Natrol Announces Third Quarter 2006 Results

CHATSWORTH, Calif., Nov 15, 2006 (BUSINESS WIRE) -- Natrol, Inc. (NTOL) , a premier manufacturer and distributor of nationally branded nutritional products, announced that it recorded operating income of $0.2 million and net income of $0.04 million on net sales of $15.7 million for the third quarter ending September 30, 2006.
Net sales for the third quarter increased 1.8% compared to net sales of $15.4 million in the third quarter of 2005. In the third quarter of 2005, the Company recorded an operating loss of $1.0 million and a net loss of $0.7 million. Gross margin increased to 42.7% for the third quarter compared to 35.8% in the same quarter of 2005.
For the nine months ended September 30, 2006, the Company recorded operating income of $0.4 million and net income of $0.2 million on net sales of $49.2 million, compared to an operating loss of $1.3 million and a net loss of $1.0 million on net sales of $52.7 million for the nine months ended September 30, 2005. Gross margin increased to 42.3% for the nine months ended September 30, 2006 compared to 36.6% for the same period in 2005.
"We are pleased with the achievement of our third consecutive quarter of positive financial results," stated Wayne M. Bos, Natrol's President and Chief Executive Officer. "Our third quarter net sales reflected gains of $2.0 million (18.1%) in Natrol(R) and Laci Le Beau(R) product sales compared to 2005. However, this increase was offset by a $1.2 million decline in Prolab(R) product sales. We are taking action to address this situation. The newly-established Natrol UK subsidiary has already made a positive contribution to Prolab sales."
Mr. Bos added, "During the third quarter, we successfully reduced materials costs and improved efficiencies within our manufacturing, planning, and procurement areas. Our improvement in gross margins compared to last year reflects the impact of these efforts. Additionally, since quarter end, we successfully completed strategic acquisitions of the Nu Hair(R) and Shen Min(R) brands, acquired U.S. licensing rights to the Promensil(R) and Trinovin(R) brands, and entered into an exclusive manufacturing and distribution arrangement for H57(TM) Hoodia, all of which will strengthen Natrol's position within the natural products industry."
About Natrol
Founded in 1980, Natrol, Inc. (NTOL) is a diversified nutrition company that manufactures and distributes premium-branded nutritional supplements, herbal teas and sports nutrition products under the Natrol(R), Laci Le Beau(R) and Prolab(R) brands, respectively. Natrol markets approximately 50 product categories with more than 500 stock-keeping units (SKU's) designed to meet a wide range of consumer needs. The products are available at thousands of food, drug, mass market and independent health food stores, catalogs and Internet sites, gyms and specialty stores nationally and in select foreign countries. For more information, visit
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, the Company's actual results could differ materially from those set forth in the forward looking statements. Certain factors that might cause the Company's actual results to differ materially from those set forth in the forward looking statements, including without limitation: (i) the Company's ability to develop and execute its business plans, (ii) the Company's ability to manage its growth and changing market conditions, (iii) the Company's ability to consummate and integrate acquisitions, (iv) adverse trends in the dietary supplements industry, (v) increased competition, (vi) adverse effects of unfavorable publicity regarding particular certain products of the Company or the dietary supplement industry, (vii) the introduction of successful new products, (viii) the Company's ability to gain market share and shelf space in its distribution channels, (ix) the Company's ability to continue to obtain raw materials for its Ester-C(R) line of products, (x) the dependence upon certain large customers, and (xi) the Company's ability to retain and attract talented management and key employees, 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, 2005, the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2006 and in the Company's other filings with the Securities and Exchange Commission.

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