Nutraceutical International chugs along fueled by latest acquisitions

By Hank Schultz contact

- Last updated on GMT

Solaray, a pioneering encapsulated herb brand, was one of Nutraceutical International's first acquisitions in 1993.
Solaray, a pioneering encapsulated herb brand, was one of Nutraceutical International's first acquisitions in 1993.

Related tags: Net sales, Revenue, Generally accepted accounting principles

Nutraceutical International Corporation continues to make good on its acquisition strategy by posting a 7.4% net sales gain for its second quarter.

The company, with headquarters in Park City, UT, said that net sales for the fiscal 2016 second quarter were $59.5 million, compared to $55.4 million for the same quarter of fiscal 2015.  For the second quarter of fiscal 2016, net income was $4.6 million, or $0.49 diluted earnings per share, compared to net income of $4.1 million, or $0.43 diluted earnings per share, for the same quarter of fiscal 2015.     

Net sales for the six months ended March 31, 2016 were $115.5 million compared to $108.4 million for the same period of fiscal 2015.  For the six months ended March 31, 2016, net income was $8.9 million, or $0.94 diluted earnings per share, compared to net income of $7.4 million, or $0.77 diluted earnings per share, for the same period of fiscal 2015. 

Growing through acquisition

For years now Nutraceutical International has pursued an aggressive acquisition strategy mostly in the form of smaller deals and now manufacturers dietary supplements personal care product and foods under brand names such as Solaray, Nature’s Life, Natural Balance and Organix South. The company says it manufacturers more than 7,500 SKUs, about 1,000 of which are sold internationally. The company also owns and operates health food stores under the names Fresh Vitamins, Granola's, Nature's Discount and Warehouse Vitamins.  The company said it has now acquired more than 65 companies since its founding in 1993, including its most recent purchases of Dynamic Health and Aubrey Organics.

Bill Gay, chairman and chief executive officer, commented, "Fiscal 2016 second quarter net sales grew by 7.4%, Adjusted EBITDA increased by $1.1M, or 10.8%, and we added $0.06 per share to diluted EPS.  Management is pleased with the overall growth and direction of our business and with the gains generated by recent acquisitions.  We are hopeful the softness in certain areas of our international business will improve later in the year.  Management now believes that consolidation synergies from the October 2015 Dynamic Health acquisition will not become fully realized until later in calendar 2017. 

“Our February 2016 acquisition of Aubrey Organics in Tampa, Florida will enable us to consolidate certain branded offices and manufacturing operations for our personal care business. Both of these new businesses expand our current branded portfolio of products with many unique offerings for our health and natural food store customers,”​ he said.

Gay said the company continues to have good access to capital to continue its strategy, and has made progress through technology application to more efficiently manage its inventory and supply chain, a challenge that grows with every acquisition.

“Management remains focused on reducing costs and improving margins in all areas of our business through process and technology innovation as well as facility integration and consolidation,”​ he said.

Stock traders appear to be buying into the company’s strategy. From a low of less that $6 a share in the 2009 post financial crash market meltdown, the company’s share price on the NASDAQ exchange has risen to more than $23 today.

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