NTY Nbty Inc.

BOHEMIA, N.Y., April 26 /PRNewswire-FirstCall/ -- NBTY, Inc. (NYSE:NTY) (http://www.nbty.com/), a leading global manufacturer and marketer of nutritional supplements, today announced results for the fiscal second quarter ended March 31, 2007. For the fiscal second quarter ended March 31, 2007, net sales were $508 million compared to net sales of $482 million for the fiscal second quarter ended March 31, 2006, a 5.5% increase. Net income for the fiscal second quarter ended March 31, 2007 was $57 million, or $0.83 per diluted share, compared to net income of $21 million, or $0.31 per diluted share for the fiscal second quarter ended March 31, 2006. Net income for the fiscal second quarter ended March 31, 2006 included non- cash charges of $0.12 per diluted share. For the six months ended March 31, 2007, net sales were $1.015 billion, compared to net sales of $937 million for the prior like period, an increase of $78 million, or 8%. Net income for the six months ended March 31, 2007 was $108 million, or $1.56 per diluted share, compared to $44 million, or $0.64 per diluted share. Net income for the six months ended March 31, 2006 included non-cash charges of $0.15 per diluted share. The Company estimates its current fiscal year tax rate to be approximately 32%. The effective tax rate used for this fiscal second quarter was 29%. At March 31, 2007, NBTY had working capital of $501 million and total assets of $1.475 billion. During this fiscal quarter, the Company acquired, for $9 million, a nutritional bar manufacturing facility. Within one year, the Company should have the capabilities to produce, in-house, a portion of its Pure Protein, Met-RX and Karma bars. OPERATIONS FOR THE FISCAL SECOND QUARTER ENDED MARCH 31, 2007 Net sales for the Wholesale/US Nutrition division, which markets Nature's Bounty, Rexall, Sundown, Solgar and other brands, increased $29 million, or 13%, to $245 million from $216 million for the prior like quarter. Gross profit for the Wholesale operation increased to 43%, compared to 30% for the prior like quarter. The increase in gross margins reflects the Company's efficiencies in manufacturing and supply chain management brought about by economies of scale. The Wholesale/US Nutrition division continues to utilize valuable consumer preference sales data generated by the Company's Vitamin World retail stores and Puritan's Pride Direct Response/E-Commerce operations to empower its wholesale customers with this latest information. The Vitamin World stores are used as a laboratory for new ideas and are an effective tool in determining and monitoring consumer preferences. This information, as well as scanned sales data from the Vitamin World stores, is shared on a real time basis with wholesale customers. While sales for the North American Retail division decreased $6 million, or 10%, to $56 million from $62 million for the fiscal second quarter ended March 31, 2006, the operation achieved its fifth consecutive quarter of profitability despite a small loss at LeNaturiste. Same store sales for Vitamin World decreased 3% from the prior like quarter. Vitamin World is focused on improving its performance by rationalizing SKU's and enhancing visual merchandising. During the fiscal second quarter of 2007, Vitamin World closed 11 under-performing stores; a total of 15 closures for the current fiscal year to date. Vitamin World anticipates closing an additional 4 stores by the fiscal year-end. Le Naturiste, the Company's Canadian operation, closed 5 stores during the fiscal second quarter; a total of 8 closures for the fiscal year to date. At the end of the fiscal second quarter, the North American Retail division operated a total of 550 stores, with 462 in the US and 88 in Canada. European Retail sales for the fiscal second quarter ended March 31, 2007 increased 12% to $160 million from $143 million for the fiscal second quarter ended March 31, 2006. European Retail net sales in local currency were unchanged from the prior like period. The European Retail business continues to leverage its premier status, high street locations and brand awareness to achieve these results. The European Retail business is comprised of 501 Holland & Barrett and 31 GNC stores in the UK, 19 Nature's Way stores in Ireland, and 69 DeTuinen stores in the Netherlands. GNC and DeTuinen stores continued to be profitable in this fiscal second quarter. During the fiscal second quarter ended March 31, 2007, the European Retail division opened 3 stores, closed 2 and now operates a total of 620 stores. Net sales from Direct Response/Puritan's Pride operations for the fiscal second quarter of 2007 decreased 21% to $48 million from $61 million for the comparable prior period. There was a shifting of sales due to a highly promotional offering in the fiscal first quarter of 2007. Accordingly, customer demand was substantially lower in this fiscal second quarter. That highly promotional catalog in the fiscal first quarter of 2007 garnered strong consumer response including a significant increase in sales and number of customer orders. With lower promotional offerings in this second fiscal quarter, Puritan's Pride anticipated lower sales. Puritan's Pride continues to vary its promotional strategy throughout the fiscal year and as such, its historical results reflect this pattern and should be viewed on an annual and not quarterly basis. Online sales increased to 36% of total Direct Response/E-Commerce sales. Puritan's Pride views the Internet as the driver of future growth and is incorporating new technologies to expand this business. NBTY remains the leader in the direct response and e-commerce sectors and continues to increase the number of products available via its catalog and web sites. NBTY Chairman and CEO, Scott Rudolph, said: "We are pleased to report another record quarter of increased revenue and profitability. These increases further demonstrate NBTY's ability to drive sales and leverage its dominant position as the leading nutritional supplement Company in the world. We remain confident in the long-term outlook for NBTY as we continue to strive to grow the business and enhance long-term shareholder value." ABOUT NBTY NBTY is a leading global vertically integrated manufacturer, marketer and distributor of a broad line of high-quality, value-priced nutritional supplements in the United States and throughout the world. Under a number of NBTY and third party brands, the Company offers over 22,000 products, including products marketed by the Company's Nature's Bounty(R) (http://www.naturesbounty.com/), Vitamin World(R) (http://www.vitaminworld.com/), Puritan's Pride(R) (http://www.puritan.com/), Holland & Barrett(R) (http://www.hollandandbarrett.com/), Rexall(R) (http://www.rexallsundown.com/), Sundown(R) (http://www.rexallsundown.com/), MET- Rx(R) (http://www.metrx.com/), WORLDWIDE Sport Nutrition(R) (http://www.sportnutrition.com/), American Health(R) (http://www.americanhealthus.com/), GNC(UK)(R) (http://www.gnc.co.uk/), DeTuinen(R) (http://www.detuinen.nl/), LeNaturiste(TM) (http://www.lenaturiste.com/), SISU(R) (http://www.sisu.com/), Solgar(R) (http://www.solgar.com/) and Ester-C(R) (http://www.ester-c.com/) brands. This release refers to non-GAAP financial measures, such as Adjusted EBITDA. "ADJUSTED EBITDA" is defined as net income, excluding the aggregate amount of all non-cash losses reducing net income, plus interest, taxes, depreciation and amortization. This non-GAAP financial measure is not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. Non- GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. A reconciliation of the non-GAAP measure to the comparable GAAP measure is included in the attached financial tables. Management believes the presentation of Adjusted EBITDA is relevant and useful because Adjusted EBITDA is a measurement industry analysts utilize when evaluating NBTY's operating performance. Management also believes Adjusted EBITDA enhances an investor's understanding of NBTY's results of operations because it measures NBTY's operating performance exclusive of interest and non-cash charges for depreciation and amortization. Management also provides this non-GAAP measurement as a way to help investors better understand its core operating performance, enhance comparisons of NBTY's core operating performance from period to period and to allow better comparisons of NBTY's operating performance to that of its competitors. This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business. These forward-looking statements can be identified by the use of terminology such as "subject to," "believe," "expects," "plan," "project," "estimate," "intend," "may," "will," "should," "can," or "anticipates," or the negative thereof, or variations thereon, or comparable terminology, or by discussions of strategy. Although all of these forward looking statements are believed to be reasonable, they are inherently uncertain. Factors which may materially affect such forward-looking statements include: (i) slow or negative growth in the nutritional supplement industry; (ii) interruption of business or negative impact on sales and earnings due to acts of God, acts of war, terrorism, bio- terrorism, civil unrest or disruption of mail service; (iii) adverse publicity regarding nutritional supplements; (iv) inability to retain customers of companies (or mailing lists) recently acquired; (v) increased competition; (vi) increased costs; (vii) loss or retirement of key members of management; (viii) increases in the cost of borrowings and/or unavailability of additional debt or equity capital; (ix) unavailability of, or inability to consummate, advantageous acquisitions in the future, including those that may be subject to bankruptcy approval or the inability of NBTY to integrate acquisitions into the mainstream of its business; (x) changes in general worldwide economic and political conditions in the markets in which NBTY may compete from time to time; (xi) the inability of NBTY to gain and/or hold market share of its wholesale and/or retail customers anywhere in the world; (xii) unavailability of electricity in certain geographical areas; (xiii) the inability of NBTY to obtain and/or renew insurance and/or the costs of the same; (xiv) exposure to and expense of defending and resolving product liability and intellectual property claims and other litigation; (xv) the ability of NBTY to successfully implement its business strategy; (xvi) the inability of NBTY to manage its retail, wholesale, manufacturing and other operations efficiently; (xvii) consumer acceptance of NBTY's products; (xviii) the inability of NBTY to renew leases for its retail locations; (xix) the inability of NBTY's retail stores to attain or maintain profitability; (xx) the absence of clinical trials for many of NBTY's products; (xxi) sales and earnings volatility and/or trends for the Company and its market segments; (xxii) the efficacy of NBTY's Internet and on-line sales and marketing strategies; (xxiii) fluctuations in foreign currencies, including the British Pound, the Euro and the Canadian dollar; (xxiv) import-export controls on sales to foreign countries; (xxv) the inability of NBTY to secure favorable new sites for, and delays in opening, new retail locations; (xxvi) introduction of and compliance with new federal, state, local or foreign legislation or regulation or adverse determinations by regulators anywhere in the world (including the banning of products) and more particularly proposed Good Manufacturing Practices in the United States, the Food Supplements Directive and Traditional Herbal Medicinal Products Directive in Europe and Section 404 requirements of the Sarbanes-Oxley Act of 2002; (xxvii) the mix of NBTY's products and the profit margins thereon; (xxviii) the availability and pricing of raw materials; (xxix) risk factors discussed in NBTY's filings with the U.S. Securities and Exchange Commission; (xxx) adverse effects on NBTY as a result of increased gasoline prices and potentially reduced traffic flow to NBTY's retail locations; (xxxi) adverse tax determinations; (xxxii) the loss of a significant customer of the Company; and (xxxiii) other factors beyond the Company's control. Readers are cautioned not to place undue reliance on forward-looking statements. NBTY cannot guarantee future results, trends, events, levels of activity, performance or achievements. NBTY does not undertake and specifically declines any obligation to update, republish or revise forward- looking statements to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events. Consequently, such forward-looking statements should be regarded solely as NBTY's current plans, estimates and beliefs. Contact: Harvey Kamil Carl Hymans NBTY, Inc. G.S. Schwartz & Co. President & Chief Financial Officer 212-725-4500 631-200-2020 NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars and shares in thousands, except per share amounts) For the three months ended March 31, 2007 2006 Net sales $508,459 $481,743 Costs and expenses: Cost of sales 239,530 251,131 Advertising, promotion and catalog 34,441 27,066 Selling, general and administrative 151,963 157,222 Trademark impairment - 10,450 425,934 445,869 Income from operations 82,525 35,874 Other income (expense): Interest (4,154) (6,958) Miscellaneous, net 2,307 997 (1,847) (5,961) Income before provision for income taxes 80,678 29,913 Provision for income taxes 23,324 8,613 Net income $57,354 $21,300 Net income per share: Basic $0.85 $0.32 Diluted $0.83 $0.31 Weighted average common shares outstanding: Basic 67,273 67,195 Diluted 69,490 69,043 NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars and shares in thousands, except per share amounts) For the six months ended March 31, 2007 2006 Net sales $1,014,697 $937,013 Costs and expenses: Cost of sales 486,578 497,080 Advertising, promotion and catalog 61,204 52,226 Selling, general and administrative 303,902 302,877 Trademark impairment - 10,450 851,684 862,633 Income from operations 163,013 74,380 Other income (expense): Interest (9,217) (15,950) Miscellaneous, net 3,646 2,146 (5,571) (13,804) Income before provision for income taxes 157,442 60,576 Provision for income taxes 49,232 16,356 Net income $108,210 $44,220 Net income per share: Basic $1.61 $0.66 Diluted $1.56 $0.64 Weighted average common shares outstanding: Basic 67,242 67,194 Diluted 69,423 69,038 SALES (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, Percentage Percentage (In thousands) 2007 2006 Change 2007 2006 Change Wholesale / US Nutrition $244,968 $216,062 13 % $491,697 $440,301 12 % North American Retail / Vitamin World 55,764 61,681 -10 % 110,737 120,123 -8 % European Retail / Holland & Barrett / GNC (UK) 159,554 143,026 12 % 312,520 282,592 11 % Direct Response / Puritan's Pride 48,173 60,974 -21 % 99,743 93,997 6 % Total $508,459 $481,743 6 % $1,014,697 $937,013 8 % GROSS PROFIT PERCENTAGES (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED MARCH 31, MARCH 31, % Increase 2007 2006 - % Decrease 2007 2006 % Increase Wholesale / US Nutrition 43 % 30 % 13 % 41 % 31 % 10 % North American Retail / Vitamin World 60 % 59 % 1 % 60 % 58 % 2 % European Retail / Holland & Barrett / GNC (UK) 64 % 64 % 0 % 64 % 62 % 2 % Direct Response / Puritan's Pride 61 % 63 % -2 % 61 % 61 % 0 % Total 53 % 48 % 5 % 52 % 47 % 5 % ADJUSTED EBITDA Reconciliation of GAAP Measures to Non-GAAP Measures ** (Unaudited) (In thousands) THREE MONTHS ENDED MARCH 31, 2007 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA Wholesale / US Nutrition $48,748 $2,770 $- $- $51,518 North American Retail / Vitamin World 984 997 - 231 2,212 European Retail / Holland & Barrett / GNC (UK) 43,705 2,737 - - 46,442 Direct Response / Puritan's Pride 12,498 1,263 - - 13,761 Segment Results 105,935 7,767 - 231 113,933 Corporate / Manufacturing (25,257) 6,747 4,154 - (14,356) Total $80,678 $14,514 $4,154 $231 $99,577 THREE MONTHS ENDED MARCH 31, 2006 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA Wholesale / US Nutrition $1,004 $2,576 $- $11,885 $15,465 North American Retail / Vitamin World 1,410 1,125 - 146 2,681 European Retail / Holland & Barrett / GNC (UK) 40,616 2,636 - - 43,252 Direct Response / Puritan's Pride 19,806 1,281 - - 21,087 Segment Results 62,836 7,618 - 12,031 82,485 Corporate / Manufacturing (32,923) 6,282 6,958 - (19,683) Total $29,913 $13,900 $6,958 $12,031 $62,802 ** SINCE ADJUSTED EBITDA IS NOT A MEASURE OF PERFORMANCE CALCULATED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"), IT SHOULD NOT BE CONSIDERED IN ISOLATION OF, OR AS A SUBSTITUTE FOR OR SUPERIOR TO, OTHER MEASURES OF FINANCIAL PERFORMANCE PREPARED IN ACCORDANCE WITH GAAP, SUCH AS OPERATING INCOME, NET INCOME AND CASH FLOWS FROM OPERATING ACTIVITIES. IN ADDITION, THE COMPANY'S DEFINITION OF ADJUSTED EBITDA IS NOT NECESSARILY COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES. ADJUSTED EBITDA Reconciliation of GAAP Measures to Non-GAAP Measures ** (Unaudited) (In thousands) SIX MONTHS ENDED MARCH 31, 2007 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA Wholesale / US Nutrition $98,337 $5,559 $- $- $103,896 North American Retail / Vitamin World 2,071 2,134 - 584 4,789 European Retail / Holland & Barrett / GNC (UK) 82,529 5,565 - - 88,094 Direct Response / Puritan's Pride 28,091 2,528 - - 30,619 Segment Results 211,028 15,786 - 584 227,398 Corporate / Manufacturing (53,586) 12,960 9,217 - (31,409) Total $157,442 $28,746 $9,217 $584 $195,989 SIX MONTHS ENDED MARCH 31, 2006 Pretax Depreciation Income and Non-cash Adjusted (Loss) amortization Interest charges EBITDA Wholesale / US Nutrition $24,985 $5,130 $- $11,885 $42,000 North American Retail / Vitamin World (1,982) 2,598 - 2,271 2,887 European Retail / Holland & Barrett / GNC (UK) 76,404 5,294 - - 81,698 Direct Response / Puritan's Pride 26,434 2,536 - - 28,970 Segment Results 125,841 15,558 - 14,156 155,555 Corporate / Manufacturing (65,265) 12,486 15,950 - (36,829) Total $60,576 $28,044 $15,950 $14,156 $118,726 ** SINCE ADJUSTED EBITDA IS NOT A MEASURE OF PERFORMANCE CALCULATED IN ACCORDANCE WITH U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("GAAP"), IT SHOULD NOT BE CONSIDERED IN ISOLATION OF, OR AS A SUBSTITUTE FOR OR SUPERIOR TO, OTHER MEASURES OF FINANCIAL PERFORMANCE PREPARED IN ACCORDANCE WITH GAAP, SUCH AS OPERATING INCOME, NET INCOME AND CASH FLOWS FROM OPERATING ACTIVITIES. IN ADDITION, THE COMPANY'S DEFINITION OF ADJUSTED EBITDA IS NOT NECESSARILY COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES. NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Dollars and shares in thousands, except per share amounts) March 31, September 30, 2007 2006 Current assets: Cash and cash equivalents $42,237 $89,805 Investments 125,578 - Accounts receivable, net 92,135 89,154 Inventories 379,196 354,496 Deferred income taxes 28,140 26,636 Prepaid expenses and other current assets 60,871 42,261 Total current assets 728,157 602,352 Property, plant and equipment, net 309,636 309,437 Goodwill 246,767 235,959 Intangible assets, net 161,637 146,169 Other assets 28,544 10,393 Total assets $1,474,741 $1,304,310 Current liabilities: Current portion of long-term debt $906 $18,660 Accounts payable 74,239 64,211 Accrued expenses and other current liabilities 151,775 127,768 Total current liabilities 226,920 210,639 Long-term debt, net of current portion 209,796 191,045 Deferred income taxes 68,598 55,276 Other liabilities 10,195 7,918 Total liabilities 515,509 464,878 Commitments and contingencies Stockholders' equity: Common stock, $0.008 par; authorized 175,000 shares; issued and outstanding 67,325 shares and 67,212 shares at March 31, 2007 and September 30, 2006, respectively 539 538 Capital in excess of par 141,294 138,777 Retained earnings 779,270 671,060 Accumulated other comprehensive income 38,129 29,057 Total stockholders' equity 959,232 839,432 Total liabilities and stockholders' equity $1,474,741 $1,304,310 NBTY, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) For the six months ended March 31, 2007 2006 Cash flows from operating activities: Net income $108,210 $44,220 Adjustments to reconcile net income to cash and cash equivalents provided by operating activities: Impairments and disposals of property, plant and equipment 1,112 3,933 Depreciation and amortization 28,746 28,044 Foreign currency transaction loss 212 19 Amortization and write-off of deferred charges 1,515 3,294 Gain on extinguishment of debt - (425) Trademark impairment - 10,450 (Recovery of) provision for doubtful accounts (384) 1,372 Inventory reserves 4,265 3,151 Deferred income taxes 7,385 2,453 Excess income tax benefit from exercise of stock options (1,884) (15) Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (203) (7,741) Inventories (19,623) 91,047 Prepaid expenses and other current assets 10,967 19,106 Other assets (150) 1,171 Accounts payable 6,807 (2,782) Accrued expenses and other liabilities 5,058 691 Net cash provided by operating activities 152,033 197,988 Cash flows from investing activities: Purchase of property, plant and equipment (20,918) (21,166) Proceeds from sale of property, plant, and equipment 38 77 Purchase of available-for-sale investments (317,050) - Proceeds from sale of available-for-sale investments 191,472 39,900 Cash paid for acquisitions, net of cash acquired (37,005) - Restricted cash (18,539) - Purchase price settlements, net - 1,846 Purchase of intangible assets - (228) Net cash (used in) provided by investing activities (202,002) 20,429 Cash flows from financing activities: Principal payments under long-term debt agreements and capital leases (425) (216,071) Principal payments under the Revolving Credit Facility - (6,000) Payments for financing fees (1,649) - Excess income tax benefit from exercise of stock options 1,884 15 Proceeds from stock options exercised 634 65 Net cash provided by (used in) financing activities 444 (221,991) Effect of exchange rate changes on cash and cash equivalents 1,957 (829) Net decrease in cash and cash equivalents (47,568) (4,403) Cash and cash equivalents at beginning of period 89,805 67,282 Cash and cash equivalents at end of period $42,237 $62,879 DATASOURCE: NBTY, Inc. CONTACT: Harvey Kamil, President & Chief Financial Officer of NBTY, Inc., +1-631-200-2020; or Carl Hymans of G.S. Schwartz & Co., +1-212-725-4500, Web site: http://www.nbty.com/

Copyright