Reliv International Reports Second-Quarter Financial Results for 2017
August 11 2017 - 7:00AM
Reliv International, Inc. (NASDAQ:RELV), a maker of nutritional
supplements that promote optimal health, today reported its
financial results for the second quarter of 2017.
Reliv reported net sales of $10.0 million for the second quarter
of 2017 compared with net sales of $11.1 million in the second
quarter of 2016. Net sales in the United States decreased to
$7.5 million in the second quarter of 2017 compared to $8.4 million
in the prior-year quarter. Net sales in Reliv’s foreign markets
decreased 5.2 percent in the second quarter of 2017 compared with
the prior-year second quarter. Foreign sales increased by 2.8
percent when the impact of foreign currency fluctuation is removed
as the result of a stronger U.S. dollar. An increase of 74.2
percent in net sales in Asia in the second quarter of 2017 was
offset by a decline of 19.3 percent in net sales in Europe, along
with decreases in other regions. Net sales in Europe declined
by 9.5 percent when the impact of foreign currency fluctuation is
removed.
Reliv reported a net loss for the second quarter of 2017 of
$520,000 (loss per diluted share of $0.28) compared to a net loss
of $988,000 (loss per diluted share of $0.54) in the second quarter
of 2016. The loss per diluted share for the
second quarter of 2016 has been adjusted for the one-for-seven
reverse stock split that took effect on October 4, 2016. The
loss from operations for the second quarter of 2017 was $508,000
compared to a loss from operations of $940,000 in the same period
in 2016. Selling, general and administrative (“SGA”) expenses
decreased from $5.5 million in the second quarter of 2016 to $4.6
million in the second quarter of 2017. The reduction in 2017
SGA expenses is the result of the continuing impact of a cost
reduction program that took place in mid-2016.
Net sales for the first six months of 2017 were $22.8 million,
which represents a 5.4 percent decrease from the same period in
2016. Net sales in the United States decreased by 4.8 percent
and net sales in Reliv’s foreign markets decreased by 7.4 percent
in the first half of 2017 compared with the first half of last
year. Net sales in Reliv’s foreign markets increased by
0.7 percent during the first six months of 2017 when the impact of
foreign currency fluctuation is removed.
Reliv reported net income of $4,000, or $0.00 per diluted share
in the first six months of 2017, compared to a net loss of $1.0
million or $0.56 per diluted share in the same period of 2016.
Reliv recently held its International Distributor Conference in
suburban Chicago, Illinois where the theme of this year’s
conference was “Fit for Life.” In addition to workshops and
panel discussions focused on how to build a home-based Reliv
business, the conference highlighted the Fit3TM product line and
program in helping people achieve a healthy and active lifestyle.
Launched in February 2017, the Fit3 program consists of three
principal components: nutrition coaching, exercise coaching, and
three new Fit3 products: Active, Burn and Purify.
Reliv also announced enhancements to its Director Program to
include distributor earnings from wholesale and retail sales in
qualifying for the various director levels, from Key Director up
through Presidential Director. “We believe it’s important to
recognize all of the activity of the leaders that are developing a
strong Customer, Preferred Customer, and Retail Distributor base,”
said Ryan Montgomery, President. “Distributors conduct their
business in different ways, and whether it’s done in a traditional
person-to-person setting or via an internet platform, such as our
personalized distributor websites, it’s critical to recognize that
performance.”
Reliv had cash and cash equivalents of $3.4 million as of June
30, 2017, compared to $3.6 million as of December 31, 2016.
Net cash generated from operating activities was $339,000 in the
first half of 2017.
As of June 30, 2017, Reliv had 35,110 distributors and preferred
customers – a decrease of 17.4 percent from June 30, 2016 – of
which 3,730 are Master Affiliate level and above. The number
of Master Affiliates decreased by 29.8 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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June 30 |
December 31 |
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2017 |
2016 |
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(Unaudited) |
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Assets |
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Current Assets: |
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|
|
|
Cash and
cash equivalents |
$3,448,928 |
|
$3,606,817 |
|
|
|
|
Accounts
receivable, less allowances of |
|
|
|
|
|
$26,300
in 2017 and $26,700 in 2016 |
|
91,292 |
|
|
126,113 |
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|
Accounts
and note due from employees and distributors |
|
137,253 |
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|
139,931 |
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Inventories |
|
4,430,941 |
|
|
4,487,830 |
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Other
current assets |
|
850,973 |
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|
571,377 |
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Total current
assets |
|
8,959,387 |
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|
8,932,068 |
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Other assets |
|
7,610,318 |
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7,679,357 |
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Net property, plant and
equipment |
|
5,937,119 |
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|
5,854,302 |
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Total Assets |
$22,506,824 |
|
$22,465,727 |
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Liabilities and
Stockholders' Equity |
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Accounts payable and
accrued expenses |
$4,359,198 |
|
$4,234,305 |
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Current portion of
long-term debt |
|
324,960 |
|
|
389,096 |
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Long-term debt -
noncurrent |
|
2,355,861 |
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|
2,518,341 |
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Other noncurrent
liabilities |
|
440,983 |
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|
409,813 |
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Stockholders'
equity |
|
15,025,822 |
|
|
14,914,172 |
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|
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|
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Total Liabilities and
Stockholders' Equity |
$22,506,824 |
|
$22,465,727 |
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Consolidated
Statements of Operations |
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Three months ended June 30 |
|
Six months ended June 30 |
|
2017 |
2016 |
|
2017 |
2016 |
|
(Unaudited) |
(Unaudited) |
|
(Unaudited) |
(Unaudited) |
Product sales |
$9,258,809 |
|
$10,166,478 |
|
|
$21,093,925 |
|
$22,209,039 |
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Handling & freight
income |
|
747,819 |
|
|
886,844 |
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|
1,690,485 |
|
|
1,880,733 |
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Net Sales |
|
10,006,628 |
|
|
11,053,322 |
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|
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22,784,410 |
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|
24,089,772 |
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Costs and
expenses: |
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Cost of
products sold |
|
2,328,452 |
|
|
2,530,771 |
|
|
|
5,163,977 |
|
|
5,514,875 |
|
Distributor royalties and commissions |
|
3,554,773 |
|
|
3,921,005 |
|
|
|
8,053,326 |
|
|
8,545,380 |
|
Selling,
general and administrative |
|
4,631,860 |
|
|
5,541,328 |
|
|
|
9,558,139 |
|
|
11,150,596 |
|
|
|
|
|
|
|
Total Costs and
Expenses |
|
10,515,085 |
|
|
11,993,104 |
|
|
|
22,775,442 |
|
|
25,210,851 |
|
|
|
|
|
|
|
Income (loss) from
operations |
|
(508,457 |
) |
|
(939,782 |
) |
|
|
8,968 |
|
|
(1,121,079 |
) |
|
|
|
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|
Other income
(expense): |
|
|
|
|
|
Interest income |
|
25,827 |
|
|
27,133 |
|
|
|
51,353 |
|
|
54,490 |
|
Interest expense |
|
(27,448 |
) |
|
(26,778 |
) |
|
|
(52,289 |
) |
|
(53,179 |
) |
Other income |
|
12,413 |
|
|
71,263 |
|
|
|
45,096 |
|
|
184,944 |
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
(497,665 |
) |
|
(868,164 |
) |
|
|
53,128 |
|
|
(934,824 |
) |
Provision for income
taxes |
|
22,000 |
|
|
120,000 |
|
|
|
49,000 |
|
|
97,000 |
|
|
|
|
|
|
|
Net income (loss) |
($519,665 |
) |
($988,164 |
) |
|
$4,128 |
|
($1,031,824 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
common share - Basic |
($0.28 |
) |
($0.54 |
) |
|
$0.00 |
|
($0.56 |
) |
Weighted average
shares |
|
1,845,000 |
|
|
1,846,000 |
|
|
|
1,845,000 |
|
|
1,846,000 |
|
|
|
|
|
|
|
Earnings (loss) per
common share - Diluted |
($0.28 |
) |
($0.54 |
) |
|
$0.00 |
|
($0.56 |
) |
Weighted average
shares |
|
1,845,000 |
|
|
1,846,000 |
|
|
|
1,846,000 |
|
|
1,846,000 |
|
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 |
|
2017 |
|
2016 |
|
prior year |
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
|
|
|
|
|
|
|
United States |
$ |
7,450 |
74.4 |
% |
|
$ |
8,356 |
75.6 |
% |
|
$ |
(906 |
) |
-10.8 |
% |
Australia/New
Zealand |
|
227 |
2.3 |
% |
|
|
286 |
2.6 |
% |
|
|
(59 |
) |
-20.6 |
% |
Canada |
|
217 |
2.2 |
% |
|
|
242 |
2.2 |
% |
|
|
(25 |
) |
-10.3 |
% |
Mexico |
|
89 |
0.9 |
% |
|
|
137 |
1.2 |
% |
|
|
(48 |
) |
-35.0 |
% |
Europe |
|
1,308 |
13.1 |
% |
|
|
1,621 |
14.7 |
% |
|
|
(313 |
) |
-19.3 |
% |
Asia |
|
716 |
7.1 |
% |
|
|
411 |
3.7 |
% |
|
|
305 |
|
74.2 |
% |
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
10,007 |
100.0 |
% |
|
$ |
11,053 |
100.0 |
% |
|
$ |
(1,046 |
) |
-9.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales by
Market |
|
|
|
|
|
|
|
|
(in thousands) |
Six months ended June 30, |
|
Change from |
|
2017 |
|
2016 |
|
prior year |
|
Amount |
% of Net Sales |
|
Amount |
% of Net Sales |
|
Amount |
% |
|
|
|
|
|
|
|
|
|
United States |
$ |
17,709 |
77.7 |
% |
|
$ |
18,610 |
77.3 |
% |
|
$ |
(901 |
) |
-4.8 |
% |
Australia/New
Zealand |
|
486 |
2.1 |
% |
|
|
584 |
2.4 |
% |
|
|
(98 |
) |
-16.8 |
% |
Canada |
|
481 |
2.1 |
% |
|
|
549 |
2.3 |
% |
|
|
(68 |
) |
-12.4 |
% |
Mexico |
|
247 |
1.1 |
% |
|
|
300 |
1.2 |
% |
|
|
(53 |
) |
-17.7 |
% |
Europe |
|
2,508 |
11.0 |
% |
|
|
3,177 |
13.2 |
% |
|
|
(669 |
) |
-21.1 |
% |
Asia |
|
1,353 |
6.0 |
% |
|
|
870 |
3.6 |
% |
|
|
483 |
|
55.5 |
% |
|
|
|
|
|
|
|
|
|
Consolidated Total |
$ |
22,784 |
100.0 |
% |
|
$ |
24,090 |
100.0 |
% |
|
$ |
(1,306 |
) |
-5.4 |
% |
|
|
|
|
|
|
|
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|
The
following table sets forth, as of June 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 4,960 and 4,490 of the Active Distributor count as of
June 30, 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 6/30/2017 |
|
As of 6/30/2016 |
|
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 |
|
24,670 |
2,690 |
|
|
|
30,080 |
4,110 |
|
|
|
-18.0 |
% |
-34.5 |
% |
Australia/New
Zealand |
|
1,240 |
110 |
|
|
|
1,660 |
130 |
|
|
|
-25.3 |
% |
-15.4 |
% |
Canada |
|
740 |
90 |
|
|
|
970 |
150 |
|
|
|
-23.7 |
% |
-40.0 |
% |
Mexico |
|
770 |
60 |
|
|
|
1,130 |
90 |
|
|
|
-31.9 |
% |
-33.3 |
% |
Europe |
|
4,130 |
430 |
|
|
|
5,630 |
510 |
|
|
|
-26.6 |
% |
-15.7 |
% |
Asia |
|
3,560 |
350 |
|
|
|
3,030 |
320 |
|
|
|
17.5 |
% |
9.4 |
% |
|
|
|
|
|
|
|
|
|
Consolidated Total |
|
35,110 |
3,730 |
|
|
|
42,500 |
5,310 |
|
|
|
-17.4 |
% |
-29.8 |
% |
For more information, contact:
Steve Albright
Chief Financial Officer
(636) 733-1305
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