Nutraceutical Reports Net Income of $5.1 Million

Nutraceutical International Corporation today reported results for the fiscal 2010 second quarter ended March 31, 2010. Net sales for the fiscal 2010 second quarter were $47.9 million compared to $42.0 million for the same quarter of fiscal 2009. For the second quarter of fiscal 2010, net income was $5.1 million, or $0.49 diluted earnings per share, compared to a net loss of $(23.4) million, or $(2.15) per diluted share, for the same quarter of fiscal 2009. The second quarter of fiscal 2009 included a non-cash goodwill impairment charge of $37.5 million ($27.3 million after tax, or $2.51 per diluted share).

Net sales for the six months ended March 31, 2010 were $92.7 million compared to $81.6 million for the same period in fiscal 2009. For the six months ended March 31, 2010, net income was $9.0 million, or $0.86 per diluted share, compared to a net loss of $(20.2) million, or $(1.86) per diluted share. The six months ended March 31, 2009 included the $37.5 million non-cash goodwill impairment charge.

Operating cash flow for the six months ended March 31, 2010 was $11.0 million compared to $11.8 million for the same period of fiscal 2009. This operating cash flow, combined with net borrowings of $12.0 million, was primarily used to invest $8.2 million in purchases of property and equipment, $11.6 million in acquisitions of branded natural product businesses and $2.8 million in repurchases of common stock.

Bill Gay, chairman and chief executive officer, commented, "Our overall business continues to improve as Health and Natural Food Store consumers seek a broader selection of products, not offered in other channels, to help maintain their healthy lifestyle. Traditionally our second quarter is usually our best overall financial quarter of the fiscal year and this was no exception. Net sales of domestic and international branded products grew during the quarter primarily as a result of integrating our most recent acquisitions. Our quarterly increase in net income and Adjusted EBITDA was primarily generated by leveraging our selling, general and administrative expenses."

Mr. Gay continued, "This quarter's financial results were extremely encouraging in light of the fact that several historically strong regional US markets remained less vibrant than the overall national market. Most areas of the country are steadily improving for us and the economic cloud of uncertainty is diminishing for our health conscious consumer. It appears that Health and Natural Food consumers continue to keep their focus on making healthy lifestyle choices during stressful times. In any case, we are continuing to invest in and automate additional areas of the company with a strong focus on distribution and manufacturing processes to allow for future growth and expansion. We will focus on finding additional efficiencies and cutting our controllable costs as we identify and make new acquisitions. We appreciate every customer, employee and shareholder for the ongoing support they provide us in allowing us to execute our long-term business strategy and we look forward to a successful fiscal 2010."

About Nutraceutical
We are an integrated manufacturer, marketer, distributor and retailer of branded nutritional supplements and other natural products sold primarily to and through domestic health and natural food stores. Internationally, we market and distribute branded nutritional supplements and other natural products to and through health and natural product distributors and retailers. Our core business strategy is to acquire, integrate and operate businesses in the natural products industry that manufacture, market and distribute branded nutritional supplements. We believe that the consolidation and integration of these acquired businesses provides ongoing financial synergies through increased scale and market penetration, as well as strengthened customer relationships.

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