Youngevity International
(NASDAQ: YGYI)
President and CFO: David Briskie
Podcast: Play in new window
About: Youngevity International, Inc. is a fast-growing, innovative, multi-dimensional consumer products company. We offer a wide range of consumer products and services, primarily through person-to-person selling relationships that comprise a “network of networks.” The company is also a vertically-integrated producer of the finest coffees for the commercial, retail and direct sales channels.
INTERVIEW TRANSCRIPTS:
WSA: Good day from Wall Street, This is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is David Briskie, the President and CFO for Youngevity International. The Company trades on NASDAQ, ticker symbol YGYI. Thanks for joining us today there Dave.
Dave Briskie: Hi, there Mr. Costello. I appreciate you having me on your program. Thank you very much.
WSA: Yeah, it’s always good to have you on. So for some of our listeners that didn’t catch our previous interview from January of the last year, can you provide us with an overview of the company?
Dave Briskie: Yeah, I will and I’ll try not to cover too much of what we went over last time we spoke. A lot of exciting things had happened since then. So that’s exciting for us as we execute our plan. Youngevity essentially is the formation of two companies that took place. I was the CEO of a company called Javalution Coffee Company, which is the coffee side of the business. And we merged with Youngevity back in July of 2011. The CEO of Youngevity is Mr. Steve Wallach and we brought those two businesses together and at the time we were doing around $22 million in revenue. And last year we’ve closed out the year at about 162 million in revenue.
So we’ve had a pretty nice run since 2011. And we’re an omni-direct company. We’re doing something that we’re not seeing happening out in the marketplace. We’ve combined very nicely. Our coffee operations, we’ve grown those pretty nicely into the direct selling space. And the reason why we like to call ourselves omni-direct is because in that channel we capitalize on all opportunities to market direct products whether that be through e-commerce platforms, through social selling platforms, through the various social media outlets that are very popular today, as well as a number of ways that we market our products in the channel.
And further to omni-direct are all of the products we have. We now have some 4,000 consumer products so that has grown pretty nicely and we’ve been very busy managing the marriage of high-tech with high touch over the last 12 months or so there Juan.
WSA: Great, so please talk about the recent Sorvana acquisition and some of your other recent news and activity there Dave?
Dave Briskie: I’d love to. The Sorvana acquisition is the largest revenue acquisition we’ve done. As you know, we have a pretty aggressive acquisition model. We’ve acquired almost, I believe its 20 companies now, over the last four years with our acquisition model. And the model is really designed–I believe you’re aware of this–to marry the databases, so we’re very interested in the databases of distributors and consumers with great products and Sorvana fit perfect with us.
The company owns two companies. One was FreeLife. FreeLife has been around 22 years so they’ve been in the space a long time. They have science-based nutritional products that’s really important to us.
We really loved products that are backed by good science so we know that that gives us lots of credibility. So putting this together was imperative for us and that’s why we’d like this particular integration so much. And they also have a very nice patented skin care program under their L’dara brand. So putting FreeLife and L’dara together was really a nice achievement for us. The database of consumers and distributors that we were able to bring in was over 50,000, so that was a really nice number and great products going along with it. We’re already seeing very, very strong interest through all the other Youngevity direct selling channels from this acquisition, so that’s exciting. And we were just opening our office in the Philippines we’ll get to international in a minute, Juan.
But we’re opening our office in the Philippines and it just so happened that Sorvana had an office in the Philippines as well. So we were able now to integrate those two offices and get some really strong experienced people there to help us, it kind of catapults our Philippines operations which we just opened. So it was a very nice strategic acquisition for us.
WSA: Great and so what are some of the key trends that you’re seeing right now in the e-commerce sector and how are you positioning the company to capitalize?
Dave Briskie: Well, we think the e-commerce business is just getting stronger and stronger so it’s a lot of more of the same. But I don’t know anyone that’s marrying the ability of distributors to market a platform and leverage their relationships through that recommendation style selling–referral based marketing is very popular. I don’t know anyone that goes to a restaurant today that for instance hasn’t been recommended by a friend. I think the last 10 restaurants I’ve eaten at, someone has recommended it to me. And that’s really what we’ve done here. We’ve put the power of e-commerce in the hands of our sellers and so it allows them to go out there and talk about products more intimately and then we give them an e-commerce platform to go ahead and market their business. So it’s very effective and it’s working really well for us.
Our new websites are finally up and running and as you know, we’ve worked two or three years on this project and its very well received. We run in nine vertical markets right now all types of consumer products. And so the only way we really can get our message out there is to create a platform where our sellers can market the products that they’re really passionate about and what we do as a company as we come behind our sellers and we market all the other products that we have to our databases of consumers and it’s pretty effective.
WSA: Certainly and so please describe the two segments that you cover and what new methods you bring to those sectors?
Dave Briskie: So the two areas that we’re really focused on is [one] the coffee business, and we’re a completely vertical operation. When you look at a company our size and you look at our coffee story, I would have to say in the midsize coffee range that we may be one of the few companies out there or maybe the only company that has what we have. We’ve been building this out for the last three years and it’s really an area of the business that’s ready to take advantage and scale off of what we built. For example, we have a 1,000 acre plantation in the middle of the Nicaraguan Rainforest where it’s very hard to obtain all the certifications for coffee in that sector. So we’re fair trade certified, organic certified, rainforest alliance certified, and bird friendly certified.
So we’ve got this wonderful 1,000 acres in Nicaragua and we also own our own processing plant there, which is one of a larger processing plants in Central America, which sits on 28 acres and we process all of that coffee through our own processing plant. The reason why this is important is when you have certifications in coffee and you move your coffee to a processing plant and you don’t move it to a place that has these certifications you lose the certification. So even though your coffee may have been organic at the farm if you move it into a processing plant that’s not organic certified then you’d lose that certification. And those certifications are very profitable and great for margin. Anyone that knows anything about the coffee business [knows] it’s very obvious how large it is in terms of scale.
But in terms of making margins your larger margins comes from having these certifications. And then we move from our own processing plant to another facility that we own and operate in Miami, Florida, which is our roasting, packaging, and grinding operation. And of course we have all of those same certifications there. So what this allows us is this “field the cup” scenario with all of the certification throughout the process. And where the link really becomes from the coffee division over to the direct selling space, is that there is a brand of coffee called the Youngevity Be The Change Coffee that is made at our roasting operation.
So that’s kind of where that marriage really comes full circle so our sellers have a coffee to sell that has all of these certifications. Of course, the coffee business is a standalone business as well. It’s a wholly owned subsidiary of Youngevity and we market green coffee distribution for example. Our coffee ends up in places like 7/11 or McDonald’s or some of the larger green coffee buyers that are out there. And of course we sell to the cruise lines, Carnival Cruise Lines, Norwegian Cruise Lines for example and we have an entire food service division. And probably one of the most exciting things that we announced is our affiliation with the major league baseball’s Miami Marlins team, where one of our brands, the Café La Rica Brand has become the official Cafecito of the Marlins. So that has been great for that brand. It’s really driven the performance of our Café La Rica Bricks at retail and at the food service accounts and in fact we’ve seen the sale of our own branded bricks Café La Rica double since the affiliation with the Miami Marlins. So that’s been terrific.
As we move over to the other side of the business, the direct selling side of the business, the larger size of the business that is in the direct selling space. We coined the phrase omni-direct because we’re in all types of categories. Many times in the direct selling space you’ll see very narrow product offerings. Our business is really beyond a narrow offering into a very wide offering and it allows us to market to various consumer groups and it really is great for our bolt-on acquisition strategy where we can literally take various size databases with great products and bolt them into our machine so to speak, so that we can then push out different products to different consumers. So we’re obviously in the coffee space. We’re in health and nutrition. We’re in jewelry and fashion. We’re in spa and beauty.
So we’re in all of the major categories and we’re also in the service sector of the business. So we offer a Teladoc type program. We, believe it or not, even have a brokerage system where we are doing small business lending and earning a commission through our databases of consumers. So you talk about a wide range of products that really fits the bill with Youngevity and we market those products in various ways. So exciting opportunity here.
WSA: And I think you may have covered this but is there anything else you feel that makes the company unique from some of the other players in the sector?
Dave Briskie: Well, yeah, I think what we’ve been talking about really is the stability to multiply along a large range of products. We’ve been starting to get the reputation as the kind of the Amazon of the direct selling space, which of course we’re not quite the Amazon just yet. But from a model standpoint we are that. We are the place that you can come and buy a host of different products and our sellers can earn an affiliation fee or commission from those sales across the platform. And I think what makes us unique is we also are partnering up with those distributors that we have out in the field.
And so we have our own internal teams that are doing outbound campaigns and outbound programs and suggesting tagalong products and leveraging search engine optimization through e-commerce portals. And all of this ability to market a number of different products, which I don’t believe many companies are in a position to do because they just don’t have the wide product range that we have.
WSA: Right. And so what are the key goals that you are hoping to accomplish over the course of the next six to twelve months?
Dave Briskie: Really for us the story is our international expansion. That is a driver we have been working on. We’ve been working on that for the last three years to put us in a position to really drive growth. If you look at various companies that are in this space that have scaled and I’m talking about companies that are north of 500 million and into the billions what you’ll notice very quickly is a large percentage of their sales comes from the global marketplace. In fact, typically 60 to 70% are outside of the US. So the most challenging market is right here at home in the US. So we have been working very, very hard to put those pieces in place. And so I think the last time we spoke we had opened up in Russia and our office in Moscow, which took us into Eastern Europe. We already were established in Australia and New Zealand. We’re in Canada. We opened up very effectively since we last spoke our office in Guadalajara. In fact Mexico now is our fastest growing global market. And the most exciting market really is Asia.
And so in Asia now we have offices in eight countries, largely through another acquisition we did of a company called Bellavita. And that acquisition really expanded our Asian footprint and when you talk about the potential for growth that’s where that really comes from. So we’re looking over the next six to twelve months for the global footprint to have a much more significant contribution to revenue. It had been running only about 9% of our revenue and our goal is in that 60 to 70% of revenue over let’s say the next five years. So in the six to twelve month category we would like to see our global revenue run between 15 and 20%.
WSA: And perhaps you can talk a little bit about your background and experience Dave, and go over some of the key team players for some of our listeners that might have not caught our last interview?
Dave Briskie: Sure, you know, I was the CEO prior to getting involved in the coffee business for a company called Drew Pearson Marketing. Drew is a former Dallas Cowboy. I met Drew when their company had about four people in it. And we grew that business as really one of the largest licensed companies and when I mean licenses, we had licenses with companies like Walt Disney Company, Warner Bros, Ford, Chevy, BMW and then all of the major sports league, the NFL, Major League Baseball, National Hockey League, and so forth. And we became a very significant player in that place and ultimately grew that company from four people to 4,000 people over 19 years.
And we took it public on the Hong Kong Exchange as an exit strategy with a tri-party merger from our company here in the US–from another company that we wholly owned called Drew Pearson Europe–with our factory that we built in Shenzhen, China, which today is still the largest headwear factory in the world and even makes New Era’s baseball cap. So it was a really big run for us so I’ve got experience in growing companies globally and I’m really looking to leverage that experience.
When you look at the rest of the team I think that really is the story. The last 18 months since I became President, I‘ve been about building the team. And the team really I want a team on the field that has done it before.
Probably the first one I’d like to note is Loren Castronovo, who is our CMO, our Chief Marketing Officer who has done brand building at companies like Estee Lauder and Chanel. She was instrumental in the growth of Mary Kay’s operation as well. She was there growing Creative Memories to $400 million in revenue in our space.
So she certainly has worked in those billion dollar categories. Since her start with Youngevity, she has been about positioning Youngevity’s brands to grow globally. And so there is an entire rebranding strategy that has been undertaken by her or led by her that’s going to all be launched and released at our annual convention coming up this August. And it’s really a transformation of Youngevity as a brand story and having someone with her caliber and her experience on board really makes us a better company.
And the people that are drawn to be a part of her team are all new and have all done things at a very large level.
We’ve also brought in Scott Salik, our VP of Global Content. Scott was instrumental in driving Beach Bodies’ look in terms of video production. When you’re in the e-commerce space it’s all about how you look and video really is the driver. And so here is a guy that’s driven video from a large scale around the world upwards of eight, $900 million revenue companies. So he is driving that piece of the business.
And of course you can’t be in e-commerce without solid analytics. And so we were able to bring in Scott Bell as a leader of VP of Analytics. And Scott was with a little company called Herbalife from 500 million to 5 billion and literally created the analytics category for the direct selling space. So he is on board on our executive team and a host of others.
The gentlemen that’s leading our services vertical is David Rutz who has grown some very significant companies as well.
And our VP of Field Relations, Alex Theis has been in this industry for 25 years and worked for some very large companies.
So when you really look at our team and where we’re going and the types of businesses they work with and how large of a scale they’ve worked within, to me that gives us the promise to be able to deliver the valuation and the revenue that we intend to deliver here at Youngevity. It’s really about this team that’s done it before.
WSA: Well good and so as far as investors and the financial community–as you’ve recently up-listed to NASDAQ–do you think that your company story better resonates with them and what are some of the drivers that you want them to still better understand about you guys?
Dave Briskie: Well, we just uplisted so it’s pretty new to be up on the NASDAQ. The way we did it is pretty different right, I mean, we did not use an investment banker to make this happen, we kind of did it on our own. And now that we’re on the NASDAQ we’re entertaining some very interesting banks if you will, investment bankers that you’d be very familiar with. So being on the NASDAQ gives us that credibility piece going through the deep dive that NASDAQ puts you through and coming out the other side, having your Board approved, and having your company dug into so deeply to me is the first step. It gives investors confidence and to be trading on the NASDAQ and the conversations I’m having now with institutions and larger family offices that really can now invest in our stock and the questions that they ask, it’s such a refreshing time for the company to be out there and tell our story.
They understand omni-direct, they understand this multiple vertical income strategy. They love that we have various degrees of revenue streams coming from different sources. They love the acquisition of the coffee business. And you know, I’ve had several of them say that they felt like our valuation could probably be supported just on what’s going on in coffee alone. And obviously they’re very keen on global, so we got a more sophisticated audience that we’re talking to. And they understand what we put together. On the global platform they’re getting the coffee space really well they love e-commerce. And so these conversations are far more intriguing, they’re with investors that I believe understand what we’re doing and many of them believing in what we’re doing and then excited about investing in a company that’s really trailblazing the integration of several large scale revenue opportunities.
So it’s been terrific. I’ve got a road show I’ll be doing the end of July and the lineup is exciting. And then finally, in front of folks, that I believe can do something with this investment and are excited about it. And it’s great to be on the NASDAQ, it was part of a five-year plan and it’s great to be here now.
WSA: Right. So once again joining us today is Dave Briskie, the President, CFO for Youngevity International, which trades on NASDAQ, ticker symbol YGYI, currently trading at $4.75 a share and market cap is at about 80 million. Before we conclude here Dave to recap some of your key points, why do you believe investors should consider the company as a good investment opportunity today?
Dave Briskie: I think those that have watched us over the last five years understand we ran a marathon to get to where we are today and that is really at the starting line to run the race for the investment community. And they understand what we build from a global platform that’s big, that drives shareholder value to actually now be in a position to take our products to various markets and have the offices set up, have the people in the offices ready to go, and to have good solid management around the globe ready to drive what will be the largest driver of the company for the next five or 10 years, which is global growth.
Understanding how we position the coffee business, we’ve watched consolidation in the coffee business. The big guys have gotten bigger, the small guys are almost gone and so there are not a lot of companies that are positioned like we are in the coffee space, that are literally “field to cup,” that literally own their own plantations, that own their own processing, that can do everything there is in coffee, from packaging to grinding to marketing green coffee and that it’s really a well positioned company for growth. And you know, I think we’ve done it well. We’ve created virtually no shareholder dilution over the last five years to put us in this position that we are today. So I think obviously the best years of Youngevity are in its future.
WSA: Well, we certainly look forward to continue to track the company’s growth and report on your upcoming progress. And we’d like to thank you for taking the time to join us today Dave and update our audience on Youngevity, it’s always good to have you on.
Dave Briskie: Thanks for having me on the program, Juan.
