NAI(US:NAII)2023-05-15 20:16Sales Performance - For the nine months ended March 31, 2023, net sales decreased by 0.3% compared to the same period in 2022, with private-label contract manufacturing sales increasing by 7.7% primarily due to higher sales to the largest customer[89]. - The company anticipates a consolidated net sales decrease of 10% to 12% for fiscal 2023 compared to fiscal 2022, driven by changes in sales mix and inflationary factors[94]. - During the three months ended March 31, 2023, private-label contract manufacturing net sales decreased by 19% compared to the same period in 2022, primarily due to reduced orders from two of the three largest customers[103]. Profitability - Gross profit for the three months ended March 31, 2023, was $1.4 million, representing a gross profit margin of 4.2%, down from 17.4% in the same period in 2022[102]. - Gross profit margin for private-label contract manufacturing decreased by 11.5 percentage points for the three months ended March 31, 2023, primarily due to lower sales and increased per-unit manufacturing costs[106]. - Patent and trademark licensing gross profit margin decreased by 1.7 percentage points for the three months ended March 31, 2023, attributed to decreased net sales in this segment[106]. Expenses and Cost Management - A workforce restructuring plan was implemented in March 2023, resulting in the elimination of 32 positions, approximately 9% of the global workforce, expected to reduce operating expenses by $1.8 million annually[95]. - Selling, general and administrative expenses decreased by $0.3 million, or 6%, for the three months ended March 31, 2023, mainly due to a partial recovery of previously reserved accounts receivable[106]. - The company expects to continue evaluating cost reduction opportunities to mitigate the impact of order reductions and higher operational costs on financial results[96]. Cash Flow and Financial Position - Net cash used by operating activities was $0.5 million for the nine months ended March 31, 2023, compared to $3.1 million provided in the prior year[111]. - Changes in accounts receivable provided $9.8 million in cash for the nine months ended March 31, 2023, compared to $1.2 million in the prior year[112]. - Cash used in investing activities was $13.2 million for the nine months ended March 31, 2023, down from $21.4 million in the prior year, primarily due to different capital expenditures[114]. - Cash provided by financing activities was $7.4 million for the nine months ended March 31, 2023, compared to $4.8 million in the prior year[115]. - As of March 31, 2023, the company had $15.6 million in cash and cash equivalents, sufficient to fund current working capital needs and capital expenditures for the next 12 months[117]. Research and Development - The company continues to invest in research and development for the SR CarnoSyn® sustained release delivery system, targeting growth in the Wellness and Healthy Aging markets[91]. - The company plans to begin commercial production in a new high-volume powder blending and packaging facility, which was fully opened in April 2023[97]. Legal and Other Expenses - Legal expenses related to the CarnoSyn® business were approximately $0.1 million for the first nine months of fiscal 2023, down from $0.3 million in the same period in fiscal 2022[92]. - Other expenses increased by $0.2 million for the three months ended March 31, 2023, primarily due to increased expenses related to the CHF balance sheet hedge and interest expense[107]. Taxation - Income tax benefit decreased by $1.1 million to a benefit of $0.4 million for the three months ended March 31, 2023, due to a pre-tax loss compared to the prior year[108].