Reliv International Reports Second-Quarter Financial Results for 2018
August 10 2018 - 07:00AM
Reliv International, Inc. (NASDAQ:RELV), a maker of nutritional
supplements that promote optimal health, today reported its
financial results for the second quarter of 2018.
Reliv reported net sales of $8.5 million for the second quarter
of 2018 compared with net sales of $10.0 million in the second
quarter of 2017. Net sales in the United States decreased to $6.3
million in the second quarter of 2018, which represented a 15.0
percent decline in net sales when compared to the prior-year
quarter. Net sales in Reliv’s foreign markets decreased 17.0
percent in the second quarter of 2018 compared with the prior-year
quarter. Net sales in Europe and Asia decreased by 21.2
percent and 10.5 percent, respectively, in the second quarter of
2018, along with decreases in all other regions except for
Mexico.
Reliv reported a net loss for the second quarter of 2018 of
$978,000 (loss per diluted share of $0.53) compared to a net loss
of $520,000 (loss per diluted share of $0.28) in the second quarter
of 2017. The loss from operations for the second quarter of 2018
was $940,000 compared to a loss from operations of $508,000 in the
same period in 2017. Results from operations were primarily
impacted by the decline in net sales and gross margin, partially
offset by a reduction in selling, general and administrative
(“SGA”) expenses in the quarter. SGA expenses decreased to
$4.2 million in the second quarter of 2018 compared to $4.6 million
in the prior-year quarter.
Net sales for the first six months of 2018 were $18.5 million,
which represents a 19.0 percent decrease from the same period in
2017. Net sales in the United States decreased by 20.9
percent and net sales in Reliv’s foreign markets decreased by 12.2
percent in the first half of 2018 compared with the first half of
last year. Net sales in Reliv’s foreign markets decreased by
15.7 percent during the first half of 2018 when the impact of
foreign currency fluctuation is removed.
Reliv reported a net loss of $1.2 million, or $0.66 per diluted
share in the first six months of 2018, compared to net income of
$4,000 or $0.00 per diluted share in the same period of 2017.
Reliv had cash and cash equivalents of $2.8 million as of June
30, 2018, compared to $3.3 million as of December 31, 2017.
Net cash used in operating activities was $256,000 in the first six
months of 2018. In July 2018, Reliv elected to redeem the
cash surrender value of a company-owned life insurance policy with
a redemption value of $3.1 million and used the proceeds to pay in
full the remaining balance of its term loan and revolving loan
balances totaling $2.9 million. As a result, Reliv has no
outstanding bank debt at this time.
As of June 30, 2018, Reliv had 31,140 distributors and preferred
customers – a decrease of 11.3 percent from June 30, 2017 – of
which 3,200 are Master Affiliate level and above. The number
of Master Affiliates decreased by 14.2 percent compared to the
year-ago total. Master Affiliate is the level at which
distributors are eligible to earn generation royalties.
“We continue the work of revitalizing sales in the United States
and other markets around the Reliv world,” said Ryan A. Montgomery,
Chief Executive Officer. “The results of the second quarter
are not indicative of the process that’s underway. We have a
number of initiatives in progress that we believe will lead to
better results for the remainder of 2018 and forward.”
“These initiatives include further product development,
technology enhancements, refocus of distributor incentives, and
streamlining our international operations,” Montgomery
reported.
Specific initiatives include:
- Reliv Now® with Whey was launched in May 2018 and other product
innovations and enhancements are in process.
- Mobile app launch in spring 2018 with new features based on
distributor input coming in near future, and a new corporate
website is scheduled for rollout at our upcoming fall distributor
conference in Orlando where the company will celebrate 30 years in
business.
- Reviewing distributor and leadership incentives with the aim to
reward building new business.
- In our Asia-Pacific region, we have consolidated nearly all
administrative functions into our office in the Philippines,
allowing the closure of our Indonesia office.
Reliv announced a number of executive level changes in recent
weeks, highlighted by the announcement of Ryan Montgomery as Chief
Executive Officer of the company. “As we approach our 30th
anniversary, I am proud to lead this company into its next chapter
and beyond.”
About Reliv International, Inc.
Reliv International, based in Chesterfield, MO, produces
nutritional supplements that promote optimal nutrition. Reliv
supplements address core nutrition 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 14 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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|
|
June 30 |
December 31 |
|
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|
|
|
2018 |
|
2017 |
|
|
|
|
(Unaudited) |
(Audited) |
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|
|
Assets |
|
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|
|
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Current Assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
2,764,088 |
|
$ |
3,272,788 |
|
|
|
|
Accounts
receivable, less allowances of |
|
|
|
|
|
$25,000
in 2018 and $26,300 in 2017 |
|
213,975 |
|
|
29,760 |
|
|
|
|
Accounts
and note due from employees and distributors |
|
136,142 |
|
|
138,497 |
|
|
|
|
Inventories |
|
4,105,201 |
|
|
4,555,485 |
|
|
|
|
Cash
surrender value of life insurance |
|
3,067,360 |
|
|
- |
|
|
|
|
Other
current assets |
|
661,751 |
|
|
399,154 |
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|
|
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|
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|
|
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|
Total
current assets |
|
10,948,517 |
|
|
8,395,684 |
|
|
|
|
|
|
|
|
|
|
Other assets |
|
3,743,908 |
|
|
3,916,551 |
|
|
|
|
Cash surrender value of
life insurance |
|
- |
|
|
3,086,522 |
|
|
|
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Net property, plant and
equipment |
|
5,441,346 |
|
|
5,677,239 |
|
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|
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|
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|
|
|
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Total Assets |
$ |
20,133,771 |
|
$ |
21,075,996 |
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Liabilities and
Stockholders' Equity |
|
|
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Accounts payable and
accrued expenses |
$ |
4,076,694 |
|
$ |
3,212,634 |
|
|
|
|
Current portion of
long-term debt |
|
2,855,861 |
|
|
3,045,421 |
|
|
|
|
Other noncurrent
liabilities |
|
458,750 |
|
|
453,354 |
|
|
|
|
Stockholders'
equity |
|
12,742,466 |
|
|
14,364,587 |
|
|
|
|
|
|
|
|
|
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Total Liabilities and
Stockholders' Equity |
$ |
20,133,771 |
|
$ |
21,075,996 |
|
|
|
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|
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Consolidated
Statements of Operations |
|
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|
Three months ended June 30 |
|
Six months ended June 30 |
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
|
(Unaudited) |
(Unaudited) |
|
(Unaudited) |
(Unaudited) |
Product sales |
$ |
7,920,596 |
|
$ |
9,258,809 |
|
|
$ |
17,311,977 |
|
$ |
21,093,925 |
|
Handling & freight
income |
|
539,145 |
|
|
747,819 |
|
|
|
1,151,003 |
|
|
1,690,485 |
|
|
|
|
|
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Net Sales |
|
8,459,741 |
|
|
10,006,628 |
|
|
|
18,462,980 |
|
|
22,784,410 |
|
|
|
|
|
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Costs and
expenses: |
|
|
|
|
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Cost of
products sold |
|
2,356,274 |
|
|
2,328,452 |
|
|
|
4,706,016 |
|
|
5,163,977 |
|
Distributor royalties and commissions |
|
2,827,357 |
|
|
3,554,773 |
|
|
|
6,219,102 |
|
|
8,053,326 |
|
Selling,
general and administrative |
|
4,215,641 |
|
|
4,631,860 |
|
|
|
8,701,536 |
|
|
9,558,139 |
|
|
|
|
|
|
|
Total Costs and
Expenses |
|
9,399,272 |
|
|
10,515,085 |
|
|
|
19,626,654 |
|
|
22,775,442 |
|
|
|
|
|
|
|
Income (loss) from
operations |
|
(939,531 |
) |
|
(508,457 |
) |
|
|
(1,163,674 |
) |
|
8,968 |
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
Interest
income |
|
23,547 |
|
|
25,827 |
|
|
|
47,499 |
|
|
51,353 |
|
Interest
expense |
|
(45,222 |
) |
|
(27,448 |
) |
|
|
(76,787 |
) |
|
(52,289 |
) |
Other
income |
|
6,252 |
|
|
12,413 |
|
|
|
16,703 |
|
|
45,096 |
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
(954,954 |
) |
|
(497,665 |
) |
|
|
(1,176,259 |
) |
|
53,128 |
|
Provision for income
taxes |
|
23,000 |
|
|
22,000 |
|
|
|
40,000 |
|
|
49,000 |
|
|
|
|
|
|
|
Net income (loss) |
($ |
977,954 |
) |
($ |
519,665 |
) |
|
($ |
1,216,259 |
) |
$ |
4,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - Basic |
($ |
0.53 |
) |
($ |
0.28 |
) |
|
($ |
0.66 |
) |
$ |
0.00 |
|
Weighted average
shares |
|
1,845,000 |
|
|
1,845,000 |
|
|
|
1,845,000 |
|
|
1,845,000 |
|
|
|
|
|
|
|
Earnings (loss) per
common share - Diluted |
($ |
0.53 |
) |
($ |
0.28 |
) |
|
($ |
0.66 |
) |
$ |
0.00 |
|
Weighted average
shares |
|
1,845,000 |
|
|
1,845,000 |
|
|
|
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 June 30, |
|
Change from |
|
|
|
2018 |
|
|
|
2017 |
|
|
prior year |
|
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
|
|
United States |
$ |
6,336 |
74.9 |
% |
|
$ |
7,450 |
74.4 |
% |
|
$ |
(1,114 |
) |
-15.0 |
% |
|
Australia/New Zealand |
|
178 |
2.1 |
% |
|
|
227 |
2.3 |
% |
|
|
(49 |
) |
-21.6 |
% |
|
Canada |
|
162 |
1.9 |
% |
|
|
217 |
2.2 |
% |
|
|
(55 |
) |
-25.3 |
% |
|
Mexico |
|
112 |
1.3 |
% |
|
|
89 |
0.9 |
% |
|
|
23 |
|
25.8 |
% |
|
Europe |
|
1,031 |
12.2 |
% |
|
|
1,308 |
13.1 |
% |
|
|
(277 |
) |
-21.2 |
% |
|
Asia |
|
641 |
7.6 |
% |
|
|
716 |
7.1 |
% |
|
|
(75 |
) |
-10.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
8,460 |
100.0 |
% |
|
$ |
10,007 |
100.0 |
% |
|
$ |
(1,547 |
) |
-15.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by Market |
|
|
|
|
|
(in thousands) |
Six months ended June 30, |
|
Change from |
|
|
|
2018 |
|
|
|
2017 |
|
|
prior year |
|
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
|
|
United States |
$ |
14,006 |
75.9 |
% |
|
$ |
17,709 |
77.7 |
% |
|
$ |
(3,703 |
) |
-20.9 |
% |
|
Australia/New
Zealand |
|
410 |
2.2 |
% |
|
|
486 |
2.1 |
% |
|
|
(76 |
) |
-15.6 |
% |
|
Canada |
|
404 |
2.2 |
% |
|
|
481 |
2.1 |
% |
|
|
(77 |
) |
-16.0 |
% |
|
Mexico |
|
220 |
1.2 |
% |
|
|
247 |
1.1 |
% |
|
|
(27 |
) |
-10.9 |
% |
|
Europe |
|
2,195 |
11.9 |
% |
|
|
2,508 |
11.0 |
% |
|
|
(313 |
) |
-12.5 |
% |
|
Asia |
|
1,228 |
6.6 |
% |
|
|
1,353 |
6.0 |
% |
|
|
(125 |
) |
-9.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
18,463 |
100.0 |
% |
|
$ |
22,784 |
100.0 |
% |
|
$ |
(4,321 |
) |
-19.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
The following table sets forth, as of June 30, 2018 and 2017,
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.
Preferred Customers represent approximately 4,760 and 4,960 of the
Active Distributor count as of June 30, 2018 and 2017,
respectively. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Distributors/Preferred Customers and Master
Affiliates and Above by Market |
|
|
|
As of 6/30/2018 |
|
As of 6/30/2017 |
|
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 |
|
21,060 |
2,270 |
|
|
|
24,670 |
2,690 |
|
|
|
-14.6 |
% |
-15.6 |
% |
|
Australia/New
Zealand |
|
1,030 |
80 |
|
|
|
1,240 |
110 |
|
|
|
-16.9 |
% |
-27.3 |
% |
|
Canada |
|
580 |
80 |
|
|
|
740 |
90 |
|
|
|
-21.6 |
% |
-11.1 |
% |
|
Mexico |
|
780 |
70 |
|
|
|
770 |
60 |
|
|
|
1.3 |
% |
16.7 |
% |
|
Europe |
|
3,290 |
380 |
|
|
|
4,130 |
430 |
|
|
|
-20.3 |
% |
-11.6 |
% |
|
Asia |
|
4,400 |
320 |
|
|
|
3,560 |
350 |
|
|
|
23.6 |
% |
-8.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
Consolidated Total |
|
31,140 |
3,200 |
|
|
|
35,110 |
3,730 |
|
|
|
-11.3 |
% |
-14.2 |
% |
|
|
For more information, contact:
Steve
Albright
Chief Financial Officer
(636) 733-1305
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