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NEWS RELEASE

 

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Steve Albright

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Reliv International Reports Third-Quarter Financial Results

 

CHESTERFIELD, MO, October 31, 2013 – Reliv International, Inc. (NASDAQ:RELV), a maker of nutritional supplements that promote optimal health, today reported its financial results for the third quarter of 2013.

 

Net sales for the quarter were $16.5 million, an 8.3 percent increase from the third quarter last year. Net U.S. sales totaled $13.2 million, an increase of $1.1 million, or 9.0 percent, compared to third-quarter 2012 net sales. Net sales outside of the United States rose 5.4 percent in the third quarter of 2013 compared to the prior-year quarter, led by the European market where net sales increased by 21.3 percent.

 

Income from operations for the third quarter of 2013 increased to $402,000 compared to a loss of $32,000 in the same quarter of 2012 due to the increase in net sales in the United States. Net income for the third quarter of 2012 included a one-time after-tax gain of approximately $247,000 resulting from a discounted balance due on a purchase agreement entered into in a previous year. As a result, net income for the third quarter of 2012 was $287,000 or $0.02 per diluted share, compared to net income for the third quarter of 2013 of $293,000 or $0.02 per diluted share.

 

Third quarter 2013 net sales grew in the United States as Reliv continues to focus on its LunaRich® product line. The LunaRich product line contains elevated levels of lunasin, a naturally occurring soy peptide that works at the epigenetic level in cells to promote optimal health. Reliv acquired the exclusive rights to certain intellectual property related to lunasin and its production from Soy Labs, LLC in July 2013.

 

“The word is getting out about lunasin as new studies emerge,” said Robert L. Montgomery, Chairman and CEO of Reliv. “Reliv’s LunaRich® products deliver more bioactive lunasin than any other product available today, and for the first time we control an ingredient in its entirety, from the extraction process to the patented mechanisms of action within the body.” U.S. third-quarter net sales were led by the flagship products in the LunaRich line, Reliv Now® and LunaRich X™, which made up 18.1 and 13.2 percent of U.S. sales, respectively.

Also, sales in the United States were boosted by the impact of its Ignition Master Affiliate qualification promotion. The number of new Master Affiliates, the level at which distributors are eligible to earn generation royalties, increased to 694 during the third quarter of 2013 compared to 284 during same period in 2012, an increase of 144%. “People are seeing health results with Reliv’s LunaRich products and entrepreneurs are seeing a potentially lucrative business opportunity in distributing nutritional products containing an exclusive ingredient,” said Montgomery. “The lunasin technology acquisition coupled with a promotion that encourages distributor advancement to the Master Affiliate level has created an ideal environment to launch a Reliv distributorship.”

 

Montgomery added: “The epigenetic science behind lunasin gives Reliv a competitive advantage in the supplement industry. Today’s health care concerns are creating high demand for proactive approaches to wellness. Nutritional epigenetics and the idea that you can help direct your DNA naturally through nutrition holds the potential for mass appeal. We believe no other products are positioned to fill this market need like Reliv’s LunaRich line.”

 

Growth in Europe continued with net sales of $1.7 million in the third quarter of 2013 compared to $1.4 million in the prior-year third quarter. “Europe remains Reliv’s strongest international market and we expect growth to continue,” Montgomery said.

 

Worldwide net sales for the first nine months of 2013 were $50.8 million, representing a 1.9 percent decrease from the same period in 2012. In the United States, net sales declined 1.7 percent compared with the first nine months of the prior year. Net sales outside of the United States decreased by 2.7 percent in the first nine months of 2013 compared with the first nine months last year.

 

Reliv reported net income of $274,000, or $0.02 per diluted share in the first nine months of 2013, compared to $922,000 or $0.07 per diluted share in the same period of 2012.

 

Reliv’s total distributor count was 51,920 as of September 30, 2013 – a decrease of 11.4 percent from the same date in 2012 – of which 6,670 are Master Affiliate level and above. The number of Master Affiliates decreased by 0.6 percent compared to the year ago total.

 

Net cash generated from operating activities in the first nine months of 2013 totaled $1.3 million, representing an increase of $243,000 over the first nine months of 2012. Reliv had cash and cash equivalents of $5.7 million as of September 30, 2013, an increase of $843,000 from the same date last year.

 

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 16 countries. Learn more about Reliv at www.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, www.reliv.com.

 

-- FINANCIAL HIGHLIGHTS FOLLOW --

Reliv International, Inc. and Subsidiaries        
ADD TWO        
         
Condensed Consolidated Balance Sheets        
  September 30 December 31    
  2013 2012    
  (Unaudited)      
Assets        
Current Assets:        
Cash and cash equivalents $5,744,193 $5,801,042    
Accounts receivable, less allowances of $23,000 in 2013 and $35,700 in 2012 253,864 247,087    
Accounts and note due from employees and distributors 137,408 109,346    
Inventories 5,080,058 5,262,916    
Other current assets 1,356,381 1,070,301    
         
Total current assets 12,571,904 12,490,692    
         
Other assets 4,432,385 4,212,442    
Intangible assets, net 3,263,436 1,443,635    
Net property, plant and equipment 6,880,018 7,111,772    
         
Total Assets $27,147,743 $25,258,541    
         
Liabilities and Stockholders' Equity        
         
Total current liabilities $7,817,234 $6,614,631    
Long-term debt, less current maturities 2,747,455 2,401,312    
Other non-current liabilities 987,362 660,728    
Stockholders' equity 15,595,692 15,581,870    
         
Total Liabilities and Stockholders' Equity $27,147,743 $25,258,541    
         
         
Consolidated Statements of Operations        
  Three months ended September 30 Nine months ended September 30
  2013 2012 2013 2012
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product sales $15,241,597 $13,571,674 $46,296,517 $46,081,154
Handling & freight income 1,297,867 1,704,862 4,525,618 5,719,730
         
Net Sales 16,539,464 15,276,536 50,822,135 51,800,884
         
Costs and expenses:        
Cost of products sold 3,529,027 3,052,687 10,490,825 10,174,128
Distributor royalties and commissions 5,974,652 5,737,908 18,595,100 19,512,681
Selling, general and administrative 6,633,771 6,517,747 21,121,858 21,013,651
         
Total Costs and Expenses 16,137,450 15,308,342 50,207,783 50,700,460
         
Income (loss) from operations 402,014 (31,806) 614,352 1,100,424
         
Other income (expense):        
Interest income 37,240 36,681 113,072 86,858
Interest expense (22,187) (20,124) (58,182) (82,338)
Other income (expense) 28,637 437,745 (62,482) 376,513
         
Income before income taxes 445,704 422,496 606,760 1,481,457
Provision for income taxes 153,000 135,000 333,000 559,000
         
Net Income $292,704 $287,496 $273,760 $922,457
         
         
Earnings per common share - Basic $0.02 $0.02 $0.02 $0.07
Weighted average shares 12,616,000 12,480,000 12,617,000 12,499,000
         
Earnings per common share - Diluted $0.02 $0.02 $0.02 $0.07
Weighted average shares 12,842,000 12,636,000 12,785,000 12,657,000
         
Cash dividends declared per common share $ -- $ -- $0.02 $0.02
 
Reliv International, Inc. and Subsidiaries
ADD THREE
             
Net sales by Market      
(in thousands)            
  Three months ended September 30, Change From
Prior Year
  2013 2012  
 
Amount
% of Net
Sales

Amount
% of Net
Sales

Amount

%
             
United States $ 13,163 79.6% $ 12,073 79.0% $ 1,090 9.0%
Australia/New Zealand 429 2.6% 462 3.0% (33) -7.1%
Canada 384 2.3% 381 2.5% 3 0.8%
Mexico 225 1.4% 274 1.8% (49) -17.9%
Europe 1,685 10.2% 1,389 9.1% 296 21.3%
Asia 653 3.9% 698 4.6% (45) -6.4%
             
Consolidated total $ 16,539 100.0% $ 15,277 100.0% $ 1,262 8.3%
             
             
Net sales by Market            
(in thousands)            
  Nine months ended September 30, Change From
Prior Year
  2013 2012  
 
Amount
% of Net
Sales

Amount
% of Net
Sales

Amount

%
             
United States $ 40,101 78.9% $ 40,786 78.7% $ (685) -1.7%
Australia/New Zealand 1,402 2.8% 1,482 2.9% (80) -5.4%
Canada 1,310 2.6% 1,370 2.7% (60) -4.4%
Mexico 759 1.5% 832 1.6% (73) -8.8%
Europe 5,664 11.1% 4,724 9.1% 940 19.9%
Asia 1,586 3.1% 2,607 5.0% (1,021) -39.2%
             
Consolidated total $ 50,822 100.0% $ 51,801 100.0% $ (979) -1.9%
             
The following table sets forth, as of September 30, 2013 and 2012, the number of our active distributors and Master Affiliates and above. We define an active distributor as one that enrolls as a distributor or renews its 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 Affiliates and above in their downline organization. Beginning with the September 30, 2013 data, the active distributor count for Europe includes our preferred customers in France. This program began in mid-2013 and the Europe active distributor count as of 9/30/13 includes 1,040 preferred customers.
             
Active Distributors and Master Affiliates and above by Market    
             
  As of 9/30/2013 As of 9/30/2012 Change in %
  Total
Active
Distributors
Master
Affiliates
and Above
Total
Active
Distributors
Master
Affiliates
and Above
Total
Active
Distributors
Master
Affiliates and
Above
 
             
United States 38,670 4,830 41,300 4,990 -6.4% -3.2%
Australia/New Zealand 1,470 200 1,910 150 -23.0% 33.3%
Canada 1,270 220 1,270 210 0.0% 4.8%
Mexico 1,080 150 1,810 150 -40.3% 0.0%
Europe 5,800 820 6,440 650 -9.9% 26.2%
Asia 3,630 450 5,840 560 -37.8% -19.6%
             
Consolidated total 51,920 6,670 58,570 6,710 -11.4% -0.6%

 

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