Nutraceutical attributes record sales to acquisitions
branded dietary supplements during the second quarter of fiscal
2005 - a three percent increase over the same three months of 2004.
"During the fiscal 2005 second quarter, our company achieved record quarterly sales bolstered by our fiscal 2004 and 2005 acquisitions, which are essential to our current and long-term sales growth," said chairman and CEO Bill Gay.
With a strong balance sheet and the ability to generate considerable cash flow, the company said it has been in an ideal position to take advantage of investment opportunities as and when they became available.
Working capital at March 31, 2005 was $29.2 million and operating cash flow for the preceding six months was approximately $9.7 million.
In the past twelve months the company has made three significant acquisitions. Last October it announced that it had entered into a purchase and sale agreement to acquire the operating assets of the Pilgrim's Natureway health food store chain.
It completed its acquisition of the Montana Big Sky brand of bee product nutritional supplements for $0.6 million in August 2004, and in May of the Nature's Balance brand for $5 million.
Despite this boon, net income for the quarter slipped to $3.5 million, or $0.29 per diluted share, compared to $4.2 million, or $0.35 diluted earnings per share, for the same quarter of fiscal 2004.
"Earnings this quarter and year to date were lower than anticipated due to the timing of acquisition and integration-related expenses, including technology and employee transition," said Gay.
The company also shouldered higher than usual corporate governance and litigation costs, including those associates with its lawsuit with the FDA over supplements containing 10mg or less per daily dose of ephedra.
Earlier this month Judge Tena Campbell of the US District Court ruled in favor of Nutraceutical in its challenge to the legality of the FDA's outright ban on products containing ephedra.
She ordered the FDA to carry out a dose-dependent toxicology study and impose a ban on use of the herbal only at and above the level at which it is found to produce toxicity, and enjoined the government agency from taking any enforcement action to block Nutraceutical from selling supplements containing 10mg or less of ephedrine alkaloids per daily dose.
The company has yet to announce whether it plans to reintroduce an ephedra product, but it has said that it sees its greatest opportunities offered by its specialty channels in what is otherwise a "soft and very competitive" market for nutritional supplements.
Altogether, Nutraceutical manufactures and/or distributes more than 3000 different supplement products, 650 of which are sold exclusively outside the United States.
