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].
NAI(NAII) - 2024 Q4 - Annual Report