SAN MARCOS, Calif., Feb. 6 /PRNewswire-FirstCall/ -- Natural Alternatives International ("NAI"), Inc. (Nasdaq: NAII), a leading formulator and manufacturer of customized nutritional supplements, today reported net income of $686,000 or $0.11 per diluted share on net sales of $26.1 million in its first six months of fiscal 2003. NAI also announced the promotions of Randell Weaver to President and John Reaves to Chief Financial Officer.
Second quarter net income increased $85,000 to $149,000 or $0.02 per diluted share from $64,000 or $0.01 per diluted share for the comparable quarter last year. Revenues increased 3% to $13.0 million from $12.7 million for the comparable quarter last year. The revenue growth resulted primarily from a 40% increase in Direct-to-Consumer ("DTC") sales. Second quarter DTC sales increased to 18.6% of total net sales from 13.6% of total net sales for the comparable quarter last year.
For the first six months of fiscal 2003 net income increased $1.3 million to $686,000 or $0.11 per diluted share from a net loss of ($594,000) or ($0.10) per share for the comparable period last year. Revenues increased 16% to $26.1 million from $22.5 million for the comparable period last year. The revenue growth resulted primarily from a 12.4% increase in contract manufacturing sales and a 34% increase in DTC sales. Additionally, the first six months of fiscal 2003 included receipt of the previously disclosed final litigation settlement payment of $225,000. For the six months of fiscal 2003 net income excluding the settlement payment was $461,000 or $0.08 per diluted share.
At December 31, 2002, NAI had cash and working capital of approximately $4.0 million and $11.4 million, respectively, compared to $640,000 and $8.7 million, respectively, at June 30, 2002.
CEO Mark LeDoux said "We are delighted with our continued progress and the strengthening of NAI's financial position especially considering the difficulties facing some competitors in our industry. We believe our commitments to quality manufacturing, customer service, scientific research and efficacious products will allow us to continue growing in a challenging regulatory and operating environment."
"Looking ahead, we are committing to increased investments in regulatory compliance and quality assurance," President Randell Weaver indicated. "Additionally, we are increasing expenditures in marketing and product development to cultivate additional DTC and contract manufacturing opportunities. We expect the DTC and contract manufacturing opportunities to provide moderate revenue growth potential in the fiscal third and fourth quarters. Additionally, we anticipate limited growth in operating income as we increase our investment in these areas."
CFO John Reaves added, "Our strong balance sheet and the previously announced $6.5 million credit facility allow us to invest as necessary to capitalize on opportunities to improve the long-term return to our shareholders. NAI had $3.8 million of cash available under the terms of the revolving line of credit in addition to the $4.0 million of cash on hand at December 31, 2002."
NAI, headquartered in San Marcos, California, is a leading formulator and manufacturer of nutritional supplements that provides strategic partnering services to its customers. The Company's comprehensive partnership approach offers a wide range of innovative nutritional products and services to the client including: scientific research, clinical studies, customer-specific nutritional product formulation, product testing and evaluation, marketing management and support, packaging and delivery system design, regulatory review and international product registration assistance. For more information about NAI, please see our website at http://www.nai-online.com .
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 that are not historical facts and information. These statements represent the Company's intentions, expectations and beliefs concerning future events, including, among other things, expectations and beliefs with respect to future financial and operating results and the ability to sustain profitability, maintain adequate financing, improve liquidity, maintain revenue growth, and implement its strategic plan. The Company wishes to caution and advise readers that these statements involve risks and uncertainties that could cause actual results and outcomes for future periods to differ materially from any forward-looking statement or views expressed herein. The Company's financial performance and the forward-looking statements contained herein are further qualified by other risks including those set forth from time to time in the documents filed by the Company with the Securities and Exchange Commission, including NAI's most recent Quarterly Report on Form 10Q and its Annual Report on Form 10-K.