Natrol Reports Second Quarter Earnings
14/Aug/2003
Natrol, Inc. (NASDAQ: NTOL - news), a manufacturer and distributor of nationally branded dietary supplements, today reported results for the second quarter ended June 30, 2003, announcing a loss of $550,000 on net sales of $19.0 million.
CHATSWORTH, Calif. - (BUSINESS WIRE) -- August 14, 2003 - Natrol, Inc. (NASDAQ: NTOL - news), a manufacturer and distributor of nationally branded dietary supplements, today reported results for the second quarter ended June 30, 2003, announcing a loss of $550,000 on net sales of $19.0 million.
Net sales increased 6.4% when compared to the second quarter of 2002 when the Company posted $17.9 million in net sales. Net income for the second quarter of 2002 amounted to $130,000.
Net sales for the six months ended June 30, 2003 were $38.2 million, 7.8% more than the $35.4 million in net sales reported during the same period in 2002. The Company posted a net loss for the six months ended June 30, 2003 of $674,000 as compared to net income before cumulative effect of a change in accounting principle of $251,000 for the six months ended June 30, 2002. In the first quarter of 2002, the Company took a $6.8 million charge against earnings as a cumulative change in accounting principle. The charge was related to the write down of goodwill associated with prior Company acquisitions.
"There are bright spots as well as disappointment in our performance during the first half of this year," noted Elliott Balbert, the Company's Chairman and President when making the earnings announcement. "Most importantly, net sales revenue and operating income related to our core Natrol segment were stronger during the first six months of 2003 than they were during the first six months of 2002. Net sales revenue for the Natrol segment grew 9.1% to $27.7 million in 2003 from $25.4 million and operating earnings for the segment more than doubled, growing from $600,000 during the first six months of 2002 to approximately $1.3 million during the first six months of this year. Our progress at Natrol was tempered by results from our Prolab unit. Net sales revenue at Prolab increased 2% to $10.2 million for the six months ending June 30, 2003 from $10.0 million for the same six month period in 2002. But, due to sales and marketing expenditures as well as inventory adjustments, the Prolab segment suffered a loss from operations of approximately $1.2 million during the first half of this year as opposed to $277,000 of income from operations posted during the first half of 2002. This was a sharp disappointment. However, our balance sheet remains strong. We invested nearly $500,000 in Annasa during the first half of this year. Even so, our working capital at the end of June was $18.5 million, nearly equal to the $18.7 million recorded at the end of 2002. We have much to do to reach the levels of profitability we desire. Fortunately our core engine, Natrol, is strengthening as we address those segments of our business that need assistance."
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, including the factors described above that factors that the Company may not currently foresee, the Company's actual results could differ materially from those set forth in the forward-looking statements. Certain factors that might cause Natrol's actual results to differ materially from those set forth in the forward-looking statements include adverse trends in the dietary supplements industry, intense competition, adverse effects of unfavorable publicity regarding particular products or the Company's industry generally, the Company's dependence on the introduction of successful new products, the Company's ability to gain market share and shelf space in each of its distribution channels, the Company experiencing high rates of product returns, and adverse government regulation, as well as those factors set forth under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2002 and in the Company's other filings with Securities and Exchange Commission.
Contact:
Natrol Inc., Chatsworth
Dennis Jolicoeur, (818) 739-6000
Natrol, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)
(unaudited)
June 30, Dec. 31,
2003 2002
Assets
Current assets:
Cash and cash equivalents $ 9,086 $10,077
Accounts receivable, net of allowances for
doubtful accounts of $521 and $409 at
June 30, 2003 and December 31, 2002,
respectively 9,492 6,790
Inventory 7,988 8,669
Income taxes receivable 425 --
Deferred income taxes 665 665
Prepaid expenses and other current assets 674 1,452
______ ______
Total current assets 28,330 27,653
______ ______
Property and equipment:
Building and improvements 15,612 15,607
Machinery and equipment 5,009 5,067
Furniture and office equipment 3,186 3,003
______ ______
23,807 23,677
Accumulated depreciation and amortization (6,615) (5,867)
______ ______
17,192 17,810
Deferred income taxes 3,853 3,853
Goodwill, net of accumulated amortization and
impairment charge of $37,381 4,026 4,026
Other assets 41 39
Total assets $53,442 $53,381
====== ======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 6,148 $ 4,395
Accrued expenses 2,281 3,358
Accrued payroll and related liabilities 1,079 693
Income taxes payable -- 205
Current portion of long-term debt 312 301
______ ______
Total current liabilities 9,820 8,952
______ ______
Long-term debt, less current portion 7,616 7,778
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
Outstanding shares -- 13,812,495 and 13,788,720
at June 30, 2003 and December 31, 2002,
respectively 138 138
Additional paid-in capital 62,034 62,005
Accumulated deficit (23,285) (22,611)
______ ______
38,887 39,532
Shares held in treasury, at cost -- 921,900
shares at June 30, 2003 and December 31, 2002 (2,881) (2,881)
Total stockholders' equity 36,006 36,651
Natrol, Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except share and per share data)
Three months ended Six months ended
June 30, June 30,
2003 2002 2003 2002
(as restated) (as restated)
Net sales $18,988 $17,843 $38,155 $35,382
Cost of goods sold 12,301 10,744 23,205 21,704
------ ------ ------ ------
Gross profit 6,687 7,099 14,950 13,678
------ ------ ------ ------
Selling and marketing
expenses 4,367 4,526 9,686 8,411
General and
administrative
expenses 3,036 2,222 6,033 4,567
------ ------ ------ ------
Total operating
expenses 7,403 6,748 15,719 12,978
------ ------ ------ ------
Operating income (loss) (716) 351 (769) 700
Interest income 4 26 14 45
Interest expense (162) (171) (324) (341)
------ ------ ------ ------
Income (loss) before
income tax provision
(benefit) and
cumulative effect of
accounting change (874) 206 (1,079) 404
Income tax provision
(benefit) (324) 76 (405) 153
------ ------ ------ ------
Income (loss) before
cumulative effect of
change in accounting
principle (550) 130 (674) 251
Cumulative effect of
change in accounting
principle, net of
income tax benefit
of $4,139 -- -- -- (6,819)
------ ------ ------ ------
Net income (loss) $ (550) $ 130 $ (674) $(6,568)
------ ------ ------ ------
Income (loss) per
share: Income (loss)
per share before
cumulative effect of
change in accounting
principle $ (0.04) $ 0.01 $ (0.05) $ 0.02
Income (loss) per
share attributable
to cumulative effect
of change in
accounting principle -- -- -- (0.53)
Income (loss) per
share $ (0.04) $ 0.01 $ (0.05) $ (0.51)
Weighted-average
shares outstanding --
basic and diluted 12,886,746 12,842,714 12,878,722 12,838,365
Total liabilities and stockholders' equity $53,442 $53,381
Contact:
Natrol Inc., Chatsworth
Dennis Jolicoeur, 818/739-6000