Natural Alternatives International Reports 35% Increase in Q2 Net Sales, Net Loss Improves

Natural Alternatives International, Inc. (NAI) reported a significant increase in financial performance for the second quarter of fiscal 2025, with net sales reaching $34.1 million, a 35% increase from $25.2 million in the same period last year. For the six months ended December 31, 2024, total net sales were $67.2 million, up 14% from $59.2 million in the prior year. The growth was primarily driven by a 40% increase in private-label contract manufacturing sales, attributed to higher orders from key customers and new client acquisitions. However, the company reported a net loss of $2.2 million for the quarter, an improvement from a loss of $3.1 million in the previous year.

The company's cost of goods sold also increased, totaling $32.4 million for the quarter, compared to $24.8 million a year earlier. This resulted in a gross profit of $1.7 million, reflecting a gross margin of 4.9%, up from 1.5% in the same quarter last year. Selling, general, and administrative expenses rose to $4.4 million, a 14% increase, primarily due to higher compensation and legal expenses. Despite the increase in sales, NAI's loss from operations decreased to $2.8 million from $3.5 million in the prior year, indicating improved operational efficiency.

Strategically, NAI has focused on expanding its product offerings, including the recent launch of TriBsyn™, a new carnosine booster designed to enhance beta-alanine absorption while minimizing side effects. This product aims to penetrate the growing Wellness and Healthy Aging markets. The company continues to invest in research and development to diversify its product line and enhance its market presence. Additionally, NAI has incurred litigation and patent compliance expenses to protect its intellectual property, which amounted to approximately $0.3 million in the first half of fiscal 2025.

Operationally, NAI reported a decrease in accounts receivable usage, which consumed $0.1 million in cash compared to $3.4 million in the previous year. Inventory management also provided $1.2 million in cash, a significant decrease from $10.1 million in the prior year, reflecting changes in order timing and anticipated sales. As of December 31, 2024, NAI had $8.7 million in cash and cash equivalents, with $10.8 million of borrowing capacity available on its credit facility.

Looking ahead, NAI anticipates continued growth in net sales for fiscal 2025, although it expects to incur a net loss in the second half of the fiscal year. The company is focused on leveraging its manufacturing capabilities, expanding its beta-alanine patent estate, and improving operational efficiencies to enhance profitability. However, NAI faces challenges related to compliance with financial covenants and potential impacts from geopolitical tensions and trade tariffs, which could affect its supply chain and customer relationships.