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8-K - FORM 8-K - RELIV INTERNATIONAL INCrelv20200326_8k.htm

Exhibit 99.1

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 2019

 

CHESTERFIELD, MO, March 27, 2020 – 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 2019.

 

Fourth-Quarter Results

 

Reliv reported net sales of $8.2 million for the fourth quarter of 2019, compared with net sales of $9.3 million for the fourth quarter of 2018, a decrease of 12.4%. U.S. net sales decreased by 17.9% for the quarter compared with the same quarter in 2018. Network marketing net sales in the U.S. decreased by 12.5% in the fourth quarter of 2019 as they were adversely impacted in the quarter by a price increase on most products effective October 1, 2019. Additionally, U.S. sales in the prior-year quarter included approximately $700,000 of contract packaging business that was divested in January 2019. Net sales outside of the United States increased by 5.8% in the fourth quarter of 2019 compared to the prior-year quarter. Net sales in Asia and Mexico were up 45.2% and 4.7%, respectively, in the fourth quarter; however, sales in Europe decreased by 17.2%. Net sales in Reliv’s foreign markets increased by 3.7% during the fourth quarter of 2019 when the impact of foreign currency fluctuation is removed.

 

Reliv reported a net loss of $514,000, or a loss of $0.29 per diluted share, for the fourth quarter of 2019 compared with a net loss of $145,000, or a loss of $0.08 per diluted share, for the fourth quarter of 2018. The loss from operations for the fourth quarter of 2019 was $308,000 compared to loss from operations of $169,000 in the same period in 2018. Income tax expense in the fourth quarter was $271,000, primarily resulting from income tax on earnings coupled with a settlement for an old tax audit in our Philippine entity.

 

Full-Year Results

 

Reliv reported net sales of $35.1 million for 2019 compared with net sales of $36.1 million in 2018, a decline of 2.9%. U.S. net sales decreased to $25.7 million from $27.7 million, a decline of 7.0%.

 

Net sales in Reliv’s foreign markets for 2019 increased 10.3% compared with net sales for 2018. Net sales increases in 2019 in Asia and Mexico of 68.7% and 21.7%, respectively, were offset by a decrease of 18.8% in Europe compared to the prior year. Net sales in Reliv’s foreign markets increased by 11.9% during 2019 when the impact of foreign currency fluctuation is removed.

 

The net loss for 2019 was $444,000 (loss per diluted share of $0.25) compared to a net loss of $1.9 million (loss per diluted share of $1.03) in 2018. The loss from operations for 2019 was $559,000 compared to a loss from operations of $1.9 million in 2018. Selling, general, and administrative expenses were $14.8 million versus $16.5 million in 2018. Other income includes a first quarter of 2019 gain of $435,000 from the sale of all manufacturing equipment as part of an asset sale with Nutracom, LLC (Nutracom). Income tax expense for 2019 was $468,000, once again resulting from income tax on earnings coupled with previously mentioned tax settlements in our Philippine entity.

 

 

 

Reliv had cash and cash equivalents of $1.6 million as of December 31, 2019, compared to $2.0 million as of December 31, 2018. Net cash used in operating activities was $943,000 in 2019 compared to $1.2 million of cash used in operations in the prior-year period.

 

As of December 31, 2019, Reliv had 15,630 customers and Preferred Customers in total – an increase of 22.3% from December 31, 2018. The number of preferred customers increased to 9,320 as of December 31, 2019 compared to 5,060 as of the prior year end. This increase is primarily driven by the growth in the Philippines. Many customers buy product directly from distributors rather than from us so the number of customers is likely greater than stated above. As of December 31, 2019, Reliv had 25,730 active Distributors – an increase of 1.7% from December 31, 2018. The number of Master Affiliates decreased by 2.1% compared to the year-ago total. Master Affiliate is the level at which Distributors are eligible to earn generation royalties.

 

“2019 was a year of transition for Reliv,” commented Ryan A. Montgomery, Chief Executive Officer. “We successfully completed our transaction with Nutracom which allows each party to focus on their respective core competencies. We launched our RLV line of hemp-extract products in the United States. We continue to focus on building our base of distributors and preferred customers through training and targeted initiatives, such as the payment of wholesale commissions on a weekly basis, to reward those distributors building their base of business in this manner. We were disappointed in our results in the fourth quarter in the U.S.; however, we believe we are laying the groundwork for a solid year in 2020.”

 

“Our RLV line continues to be a solid contributor to U.S. sales representing 7.3% of net sales in the fourth quarter. We launched additional products in the RLV line in the fourth quarter and at our recent distributor conference in Dallas, TX and plan further developments in this line during 2020,” said Montgomery.

 

In international operations, sales and distributor activity in the Philippines continued its strong pace in the fourth quarter of 2019. “We’ve completed an outstanding year in the Philippines, and we intend to fuel that growth in 2020 and expand the excitement there to our other markets in the Asia-Pacific region,” noted Montgomery. Net sales in the Philippines grew by 39.7% in local currency in the fourth quarter of 2019, compared to the prior-year quarter, as the active distributor and preferred customer and Master Affiliate counts across all of the Asia markets increased by 116% and 63%, respectively.

 

About Reliv International, Inc. 

 

Reliv International, based in Chesterfield, MO, produces nutritional supplements that promote optimal nutrition. Reliv supplements address core nutrition, targeted solutions and overall wellness and now include a line of RLV hemp extracts. 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 13 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

 
   

2019

   

2018

 
   

(Unaudited)

   

(Audited)

 

Assets

               

Current Assets:

               

Cash and cash equivalents

  $ 1,630,779     $ 1,989,974  

Accounts receivable, less allowances of $5,000 in 2019 and 2018

    107,369       400,759  

Notes & accounts receivables & deposits - related parties

    1,099,228       151,222  

Inventories

    2,701,688       2,954,947  

Assets held for sale

    -       2,124,939  

Other current assets

    326,454       464,165  
                 

Total current assets

    5,865,518       8,086,006  
                 

Notes & accounts receivables - related parties

    2,418,921       1,282,072  

Other assets

    2,581,717       2,287,237  

Net property, plant and equipment

    4,440,840       4,698,550  
                 

Total Assets

  $ 15,306,996     $ 16,353,865  
                 

Liabilities and Stockholders' Equity

               
                 

Accounts payable, accruals & other current liabilities

  $ 3,489,157     $ 3,915,390  

Revolving line of credit

    500,000       -  

Other noncurrent liabilities

    216,196       445,611  

Stockholders' equity

    11,101,643       11,992,864  
                 

Total Liabilities and Stockholders' Equity

  $ 15,306,996     $ 16,353,865  

 

 

Consolidated Statements of Operations

 

   

Three months ended December 31

   

Year ended December 31

 
   

2019

   

2018

   

2019

   

2018

 
   

(Unaudited)

   

(Unaudited)

   

(Unaudited)

   

(Audited)

 

Product sales

  $ 7,488,554     $ 8,788,666     $ 32,298,533     $ 33,918,169  

Freight income

    452,306       527,050       1,973,320       2,197,572  

Other revenue

    219,073       -       783,462       -  
                                 

Net Sales

    8,159,933       9,315,716       35,055,315       36,115,741  
                                 

Costs and expenses:

                               

Cost of goods sold

    2,356,400       2,619,785       9,557,116       9,709,743  

Distributor royalties and commissions

    2,537,219       2,890,639       11,259,071       11,749,604  

Selling, general and administrative

    3,573,838       3,974,045       14,798,586       16,520,885  
                                 

Total Costs and Expenses

    8,467,457       9,484,469       35,614,773       37,980,232  
                                 

Loss from operations

    (307,524 )     (168,753 )     (559,458 )     (1,864,491 )
                                 

Other income (expense):

                               

Interest income

    40,782       22,922       177,810       93,054  

Interest expense

    (7,443 )     (2,361 )     (47,180 )     (95,556 )

Other income

    31,146       50,140       17,922       62,347  

Gain (loss) on sale of fixed assets

    -       3,271       434,549       (695 )
                                 

Income (loss) before income taxes

    (243,039 )     (94,781 )     23,643       (1,805,341 )

Provision for income taxes

    271,000       50,000       468,000       98,000  
                                 

Net loss

  $ (514,039 )   $ (144,781 )   $ (444,357 )   $ (1,903,341 )
                                 
                                 

Loss per common share - Basic

  $ (0.29 )   $ (0.08 )   $ (0.25 )   $ (1.03 )

Weighted average shares

    1,746,000       1,845,000       1,746,000       1,845,000  
                                 

Loss per common share - Diluted

  $ (0.29 )   $ (0.08 )   $ (0.25 )   $ (1.03 )

Weighted average shares

    1,746,000       1,845,000       1,746,000       1,845,000  

 

 

 

Reliv International, Inc. and Subsidiaries

 

Net sales by Market

                                               

(in thousands)

 

Three months ended December 31,

   

Change from

 
   

2019

   

2018

   

prior year

 
   

Amount

   

% of Net Sales

   

Amount

   

% of Net Sales

   

Amount

   

%

 
                                                 

United States

  $ 5,888       72.2 %   $ 7,168       76.9 %   $ (1,280 )     -17.9 %

Australia/New Zealand

    151       1.9 %     167       1.8 %     (16 )     -9.6 %

Canada

    137       1.7 %     162       1.7 %     (25 )     -15.4 %

Mexico

    133       1.6 %     127       1.4 %     6       4.7 %

Europe

    803       9.8 %     970       10.4 %     (167 )     -17.2 %

Asia

    1,048       12.8 %     722       7.8 %     326       45.2 %
                                                 

Consolidated Total

  $ 8,160       100.0 %   $ 9,316       100.0 %   $ (1,156 )     -12.4 %

 

 

Net sales by Market

                                               

(in thousands)

 

Year ended December 31,

   

Change from

 
   

2019

   

2018

   

prior year

 
   

Amount

   

% of Net Sales

   

Amount

   

% of Net Sales

   

Amount

   

%

 
                                                 

United States

  $ 25,747       73.4 %   $ 27,673       76.6 %   $ (1,926 )     -7.0 %

Australia/New Zealand

    595       1.7 %     732       2.0 %     (137 )     -18.7 %

Canada

    617       1.8 %     719       2.0 %     (102 )     -14.2 %

Mexico

    577       1.6 %     474       1.3 %     103       21.7 %

Europe

    3,225       9.2 %     3,973       11.0 %     (748 )     -18.8 %

Asia

    4,294       12.3 %     2,545       7.1 %     1,749       68.7 %
                                                 

Consolidated Total

  $ 35,055       100.0 %   $ 36,116       100.0 %   $ (1,061 )     -2.9 %

 

 

 

Reliv International, Inc. and Subsidiaries

 

Retail and Preferred Customers/Active Distributors/Master Affiliates and Above by Market

 

 

   

As of 12/31/2019

 
   

Retail

Customers

   

Preferred

Customers

   

Active

Distributors

   

Total

Customers and

Distributors

   

Master

Affiliates and

Above

 
                                         
                                         

United States

    3,500       1,500       17,580       22,580       2,110  

Australia/New Zealand

    50       210       660       920       80  

Canada

    90       30       470       590       60  

Mexico

    20       100       1,160       1,280       100  

Europe

    740       690       1,650       3,080       330  

Asia

    1,910       6,790       4,210       12,910       620  
                                         

Consolidated Total

    6,310       9,320       25,730       41,360       3,300  

 

 

   

As of 12/31/2018

 
   

Retail

Customers

   

Preferred

Customers

   

Active

Distributors

   

Total

Customers and

Distributors

   

Master

Affiliates and

Above

 
                                         
                                         

United States

    4,190       1,470       18,340       24,000       2,340  

Australia/New Zealand

    50       240       720       1,010       90  

Canada

    100       30       530       660       80  

Mexico

    10       110       860       980       90  

Europe

    550       1,120       1,860       3,530       390  

Asia

    2,820       2,090       3,000       7,910       380  
                                         

Consolidated Total

    7,720       5,060       25,310       38,090       3,370  

 

 

   

Change in %

 
   

Retail

Customers

   

Preferred Customers

   

Active

Distributors

   

Total

Customers and

Distributors

   

Master

Affiliates and

Above

 
                                         
                                         

United States

    -16.5 %     2.0 %     -4.1 %     -5.9 %     -9.8 %

Australia/New Zealand

    0.0 %     -12.5 %     -8.3 %     -8.9 %     -11.1 %

Canada

    -10.0 %     0.0 %     -11.3 %     -10.6 %     -25.0 %

Mexico

    100.0 %     -9.1 %     34.9 %     30.6 %     11.1 %

Europe

    34.5 %     -38.4 %     -11.3 %     -12.7 %     -15.4 %

Asia

    -32.3 %     224.9 %     40.3 %     63.2 %     63.2 %
                                         

Consolidated Total

    -18.3 %     84.2 %     1.7 %     8.6 %     -2.1 %

 

 

The table above sets forth, as of December 31, 2019 and 2018, the number of our Retail Customers/Preferred Customers/Active Distributors and Master Affiliates and above.  The total number of active distributors includes Master Affiliates and above. We define an active retail or preferred customer as one that has placed a product order in the prior twelve months, and we define an active distributor as one that enrolls as a distributor or renews his or her distributorship during the prior twelve months. Many individuals join Reliv as distributors to obtain our products at a discount and may not participate in the Reliv business opportunity. 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.