NUTR Nutraceutical International Corp. (MM)

PARK CITY, Utah, April 30 /PRNewswire-FirstCall/ -- Nutraceutical International Corporation (NASDAQ:NUTR) today reported results for the fiscal 2009 second quarter ended March 31, 2009. Net sales for the fiscal 2009 second quarter were $42.0 million compared to $44.4 million for the same quarter of fiscal 2008. Primarily as a result of the ongoing U.S. and global economic recession and the related turmoil in the equity markets, there has been a significant and prolonged decrease in the Company's stock price and related market capitalization over the past six months. The ongoing economic recession also has negatively impacted the Company during this period, both domestically and internationally. Based on these factors, the Company determined that an interim goodwill impairment analysis was necessary and performed this goodwill impairment analysis on each of its reporting units during the second quarter of fiscal 2009 in accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. Based on the results of this goodwill impairment analysis, a non-cash goodwill impairment charge of $37.5 million ($27.3 million after tax, or $2.51 per diluted share) was recorded during the second quarter of fiscal 2009. This non-cash goodwill impairment charge resulted in a net loss of $(23.4) million, or $(2.15) per diluted share, for the second quarter of fiscal 2009, compared to net income of $4.4 million, or $0.39 per diluted share, for the same quarter of fiscal 2008. Excluding the above non-cash impairment charge, net income for the second quarter of fiscal 2009 would have been $3.9 million, or $0.36 per diluted share. Net sales for the six months ended March 31, 2009 were $81.6 million compared to $85.5 million for the same period in fiscal 2008. The non-cash goodwill impairment charge resulted in a net loss of $(20.2) million, or $(1.86) per diluted share, for the six months ended March 31, 2009, compared to net income of $7.6 million, or $0.67 per diluted share, for the same period of fiscal 2008. Excluding the above non-cash impairment charge, net income for the six months ended March 31, 2009 would have been $7.0 million, or $0.64 per diluted share. Operating cash flow for the six months ended March 31, 2009 was $11.8 million compared to $9.4 million for the same period of fiscal 2008. This operating cash flow was used to invest $6.4 million in purchases of property and equipment and repay $5.5 million in net borrowings on the Company's revolving credit facility. Bill Gay, chairman and chief executive officer, commented, "The economic environment continued to present challenges during the second quarter of fiscal 2009. During both the first and second quarters of fiscal 2009, net sales to many of our domestic and international customers were adversely affected by the decline in world economies. Despite these difficult circumstances, operating cash flow and Adjusted EBITDA remained strong. Gross profit margins remained strong at 53.5% for the second quarter and we were able to reduce inventories by $2.4 million. Additionally, synergies were achieved through reductions in operational and transitional costs related to businesses acquired over the last two years as well as year-over-year cost improvements in many of our selling, general and administrative areas." Mr. Gay continued, "The uncertainties of the current environment will continue to present ongoing challenges as we strive to serve our customers and grow our business. Our management group is focusing on expanding revenues through customer promotions and product innovation, material sourcing improvements and further reducing controllable costs. Our long term business strategy of selling primarily to the Healthy Foods Channel and growing through add-on acquisitions has served our stakeholders well over the last ten years as a public company and we continue to explore opportunities that will improve profitability and cash flow." 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, from beginning to end, the manufacturing, marketing and distribution of branded nutritional supplement businesses in the natural products industry. 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. We sell branded nutritional supplements and other natural products under the trademarks Solaray(R), VegLife(R), KAL(R), Nature's Life(R), Sunny Green(R), Action Labs(R), Natural Balance(R), NaturalMax(R), bioAllers(R), Herbs for Kids(TM), Natra-Bio(R), NaturalCare(R), Zand(R), Health from the Sun(R), Life-flo(R), Larenim(R), Living Flower Essences(R), Pioneer(R), Thompson(R), Natural Sport(R), Supplement Training Systems(R), Premier One(R), Montana Big Sky(TM), ActiPet(R), FunFresh Foods(TM), Dowd & Rogers(TM), CompliMed(R), AllVia(TM), Oakmont Labs(R), Healthway(R), Body Gold(R), Sayge BioSciences(TM), Monarch Nutraceuticals(TM) and Great Basin Botanicals(TM). Under the name Woodland Publishing(TM), we publish, print and market a line of books and booklets to, among others, book distributors, national retail bookstores and health and natural food stores. We also distribute branded products of certain third parties. We own neighborhood natural food markets, which operate under the trade names The Real Food Company(TM), Thom's Natural Foods(TM) and Cornucopia Community Market(TM). We also own health food stores, which operate under the trade names Fresh Vitamins(TM) and Granola's(TM). We manufacture and/or distribute one of the broadest branded product lines in the industry with over 4,000 SKUs, including over 700 SKUs sold internationally. We believe that as a result of our emphasis on innovation, quality, loyalty, education and customer service, our brands are widely recognized in health and natural food stores and among their customers. This Press Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. These forward-looking statements can be identified by the use of terms such as "believe," "expects," "plan," "intend," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy. Although these statements are believed to be reasonable, they are inherently uncertain. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. We undertake no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Press Release. Important factors that may cause our results to differ from these forward-looking statements include, but are not limited to: (i) slow or negative growth in the nutritional supplement industry or the healthy foods channel, (ii) interruption of business or negative impact on sales and earnings due to acts of God, acts of war, terrorism, bio-terrorism or civil unrest, (iii) adverse publicity or negative consumer perception regarding nutritional supplements, (iv) changes in government regulations, (v) product liability claims and litigation, (vi) insurance coverage issues, (vii) increased competition or costs, (viii) intellectual property rights of other parties, (ix) the loss of key personnel, (x) disruptions from acquisitions, (xi) issues with obtaining raw materials of adequate quality or quantity, (xii) problems with information management systems, manufacturing efficiencies and operations, (xiii) changes in general worldwide economic or political conditions, (xiv) the volatility of the stock market generally and of our stock specifically, (xv) litigation generally, and (xvi) other factors indicated from time to time in our SEC reports, copies of which are available upon request from our investor relations group or which may be obtained at the SEC's website (http://www.sec.gov/). (C) 2009 Nutraceutical Corporation. All rights reserved. NUTRACEUTICAL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited; dollars in thousands) March 31, September 30, ---------- -------------- 2009 2008 Assets Current assets, net $51,054 $55,577 Property, plant and equipment, net 55,790 52,356 Goodwill 332 37,632 Other non-current assets, net 25,869 16,099 ------ ------ $133,045 $161,664 -------- -------- Liabilities and Stockholders' Equity Current liabilities $16,187 $19,239 Long-term liabilities 23,776 28,965 Stockholders' equity 93,082 113,460 ------ ------- $133,045 $161,664 -------- -------- NUTRACEUTICAL INTERNATIONAL CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited; dollars in thousands, except per share data) Three months ended Six months ended March 31, March 31, ------------------ ---------------- 2009 2008 2009 2008 Net sales $41,957 $44,446 $81,586 $85,532 Cost of sales 19,517 19,930 37,714 38,703 ------ ------ ------ ------ Gross profit 22,440 24,516 43,872 46,829 Operating expenses Selling, general and administrative 15,713 16,978 31,486 33,606 Amortization of intangible assets 158 170 317 337 Impairment of goodwill 37,519 - 37,519 - ------ ---- ------ ---- Income/(loss) from operations (30,950) 7,368 (25,450) 12,886 Interest and other (income)/expense, net 264 405 774 785 --- --- --- --- Income/(loss) before provision/(benefit) for income taxes (31,214) 6,963 (26,224) 12,101 Provision/(benefit) for income taxes (7,855) 2,611 (5,977) 4,538 ------ ----- ------ ----- Net income/(loss) $(23,359) $4,352 $(20,247) $7,563 -------- ------ -------- ------ Net income/(loss) per common share Basic $(2.15) $0.39 $(1.86) $0.68 Diluted (2.15) 0.39 (1.86) 0.67 Weighted average common shares outstanding Basic 10,870,769 11,039,703 10,859,876 11,081,978 Diluted 10,870,769 11,176,351 10,859,876 11,223,450 NUTRACEUTICAL INTERNATIONAL CORPORATION ADJUSTED EBITDA SCHEDULE (unaudited; dollars in thousands) Three months Six months ended March 31, ended March 31, --------------- --------------- 2009 2008 2009 2008 Net income/(loss) $(23,359) $4,352 $(20,247) $7,563 Provision/(benefit) for income taxes (7,855) 2,611 (5,977) 4,538 Interest and other (income)/ expense, net (1) 264 405 774 785 Depreciation and amortization 1,642 1,430 3,276 2,742 Impairment of goodwill (2) 37,519 - 37,519 - ------ ---- ------ ---- Adjusted EBITDA $8,211 $8,798 $15,345 $15,628 ------ ------ ------- ------- (1) Includes amortization of deferred financing fees (2) For the three months and six months ended March 31, 2009, a non-cash goodwill impairment charge of $37,519 was recorded related to our branded and natural food markets reporting units. DATASOURCE: Nutraceutical International Corporation CONTACT: Cory McQueen, Vice President and Chief Financial Officer of Nutraceutical International Corporation, +1-435-655-6106

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