly, you know we're not going to cut our way to success. We're going to grow our way to success and so again i think by getting the brand right by getting our go-to-market strategy becoming more consumer relevant by making sure our products actually do speak to to consumers and meet them kind of where they are that's how we're gonna again get back to scale get to growth but but but on a more productive level going forward as well and one of the concepts that we haven't talked very much about yet but that i i strongly believe in is you know there's Zog and Nog, zero overhead growth, negative overhead growth and just managing to that type of discipline on an ongoing basis and making that part of the cultural DNA of LifeVantage is critically important. So I think we're all kind of very much in tune with, all very aware of kind of what we need to do and in tune avec the opportunities and challenges that lie ahead. okay that makes sense um so in terms of your um your production and your supply chain you're a fully outsourced model and it's an asset light model for manufacturing maybe you could tell us about the current state of the supply chain infrastructure do you have any ideas for improvement there and i'm just curious do you source your international markets where you are located outside the US. Do you source that from inside the US? You know what, I'll let Carl kind of take the lead on this one, and then I'll follow. Yeah, no, on your question about sourcing, supplying the international markets, for the most part, the majority of the international markets are supplied from the US, you know, most of our international markets as you know are not significant in size that you can really justify the manufacturing in those locations. Japan would be the closest to that. There are a couple of local country or local market products that are specific for the Japanese market that we're able to source locally in order to maximize the opportunities there. But currently, for the most part, everything is sourced through our third-party contract manufacturers here in the U.S. I think part of the potential opportunity for us, especially in places like Mexico, where consumers are particularly price sensitive. There may be some opportunities for us to look at sourcing opportunities that are more locally based that would allow us to hit some price points that would be more consumer friendly in markets, again, like Mexico. I think Mexico is potentially a great growth opportunity for us. Japan could be a great growth opportunity for us as well. So again, you want to talk about being consumer relevant and a little quicker to market with some types of things, possibly looking at sourcing options that are on the ground in those markets could potentially help us both with faster turnaround in terms of new product launches, registrations, but also in terms of cost. So that's something we just need to look at. Right. Okay. That sounds promising. So Terrence, you alluded previously to some decline on the top line, which has caused this sort of negative operating leverage situation. Part of the sales decline has been due to the decline of MindBody GLP-1 system, which was your big blockbuster product in FY25. And then the sales declined in FY26. Can you just give us a brief snapshot of what happened to cause that decline? And what kind of future do you see for that product? Yeah, I think what you saw is, again, rightfully so, a lot of excitement. You know, the only naturally, clinically supported natural GLP-1 product in America. So I think what you saw is people kind of running out the gate, getting very excited about it, trying it, getting results with it. And then through the natural course of events, some people stick with the product, some PeopleMigrate off of it. And I don't think, it's a very competitive space. Prices of GLP ones have actually moderated and come down. You've had some new product forms come out as well. So in addition to the injections, you've got pills kind of out on the marketplace. And from my perspective, the company probably didn't respond quickly enough to some of those competitive factors. I also think, you know, we didn't drive enough new customer growth and new customer acquisition to continue to sustain that type of you know kind of the thresholds so I think where we are right now is you know there's a group of folks who are using the products they're still on the product so you don't have the type of incremental explosive growth that the company saw when they launched the product and there was all that trial going on out there and now you've got the folks who have kind of settled in they're using it they're selling it and in my mind that next generation of growth can and should come when you start kind of refocusing on new customer acquisition. However you go, however we kind of find the way to chase that down. And that might be through digital channels. That might be Through greater exposure on social media. But again, I think much of the focus initially was kind of selling to a fixed group of people, concentrating on a fixed group of individuals. And then you see that natural, you know, kind of trial, adoption, you know kind of maturity, and then you get the that main group of folks that are that are there with the product now. But again, when I look at the concept of MindBody as the only clinically proven natural GLP-1 in America, that's an exciting concept that I'll say over the next 12 months, we hope to be able to position ourselves to really move forward with that, get the pricing right, get the positioning right, get the kind of access points right, and really do something with it. Yeah, that sounds like a good product. I think I want to try it myself. Yes, yeah. Yeah, right. It's like no side effects, no pills. Yeah. It is no pills, no needles. So, yeah, not so bad. Hmm. So, Terrence, I am I'm very familiar with with what you did at your previous company, sort of an omni channel company. And you were very successful there with certain initiatives that you used to drive growth. So you had a lot of focus on subscription programs, driving e-commerce. You had started with personalization. Are there any elements of that playbook that we saw at your previous company? Do you see any of that that could be applied here at LifeVantage? I certainly think the work that we did on – it's parallels, I'll say – the work that we Did on getting the brand right, getting the consumer proposition right, trying to improve the toolkit that we have at our disposal and becoming more digital. LifeVantage is a unique company and has a unique competitive advantage. So I think the opportunities here are different, but in many ways, I think they're actually greater than they were. I think there, and I think that can be greater again, because our product philosophy is so very different from anything that's out there on the market right now. And the effectiveness of our products is so demonstrably different from kind of anything, just what you would normally expect from a normal supplement product. So in many ways, we have some tremendous advantages. I think we're behind, LifeVantage is behind in terms of its digital capabilities, but that's something we can fix. We're behind in term of where the brand is right now, but something we address also. Actually, if I'm being totally honest and transparent i think our distributor force here is is actually much stronger it's it's a much better um skilled uh group of of individuals that i think when we get if you get the right tools in their hands that allow them to more effectively and more assertively attack the marketplace they can do something with that and they and they've proven the ability to do that uh the way they they kind of charged out with mind body, the whole mind body program. They've proven kind of the power of what they can accomplish. I think we probably let them down to a certain extent with not having enough sustainable kind of backing behind that. But again, I think when you get them the tools, when you give them the assets, when you kind of unleash them, get out of their way, start to get the you know the messaging right the the science behind it you know kind of becomes understandable uh you know i think a lot of times right now we're talking about things like oxidative stress and um you know sort of the nrf2 pathway no one knows what you're talking about right if people's eyes glaze over very quickly there's much more effective ways to talk about you know protecting your body and cellular cellular cellular defense if you can actually get words out of that are that consumers can start to understand um and and then talking about the benefits of having kind of healthy cells in terms of more energy right more resilience um quicker you know faster um um what's a repair of your of your body and and um you know kind of being able to get sleeping better i mean it's so many different things that consumers actually understand. So yes, I think there are some things from the playbook that we can kind of take and adopt here, but it'll be in a very different way if and when we do it. Okay. That makes sense. So earlier in the discussion, you did allude to the international business and it struck me that you're much lower percentage of revenue outside the U.S. than other companies like yours. It's only 20 percent outside the US. Where do you see the opportunities here and how high is this on your priority list to expand more internationally? Well, I'll say from priorities, I'd say, you know, the first thing is to right the ship here in the U S make sure we're strong here, make sure that we're driving growth. And then our priorities are going to probably focus in APAC, so Asia Pacific. Japan is a great opportunity for us. We'll have to see. Right now, Linda, I think our kind of phase one approach is going to be to penetrate the markets where we already have business, where we уже have kind of a leg up in those markets. So, So, you know, Japan has to has to be at the top of the list. And I think we've got some some good people on the ground there. We have a solid team on the round. And and I think wir have some real opportunities to do something there. The other market that it's just a great market. I mentioned it earlier is Mexico. And, you Know, I want to spend some some time and effort and put some thought into how we can drive growth in Mexico. You know, the supplement market there is growing double digit. I think that there's opportunity there, that the marketplace is becoming increasingly sophisticated, both from a product standpoint, but also from a digital and payment standpoint. So I think there's something that we can do there and possibly take kind of a next generation approach to growing that market, which is, by the way, that's what we want to do everywhere. Our goal isn't to just get better at the stuff that we've done for the past 20 years. It really is all about creating that next generation approach to going to market. So, yeah, I'm actually very excited about what we could potentially do in Mexico in particular. And then there's a spillover effect. If you get that Hispanic kind of population growing in Mexico, can you start to tap into the Hispanic population here in the U.S. as well? So we're hoping there's a synergistic effect that we can leverage by doing that. Yeah, Mexico is generally a great market for direct selling. It's a lot of opportunity there. Yeah, and again, I look at it as just a channel agnostic consumer market. And it's a great marketplace for supplements. Folks really, they're very passionate kind of about supplementation, about their health. And as I mentioned, they're becoming increasingly sophisticated from a digital standpoint. They're increasingly sophisticated in terms of their ability to pay with a credit card and other alternate payments. So have other payment forms. So that could be a great opportunity for us. And so we've been having some meetings talking about about that internally. And we'll kind of think about it more and figure out how we can increase our kind of foothold on the market down there. Mm hmm. All right. So just to conclude, I'd like to touch on your balance sheet and cash flows. The company has no debt, which is great. You've got an annual cash dividend of 18 cents per share, which is about two point three million a year. And you've done some share repurchase in the past, anywhere from two million to six million annually in each of the past few years. What are your initial thoughts, Terrence on capital allocation. And do you think that the company might have foregone some growth opportunity in order to maintain the dividend and repurchase stock? That's not my impression historically that they have necessarily. But however, I think going forward, I'm going to try be much more strategically driven. And we have to be more digital as a company, just across the board. We have to have more capabilities in terms of outreach to consumers that has to be improved. So I think there's still organic investment opportunities to drive growth within the company. I don't see us in the short term kind of focusing on opening new markets. Again, I think it's about penetrating existing markets and using our capital to, again, get a greater foothold in some of these really high potential markets where we're doing business right now, but we're completely underpenetrated. So I think it's perfectly appropriate and perfectly fine for us to continue our, and I think it's a great idea for us, and we want to do it, to continue our share repurchase program. We'll continue the dividend. But we really do have to focus on how do we build our internal capabilities? And I didn't even mention investments in AI, which we're going to need to do also. I mean, that's a part of this. How do you have a smarter organization, right? You start using automation, start using AI in order to help you make smarter, faster, better decisions. So those are the things I'd kind of watch out for going forward. And Carl, I don't know if you have any other thoughts on any of that. Yeah, no, I think that covers it. And, you know, I would agree at the beginning, you know, in the past, I wouldn't say that, you know, our share repurchase or the dividend policy hindered any of our internal growth initiatives. We still are, you know, the company, the beauty of this business model is it does put off a lot of free cash flow and definitely exceeded the needs of the business. So we were able to reinvest in the areas of revamping our compensation plan, of investing in some of the product roadmap and some of those things. But as Taryn mentions going forward, as I shift and look forward, the priorities are going to be around technology and digital AI and investment around the brand. And I think our current business model will allow us to continue to do that and still maintain the balanced approach that we have, maintaining the dividend and opportunistically looking at share repurchases. Okay. Well, I think that is our time here, but I want to thank you, Terrence and Carl, for participating, for joining us in this session of our WTR Insights Conference. And thank you to everyone who participated and listened in. Please look for additional content on LifeVantage on our website at www.watertowerresearch.com. And for those with further questions or for investors wishing to meet with management after this event, please reflect that interest through the conference portal. Our next conference session will be starting shortly, so please stay tuned. Thank you.