NTY Nbty Inc.

RONKONKOMA, N.Y., Jan. 28 /PRNewswire-FirstCall/ -- NBTY, Inc. (NYSE:NTY) (http://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." 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 25,000 products, including products marketed by the Company's Nature's Bounty® (http://www.naturesbounty.com/), Vitamin World® (http://www.vitaminworld.com/), Puritan's Pride® (http://www.puritan.com/), Holland & Barrett® (http://www.hollandandbarrett.com/), Rexall® (http://www.rexall.com/), Sundown® (http://www.sundownnutrition.com/), MET-Rx® (http://www.metrx.com/), Worldwide Sport Nutrition® (http://www.sportnutrition.com/), American Health® (http://www.americanhealthus.com/), GNC (UK)® (http://www.gnc.co.uk/), DeTuinen® (http://www.detuinen.nl/), LeNaturiste(TM) (http://www.lenaturiste.com/), SISU® (http://www.sisu.com/), Solgar® (http://www.solgar.com/), Good 'n' Natural® (http://www.goodnnatural.com/), Home Health(TM) (http://www.homehealthus.com/), Julian Graves, and Ester-C® (http://www.ester-c.com/) brands. NBTY routinely posts information that may be important to investors on its web site. 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 and manufacturing 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 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 energy 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; (xxxiii) potential investment losses as a result of liquidity conditions; and (xxxiv) 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. NBTY, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts) Three months ended December 31, 2009 2008 ---- ---- Net sales $751,151 $660,552 Costs and expenses: Cost of sales 411,448 388,503 Advertising, promotion and catalog 28,742 31,291 Selling, general and administrative 188,731 195,901 IT project termination costs - 8,647 --- ----- 628,921 624,342 ------- ------- Income from operations 122,230 36,210 ------- ------ Other income (expense): Interest (8,056) (9,489) Miscellaneous, net 1,755 (5,633) ----- ------ (6,301) (15,122) ------ ------- Income before provision for income taxes 115,929 21,088 Provision for income taxes 40,343 7,613 Net income $75,586 $13,475 ======= ======= Net income per share: Basic $1.21 $0.22 ===== ===== Diluted $1.18 $0.21 ===== ===== Weighted average common shares outstanding: Basic 62,408 61,600 ====== ====== Diluted 63,885 63,114 ====== ====== NET SALES (Unaudited) THREE MONTHS ENDED DECEMBER 31, Percentage (In thousands) 2009 2008 Change ---- ---- ------ Wholesale / US Nutrition $471,114 $406,966 16% North American Retail 51,458 48,438 6% European Retail 175,995 156,026 13% Direct Response / E-Commerce 52,584 49,122 7% --- Total $751,151 $660,552 14% -------- -------- --- GROSS PROFIT PERCENTAGES (Unaudited) THREE MONTHS ENDED DECEMBER 31, Increase 2009 2008 - Decrease ---- ---- ---------- Wholesale / US Nutrition 34% 28% 6% North American Retail 68% 67% 1% European Retail 62% 63% -1% Direct Response / E-Commerce 63% 59% 4% --- --- --- Total 45% 41% 4% --- --- --- ADJUSTED EBITDA** Reconciliation of GAAP Measures to Non-GAAP Measures (Unaudited) (In thousands) THREE MONTHS ENDED DECEMBER 31, 2009 Pretax Depreciation Income and Interest Non-cash Adjusted ------- ------------- -------- -------- -------- (Loss) amortization charges EBITDA** ------ ------------ ------- -------- Wholesale / US Nutrition $86,238 $3,672 $- $5,578 $95,488 North American Retail 2,072 709 - 49 2,830 European Retail 34,644 3,626 - 119 38,389 Direct Response / E-Commerce 16,388 1,206 - 15 17,609 ------ ----- --- --- ------ Segment Results 139,342 9,213 - 5,761 154,316 Corporate / Manufacturing (23,413) 7,734 8,056 1,183 (6,440) ------- ----- ----- ----- ------ Total $115,929 $16,947 $8,056 $6,944 $147,876 ======== ======= ====== ====== ======== THREE MONTHS ENDED DECEMBER 31, 2008 Pretax Depreciation Income and Interest Non-cash Adjusted ------- ------------- -------- -------- -------- (Loss) amortization charges EBITDA** ------ ------------ ------- -------- Wholesale / US Nutrition $30,017 $3,724 $- $47 $33,788 North American Retail (1,155) 752 - 24 (379) European Retail 26,171 3,561 - 52 29,784 Direct Response / E- Commerce 709 1,265 - 4,685 6,659 --- ----- --- ----- ----- Segment Results 9,302 - 4,808 55,742 69,852 Corporate / Manufacturing (34,654) 8,219 9,489 562 (16,384) ------- ----- ----- --- ------- Total $21,088 $17,521 $9,489 $5,370 $53,468 ======= ======= ====== ====== ======= ** 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, ADJUSTED EBITDA IS AS DEFINED BY THE COMPANY'S CREDIT AGREEMENT AND IS NOT NECESSARILY COMPARABLE TO SIMILARLY TITLED MEASURES REPORTED BY OTHER COMPANIES. NBTY, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except per share amounts) December 31, September 30, 2009 2009 Assets Current assets: Cash and cash equivalents $158,706 $106,001 Accounts receivable, net 187,593 155,863 Inventories 655,448 658,534 Deferred income taxes 28,221 28,154 Other current assets 62,978 49,999 ------ ------ Total current assets 1,092,946 998,551 Property, plant and equipment, net 367,365 373,817 Goodwill 339,937 339,099 Other intangible assets, net 210,285 214,139 Other assets 20,852 34,615 ------ ------ Total assets $2,031,385 $1,960,221 ========== ========== Liabilities and stockholders' Equity Current liabilities: Current portion of long-term debt $61,227 $38,893 Accounts payable 96,206 128,485 Accrued expenses and other current liabilities 179,165 156,734 ------- ------- Total current liabilities 336,598 324,112 Long-term debt, net of current portion 404,479 437,629 Deferred income taxes 40,676 36,422 Other liabilities 30,753 34,233 ------ ------ Total liabilities 812,506 832,396 ------- ------- Commitments and contingencies Stockholders' equity: Common stock, $0.008 par; authorized 175,000 shares issued and outstanding 63,209 and 506 495 61,874 shares at December 31, 2009 and September 30, 2009, respectively Capital in excess of par 159,378 145,885 Retained earnings 1,060,383 984,797 Accumulated other comprehensive income (1,388) (3,352) ------ ------ Total stockholders' equity 1,218,879 1,127,825 --------- --------- Total liabilities and stockholders' equity $2,031,385 $1,960,221 ========== ========== NBTY, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Three months ended December 31, 2009 2008 ---- ---- Cash flows from operating activities: Net income $75,586 $13,475 Adjustments to reconcile net income to cash provided by operating activities: Impairments and disposals of assets 5,591 5,154 Depreciation and amortization 16,947 17,521 Foreign currency transaction loss 115 5,886 Stock-based compensation 1,420 702 Amortization of deferred charges 392 316 Allowance for doubtful accounts (115) 1,361 Inventory reserves 2,174 1,737 Deferred income taxes 773 152 Excess income tax benefit from exercise of stock options (4,240) - Changes in operating assets and liabilities: Accounts receivable (31,989) (27,740) Inventories 2,036 (44,047) Other assets 1,523 4,698 Accounts payable (32,864) 24,613 Accrued expenses and other liabilities 22,666 2,884 ------ ----- Net cash provided by operating activities 60,015 6,712 ------ ----- Cash flows from investing activities: Purchase of property, plant and equipment (9,883) (22,639) Cash paid for acquisitions (87) (264) Proceeds from sale of investments 1,650 - Escrow refund, net of purchase price adjustments - 12,219 --- ------ Net cash used in investing activities (8,320) (10,684) ------ ------- Cash flows from financing activities: Principal payments under long-term debt agreements and capital leases (10,968) (8,497) Proceeds from borrowings under the Revolving Credit Facility - 35,000 Principal payments under the Revolving Credit Facility - (60,000) Excess income tax benefit from exercise of stock options 4,240 - Proceeds from stock options exercised 7,843 6 ----- --- Net cash provided by (used in) financing activities 1,115 (33,491) ----- ------- Effect of exchange rate changes on cash and cash equivalents (105) (19) ---- --- Net increase (decrease) in cash and cash equivalents 52,705 (37,482) Cash and cash equivalents at beginning of period 106,001 90,180 Cash and cash equivalents at end of period $158,706 $52,698 -------- ------- Contact: Harvey Kamil Carl Hymans NBTY, Inc. G.S. Schwartz & Co. President and Chief Financial Officer 212-725-4500 631-200-2020 DATASOURCE: NBTY, Inc. CONTACT: Harvey Kamil, NBTY, Inc., President and Chief Financial Officer, +1-631-200-2020; Carl Hymans, G.S. Schwartz & Co., +1-212-725-4500, Web Site: http://www.nbty.com/

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