NATURAL ALTERNATIVES INTERNATIONAL INC Segments Disclosure

N. Segment Information

 

Our business consists of two segments for financial reporting purposes. The two segments are identified as (i) private-label contract manufacturing, which primarily relates to the provision of private-label contract manufacturing services to companies that market and distribute nutritional supplements and other health care products, and (ii) patent and trademark licensing, which primarily includes direct raw material sales and royalty income from our license and supply agreements associated with the sale and use of beta-alanine under our CarnoSyn® and SR CarnoSyn® trade names and TriBsyn™ trademark.

 

The chief operating decision maker is the Company's Chief Executive Officer, who, in conjunction with senior management, evaluates segment performance based on a number of factors. The primary performance measures for each segment are net sales and income or loss from operations before corporate allocations. Operating income or loss for each segment does not include corporate general and administrative expenses, interest expense and other miscellaneous income and expense items. Corporate general and administrative expenses include, but are not limited to human resources, corporate legal, finance, information technology, and other corporate level related expenses, which are not allocated to any segment. Transfers of raw materials between segments are recorded at cost. The accounting policies of our segments are the same as those described in the summary of significant accounting policies in Note A.

 

Our operating results by business segment for the year ended June 30, 2025 were as follows (in thousands):

 

														Natural
										Corporate				Alternatives
		Private-label				Patent and				expenses				International
		contract				trademark				not allocated				Inc.
		manufacturing				licensing				to segments				Consolidated
Net sales		$	121,779			$	8,081			$	-			$	129,860
Cost of goods sold			118,111				2,460				-				120,571
Gross profit			3,668				5,621				-				9,289
Other selling, general and administrative expenses			5,395				2,215				8,939				16,549
Settlement of legal proceeding and associated expense			-				-				1,400	(1)			1,400
(Loss) income from operations			(1,727	)			3,406				(10,339	)			(8,660	)
Other income (expense):
Interest income			168				-				-				168
Interest expense			(915	)			-				-				(915	)
Foreign exchange loss			(1,340	)			-				-				(1,340	)
Other, net			7				-				-				7
Total other expense			(2,080	)			-				-				(2,080	)
(Loss) income before income taxes			(3,807	)			3,406				(10,339	)			(10,740	)
Provision for income taxes															2,835
Net loss														$	(13,575	)
Other supplemental information:
Stock-based compensation		$	887			$	90			$	-			$	977
Depreciation and amortization			4,553				7				-				4,560
Total assets			113,843				38,096				-				151,939
Capital expenditures			3,614				-				-				3,614

 

1	Expenses accrued for gross settlement of legal action pursuant to and in accordance with California's PAGA and related legal fees for services associated with the legal settlement were allocated to Corporate expenses.

 

Our operating results by business segment for the year ended June 30, 2024 were as follows (in thousands):

 

														Natural
										Corporate				Alternatives
		Private-label				Patent and				expenses				International
		contract				trademark				not allocated				Inc.
		manufacturing				licensing				to segments				Consolidated
Net sales		$	105,358			$	8,438			$	-			$	113,796
Cost of goods sold			103,727				3,204				-				106,931
Gross profit			1,631				5,234				-				6,865
Selling, general and administrative expenses			5,097				1,915				8,387				15,399
(Loss) income from operations			(3,466	)			3,319				(8,387	)			(8,534	)
Other income (expense):
Interest income			176				-				-				176
Interest expense			(361	)			-				-				(361	)
Foreign exchange loss			(652	)			-				-				(652	)
Other, net			(93	)			-				-				(93	)
Total other expense			(930	)			-				-				(930	)
(Loss) income before income taxes			(4,396	)			3,319				(8,387	)			(9,464	)
Benefit for income taxes															(2,247	)
Net loss														$	(7,217	)
Other supplemental information:
Stock-based compensation		$	1,104			$	96			$	-			$	1,200
Depreciation and amortization			4,640				7				-				4,647
Total assets			127,786				34,556				-				162,342
Capital expenditures			3,017				-				-				3,017

 

Our private-label contract manufacturing products are sold both in the U.S. and in markets outside the U.S., including Europe, Canada, Australia, New Zealand, Mexico and Asia. Our primary markets outside the U.S. are Europe and Asia. Our patent and trademark licensing activities are primarily based in the U.S.

 

Net sales by geographic region, based on the customers’ location, for the two years ended June 30 were as follows (in thousands):

 

		2025				2024
United States		$	79,128			$	73,512
Markets outside the United States			50,732				40,284
Total net sales		$	129,860			$	113,796

 

Products manufactured by NAIE accounted for 85% of consolidated net sales in markets outside the U.S. in fiscal 2025 and 79% of consolidated net sales in markets outside the U.S. in fiscal 2024. No products manufactured by NAIE were sold in the U.S. during the fiscal years ended June 30, 2025 and 2024.

 

Long-lived assets by geographic region, based on the location of the company or subsidiary at which they were located or made, for the two years ended June 30 were as follows (in thousands):

 

		2025				2024
United States		$	76,212			$	78,146
Europe			15,732				17,602
Total Long-lived assets		$	91,944			$	95,748

 

Total assets by geographic region, based on the location of the company or subsidiary at which they were located or made, for the two years ended June 30 were as follows (in thousands):

 

		2025				2024
United States		$	105,860			$	118,878
Europe			46,079				43,464
Total assets		$	151,939			$	162,342

 

Capital expenditures by geographic region, based on the location of the company or subsidiary at which they were located or made, for the two years ended June 30 were as follows (in thousands):

 

		2025				2024
United States		$	2,862			$	2,793
Europe			752				224
Total capital expenditures		$	3,614			$	3,017