Natural Alternatives International, Inc. Announces Fiscal 2018 Q1 Results

CARLSBAD, Calif., Nov. 13, 2017 /PRNewswire/ -- Natural Alternatives International, Inc. ("NAI") (Nasdaq: NAII), a leading formulator, manufacturer and marketer of customized nutritional supplements, today announced net income of $1.4 million, or $0.21 per diluted share, on net sales of $28.1 million for the quarter ended September 30, 2017.

Net sales during the three months ended September 30, 2017 decreased $6.0 million, or 17.6%, from $34.1 million recorded in the comparable prior year period.  For the quarter ended September 30, 2017, private label contract manufacturing sales decreased $5.2 million, or 18.8%, from the comparable quarter last year.  Our first quarter fiscal 2018 contract manufacturing sales were unfavorably impacted due primarily to the timing and shipments of orders of existing products to existing customers and discontinued customer relationships.  The current quarter contract manufacturing sales decline resulted primarily from reduced orders from our largest customer for specific products associated with an inventory reduction program. During our second quarter of fiscal 2018, we expect sales of these products to increase to historical levels as it appears this excess inventory has been effectively sold through to consumers.  Additionally, we expect our fiscal Q2 2018 sales to our largest customer to increase as we begin shipping products under our previously announced expanded relationship.

CarnoSyn® beta-alanine royalty, licensing and raw material sales revenue decreased 12.5% to $5.9 million during the first quarter of fiscal 2018 as compared to $6.7 million for the first quarter of fiscal 2017.  The decrease in CarnoSyn® beta-alanine revenue was primarily due to decreased material shipments as a result of market and seasonal factors and lower average material sales prices. While we still have active patents covering instant release CarnoSyn® beta-alanine, we are beginning to see increased competition from companies selling generic beta-alanine.  In addition to legal actions we have prosecuted and others we may institute, to offset this decline, we have increased our sales and marketing activities to consumers, customers, potential customers, and brand owners on multiple platforms to promote and reinforce the features and benefits of utilizing CarnoSyn® beta-alanine.  We have also recently seen improved activity with our efforts to further commercialize our SR CarnoSyn® patent estate with multiple customers having launched or in the process of launching products containing SR CarnoSyn®.

Net income for our first quarter of fiscal 2018 was $1.4 million, or $0.21 per diluted share, compared to net income of $2.5 million, or $0.37 per diluted share, in the first quarter of fiscal 2017. This decrease was primarily attributable to decreased sales from both our private label contract manufacturing segment and our patent and trademark licensing segment.

As of September 30, 2017, NAI had cash of $27.7 million and working capital of $42.6 million compared to $27.8 million and $41.4 million, respectively, as of June 30, 2017.  As of September 30, 2017, we had $10.0 million available under our line of credit agreements.

Mark A. Le Doux, Chairman and Chief Executive Officer stated, "Our first quarter of this fiscal year had some quarter to quarter timing issues that negatively impacted our results for the quarter, and was also a period of transition as we geared up to address our recently announced expanded relationship with our largest customer.  New deliveries from this expanded relationship began shipping in the current quarter.  With our expanded capacities in both manufacturing facilities, we are poised to deliver against strong demands, both from this relationship, as well as others we have cultivated in the international marketplace.  With a robust balance sheet, strong cash levels and no debt, we are focusing our attention on a variety of opportunities before us as we seek to diversify and expand our product offerings, our intellectual property portfolio, and our market segment penetration."

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 future revenue profits and financial condition, our ability to maintain our patents, generate revenues from the commercialization of our patents and trademarks, secure compliance with our intellectual property rights, and 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, 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

SOURCE Natural Alternatives International, Inc.

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