RELV

Reliv' International, Inc. (RELV)

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Reliv International Inc. (RELV)

Q3 2008 Earnings Call

October 29, 2008 1:00 pm ET

Executives

Robert L. Montgomery – Chairman, Chief Executive Officer, President

Carl W. Hastings – Vice Chairman and Chief Scientific Officer

Steven D. Albright CPA – Chief Financial Officer

R. Scott Montgomery – Chief Operating Officer and Exec. VP

Martin Burks – Investor Relations

Analysts

Scott Van Winkle – Canaccord Adams

Presentation

Operator

Good day ladies and gentlemen, and welcome to the Third Quarter 2008 Reliv International Earnings Conference Call. My name is [Francine] and I will be your coordinator for today. (Operator Instructions) Today we have with us Mr. Robert Montgomery, Chairman, President, and CEO, and Steve Albright, Chief Financial Officer. I would now like to turn the presentation over to your host for today's conference, Mr Robert Montgomery. Please proceed, sir.

Robert Montgomery

Hello everyone and welcome to Reliv International's Conference Call in which we will report on our results for the third quarter of 2008. I'll be joined on the call today by Steve Albright, Chief Financial Officer at Reliv. Before we begin Martin Burks will read our Safe Harbor statement.

Martin Burks

Thanks, Bob. Statements made in this conference call that are not historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, and 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 can 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 it's public filings made with the Securities and Exchange Commission, including it's annual report of Form 10-K and quarterly reports on Form 10-Q. Copies of which are available on the company's Web site www.reliv.com. With that said, I'll turn the call back over to Mr. Montgomery.

Robert Montgomery

Thank you, Martin. The third quarter was not as strong as we had hoped, but we believe based on anecdotal evidence the significant problems in the U.S. economy in September played a role in our sales decline. But we also know that in tough economic times many people turn to direct selling as a means of earning additional income, and we're encouraging our distributors to explore this avenue in responsory efforts.

We believe that this economic environment offers a growth potential for Reliv. Our sales force is excited about the new product, which we will launch in Chicago on November the 8th. Over the two weeks following the launch a number of our senior executives will conduct meetings in eight cities to introduce the new product in person, and to continue generating excitement. And we will continue to look at other opportunities and other incentives to support sales in the fourth quarter.

We've taken steps to reduce our expenses, particularly internationally. When U.S. sales start growing again we should be able to leverage those reductions for improved earnings.

I'll now turn the call over to Steve Albright who will cover our financial results in more detail. Steve.

Steve Albright

Thank you, Bob. Reliv's net sales for the third quarter totaled $23.9 million, down 5% compared to sales in the third quarter of 2007. In the United States net sales for the third quarter was down 5.4% to $20.8 million. Sales in July were strong prior to the price increase that went into effect upon August the 1st. This was followed by a soft August, as we expected. However, sales in September did not recover as much as we had anticipated.

We believe September sales were hurt somewhat due to incentive trips that took a number of top producers out of the field on two weekends during the month. We also held our quarterly training for new business builders, newly qualified master affiliates during the month. When we scheduled these incentive events we tried to spread them out in order to avoid any possible negative impact on sales. In these cases these dates were unavoidable.

Sales outside the United States were down slightly in the third quarter from $3.1 million to $3.0 million. Part of the decline was due to slower sales in Europe as a result of the restructuring of our European operations, which we announced in the second quarter. Sales in the Philippines were also down in part due to the economic uncertainty in September and in part because the distributor leaders and corporate staff were out of the field in August due to conferences and holidays.

Net income for the quarter equaled $536, 000, or $0.04 per diluted share, compared to net income of $901,000 in the third quarter of 2007, or $0.06 per diluted share. For the first nine months of 2008, Reliv's net sales were $76.1 million, compared to $86.4 million for the same period in 2007. Net income for the first three quarters of 2008 was $2.6 million, or $0.17 per diluted share, compared to $4.3 million, or $0.27 per diluted share for the same period last year.

Excluding the second quarter, after tax charge of $110,000 for restructuring European operations, we would have earned $2.7 million in the first nine months, and diluted earnings per share would have come in at $0.18 per share. For the first nine months of 2008 U.S. sales were up 14.6%, and international sales were up 10.5% compared to the first nine months of 2007.

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