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8-K - FORM 8-K - RELIV INTERNATIONAL INCrelv20180326_8k.htm

Exhibit 99

 

 

NEWS RELEASE                                   

 

For more information, contact:

 

Steve Albright

 

 

 

 

 

 

Chief Financial Officer

 

 

 

 

(636) 733-1305                         

 

FOR IMMEDIATE DISTRIBUTION

 

Reliv International Reports Fourth-Quarter

and Full-Year Financial Results for 2017

 

CHESTERFIELD, MO, March 27, 2018 – 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 FacebookTwitter 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

 

Condensed Consolidated Balance Sheets

 

   

December 31

   

December 31

 
   

2017

   

2016

 
   

(Unaudited)

   

(Audited)

 

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  

Other current assets

    399,154       571,377  
                 

Total current assets

    8,395,684       8,932,068  
                 

Other assets

    7,003,073       7,679,357  

Net property, plant and equipment

    5,677,239       5,854,302  
                 

Total Assets

  $ 21,075,996     $ 22,465,727  
                 

Liabilities and Stockholders' Equity

               
                 

Accounts payable and accrued expenses

  $ 3,212,634     $ 4,234,305  

Current portion of long-term debt

    3,045,421       389,096  

Long-term debt - noncurrent

    -       2,518,341  

Other noncurrent liabilities

    453,354       409,813  

Stockholders' equity

    14,364,587       14,914,172  
                 

Total Liabilities and Stockholders' Equity

  $ 21,075,996     $ 22,465,727  

 

Consolidated Statements of Operations

                               
   

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  
                                 

Net Sales

    9,935,049       10,637,649       41,788,782       45,512,836  
                                 

Costs and expenses:

                               

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  
                                 

Total Costs and Expenses

    9,793,802       10,362,235       41,972,185       46,324,815  
                                 

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 )
                                 
                                 

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  

 

 

 

 

Reliv International, Inc. and Subsidiaries

           

 

Net sales by Market

                                               

(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 %

 

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 %

 

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.

 

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 %