ChromaDex Corp. (NASDAQ:CDXC), an integrated, science-based,
nutraceutical company devoted to improving the way people age with
its flagship ingredient NIAGEN® and consumer product TRU NIAGEN®,
announced today second quarter 2018 financial results.
Second Quarter 2018 Highlights vs.
Second Quarter 2017
- Net sales up 85%, fueled by growth of TRU NIAGEN®;
- TRU NIAGEN sales at 66% of NIAGEN-related sales, up from
7%;
- NIAGEN®-related sales at 73% of total sales, up from 50%;
- Gross profit as a percentage of net sales nearly flat at
approximately 49%; and
- International expansion continued with launch of TRU NIAGEN on
Amazon in UK and appointment of Matakana Superfoods (MSF) as
exclusive distributor of TRU NIAGEN in New Zealand.
“The TRU NIAGEN brand continued to grow
worldwide in the second quarter of 2018, and sales growth once
again exceeded our plan,” said Rob Fried, Chief Executive Officer.
“We are continuing to make necessary marketing, legal and R&D
investments, and we remain encouraged by our progress.”
Frank Jaksch, Jr., Executive Chairman and
co-founder of ChromaDex commented: “The success we have seen with
TRU NIAGEN in our sales growth reflects the accelerating expansion
of published science, backed by human clinical data, around NIAGEN
and its benefits to human health and wellness.”
Results of operations for the three
months ended June 30, 2018
For the three months ended June 30, 2018 (“Q2
2018”), ChromaDex reported net sales of $7.8 million, up 85%
compared to $4.2 million from continuing operations in the second
quarter of 2017 ("Q2 2017"). The increase in second quarter
revenues was driven by growth in sales of TRU NIAGEN.
Gross margin as a percentage of sales remained
nearly flat at 49.3% for Q2 2018 compared to 50.0% for Q2
2017. In 2018, we elected to account for shipping and
handling activities performed as cost of sales under a fulfillment
cost and not as sales adjustments. The impact of such
election for Q2 2018 was approximately $0.4 million, which had a
negative impact of approximately 290 basis points on the gross
margin rate for Q2 2018. Excluding the impact of the election to
account for shipping and handling activities as a cost of sales, we
experienced better gross margins due to the positive impact of TRU
NAIGEN consumer product sales, which we anticipate will
continue.
Operating expenses were $11.8 million in the
second quarter of 2018, compared to $4.8 million from continuing
operations in the same period for 2017. The increase of $7.0
million in operating expenses for second quarter was the result of
the Company’s strategic decision to invest $2.8 million in
advertising and marketing to build out the TRU NIAGEN brand, higher
R&D expenses of $0.5 million as well as higher legal costs of
$1.3 million, and higher stock-based compensation expense of $1.4
million. Excluding legal and equity-based compensation expenses,
general and administrative expenses were $2.9 million, up by $1.5
million as compared to the prior year.
The net loss for the second quarter of 2018 was
$8.1 million or ($0.15) per share as compared to a net loss from
continuing operations of $2.7 million or ($0.06) per share for Q2
2017. The higher losses in the second quarter were the result of
the strategic decision to invest ahead of growth including higher
stock-based compensation expense related to the hiring of senior
executives, and higher legal fees, partially offset by higher sales
volume and gross profits.
For the second quarter of 2018, the reported
loss was negatively impacted by a non-cash charge of $1.8 million
related to stock-based compensation.
Adjusted EBITDA, a non-GAAP measure, was ($6.0)
million for Q2 2018, compared to adjusted EBITDA of ($2.1) million
for Q2 2017. ChromaDex defines Adjusted EBITDA as net income (loss)
adjusted for income tax, interest, depreciation, amortization and
non-cash stock compensation costs. The Basic and Diluted Adjusted
EBITDA per share for Q2 2018 was ($0.11) versus ($0.05) for Q2
2017.
In the first half of 2018, the net cash used in
operating activities was $10.5 million versus $5.6 million in the
prior year. The Company ended the second quarter of 2018 with
a solid balance sheet with cash of $33.4 million.
Outlook
For 2018, the Company expects to realize
continued growth in TRU NIAGEN sales driven by our U.S. ecommerce
and Watsons’ international business, as well as the launch of TRU
NIAGEN in certain new international markets. The Company will
continue to invest in marketing expenditures to build out the TRU
NIAGEN brand and new capabilities to support growth.
For the second half of the year, and full year,
we currently expect working capital to be a positive source of cash
of $3 to $5 million for the full year, as we expect our net losses
to moderate in the second half of the year and as we continue to
tightly manage working capital for the balance of the
year.
We expect the company will generate positive
cash flow by the end of 2019 / early 2020.
Investor Conference Call
ChromaDex management will host an investor
conference call to discuss the year end results and provide a
general business update on Thursday, August 9, at 4:30pm ET.
Participants should call in at least 10 minutes prior to the
call. The dial-in information is as follows:
Date: Thursday, August 9, 2018Time: 4:30 p.m. Eastern time (1:30
p.m. Pacific time)Toll-free dial-in number:
1-866-327-8118International dial-in number:
1-678-509-7526Conference ID: 4997875Webcast
link:
https://edge.media-server.com/m6/p/nonz226e
The webcast replay will be available after the
completion of the call on the Investor Relations section of the
Company website, www.chromadex.com.
The earnings press release, and its accompanying
financial exhibits, will be available on the Investor Relations
section of the Company website, www.chromadex.com.
About Non-GAAP Financial
Measures
ChromaDex’s non-GAAP financial measures exclude
interest, tax, depreciation, amortization and share-based
compensation for adjusted EBITDA. ChromaDex used these
non-GAAP measures when evaluating its financial results as well as
for internal resource management, planning and forecasting
purposes. These non-GAAP measures should not be viewed in isolation
from or as a substitute for ChromaDex’s financial results in
accordance with GAAP. Reconciliation of GAAP to non-GAAP measures
are attached to this press release.
About ChromaDex: ChromaDex
Corp. is an integrated, global nutraceutical company devoted
to improving the way people age. ChromaDex scientists
partner with leading universities and research institutions
worldwide to uncover the full potential of NAD and identify and
develop novel, science-based ingredients. Its flagship
ingredient, NIAGEN® nicotinamide riboside, sold directly
to consumers as TRU NIAGEN®, is backed with clinical and
scientific research, as well as extensive IP protection. TRU
NIAGEN is helping the world AGE BETTER®. ChromaDex maintains a
website at www.ChromaDex.com to which ChromaDex regularly
posts copies of its press releases as well as additional and
financial information about the Company.
Important Note on Forward Looking
Statements:
This release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities and Exchange Act of
1934, as amended. Because such statements are subject to risks and
uncertainties, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such
statements include the quotations from ChromaDex’s Chief Executive
Officer and Executive Chairman and statements regarding the future
growth of TRU NIAGEN sales and for Watsons’ international business,
launching TRU NIAGEN in certain new international markets, whether
the Company will continue to invest in marketing expenditures and
the expectations of future working capital, cash flow and net loss.
Other risks that contribute to the uncertain nature of the
forward-looking statements are reported in our most recent Forms
10-Q and 10-K as filed with the SEC. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
speak only as of the date hereof, and actual results may differ
materially from those suggested by these forward-looking
statements. All forward-looking statements are qualified in their
entirety by this cautionary statement and ChromaDex undertakes no
obligation to revise or update this release to reflect events or
circumstances after the date hereof.
ChromaDex Investor Relations Contact:
Andrew Johnson, Director of Investor Relations
949-419-0288
andrewj@chromadex.com
ChromaDex Media Contact:
Alex Worsham, Director of Strategic Partnerships
949-648-3775
alexw@chromadex.com
|
|
|
ChromaDex
Corporation and Subsidiaries |
|
|
|
|
|
Condensed
Consolidated Statements of Operations |
|
|
For
the Three Month Periods Ended June 30, 2018 and July 1,
2017 |
|
(In thousands,
except per share data) |
|
|
|
|
|
|
June 30, 2018 |
July 1, 2017 |
|
|
|
Sales, net |
$ |
7,803 |
|
$ |
4,218 |
|
Cost of sales |
|
3,957 |
|
|
2,109 |
|
|
|
|
Gross profit |
|
3,846 |
|
|
2,109 |
|
|
|
|
Operating
expenses: |
|
|
Sales and
marketing |
|
3,773 |
|
|
550 |
|
Research
and development |
|
1,414 |
|
|
850 |
|
General
and administrative |
|
6,596 |
|
|
2,613 |
|
Other |
|
- |
|
|
746 |
|
Operating expenses |
|
11,783 |
|
|
4,759 |
|
|
|
|
Operating loss |
|
(7,937 |
) |
|
(2,650 |
) |
|
|
|
Nonoperating
expense: |
|
|
Interest
expense, net |
|
(48 |
) |
|
(36 |
) |
Other |
|
(65 |
) |
|
- |
|
Nonoperating expenses |
|
(113 |
) |
|
(36 |
) |
|
|
|
Loss from continuing operations |
|
(8,050 |
) |
|
(2,686 |
) |
|
|
|
Loss from discontinued operations |
|
- |
|
|
(78 |
) |
|
|
|
Net loss |
$ |
(8,050 |
) |
$ |
(2,764 |
) |
|
|
|
Basic and diluted loss
per common share: |
|
|
Loss from
continuing operations |
$ |
(0.15 |
) |
$ |
(0.06 |
) |
Loss from
discontinued operations |
$ |
- |
|
$ |
(0.01 |
) |
|
|
|
Basic and diluted loss
per common share |
$ |
(0.15 |
) |
$ |
(0.07 |
) |
|
|
|
Basic and diluted
weighted average common shares outstanding |
|
54,892 |
|
|
42,121 |
|
|
|
|
See Notes
to Condensed Consolidated Financial Statements in Part I of
ChromaDex's Quarterly Report on Form 10-Q filed with Securities and
Exchange Commission on August 9, 2018. |
|
|
ChromaDex
Corporation and Subsidiaries |
|
|
|
|
|
Condensed
Consolidated Balance Sheets |
|
|
June 30, 2018 and December 30, 2017 |
|
|
(In thousands, except per share data) |
|
|
|
|
|
|
June 30, 2018 |
December 30, 2017 |
Assets |
|
|
|
|
|
Current
Assets |
|
|
Cash |
$ |
33,389 |
|
$ |
45,389 |
|
Trade
receivables, net of allowances of $0.5 million and $0.7 million,
respectively; |
|
|
Receivables from Related Party: $0.9 million and $1.5 million,
respectively |
|
5,130 |
|
|
5,338 |
|
Contract
assets |
|
62 |
|
|
- |
|
Receivable held at escrow |
|
751 |
|
|
- |
|
Inventories |
|
6,526 |
|
|
5,796 |
|
Prepaid
expenses and other assets |
|
627 |
|
|
655 |
|
Total current assets |
|
46,485 |
|
|
57,178 |
|
|
|
|
Leasehold Improvements and Equipment, net |
|
3,878 |
|
|
2,872 |
|
Deposits |
|
269 |
|
|
272 |
|
Receivable Held at Escrow |
|
- |
|
|
750 |
|
Intangible Assets, net |
|
1,536 |
|
|
1,652 |
|
|
|
|
Total assets |
$ |
52,168 |
|
$ |
62,724 |
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
Current
Liabilities |
|
|
Accounts
payable |
$ |
6,757 |
|
$ |
3,719 |
|
Accrued
expenses |
|
3,684 |
|
|
3,645 |
|
Current
maturities of capital lease obligations |
|
191 |
|
|
196 |
|
Contract
liabilities and customer deposits |
|
185 |
|
|
314 |
|
Deferred
rent, current |
|
139 |
|
|
114 |
|
Due to
officer |
|
- |
|
|
100 |
|
Total current liabilities |
|
10,956 |
|
|
8,088 |
|
|
|
|
Capital Lease
Obligations, Less Current Maturities |
|
219 |
|
|
310 |
|
Deferred Rent, Less
Current |
|
493 |
|
|
492 |
|
|
|
|
Total liabilities |
|
11,668 |
|
|
8,890 |
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
Stockholders' Equity |
|
|
Common
stock, $.001 par value; authorized 150,000 shares; |
|
|
issued
and outstanding June 30, 2018 54,870 shares and |
|
|
December
30, 2017 54,697 shares |
|
55 |
|
|
55 |
|
Additional paid-in capital |
|
113,375 |
|
|
110,380 |
|
Accumulated deficit |
|
(72,930 |
) |
|
(56,601 |
) |
Total stockholders' equity |
|
40,500 |
|
|
53,834 |
|
|
|
|
Total liabilities and stockholders' equity |
$ |
52,168 |
|
$ |
62,724 |
|
|
|
|
See Notes
to Condensed Consolidated Financial Statements in Part I of
ChromaDex's Quarterly Report on Form 10-Q filed with Securities and
Exchange Commission on August 9, 2018. |
|
|
|
|
|
|
|
|
Consolidated Statements of Operations,
Unaudited |
|
|
(US
GAAP) |
|
|
|
|
|
|
|
Three Months Ended June 30, 2018 and July 1,
2017 |
|
|
(In thousands,
except per share data) |
|
|
|
|
|
|
|
|
Q2 2018 |
Q2 2017 |
|
|
|
|
|
Sales, net |
$ |
7,803 |
|
$ |
4,218 |
|
|
Cost of sales |
|
3,957 |
|
|
2,109 |
|
|
|
|
|
|
Gross profit |
|
3,846 |
|
|
2,109 |
|
|
|
|
|
|
Operating
expenses: |
|
|
|
Sales and
marketing |
|
3,773 |
|
|
550 |
|
|
Research
and development |
|
1,414 |
|
|
850 |
|
|
General
and administrative |
|
6,596 |
|
|
2,613 |
|
|
Other |
|
- |
|
|
746 |
|
|
Operating expenses |
|
11,783 |
|
|
4,759 |
|
|
|
|
|
|
Operating loss |
|
(7,937 |
) |
|
(2,650 |
) |
|
|
|
|
|
Nonoperating
expense: |
|
|
|
Interest
expense, net |
|
(48 |
) |
|
(36 |
) |
|
Other |
|
(65 |
) |
|
- |
|
|
Nonoperating expenses |
|
(113 |
) |
|
(36 |
) |
|
|
|
|
|
Loss from continuing operations |
|
(8,050 |
) |
|
(2,686 |
) |
|
|
|
|
|
Income from discontinued operations |
|
- |
|
|
(78 |
) |
|
|
|
|
|
Net loss |
$ |
(8,050 |
) |
$ |
(2,764 |
) |
|
|
|
|
|
Basic and diluted loss
per common share: |
|
|
|
Loss from
continuing operations |
$ |
(0.15 |
) |
$ |
(0.06 |
) |
|
Earnings
from discontinued operations |
$ |
- |
|
$ |
(0.01 |
) |
|
|
|
|
|
Basic and diluted loss
per common share |
$ |
(0.15 |
) |
$ |
(0.07 |
) |
|
|
|
|
|
Weighted average common
shares outstanding |
|
|
|
Basic and
diluted |
|
54,892 |
|
|
42,121 |
|
|
|
|
|
|
|
|
Effects of Charges associated with Interest, Tax,
Depreciation, |
Amortization and Share-based Compensation
Expense |
|
|
|
|
Three Months Ended June 30, 2018 and July 1,
2017 |
|
(In thousands,
except per share data) |
|
|
|
|
|
|
Q2 2018 |
Q2 2017 |
|
|
|
Sales, net |
$ |
- |
|
$ |
- |
|
Cost of sales |
|
(89 |
) |
|
(37 |
) |
|
|
|
Gross profit |
|
89 |
|
|
37 |
|
|
|
|
Operating
expenses: |
|
|
Sales and
marketing |
|
(76 |
) |
|
- |
|
Research
and development |
|
(136 |
) |
|
- |
|
General
and administrative |
|
(1,714 |
) |
|
(500 |
) |
Other |
|
- |
|
|
- |
|
Operating expenses |
|
(1,926 |
) |
|
(500 |
) |
|
|
|
Operating income |
|
2,015 |
|
|
537 |
|
|
|
|
Nonoperating
income: |
|
|
Interest
expense, net |
|
48 |
|
|
36 |
|
Other |
|
- |
|
|
- |
|
Nonoperating income |
|
48 |
|
|
36 |
|
|
|
|
Income from continuing operations |
|
2,063 |
|
|
573 |
|
|
|
|
Income from discontinued operations |
|
- |
|
|
73 |
|
|
|
|
Effects of adjusted EBITDA |
$ |
2,063 |
|
$ |
646 |
|
|
|
|
Effects of adjusted
EBITDA per common share: |
|
|
From
continuing operations |
$ |
0.04 |
|
$ |
0.01 |
|
From
discontinued operations |
$ |
- |
|
$ |
0.01 |
|
|
|
|
Effects of adjusted
EBITDA per common share |
$ |
0.04 |
|
$ |
0.02 |
|
|
|
|
Weighted average common
shares outstanding |
|
|
Basic and
diluted |
|
54,892 |
|
|
42,121 |
|
|
|
|
|
|
|
Consolidated Statements of Operations, Adjusted
EBITDA |
|
Excluding Interest, Tax, Depreciation, Amortization
and |
|
Share-based Compensation (Non-GAAP
Presentation) |
|
Three Months Ended June 30, 2018 and July 1,
2017 |
|
(In thousands,
except per share data) |
|
|
|
|
|
|
Q2 2018 |
Q2 2017 |
|
|
|
Sales, net |
$ |
7,803 |
|
$ |
4,218 |
|
Cost of sales |
|
3,868 |
|
|
2,072 |
|
|
|
|
Gross profit |
|
3,935 |
|
|
2,146 |
|
|
|
|
Operating
expenses: |
|
|
Sales and
marketing |
|
3,697 |
|
|
550 |
|
Research
and development |
|
1,278 |
|
|
850 |
|
General
and administrative |
|
4,882 |
|
|
2,113 |
|
Other |
|
- |
|
|
746 |
|
Operating expenses |
|
9,857 |
|
|
4,259 |
|
|
|
|
Operating loss |
|
(5,922 |
) |
|
(2,113 |
) |
|
|
|
Nonoperating income
(expense): |
|
|
Interest
expense, net |
|
- |
|
|
- |
|
Other |
|
(65 |
) |
|
- |
|
Nonoperating expenses |
|
(65 |
) |
|
- |
|
|
|
|
Loss from continuing operations |
|
(5,987 |
) |
|
(2,113 |
) |
|
|
|
Income from discontinued operations |
|
- |
|
|
(5 |
) |
|
|
|
Adjusted EBITDA |
$ |
(5,987 |
) |
$ |
(2,118 |
) |
|
|
|
Basic and
diluted adjusted EBITDA per common share: |
|
From
continuing operations |
$ |
(0.11 |
) |
$ |
(0.05 |
) |
From
discontinued operations |
$ |
- |
|
$ |
(0.00 |
) |
|
|
|
Basic and diluted
adjusted EBITDA per common share |
$ |
(0.11 |
) |
$ |
(0.05 |
) |
|
|
|
Weighted average common
shares outstanding |
|
|
Basic and
diluted |
|
54,892 |
|
|
42,121 |
|
|
|
|
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