NBTY announces record results for fiscal first quarter

Jan 28 2010

NBTY, Inc. (NYSE: NTY) (www.NBTY.com), a leading global manufacturer and marketer of nutritional supplements, today announced record results for the fiscal first quarter ended December 31, 2009.

For the fiscal first quarter ended December 31, 2009, net sales were a record $751 million compared to $661 million for the fiscal first quarter ended December 31, 2008, an increase of $91 million or 14%.

Net income for the fiscal first quarter ended December 31, 2009 was $76 million, or $1.18 per diluted share, compared to net income of $13 million, or $0.21 per diluted share, for the prior comparable quarter.  Included in the fiscal first quarter ended December 31, 2008 was a pre-tax charge of $8.6 million, or $0.09 per diluted share, for information technology project termination costs.

Net income for this fiscal first quarter of 2010 reflects greater sales and improved supply chain management, both of which contributed to higher gross profits in all divisions.  The overall gross profit percentage increased 4% to 45%.  Selling, general & administrative costs decreased to 25% of sales for the fiscal first quarter of 2010 as a result of cost containment initiatives, and advertising costs decreased to 4% of sales for this period.  These improvements in efficiency resulted in a $10 million decrease in SG&A and advertising costs compared with the prior like quarter.  With a $91 million increase in sales, income from operations increased $86 million.  The Company also benefited in part from the strengthening of the British Pound Sterling, which resulted in the reduction of foreign exchange losses reported in the caption Miscellaneous net in the prior like quarter.

Adjusted EBITDA for the fiscal first quarter of 2010 was a record $148 million, compared to $53 million for the fiscal first quarter of 2009.  The Company's balance sheet continues to be strong and well capitalized.  At December 31, 2009, working capital was $756 million, total assets were $2 billion, and $325 million remained undrawn under the Company's Revolving Credit Facility.

OPERATIONS FOR THE FISCAL FIRST QUARTER ENDED DECEMBER 31, 2009

Net sales for the Wholesale/US Nutrition division, which markets various brands including Nature's Bounty, Osteo Bi-Flex, Rexall, Sundown,  Ester-C, Solgar, and private label products, increased $64 million, or 16%, to $471 million.  Private label sales were $198 million, or 42% of total wholesale sales.

The Nielsen Company tracks industry-wide sales of vitamins, minerals, herbs and other supplements in the food, drug and mass market sectors.  For the thirteen week period ended January 2, 2010, Nielsen reported an increase in the entire category of 14%.  According to Nielsen, for that same period, the Company's Wholesale brands reported a 16% increase.

The Wholesale/US Nutrition division utilizes 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 data.  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 our wholesale customers to give them a competitive advantage.

Net sales for the North American Retail division, comprised of Vitamin World Stores in the United States and LeNaturiste stores in Canada, were $51 million, a 6% increase from the prior like quarter.   The division's same store sales were up 5% for the fiscal first quarter of 2010 as the modernization of the Vitamin World stores had a favorable impact on its operations.  

During the fiscal first quarter of 2010, the North American Retail division opened six new stores.  At the end of the fiscal first quarter of 2010, the North American Retail division operated a total of 534 stores, consisting of 448 Vitamin World stores in the United States and 86 LeNaturiste stores in Canada.

European Retail net sales for the fiscal first quarter ended December 31, 2009 were $176 million, a 13% increase compared to $156 million for the prior like quarter.  In local currency, (British Pound Sterling), European Retail net sales increased 8% and same store sales increased 6%.

The Company is integrating the Julian Graves operations into our European Retail Division.  This process will include converting a number of Julian Graves stores into Holland & Barrett stores and eliminating redundant activities.  The Company should begin to see the benefits from this integration by the fiscal fourth quarter 2010.

The European Retail division continues to leverage its premier status, high street locations and brand awareness to maintain market share in a difficult retail environment. The European Retail division consists of 543 Holland & Barrett stores, 351 Julian Graves stores and 32 GNC stores in the UK, 25 Nature's Way stores in Ireland, and 82 DeTuinen stores in the Netherlands, for a total of 1,033 stores in Europe and 14 Holland & Barrett franchised stores in South Africa, Singapore and Malta.  As part of Holland & Barrett's global expansion, additional franchise locations are expected during fiscal 2010.

Net sales from Direct Response/E-Commerce operations for the fiscal first quarter of 2010 increased $3 million, or 7% to $53 million from $49 million for the fiscal first quarter of 2009.  As this division varies its promotional strategy throughout the fiscal year, its results should be viewed on an annual and not quarterly basis.  Puritan's Pride is 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.  Average order size increased to $79 compared with $75 for the prior like quarter.

NBTY Chairman and CEO, Scott Rudolph, said: "We are pleased to report record results for the quarter.  Our significant increase in revenue and profitability reflect NBTY's on-going initiatives to improve operations, control costs and expand our premiere position as the leading nutritional supplement company.  Our growing financial strength continues to play a vital role in generating future growth and shareholder value."