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Natural Alternatives International, Inc. Announces Fiscal 2015 Q3 Results

SAN MARCOS, Calif., Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced net income of $788,000 or $0.12 per diluted share on net sales of $19.6 million for the quarter ended March 31, 2015.

Net sales for the three months ended March 31, 2015 increased $500,000 or 2.5% from $19.1 million recorded in the comparable prior year period. For the quarter ended March 31, 2015, contract manufacturing sales decreased $400,000 or 2.1% from the comparable quarter last year due primarily to lower sales of established products to existing customers partially offset by new product sales to new customers. Patent and trademark licensing revenue increased 100.7% to $2.3 million during the quarter ended March 31, 2015 as compared to the prior year period.

Net sales for the nine months ended March 31, 2015 increased 7.9% to $56.9 million from $52.8 million recorded in the comparable prior year period. Contract manufacturing sales during the first nine months of fiscal 2015 increased $3.5 million or 7.2% from the comparable prior year period and patent and trademark licensing revenue increased $900,000 or 23.5% during this same period. We discontinued our Pathway to Healing® branded product line and all termination activities were substantially completed in the prior quarter. As a result our branded products sales decreased $191,000 or 21.5% for the first nine months of fiscal 2015.

Net income for the first nine months of fiscal 2015 totaled $2.4 million or $0.35 per diluted share compared to net income of $904,000 or $0.13 per diluted share in the comparable prior year period. The increase in net income was primarily attributable to higher contract manufacturing sales, increased licensing revenue, along with a decrease in patent prosecution expenses and a 1.9% gross margin improvement related to a favorable product sales mix. Patent litigation and prosecution expenses totaled $1.1 million for the first nine months of fiscal 2015 as compared to $1.7 million for the comparable prior year period.

In an effort to increase our top-line revenue and profit profile, and to take advantage of various strategic opportunities, including possible additional contract manufacturing services, we elected not to renew our CarnoSyn® license agreement with Compound Solutions Inc. which expired on March 31, 2015. Effective April 1, 2015, we began selling CarnoSyn® beta-alanine raw material and directly licensing our related patent and trademark rights.

In March 2015, NAI attained certification by Natural Food Certifiers (NFC) as an Organic Processor and Handler under the USDA National Organic Program Standards. NAI adds Organic Certification to its list of regulatory and compliance registrations including NSF International GMP certification, NSF "GMP for Sport" certification, Therapeutic Goods Administration (TGA) GMP certification, Health Canada GMP clearance, and Kosher and Halal certifications. We are pleased to secure another level of quality assurance for our clients in the organic market.

As of March 31, 2015, we had cash of $19.4 million and working capital of $34.7 million compared to $19.5 million and $31.3 million, respectively, as of June 30, 2014. As of March 31, 2015, we had $5.5 million available under our line of credit agreements with no amount outstanding.

Mark A. Le Doux, Chairman and Chief Executive Officer stated, "The third quarter ended March 31, 2015 has been a challenging time with foreign currency rate declines, commercial port congestion, and quality questions being raised about certain products and other companies by various government officials in the USA. Given these business headwinds, we are pleased with our third quarter results, and we remain cautious about the future impact of these challenges and other uncertainties related to the current business environment. As we move forward with the direct distribution of CarnoSyn® beta-alanine, we expect to garner new clients and new product applications through expanded investment in marketing, advertising and new product development efforts. We also remain hopeful we may have resolution to the ongoing litigation associated with our patent portfolio surrounding CarnoSyn® beta-alanine.

"Our steadfast commitment to quality remains the driving force of our dedicated global team members, and we are ever mindful of the mission to exceed our customers' expectations while bringing the best of health to the world based on sound science and longstanding integrity."

NAI, headquartered in San Marcos, 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 expectations and beliefs with respect to our future financial and operating results, including the amount of our future revenue and profits and our future financial condition, our ability to expand our contract manufacturing business and patent estate, comply with Good Manufacturing Practices and other applicable regulations and standards, improve stockholder value, 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 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.

CONTACT – Kenneth Wolf, Chief Operating and Chief Financial Officer, Natural Alternatives International, Inc., at 760-736-7700 or investor@nai-online.com.