Natrol (NASDAQ:NTOL)
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Natrol, Inc. (Nasdaq:NTOL), a leading manufacturer and
marketer of nationally branded nutritional products, today announced
that it had recorded operating income of $0.3 million and net income
of $0.1 million on net sales of $16.6 million for its second quarter
ending June 30, 2006.
Net sales in the second quarter decreased 15.5% or $3.0 million
compared to net sales of $19.6 million in the second quarter of 2005.
The Company recorded operating income of $0.6 million and net income
of $0.3 million for the second quarter of 2005.
The Company's gross margin increased to 43.4% for the second
quarter from 38.4% in the same quarter of 2005. The gross margin also
improved relative to the first quarter of 2006 when the Company
recorded a gross margin of 40.7%
For the six months ended June 30, 2006, the Company recorded
operating income of $0.3 million and net income of $0.2 million on net
sales of $33.5 million compared to an operating loss of $0.3 million
and a net loss of $0.3 million on net sales of $37.3 million for the
six months ended June 30, 2005. The Company's gross margin increased
to 42.0% for the six months ended June 30, 2006 compared to 37.0% for
the six months ended June 30, 2005.
"This is our second consecutive quarter of profitability," said
Wayne Bos, Natrol's President and CEO, when making the announcement.
"We have achieved profitability by being sharply-focused on the core
business. Revenue was down during the second quarter because we did
not introduce new products to the level that we did in same quarter of
2005 when we introduced approximately $2 million of new Natrol items.
Repeat sales on these items have not been strong. It is a testament to
the Natrol brand that our core, established products showed growth. A
second contributing factor to our decline in sales was our intentional
exit from unprofitable portions of the contract manufacturing
business. This contributed to $0.5 million of the drop in sales.
Lastly, our Prolab business remains soft, particularly outside the US
and declined $1.3 million relative to the second quarter of 2005. We
believe that our UK subsidiary, which will begin selling product
during the latter part of the third quarter, will help strengthen
Prolab sales.
"To compensate for the top line, we have initiated prudent cost
controls and begun many projects focused on improving our gross
margins through improved purchasing and manufacturing efficiency. The
many projects we have initiated regarding our gross margins are
producing results, allowing us to better last year's year-to-date
performance, in spite of additional staffing at the executive level
and the implementation of option expensing rules which cost us
approximately $0.4 million compared to last year. Our positive
performance year-to-date is a direct result of our following our
business strategy, the first priority of which is to strengthen our
core business."
About Natrol
Founded in 1980, Natrol, Inc. (Nasdaq:NTOL) is a diversified
nutrition company that manufactures and markets premium-branded
nutritional products, functional teas and sports fitness products
under the Natrol(R), Laci Le Beau(R) and Prolab(R) Sports Nutrition
brands. Natrol markets more than 200 nutritional products designed to
meet a wide range of consumer needs. The products are available at
more than 54,000 food, drug, mass market and independent health food
stores, catalogs and Internet sites, gyms and specialty stores
nationally and in select foreign countries. For more information,
visit www.natrol.com.
The statements made in this press release which are not historical
facts including statements regarding expectations for future growth of
revenue and profits and trends concerning net sales, are forward
looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. As a result of a number of factors, our
actual results could differ materially from those set forth in the
forward looking statements. Certain factors that might cause our
actual results to differ materially from those set forth in the
forward looking statements include our ability to define and implement
our business strategies, adverse trends in the dietary supplements
industry, intense competition, adverse effects of unfavorable
publicity regarding particular products or our industry generally, our
dependence on the introduction of successful new products, our ability
to gain market share and shelf space in each of its distribution
channels, our experiencing high rates of product returns, and adverse
government regulation, as well as those factors set forth under the
heading "Risk Factors" in our Annual Report on Form 10-K for the year
ended December 31, 2005 and in our other filings with the Securities
and Exchange Commission.
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Natrol, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30 December 31
2006 2005
------------ ------------
(unaudited)
Assets
Current assets:
Cash $ 2,262 $ 3,097
Accounts receivable, net of allowances of
$210 and $247 at June 30, 2006 and
December 31, 2005, respectively 7,541 6,723
Inventory 12,236 11,797
Income taxes receivable 234 439
Deferred income taxes 2,021 2,021
Prepaid expenses and other current assets 491 726
------------ ------------
Total current assets 24,785 24,803
------------ ------------
Property and equipment:
Building and improvements 14,936 14,930
Machinery and equipment 5,777 5,754
Furniture and office equipment 3,138 2,900
------------ ------------
23,851 23,584
Accumulated depreciation and amortization (9,376) (8,684)
--------------------------
Property and equipment, net 14,475 14,900
Property held for sale, net -- 761
Restricted cash 5,000 5,000
Deferred income taxes 4,033 3,905
Goodwill, net of accumulated amortization
and impairment charge of $37,381 2,026 2,026
Other assets 53 67
------------ ------------
Total assets $ 50,372 $ 51,462
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,750 $ 4,647
Accrued expenses 4,122 2,888
Accrued payroll and related liabilities 1,063 826
Current portion of long-term debt 548 532
------------ ------------
Total current liabilities 7,483 8,893
============ ============
Long-term debt, less current portion 6,887 7,165
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value of $0.01 per
share:
Authorized shares--2,000,000; Issued and
outstanding shares--none -- --
Common stock, par value of $0.01 per
share:
Authorized shares--50,000,000 Issued and
outstanding shares--13,575,648 and
13,535,837 at June 30, 2006 and
December 31, 2005, respectively 136 135
Additional paid-in capital 60,537 60,113
Accumulated deficit (24,671) (24,844)
--------------------------
Total stockholders' equity 36,002 35,404
============ ============
Total liabilities and stockholders' equity $ 50,372 $ 51,462
============ ============
Natrol, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data)
(unaudited)
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales $16,587 $19,604 $33,511 $37,273
Cost of goods sold 9,394 12,076 19,423 23,480
----------- ----------- ----------- -----------
Gross profit 7,193 7,528 14,088 13,793
----------- ----------- ----------- -----------
Selling and marketing
expenses 4,091 4,860 8,183 9,045
General and
administrative
expenses 2,765 2,086 5,290 5,003
Option expenses 67 -- 359 --
----------- ----------- ----------- -----------
Total operating
expenses 6,923 6,946 13,832 14,048
----------- ----------- ----------- -----------
Operating income
(loss) 270 582 256 (255)
Interest income 60 48 116 90
Interest expense (153) (160) (307) (320)
Gain on sale of
property -- -- 230 --
----------- ----------- ----------- -----------
Income (loss) before
taxes 177 470 295 (485)
Income tax provision
(benefit) 77 179 122 (184)
----------- ----------- ----------- ------------
Net Income (loss) $ 100 $ 291 $ 173 $ (301)
=========== =========== =========== ============
Income (loss) per
share:
Basic $ .01 $ .02 $ .01 $ (.02)
=========== =========== =========== ============
Diluted $ .01 $ .02 $ .01 $ (.02)
=========== =========== =========== ============
Weighted-average
shares outstanding--
basic and diluted
Basic 13,563,747 13,453,164 13,557,115 13,418,981
Diluted 13,914,763 14,178,075 13,865,531 13,418,981
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