Core Insights - Natural Alternatives International, Inc. (NAI) and CarnoSyn® Brands announced positive clinical trial results for TriBsyn™, demonstrating enhanced bioavailability and efficiency of beta-alanine while eliminating paresthesia, a common side effect [1][5]. Product Overview - TriBsyn™ is a carnosine booster derived from CarnoSyn® beta-alanine, utilizing proprietary Hydro Oleo technology for higher bioavailability and potency, allowing for effective dosages at lower volumes [2][5]. - The formulation enables absorption through multiple pathways, including direct cellular uptake and traditional gastrointestinal routes, enhancing delivery at both cellular and systemic levels [2]. Clinical Study Details - The study evaluated the bioavailability, pharmacokinetics, and tolerability of a 400 mg Hydro Oleo encapsulated beta-alanine complex (TriBsyn™) designed to reduce paresthesia [3]. - A randomized, double-blind, single-dose, three-treatment, three-way crossover study was conducted in healthy older adults, showing that TriBsyn™ (400 mg) achieved a nearly 4.5-fold increase in circulating beta-alanine plasma concentrations compared to 400 mg and a 1.3-fold increase compared to 1200 mg of conventional beta-alanine [3][7]. Sensory Side Effects Assessment - Sensory side effects were assessed using Visual Analogue Score (VAS) and Qualitative Light Symptoms Inventory (QLSI), with no paresthesia reported in the TriBsyn™ group, while conventional beta-alanine groups exhibited increasing paresthesia with dose [4]. - TriBsyn™ recorded a VAS score of 0.62, indicating almost absent symptoms, compared to scores of 2.02 and 4.01 for conventional beta-alanine at 400 mg and 1200 mg, respectively [4]. Market Implications - The results confirm TriBsyn™ as a significant advancement in beta-alanine supplementation, providing scientifically proven claims to improve muscle vitality, working capacity, and cognitive performance, particularly beneficial for the active aging population and those with plant-based diets [5][6]. - NAI's new "paresthesia-free" TriBsyn™ powder allows the company to expand its product offerings within dietary supplements, medical food, and fortified food products [6].

Core Viewpoint - Natural Alternatives International, Inc. reported a net loss of $2.2 million for Q2 FY2025, an improvement from a net loss of $3.1 million in the same quarter of the previous year, with net sales increasing to $34.1 million, a 35% rise compared to $25.2 million in Q2 FY2024 [1][2]. Financial Performance - Net sales for the three months ended December 31, 2024, increased by $8.9 million, or 35%, reaching $34.1 million compared to $25.2 million in the prior year [2]. - For the six months ended December 31, 2024, net sales rose by $8.1 million, or 14%, totaling $67.2 million compared to $59.2 million in the same period of the previous year [5]. - Private-label contract manufacturing sales increased by 40% to $32.3 million in Q2 FY2025, driven by higher orders from major customers and new customer shipments [2]. - CarnoSyn beta-alanine royalty, licensing, and raw material sales revenue decreased by 18% to $1.8 million in Q2 FY2025, primarily due to reduced orders from existing customers [3]. Losses and Expenses - The company reported a net loss of $4.2 million, or $0.70 per diluted share, for the six months ended December 31, 2024, compared to a net loss of $3.8 million, or $0.64 per diluted share, for the same period in 2023 [4]. - The loss from operations for the three and six months ended December 31, 2024, was attributed to a change in sales mix, increased manufacturing costs, and higher legal expenses related to patent expansion [6]. Cash and Working Capital - As of December 31, 2024, the company had cash of $8.7 million and working capital of $36.9 million, down from $12.0 million and $38.1 million, respectively, as of June 30, 2024 [7]. Management Commentary - The CEO expressed satisfaction with revenue growth and reduced anticipated losses, while acknowledging challenges such as customer order flow and currency valuations [8].

Financial Performance - Net sales for the six months ended December 31, 2024, increased by 14% to $67.2 million compared to $59.2 million for the same period in 2023[97] - The company experienced a net loss of $4.2 million for the six months ended December 31, 2024, an 11% increase compared to a net loss of $3.8 million in the same period of 2023[102] - Patent and trademark licensing revenue increased by 9% to $4.3 million for the six months ended December 31, 2024, compared to $3.9 million in the prior year[98] Expenses - Selling, general, and administrative expenses increased by 14% to $8.5 million during the six months ended December 31, 2024, primarily due to higher compensation and legal expenses[110] - The company incurred litigation and patent compliance expenses of approximately $0.3 million during the six months ended December 31, 2024, compared to $0.1 million in the prior year[100] Profit Margins - The gross profit margin for the six months ended December 31, 2024, was 5.8%, slightly down from 6.0% in the prior year[106] - Private-label contract manufacturing gross profit margin increased by 5.5 percentage points during the three months ended December 31, 2024, primarily due to increased sales volume[116] - Patent and trademark licensing gross profit margin decreased by 2.1 percentage points during the three months ended December 31, 2024, due to decreased net sales in this segment[116] Cash Flow and Financing - Cash used in investing activities was $1.4 million for the six months ended December 31, 2024, down from $1.7 million in the prior year[117] - Cash provided by financing activities was $1.4 million for the six months ended December 31, 2024, compared to using $0.1 million in the prior year[118] - As of December 31, 2024, the company had $10.8 million of borrowing capacity available on its credit facility, with outstanding borrowings of $5.0 million[119] - The company had $8.7 million in cash and cash equivalents as of December 31, 2024, with $8.2 million held by NAIE[120] Future Outlook - The company anticipates a net loss in the second half of fiscal 2025, despite an overall increase in sales forecasted for the year[102] - The company plans to continue focusing on expanding its beta-alanine patent estate and developing new sales channels in the Wellness and Healthy Aging category[107] - The company anticipates non-compliance with financial covenants related to net income requirements and fixed charge coverage ratio in the next two quarters of fiscal 2025[120] Inventory and Sales - Days sales outstanding increased to 46 days during the six months ended December 31, 2024, compared to 27 days in the prior year[114] - Changes in inventory provided $1.2 million in cash during the six months ended December 31, 2024, compared to $10.1 million in the prior year period[115] Compliance and Accounting - There were no off-balance sheet arrangements or debt as of December 31, 2024, that would materially affect the company's financial condition[122] - Recent accounting pronouncements do not materially affect the company's financial position or results of operations[123]

Financial Performance - Net sales for the three months ended September 30, 2024, were $33.15 million, a 2% decrease compared to $33.97 million for the same period in 2023[97]. - Private-label contract manufacturing sales decreased by 5% to $30.63 million, primarily due to reduced orders from a larger customer[87]. - Patent and trademark licensing revenue increased by 42% to $2.5 million, up from $1.78 million in the prior year[88]. - Gross profit for the three months ended September 30, 2024, was $2.26 million, representing a gross profit margin of 6.8%, down from 9.2% in the prior year[97]. - Loss from operations was $1.84 million, a 238% increase compared to a loss of $0.54 million in the same period last year[92]. - Selling, general, and administrative expenses rose by 11% to $4.1 million, primarily due to increased compensation and legal fees[101]. - Cash used in operating activities was $3.4 million for the three months ended September 30, 2024, compared to cash provided of $4.5 million in the same period last year[104]. Strategic Initiatives - The company plans to continue focusing on expanding its beta-alanine patent estate and developing new sales channels in the Wellness and Healthy Aging markets[94]. - The new product TriBsyn™ was announced in August 2024, aimed at enhancing market penetration in the Wellness and Healthy Aging segments[89]. Financial Position and Liquidity - As of September 30, 2024, the company had $12.5 million of borrowing capacity on its credit facility, with outstanding borrowings of $5.4 million[109]. - As of September 30, 2024, the company had $10.2 million in cash and cash equivalents, with $9.9 million held by NAIE[110]. - The company anticipates non-compliance with financial covenants related to net income requirements and fixed charge coverage ratio in the next two quarters of fiscal 2025[110]. - The company is negotiating a potential revised credit facility or waiver with Wells Fargo, which has not yet exercised any options under the Credit Agreement[110]. - There is no assurance that the company will successfully negotiate a revised credit facility or the terms of such a facility[110]. - As of September 30, 2024, the company did not have any off-balance sheet debt or significant relationships that could materially affect its financial condition[111]. - Recent accounting pronouncements are discussed in the notes to the consolidated financial statements, with no material effects on financial position or results of operations identified[112].

Financial Performance - The company reported a net loss of $2.0 million, or $0.33 per diluted share, on net sales of $33.2 million for the first quarter of fiscal year 2025, compared to a net loss of $0.7 million, or $0.12 per diluted share, in the same period of the prior fiscal year [1] - Net sales decreased by $0.8 million, or 2.4%, to $33.2 million compared to $34.0 million in the prior year period [2] - Private-label contract manufacturing sales decreased by $1.6 million, or 4.8%, primarily due to reduced orders from one larger customer, partially offset by increased shipments from other existing and new customers [2] - CarnoSyn® beta-alanine royalty, licensing, and raw material sales revenue increased by 41.6% to $2.5 million compared to $1.8 million in the prior year period [3] - The company anticipates a net loss in the first half of fiscal 2025, net income in the second half, and an overall net loss for the fiscal year [4] Operational Challenges - The loss from operations was primarily due to reduced sales, a change in sales mix from the private-label contract manufacturing segment, and increased manufacturing costs, including labor, supplies, rent, and freight [4] - Selling, general, and administrative expenses increased to $4.095 million, or 12.4% of net sales, compared to $3.681 million, or 10.8% of net sales, in the prior year period [10] Liquidity and Capital - As of September 30, 2024, the company had $10.1 million in cash and $38.0 million in working capital, compared to $12.0 million and $38.1 million, respectively, as of June 30, 2024 [5] - The company had $12.5 million of borrowing capacity on its credit facility, with $5.4 million in outstanding borrowings [5] Strategic Outlook - The company remains optimistic about securing additional revenues and profitability through expanded product offerings and new client relationships [6] - The recent U.S. election has highlighted a consumer-driven mandate to promote health, which could benefit the nutraceutical and vitamin industry [6] - The company is committed to working with the new administration to foster greater understanding and acceptance of properly made health products [6] Industry Context - The company operates in the nutritional supplements industry, providing customized products and strategic partnering services, including scientific research, clinical studies, and regulatory assistance [7] - The industry is poised to meet increasing consumer demand for high-quality health products, driven by a renewed emphasis on health and wellness [6]

Company Overview - Natural Alternatives International, Inc. (NAI) is a leading formulator, manufacturer, and marketer of nutritional supplements, headquartered in Carlsbad, California [6] - NAI offers a comprehensive partnership approach that includes scientific research, proprietary ingredients, product formulation, testing, marketing management, and regulatory review [6] Product Launch - NAI has introduced a new carnosine booster called TriBsyn™, which utilizes proprietary technology to enhance beta-alanine bioavailability and absorption while eliminating the common paresthesia sensation [2] - TriBsyn™ is positioned to appeal to a wide range of consumers, including older adults, vegetarians, and vegans, looking to increase their carnosine levels [2] Strategic Partnership - NAI has formed a distribution partnership with B&D Nutritional Ingredients, effective October 1, 2024, to distribute TriBsyn™ in the U.S. dietary supplement, functional food, and beverage markets [1][2] - B&D Nutritional Ingredients has been a prominent raw material distributor in the dietary supplement industry since 1993 and is recognized for its commitment to customer service [3][4] Market Positioning - TriBsyn™ is expected to enhance B&D's specialty ingredient portfolio, which includes clinically supported and unique dietary ingredients [4] - The partnership aims to drive awareness and growth of TriBsyn™, which was launched in August 2024 [3] Industry Context - B&D Nutritional Ingredients specializes in the sales, distribution, and marketing of high-quality dietary ingredients across various sectors, including dietary supplements and functional foods [4] - The dietary supplement industry is increasingly focused on innovative ingredients that support health benefits such as anti-aging, cognitive function, and physical activity [4]

Core Viewpoint - Natural Alternatives International, Inc. reported a significant decline in both net sales and profitability for the fourth quarter and fiscal year 2024, indicating challenges in their private-label contract manufacturing segment and overall market conditions [1][4]. Financial Performance - The company experienced a net loss of $1.9 million, or ($0.32) per diluted share, for Q4 FY 2024, compared to a net income of $2.0 million, or $0.35 per diluted share, in Q4 FY 2023 [1]. - For the fiscal year 2024, the net loss was $7.2 million, or ($1.23) per diluted share, compared to a net income of $2.5 million, or $0.43 per diluted share, for fiscal year 2023 [4]. - Net sales for Q4 FY 2024 decreased by $6.4 million, or 18%, to $29.5 million from $35.9 million in the same period last year [2]. - Annual net sales for FY 2024 decreased by $40.2 million, or 26%, to $113.8 million compared to $154.0 million in FY 2023 [5]. Segment Performance - Private-label contract manufacturing sales fell by 14% to $27.6 million in Q4 FY 2024, primarily due to reduced orders from a major customer aiming to cut excess inventory [2]. - CarnoSyn® beta-alanine royalty, licensing, and raw material sales revenue decreased by 48% to $1.85 million in Q4 FY 2024, down from $3.57 million in Q4 FY 2023, attributed to lower raw material sales and unfavorable volume rebate estimates [3]. Operational Insights - The company reported a loss from operations for both the three and twelve months ended June 30, 2024, mainly due to a slowdown in sales within the private-label contract manufacturing segment [6]. - Despite the current challenges, the company anticipates a significant increase in sales for fiscal 2025, projecting a net loss in the first half but expecting net income in the second half [6]. Cash and Working Capital - As of June 30, 2024, the company had cash of $12.0 million and working capital of $38.1 million, a decrease from $13.6 million and $41.1 million, respectively, as of June 30, 2023 [7]. Strategic Developments - The company re-opened its Carlsbad powder facility in Q4 FY 2024 to meet customer demands and is optimistic about new business opportunities, including the introduction of a new ingredient, TriBsynTM, at the ESPEN conference [8].

Financial Performance - Consolidated net sales for fiscal 2024 decreased by 26% to $113.8 million compared to $154.0 million in fiscal 2023[125]. - The company experienced a net loss of $7.2 million in fiscal 2024, compared to a net income of $2.5 million in fiscal 2023[133]. - Net sales for the year ended June 30, 2024, were $113,796,000, a decrease of 26% from $154,015,000 in 2023[161]. - Gross profit for 2024 was $6,865,000, down from $18,158,000 in 2023, reflecting a gross margin decline[161]. - The company reported a loss from operations of $8.5 million for fiscal 2024, compared to an income of $4.7 million in fiscal 2023[279]. - The total loss before income taxes for fiscal 2024 was $9.464 million, a decrease from a profit of $3.555 million in fiscal 2023[228]. Revenue Sources - Private-label contract manufacturing sales fell by 27% primarily due to reduced orders from larger customers, with revenue concentration from the largest customer increasing to 42% in fiscal 2024 from 40% in fiscal 2023[125][135]. - Patent and trademark licensing revenue decreased by 3% to $8.4 million in fiscal 2024, down from $8.7 million in fiscal 2023[126]. - Revenue recognized from beta-alanine raw material sales and royalty income was $8.4 million in fiscal 2024, compared to $8.7 million in fiscal 2023[196]. - The company’s private-label contract manufacturing segment generated $105.4 million in net sales for fiscal 2024, down from $145.3 million in fiscal 2023[279]. Expenses and Costs - Selling, general, and administrative expenses increased by 15% to $15.4 million in fiscal 2024, compared to $13.5 million in fiscal 2023[138]. - Gross profit margin for private-label contract manufacturing decreased by 6.9 percentage points in fiscal 2024, primarily due to unfavorable sales mix and increased per unit manufacturing costs[136]. - Operating expenses increased to $15,399,000 in 2024 from $14,869,000 in 2023, indicating a rise in selling, general, and administrative costs[161]. - Research and development expenses were $1.9 million for fiscal 2024, down from $2.1 million in fiscal 2023[199]. - Advertising costs incurred were $0.3 million in fiscal 2024, a decrease from $0.7 million in fiscal 2023[200]. Cash Flow and Liquidity - Net cash used in operating activities was $1.5 million in fiscal 2024, a decrease from $7.0 million in fiscal 2023[141]. - Cash used in investing activities decreased to $3.0 million in fiscal 2024 from $13.5 million in fiscal 2023 due to reduced capital expenditures[143]. - Cash provided in financing activities increased to $2.9 million in fiscal 2024 compared to $1.8 million used in fiscal 2023, driven by $3.4 million of outstanding short-term borrowing[143]. - As of June 30, 2024, the company had $12.0 million in cash and cash equivalents, down from $13.6 million in 2023[145]. Assets and Liabilities - Total current assets increased to $61.6 million in 2024 from $57.0 million in 2023, while total assets rose to $162.3 million from $134.2 million[159]. - Current liabilities increased to $23.5 million in 2024 from $15.9 million in 2023, with accounts payable rising to $12.7 million[159]. - The company reported a decrease in retained earnings to $72.97 million in 2024 from $80.18 million in 2023[159]. - The company had no significant off-balance sheet debt or obligations as of June 30, 2024[146]. Debt and Financing - As of June 30, 2024, the company had $3.4 million outstanding on its line of credit and $9.2 million on its term loan, compared to no balance on the line of credit and $9.5 million on the term loan as of June 30, 2023[181]. - The amended credit facility with Wells Fargo decreased total borrowing capacity to $12.5 million and increased the interest rate on borrowings to 2.25% above the daily simple SOFR rate[223]. - The company is negotiating a potential revised credit facility or waiver due to anticipated non-compliance with covenants in the first half of fiscal 2025[226]. Taxation - The company recorded a U.S.-based domestic tax benefit of $2.2 million in fiscal 2024, compared to a tax expense of $0.8 million in fiscal 2023[228]. - The effective tax rate for fiscal 2024 was approximately (23.7)%, compared to 29.1% in fiscal 2023[237]. - The company had net deferred tax assets of $3.170 million as of June 30, 2024, significantly up from $0.355 million in 2023[230]. Pension and Employee Benefits - The defined benefit pension plan's benefit obligation at the end of the year increased to $1,374,000 in 2024 from $1,364,000 in 2023, reflecting a change of 0.74%[245]. - The fair value of plan assets at the end of the year rose to $1,232,000 in 2024 from $1,025,000 in 2023, representing an increase of 20.18%[245]. - The net periodic benefit expense decreased to $46,000 in 2024 from $81,000 in 2023, a reduction of 43.21%[246]. - The company contributed $0.1 million to the defined benefit pension plan in 2024, compared to no contributions in 2023[246]. Operational Challenges - Inflationary pressures have led to increased costs for raw materials and operations, which are expected to continue impacting fiscal 2025[147]. - The company is monitoring the impact of the Israel-Hamas conflict on its operations and is evaluating alternative sources for raw materials sourced from the region[277]. Future Plans - The company plans to focus on expanding commercialization of its beta-alanine patent estate and developing new sales distribution channels in fiscal 2025[130]. - The company expects to adopt ASU 2023-07 on segment reporting in fiscal 2025, with no material impact anticipated on consolidated financial statements[171].

Core Insights - Natural Alternatives International, Inc. (NAI) and CarnoSyn® Brands will showcase their innovative product TriBsyn™ at the 46th ESPEN Congress on Clinical Nutrition & Metabolism in Milan, Italy from September 7-10, 2024, highlighting advancements in clinical nutrition and metabolism [1][2] Product Innovation - TriBsyn™ is a patent-pending formula designed to enhance beta-alanine bioavailability and absorption while eliminating the common paresthesia sensation associated with high doses of beta-alanine, targeting a diverse consumer base including older adults and vegans [2][3] - The product aims to address the growing demand for healthy aging and wellness solutions, focusing on muscle vitality, cognitive performance, and anti-aging support [3] Company Background - NAI is a leading formulator, manufacturer, and marketer of nutritional supplements, providing a comprehensive range of services including scientific research, proprietary ingredients, and product formulation [6] - CarnoSyn® Brands offers three clinically studied, patented ingredients, including CarnoSyn® instant release beta-alanine powder and SR CarnoSyn® sustained release beta-alanine tablets, with TriBsyn™ being the latest addition to their product line [5]

Core Insights - Natural Alternatives International, Inc. (NAI) has launched TriBsyn™, a new carnosine booster that enhances beta-alanine bioavailability while eliminating the common side effect of paresthesia [1][2][3] Product Innovation - TriBsyn™ utilizes CarnoSyn® beta-alanine and patent-pending technology to significantly improve the absorption of beta-alanine, increasing its pharmacokinetic efficiency by more than four times compared to conventional forms [2][3] - The formulation is designed to cater to a broader consumer base, including older adults and individuals following vegetarian or vegan diets, by providing the health benefits of increased carnosine levels without the discomfort of paresthesia [2][3] Health Benefits - Increased carnosine levels are linked to various health benefits, such as enhancing cognitive performance, improving muscle function in older adults, and slowing age-related health decline [2] - Clinical trials have confirmed the effectiveness of TriBsyn™ in eliminating paresthesia while enhancing the delivery of beta-alanine [2][3] Market Positioning - The launch of TriBsyn™ is expected to strengthen NAI's presence in multiple dietary supplement categories, including fortified and medical foods, addressing the growing demand for wellness solutions among aging populations and those with plant-based diets [3][4] - TriBsyn™ will be showcased at the 46th ESPEN Congress on Clinical Nutrition & Metabolism in Milan, Italy, marking its commercial debut [3] Company Overview - NAI is a leading formulator and manufacturer of nutritional supplements, providing a range of services including scientific research, product formulation, and regulatory review [5] - The company has a portfolio that includes CarnoSyn® instant release beta-alanine powder and SR CarnoSyn® sustained release beta-alanine tablets, both of which have received FDA approval and GRAS status [4][5]