Schiff Nutrition International, Inc., (NYSE:WNI), announced
results for the three- and nine-month periods ended February 29,
2012.
“We are pleased with our third quarter performance,” stated
Tarang Amin, president and chief executive officer. “Net sales grew
25%, which was driven by a 53% increase in our branded business.
These results reflect successful execution against Schiff’s growth
strategy as we invest to build premium brands and lead innovation
in our categories. Our core brands Schiff Move Free® and Schiff
MegaRed®, in particular, benefited from strong marketing and sales
execution as well as traction from new items.”
Three Months Results Ended February 29, 2012
For the fiscal 2012 third quarter ended February 29, 2012, net
sales were $72.2 million, compared to $57.7 million for the same
period in fiscal 2011. The 25% increase reflects growth in key
brands, new product introductions and a full quarter’s contribution
from the probiotics acquisition. Branded sales results were
partially offset by an expected decline in private label business.
Selling and marketing expenses were $17.8 million, or 25% of
revenue, compared to $7.9 million, or 14% of revenue. Net income
for the fiscal 2012 third quarter was $4.6 million, compared to net
income of $4.0 million for the same period in fiscal 2011. Earnings
per diluted share were $0.16 for the fiscal 2012 third quarter,
compared to $0.14 for the same period in fiscal 2011. Adjusted
EBITDA, which is defined as income from operations before
depreciation, amortization and stock-based compensation, was $9.3
million for the fiscal 2012 third quarter, compared to $7.4 million
for the same period in fiscal 2011.
Nine Months Results Ended February 29, 2012
For the first nine months of fiscal 2012, net sales were $191.5
million, compared to $161.8 million for the same period in fiscal
2011. Selling and marketing expenses were $45.0 million, or 24% of
revenue, compared to $26.2 million, or 16% of revenue. Net income
for the first nine months of fiscal 2012 was $11.8 million,
compared to net income of $9.6 million for the same period in
fiscal 2011. Earnings per diluted share were $0.40 for the first
nine months of fiscal 2012, compared to $0.33 for the same period
in fiscal 2011. Adjusted EBITDA was $25.3 million for the first
nine months of fiscal 2012, compared to $21.5 million for the same
period in fiscal 2011.
“We are positioning Schiff for long-term growth. Our sales and
gross margins continue to benefit from our investments in brand
building. It is gratifying the business has responded to these
efforts so positively in fiscal 2012,” concluded Amin.
Company Outlook
The company adjusted its fiscal year 2012 expectations. Net
sales are expected to grow 16% to 19% as compared to fiscal year
2011 net sales of $213.6 million. Gross profit percentage is
expected to be in the range of 44% to 46%. Selling and marketing
expenses, as a percentage of net sales, are estimated to be in the
range of 23.0% to 24.5%. Other operating expenses are estimated at
approximately $27.5 million to $29.0 million. The company continues
to anticipate a very high single-digit operating margin for fiscal
2012.
Conference Call Information
Schiff will hold a conference call today, March 22nd, at 11:00
a.m. ET. The event will be webcast at
http://www.schiffnutrition.com/press_conference_calls.asp. The
webcast replay will be available for 90 days. If you do not have
Internet access, the dial-in number will be 800-510-9836 for
domestic callers and 617-614-3670 for international callers. The
participant access code is 36431763. A replay of the call will be
available by dialing 888-286-8010 for domestic callers and
617-801-6888 for international callers, and entering access code
12672030. The telephone replay will be available through March 29,
2012.
Reconciliation of Adjusted EBITDA to Income from
Operations
This press release refers to non-GAAP financial measures. The
company defines "Adjusted EBITDA" as income from operations before
depreciation, amortization and stock-based compensation. This
non-GAAP financial measure is not prepared in accordance with
generally accepted accounting principles (GAAP) 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 the company’s
operating performance. Management also believes Adjusted EBITDA
enhances an investor's understanding of the company’s results of
operations because it measures the company’s operating performance
exclusive of non-cash charges for depreciation, amortization and
stock-based compensation. Management also provides this non-GAAP
measurement as a way to help investors better understand the
company’s core operating performance, enhance comparisons of the
company’s core operating performance from period to period and to
allow better comparisons of the company’s operating performance to
that of its competitors.
About Schiff Nutrition
Schiff Nutrition International, Inc. is a leading nutritional
supplement company offering vitamins, nutritional supplements and
nutrition bars in the United States and throughout the world.
Schiff’s portfolio of well-known brands includes Schiff Move Free®,
Schiff® Vitamins, Schiff MegaRed®, Schiff Mega-D3®, Tiger's Milk®,
Schiff Sustenex®, and Schiff Digestive Advantage®. Focused on
quality for 75 years, Schiff’s headquarters and award-winning
manufacturing and distribution facility are based in Salt Lake
City, Utah. To learn more about Schiff, please visit the web site
www.schiffnutrition.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that are based
on management’s beliefs and assumptions, current expectations,
estimates, and projections. These statements, including those under
the heading “Company Outlook,” are subject to known and unknown
risks and uncertainties, certain of which are beyond the company’s
ability to control or predict, and therefore, actual results may
differ materially. For example, statements concerning Schiff’s
financial condition, possible or expected results of operations,
commercialization of new products, growth opportunities and plans
of management are all forward-looking statements. Any
forward-looking statements are made pursuant to the Private
Securities Litigation Reform Act of 1995 and, as such, speak only
as of the date hereof. Schiff disclaims any obligation to update
any forward-looking statements whether as a result of new
information, future events or otherwise. You are cautioned not to
place undue reliance on these forward-looking statements.
Important factors that may cause actual results of Schiff to
differ materially from those expressed or implied by such
forward-looking statements include, but are not limited
to: dependence on sales of Schiff Move Free product and the
joint care category, dependence on sales of Schiff MegaRed product,
dependence on individual customers, adverse publicity or consumer
perception regarding our nutritional supplements and/or their
ingredients, similar products distributed by other companies or the
nutritional supplement industry generally, the impact of
competitive products and pricing pressure (including expansion of
private label products), the inability to successfully bid on new
and existing private label business, the impact of raw material
pricing, availability and quality (particularly relating to joint
care products and ingredients from third-party suppliers outside
the United States, including China), claims that our products
infringe the intellectual property rights of others, the inability
to enforce or protect our intellectual property rights and
proprietary techniques against infringement, the inability to
successfully launch and maintain sales (especially in the joint
care and omega-3 categories) outside of the United States while
maintaining the integrity of the products sold and complying with
local regulations, the inability to appropriately respond to
changing consumer preferences and demand for new products, the
inability to gain or maintain market distribution for new products
or product enhancements, including products in the probiotic space,
litigation and government or administrative regulatory action in
the United States and internationally, including FDA enforcement
and product liability claims, the inability or increased cost to
obtain sufficient levels of product liability and general
insurance, the inability to comply with existing or new
regulations, both in the United States and abroad, and adverse
actions regarding product formulation, claims or advertising,
product recalls or a significant amount of product returns,
dependence on a single manufacturing facility and potential
disruptions of our manufacturing operations, the inability to find
strategic transaction opportunities or the inability to
successfully consummate or integrate a strategic transaction
(including the inability to successfully integrate the assets
recently acquired from Ganeden), the inability to maintain or
attract key personnel, interruptions to our information technology
systems, control by our principal stockholders, and other factors
indicated from time to time in the company’s SEC reports, copies of
which are available upon request from the company’s investor
relations department or may be obtained at the SEC's web site
(www.sec.gov). These risks and
uncertainties should be carefully considered before making an
investment decision with respect to shares of our common stock.
SCHIFF NUTRITION INTERNATIONAL,
INC.
CONSOLIDATED CONDENSED STATEMENTS OF
INCOME
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended Nine Months Ended
February 29,2012
February 28,2011
February 29,2012
February 28,2011
Net sales $ 72,211 $ 57,735 $ 191,479 $ 161,776 Cost of
goods sold 39,124 36,863 105,523
100,394 Gross profit 33,087 20,872
85,956 61,382 Operating expenses: Selling and marketing
17,789 7,906 45,044 26,241 Other operating expenses 8,198
6,613 21,798 19,867 Total operating expenses
25,987 14,519 66,842 46,108
Income from operations 7,100 6,353 19,114 15,274 Other expense, net
112 121 694 199 Income before
income taxes 6,988 6,232 18,420 15,075 Income tax expense
2,358 2,187 6,651 5,505 Net income $
4,630 $ 4,045 $ 11,769 $ 9,570
Weighted average common shares outstanding
- diluted
29,383 29,388 29,406 29,178 Net
income per share - diluted $ 0.16 $ 0.14 $ 0.40 $ 0.33
SCHIFF NUTRITION INTERNATIONAL,
INC.
CONSOLIDATED CONDENSED BALANCE
SHEETS
(in thousands)
(unaudited)
February 29, May 31, 2012 2011 Cash and cash
equivalents $ 18,041 $ 39,547 Available-for-sale securities 7,649
5,938 Receivables, net 28,971 27,339 Inventories 34,657 34,923
Other current assets 4,761 4,812 Total current
assets 94,079 112,559 Property and equipment,
net 13,553 14,219 Other assets, net:
Intangible assets and goodwill 42,189 4,346 Other assets 767
1,442 Total other assets, net 42,956
5,788 Total assets $ 150,588 $ 132,566 Total current
liabilities $ 35,833 $ 32,938 Long-term liabilities 4,734
3,168 Stockholders’ equity 110,021 96,460
Total liabilities & stockholders’ equity $ 150,588 $
132,566
SCHIFF NUTRITION INTERNATIONAL,
INC.
ADJUSTED EBITDA RECONCILIATION
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
February 29,2012
February 28,2011
February 29,2012
February 28,2011
Income from operations $ 7,100 $ 6,353 $ 19,114 $ 15,274
Depreciation 987 967 2,873 2,592 Amortization 416 —
1,245 — Stock based compensation, non-cash 763
30 2,077 3,605 Adjusted EBITDA $ 9,266 $ 7,350
$ 25,309 $ 21,471
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