Natural Alternatives International, Inc. Announces 2025 Q1 Results

Rhea-AI Summary

Natural Alternatives International (NAII) reported Q1 2025 financial results with a net loss of $2.0 million ($0.33 per share) on net sales of $33.2 million, compared to a net loss of $0.7 million in Q1 2024. Sales decreased 2.4% year-over-year, with private-label contract manufacturing down 4.8%. However, CarnoSyn® beta-alanine revenue increased 41.6% to $2.5 million. The company faced operational losses due to reduced sales, changes in sales mix, and increased manufacturing costs. As of September 30, 2024, NAII had $10.1 million in cash and $38.0 million in working capital, with $5.4 million in outstanding borrowings.

Positive

• CarnoSyn® beta-alanine revenue increased 41.6% to $2.5 million
• Strong working capital position of $38.0 million
• Available credit facility borrowing capacity of $12.5 million

Negative

• Net loss widened to $2.0 million from $0.7 million year-over-year
• Net sales decreased 2.4% to $33.2 million
• Private-label contract manufacturing sales declined 4.8%
• Increased manufacturing costs due to higher labor, supplies, rent, and freight
• Company expects overall net loss for fiscal 2025
• Cash position decreased from $12.0 million to $10.1 million since June 2024

Insights

Financial Analyst

The Q1 FY2025 results reveal concerning financial performance with a $2.0 million net loss ($0.33 per share), significantly worse than the $0.7 million loss in Q1 FY2024. Revenue declined 2.4% to $33.2 million, with private-label manufacturing down 4.8%. Despite CarnoSyn® sales growing 41.6%, the core business faces challenges from increased operational costs and reduced orders from a major customer.

The balance sheet shows deteriorating cash position, dropping from $12.0 million to $10.1 million in just one quarter. With $5.4 million drawn from their credit facility, liquidity concerns may arise if operational losses continue. Management's forecast of continued losses through H1 2025 signals ongoing challenges, though they project improvement in H2. The $38.0 million working capital provides some cushion, but cost control measures appear necessary to reverse the negative trend.

Market Research Analyst

The company's strategic positioning in the nutritional supplements market faces both opportunities and challenges. While the core contract manufacturing business struggles with reduced orders and increased costs, the CarnoSyn® segment shows promising growth. The management's optimistic outlook tied to potential regulatory changes and increased consumer focus on health supplements requires careful evaluation.

The reference to political shifts and potential regulatory changes affecting nutraceuticals represents a speculative catalyst rather than immediate business improvement. Investors should focus on the concrete challenges: rising operational costs, customer concentration risk and declining margins. The company needs to demonstrate successful execution of its diversification strategy and cost management initiatives before market sentiment is likely to improve.

CARLSBAD, Calif., Nov. 13, 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 $2.0 million, or $0.33 per diluted share, on net sales of $33.2 million for the first quarter of fiscal year 2025 compared to a net loss of $0.7 million, or $0.12 per diluted share, in the first quarter of the prior fiscal year.

Net sales during the three months ended September 30, 2024, decreased $0.8 million, or 2.4%, to $33.2 million as compared to $34.0 million recorded in the comparable prior year period. During the same period, private-label contract manufacturing sales decreased $1.6 million, a 4.8% decrease from the comparable quarter last year. Private-label contract manufacturing sales decreased primarily due to reduced orders from one of our larger customers, partially offset by increased shipments from a majority of other existing customers and shipments to new customers.

CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue increased 41.6% to $2.5 million during the first quarter of fiscal year 2025, as compared to $1.8 million for the first quarter of fiscal year 2024. The increase in patent and trademark licensing revenue during the first quarter of fiscal 2025 was primarily due to decreased volume rebates and an increase in orders from existing customers.

We experienced a loss from operations during the three months ended September 30, 2024, primarily due to reduced sales and a change in sales mix from our private-label contract manufacturing segment and increased manufacturing costs.  Manufacturing costs were negatively impacted by increased labor, supplies, rent, and freight costs. Although our overall sales forecast for fiscal 2025 includes a significant increase in sales as compared to fiscal 2024, we now anticipate we will experience a net loss in the first half of fiscal 2025, net income in the second half of fiscal 2025, and an overall net loss for the fiscal 2025 year.

As of September 30, 2024, we had cash of $10.1 million and working capital of $38.0 million compared to $12.0 million and $38.1 million respectively, as of June 30, 2024. As of September 30, 2024, we had $12.5 million of borrowing capacity on our credit facility of which we had outstanding borrowings of $5.4 million.

Mark A. Le Doux, Chairman and Chief Executive Officer of NAI stated, “While experiencing recent losses from operations due to anomalies in demand from various markets, I remain encouraged by our efforts to secure additional revenues and commensurate profitability through expanded product offerings and new client relationships.  The recent election in the USA has underlined a consumer driven mandate to ‘make America Healthy Again.’  Such a statement from the likes of Robert F. Kennedy Jr., along with the President Elect demonstrate their desire to eliminate the aggressive suppression of consumer use of nutraceuticals, vitamins, and anything else that advances human health and cannot be patented by Pharma.  With a renewed emphasis on becoming healthy and not just treating diseases, our entire industry stands ready to meet the quality standards consumers will demand as they seek to foster their health.  We remain committed to working with the new administration in fostering a greater understanding and acceptance of properly made products in this noble effort.”

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 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: https://www.nai-online.com

NATURAL ALTERNATIVES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
	(Unaudited)
	Three Months Ended
	September 30,
		2024							2023
NET SALES	$	33,150			100.0	%		$	33,969			100.0	%
Cost of goods sold		30,891			93.2	%			30,832			90.8	%
Gross profit		2,259			6.8	%			3,137			9.2	%
Selling, general & administrative expenses		4,095			12.4	%			3,681			10.8	%
LOSS FROM OPERATIONS		(1,836	)		-5.5	%			(544	)		-1.6	%
Other expense, net		(577	)		-1.7	%			(340	)		-1.0	%
LOSS BEFORE TAXES		(2,413	)		-7.3	%			(884	)		-2.6	%
Income tax benefit		(431	)						(189	)
NET LOSS	$	(1,982	)					$	(695	)
NET LOSS PER COMMON SHARE:
Basic:	($0.33		)					($0.12		)
Diluted:	($0.33		)					($0.12		)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		5,919							5,850
Diluted		5,919							5,850

NATURAL ALTERNATIVES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
	September 30,				June 30,
	2024				2024
	(Unaudited)
ASSETS
Cash and cash equivalents	$	10,156			$	11,981
Accounts receivable, net		17,623				16,891
Inventories, net		25,927				24,249
Other current assets		8,775				8,489
Total current assets		62,481				61,610
Property and equipment, net		51,060				52,211
Operating lease right-of-use assets		42,919				43,537
Other noncurrent assets, net		4,810				4,984
Total Assets	$	161,270			$	162,342
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities		17,657				19,456
Line of Credit		5,400				3,400
Mortgage note payable		9,156				9,229
Operating lease liability		48,872				47,662
Total Liabilities		81,085				79,747
Stockholders’ Equity		80,185				82,595
Total Liabilities and Stockholders’ Equity	$	161,270			$	162,342

FAQ

What was NAII's Q1 2025 net loss?

NAII reported a net loss of $2.0 million, or $0.33 per diluted share, for Q1 2025.

How much did NAII's CarnoSyn revenue grow in Q1 2025?

NAII's CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue increased 41.6% to $2.5 million.

What is NAII's current cash position as of September 30, 2024?

NAII had $10.1 million in cash and working capital of $38.0 million as of September 30, 2024.

How much did NAII's net sales decline in Q1 2025?

NAII's net sales decreased by $0.8 million, or 2.4%, to $33.2 million compared to the prior year period.