Reliv Reports $10.8 million Net Sales in Third Quarter Financial Results for 2016

- November 11th, 2016

Reliv International, Inc. (NASDAQ: RELV), a maker of nutritional supplements that promote optimal health, today reported its financial results for the third quarter of 2016. Reliv reported net sales of $10.8 million for the third quarter of 2016 compared with net sales of $12.2 million in the third quarter of 2015. U.S. net sales decreased … Continued

Reliv International, Inc. (NASDAQ: RELV), a maker of nutritional supplements that promote optimal health, today reported its financial results for the third quarter of 2016.
Reliv reported net sales of $10.8 million for the third quarter of 2016 compared with net sales of $12.2 million in the third quarter of 2015. U.S. net sales decreased to $8.6 million from $9.8 million, a decline of 12.1 percent. Net sales in Reliv’s foreign markets for the third quarter of 2016 decreased 9.5 percent compared with net sales in the prior-year third quarter. Absent the impact of foreign currency fluctuation as the result of a stronger U.S. dollar, net sales in Reliv’s foreign markets were flat during the third quarter of 2016 compared to the prior-year quarter.
Reliv reported net income for the third quarter of 2016 of $134,000 (income per diluted share of $0.07) compared to a net loss of $289,000 (loss per diluted share of $0.16) in the third quarter of 2015. All earnings/loss per share amounts are based on the number of shares outstanding subsequent to the one-for-seven reverse stock split that took effect on October 4, 2016. Income from operations for the third quarter of 2016 was $34,000 compared to a loss from operations of $377,000 in the same period in 2015. The impact to operations from the decrease in net sales was offset by a reduction in selling, general and administrative expenses (“SGA”). SGA expenses were $4.7 million in the third quarter of 2016, compared to $5.7 million in the third quarter of 2015. The decrease in SGA expenses is the result of a cost reduction program implemented in May 2016 and completed in the third quarter of 2016.
Net sales for the first nine months of 2016 were $34.9 million, which represents an 11.7 percent decrease from the same period in 2015. Net sales in the United States and in Reliv’s foreign markets decreased by 11.8 percent and 11.1 percent, respectively, in the first nine months of 2016 compared with the same period last year. Foreign currency fluctuation contributed 7.3 percent of the decline in net sales in Reliv’s foreign markets during the first nine months of 2016.
Reliv reported a net loss of $897,000, or $0.49 per diluted share in the first nine months of 2016, compared to a net loss of $1.0 million, or $0.55 per diluted share in the same period of 2015.
As previously reported, Reliv executed a one-for-seven (1:7) reverse stock split and Reliv’s common stock began trading on a split-adjusted basis when the market opened on October 4, 2016. As a result of the reverse stock split, each seven pre-split shares of common stock automatically combined into one new share of common stock, and the number of outstanding common shares decreased from approximately 12.9 million shares to 1.85 million shares. This reverse stock split, and the resulting increase in Reliv’s per share price, allowed Reliv to satisfy the NASDAQ minimum share price requirement for continued listing on the NASDAQ Capital Market.
“We are pleased that our cost reduction program is fully implemented and we have returned to profitability; however, there is still much work to be done,” said Robert L. Montgomery, Chairman and Chief Executive Officer. “We continue to work on promoting the business opportunity with focus on training the distributor force to succeed in this business.”
“Along with that work, we are planning ahead to 2017 with the introduction of a new product line and program called Fit3™,” Montgomery commented. “We expect Fit3 will combine a new line of products with an exercise and nutrition plan for maximum results. This program is already being tested by a group of distributors, with a launch planned for early 2017.”
Reliv had cash and cash equivalents of $3.2 million as of September 30, 2016, compared to $3.3 million as of December 31, 2015 and $3.2 million as of September 30, 2015. Net cash generated from operating activities was $763,000 in the nine-month period ended September 30, 2016 compared to $1.1 million of cash used in operations in the prior-year nine-month period.
As of September 30, 2016, Reliv had 40,450 distributors and preferred customers — a decrease of 14.2 percent from September 30, 2015 — of which 5,320 are Master Affiliate level and above. The number of Master Affiliates decreased by 9.7 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, 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.
–FINANCIAL HIGHLIGHTS FOLLOW –
Reliv International, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30 December 31
2016 2015
(Unaudited)
Assets
Current Assets:
Cash and cash equivalents $3,170,008 $3,262,263
Accounts receivable, less allowances of $29,300 in 2016 and $30,200 in 2015 6,562 89,376
Accounts and note due from employees and distributors 139,671 134,668
Inventories 4,221,381 5,172,722
Other current assets 1,140,885 1,140,680
Total current assets 8,678,507 9,799,709
Other assets 7,731,396 8,042,196
Net property, plant and equipment 5,895,664 6,419,127
Total Assets $22,305,567 $24,261,032
Liabilities and Stockholders’ Equity
Accounts payable and accrued expenses $4,156,496 $3,937,752
Current portion of long-term debt 426,035 781,505
Long-term debt – noncurrent 2,599,581 3,159,575
Other noncurrent liabilities 382,340 499,705
Stockholders’ equity 14,741,115 15,882,495
Total Liabilities and Stockholders’ Equity $22,305,567 $24,261,032
Consolidated Statements of Operations
Three months ended September 30 Nine months ended September 30
2016 2015 2016 2015
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product sales $9,972,547 $11,250,271 $32,181,585 $36,401,384
Handling & freight income 812,868 944,182 2,693,602 3,072,783
Net Sales 10,785,415 12,194,453 34,875,187 39,474,167
Costs and expenses:
Cost of products sold 2,214,633 2,603,167 7,729,508 8,245,871
Distributor royalties and commissions 3,799,791 4,308,647 12,345,171 14,048,971
Selling, general and administrative 4,737,305 5,659,989 15,887,901 18,244,930
Total Costs and Expenses 10,751,729 12,571,803 35,962,580 40,539,772
Income (loss) from operations 33,686 (377,350 ) (1,087,393 ) (1,065,605 )
Other income (expense):
Interest income 26,199 28,536 80,689 88,991
Interest expense (28,982 ) (36,814 ) (82,161 ) (87,502 )
Other income (expense) 41,575 (72,373 ) 226,519 (227,434 )
Income (loss) before income taxes 72,478 (458,001 ) (862,346 ) (1,291,550 )
Provision (benefit) for income taxes (62,000 ) (169,000 ) 35,000 (273,000 )
Net income (loss) $134,478 ($289,001 ) ($897,346 ) ($1,018,550 )
Earnings (loss) per common share – Basic $0.07 ($0.16 ) ($0.49 ) ($0.55 )
Weighted average shares 1,846,000 1,846,000 1,846,000 1,836,000
Earnings (loss) per common share – Diluted $0.07 ($0.16 ) ($0.49 ) ($0.55 )
Weighted average shares 1,846,000 1,846,000 1,846,000 1,836,000
Reliv International, Inc. and Subsidiaries
Net sales by Market
(in thousands) Three months ended September 30, Change from
2016 2015 prior year
Amount % of Net Sales Amount % of Net Sales Amount %
United States $ 8,581 79.6 % $ 9,759 80.0 % $ (1,178 ) -12.1 %
Australia/New Zealand 242 2.2 % 283 2.3 % (41 ) -14.5 %
Canada 250 2.3 % 260 2.2 % (10 ) -3.8 %
Mexico 119 1.1 % 136 1.1 % (17 ) -12.5 %
Europe 1,166 10.8 % 1,304 10.7 % (138 ) -10.6 %
Asia 427 4.0 % 452 3.7 % (25 ) -5.5 %
Consolidated Total $ 10,785 100.0 % $ 12,194 100.0 % $ (1,409 ) -11.6 %
Net sales by Market
(in thousands) Nine months ended September 30, Change from
2016 2015 prior year
Amount % of Net Sales Amount % of Net Sales Amount %
United States $ 27,191 78.0 % $ 30,831 78.1 % $ (3,640 ) -11.8 %
Australia/New Zealand 825 2.4 % 984 2.5 % (159 ) -16.2 %
Canada 799 2.3 % 1,028 2.6 % (229 ) -22.3 %
Mexico 419 1.2 % 567 1.4 % (148 ) -26.1 %
Europe 4,344 12.4 % 4,651 11.8 % (307 ) -6.6 %
Asia 1,297 3.7 % 1,413 3.6 % (116 ) -8.2 %
Consolidated Total $ 34,875 100.0 % $ 39,474 100.0 % $ (4,599 ) -11.7 %

The following table sets forth, as of September 30, 2016 and 2015, 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 4,720 and 4,390 of the Active Distributor count as of September 30, 2016 and 2015, respectively. The significant majority of these Preferred Customers are in Europe.

Active Distributors/Preferred Customers and Master Affiliates and Above by Market
As of 9/30/2016 As of 9/30/2015 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 28,700 4,110 33,400 4,500 -14.1 % -8.7 %
Australia/New Zealand 1,580 130 1,790 130 -11.7 % 0.0 %
Canada 890 140 1,250 230 -28.8 % -39.1 %
Mexico 1,010 90 1,240 100 -18.5 % -10.0 %
Europe 5,230 520 6,390 630 -18.2 % -17.5 %
Asia 3,040 330 3,100 300 -1.9 % 10.0 %
Consolidated Total 40,450 5,320 47,170 5,890 -14.2 % -9.7 %
For more information, contact:
Steve Albright
Chief Financial Officer
(636) 733-1305

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