RELV

Reliv' International, Inc. (RELV)

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Reliv International Inc. (RELV)

Q3 2009 Earnings Call

October 29, 2009; 1:00 pm ET

Executives

Robert Montgomery - Chairman, President & Chief Executive Officer

Steve Albright - Chief Financial Officer

Martin Burks - Investor Relations

Presentation

Operator

Good day, ladies and gentlemen and welcome to the third quarter, 2009 Reliv International earnings conference call. My name is Erica and I’ll be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions)

I’d now like to turn the presentation over to the host for today’s call, Mr. Robert Montgomery, Chairman, President and CEO; please proceed sir.

Robert Montgomery

Hello, everyone and welcome to Reliv International’s conference call and which we will report on our results for the third quarter of 2009. I’ll be joined on the call today by Chief Financial Officer, Steve Albright. Before we begin Martin Burks will read our Safe Harbor statement. Go ahead, please Martin.

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 its public filings made with the Securities and Exchange Commission, including its Annual Report of Form 10-K and Quarterly Reports on Form 10-Q. Copies of which are available on the company’s website www.reliv.com.

With that said, I’ll turn the call back over to Mr. Montgomery.

Robert Montgomery

Thank you, Martin. It may well be that by now you know that our third quarter performance was down compared to last year. Steve will give you the financial results in detail in just a few minutes, but I’d like to tell you that we have seen some glimmers of light, during the last quarter that we hope are going to shine brighter as we move into 2010.

For example, the number of new distributors entering the business rose by 5% compared to the same quarter of last year it’s attribute to our distributor base. The total number of orders increased compared to last year as well.

Another positive development is that for the first time since 2006, we reported a sequential increase in net sales from the second quarter to the third quarter. Over the past six months, August and September represent our two highest sales months. We think these are positive developments to be sure, but we still face challenges and we know that.

Now I’ll turn the call over to Steve Albright who will cover our financial results in detail. Steve.

Steve Albright

Thank you, Bob. Today we reported net sales of $20.9 million for the third quarter of 2009, down from net sales of $23.9 million in the same quarter last year and the United States net sales totaled $18.3 million compared to net sales of $20.8 million in the third quarter of 2008.

Net sales outside the United States equaled $2.6 million compared to the $3.0 million in the year ago quarter, a decline of approximately 14%. Excluding foreign currency fluctuations, however, international net sales would have been down about 5%. We reported net income for the quarter of $324,000 or $0.03 per diluted share that compares to net income in the third quarter of last year of $536,000 or $0.04 per diluted share.

Sponsoring rose about 5% in the quarter compared to the third quarter of 2008 and the number of orders also increased in this year’s quarter. In comparisons with last year, we continued to see economic conditions hampering our performance. Also, the number of distributors reaching master affiliate in the United States during the third quarter of 2009 was down about 23% from the prior year quarter.

As Bob mentioned, we reported several areas of sequential improvement in the third quarter over second quarter of 2009 results. Net sales, for example, rose approximately 4%, that’s the first time we’ve seen sequential increases between those quarters since 2006. Traditionally our first quarter has always been our strongest quarter of the year and we have usually reported sequential increases from the fourth quarter of one year to the first quarter of next.

Still, the mid year sequential increase this year is positive. The number of orders in the third quarter is our best order level in the last five quarters. Order’s of the new Relivables line which was introduced in the third quarter was the catalyst that boost of the number of orders in the quarter. In addition, the size of our average order rose slightly in the third quarter over the second quarter of 2009.

However, our average order size remains below last year’s levels. Worldwide, our distributor count at the end of the third quarter was 68,300, a small decline of about 230 distributors compared to the number as of September 30, 2008. Our gross margin for the third quarter was 78.7% compared to the third quarter 2008 gross margin of 81.3%.

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