LifeVantage (LFVN) Q4 2012 earnings summary

Executive summary

• FY12 was a record year: revenue rose 224% to $126.2M, exceeding $100M, with operating income of $21.5M and net income of $12.5M.

• Growth reflected a larger distributor and preferred-customer base, international expansion, and rising product awareness; infrastructure and distributor support remained priorities.

Financial highlights

• Net sales were $126.2M vs. $38.9M in FY11; the $87.3M increase included $54.6M in the Americas and $32.6M in Japan.

• Operating income was $21.5M vs. $3.7M; net income was $12.5M vs. a net loss of $50.8M, with the prior-year loss heavily affected by derivative fair-value expense.

• Gross profit was $108.1M vs. $33.0M; gross margin was 86% vs. 85%.

• Operating expenses rose to $86.7M from $29.3M, primarily due to higher distributor commissions, event and promotion costs, and increased headcount.

Outlook and guidance

• FY13 revenue growth was expected to continue with new distributor and preferred-customer additions and further international expansion.

• Continued investment in marketing, technology, personnel, and training was expected to moderate profit margins during the expansion period.

• Gross margin was expected to remain near the current range; sales and marketing expenses were expected to rise with sales and remain relatively stable as a percentage of revenue.

• Forecast cash flow was expected to fund operations through June 30, 2013 and the foreseeable future thereafter.