Natural Alternatives International Inc. reported a decline in financial performance for the three months ended September 30, 2024, compared to the same period in 2023. Net sales decreased by 2% to $33.15 million from $33.97 million, primarily due to a 5% drop in private-label contract manufacturing sales, attributed to reduced orders from a major customer. However, revenue from the patent and trademark licensing segment increased by 42% to $2.52 million, up from $1.78 million.

The company's gross profit also fell significantly, down 28% to $2.26 million from $3.14 million in the prior year. This decline contributed to a net loss of $1.98 million, compared to a net loss of $0.70 million in the same period last year, marking an increase in loss of 185%. The loss from operations rose to $1.84 million from $0.54 million, indicating a 238% increase in operational loss.

Total current assets increased slightly to $62.48 million as of September 30, 2024, from $61.61 million at the end of June 2024. However, total assets decreased to $161.27 million from $162.34 million. The company’s total liabilities rose to $81.09 million from $79.75 million, while total stockholders' equity decreased to $80.19 million from $82.60 million.

Cash and cash equivalents decreased to $10.16 million from $11.98 million, with net cash used in operating activities amounting to $3.44 million, a stark contrast to the $4.50 million provided in the same period last year. The company also reported a net decrease in cash and cash equivalents of $1.83 million, compared to a net increase of $3.15 million in the prior year.

Strategically, Natural Alternatives extended the lease for its Vista, California manufacturing facility for an additional 10 years and 5 months, which will increase lease liabilities and Right of Use assets by approximately $25.9 million. The company is also investing approximately $2.3 million in a solar electrical generating system for this facility. Additionally, the company is focusing on expanding its CarnoSyn® product offerings and has introduced a new product, TriBsyn™, aimed at the Wellness and Healthy Aging markets.

As of September 30, 2024, the company was not in compliance with certain financial covenants related to net income and anticipates continued non-compliance in the next two quarters. The company is also monitoring the ongoing Israel-Hamas conflict for potential impacts on operations, as it sources multiple raw materials from the region.