Reliv 2015 Q2 – Net Sales Down 14% To $12.4 Million

 

Reliv International, Inc., a maker of nutritional supplements that promote optimal health reported its financial results for the second quarter of 2015.

Net sales for the quarter were $12.4 million, a 14.0 percent decrease from the second quarter last year. Net U.S. sales totaled $9.6 million, down from $10.8 million in the second quarter of 2014. Net sales outside of the United States decreased 22.1 percent in the second quarter of 2015 compared to the prior-year quarter. Foreign currency fluctuation accounted for 8.7 percent of the net sales decline outside of the United States. Net sales in Europe declined 30.7 percent in the second quarter of 2015 compared to the prior-year quarter, with foreign currency fluctuation accounting for 6.8 percent of the decline.

The net loss for the second quarter of 2015 was $846,000 or $0.07 per diluted share, compared to a net loss of $289,000 or $0.02 per diluted share in the 2014 second quarter. The loss from operations for the second quarter of 2015 was $1.12 million compared to a loss of $475,000 in the same quarter of 2014.

Net sales for the first six months of 2015 were $27.3 million, which represents a 5.7 percent decrease from the same period in 2014. In the United States, net sales declined 2.0 percent. Reliv's international net sales decreased 16.5 percent in the first half of 2015 compared with the first half of last year, with 8.3 percent of the decline due to foreign currency fluctuation.

Reliv reported a net loss of $730,000, or $0.06 per diluted share in the first six months of 2015, compared to net loss of $440,000 or $0.03 per diluted share in the same period of 2014.

The loss from operations in the second quarter of 2015 was primarily due to the previously mentioned decrease in net sales. However, there were two charges impacting the second quarter results that will not impact results going forward. In Mexico, operating costs in the second quarter of 2015 were negatively impacted by a newly implemented value added tax (VAT). The implementation of this new VAT has impacted many nutritional supplement companies in Mexico. As part of a decree issued by the Mexico treasury department, Reliv entered into an amnesty program during the second quarter of 2015 resulting in an overall VAT implementation pre-tax charge of approximately $130,000.

In Europe, we concluded a long-term performance-based incentive compensation agreement with our senior managers in the region during the second quarter of 2015. We recognized $165,000 in compensation expense during the second quarter of 2015 related to this agreement. This compares to compensation expense recognized under this agreement of $145,000 during the second quarter of 2014.

For the six-month period ended June 30, 2015, Reliv used $108,000 in cash in operating activities. This compares to cash used in operating activities of $1.21 million for the six-month period ended June 30, 2014. Reliv had cash and cash equivalents of $4.50 million as of June 30, 2015. This amount compares to $4.99 million as of December 31, 2014 and $4.93 million as of this date last year.

While these results are less favorable than we hoped, we have launched new initiatives to implement the training and rewards necessary to turn our sales in a positive direction, said Robert L. Montgomery, Chairman and Chief Executive Officer. We have conducted an evaluation process within the company and among our distributor field and have decided to focus messaging and training on simplified and specific steps for our distributors to build a successful business. Early adopters are experiencing business success, he added.

In May 2015, Reliv launched mobile-ready personal websites for Reliv distributors. Not only do these sites allow distributors to tell the Reliv story through engaging content and videos, they offer a whole new way to speed up business, Montgomery said. For the first time distributors have their own online shopping carts and new distributor sign-up. And since the sites are mobile-ready, distributors can give presentations and complete transactions on the spot — anytime, anywhere. In June 2015, their first full month in operation, personal websites accounted for nearly 40% of all new customer sign-ups. We see this as a positive start to a promising growth opportunity.

About Reliv International, Inc.

Reliv International, based in Chesterfield, MO, produces nutritional supplements that promote optimal nutrition along with premium skincare products. 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, the peptide behind many of soy's health benefits. The company sells its products through an international network marketing system of independent distributors in 15 countries.