Total net sales of $19.5 million, a gross
margin of 61.4% and a net loss of $1.0 million while achieving a
positive Adjusted EBITDA of $0.5 million and positive operating
cash flows for the three months ended September 30, 2023.
ChromaDex Corp. (NASDAQ: CDXC) today announced financial results
for the third quarter of 2023.
Third Quarter 2023 and Recent Highlights
- Total net sales were $19.5 million, with $17.4 million from Tru
Niagen®, up 14% and 19% from the prior year quarter,
respectively.
- Strong gross margin of 61.4%, an increase of 160 basis points,
compared to 59.8% from the prior year quarter.
- Sales and marketing expense as a percentage of net sales was
31.0%, an improvement of 340 basis points, compared to 34.4% from
the prior year quarter.
- Net loss was $1.0 million or $(0.01) per share, remaining
stable compared to the prior year quarter, a notable achievement as
the prior year's results included the one-time Employee Retention
Tax Credit recognition of $2.1 million ($0.03 per share).
- Adjusted EBITDA, a non-GAAP measure, was a positive $0.5
million, a $1.7 million improvement from the prior year
quarter.
- In August 2023, launched Tru Niagen® on iHerb, a global
destination for supplements, expanding ChromaDex’s worldwide
reach.
- Clinical study published in August 2023 in the peer-reviewed
journal Cell Reports found that supplementation of NR effectively
reduced inflammation in both healthy subjects and immune cells
derived from psoriasis patients.
- In October 2023, launched Tru Niagen® 1,000 mg, the most
researched dosage in clinical studies, empowering customers to
elevate their NAD levels by up to 150% after three weeks.
- In October 2023, Zesty Paws, a prominent name in pet
supplements, partnered with ChromaDex to launch a Healthy Aging
NAD+ Precursor supplement for pets, featuring Niagen®. This
partnership marks the entry into the longevity category for pets
and extends the power of Niagen® to animal companions.
“We had a solid quarter, delivering 14% year-over-year revenue
growth, a net loss of only $1.0 million, positive Adjusted EBITDA
of $0.5 million, and positive operating cash flows for the third
consecutive quarter, ending with $26.8 million in cash and no
debt,” said ChromaDex Chief Executive Officer, Rob Fried. “These
results serve as a testament to our commitment to financial
discipline and operational efficiency. ChromaDex is in its
strongest financial position to date, and we expect to unlock
commercial opportunities driven by new innovation in 2024 and
beyond.”
Results of operations for the three months ended September
30, 2023 compared to the prior year quarter
ChromaDex reported a net sales increase of 14%, or $2.4 million,
to $19.5 million. The increase in total net sales was driven by
growth in Tru Niagen® sales, partially offset by lower Niagen®
ingredient sales.
Gross margin percentage improved 160 basis points to 61.4%. The
improvement in gross margin percentage is primarily driven by
supply chain management optimization efforts, including
improvements in yield loss, and benefits from economies of scale,
partly offset by changes in business mix.
Operating expense decreased 1%, or $0.2 million, to $13.1
million due to a $0.3 million reduction in general and
administrative expense, partially offset by a slight increase in
sales and marketing expense.
Net loss was $1.0 million, or $0.01 loss per share, consistent
with the net loss of $1.0 million or $0.01 loss per share for the
third quarter of 2022. Notably, the third quarter of 2022 included
a one-time recognition of the Employee Retention Tax Credit
recognition of $2.1 million, or $0.03 per share, further
underlining the improvements in performance this quarter compared
to the prior year quarter. Adjusted EBITDA, a non-GAAP measure, was
a positive $0.5 million, a $1.7 million improvement from the third
quarter of 2022. See “Reconciliation of Non-GAAP Financial
Measures” for a reconciliation of non-GAAP Adjusted EBITDA to net
loss, the most directly comparable GAAP measure.
Net cash inflow from operating activities was $6.5 million for
the nine months ended September 30, 2023, showing a significant
improvement compared to a net cash outflow of $14.8 million in the
prior year. This improvement can be attributed to a $10.1 million
reduction in net loss and positive cash impacts of $4.1 million
from inventory management, $3.0 million from lower prepaid expenses
and other assets, $1.5 million from reduced trade receivables, $1.6
million from higher accrued expenses and $0.9 million from higher
provisions for doubtful trade receivables.
2023 Full Year Outlook
Looking forward, for the full year, the Company expects between
14% - 16% revenue growth year-over-year, driven by its global
e-commerce business, steady growth from new and existing
partnerships, upside realized from new partnerships in the first
nine months of 2023 and realistic opportunities in the pipeline for
the fourth quarter of 2023. The Company projects that gross margin
will remain stable year over year as cost savings initiatives and
benefits from economies of scale are expected to largely offset
continued inflationary pressures. Moreover, further optimization,
coupled with new and focused customer acquisition strategies are
expected to result in reduced selling and marketing expense as a
percentage of net sales. The Company plans to increase investments
in research and development to drive innovation, and expects
general and administrative expense to be flat to down $1 million
year over year.
Investor Conference Call
A live webcast will be held Wednesday, November 8, 2023 at 4:30
p.m. Eastern time (1:30 p.m. Pacific time) to discuss ChromaDex’s
third-quarter financial results and provide a general business
update.
To listen to the webcast, or to view the earnings press release
and its accompanying financial exhibits, please visit the Investors
Relations section of ChromaDex’s website at http://chromadex.com.
The toll-free dial-in information for this call is 1-888-330-2446
with Conference ID: 4126168.
The webcast will be recorded, and will be available for replay
via the website from 7:30 p.m. Eastern time on November 8, 2023
through 11:59 p.m. Eastern time on November 15, 2023. The replay of
the call can also be accessed by dialing 800-770-2030, using the
Replay ID: 4126168.
Important Note on Forward-Looking Statements:
This 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. Statements that are not
a description of historical facts constitute forward-looking
statements and may often, but not always, be identified by the use
of such words as “expects,” “anticipates,” “intends” “estimates,”
“plans,” “potential,” “possible,” “probable,” “believes” “seeks,”
“may,” “will,” “should,” “could,” “predicts,” “projects,”
“continue,” “would” or the negative of such terms or other similar
expressions. Forward-looking statements include statements
regarding our intentions, beliefs, projections, outlook, analyses
or current expectations concerning, among other things: the
quotation from ChromaDex’s Chief Executive Officer, and statements
related to the Company’s 2023 financial outlook including but not
limited to revenue growth, gross margin, expenses, and investment
plans. Risks that contribute to the uncertain nature of the
forward-looking statements include: inflationary conditions and
adverse economic conditions; our history of operating losses and
need to obtain additional financing; the growth and profitability
of our product sales; our ability to maintain sales, marketing and
distribution capabilities; changing consumer perceptions of our
products; our reliance on a single or limited number of third-party
suppliers; risks of conducting business in China; and the risks and
uncertainties associated with our business and financial condition
in general, described in our filings with the Securities and
Exchange Commission (SEC), including, without limitation, our most
recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q
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.
About ChromaDex:
ChromaDex Corporation is a global bioscience company dedicated
to healthy aging. The ChromaDex team, which includes world-renowned
scientists, is pioneering research on nicotinamide adenine
dinucleotide (NAD+), an essential coenzyme that is a key regulator
of cellular metabolism and is found in every cell of the human
body. NAD+ levels in humans have been shown to decline with age,
among other factors, and may be increased through supplementation
with NAD+ precursors. ChromaDex is the innovator behind the NAD+
precursor nicotinamide riboside (NR), commercialized as the
flagship ingredient Niagen®. Nicotinamide riboside and other NAD+
precursors are protected by ChromaDex’s patent portfolio.
The Company delivers Niagen® as the sole active ingredient in
its consumer product Tru Niagen® available at www.truniagen.com and
through partnerships with global retailers and distributors. The
Company also develops and commercializes proprietary-based
ingredient technologies and supplies these ingredients as raw
materials to the manufacturers of consumer products. The Company
further offers natural product fine chemicals, known as
phytochemicals, and related research and development services.
Follow us on X (formerly Twitter) @ChromaDex and Instagram
@TruNiagen and subscribe to our latest news via our website
accessible at www.chromadex.com to which ChromaDex regularly posts
copies of its press releases as well as additional updates and
financial information about the Company.
ChromaDex Corporation and
Subsidiaries
Unaudited Condensed
Consolidated Statements of Operations
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
(In thousands, except per share data)
Sales, net
$
19,495
$
17,063
$
62,374
$
51,054
Cost of sales
7,526
6,856
24,531
20,273
Gross profit
11,969
10,207
37,843
30,781
Operating expenses:
Sales and marketing
6,035
5,868
19,918
22,126
Research and development
1,241
1,224
3,799
3,547
General and administrative
5,840
6,180
19,557
22,292
Total operating expenses
13,116
13,272
43,274
47,965
Operating loss
(1,147
)
(3,065
)
(5,431
)
(17,184
)
Nonoperating income (expenses):
Other income, net - Employee Retention Tax
Credit
—
2,085
—
2,085
Interest income (expense), net
188
(5
)
379
(23
)
Net loss
$
(959
)
$
(985
)
$
(5,052
)
$
(15,122
)
Basic and diluted loss per share
attributable to common stockholders:
$
(0.01
)
$
(0.01
)
$
(0.07
)
$
(0.22
)
Basic and diluted weighted average common
shares outstanding
75,050
68,345
74,938
68,331
ChromaDex Corporation and
Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands except par values, unless
otherwise indicated)
September 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents, including
restricted cash of $152 for both periods presented
$
26,773
$
20,441
Trade receivables, net of allowances of
$993 and $122, respectively; Including receivables from Related
Party of $2.9 million and $3.1 million, respectively
5,601
8,482
Inventories
12,624
14,677
Prepaid expenses and other assets
2,183
2,967
Total current assets
47,181
46,567
Leasehold improvements and equipment,
net
2,293
2,799
Intangible assets, net
552
671
Right-of-use assets
3,003
3,523
Other long-term assets
454
497
Total assets
$
53,483
$
54,057
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
9,198
$
9,679
Accrued expenses
9,193
7,337
Current maturities of operating lease
obligations
854
680
Current maturities of finance lease
obligations
10
16
Customer deposits
189
157
Total current liabilities
19,444
17,869
Deferred revenue
3,806
3,955
Operating lease obligations, less current
maturities
2,911
3,539
Finance lease obligations, less current
maturities
14
22
Total stockholders’ equity
27,308
28,672
Total liabilities and stockholders’
equity
$
53,483
$
54,057
ChromaDex Corporation and
Subsidiaries
Unaudited Condensed
Consolidated Statements of Cash Flows
Nine Months Ended September
30,
(In thousands)
2023
2022
Net cash provided by / (used
in):
Operating activities
$
6,468
$
(14,770
)
Investing activities
(122
)
(162
)
Financing activities
(14
)
(25
)
Net increase (decrease) in cash and cash
equivalents
6,332
(14,957
)
Cash and cash equivalents beginning of
period
20,441
28,219
Cash and cash equivalents at end of
period
$
26,773
$
13,262
ChromaDex Corporation and
Subsidiaries
Unaudited Reconciliation of
Non-GAAP Financial Measures
Reconciliation of Net Loss to Adjusted
EBITDA
(In thousands)
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Net loss, as reported
$
(959
)
$
(2,191
)
$
(1,902
)
$
(1,418
)
$
(985
)
Adjustments:
Interest (income) expense, net
(188
)
(125
)
(66
)
(26
)
5
Depreciation
233
232
228
221
235
Amortization of intangibles
39
39
41
43
44
Amortization of right of use assets
176
173
171
191
170
Share-based compensation
1,117
1,324
1,273
1,326
1,229
Severance and restructuring
86
766
186
13
181
Other income - Employee Retention Tax
Credit
—
—
—
—
(2,085
)
Adjusted EBITDA
$
504
$
218
$
(69
)
$
350
$
(1,206
)
Non-GAAP Financial Information:
To supplement ChromaDex’s unaudited financial data presented in
accordance with generally accepted accounting principles (GAAP),
the Company has presented Adjusted EBITDA, a non-GAAP financial
measure. ChromaDex believes the presentation of such non-GAAP
financial measure provides important supplemental information to
management and investors and enhances the overall understanding of
the Company’s historical and current financial operating
performance. The Company believes disclosure of the non-GAAP
financial measure has substance because the excluded expenses are
infrequent in nature, are variable in nature or do not represent
current cash expenditures. Further, such non-GAAP financial measure
is among the indicators the Company uses as a basis for evaluating
the Company’s financial performance as well as for planning and
forecasting purposes. Accordingly, disclosure of this non-GAAP
financial measure provides investors with the same information that
management uses to understand the Company’s economic performance
year-over-year.
Adjusted EBITDA is defined as net income before (a) interest,
(b) depreciation, (c) amortization, (d) non-cash share-based
compensation costs, (e) severance and restructuring expense and (f)
Other income from the Employee Retention Tax Credit. While
ChromaDex believes that this non-GAAP financial measure provides
useful supplemental information to investors, there are limitations
associated with the use of such measure. This measure is not
prepared in accordance with GAAP and may not be directly comparable
to similarly titled measures of other companies due to potential
differences in the method of calculation. Management compensates
for these limitations by relying primarily on the Company’s GAAP
results and by using Adjusted EBITDA only supplementally and by
reviewing the reconciliation of the non-GAAP financial measure to
its most comparable GAAP financial measure.
Non-GAAP financial measures are not in accordance with, or an
alternative for, generally accepted accounting principles in the
United States. The Company’s non-GAAP financial measure is not
meant to be considered in isolation or as a substitute for
comparable GAAP financial measures and should be read only in
conjunction with the company’s consolidated financial statements
prepared in accordance with GAAP.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231108739148/en/
Investor Relations +1 (949) 356-1620
InvestorRelations@ChromaDex.com
Media Relations Kendall Knysch Director of Media
Relations +1 (310) 388-6706 Ext. 689
Kendall.Knysch@ChromaDex.com
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