Natrol Announces Second Quarter Earnings
12/Aug/2005
Natrol, Inc. (NASDAQ: NTOL - news), a manufacturer and distributor of nationally branded dietary supplements, today reported results for the second quarter ended June 30, 2005, announcing net income of $291,000 or $0.02 per diluted share on net sales of $19.6 million.
CHATSWORTH, Calif. (BUSINESS WIRE)- August 12, 2005 - Natrol, Inc. (NASDAQ: NTOL - news), a manufacturer and distributor of nationally branded dietary supplements, today reported results for the second quarter ended June 30, 2005, announcing net income of $291,000 or $0.02 per diluted share on net sales of $19.6 million. For the six months ended June 30, 2005, the Company recorded a net loss of $301,000 or $0.02 per share.
Net sales decreased 5.2%, or $1.1 million, to $19.6 million for the second quarter of 2005 from $20.7 million in the second quarter of 2004. For the six months ended June 30, 2005, sales decreased 9.3%, or $3.8 million, to $37.3 million from $41.1 million for the six months ended June 30, 2004. The most significant negative factor affecting sales was the decline of one of the Company’s diet products, Carb Intercept. Gross shipments of this product were $3.0 million less in the second quarter of 2005 than in the second quarter of 2004 and for the six month period ending June 30, 2005, gross shipments were $5.0 million less than in the same period of 2004.
“The fall of Carb Intercept,” noted Elliott Balbert, Natrol’s Chairman and President, “has been one of the sharpest product declines in the history of the Company making it both stunning and unusual. Just as companies such as Natrol came to believe that the Atkins-stimulated low-carbohydrate diet phenomenon was more of a lifestyle change than a fad, negative publicity at the end of 2004 drove consumers away. We launched Carb Intercept in 2002 and saw continuous growth in 2003 and 2004 before seeing sales plummet in 2005. On a more positive note, Carb Intercept sales during the first half of 2005 amounted to more than $900,000 and sales at certain retailers, while not at 2004 levels, remain steady. The bottom line is that Carb Intercept remains one of our top 20 items. Overcoming issues with Carb intercept has been new product introductions such as Natrol’s brainSpeed™, launched during this last quarter with shipments of approximately $2.0 million, as well as strength in many of Natrol’s core items. Natrol is clearly not a one product business. Our corporate mission is to provide products that nourish the potential of mind and body. And, as a Company, we are committed to broadening our product offerings by introducing new, cutting edge formulations, that scientifically benefit our consumers. These products are difficult to develop, often requiring years of research. However, by making product development a priority, we believe that we both fulfill our mission to consumers and benefit our shareholders by making the Company less dependent upon single items through diversified product offerings.”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, 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, 2004 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) | |||
|---|---|---|---|
| June 30, 2005 | December 31, 2004 | ||
| Assets | |||
| Current assets: | |||
| Cash and cash equivalents................................... | $3,854 | $6,022 | |
| Accounts receivable, net of allowances of $242 and $421 at June 30, 2005 and December 31, 2004, respectively............................. | 9,158 | 7,431 | |
| Inventory ............................................. | 10,546 | 9,723 | |
| Income taxes receivable ...................................... | 728 | 956 | |
| Deferred income taxes ..................................................... | 814 | 814 | |
| Prepaid expenses and other current assets............................ | 678 | 793 | |
| Total current assets....................................... | 25,778 | 25,739 | |
| Property and equipment: | |||
| Land, building and improvements................................... | 15,891 | 15,891 | |
| Machinery and equipment........................................ | 5,656 | 5,332 | |
| Furniture and office equipment................................. | 3,168 | 3,112 | |
| 24,715 | 24,335 | ||
| Accumulated depreciation......................................... | (8,664) | (8,022) | |
| Property and equipment, net | 16,051 | 16,313 | |
| Restricted cash | 5,000 | 5,000 | |
| Deferred income taxes....................................... | 3,628 | 3,628 | |
| Goodwill, net of accumulated amortization and impairment charge of $37,381.. | 2,026 | 2,026 | |
| Other assets............................................... | 193 | 218 | |
| Total assets ............................................... | $52,676 | $52,924 | |
| Liabilities and stockholders' equity | |||
| Current liabilities: | |||
| Accounts payable................................... | $3,139 | $2,904 | |
| Accrued expenses...................................... | 3,091 | 2,483 | |
| Accrued payroll and related liabilities.................................... | 835 | 1,589 | |
| Current portion of long term debt................................... | 517 | 503 | |
| Total current liabilities.................................. | 7,582 | 7,479 | |
| Long-term debt, less current portion......................... | 7,435 | 7,685 | |
| 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- 14,414,815 and 14,281,928 at June 30, 2005 and December 31, 2004, respectively ....... | 144 | 143 | |
| Additional paid-in capital.......................... | 62,907 | 62,709 | |
| Accumulated deficit.................................. | (22,511) | (22,211) | |
| 40,540 | 40,641 | ||
| Shares held in treasury, at cost-921,900 shares at June 30, 2005 and December 31, 2004.... | (2,881) | (2,881) | |
| Total stockholders’ equity..................................... | 37,659 | 37,760 | |
| Total liabilities and stockholders’ equity............. | $52,676 | $52,924 | |
| Natrol, Inc. and Subsidiaries Consolidated Statements of Operations (In thousands) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three months ended June 30, | Six months ended June 30, | |||||||
| | 2005 | 2004 | 2005 | 2004 | ||||
| Net sales...................................................... | $19,604 | $20,682 | $37,273 | $41,107 | ||||
| Cost of goods sold............ | 12,076 | 11,338 | 23,480 | 23,933 | ||||
| Gross profit............................................ | 7,528 | 9,344 | 13,793 | 17,174 | ||||
| Selling and marketing expenses....................... | 4,860 | 5,643 | 9,045 | 10,262 | ||||
| General and administrative expenses.......... | 2,086 | 2,274 | 5,003 | 4,599 | ||||
| Total operating expenses................................. | 6,946 | 7,917 | 14,048 | 14,861 | ||||
| Operating income (loss)............................ | 582 | 1,427 | (255) | 2,313 | ||||
| Interest income................................................ | 48 | 22 | 90 | 44 | ||||
| Interest expense.......................................... | (160) | (156) | (320) | (314) | ||||
| Income (loss) before taxes | 470 | 1,293 | (485) | 2,043 | ||||
| Income tax provision (benefit)........................... | 179 | 524 | (184) | 824 | ||||
| Net Income (loss) | $291 | $769 | $(301) | $1,219 | ||||
| Income (loss) per share | ||||||||
| Basic.................................................. | $.02 | $.06 | $(.02) | $.09 | ||||
| Diluted................................................. | $.02 | $.05 | $(.02) | $.09 | ||||
| Weighted-average shares outstanding—basic and diluted........................... | ||||||||
| Basic............. | 13,453,164 | 13,240,248 | 13,418,981 | 13,201,354 | ||||
| Diluted............ | 14,178,075 | 14,093,944 | 13,418,981 | 14,085,885 | ||||