STOCK TITAN

Natural Alternatives International, Inc. Announces Fiscal 2024 Q3 and YTD Results

Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Neutral)
Tags
Rhea-AI Summary

Natural Alternatives International (NAII) announced its fiscal 2024 Q3 results, revealing a net loss of $1.6 million, or ($0.27) per diluted share, on net sales of $25.1 million. This compares to a $2.4 million net loss in Q3 of the prior year. Q3 net sales fell by 23%, driven by a 26% decrease in private-label contract manufacturing sales. However, CarnoSyn® beta-alanine revenue rose 13% to $2.7 million. For the nine months ending March 31, 2024, NAII reported a net loss of $5.3 million on net sales of $84.3 million, a 29% decrease year-over-year. Cash reserves stood at $12.4 million, with zero outstanding on their credit facility. The company expects to report a net loss for Q4 and fiscal 2024 due to ongoing market adjustments but forecasts future sales growth and a return to profitability with the reopening of their Carlsbad facility in May 2024.

Positive
  • CarnoSyn® beta-alanine revenue increased 13% in Q3 and 28% year-to-date.
  • Cash reserves at $12.4 million as of March 31, 2024.
  • Zero outstanding on credit facility as of March 31, 2024.
  • The Carlsbad powder facility is set to reopen in May 2024, potentially boosting future sales.
Negative
  • Net loss of $1.6 million in Q3 2024, or ($0.27) per diluted share.
  • Net sales decreased by 23% to $25.1 million in Q3 2024.
  • Private-label contract manufacturing sales dropped by 26% in Q3.
  • Year-to-date net loss of $5.3 million.
  • Net sales for nine months ending March 31, 2024, fell by 29%.
  • Anticipated net loss for Q4 and fiscal 2024.

Insights

NAI's fiscal Q3 2024 results reveal a significant net loss reduction but still portray a challenging financial landscape due to a notable decrease in net sales by 23% compared to the same quarter last year. The primary contributor to this reduction was a 26% drop in private-label contract manufacturing sales, which stemmed from decreased orders as large customers attempted to balance their inventories. This decline signals potential issues with demand forecasting and inventory management, key aspects that investors should keep an eye on.

While the increase in CarnoSyn® beta-alanine royalty revenues by 13% is a positive aspect, it wasn't sufficient to offset the substantial drop in private-label sales. NAI’s decision to temporarily close, then reopen, its powder processing facility might be a reactive strategy to inventory management. Nevertheless, the company’s cash position remains relatively stable at $12.4 million and having no outstanding credit is a reassuring sign of financial prudence.

However, management's guidance indicating continued net losses for Q4 2024 casts uncertainty over short-term recovery. Given the company's forecast and overall sales weakening, investors should approach with caution, monitoring for signs of stabilization and any realignment toward profitability.

The nutritional supplements market has been growing, but NAI’s results highlight pressures specific to the private-label sector. The 31% decrease in private-label contract manufacturing sales over nine months is significant, suggesting either market saturation or competitive pressures. The company's strategy to re-open its powder processing facility and its effort to address excess inventory issue reflect a short-term tactical move rather than a robust long-term strategy.

The increase in CarnoSyn® beta-alanine sales revenue is noteworthy, showing a demand for specialized products. However, reliance on a few large customers poses a risk. Diversification of the customer base and expansion of their proprietary ingredient market could reduce such vulnerabilities. Investors should watch for how effectively NAI leverages its current pipeline of new business opportunities and whether these efforts translate into sustainable sales growth.

CARLSBAD, Calif., May 14, 2024 (GLOBE NEWSWIRE) -- Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer, and marketer of customized nutritional supplements, today announced a net loss of $1.6 million, or ($0.27) per diluted share, on net sales of $25.1 million for the third quarter of fiscal year 2024 compared to a net loss of $2.4 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, 2024, decreased $7.6 million, or 23%, to $25.1 million as compared to $32.7 million recorded in the comparable prior year period. During the same period, private-label contract manufacturing sales decreased 26% to $22.4 million. Private-label contract manufacturing sales decreased primarily due to reduced orders from several of our larger customers associated with their efforts to reduce excess on-hand inventories, partially offset by increased shipments from other existing customers and shipments to new customers.

CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue increased 13% to $2.7 million during the third quarter of fiscal year 2024, as compared to $2.3 million for the third quarter of fiscal year 2023. The increase in CarnoSyn® beta-alanine royalty, licensing, and raw material sales revenue during the third quarter of fiscal 2024 was primarily due to increased royalty income and favorable volume rebate activity. The increase during the nine months ended March 31, 2024, was primarily due to an increase in orders from existing customers and increased royalty income.

Our net loss for the nine months ended March 31, 2024, was $5.3 million, or ($0.91) per diluted share, compared to net income of $0.5 million, or $0.08 per diluted share, for the nine months ended March 31, 2023.

Net sales during the nine months ended March 31, 2024, decreased $33.8 million, or 29%, to $84.3 million as compared to $118.1 million recorded in the comparable prior year period. During the nine months ended March 31, 2024, private-label contract manufacturing sales decreased 31% to $77.7 million, as compared to $113.0 million in the comparable prior period. CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue increased 28% to $6.6 million during the first nine months of fiscal 2024, as compared to $5.2 million for the first nine months of fiscal 2023.

We experienced a loss from operations during the three and nine months ended March 31, 2024. This was primarily due to a slowdown in sales across our private-label contract manufacturing segment. On August 16, 2023, we announced the temporary closure of our high-speed powder processing facility in Carlsbad, California due to excess inventory on hand at one of our largest customers and their efforts to rebalance supply and demand. On April 2, 2024, we announced we will be reopening this facility in May 2024.

Based on our current overall sales forecast, we anticipate we will experience a net loss in the fourth quarter of fiscal 2024 and an overall net loss for fiscal 2024.

As of March 31, 2024, we had cash of $12.4 million and working capital of $40.7 million, compared to $13.6 million and $41.1 million respectively, as of June 30, 2023. As of March 31, 2024, we had zero outstanding on our credit facility.

Mark A. Le Doux, Chairman and Chief Executive Officer of NAI stated, “Our efforts to re-open our Carlsbad powder facility are progressing as planned and we expect to resume commercial product production later this month. We believe the industry has worked through a substantial portion of its excess inventory positions, and with a healthy pipeline of new business opportunities, we are optimistic of our future sales growth and return to profitability.”   

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 develop, maintain or increase sales to new and existing customers, our ability to re-open our Carlsbad powder facility, our future revenue profits and financial condition, as well as current and 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.

SOURCE - Natural Alternatives International, Inc.

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 OPERATIONS
(In thousands, except per share data)
        
 (Unaudited)   (Unaudited)  
 Three Months Ended   Nine Months Ended  
 March 31,   March 31,  
  2024     2023     2024     2023   
NET SALES$25,136  100.0% $32,699  100.0% $84,307  100.0% $118,121  100.0%
Cost of goods sold 23,214  92.4%  31,323  95.8%  78,861  93.5%  105,160  89.0%
Gross profit 1,922  7.6%  1,376  4.2%  5,446  6.5%  12,961  11.0%
                
Selling, general & administrative expenses 3,874  15.4%  3,864  11.8%  11,455  13.6%  11,422  9.7%
                
(LOSS) INCOME FROM OPERATIONS (1,952) -7.8%  (2,488) -7.6%  (6,009) -7.1%  1,539  1.3%
                
Other expense, net (16) -0.1%  (300) -0.9%  (674) -0.8%  (723) -0.6%
(LOSS) INCOME BEFORE TAXES (1,968) -7.8%  (2,788) -8.5%  (6,683) -7.9%  816  0.7%
                
Income tax (benefit) expense (390)    (407)    (1,340)    331   
                
NET (LOSS) INCOME$(1,578)   $(2,381)   $(5,343)   $485   
                
                
NET (LOSS) INCOME PER COMMON SHARE:               
Basic:($0.27)   ($0.41)   ($0.91)   $0.08   
                
Diluted:($0.27)   ($0.41)   ($0.91)   $0.08   
                
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:               
Basic 5,868     5,816     5,856     5,867   
Diluted 5,868     5,816     5,856     5,885   
                


NATURAL ALTERNATIVES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
    
 (unaudited)  
 March 31, June 30,
 2024 2023
    
ASSETS   
Cash and cash equivalents$12,407 $13,604
Accounts receivable, net 11,221  7,022
Inventories, net 21,071  29,694
Other current assets 9,662  6,690
    Total current assets 54,361  57,010
Property and equipment, net 52,384  53,841
Operating lease right-of-use assets 44,032  20,369
Other noncurrent assets, net 2,434  2,932
    Total Assets$153,211 $134,152
    
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Accounts payable and accrued liabilities 13,254  14,450
Line of Credit -  -
Mortgage note payable 9,301  9,517
Operating lease liability 46,557  21,413
    Total Liabilities 69,112  45,380
Stockholders’ Equity 84,099  88,772
    Total Liabilities and Stockholders’ Equity$153,211 $134,152
    


FAQ

What were the Q3 2024 financial results for NAII?

Natural Alternatives International (NAII) reported a net loss of $1.6 million, or ($0.27) per diluted share, on net sales of $25.1 million for Q3 2024.

How did NAII's net sales perform in Q3 2024?

NAII's net sales in Q3 2024 decreased by 23% to $25.1 million compared to the same period last year.

What caused the decrease in NAII's private-label contract manufacturing sales in Q3 2024?

The 26% decrease in private-label contract manufacturing sales was primarily due to reduced orders from larger customers aiming to reduce excess on-hand inventories.

How did CarnoSyn® beta-alanine revenue perform in Q3 2024?

CarnoSyn® beta-alanine revenue increased by 13% to $2.7 million in Q3 2024 compared to the same period last year.

What is NAII's financial outlook for Q4 2024?

NAII anticipates a net loss for Q4 2024 and an overall net loss for the fiscal year 2024.

What were NAII's cash reserves as of March 31, 2024?

As of March 31, 2024, NAII had cash reserves of $12.4 million.

When is NAII's Carlsbad powder facility expected to reopen?

NAII's Carlsbad powder facility is expected to reopen in May 2024.

Natural Alternatives International Inc.

NASDAQ:NAII

NAII Rankings

NAII Latest News

NAII Stock Data

28.14M
6.20M
21.28%
30.95%
0.06%
Packaged Foods
Medicinal Chemicals & Botanical Products
Link
United States of America
CARLSBAD