Natural Alternatives International, Inc. Announces 2025 Q2 and YTD Results

Rhea-AI Summary

Natural Alternatives International (NAII) reported Q2 fiscal 2025 results with a net loss of $2.2 million ($0.37 per share) on net sales of $34.1 million, compared to a $3.1 million loss ($0.52 per share) in Q2 fiscal 2024. Net sales increased 35% year-over-year, driven by a 40% growth in private-label contract manufacturing to $32.3 million.

CarnoSyn® beta-alanine revenue decreased 18% to $1.8 million in Q2. For the first six months of fiscal 2025, the company reported a net loss of $4.2 million on sales of $67.2 million, with sales up 14% from the prior year. The company expects continued losses through fiscal 2025.

As of December 31, 2024, NAII had $8.7 million in cash, working capital of $36.9 million, and $5.0 million in outstanding borrowings against its $10.8 million credit facility.

Positive

• Net sales increased 35% YoY to $34.1 million in Q2 2025
• Private-label contract manufacturing sales grew 40% to $32.3 million
• Six-month net sales increased 14% to $67.2 million

Negative

• Q2 2025 net loss of $2.2 million ($0.37 per share)
• CarnoSyn® revenue declined 18% to $1.8 million in Q2
• Expected continued losses through fiscal 2025
• Cash position decreased from $12.0M to $8.7M since June 2024
• Increased manufacturing and administrative costs impacting profitability

Insights

Financial Analyst

The Q2 FY2025 results reveal a complex picture for Natural Alternatives International. While the 35% revenue growth appears impressive at first glance, deeper analysis exposes concerning underlying trends. The improved top-line performance is primarily driven by contract manufacturing volume increases, but this growth comes at the cost of compressed margins, suggesting potential pricing pressure in the competitive contract manufacturing space.

The deterioration in the company's liquidity position is particularly noteworthy. Cash reserves have declined by 27.7% from June 2024 to December 2024, while borrowings have increased by $1.6 million. This cash burn, combined with working capital reduction of $1.2 million, indicates operational inefficiencies that need addressing.

The 18% decline in CarnoSyn® revenue is concerning as this segment typically carries higher margins than contract manufacturing. The shift in sales mix toward lower-margin contract manufacturing, coupled with increased operating costs and legal expenses for patent development, suggests that profitability challenges may persist beyond management's current fiscal year projections.

The company's strategic focus on expanding its patent estate through the new TriBSyn™ product line, while potentially valuable long-term, is creating near-term pressure on operating expenses. With management explicitly forecasting continued losses through fiscal 2025, the key to recovery will lie in their ability to optimize manufacturing costs and restore higher-margin product sales while managing their increasing debt load.

CARLSBAD, Calif., Feb. 14, 2025 (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 $2.2 million, or $0.37 per diluted share, on net sales of $34.1 million for the second quarter of fiscal year 2025 compared to a net loss of $3.1 million, or $0.52 per diluted share, in the second quarter of the prior fiscal year.

Net sales during the three months ended December 31, 2024, increased $8.9 million, or 35%, to $34.1 million as compared to $25.2 million recorded in the comparable prior year period. During the same period, private-label contract manufacturing sales increased 40% to $32.3 million. Private-label contract manufacturing sales increased primarily due to increased orders from two of our larger customers and shipments to new customers, partially offset by decreased shipments to other existing customers.

CarnoSyn^® beta-alanine royalty, licensing and raw material sales revenue decreased 18% to $1.8 million during the second quarter of fiscal year 2025, as compared to $2.2 million for the second quarter of fiscal year 2024. The decrease in CarnoSyn^® beta-alanine royalty, licensing, and raw material sales revenue during the second quarter of fiscal 2025 was primarily due to a decrease in orders from existing customers.

Our net loss for the six months ended December 31, 2024, was $4.2 million, or $0.70 per diluted share, compared to a net loss of $3.8 million, or $0.64 per diluted share, for the six months ended December 31, 2023.

Net sales during the six months ended December 31, 2024, increased $8.1 million, or 14%, to $67.2 million as compared to $59.2 million recorded in the comparable prior year period. During the six months ended December 31, 2024, private-label contract manufacturing sales increased 14% to $62.9 million, as compared to $55.2 million in the comparable prior period. CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue increased 9% to $4.3 million during the first six months of fiscal 2025, as compared to $3.9 million for the first six months of fiscal 2024.

We experienced a loss from operations during the three and six months ended December 31, 2024. This operating loss was primarily due to a change in sales mix from our private-label contract manufacturing segment, increased manufacturing and selling and general administrative costs, and increased legal costs associated with expanding our beta-alanine patent estate. Although our overall sales forecast for fiscal 2025 includes an increase in sales as compared to fiscal 2024, we anticipate we will experience a net loss in the second half of fiscal 2025, and an overall net loss for the fiscal 2025 year.

As of December 31, 2024, we had cash of $8.7 million and working capital of $36.9 million, compared to $12.0 million and $38.1 million respectively, as of June 30, 2024. As of December 31, 2024, we had $10.8 million of borrowing capacity on our credit facility of which we had outstanding borrowings of $5.0 million.

Mark A. Le Doux, Chairman and Chief Executive Officer of NAI stated, “We are pleased to have seen growth in our revenues this last quarter leading to significant reductions in anticipated losses. Consistent customer order flow and currency valuations provided significant headwinds during the past six months. As we begin the second half of our fiscal year, we remain dedicated to restoring profitability in what remains a challenging environment, and steadfast in our commitment to excellent customer service, continued product innovation along with patent expansion with our new TriBSyn™ product offerings.”

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: 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														Six Months Ended
	December 31,														December 31,
		2024							2023							2024							2023
NET SALES	$	34,078			100.0	%		$	25,202			100.0	%		$	67,228			100.0	%		$	59,171			100.0	%
Cost of goods sold		32,409			95.1	%			24,815			98.5	%			63,300			94.2	%			55,647			94.0	%
Gross profit		1,669			4.9	%			387			1.5	%			3,928			5.8	%			3,524			6.0	%
Selling, general & administrative expenses		4,449			13.1	%			3,900			15.5	%			8,544			12.7	%			7,581			12.8	%
LOSS FROM OPERATIONS		(2,780	)		-8.2	%			(3,513	)		-13.9	%			(4,616	)		-6.9	%			(4,057	)		-6.9	%
Other expense, net		(86	)		-0.3	%			(318	)		-1.3	%			(663	)		-1.0	%			(658	)		-1.1	%
LOSS BEFORE TAXES		(2,866	)		-8.4	%			(3,831	)		-15.2	%			(5,279	)		-7.9	%			(4,715	)		-8.0	%
Income tax benefit		(675	)						(761	)						(1,106	)						(950	)
NET LOSS	$	(2,191	)					$	(3,070	)					$	(4,173	)					$	(3,765	)
NET LOSS PER COMMON SHARE:
Basic:	($	0.37	)					($	0.52	)					($	0.70	)					($	0.64	)
Diluted:	($	0.37	)					($	0.52	)					($	0.70	)					($	0.64	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic		5,921							5,850							5,920							5,850
Diluted		5,921							5,850							5,920							5,850

NATURAL ALTERNATIVES INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
	(unaudited)
	December 31,			June 30,
		2024			2024
ASSETS
Cash and cash equivalents	$	8,663		$	11,981
Accounts receivable, net		16,898			16,891
Inventories, net		23,036			24,249
Other current assets		9,950			8,489
Total current assets		58,547			61,610
Property and equipment, net		50,939			52,211
Operating lease right-of-use assets		42,303			43,537
Other noncurrent assets, net		4,339			4,984
Total Assets	$	156,128		$	162,342
LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable and accrued liabilities		15,314			19,456
Line of Credit		5,000			3,400
Mortgage note payable		9,082			9,229
Operating lease liability		47,591			47,662
Total Liabilities		76,987			79,747
Stockholders’ Equity		79,141			82,595
Total Liabilities and Stockholders’ Equity	$	156,128		$	162,342

FAQ

What were NAII's Q2 2025 financial results?

NAII reported Q2 2025 net sales of $34.1 million with a net loss of $2.2 million ($0.37 per share), compared to a net loss of $3.1 million ($0.52 per share) in Q2 2024.

How much did NAII's private-label manufacturing sales grow in Q2 2025?

NAII's private-label contract manufacturing sales increased 40% to $32.3 million in Q2 2025 compared to the same period last year.

What is NAII's current cash position and working capital as of December 2024?

As of December 31, 2024, NAII had $8.7 million in cash and working capital of $36.9 million.

Why did NAII's CarnoSyn revenue decline in Q2 2025?

CarnoSyn® beta-alanine revenue decreased 18% to $1.8 million primarily due to decreased orders from existing customers.

What is NAII's financial outlook for fiscal 2025?

NAII anticipates continued net losses in the second half of fiscal 2025 and an overall net loss for the fiscal 2025 year, despite expecting increased sales compared to fiscal 2024.