BOHEMIA, N.Y., Nov. 13 /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 fourth quarter and fiscal year ended September 30,
2006 and preliminary unaudited net sales results for the month of
October 2006. For the fiscal fourth quarter ended September 30,
2006, net sales increased $33 million, or 8%, to $468 million
compared to net sales of $435 million for the fiscal fourth quarter
ended September 30, 2005. Net income for the fiscal fourth quarter
ended September 30, 2006 was $38 million, or $0.54 per diluted
share, an increase of 230%, compared to $11 million, or $0.17 per
diluted share, for the fiscal fourth quarter ended September 30,
2005. The rise in net income for the fiscal fourth quarter resulted
from the aforementioned sales increase of $33 million, an
improvement in gross profit, greater manufacturing efficiencies,
the continued profitability in the North American Retail operations
and a decrease in interest expense. For the year ended September
30, 2006, net sales increased $143 million, or 8%, to $1.9 billion,
compared to net sales of $1.7 billion for the prior like period.
Net income for the year ended September 30, 2006 was $112 million,
or $1.62 per diluted share, an increase of 43% as compared to $78
million, or $1.13 per diluted share, for the year ended September
30, 2005. Included in the results for the year ended September 30,
2006 and 2005 were non-cash charges, primarily asset and goodwill
impairment, of $0.15 and $0.14 per diluted share respectively.
Without these non-cash charges, earnings per diluted share for the
year ended September 30, 2006 and 2005 would have been $1.77 and
$1.27 respectively. In fiscal 2006, the Company also benefited from
the Homeland Investment Act's treatment of the repatriation of
foreign earnings, which allowed the Company to lower its effective
tax rate from 35% to 27%. At September 30, 2006, NBTY had working
capital of $392 million and total assets of $1.3 billion. During
fiscal 2006, the Company decreased inventory by $137 million while
still providing uninterrupted product supply to customers. The
Company's strong cash flow in fiscal 2006 allowed for the
accelerated repayment of $236 million of long-term debt. Effective
November 3, 2006, the Company put into place a $325 million bank
revolving credit agreement to provide funds, if needed, for future
growth. Presently, there are no borrowings under this agreement.
OPERATIONS FOR THE FISCAL FOURTH QUARTER ENDED SEPTEMBER 30, 2006
Sales for the Wholesale/US Nutrition division, which markets
Nature's Bounty, Sundown and Solgar brands, increased $21 million,
or 10%, to $217 million, from $197 million for the prior like
quarter. Product returns for the fiscal fourth quarter were $8
million, compared with $11 million for the fiscal fourth quarter
2005. Total product returns for the year ended September 30, 2006
were $28 million, a 36% decrease as compared to $44 million for the
previous year. Gross margin in the Wholesale operation increased to
35%, compared with 30% for the fiscal fourth quarter of 2005.
During 2005, gross margins were hampered by aggressive promotional
incentives, competitive pricing for the joint care category and
high prices paid for certain raw materials. That year, the Company
purchased raw materials that were in short supply. Market prices
for these raw materials decreased during fiscal 2006 as the supply
shortage dissipated. The US Nutrition/Wholesale 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
effectively used as a laboratory for new ideas and have become a
significant tool for determining and monitoring consumer
preferences. This information, as well as scanned sales data from
the Vitamin World stores, is shared with NBTY's wholesale
customers. The North American Retail operation continued to achieve
profitability in the fiscal fourth quarter 2006. The division's
sales remained constant at $56 million, even though there were 71
fewer stores. Vitamin World closed a total of 75 underperforming
stores and opened 9 new stores during fiscal 2006. At the end of
the fiscal fourth quarter, the North American Retail division
operated a total of 572 stores with 476 stores in the United States
and 96 in Canada. It is anticipated that approximately 20
under-performing stores will be closed in fiscal 2007. Same store
sales for Vitamin World increased 7% from the prior like quarter.
These results reflect continued improvements in the retail
environment. European Retail sales for the fiscal fourth quarter
ended September 30, 2006 increased $8 million or 6% to $142 million
from $134 million for the fiscal fourth quarter ended September 30,
2005. In local currency, same store sales increased 3% from the
prior like period. The European Retail business continues to
leverage its premier status, high street locations and brand
awareness. The European Retail business is comprised of 498 Holland
& Barrett and 32 GNC stores in the UK, 19 Nature's Way stores
in Ireland and 68 DeTuinen stores in the Netherlands. During the
fiscal fourth quarter ended September 30, 2006, the European Retail
division opened 3 stores and closed 2 stores. For the year ended
September 30, 2006, the European Retail operation opened 11 stores
and closed 6. A total of 617 stores were in operation at September
30, 2006. Revenues from Direct Response/Puritan's Pride operations
for the fiscal fourth quarter of 2006 increased $4 million or 9%
from the comparable like period. The average order size increased
to $73 from $70. Online sales constituted 34% of total Direct
Response/E-Commerce sales. NBTY remains the leader in the direct
response and e-commerce sectors. NBTY Chairman and CEO, Scott
Rudolph, said: "We are pleased with our results which lend further
credence to our ability to drive sales, increase profitability and
enhance our dominant market share position. We remain confident in
the long-term outlook for NBTY as we continue to strive to grow the
business while controlling costs and increasing long-term
shareholder value." ABOUT NBTY NBTY is a global leading 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), Vitamin
World(R), Puritan's Pride(R), Holland & Barrett(R), Rexall(R),
Sundown(R), MET-Rx(R), WORLDWIDE Sport Nutrition(R), American
Health(R), GNC (UK)(R), DeTuinen(R), LeNaturiste(TM), SISU(R),
Solgar(R) and Ester-C(R) 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 and 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 September 30, 2006 2005
Net sales $467,912 $435,218 Costs and expenses: Cost of sales
238,523 236,650 Advertising, promotion and catalog 23,276 25,308
Selling, general and administrative 151,910 151,668 413,709 413,626
Income from operations 54,203 21,592 Other income (expense):
Interest (4,516) (9,238) Miscellaneous, net 1,603 2,323 (2,913)
(6,915) Income before provision for income taxes 51,290 14,677
Provision for income taxes 13,627 3,265 Net income $37,663 $11,412
Net income per share: Basic $0.56 $0.17 Diluted $0.54 $0.17
Weighted average common shares outstanding: Basic 67,206 67,189
Diluted 69,242 69,116 NBTY, INC. and SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars and shares
in thousands, except per share amounts) For the fiscal years ended
September 30, 2006 2005 Net sales $1,880,222 $1,737,187 Costs and
expenses: Cost of sales 992,197 895,644 Advertising, promotion and
catalog 103,614 108,005 Selling, general and administrative 598,742
588,166 Trademark / goodwill impairments 10,450 7,686 1,705,003
1,599,501 Income from operations 175,219 137,686 Other income
(expense): Interest (25,924) (26,475) Miscellaneous, net 3,532
8,051 (22,392) (18,424) Income before provision for income taxes
152,827 119,262 Provision for income taxes 41,042 41,125 Net income
$111,785 $78,137 Net income per share: Basic $1.66 $1.16 Diluted
$1.62 $1.13 Weighted average common shares outstanding: Basic
67,199 67,162 Diluted 69,130 69,137 SALES (Thousands) THREE MONTHS
ENDED FISCAL YEARS ENDED SEPTEMBER 30, SEPTEMBER 30, Percentage
Percentage 2006 2005 Change 2006 2005 Change Wholesale / US
Nutrition $217,484 $196,832 10% $885,146 $747,234 18% North
American Retail / Vitamin World 56,105 56,136 0% 234,215 224,008 5%
European Retail / Holland & Barrett / GNC (UK) 141,888 134,078
6% 564,933 566,140 0% Direct Response / Puritan's Pride 52,435
48,172 9% 195,928 199,805 -2% Total $467,912 $435,218 8% $1,880,222
$1,737,187 8% GROSS PROFIT PERCENTAGES THREE MONTHS ENDED FISCAL
YEARS ENDED SEPTEMBER 30, SEPTEMBER 30, - % Decrease 2006 2005 %
Increase 2006 2005 % Increase Wholesale / US Nutrition 35% 30% 5%
32% 34% -2% North American Retail / Vitamin World 59% 57% 2% 58%
55% 3% European Retail / Holland & Barrett / GNC (UK) 63% 61%
2% 62% 62% 0% Direct Response / Puritan's Pride 58% 52% 6% 59% 57%
2% Total 49% 46% 3% 47% 48% -1% Reconciliation of GAAP Measures to
Non-GAAP Measures (Thousands) (Unaudited) THREE MONTHS ENDED
SEPTEMBER 30, 2006 Pretax Depreciation Income and Non-cash Adjusted
(Loss) amortization Interest charges EBITDA Wholesale / US
Nutrition $27,661 $2,550 $- $(128) $30,083 North American Retail /
Vitamin World 199 1,188 736 2,123 European Retail / Holland &
Barrett / GNC (UK) 34,283 2,843 37,126 Direct Response / Puritan's
Pride 14,202 1,261 15,463 Segment Results 76,345 7,842 - 608 84,795
Corporate / Manufacturing (25,055) 6,222 4,516 (14,317) Total
$51,290 $14,064 $4,516 $608 $70,478 THREE MONTHS ENDED SEPTEMBER
30, 2005 Pretax Depreciation Income and Non-cash Adjusted (Loss)
amortization Interest charges EBITDA Wholesale / US Nutrition
$10,564 $2,482 $- $- $13,046 North American Retail / Vitamin World
(3,881) 1,507 215 (2,159) European Retail / Holland & Barrett /
GNC (UK) 32,479 2,559 35,038 Direct Response / Puritan's Pride
10,731 1,253 11,984 Segment Results 49,893 7,801 - 215 57,909
Corporate / Manufacturing (35,216) 6,206 9,238 - (19,772) Total
$14,677 $14,007 $9,238 $215 $38,137 Reconciliation of GAAP Measures
to Non-GAAP Measures (Thousands) (Unaudited) FISCAL YEAR ENDED
SEPTEMBER 30, 2006 Pretax Depreciation Income and Non-cash Adjusted
(Loss) amortization Interest charges EBITDA Wholesale / US
Nutrition $75,823 $10,159 $- $11,370 $97,352 North American Retail
/ Vitamin World 332 4,884 - 3,141 8,357 European Retail / Holland
& Barrett / GNC (UK) 143,456 11,174 - - 154,630 Direct Response
/ Puritan's Pride 52,748 5,051 - - 57,799 Segment Results 272,359
31,268 - 14,511 318,138 Corporate / Manufacturing (119,532) 24,780
25,924 - (68,828) Total $152,827 $56,048 $25,924 $14,511 $249,310
FISCAL YEAR ENDED SEPTEMBER 30, 2005 Pretax Depreciation Income and
Non-cash Adjusted (Loss) amortization Interest charges EBITDA
Wholesale / US Nutrition $67,873 $9,923 $- $- $77,796 North
American Retail / Vitamin World (26,216) 6,756 11,204 (8,256)
European Retail / Holland & Barrett / GNC (UK) 151,459 13,175
164,634 Direct Response / Puritan's Pride 52,254 5,079 57,333
Segment Results 245,370 34,933 - 11,204 291,507 Corporate /
Manufacturing (126,108) 23,350 26,475 - (76,283) Total $119,262
$58,283 $26,475 $11,204 $215,224 NBTY, INC. and SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS (Dollars
and shares in thousands) September 30, September 30, 2006 2005
Current assets: Cash and cash equivalents $89,805 $67,282
Investments - 39,900 Accounts receivable, less allowance for
doubtful accounts of $10,361 and $9,155, respectively 89,154 73,226
Inventories 354,496 491,335 Deferred income taxes 26,636 23,645
Prepaid expenses and other current assets 42,261 54,469 Total
current assets 602,352 749,857 Property, plant and equipment, net
of accumulated depreciation of $296,069 and $279,883, respectively
309,437 320,528 Goodwill 235,959 228,747 Other intangible assets,
net 146,169 166,325 Other assets 10,393 16,845 Total assets
$1,304,310 $1,482,302 NBTY, INC. and SUBSIDIARIES CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND
STOCKHOLDERS' EQUITY (Dollars and shares in thousands) September
30, September 30, 2006 2005 Current liabilities: Current portion of
long-term debt $18,660 $80,922 Accounts payable 64,211 72,720
Accrued expenses and other current liabilities 127,768 120,487
Total current liabilities 210,639 274,129 Long-term debt, net of
current of portion 191,045 428,204 Deferred income taxes 55,276
57,092 Other liabilities 7,918 6,822 Total liabilities 464,878
766,247 Commitments and contingencies Stockholders' equity: Common
stock, $0.008 par; authorized 175,000 shares; issued and
outstanding 67,212 shares and 67,191 shares at September 30, 2006
and 2005 538 537 Capital in excess of par 138,777 138,657 Retained
earnings 671,060 559,275 Accumulated other comprehensive income
29,057 17,586 Total stockholders' equity 839,432 716,055 Total
liabilities and stockholders' equity $1,304,310 $1,482,302 NBTY,
INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (UNAUDITED) (Dollars in thousands) For the fiscal year ended
September 30, 2006 2005 Cash flows from operating activities: Net
income $111,785 $78,137 Adjustments to reconcile net income to cash
and cash equivalents provided by operating activities: Provision
relating to impairments and disposals of property, plant and
equipment 4,420 5,471 Depreciation and amortization 56,048 58,283
Foreign currency transaction loss / (gain) 1,851 (4,286)
Amortization and write-off of deferred financing costs 3,975 2,398
Amortization and write-off of bond discount 379 152 Loss on bond
redemption - 790 Gain on extinguishment of debt (425) - Gain on
settlement of interest rate SWAP (353) - Compensation expense for
ESOP - 2,583 Impairment on asset held for sale - 1,908 Gain on sale
of business assets - (1,999) Trademark / goodwill impairments
10,450 7,686 Provision for doubtful accounts 1,427 182 Inventory
reserves 8,908 9,500 Excess income tax benefit from exercise of
stock options (15) 220 Deferred income taxes (12,019) 4,527 Changes
in operating assets and liabilities, net of acquisitions: Accounts
receivable (16,056) 29,354 Inventories 131,469 (87,434) Prepaid
expenses and other current assets 11,105 (1,613) Other assets 1,954
(139) Accounts payable (4,852) (28,519) Accrued expenses and other
liabilities 2,912 8,647 Net cash provided by operating activities
312,963 85,848 Cash flows from investing activities: Purchase of
property, plant and equipment (35,308) (71,516) Proceeds from sale
of property, plant, and equipment 1,426 298 Proceeds from sale of
property, plant, and equipment held for sale 9,950 Proceeds from
sale of business assets - 5,766 Proceeds from sale / (purchase) of
available-for-sale marketable securities 39,900 (39,900) Cash paid
for acquisitions, net of cash acquired - (131,397) Purchase price
settlements, net 1,845 (8,236) Purchase / sale of intangible assets
(478) (533) Purchase of industrial revenue bonds - (14,973) Net
cash provided by (used in) investing activities 7,385 (250,541)
Cash flows from financing activities: Principal payments under
long-term debt agreements and capital leases (312,107) (138,544)
Proceeds from borrowings under long-term agreements - 132,950
Proceeds from short-term borrowings 18,204 - Principal payments
under the Revolving Credit Facility (11,000) (20,000) Proceeds from
borrowings under the Revolving Credit Facility 5,000 26,000
Proceeds from sale-leaseback - 14,973 Proceeds from bond offering,
net of discount - 198,234 Bond issuance costs - (3,329) Proceeds
from settlement of interest rate SWAP 353 - Excess income tax
benefit from exercise of stock options 15 - Proceeds from stock
options exercised 105 225 Purchase of treasury stock - (176) Net
cash (used in) provided by financing activities (299,430) 210,333
Effect of exchange rate changes on cash and cash equivalents 1,605
(109) Net increase in cash and cash equivalents 22,523 45,531 Cash
and cash equivalents at beginning of year 67,282 21,751 Cash and
cash equivalents at end of year $89,805 $67,282 NBTY's preliminary
unaudited net sales results for October 2006 by segment are as
follows (amounts are rounded): NET SALES (Preliminary and
Unaudited) FOR THE MONTH OF OCTOBER ($ In Millions) 2006 2005 %
Change Wholesale/ US Nutrition $87 $78 13 % North American Retail /
Vitamin World $18 $19 -4 % European Retail / Holland & Barrett
/ GNC (UK) $50 $48 4 % Direct Response/ Puritan's Pride $12 $10 17
% Total $168 $155 8 % European Retail net sales in local currency
decreased 4% in October 2006. Vitamin World same store sales
increased 4% in October 2006. DATASOURCE: NBTY, Inc. CONTACT:
Harvey Kamil, President and 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/
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