NAI acquires factory, warehouse space in $17.5 million deal

By Hank Schultz

- Last updated on GMT

©Getty Images - Galeaneu Milhai
©Getty Images - Galeaneu Milhai

Related tags Dietary supplement companies Dietary supplement industry contract manufacturing

Contract manufacturer Natural Alternatives International Inc. is maintaining its rapid growth with the acquisition of an additional manufacturing facility in a $17.5 million deal.

NAI announced yesterday that it had acquired a 54,000 square foot manufacturing and warehouse facility in Carlsbad, CA.  The plan is to retrofit the facility for the blending and packaging of powder products.  

As a sign of its strong cash position NAI financed almost 40% of the deal $7.5 million of cash on hand, the balance — $10 million — coming in the from of a bank loan from Wells Fargo.  NAI announced in May of 2021 that it had increased its lending limit with Wells Fargo from $10 million to $20 million. 

Space aimed at future growth

NAI said it also needed the additional warehouse space to accommodate anticipated future sales growth.  IN the company’s most recent earnings statement from teh third quarter of its fiscal 2021 the company reported $46.3 million in net sales for the quarter which represented an 81.8% year over year increase.  At the same time, the company updated its full year earnings guidance in which it anticipated a 45% to 55% net sales increase.

NAI also reported that as of March 30, 2021 it had more than $28 million cash on hand.

NAI CEO Mark Le Doux said the new acquisition would both help the company avoid supply chain perturbations but would also help it compete in a new segment of the industry.

"We are excited to expand our USA manufacturing capabilities and footprint.  While this new facility will not fully come on line for us until late in the current fiscal year, we believe this is an important investment that provides us with additional environmentally conditioned raw material storage space to accommodate our current and future anticipated sales demand,” ​Le Doux said.

Moving into powder products

“Once fully built-out, this new facility will provide NAI with state-of-the-art high speed powder production capabilities in a segment of the dietary supplement space that we have previously only marginally participated in.  We believe powder packaged delivery systems are a growing segment within our industry and this facility will provide us with the ability to better service existing customers, attract new customers, expand our sales, and provide potential for channel and customer diversification,”​ he added.

NAI’s stock is currently trading for almost $16 a share, off of its 52-week high of $19.93 but more than the low of $6.52 a share.

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