Net sales for the third quarter were $33.8 million compared to $29.7 million for the same quarter of fiscal 2003. Net income was $2.9 million or $0.24 diluted earnings per share, compared to $3.2 million or $0.28 in 2003.
"Sales growth and gross margin improvements reflect positive contributions from the acquisitions of Nature's Life, Arizona Health Foods and Natural Balance," said Bill Gay, chairman and CEO.
However, he also commented that this quarter had been negatively affected by "a softness in sales in certain areas and customers" operating in the healthy food sector. And that "increasing costs associated with shipping, insurance, legal and corporate governance have impacted us.
In June, Nutraceutical bought the Montana Big Sky brand of nutritional supplements for around $600,000 in cash from Montana Naturals.
The Montana Big Sky brand focuses on specialty bee products, including bee pollen, royal jelly and propolis. It achieved pro-forma 2003 net sales by Montana Naturals of approximately $900,000.
This purchase rounded off Nutraceutical's recent acquisition spree, which saw its purchase of the Arizona Health Foods chain and supplement marketer Nature's Life for a total of $15 million in 2003. This year it has added Colorado firm Natural Balance, which manufactures and markets branded products primarily through health and natural food stores, for $9.0 million.
These acquisitions have helped Nutraceutical International become one of the largest manufacturers and suppliers of branded nutritional supplements for health food stores. It claims to distribute more than 3,000 SKUs, including 600 sold internationally.
Nutraceutical was formed in 1993 "to effect a consolidation strategy in the fragmented nutritional supplements industry", according to Gay. It operates the marketing, distribution, retailing and manufacturing activities for its products, designed to offer financial synergies through increased scale and market penetration.