Reliv' International, Inc. (RELV)

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Reliv International Inc. (RELV)

Q4 2007 Earnings Call

February 27, 2008 1:00 pm ET


Robert Montgomery – President & CEO

Steven Albright – CFO

Martin Burks – Investor Relations


Scott Van Winkle – Canaccord Adams



Good day ladies and gentlemen and welcome to the quarter four 2007 Reliv International earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s conference Mr. Robert Montgomery, President, Chairman and Chief Executive Officer, please proceed.

Robert Montgomery

Hello everyone and welcome to Reliv International’s conference call in which we will report on our results for the fourth quarter of 2007 as well as the fiscal year of 2007. I’ll be joined on the call today by Steven Albright, Chief Financial Officer at Reliv. But 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 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 it’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, copies of which are available on the company’s website With that said, I’ll turn the call back over to Mr. Montgomery.

Robert Montgomery

Thanks Martin. We were not satisfied with our fourth quarter or our full year financial performance for 2007. Net sales and net income declined for both periods compared to the same periods of 2006. We were very happy that our distributor base as of December 31, 2007 increased compared to the year earlier. We also maintained our distributor retention rate at about twice the industry average. We also felt very good about the fact that sales in Asia and the Australia-New Zealand region increased compared to 2006 sales. In Asia in particular, the pace of sales growth picked up significantly in the last half of the year, which is a promising sign.

We certainly intend to return to top and bottom line growth in 2008 and I’ll talk about the strategies that we have in place to achieve that goal later in this call. But now I’ll hand the call over to Steven Albright who will cover our financial results in more detail, Steve?

Steven Albright

Thank you Bob. Reliv’s net sales for the fourth quarter totaled $24.6 million compared to sales of $28.6 million in the fourth quarter of 2006. Fourth quarter United States sales of $21.1 million were down from sales of $25.4 million for the same quarter of 2006. Outside of the United States, net sales for the fourth quarter totaled $3.5 million up from $3.2 million in the fourth quarter of 2006.

Net income for the quarter was $697,000 or $0.04 per share on a diluted basis compared to net income of $2.0 million or $0.12 per share diluted in the fourth quarter of 2006.

Now for the full year results. Net sales for 2007 were $111.1 million down 5.5% from 2006 sales. US sales were off about 7% for the year at $98.3 million. Our sales outside the US equaled $12.7 million compared to international sales of $11.7 million in 2006. International sales increased primarily from the weakening US dollar. When measured using the same exchange rates for both years international sales would have been up 0.6%.

As Bob mentioned our distributor base rose during 2007. We ended the year with 69,970 distributors versus 64,960 at the end of 2006. The number of distributors at the Master Affiliate level and above however declined for the year. That decline in turn has reflected in a drop in the size of our average order which had a negative impact on sales.

Our gross margin for the fourth quarter was 82.5% compared to 83.4% in the year ago quarter. Operating margins in the fourth quarter of 2007 were 4.4% versus 10.1% in the fourth quarter of 2006. For full year 2007 the operating margin was 6.6% compared to 10.3% for 2006.

We generate cash flow from operations in 2007 of $4.8 million. As of December 31, 2007 we had $12.1 million in cash, cash equivalents and short term investments. As you know we have no long term debt on our books. We did not repurchase any additional stock during the fourth quarter. During 2007 we bought back 752,491 shares at a cost of $7.7 million in our stock repurchase program.

Bob will discuss strategies to return Reliv to sales and profit growth in 2008. Before he begins however I should point out that the first quarter of 2007 was a record quarter for us and we do not foresee our turnaround beginning in this current quarter. Bob?

Robert Montgomery

Thank you Steve. As Steve just mentioned we’re very sound financially but we need to get our growth back on track and I will talk about those strategies that we’re pursuing to increase our sales and profits.

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