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Natural Alternatives International, Inc. Announces 2020 Q2 and YTD Results

CARLSBAD, Calif., Feb. 11, 2020 /PRNewswire/ -- Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced net income of $476,000, or $0.07 per diluted share. 

Net sales during the three months ended December 31, 2019 decreased $6.9 million, or 19.3%, from $36.0 million recorded in the comparable prior year period.  During the same period, private-label contract manufacturing sales decreased $6.8 million, or 21.6%, from the comparable quarter last year. Second quarter contract manufacturing sales decreased primarily due to lower sales to our largest contract manufacturing customer.

CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue decreased 2.5% to $4.3 million during the second quarter of fiscal 2020, as compared to $4.4 million for the second quarter of fiscal 2019.

Net income for the three months ended December 31, 2019 was $476,000, or $0.07 per diluted share as compared to net income of $2.2 million, or $0.31 per diluted share in the second quarter of fiscal 2019.

Net income for the six months ended December 31, 2019 was $572,000, or $0.08 per diluted share, compared to net income of $4.7 million, or $0.68 per diluted share, for the six months ended December 31, 2018.

Net sales during the six months ended December 31, 2019 decreased $14.3 million, or 19.7%, from $72.6 million recorded in the comparable prior year period.  For the six months ended December 31, 2019, private label contract manufacturing sales decreased $11.9 million, or 19.0%, from the comparable period last year. Contract manufacturing sales for the first six months of fiscal 2020 decreased primarily due to lower sales to our largest customer partially offset by increased sales to other new and existing customers. Sales to our largest contract manufacturing customer declined over 31%. 

CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue during the six months ended December 31, 2019 decreased $2.4 million, or 24.1%, from $9.8 million during the comparable period last year. We believe this decline was impacted by certain customers discontinuing the use of our CarnoSyn® beta-alanine in favor of generic beta-alanine and lower overall consumer demand for our customers' CarnoSyn® products.  We expect the recent ruling from the U.S. Court of Appeals for the Federal Circuit in favor of NAI's CarnoSyn® beta-alanine patents, along with our CarnoSyn® beta-alanine New Dietary Ingredient (NDI) status from the FDA, will help motivate buyers to purchase CarnoSyn® in the future.  We continue to vigorously pursue all legal avenues to protect our CarnoSyn® brands, intellectual property portfolios, and regulatory compliance status.

For the second half of fiscal 2020, as compared to the same period in the prior year, we expect sales levels to our largest contract manufacturing customer to decline 20% to 25% and our CarnoSyn® beta-alanine revenue to be comparable to the prior year. As a result, on an annualized basis, we now expect our consolidated fiscal 2020 revenue to decline approximately 10% to 15% as compared to the prior fiscal year.  

As of December 31, 2019, NAI had cash of $26.9 million and working capital of $57.3 million compared to $25.0 million and $57.1 million, respectively, as of June 30, 2019.  As of December 31, 2019, we had $10.0 million available under our line of credit agreement.

Mark A. Le Doux, Chairman and Chief Executive Officer of NAI stated, "The second quarter remained challenging, but our sales team and management continue to work diligently to secure additional opportunities given the continued right-sizing of inventory by our largest customer."

"The marketplace has been challenging due to several factors, but we see signs of normalization appearing on the horizon as evidenced by renewed purchases from many of our customers who have been cautiously monitoring their inventory levels."

"While sales to our largest contract manufacturing customer contracted in the past several quarters due to a variety of factors, we believe their sales will stabilize later this fiscal year and we will continue to expand our customer base through new customer acquisition and new product launches with existing customers."

"We continue to seek to expand our footprint of CarnoSyn® and SR CarnoSyn® patented supplements, in addition to working with regulators to monitor and fully implement provisions leading to better consumer protections under applicable laws and regulations."

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 future revenue profits and financial condition, our ability to introduce products in new sales channels, maintain our patents, generate revenues from the commercialization of our patents and trademarks, secure compliance with our intellectual property rights, and develop, maintain or increase sales to new and existing customers, as well as future economic conditions and the impact of such conditions on our business. We wish to caution readers that 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)


















Three Months Ended




Six Months Ended




December 31,




December 31,




2019




2018




2019




2018



NET SALES

29,103


100.0%


36,043


100.0%


58,298


100.0%


72,575


100.0%

Cost of goods sold

24,042


82.6%


29,607


82.1%


48,853


83.8%


58,976


81.3%

Gross profit

5,061


17.4%


6,436


17.9%


9,445


16.2%


13,599


18.7%

















Selling, general & administrative expenses

4,363


15.0%


4,229


11.7%


8,802


15.1%


8,668


11.9%

















INCOME FROM OPERATIONS

698


2.4%


2,207


6.1%


643


1.1%


4,931


6.8%

















Other (loss) income, net

-124


-0.4%


543


1.5%


53


0.1%


1,040


1.4%

INCOME BEFORE TAXES

574


2.0%


2,750


7.6%


696


1.2%


5,971


8.2%

















Income tax expense

98




569




124




1,231



















NET INCOME

$ 476




$2,181




$ 572




$4,740



































NET INCOME PER COMMON SHARE:
















Basic:

$0.07




$0.32




$0.08




$0.70



















Diluted:

$0.07




$0.31




$0.08




$0.68



















WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
















Basic

6,795




6,808




6,818




6,786



Diluted

6,886




6,999




6,936




6,982




 

NATURAL ALTERNATIVES INTERNATIONAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


(Unaudited)








December 31,


June 30,


2019


2019





ASSETS




Cash and cash equivalents

$26,900


$25,040

Accounts receivable, net

14,227


15,964

Inventories, net

22,650


26,003

Other current assets

4,745


4,379

    Total current assets

68,522


71,386

Property and equipment, net

20,613


21,085

Operating lease right-of-use assets

19,523


-

Other noncurrent assets, net

863


1,019

    Total Assets

$109,521


$93,490





LIABILITIES AND STOCKHOLDERS' EQUITY




Accounts payable and accrued liabilities

13,659


16,863

Long-term liability - operating leases

19,742


-

Deferred rent

-


543

    Total Liabilities

33,401


17,406

Stockholders' Equity

76,120


76,084

    Total Liabilities and Stockholders' Equity

$109,521


$93,490






 

Cision

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SOURCE Natural Alternatives International, Inc.