Reliv' International, Inc.

Third-quarter 2009 net sales were $20.9 million, down from $23.9 million in the prior-year quarter. U.S. net sales were $18.3 million versus $20.8 million, and international net sales were $2.6 million versus $3.0 million, a decline of about 14% (or about 5% excluding currency effects). Net income was $324,000, or $0.03 per diluted share, versus $536,000, or $0.04 per diluted share, a year ago. Gross margin was 78.7% versus 81.3% last year, operating margin was 2.2% versus 4.7%, and distributor royalties and commissions were 37.9% of sales versus 39.1%. For the first nine months, net sales were $64.7 million versus $76.1 million, net income was $1.7 million versus $2.6 million, and diluted EPS was $0.13 versus $0.17. Cash from operations for the first nine months was $4.8 million, up about 34%, and cash and cash equivalents were $6.4 million as of September 30, 2009. Long-term debt plus the outstanding line of credit balance totaled approximately $6.4 million. No explicit full-year or next-quarter revenue/EPS guidance was provided; the main forward-looking comments centered on expected growth from Relivables, autoship expansion, and international expansion, plus the dividend cut from $0.05 to $0.02 per share.

CEO Robert Montgomery struck a cautious but somewhat encouraged tone. He said third-quarter performance was down year over year, but highlighted “glimmers of light,” including a 5% increase in new distributors, more orders, and the first sequential sales increase from Q2 to Q3 since 2006. He emphasized Relivables, autoship expansion, the Financial Freedom Tour, and the opening of Indonesia as key initiatives to support growth heading into 2010.

CFO Steve Albright focused on the financial decline versus last year but also pointed to operating and cash-flow discipline. He cited 78.7% gross margin, 37.9% distributor royalties and commissions as a percentage of sales, 38.6% SG&A as a percentage of sales, and 2.2% operating margin; he also noted SG&A was almost $900,000 lower than a year ago. He said net cash from operations for the first nine months was $4.8 million, helped by an more than 18% reduction in inventories, and that cash and cash equivalents were $6.4 million at quarter-end. He also explained that the dividend was cut to save cash and strengthen the business, with the annual dividend reduced to $0.07 from $0.10 per share.

There was no analyst Q&A; the operator stated there were no questions at this time. As a result, the call did not surface additional external concerns or management clarifications beyond the prepared remarks. The main implied concerns were the ongoing sales decline, lower margin, and softer distributor metrics, which management addressed through product launches, autoship expansion, international growth, and cost/cash actions.