CARLSBAD, Calif., May 15, 2023
/PRNewswire/ -- Natural Alternatives International, Inc.
("NAI") (Nasdaq: NAII), a leading formulator, manufacturer, and
marketer of customized nutritional supplements, today announced a
net loss of $2.4 million, or
$0.41 per diluted share, on net sales
of $32.7 million for the third
quarter of fiscal year 2023 compared to net income of
$2.5 million, or $0.41 per diluted share, in the third quarter of
the prior fiscal year.
Net sales during the three months ended March 31, 2023, decreased $9.7 million, or 22.8%, to $32.7 million as compared to $42.4 million recorded in the comparable prior
year period. During the same period, private-label contract
manufacturing sales decreased 19.3% to $30.4
million. Private-label contract manufacturing sales
decreased for most of our customers including two key customers,
partially offset by increased sales to our largest customer. The
primary driver for our sales decline relates to our customers'
excess on-hand inventory levels associated with softening consumer
demand. In addition, many of our customers maintained larger
inventory balances during the previous twelve months related to
supply constraints and have now begun to release these excess
inventory positions associated with improving supply chain
conditions. Sales were also negatively impacted by lower average
exchange rates applied to sales denominated in Euro as compared to
the prior year period.
CarnoSyn® beta-alanine royalty, licensing and raw material sales
revenue decreased 50.6% to $2.3
million during the third quarter of fiscal year 2023, as
compared to $4.8 million for the
third quarter of fiscal year 2022. This decrease was primarily due
to fewer orders from existing customers as a result of market and
inflationary factors along with a general slowdown in the Sports
Nutrition sales channel. In addition, the three months ended
March 31, 2022, included an unusual
ramp up of Sports Nutrition sales activity due to easing COVID
restrictions on athletic activities with no corresponding factors
in the three months ended March 31,
2023.
Net income for the nine months ended March 31, 2023, was $0.5
million, or $0.08 per diluted
share, compared to net income of $7.6
million, or $1.22 per diluted
share, for the nine months ended March 31,
2022.
Net sales during the nine months ended March 31, 2023, decreased $0.3 million, or 0.3%, to $118.1 million as compared to $118.4 million recorded in the comparable prior
year period. During the nine months ended March 31, 2023, private-label contract
manufacturing sales increased 7.7% to $113.0
million, while CarnoSyn® beta-alanine royalty, licensing and
raw material sales revenue decreased 62.0% to $5.2 million compared to $13.5 million for the first nine months of fiscal
2022.
While our sales decreased further than anticipated during the
third quarter of fiscal 2023, we expect our sales during the fourth
quarter of fiscal 2023 will increase as compared to the third
quarter.
Based on our current sales order volumes and our customers'
forecasts, we anticipate our fiscal 2023 consolidated net sales
will decrease between 10% to 12% compared to fiscal 2022, and we
will still generate net operating income for our fourth quarter of
fiscal 2023 and for the fiscal year ended June 30, 2023. We believe this decline in near
term demand from our customer base is consistent with the overall
economic trends in our industry. Changes in sales mix, unfavorable
foreign exchange rates, and inflationary factors including
increased operational costs, increased labor rates, raw material,
freight and supply chain costs are anticipated to negatively impact
our near-term financial results.
In March 2023, we implemented a
workforce restructuring plan eliminating 32 employee positions,
representing approximately 9% of our global workforce. The
reduction in workforce impacted all of our global locations and is
expected to result in reduced operating expenses of approximately
$1.8 million on an annualized basis.
During the quarter ended March 31,
2023, we recognized restructuring charges of $449,000, primarily related to severance payments
associated with this workforce restructuring plan.
We continue to evaluate further cost reduction opportunities,
including working with both suppliers and customers, to mitigate
the impact of order reductions and higher operational costs.
As of March 31, 2023, we had cash
of $15.6 million and working capital
of $40.7 million, compared to
$21.8 million and $53.5 million respectively, as of June 30, 2022. As of March
31, 2023, we had $10.9 million
available under our line of credit.
Mark A. Le Doux, Chairman and
Chief Executive Officer of NAI stated, "Despite the recent
volatility in our industry, we remain optimistic about the
long-term growth trends for nutritional supplements. We anticipate
continued near term headwinds associated with both the overall
macro-economic environment and factors specific to our
industry."
"While we are seeing some normalization with freight costs,
these and other costs continue to trend higher than pre-pandemic
levels and future operating costs are expected to be impacted by
inflationary pressures and are an area of our focus."
"We continue to aggressively seek opportunities to increase our
sales and customer base. I'm excited to report that construction on
our new powder manufacturing facility in Carlsbad, California is now complete, and this
state-of-the art powder plant began full operations in April 2023."
An updated investor presentation will be posted to the investor
relations page on our website later today
(https://www.nai-online.com/our-company/investors/).
NAI, headquartered in Carlsbad,
California, is a leading formulator, manufacturer and
marketer of nutritional supplements and provides strategic
partnering services to its customers. Our comprehensive
partnership approach offers a wide range of innovative nutritional
products and services to our clients including scientific research,
clinical studies, proprietary ingredients, customer-specific
nutritional product formulation, product testing and evaluation,
marketing management and support, packaging and delivery system
design, regulatory review and international product registration
assistance. For more information about NAI, please see our website
at http://www.nai-online.com.
This press release contains forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934
that are not historical facts and information. These
statements represent our intentions, expectations and beliefs
concerning future events, including, among other things, our
ability to increase sales to new and existing customers, our future
revenue profits and financial condition, as well as future economic
conditions and the impact of such conditions on our business. We
wish to caution readers these statements involve risks and
uncertainties that could cause actual results and outcomes for
future periods to differ materially from any forward-looking
statement or views expressed herein. NAI's financial
performance and the forward-looking statements contained herein are
further qualified by other risks, including those set forth from
time to time in the documents filed by us with the Securities and
Exchange Commission, including our most recent Annual Report on
Form 10-K.
CONTACT – Michael Fortin, Chief
Financial Officer, Natural Alternatives International, Inc., at
760-736-7700 or investor@nai-online.com.
Web site: http://www.nai-online.com
NATURAL ALTERNATIVES
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
|
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
March
31,
|
|
|
|
March
31,
|
|
|
|
2023
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2022
|
|
|
NET
SALES
|
$ 32,699
|
|
100.0 %
|
|
$ 42,373
|
|
100.0 %
|
|
$ 118,121
|
|
100.0 %
|
|
118,440
|
|
100.0 %
|
Cost of goods
sold
|
31,323
|
|
95.8 %
|
|
34,980
|
|
82.6 %
|
|
105,160
|
|
89.0 %
|
|
96,220
|
|
81.2 %
|
Gross profit
|
1,376
|
|
4.2 %
|
|
7,393
|
|
17.4 %
|
|
12,961
|
|
11.0 %
|
|
22,220
|
|
18.8 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general &
administrative expenses
|
3,864
|
|
11.8 %
|
|
4,119
|
|
9.7 %
|
|
11,422
|
|
9.7 %
|
|
12,317
|
|
10.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(LOSS) INCOME FROM
OPERATIONS
|
(2,488)
|
|
-7.6 %
|
|
3,274
|
|
7.7 %
|
|
1,539
|
|
1.3 %
|
|
9,903
|
|
8.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
(300)
|
|
-0.9 %
|
|
(88)
|
|
-0.2 %
|
|
(723)
|
|
-0.6 %
|
|
(123)
|
|
-0.1 %
|
(LOSS) INCOME BEFORE
TAXES
|
(2,788)
|
|
-8.5 %
|
|
3,186
|
|
7.5 %
|
|
816
|
|
0.7 %
|
|
9,780
|
|
8.3 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
(407)
|
|
|
|
682
|
|
|
|
331
|
|
|
|
2,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS)
INCOME
|
$ (2,381)
|
|
|
|
$
2,504
|
|
|
|
$
485
|
|
|
|
$ 7,607
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET (LOSS) INCOME
PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic:
|
($0.41)
|
|
|
|
$0.42
|
|
|
|
$0.08
|
|
|
|
$1.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
($0.41)
|
|
|
|
$0.41
|
|
|
|
$0.08
|
|
|
|
$1.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
5,816
|
|
|
|
6,003
|
|
|
|
5,867
|
|
|
|
6,168
|
|
|
Diluted
|
5,816
|
|
|
|
6,041
|
|
|
|
5,885
|
|
|
|
6,216
|
|
|
NATURAL ALTERNATIVES
INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
|
|
|
(unaudited)
|
|
|
|
March
31,
|
|
June
30,
|
|
2023
|
|
2022
|
|
|
|
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$15,560
|
|
$21,833
|
Accounts receivable,
net
|
7,611
|
|
17,422
|
Inventories,
net
|
39,309
|
|
32,475
|
Other current
assets
|
3,806
|
|
5,016
|
Total current assets
|
66,286
|
|
76,746
|
Property and equipment,
net
|
54,757
|
|
44,573
|
Operating lease
right-of-use assets
|
19,958
|
|
21,701
|
Other noncurrent
assets, net
|
2,926
|
|
2,983
|
Total Assets
|
$143,927
|
|
$146,003
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Accounts payable and
accrued liabilities
|
17,849
|
|
25,641
|
Line of
Credit
|
9,100
|
|
-
|
Mortgage note
payable
|
9,586
|
|
9,795
|
Long-term liability -
operating leases
|
20,786
|
|
22,047
|
Total Liabilities
|
57,321
|
|
57,483
|
Stockholders'
Equity
|
86,606
|
|
88,520
|
Total Liabilities and Stockholders' Equity
|
$143,927
|
|
$146,003
|
View original
content:https://www.prnewswire.com/news-releases/natural-alternatives-international-inc-announces-2023-q3-and-ytd-results-301825136.html
SOURCE Natural Alternatives International, Inc.