Natrol Reports Fourth Quarter and Fiscal 2006 Results

CHATSWORTH, Calif., Apr 02, 2007 (BUSINESS WIRE) -- Natrol, Inc. (NTOL) , a premier manufacturer and distributor of nationally branded nutritional products, today reported its fiscal fourth quarter and full-year results for the period ended December 31, 2006. For the fourth quarter, the company reported that net sales increased 10.3% to $16.4 million versus $14.9 million a year ago; diluted earnings per share for the fourth quarter were $0.02 versus a loss of $0.12 in the fourth quarter of last year. For the full year, the Company reported net sales of $65.6 million, a 2.9% decrease versus the fiscal 2005 level of $67.5 million, and diluted earnings per share of $0.03, a significant improvement versus the year-ago loss of $0.20 per diluted share.

Wayne Bos, Natrol's President and Chief Executive Officer, commented: "Over the course of the past year, we have successfully returned our business to profitability. We have controlled our costs and improved our margins and positioned our business to resume meaningful long-term growth. We are making careful, thoughtful investments in our brands, our market presence, and our operating infrastructure to ensure that we take advantage of the significant opportunities that exist for our business."

The Company noted that its 2006 full-year gross profit margin improved to 43.4% from 34.7% in the prior year. This improvement was driven by improved pricing in raw material costs, more efficient production, a reduction in the mix of low-margin sales, and better inventory controls. Fiscal 2006 operating expenses increased only slightly, with savings in sales and marketing expenses offset by increases in general and administrative costs.

The Company noted that it had made significant progress over the course of the year in a variety of areas. These included the hiring of a new Chief Executive Officer and a new Chief Operating Officer, the establishment of a $10 million, three-year line of credit, the establishment of a U.K.-based subsidiary to further penetrate the European market, the acquisition of the NuHair(R) and Shen Min(R) brands of hair thinning and re-growth products, and the acquisition of the exclusive U.S. intellectual property rights related to the Promensil(R) and Trinovin(R) brands, leading dietary supplements specifically marketed to the fast-growing demographic of aging adult consumers.

Mr. Bos continued: "We remain committed to both continuing to expand our existing suite of products and brands as well as to exploring new opportunities. We believe that there are additional opportunities in this highly fragmented market and intend to use the strength of our balance sheet and, over time, our ability to generate significant, positive operating cash flow to take advantage of additional growth opportunities."

Mr. Bos concluded: "As we enter fiscal 2007, we believe that we are well positioned to continue to execute on our strategy to improve our operations, grow sales in our core and newly acquired brands across each tier of distribution, and to leverage our financial position to continue to make compelling acquisitions in a variety of categories. We look forward to demonstrating the power of our operating model and in flowing tangible increases in value to 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 U.K. 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

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, and (viii) our ability to retain and attract talented management and other key employees, 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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