Natrol (NASDAQ:NTOL)
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Natrol, Inc. (Nasdaq:NTOL), a premier manufacturer and marketer of
nationally branded nutritional products, today reported its fiscal first
quarter results for the period ended March 31, 2007. For the first
quarter, the Company reported that net sales increased 10.5% to $18.7
million versus $16.9 million a year ago; diluted earnings per share for
the first quarter were $0.02 versus $0.01 in the first quarter of last
year.
Wayne Bos, Natrol’s President and Chief
Executive Officer, commented, “We are pleased
to have begun this year with another successful quarter. We have
continued to see gains in our operating profitability, revenue growth,
and improvements in our operating cash flow. At the same time, we have
continued to invest in a variety of growth initiatives to build our
future.”
The Company noted that its first quarter gross profit margin improved to
47.0% from 40.7% in the prior year. This improvement was driven
primarily by a better mix of high-margin sales, predominantly due to the
inclusion of the NuHair®, Shen Min®,
and Promensil® businesses. Gross margin also
benefited from continued improvements in manufacturing efficiency.
Selling, marketing and administrative expenses as a percentage of sales
rose slightly, to 43.0% from 40.8% in the prior year, primarily due to
planned increases in its sales and marketing activity.
The Company reported first quarter operating income of $744,000, a
margin of 4.0%, versus a small operating loss in the year-ago quarter
and noted that pre-tax income rose to $555,000 versus the year-ago level
of $118,000. First quarter net income increased to $340,000 versus just
$73,000 in the same quarter of 2006.
Mr. Bos continued, “We are pleased by our
progress, but remain intently focused on implementing strategies to
continue growth and further improve our profitability. Shortly after the
close of the first quarter, we successfully executed a sale and
leaseback of our real estate properties which netted approximately $12.0
million in cash. It is our intent to use this capital to fund new growth
initiatives.”
Mr. Bos concluded, “We will continue to
instill a culture of operating discipline and growth throughout our
organization. We believe that Natrol has a compelling opportunity within
the global marketplace for nutritional supplements. We intend to take
full advantage of the global wellness trend to maximize returns for our
shareholders.”
About Natrol – Nourishing the Potential of
Mind and Body™
Natrol, Inc. (Nasdaq:NTOL), headquartered in Chatsworth, CA, has a
portfolio of health and wellness brands representing the highest quality
nutritional supplements, functional herbal teas and sports nutrition
products. Natrol’s business consists of
ownership, management, marketing and distribution of premium brands and
products, as well as nutraceutical manufacturing for its own brands and
on behalf of third parties. The company’s
brands include Natrol®, Prolab®,
Laci Le Beau®, Promensil®,
Trinovin®, Nu Hair®,
and Shen Min®.
Natrol distributes products nationally through more than 54,000
retailers, as well as internationally in 40 countries through
distribution partners and a wholly-owned subsidiary in the UK. Natrol’s
dedication to quality is evidenced by its commitment to high
manufacturing standards, earning the company an “A”
rating from the Natural Products Association’s
GMP Certification Program – a designation
achieved by less than ten percent of U.S. nutrition companies. 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 and Section 21E of the Securities Exchange Act of 1934. 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 in the
forward-looking statements include, without limitation: (i) our ability
to develop and execute our business plans, (ii) our ability to respond
to competitive challenges and changing consumer preferences, (iii) our
ability to consummate and integrate acquisitions, (iv) increased
competition, (v) unfavorable publicity about dietary supplements in
general or regarding our products or similar products sold by others,
(vi) our exposure to product liability claims, (vii) our dependence upon
certain large customers, (viii) our ability to retain and attract
talented management and other key employees, and, (ix) our ability to
replace our Ester-C® business once we have
used the remaining inventory of Ester-C, 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, 2006, and in our other filings with the
Securities and Exchange Commission.
Natrol, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
(In thousands, except share and per share data)
March 31,
December 31,
2007
2006
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$ 581
$ 1,003
Accounts receivable, net of allowances of $237 and $181 at March
31, 2007 and December 31, 2006, respectively
8,487
6,485
Inventory
11,444
11,788
Income taxes receivable
280
375
Deferred income taxes
1,634
1,630
Prepaid expenses and other current assets
1,602
1,743
Total current assets
24,028
23,024
Property and equipment:
Building and improvements
14,991
14,953
Machinery and equipment
5,816
5,757
Furniture and office equipment
3,027
3,013
23,834
23,723
Accumulated depreciation and amortization
(10,220)
(9,912)
Property and equipment, net
13,614
13,811
Restricted cash
5,250
5,000
Deferred income taxes
4,265
4,265
Goodwill, net of accumulated amortization and impairment charge
2,026
2,026
Trademarks
5,730
5,730
Other assets
933
744
Total assets
$ 55,846
$ 54,600
Liabilities and stockholders’ equity
Current liabilities:
Line of credit
$ 2,952
$ 3,694
Accounts payable
4,274
3,058
Accrued expenses
2,763
2,558
Accrued payroll and related liabilities
1,326
1,185
Current portion of long-term debt
423
414
Total current liabilities
11,738
10,909
Long-term debt, less current portion
6,191
6,301
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—14,152,227
and 14,116,148 at March 31, 2007 and December 31, 2006 respectively
142
141
Additional paid-in capital
61,826
61,638
Accumulated deficit
(24,069)
(24,409)
Accumulated other comprehensive income
18
20
Total stockholders’ equity
37,917
37,390
Total liabilities and stockholders’ equity
$ 55,846
$ 54,600
Natrol, Inc. and Subsidiaries
Consolidated Condensed Statements of Income
(In thousands, except share and per share data)
(unaudited)
Three Months Ended March 31,
2007
2006
Net sales
$
18,707
$
16,923
Cost of goods sold
9,921
10,029
Gross profit
8,786
6,894
Selling and marketing expenses
5,026
4,091
General and administrative expenses
3,016
2,817
Total operating expenses
8,042
6,908
Operating income (loss)
744
(14)
Interest income
32
56
Interest expense
(221)
(154)
Gain on sale of property
—
230
Income before income taxes
555
118
Income tax provision
215
45
Net income
$
340
$
73
Income per share:
Basic
$
0.02
$
0.01
Diluted
0.02
0.01
Weighted-average shares outstanding:
Basic
14,145,073
13,534,237
Diluted
15,226,377
13,805,234
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