NAI(US:NAII)2023-09-21 20:15Financial Performance - Consolidated net sales for fiscal 2023 decreased by 10% to $154.0 million compared to $171.0 million in fiscal 2022[143]. - Net income for fiscal 2023 was $2.5 million, a decrease of 76% compared to $10.7 million in fiscal 2022[154]. - Gross profit fell to $18,158 thousand in 2023, down from $30,509 thousand in 2022, a decrease of about 40.4%[189]. - Total income before income taxes decreased from $13.659 million in fiscal 2022 to $3.555 million in fiscal 2023[269]. - The comprehensive income for 2023 was $740 thousand, a sharp decline from $12,972 thousand in 2022, reflecting a decrease of approximately 94.3%[189]. - Basic net income per common share for the year ended June 30, 2023, was $0.43, down 75.4% from $1.75 for the year ended June 30, 2022[243]. - Diluted net income per common share for the year ended June 30, 2023, was $0.43, compared to $1.74 for the year ended June 30, 2022, reflecting a decrease of 75.1%[243]. Sales and Revenue - Private-label contract manufacturing sales decreased by 6% primarily due to reduced orders from larger customers, with sales to the largest customer increasing by 66%[143]. - Patent and trademark licensing revenue decreased by 46% to $8.7 million from $16.2 million in fiscal 2022, attributed to market factors and a slowdown in the Sports Nutrition sales channel[144]. - Net sales decreased to $154,015 thousand in 2023 from $170,966 thousand in 2022, representing a decline of approximately 9.9%[189]. - Private-label contract manufacturing segment net sales were $145.3 million in fiscal 2023, down from $154.8 million in fiscal 2022, a decrease of about 6%[322]. - Patent and trademark licensing segment net sales fell to $8.7 million in fiscal 2023 from $16.2 million in fiscal 2022, a decline of approximately 46%[322]. - Net sales in the United States were $109,277,000 in 2023, down from $115,255,000 in 2022, a decrease of about 5.9%[323]. Expenses and Costs - Selling, general, and administrative expenses decreased by 20% to $13.5 million from $16.8 million in fiscal 2022[157]. - Interest expense increased significantly to $451 thousand in 2023 from $83 thousand in 2022, marking a rise of approximately 443.4%[189]. - Advertising costs incurred during fiscal 2023 were $0.7 million, down from $1.1 million in fiscal 2022[233]. - Health care benefits expenses for active employees totaled $1.7 million for the fiscal year ended June 30, 2023, compared to $1.4 million for the fiscal year ended June 30, 2022[280]. Cash Flow and Liquidity - Cash provided by operating activities was $7.0 million in fiscal 2023, down from $11.9 million in fiscal 2022[160]. - Cash and cash equivalents at the end of 2023 were $13,604 thousand, compared to $21,833 thousand at the end of 2022, indicating a decrease of approximately 37.6%[194]. - Cash used in investing activities decreased to $13.5 million in fiscal 2023 from $26.5 million in fiscal 2022, primarily due to the absence of a new facility purchase[163]. - Cash used in financing activities was $1.8 million in fiscal 2023, down from $4.3 million provided in fiscal 2022, reflecting reduced stock repurchase activity[164]. - The company anticipates not being able to comply with all covenants under the Credit Agreement in Q2 of fiscal 2024 due to reduced sales and temporary facility closures[167]. Inventory and Assets - Total current assets decreased to $57.0 million as of June 30, 2023, from $76.7 million in 2022[187]. - The company’s inventories decreased to $29.694 million as of June 30, 2023, from $32.475 million as of June 30, 2022, a reduction of 8.7%[247]. - Total assets decreased to $134.2 million as of June 30, 2023, compared to $146.0 million as of June 30, 2022, a decline of approximately 8%[322]. - Long-lived assets in the United States increased from $43,769,000 in 2022 to $53,536,000 in 2023, an increase of approximately 22.4%[324]. Debt and Financing - The company entered into a new credit facility with Wells Fargo, extending the maturity of its working line of credit to May 24, 2024, with a total lending capacity of $20.0 million[260]. - The company has $20.0 million available for borrowing under its credit facility as of June 30, 2023[267]. - The company is currently negotiating a potential revised credit facility with its lender[167]. Operational Developments - A temporary closure of the new high-speed powder processing facility was announced due to excess inventory, with expectations to resume operations by late Q3 of fiscal 2024[148]. - The company plans to continue focusing on expanding its beta-alanine patent estate and developing new sales distribution channels in the Wellness and Healthy Aging category[152]. - The company recognized a benefit of $3.5 million from the Employee Retention Tax Credit, with $2.2 million offsetting cost of goods sold and $1.3 million offsetting other selling, general and administrative expenses[204]. Pension and Employee Benefits - The defined benefit pension plan's funded status showed a benefit obligation of $1.364 million at the end of June 30, 2023, down from $1.438 million at the end of June 30, 2022[286]. - The net periodic benefit expense for the defined benefit pension plan was $81,000 for the fiscal year ended June 30, 2023, compared to $83,000 for the fiscal year ended June 30, 2022[287]. - The fair value of plan assets at the end of June 30, 2023, was $1.025 million, a decrease from $1.094 million at the end of June 30, 2022[286].