SOURCE: Reliv International, Inc.

Reliv International: The Nutritional Epigenetics Company

November 13, 2015 07:00 ET

Reliv International Reports Third-Quarter Financial Results

CHESTERFIELD, MO--(Marketwired - November 13, 2015) - Reliv International, Inc. (NASDAQ: RELV), a maker of nutritional supplements that promote optimal health, today reported its financial results for the third quarter of 2015.

Net sales for the quarter were $12.2 million, a 14.8 percent decrease from the third quarter last year. U.S. net sales totaled $9.8 million, a decrease of 10.8 percent, compared to third-quarter 2014 net sales. Net sales outside of the United States declined 27.7 percent in the third quarter of 2015 compared to the prior-year quarter, with 9.3 percent of that decline due to the impact of foreign currency fluctuation as the result of a stronger U.S. dollar.

The net loss for the third quarter of 2015 was $289,000 or $0.02 per diluted share, compared to net income of $166,000 or $0.01 per diluted share in the third quarter of 2014. Loss from operations for the third quarter of 2015 was $377,000 compared to income of $228,000 for the same quarter of 2014.

On November 2, Reliv announced major updates to its distributor compensation plan that will go into effect February 1, 2016. The updated compensation plan will adjust profit level qualifications for distributors and introduce a new preferred customer program.

"Clearly, the results of the third quarter are not satisfactory. To achieve improved results, we initiated a strategic plan to further engage and support our distributor force," said Robert L. Montgomery, Chairman and Chief Executive Officer. "Our announcements on November 2 were a key initial step in our strategy for 2016 and beyond."

"We announced the updates three months before they go into effect in order to prepare and train our distributor field," Montgomery said. "This also allows distributors during this three-month period to take advantage of unique incentives resulting from the transition process."

"The new profit level qualifications simplify the compensation structure and provide a clearer, more achievable path to advancement," Montgomery said. "We know from past success that this approach works, and we anticipate a greater number of distributors achieving higher ranks within the plan and driving sales growth."

The preferred customer program will allow new customers to receive an automatic discount on all product orders without having to sign up as a distributor -- a first for Reliv. "The preferred customer program provides an entirely new entry point into Reliv," Montgomery said. "People interested in our nutritional solutions but reluctant to launch a Reliv distributorship now have added incentive to become customers. Similar programs within the direct sales industry have been met with great success, and we anticipate this program will lead to an increase in customer retail sales."

For the first nine months of 2015, worldwide net sales were $39.5 million, representing an 8.7 percent decrease from the same period in 2014. In the United States, net sales declined 5.0 percent compared with the first nine months of the prior year. Net sales outside of the United States decreased by 20.0 percent in the first nine months of 2015 compared with the first nine months last year.

Reliv reported a net loss of $1.0 million, or $0.08 per diluted share in the first nine months of 2015, compared to a net loss of $274,000 or $0.02 per diluted share in the same period of 2014.

On September 30, 2015, Reliv entered into a term loan with Enterprise Bank & Trust in the principal amount of $3.25 million and a revolving credit facility with available borrowing capacity of $3.5 million. Reliv used the proceeds of the term loan to pay off the outstanding balance of principal and accrued interest under its prior term loan and revolving credit facility with BMO Harris Bank N.A. "We are pleased to begin a banking relationship with Enterprise and look forward to a long partnership with them," said Montgomery. "This credit facility, coupled with our current cash reserves, gives us the capital needed for our strategic initiatives to grow Reliv in the coming years," he added.

Reliv had cash and cash equivalents of $3.2 million as of September 30, 2015. This amount compares to $5.0 million as of December 31, 2014 and $5.2 million at this date last year.

Reliv's total distributor count was 45,890 as of September 30, 2015 -- a decrease of 7.1 percent from the same date in 2014 -- of which 5,890 are Master Affiliate level and above. Master Affiliate is the level at which distributors are eligible to earn generation royalties.

About Reliv International, Inc.
Reliv International, based in Chesterfield, MO, produces nutritional supplements that promote optimal nutrition. Reliv supplements address essential nutrition, weight loss, athletic performance, digestive health, women's health, anti-aging and healthy energy. Reliv is the exclusive provider of LunaRich® products, which optimize levels of lunasin, a soy peptide that works at the epigenetic level to promote optimal health. The company sells its products through an international network marketing system of independent distributors in 15 countries. Learn more about Reliv at reliv.com, or on Facebook, Twitter or YouTube.

Statements made in this news release that are not historical facts are "forward-looking" statements (as defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties and are subject to change at any time. These forward-looking statements may include, but are not limited to, statements containing words such as "may," "should," "could," "would," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" or similar expressions. Factors that could cause actual results to differ are identified in the public filings made by Reliv with the Securities and Exchange Commission. More information on factors that could affect Reliv's business and financial results are included in its public filings made with the Securities and Exchange Commission, including its Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on the Company's web site, reliv.com.

 
Reliv International, Inc. and Subsidiaries            
             
Condensed Consolidated Balance Sheets            
 
   September 30   December 31          
   2015   2014          
   (Unaudited)              
Assets                     
Current Assets:                     
 Cash and cash equivalents  $3,158,965   $4,989,392            
 Accounts receivable, less allowances of $30,200 in 2015 and $26,300 in 2014   84,536    265,530            
 Accounts and note due from employees and distributors   132,786    121,208            
 Inventories   5,619,487    5,177,465            
 Other current assets   1,315,814    979,615            
                      
Total current assets   10,311,588    11,533,210            
                      
Other assets   5,466,291    5,462,855            
Intangible assets, net   2,723,179    2,925,775            
Net property, plant and equipment   6,574,752    6,925,970            
                      
Total Assets  $25,075,810   $26,847,810            
                      
Liabilities and Stockholders' Equity                     
                      
Accounts payable and accrued expenses  $4,486,860   $5,187,057            
Current portion of long-term debt   813,560    697,423            
Long-term debt - noncurrent   3,279,589    3,547,267            
Other noncurrent liabilities   377,825    418,785            
Stockholders' equity   16,117,976    16,997,278            
                      
Total Liabilities and Stockholders' Equity  $25,075,810   $26,847,810            
                      
                      
Consolidated Statements of Operations                 
   Three months ended September 30   Nine months ended September 30  
   2015   2014   2015   2014  
   (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)  
Product sales  $11,250,271   $13,206,275   $36,401,384   $39,867,425  
Handling & freight income   944,182    1,108,006    3,072,783    3,387,322  
                      
Net Sales   12,194,453    14,314,281    39,474,167    43,254,747  
                      
Costs and expenses:                     
 Cost of products sold   2,603,167    2,968,139    8,245,871    8,855,401  
 Distributor royalties and commissions   4,308,647    4,985,450    14,048,971    15,425,704  
 Selling, general and administrative   5,659,989    6,133,040    18,244,930    19,390,732  
                      
Total Costs and Expenses   12,571,803    14,086,629    40,539,772    43,671,837  
                      
Income (loss) from operations   (377,350 )  227,652    (1,065,605 )  (417,090 )
                      
Other income (expense):                     
Interest income   28,536    31,736    88,991    100,008  
Interest expense   (36,814 )  (26,054 )  (87,502 )  (75,689 )
Other income (expense)   (72,373 )  (60,372 )  (227,434 )  (53,983 )
                      
Income (loss) before income taxes   (458,001 )  172,962    (1,291,550 )  (446,754 )
Provision (benefit) from income taxes   (169,000 )  7,000    (273,000 )  (173,000 )
                      
Net income (loss)   ($289,001 ) $165,962    ($1,018,550 )  ($273,754 )
                      
                      
Earnings (loss) per common share - Basic   ($0.02 ) $0.01    ($0.08 )  ($0.02 )
Weighted average shares   12,919,000    12,666,000    12,853,000    12,666,000  
                      
Earnings (loss) per common share - Diluted   ($0.02 ) $0.01    ($0.08 )  ($0.02 )
Weighted average shares   12,919,000    12,750,000    12,853,000    12,666,000  
                      
                 
   
Reliv International, Inc. and Subsidiaries  
   
Net sales by Market                
(in thousands)                             
    Three months ended September 30,    Change From  
    2015    2014    Prior Year  
    Amount   % of Net Sales    Amount   % of Net Sales    Amount    %  
                                 
United States   $9,759   80.0 %  $10,946   76.5 %  $(1,187 )  -10.8 %
Australia/New Zealand    283   2.3 %   399   2.8 %   (116 )  -29.1 %
Canada    260   2.2 %   346   2.4 %   (86 )  -24.9 %
Mexico    136   1.1 %   192   1.3 %   (56 )  -29.2 %
Europe    1,304   10.7 %   1,956   13.7 %   (652 )  -33.3 %
Asia    452   3.7 %   475   3.3 %   (23 )  -4.8 %
                                 
Consolidated total   $12,194   100.0 %  $14,314   100.0 %  $(2,120 )  -14.8 %
                                 
                                 
Net sales by Market                                
(in thousands)                                
    Nine months ended September 30,    Change From  
    2015    2014    Prior Year
    Amount   % of Net Sales    Amount   % of Net Sales    Amount    %  
                                 
United States   $30,831   78.1 %  $32,453   75.0 %  $(1,622 )  -5.0 %
Australia/New Zealand    984   2.5 %   1,261   2.9 %   (277 )  -22.0 %
Canada    1,028   2.6 %   993   2.3 %   35    3.5 %
Mexico    567   1.4 %   607   1.4 %   (40 )  -6.6 %
Europe    4,651   11.8 %   6,529   15.1 %   (1,878 )  -28.8 %
Asia    1,413   3.6 %   1,412   3.3 %   1    0.1 %
                                 
Consolidated total   $39,474   100.0 %  $43,255   100.0 %  $(3,781 )  -8.7 %
                                 
                                 
The following table sets forth, as of September 30, 2015 and 2014, the number of our active distributors and Master Affiliates and above. The total number of active distributors includes Master Affiliates and above. We define an active distributor as one that enrolls as a distributor or renews his or her distributorship during the prior twelve months. Master Affiliates and above are distributors that have attained the highest level of discount and are eligible for royalties generated by Master Affiliates and above in their downline organization. The active distributor count for Europe includes our preferred customers in France. This program began in mid-2013 and the Europe active distributor count as of September 30, 2015 and 2014 includes France preferred customers of 3,106 and 2,822, respectively.  
  
Active Distributors and Master Affiliates and above by Market  
   
    As of 9/30/2015    As of 9/30/2014    Change in %  
    Total Active Distributors   Master Affiliates and Above    Total Active Distributors   Master Affiliates and Above    Total Active Distributors    Master Affiliates and Above  
                                 
United States    33,360   4,500     35,680   5,240     -6.5 %  -14.1 %
Australia/New Zealand    1,210   130     1,290   150     -6.2 %  -13.3 %
Canada    1,250   230     1,250   260     0.0 %  -11.5 %
Mexico    1,240   100     1,140   140     8.8 %  -28.6 %
Europe    6,390   630     8,060   920     -20.7 %  -31.5 %
Asia    2,440   300     2,000   320     22.0 %  -6.3 %
                                 
Consolidated total    45,890   5,890     49,420   7,030     -7.1 %  -16.2 %
                          
                          

Contact Information

  • For more information, contact:
    Steve Albright
    Chief Financial Officer
    (636) 733-1305