Reliv International Reports Third-Quarter Financial Results for 2017
November 10 2017 - 7:00AM
Reliv International, Inc. (NASDAQ:RELV), a maker of nutritional
supplements that promote optimal health, today reported its
financial results for the third quarter of 2017.
Reliv reported net sales of $9.1 million for the third quarter
of 2017 compared with net sales of $10.8 million in the third
quarter of 2016. Net sales in the United States decreased to
$7.1 million in the third quarter of 2017 compared to $8.6 million
in the prior-year quarter. Net sales in Reliv’s foreign markets
decreased 9.8 percent in the third quarter of 2017 compared with
the prior-year third quarter. An increase of 32.8 percent in
net sales in Asia in the third quarter of 2017 was offset by a
decline of 23.6 percent in net sales in Europe, along with
decreases in other regions.
Reliv reported a net loss for the third quarter of 2017 of
$319,000 (loss per diluted share of $0.17) compared to net income
of $134,000 (income per diluted share of $0.07) in the third
quarter of 2016. The loss from operations for the third
quarter of 2017 was $334,000 compared to income from operations of
$34,000 in the same period in 2016. The impact to operations
from the decrease in third quarter 2017 net sales was partially
offset by a reduction in selling, general and administrative
(“SGA”) expenses. SGA expenses decreased to $4.3 million in
the third quarter of 2017 compared to $4.7 million in the third
quarter of 2016.
Net sales for the first nine months of 2017 were $31.9 million,
which represents an 8.7 percent decrease from the same period in
2016. Net sales in the United States decreased by 8.8 percent
and net sales in Reliv’s foreign markets decreased by 8.1 percent
in the first nine months of 2017 compared with the same period of
last year. When the impact of foreign currency
fluctuation is removed, net sales in Reliv’s foreign markets
decreased by 2.6 percent during the first nine months of 2017 as
the result of a stronger U.S. dollar on a year-to-date basis in
2017 in most of our markets.
Reliv reported a net loss of $315,000, or $0.17 per diluted
share in the first nine months of 2017, compared to a net loss of
$897,000 or $0.49 per diluted share in the same period of 2016.
The loss from operations for the first nine months of 2017
was $325,000 compared to a loss from operations of $1.1 million in
the same period in 2016. SGA expenses were reduced to $13.8
million for the first nine months of 2017 compared to $15.9 million
in the same period in 2016. The reduction in 2017 SGA
expenses is the result of the continuing impact of a cost reduction
program that took place in mid-2016.
Reliv continues to build on the “Fit for Life” theme of our
International Distributor Conference held in August. In
order to fuel the momentum that has generated with its Fit3TM
program, Reliv has launched a 90-day Fit for Life Challenge from
October through December in which participants have a chance to win
a trip for two to St. Louis for a Fit3 weekend retreat.
In addition to the product focus on Fit3, Reliv continues to
improve its processes and tools related to building the customer
and distributor ranks. “We are simplifying our every
approach and process to speed up activity in the field. Reliv
is focused on three things: Recruiting, Onboarding and
Retention,” said Ryan Montgomery, President. “To grow, we
must improve our customer and distributor enrollment totals.
From now through December, recruiting new customers and business
builders is the number one focus and we’ve added a trip incentive
for those who reach preset recruiting and volume goals.
Upon enrollment, it is critical the new recruit is onboarded in an
effective manner to give them the knowledge, tools and training
necessary to be successful as a new distributor. From there,
we strive to be leaders in customer and distributor retention,
which derives from individual results with our products and
business opportunity.”
In order to support activity on the local level, corporate and
distributor leaders are conducting numerous special events
throughout the U.S. during the trip challenge. To help meet
the trip qualifications, the company has introduced free ground
shipping for distributors attaining the Quick Start and Master
Affiliate levels of business for a limited time.
Reliv had cash and cash equivalents of $2.5 million as of
September 30, 2017, compared to $3.6 million as of December 31,
2016. Net cash used in operating activities was $593,000 in
the first nine months of 2017.
As of September 30, 2017, Reliv had 34,490 distributors and
preferred customers – a decrease of 14.7 percent from September 30,
2016 – of which 3,810 are Master Affiliate level and above.
The number of Master Affiliates decreased by 28.4 percent
compared to the year-ago total. Master Affiliate is the level
at which distributors are eligible to earn generation royalties.
The decrease in the number of Master Affiliates in the U.S. and
Canada was due in part to the increase in the business volume
requirement for distributors to reach the Master Affiliate
level. This change was effective February 1, 2016 as part of
our revised compensation plan strategy and affected Master
Affiliate requalifications during the first quarter of 2017.
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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September 30 |
December 31 |
|
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|
|
2017 |
|
|
2016 |
|
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|
|
|
(Unaudited) |
|
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Assets |
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|
|
|
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Current Assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
2,465,411 |
|
$ |
3,606,817 |
|
|
|
|
Accounts
receivable, less allowances of |
|
|
|
|
|
$25,800
in 2017 and $26,700 in 2016 |
|
33,705 |
|
|
126,113 |
|
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|
|
Accounts
and note due from employees and distributors |
|
138,684 |
|
|
139,931 |
|
|
|
|
Inventories |
|
4,877,594 |
|
|
4,487,830 |
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|
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Other
current assets |
|
548,705 |
|
|
571,377 |
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Total
current assets |
|
8,064,099 |
|
|
8,932,068 |
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Other assets |
|
7,592,582 |
|
|
7,679,357 |
|
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|
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Net property, plant and
equipment |
|
5,797,867 |
|
|
5,854,302 |
|
|
|
|
|
|
|
|
|
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Total Assets |
$ |
21,454,548 |
|
$ |
22,465,727 |
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Liabilities and
Stockholders' Equity |
|
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Accounts payable and
accrued expenses |
$ |
3,636,669 |
|
$ |
4,234,305 |
|
|
|
|
Current portion of
long-term debt |
|
2,626,661 |
|
|
389,096 |
|
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|
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Long-term debt -
noncurrent |
|
- |
|
|
2,518,341 |
|
|
|
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Other noncurrent
liabilities |
|
432,389 |
|
|
409,813 |
|
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|
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Stockholders'
equity |
|
14,758,829 |
|
|
14,914,172 |
|
|
|
|
|
|
|
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|
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Total Liabilities and
Stockholders' Equity |
$ |
21,454,548 |
|
$ |
22,465,727 |
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Consolidated
Statements of Operations |
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|
Three months ended September 30 |
|
Nine months ended September 30 |
|
|
2017 |
|
|
2016 |
|
|
|
2017 |
|
|
2016 |
|
|
(Unaudited) |
(Unaudited) |
|
(Unaudited) |
(Unaudited) |
Product sales |
$ |
8,385,999 |
|
$ |
9,972,547 |
|
|
$ |
29,479,924 |
|
$ |
32,181,585 |
|
Handling & freight
income |
|
683,324 |
|
|
812,868 |
|
|
|
2,373,809 |
|
|
2,693,602 |
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Net Sales |
|
9,069,323 |
|
|
10,785,415 |
|
|
|
31,853,733 |
|
|
34,875,187 |
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Costs and
expenses: |
|
|
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|
|
Cost of products
sold |
|
1,949,670 |
|
|
2,214,633 |
|
|
|
7,113,647 |
|
|
7,729,508 |
|
Distributor
royalties and commissions |
|
3,199,596 |
|
|
3,799,791 |
|
|
|
11,252,922 |
|
|
12,345,171 |
|
Selling, general
and administrative |
|
4,253,675 |
|
|
4,737,305 |
|
|
|
13,811,814 |
|
|
15,887,901 |
|
|
|
|
|
|
|
Total Costs and
Expenses |
|
9,402,941 |
|
|
10,751,729 |
|
|
|
32,178,383 |
|
|
35,962,580 |
|
|
|
|
|
|
|
Income (loss) from
operations |
|
(333,618 |
) |
|
33,686 |
|
|
|
(324,650 |
) |
|
(1,087,393 |
) |
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
income |
|
25,277 |
|
|
26,199 |
|
|
|
76,630 |
|
|
80,689 |
|
Interest
expense |
|
(27,183 |
) |
|
(28,982 |
) |
|
|
(79,472 |
) |
|
(82,161 |
) |
Other
income (expense) |
|
(4,579 |
) |
|
41,575 |
|
|
|
40,517 |
|
|
226,519 |
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
(340,103 |
) |
|
72,478 |
|
|
|
(286,975 |
) |
|
(862,346 |
) |
Provision (benefit) for
income taxes |
|
(21,000 |
) |
|
(62,000 |
) |
|
|
28,000 |
|
|
35,000 |
|
|
|
|
|
|
|
Net income (loss) |
($ |
319,103 |
) |
$ |
134,478 |
|
|
($ |
314,975 |
) |
($ |
897,346 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - Basic |
($ |
0.17 |
) |
$ |
0.07 |
|
|
($ |
0.17 |
) |
($ |
0.49 |
) |
Weighted average
shares |
|
1,845,000 |
|
|
1,846,000 |
|
|
|
1,845,000 |
|
|
1,846,000 |
|
|
|
|
|
|
|
Earnings (loss) per
common share - Diluted |
($ |
0.17 |
) |
$ |
0.07 |
|
|
($ |
0.17 |
) |
($ |
0.49 |
) |
Weighted average
shares |
|
1,845,000 |
|
|
1,846,000 |
|
|
|
1,845,000 |
|
|
1,846,000 |
|
|
|
|
|
|
|
|
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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 September 30, |
|
Change from |
|
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2017 |
|
|
|
2016 |
|
|
prior year |
|
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
|
|
United States |
$ |
7,082 |
78.1 |
% |
|
$ |
8,581 |
79.6 |
% |
|
$ |
(1,499 |
) |
-17.5 |
% |
|
Australia/New
Zealand |
|
224 |
2.5 |
% |
|
|
242 |
2.2 |
% |
|
|
(18 |
) |
-7.4 |
% |
|
Canada |
|
200 |
2.2 |
% |
|
|
250 |
2.3 |
% |
|
|
(50 |
) |
-20.0 |
% |
|
Mexico |
|
105 |
1.2 |
% |
|
|
119 |
1.1 |
% |
|
|
(14 |
) |
-11.8 |
% |
|
Europe |
|
891 |
9.8 |
% |
|
|
1,166 |
10.8 |
% |
|
|
(275 |
) |
-23.6 |
% |
|
Asia |
|
567 |
6.2 |
% |
|
|
427 |
4.0 |
% |
|
|
140 |
|
32.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
9,069 |
100.0 |
% |
|
$ |
10,785 |
100.0 |
% |
|
$ |
(1,716 |
) |
-15.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net sales by Market |
|
|
|
|
|
|
|
|
|
(in thousands) |
Nine months ended September 30, |
|
Change from |
|
|
|
2017 |
|
|
|
2016 |
|
|
prior year |
|
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
United States |
$ |
24,791 |
77.8 |
% |
|
$ |
27,191 |
78.0 |
% |
|
$ |
(2,400 |
) |
-8.8 |
% |
|
Australia/New
Zealand |
|
711 |
2.2 |
% |
|
|
825 |
2.4 |
% |
|
|
(114 |
) |
-13.8 |
% |
|
Canada |
|
681 |
2.2 |
% |
|
|
799 |
2.3 |
% |
|
|
(118 |
) |
-14.8 |
% |
|
Mexico |
|
352 |
1.1 |
% |
|
|
419 |
1.2 |
% |
|
|
(67 |
) |
-16.0 |
% |
|
Europe |
|
3,399 |
10.7 |
% |
|
|
4,344 |
12.4 |
% |
|
|
(945 |
) |
-21.8 |
% |
|
Asia |
|
1,920 |
6.0 |
% |
|
|
1,297 |
3.7 |
% |
|
|
623 |
|
48.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
31,854 |
100.0 |
% |
|
$ |
34,875 |
100.0 |
% |
|
$ |
(3,021 |
) |
-8.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth, as of September 30, 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 5,010 and 4,720 of the Active Distributor count as of
September 30, 2017 and 2016, respectively. |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Distributors/Preferred Customers and Master
Affiliates and Above by Market |
|
|
|
As of 9/30/2017 |
|
As of 9/30/2016 |
|
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 |
|
23,860 |
2,750 |
|
|
|
28,700 |
4,110 |
|
|
|
-16.9 |
% |
-33.1 |
% |
|
Australia/New
Zealand |
|
1,180 |
110 |
|
|
|
1,580 |
130 |
|
|
|
-25.3 |
% |
-15.4 |
% |
|
Canada |
|
710 |
80 |
|
|
|
890 |
140 |
|
|
|
-20.2 |
% |
-42.9 |
% |
|
Mexico |
|
730 |
60 |
|
|
|
1,010 |
90 |
|
|
|
-27.7 |
% |
-33.3 |
% |
|
Europe |
|
3,940 |
440 |
|
|
|
5,230 |
520 |
|
|
|
-24.7 |
% |
-15.4 |
% |
|
Asia |
|
4,070 |
370 |
|
|
|
3,040 |
330 |
|
|
|
33.9 |
% |
12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
|
34,490 |
3,810 |
|
|
|
40,450 |
5,320 |
|
|
|
-14.7 |
% |
-28.4 |
% |
|
|
For more information, contact:
Steve
Albright
Chief Financial
Officer
(636) 733-1305
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