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Nutraceutical International Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: November 21, 2012 03:40PM

Nutraceutical International Corp. (NUTR) filed Annual Report for the period ended 2012-09-30. Nutraceutical International Corporation has a market cap of $148.6 million; its shares were traded at around $16.24 with a P/E ratio of 9.8 and P/S ratio of 0.8. Nutraceutical International Corporation had an annual average earning growth of 4.3% over the past 10 years. GuruFocus rated Nutraceutical International Corporation the business predictability rank of 4.5-star.



Highlight of Business Operations:

$975 ($599 after tax, or $0.06 per diluted share) related to certain tradenames. During the year ended September 30, 2008, we recorded a non-cash goodwill impairment charge of $2,875 ($1,811 after tax, or $0.16 per diluted share) related to our domestic health food stores reporting unit. (2)"Adjusted EBITDA" (a non-GAAP measure) is defined as earnings before net interest and other expense, taxes, depreciation, amortization and goodwill and intangible asset impairment. Adjusted EBITDA has some inherent limitations in measuring operating performance due to the exclusion of certain financial elements such as depreciation and amortization and is not necessarily comparable to other similarly-titled captions of other companies due to potential inconsistencies in the method of calculation. Furthermore, Adjusted EBITDA is not intended to be a substitute for cash flows from operating activities, as a measure of liquidity or an alternative to net income in determining our operating performance in accordance with United States generally accepted accounting principles. Our use of an EBITDA-based metric should be considered within the following context: •We acknowledge that plant and equipment (while less important in our line of business due to outsourcing alternatives) are necessary to earn revenue based on our current business model. •Our use of an EBITDA-based measure of operating performance is not based on any belief about the reasonableness of excluding depreciation when measuring financial performance. •Our use of an EBITDA-based measure is supported by its importance to the following key stakeholders: •Analysts—who estimate our projected Adjusted EBITDA and other EBITDA-based metrics in their independently-developed financial models for investors; •Creditors—who evaluate our operating performance based on compliance with certain EBITDA-based debt covenants; •Investment Bankers—who use EBITDA-based metrics in their written evaluations and comparisons of companies within our industry; and •Board of Directors and Executive Management—who use EBITDA-based metrics for evaluating management performance relative to our operating budget and bank covenant compliance, as well as our ability to service debt and raise capital for growth opportunities, including acquisitions, which are a critical component of our stated strategy. Generally, we have recorded a monthly accrual for incentive compensation as a percentage of Adjusted EBIDTA, which has been paid out to executive management, as well as other employees, upon completion of our annual audit.

Net Sales. Net sales increased by $12.3 million, or 6.5%, to $200.4 million for fiscal 2012 from $188.1 million for fiscal 2011. Net sales of branded nutritional supplements and other natural products increased by $9.6 million, or 5.5%, to $183.4 million for fiscal 2012 compared to $173.8 million for fiscal 2011. The increase in net sales of branded nutritional supplements and other natural products was primarily related to the net sales contributions of the fiscal 2011 and fiscal 2012 acquisitions and, to a lesser extent, an increase in sales volume of branded products to certain customers. The impact on net sales of branded products attributable to price changes was not material. Other net sales increased by $2.7 million, or 19.4%, to $17.0 million for fiscal 2012 compared to $14.3 million for fiscal 2011. The increase in other net sales was primarily related to the net sales contributions of the fiscal 2012 acquisitions, partially offset by the closure of three health food stores and one natural food market during fiscal 2011 and fiscal 2012.

Selling, General and Administrative. Selling, general and administrative expenses increased by $3.2 million, or 4.7%, to $71.4 million for fiscal 2012 from $68.2 million for fiscal 2011. This increase in selling, general and administrative expenses was primarily attributable to operational and transition costs related to the fiscal 2011 and fiscal 2012 acquisitions. As a percentage of net sales, selling, general and administrative expenses decreased to 35.6% for fiscal 2012 compared to 36.3% for fiscal 2011. This decrease in selling, general and administrative expenses as a percentage of net sales was primarily attributable to the increase in net sales, which allowed us to better leverage our cost structure.

Net Sales. Net sales increased by $8.0 million, or 4.5%, to $188.1 million for fiscal 2011 from $180.1 million for fiscal 2010. Net sales of branded nutritional supplements and other natural products increased by $9.2 million, or 5.6%, to $173.8 million for fiscal 2011 compared to $164.6 million for fiscal 2010. The increase in net sales of branded nutritional supplements and other natural products was primarily related to the net sales contributions of the fiscal 2011 and fiscal 2010 acquisitions. The impact on net sales of branded products attributable to price changes was not material. Other net sales decreased by $1.2 million, or 7.7%, to $14.3 million for fiscal 2011 compared to $15.5 million for fiscal 2010. The decrease in other net sales was primarily related to the closure of two health food stores and one natural food market during fiscal 2011.

Selling, General and Administrative. Selling, general and administrative expenses increased by $2.5 million, or 3.9%, to $68.2 million for fiscal 2011 from $65.7 million for fiscal 2010. This increase in selling, general and administrative expenses was primarily attributable to operational and transition costs related to the fiscal 2011 acquisitions. As a percentage of net sales, selling, general and administrative expenses were 36.3% for fiscal 2011 compared to 36.5% for fiscal 2010.

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