Natural Alternatives International, Inc. Announces 2023 Q2 and YTD Results
CARLSBAD, Calif., Feb. 8, 2023 /PRNewswire/ — Natural Alternatives International, Inc. (“NAI”) (Nasdaq: NAII), a leading formulator, manufacturer, and marketer of customized nutritional supplements, today announced net income of $1.8 million, or $0.31 per diluted share, on net sales of $42.3 million for the second quarter of fiscal year 2023 compared to net income of $1.8 million, or $0.30 per diluted share, in the second quarter of the prior fiscal year.
Net sales during the three months ended December 31, 2022, increased $4.6 million, or 12.1%, to $42.3 million as compared to $37.7 million recorded in the comparable prior year period. During the same period, private-label contract manufacturing sales increased 21.3% to $40.8 million. Private-label contract manufacturing sales increased primarily due to increased sales to two of our largest customers, partially offset by decreased sales to other customers and lower average exchange rates applied to sales denominated in Euro as compared to the prior year period. Sales backlog for the quarter ended December 31, 2022 was approximately $2.2 million, which was a decrease of approximately $6.0 million from the quarter ended September 30, 2022.
CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue decreased 64.0% to $1.5 million during the second quarter of fiscal year 2023, as compared to $4.1 million for the second quarter of fiscal year 2022. The decrease in CaronSyn® beta-alanine royalty, licensing and raw material sales revenue during the second quarter of fiscal 2023 was primarily due to a decrease in orders from existing customers as a result of market and inflationary factors along with a general slowdown in the Sports Nutrition sales channel. Included in the market factors in the three months ended December 31, 2021 was a unique ramp up of Sports Nutrition sales activity due to easing COVID restrictions on athletic activities with no corresponding factors in the three months ended December 31, 2022.
Net income for the six months ended December 31, 2022 was $2.9 million, or $0.49 per diluted share, compared to net income of $5.1 million, or $0.81 per diluted share, for the six months ended December 31, 2021.
Net sales during the six months ended December 31, 2022, increased $9.3 million, or 12.3%, to $85.4 million as compared to $76.1 million recorded in the comparable prior year period. During the six months ended December 31, 2022, private-label contract manufacturing sales increased 22.8% to $82.6 million. CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue decreased 68.1% to $2.8 million during the first six months of fiscal 2023, as compared to $8.8 million for the first six months of fiscal 2022.
Based on our current sales order volumes and forecasts we have received from our customers, we now anticipate our fiscal year 2023 consolidated net sales will decrease slightly compared to fiscal 2022. We anticipate operating income will be negatively impacted by changes in sales mix, unfavorable foreign exchange rates, and inflationary factors including increased operational costs, increased labor, raw material, freight and supply chain costs. We anticipate the negative effects of these factors will have a more significant impact to our operating income in the second half of fiscal 2023. We are actively evaluating cost reduction opportunities, including working with both suppliers and customers, to mitigate the impact of these higher operational costs on our financial results. There can be no assurance our expectations will result in the currently anticipated net sales or financial results.
As of December 31, 2022, we had cash of $12.8 million and working capital of $44.5 million, compared to $21.8 million and $53.5 million respectively, as of June 30, 2022. As of December 31, 2022, we had $20.0 million available under our line of credit.
Mark A. Le Doux, Chairman and Chief Executive Officer of NAI stated, “While overall contract manufacturing sales activities remain strong, we continue to face challenges related to sales mix and increased operating costs that will negatively affect our profitability over the next couple of quarters. We continue to navigate the current economic environment which has resulted in inflationary cost increases across all our operating segments, while actively evaluating cost savings initiatives to help offset these impacts.”
“These challenges are not unique to our company as many other companies in our industry along with other industries are facing the same headwinds. Given our strong balance sheet and the long-term tailwinds in the nutritional space, we believe we will be able to weather this storm while still allowing us to seek opportunities for growth. As a management team, our goal of delivering for both our shareholders and customers remains unchanged.”
“Construction on our new powder manufacturing facility in Carlsbad, California is nearly complete, and we still anticipate this state-of-the art powder plant will be operational by the spring of calendar year 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 develop, maintain or increase sales to new and existing customers, our ability to attract and retain sufficient labor, COVID-19 and related impacts on the availability of raw materials, 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 [email protected].
Web site: http://www.nai-online.com