Reliv International, Inc. (NASDAQ:RELV), a maker of nutritional
supplements that promote optimal health, today reported its
financial results for the fourth quarter and full year of 2017.
Fourth-Quarter Results
Reliv reported net sales of $9.9 million for the fourth quarter
of 2017, compared with net sales of $10.6 million for the fourth
quarter of 2016. U.S. net sales decreased by 8.5 percent for the
quarter compared with the same quarter in 2016. Net sales
outside of the United States increased by 0.6 percent in the fourth
quarter of 2017 compared to the prior-year quarter.
Reliv reported a net loss of $382,000, or loss of $0.21 per
diluted share, for the fourth quarter of 2017 compared with a net
income of $272,000, or earnings of $0.15 per diluted share, for the
fourth quarter of 2016. Income from operations for the
fourth quarter of 2017 was $141,000 compared to $275,000 in the
same period in 2016. The impact to operations from the
decrease in fourth quarter 2017 net sales was partially offset by a
reduction in selling, general and administrative (“SGA”)
expenses. SGA expenses decreased to $4.1 million in the
fourth quarter of 2017 compared to $4.3 million in the fourth
quarter of 2016. Income tax expense was $517,000 for the
fourth quarter of 2017 primarily the result of non-cash adjustments
to our deferred tax assets, including a $509,000 valuation
allowance recorded against the value of net operating loss
carryforwards in our European subsidiary.
Full-Year Results
Reliv reported net sales of $41.8 million for 2017 compared with
net sales of $45.5 million in 2016. U.S. net sales decreased to
$32.5 million from $35.6 million, a decline of 8.8 percent.
Net sales in Reliv’s foreign markets for 2017 decreased 6.1
percent compared with net sales for 2016, with 3.4 percent of the
decline due to the impact of foreign currency fluctuation as the
result of a stronger U.S. dollar in certain markets.
The decline in net sales in Europe represented a
significant portion of the decrease in foreign sales. Net
sales in Europe declined by 16.6 percent in 2017 compared to the
prior year, with 4.3 percent of the decline due to the impact of
foreign currency fluctuation. Sales in Asia increased by 39.7
percent in 2017 compared to the prior year.
The net loss for 2017 was $697,000 (loss per diluted share of
$0.38) compared to a net loss of $625,000 (loss per diluted share
of $0.34) in 2016. The loss from operations for 2017 was
$183,000 compared to a loss from operations of $812,000 in
2016. SGA expenses were $17.9 million versus $20.2 million in
2016, as the continuing effect of a cost reduction program
implemented in mid-2016 helped offset the impact of the sales
decline. Income tax expense for 2017 was $545,000 compared to
$9,000 in 2016, primarily the result of the deferred tax
adjustments discussed in the fourth-quarter results.
“While our results from operations improved in 2017 when
compared to 2016, we remain focused on growing sales through new
product and business development by providing additional tools and
support with programs to attract new distributors and customers,”
said Ryan A. Montgomery, President.
“In mid-April, we are introducing an additional whey-based
version of our flagship NOW product. This new version is in
response to consumer trends and offers an alternative to those that
prefer a whey protein based product,” commented Montgomery.
Other distributor/customer recruitment programs include
continued free ground shipping for new distributors reaching the
Quick Start and Master Affiliate business levels, an additional 10
percent discount on autoship orders placed by Preferred Customers,
and a free product credit to distributors for enrolling three new
Preferred Customers with a minimum order amount.
Additionally, a new mobile app is in development for launch in
April that will allow distributors to perform most of their key
sales and recruiting functions via a smartphone or tablet,
including enrollment of new distributors and customers, placing
orders and tracking downline organizational activity.
“Lastly, our Fit3TM program continues to grow in
popularity throughout the Reliv distributor base. It’s not
just about the Fit3 products, it’s also a fitness and lifestyle
transformation,” stated Montgomery.
Reliv had cash and cash equivalents of $3.3 million as of
December 31, 2017, compared to $3.6 million as of December 31,
2016. Net cash used in operating activities was $157,000 in
2017 compared to $1.5 million of cash generated from operations in
the prior-year period.
As of December 31, 2017, Reliv had 33,620 Distributors and
Preferred Customers – a decrease of 12.6 percent from December 31,
2016 – of which 3,910 are Master Affiliate level and above.
The number of Master Affiliates decreased by 26.5 percent compared
to the year-ago total. Master Affiliate is the level at which
Distributors are eligible to earn generation royalties. With
the formal introduction of the Preferred Customer program in the
United States and Canada in February 2016, Reliv now includes
Preferred Customers as part of Active Distributor statistics.
About Reliv International, Inc.
Reliv International, based in Chesterfield, MO, produces
nutritional supplements that promote optimal nutrition. Reliv
supplements address essential nutrition, fitness and weight
loss and targeted solutions. 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 Instagram.
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.
--FINANCIAL HIGHLIGHTS FOLLOW
–
Reliv
International, Inc. and Subsidiaries |
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Condensed
Consolidated Balance Sheets |
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December 31 |
|
|
December 31 |
|
|
|
|
|
|
2017 |
|
|
2016 |
|
|
|
|
|
(Unaudited) |
|
(Audited) |
|
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|
Assets |
|
|
|
|
|
Current Assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
3,272,788 |
|
$ |
3,606,817 |
|
|
|
|
Accounts
receivable, less allowances of |
|
|
|
|
|
$26,300
in 2017 and $26,700 in 2016 |
|
29,760 |
|
|
126,113 |
|
|
|
|
Accounts
and note due from employees and distributors |
|
138,497 |
|
|
139,931 |
|
|
|
|
Inventories |
|
4,555,485 |
|
|
4,487,830 |
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Other
current assets |
|
399,154 |
|
|
571,377 |
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|
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|
|
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Total
current assets |
|
8,395,684 |
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|
8,932,068 |
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|
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|
|
|
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Other assets |
|
7,003,073 |
|
|
7,679,357 |
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Net property, plant and
equipment |
|
5,677,239 |
|
|
5,854,302 |
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|
|
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|
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Total Assets |
$ |
21,075,996 |
|
$ |
22,465,727 |
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Liabilities and
Stockholders' Equity |
|
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Accounts payable and
accrued expenses |
$ |
3,212,634 |
|
$ |
4,234,305 |
|
|
|
|
Current portion of
long-term debt |
|
3,045,421 |
|
|
389,096 |
|
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|
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Long-term debt -
noncurrent |
|
- |
|
|
2,518,341 |
|
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|
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Other noncurrent
liabilities |
|
453,354 |
|
|
409,813 |
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|
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Stockholders'
equity |
|
14,364,587 |
|
|
14,914,172 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
$ |
21,075,996 |
|
$ |
22,465,727 |
|
|
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|
|
|
|
|
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|
Consolidated
Statements of Operations |
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|
Three months ended December 31 |
|
|
Year ended December 31 |
|
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
(Unaudited) |
|
(Audited) |
|
Product sales |
$ |
9,271,433 |
|
$ |
9,823,376 |
|
|
$ |
38,751,357 |
|
$ |
42,004,961 |
|
Handling & freight
income |
|
663,616 |
|
|
814,273 |
|
|
|
3,037,425 |
|
|
3,507,875 |
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|
|
|
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Net Sales |
|
9,935,049 |
|
|
10,637,649 |
|
|
|
41,788,782 |
|
|
45,512,836 |
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|
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|
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Costs and
expenses: |
|
|
|
|
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Cost of
products sold |
|
2,287,759 |
|
|
2,294,513 |
|
|
|
9,401,406 |
|
|
10,024,021 |
|
Distributor royalties and commissions |
|
3,432,631 |
|
|
3,749,861 |
|
|
|
14,685,553 |
|
|
16,095,032 |
|
Selling,
general and administrative |
|
4,073,412 |
|
|
4,317,861 |
|
|
|
17,885,226 |
|
|
20,205,762 |
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|
|
|
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Total Costs and
Expenses |
|
9,793,802 |
|
|
10,362,235 |
|
|
|
41,972,185 |
|
|
46,324,815 |
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|
|
|
|
|
|
Income (loss) from
operations |
|
141,247 |
|
|
275,414 |
|
|
|
(183,403 |
) |
|
(811,979 |
) |
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
income |
|
25,271 |
|
|
26,317 |
|
|
|
101,901 |
|
|
107,006 |
|
Interest
expense |
|
(29,782 |
) |
|
(24,521 |
) |
|
|
(109,254 |
) |
|
(106,682 |
) |
Other
income (expense) |
|
(1,673 |
) |
|
(30,919 |
) |
|
|
38,844 |
|
|
195,600 |
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
135,063 |
|
|
246,291 |
|
|
|
(151,912 |
) |
|
(616,055 |
) |
Provision (benefit) for
income taxes |
|
517,000 |
|
|
(26,000 |
) |
|
|
545,000 |
|
|
9,000 |
|
|
|
|
|
|
|
Net income (loss) |
$ |
(381,937 |
) |
$ |
272,291 |
|
|
$ |
(696,912 |
) |
$ |
(625,055 |
) |
|
|
|
|
|
|
|
|
|
|
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|
Earnings (loss) per
common share - Basic |
$ |
(0.21 |
) |
$ |
0.15 |
|
|
$ |
(0.38 |
) |
$ |
(0.34 |
) |
Weighted average
shares |
|
1,845,000 |
|
|
1,845,000 |
|
|
|
1,845,000 |
|
|
1,845,000 |
|
|
|
|
|
|
|
Earnings (loss) per
common share - Diluted |
$ |
(0.21 |
) |
$ |
0.15 |
|
|
$ |
(0.38 |
) |
$ |
(0.34 |
) |
Weighted average
shares |
|
1,845,000 |
|
|
1,845,000 |
|
|
|
1,845,000 |
|
|
1,845,000 |
|
|
|
|
|
|
|
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|
Reliv
International, Inc. and Subsidiaries |
|
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Net sales by Market |
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|
(in thousands) |
Three months ended December 31, |
|
Change from |
|
|
2017 |
|
2016 |
|
prior year |
|
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
|
|
|
|
|
|
|
|
|
United States |
$ |
7,683 |
77.3 |
% |
|
$ |
8,400 |
79.0 |
% |
|
$ |
(717 |
) |
-8.5 |
% |
|
Australia/New
Zealand |
|
212 |
2.1 |
% |
|
|
254 |
2.4 |
% |
|
|
(42 |
) |
-16.5 |
% |
|
Canada |
|
234 |
2.4 |
% |
|
|
266 |
2.5 |
% |
|
|
(32 |
) |
-12.0 |
% |
|
Mexico |
|
94 |
0.9 |
% |
|
|
111 |
1.0 |
% |
|
|
(17 |
) |
-15.3 |
% |
|
Europe |
|
1,179 |
11.9 |
% |
|
|
1,147 |
10.8 |
% |
|
|
32 |
|
2.8 |
% |
|
Asia |
|
533 |
5.4 |
% |
|
|
460 |
4.3 |
% |
|
|
73 |
|
15.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
9,935 |
100.0 |
% |
|
$ |
10,638 |
100.0 |
% |
|
$ |
(703 |
) |
-6.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net sales by Market |
|
|
|
|
|
|
|
|
|
(in thousands) |
Year ended December 31, |
|
Change from |
|
|
2017 |
|
2016 |
|
prior year |
|
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
|
|
|
|
|
|
|
|
|
United States |
$ |
32,475 |
77.7 |
% |
|
$ |
35,592 |
78.2 |
% |
|
$ |
(3,117 |
) |
-8.8 |
% |
|
Australia/New
Zealand |
|
923 |
2.2 |
% |
|
|
1,079 |
2.4 |
% |
|
|
(156 |
) |
-14.5 |
% |
|
Canada |
|
915 |
2.2 |
% |
|
|
1,065 |
2.3 |
% |
|
|
(150 |
) |
-14.1 |
% |
|
Mexico |
|
445 |
1.0 |
% |
|
|
530 |
1.2 |
% |
|
|
(85 |
) |
-16.0 |
% |
|
Europe |
|
4,578 |
11.0 |
% |
|
|
5,491 |
12.0 |
% |
|
|
(913 |
) |
-16.6 |
% |
|
Asia |
|
2,453 |
5.9 |
% |
|
|
1,756 |
3.9 |
% |
|
|
697 |
|
39.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
41,789 |
100.0 |
% |
|
$ |
45,513 |
100.0 |
% |
|
$ |
(3,724 |
) |
-8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
The following table sets forth, as of December 31, 2017 and
2016, the number of our Active Distributors/Preferred Customers 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 Affiliate groups in their downline organization. In
February 2016, we introduced a formal Preferred Customer program in
the United States and Canada. As a result, we are including
Preferred Customers as part of our Active Distributor count.
Preferred Customer programs were previously in place in Europe and
other foreign markets. Preferred Customers represent
approximately 4,990 and 5,050 of the Active Distributor count as of
December 31, 2017 and 2016, respectively. |
|
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|
|
|
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|
|
|
|
|
|
|
|
|
Active Distributors/Preferred Customers and Master
Affiliates and Above by Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of 12/31/2017 |
|
As of 12/31/2016 |
|
Change in % |
|
|
Active Distributors and Preferred
Customers |
Master Affiliates and Above |
|
Active Distributors and Preferred
Customers |
Master Affiliates and Above |
|
Active Distributors and Preferred
Customers |
Master Affiliates and Above |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States |
|
23,050 |
2,820 |
|
|
|
27,220 |
4,080 |
|
|
|
-15.3 |
% |
-30.9 |
% |
|
Australia/New
Zealand |
|
1,100 |
110 |
|
|
|
1,530 |
130 |
|
|
|
-28.1 |
% |
-15.4 |
% |
|
Canada |
|
660 |
90 |
|
|
|
840 |
150 |
|
|
|
-21.4 |
% |
-40.0 |
% |
|
Mexico |
|
710 |
60 |
|
|
|
940 |
90 |
|
|
|
-24.5 |
% |
-33.3 |
% |
|
Europe |
|
3,800 |
450 |
|
|
|
4,860 |
530 |
|
|
|
-21.8 |
% |
-15.1 |
% |
|
Asia |
|
4,300 |
380 |
|
|
|
3,090 |
340 |
|
|
|
39.2 |
% |
11.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
|
33,620 |
3,910 |
|
|
|
38,480 |
5,320 |
|
|
|
-12.6 |
% |
-26.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
For more information, contact:
Steve
Albright
Chief Financial
Officer
(636) 733-1305
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