Natrol Reports First Quarter Fiscal 2007 Results

CHATSWORTH, Calif., May 14, 2007 (BUSINESS WIRE) -- Natrol, Inc. (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(R), Shen Min(R), and Promensil(R) 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(TM)
Natrol, Inc. (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(R), Prolab(R), Laci Le Beau(R), Promensil(R), Trinovin(R), Nu Hair(R), and Shen Min(R).

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(R) 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.

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