Nutraceutical Reports 2008 Fiscal Year End Results
Net sales for the fiscal 2008 fourth quarter were $40.9 million comparedto $39.9 million for the same quarter of fiscal 2007. For the fourth quarterof fiscal 2008, net income was $1.5 million, or $0.14 diluted earnings pershare, compared to net income of $2.6 million, or $0.23 diluted earnings pershare, for the same quarter of fiscal 2007. Net income for the fourth quarterof fiscal 2008 included a non-cash goodwill impairment charge of $1.8 million(net of tax), or $0.17 per diluted share, related to the company's health foodstores. Net income for the fourth quarter of fiscal 2007 included a non-cashintangible asset impairment charge of $0.3 million (net of tax), or $0.02 perdiluted share, related to the re-branding of certain health food stores.
Net sales for the fiscal year ended September 30, 2008 were $166.9 millioncompared to $156.5 million for fiscal 2007. For fiscal 2008, net income was$11.9 million (including the $1.8 million goodwill impairment charge), or$1.07 diluted earnings per share (including the goodwill impairment charge of$0.16 per share), compared to net income of $13.0 million (including the $0.3million intangible asset impairment charge), or $1.15 diluted earnings pershare (including the intangible asset impairment charge of $0.02 per share),for fiscal 2007.
Operating cash flow for the fiscal year ended September 30, 2008 was $20.3million compared to $23.8 million for the same period of fiscal 2007. Thisoperating cash flow, combined with net borrowings of $8.0 million, was used toinvest $17.9 million in property and equipment, $5.9 million in acquisitionsof branded natural product businesses and $4.5 million in repurchases ofcommon stock.
Bill Gay, chairman and chief executive officer, commented, "Fiscal 2008revenues were the highest in company history and reflect the positivecontributions of our fiscal 2007 and 2008 acquisitions. Fiscal 2008 grossprofit margins were strong and improved slightly to 54.4% as a result of ourfocus on raw material sourcing and controlling manufacturing costs. Ourmanagement team has been successful during these challenging economic times byfocusing on cost containment throughout the company to offset costs that areoutside of our control and inflationary pressures. We believe that thestrength of our balance sheet, operating cash flows and bank relationships areimportant and will enable us to execute our business strategy and pursueacquisition opportunities that can enhance EBITDA and profitability. We areappreciative of our customers, employees and investors that support us in ourefforts to improve our business and achieve leadership in the Healthy FoodsChannel."
We are an integrated manufacturer, marketer, distributor and retailer ofbranded nutritional supplements and other natural products sold primarily toand through domestic health and natural food stores. Internationally, wemarket and distribute branded nutritional supplements and other naturalproducts to and through health and natural product distributors and retailers.Our core business strategy is to acquire, integrate and operate, frombeginning to end, the manufacturing, marketing and distribution of brandednutritional supplement businesses in the natural products industry. Webelieve that the consolidation and integration of these acquired businessesprovides ongoing financial synergies through increased scale and marketpenetration, as well as strengthened customer relationships.
We sell branded nutritional supplements and other natural products underthe trademarks Solaray(R), VegLife(R), KAL(R), Nature's Life(R), SunnyGreen(R), Action Labs(R), Natural Balance(R), NaturalMax(R), bioAllers(R),Herbs for Kids(TM), Natra-Bio(R), NaturalCare(R), Zand(R), Health from theSun(R), Life-flo(R), Larenim(R), Living Flower Essences(R), Pioneer(R),Thompson(R), Natural Sport(R), Supplement Training Systems(R), Premier One(R),Montana Big Sky(TM), ActiPet(R), FunFresh Foods(TM), Dowd & Rogers(TM),CompliMed(R), AllVia(TM), Oakmont Labs(R), Healthway(R), Body Gold(R), SaygeBiosciences(TM), Monarch Nutraceuticals(TM) and Great Basin Botanicals(TM).Under the name Woodland Publishing(TM), we publish, print and market a line ofbooks and booklets to, among others, book distributors, national retailbookstores and health and natural food stores. We also distribute brandedproducts of certain third parties.
We own neighborhood natural food markets, which operate under the tradenames The Real Food Company (TM), Thom's Natural Foods(TM) and CornucopiaCommunity Market(TM). We also own health food stores, which operate under thetrade names Fresh Vitamins(TM), Granola's(TM) and Pilgrim's Natureway(TM).
We manufacture and/or distribute one of the broadest branded product linesin the industry with over 4,000 SKUs, including over 700 SKUs soldinternationally. We believe that as a result of our emphasis on innovation,quality, loyalty, education and customer service, our brands are widelyrecognized in health and natural food stores and among their customers.
This Press Release contains forward-looking statements within the meaningof Section 27A of the Securities Act of 1933 and Section 21E of the SecuritiesExchange Act of 1934. These statements relate to our future plans, objectives,expectations, intentions and financial performance and the assumptions thatunderlie these statements. These statements involve known and unknown risks,uncertainties and other factors that may cause our actual results, level ofactivity, performance or achievements to be materially different from anyfuture results, levels of activity, performance or achievements expressed orimplied by these statements. We undertake no obligation to updateforward-looking statements to reflect events or circumstances occurring afterthe date of this Press Release. Important factors that may cause our resultsto differ from these forward-looking statements include, but are not limitedto, government regulations, product liability claims and litigation, insurancecoverage issues, a decrease in or slowing of the growth rate of the vitamin,mineral and supplement market, the success of the healthy foods channel,consumer perception of safety and quality of our products and similarproducts, competition, intellectual property rights of other parties, the lossof key personnel, disruptions from acquisitions, issues with obtaining rawmaterials of adequate quality or quantity, problems with informationmanagement systems, manufacturing efficiencies and operations, litigationgenerally, the volatility of the stock market generally and of our stockspecifically, a general lack of adequate industry analyst coverage, and otherfactors indicated from time to time in our SEC reports, copies of which areavailable upon request from our investor relations group or which may beobtained at the SEC's website (http://www.sec.gov).(C) 2008 Nutraceutical Corporation. All rights reserved. NUTRACEUTICAL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; dollars in thousands) September 30, September 30, 2008 2007 Assets Current assets, net $55,577 $51,534 Property, plant and equipment, net 52,356 39,506 Goodwill 37,632 38,978 Other non-current assets, net 16,099 16,384 $161,664 $146,402 Liabilities and Stockholders' Equity Current liabilities $19,239 $20,275 Long-term liabilities 28,965 20,208 Stockholders' equity 113,460 105,919 $161,664 $146,402 NUTRACEUTICAL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; dollars in thousands, except per share data) Three months ended Twelve months ended September 30, September 30, 2008 2007 2008 2007 Net sales $40,899 $39,902 $166,885 $156,548 Cost of sales 18,914 18,429 76,106 71,622 Gross profit 21,985 21,473 90,779 84,926 Operating expenses Selling, general and administrative 16,434 16,217 66,973 61,905 Amortization of intangible assets 179 161 701 391 Impairment of goodwill and intangible asset 2,875 450 2,875 450 Income from operations 2,497 4,645 20,230 22,180 Interest and other (income)/expense, net 262 443 1,270 1,257 Income before provision for income taxes 2,235 4,202 18,960 20,923 Provision for income taxes 708 1,597 7,017 7,951 Net income $1,527 $2,605 $11,943 $12,972 Net income per common share Basic $0.14 $0.23 $1.09 $1.17 Diluted 0.14 0.23 1.07 1.15 Weighted average common shares outstanding Basic 10,846,018 11,136,702 10,993,505 11,054,828 Diluted 10,966,785 11,307,910 11,127,634 11,253,283 NUTRACEUTICAL INTERNATIONAL CORPORATION ADJUSTED EBITDA SCHEDULE (unaudited; dollars in thousands) Three months Twelve months ended ended September 30, September 30, 2008 2007 2008 2007 Net income $1,527 $2,605 $11,943 $12,972 Provision for income taxes 708 1,597 7,017 7,951 Interest and other (income)/expense, net (1) 262 443 1,270 1,257 Depreciation and amortization 1,603 1,292 5,859 4,793 Impairment of goodwill and intangible asset (2) 2,875 450 2,875 450 Adjusted EBITDA $6,975 $6,387 $28,964 $27,423 (1) Includes amortization of deferred financing fees. (2) A non-cash goodwill impairment charge of $2,875 related to the company's health food stores was recorded for the three months and twelve months ended September 30, 2008. A non-cash intangible asset impairment charge of $450 related to the re-branding of certain health food stores was recorded for the three months and twelve months ended September 30, 2007.
SOURCE Nutraceutical International Corporation
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