Total net sales of $16.7 million for the three
months ended June 30, 2022 with $14.5 million from Tru Niagen® and
gross margin of 60.0% for the quarter
ChromaDex Corp. (NASDAQ:CDXC) today announced financial results
for the second quarter of 2022.
Second Quarter 2022 and Recent Highlights
- Total net sales were $16.7 million, with $14.5 million from Tru
Niagen®, down 5% and 6% from the prior year period,
respectively.
- Total net sales and Tru Niagen® net sales remained relatively
flat year over year excluding the initial shelf stocking sales to
Wal-Mart in the second quarter of 2021. Sales were also impacted by
the timing of shipments to Watson's due to COVID-19 ($1.5 million
versus $2.9 million in the prior year period).
- Strong gross margin of 60% despite lower sales and inflationary
pressures in global supply chains.
- General and administrative expense decreased $2.0 million from
the prior year quarter driven by lower legal expense.
- Announced agreement to launch commercial joint venture in
Mainland China, marking an expansion milestone for the brand in a
strategic market. Signed agreement with Sinopharm Xingsha to
accelerate cross-border sales of Tru Niagen®.
- Partnered with Juvenis for cross-border sales of Tru Niagen®
into South Korea, furthering Asia expansion strategy.
- In May 2022, the ChromaDex External Research Program (CERP) was
honored in the “Nutrition Research Project” category for pioneering
research behind Niagen®.
“Our team is doing great work in a challenging environment,”
said CEO Rob Fried. “The e-commerce business continues to grow, and
we are excited about our new partnerships in China and South Korea.
We are placing greater emphasis on operating efficiency and
profitable growth in the second half of the year.”
Results of operations for the three months ended June 30,
2022 compared to the prior year quarter
For the three months ended June 30, 2022 (“Q2 2022”), ChromaDex
reported net sales of $16.7 million, a decrease $1.0 million or
(5)% compared to the second quarter of 2021 (“Q2 2021”). The
decline in Q2 2022 revenues compared to Q2 2021 was related to the
initial shelf stocking in Wal-Mart to support our launch in the
prior quarter driving increased sales in Q2 2021, paired with lower
sales to A.S. Watson, a related party, during Q2 2022, which was
impacted by timing of shipments due to COVID-19. These declines
were largely offset by growth in e-commerce sales of Tru
Niagen®.
Gross margin percentage declined to 60.0% in Q2 2022 compared to
61.1% in Q2 2021 primarily due to business mix and increases in
supply chain headcount to scale the business.
Operating expense was flat at $16.4 million in Q2 2022, compared
to $16.4 million in Q2 2021. For operating expense, there was a
$2.0 million decrease in general and administrative expense which
was largely offset by $1.8 million of higher selling and marketing
expense. The increase in selling and marketing expense was related
to brand building activities, including the new Tru Niagen®
television campaign. We expect to scale back our larger brand
campaigns in the second half of 2022, as we shift our focus to more
efficient distribution channels, primarily e-commerce, coupled with
overall expense management.
The net loss for Q2 2022 was $6.4 million or $(0.09) per share
compared to a net loss of $5.6 million or $(0.08) per share for Q2
2021. Adjusted EBITDA including legal expense, a non-GAAP measure,
delivered a loss of $4.6 million for Q2 2022, a $1.1 million
decline from Q2 2021. Adjusted EBITDA excluding legal expense, a
non-GAAP measure, was a loss of $2.9 million for Q2 2022. See
“Reconciliation of Non-GAAP Financial Measures” for a
reconciliation of non-GAAP measures to net loss, the most directly
comparable GAAP measure.
For Q2 2022, net cash outflow from operating activities was $3.8
million, compared to $7.9 million in Q2 2021 largely due to changes
in working capital including improvements in the collections of
trade receivables.
2022 Full Year Outlook
Looking forward, for the full year, the Company expects high
single digit revenue growth, driven by its global e-commerce
business, offset by slower growth with new, and existing, partners.
For the full year, the Company expects approximately 60% gross
margin, selling and marketing expense will be down as a percentage
of net sales, approximately $1 million increase in R&D, and
approximately $6 to 7 million decrease in general and
administrative expense, as reported, driven by lower legal expense.
The Company expects to approach cash flow break-even in the third
quarter and be cash flow break-even or better in the fourth quarter
of 2022. The Company considers Adjusted EBITDA including legal
expense, a non-GAAP metric, to be a proxy for cash flow before
working capital investments, and is targeting cash flow break-even
on that basis.
Investor Conference Call
A live webcast will be held Wednesday, August 10, 2022 at 4:30
p.m. Eastern time (1:30 p.m. Pacific time) to discuss ChromaDex’s
second-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 August 10, 2022 to
11:59 p.m. Eastern time on August 17, 2022. 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 2022 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: the impact of the COVID-19
pandemic on our business and the global economy; 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 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
(In thousands, except per share
data)
Three Months Ended June
30,
Six Months Ended June
30,
2022
2021
2022
2021
Sales, net
$
16,732
$
17,699
$
33,991
$
32,382
Cost of sales
6,690
6,889
13,417
12,338
Gross profit
10,042
10,810
20,574
20,044
Operating expenses:
Sales and marketing
8,021
6,232
16,258
12,490
Research and development
1,245
1,004
2,323
1,791
General and administrative
7,163
9,128
16,112
18,679
Total operating expenses
16,429
16,364
34,693
32,960
Operating loss
(6,387
)
(5,554
)
(14,119
)
(12,916
)
Interest expense, net
(10
)
(12
)
(18
)
(31
)
Net loss
$
(6,397
)
$
(5,566
)
$
(14,137
)
$
(12,947
)
Basic and diluted loss per share
attributable to common stockholders:
$
(0.09
)
$
(0.08
)
$
(0.21
)
$
(0.20
)
Basic and diluted weighted average common
shares outstanding
68,336
67,986
68,325
66,086
ChromaDex Corporation and
Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands except par values,
unless otherwise indicated)
Jun 30, 2022
Dec 31, 2021
Assets
Current assets:
Cash and cash equivalents, including
restricted cash of $0.2 million as of both dates
$
17,072
$
28,219
Trade receivables, net of allowances of
$54 and $65, respectively; Including receivables from Related Party
of: $1.3 million and $2.1 million, respectively
4,228
5,226
Inventories
15,753
13,601
Prepaid expenses and other assets
1,455
1,859
Total current assets
38,508
48,905
Leasehold improvements and equipment,
net
2,899
3,003
Intangible assets, net
758
857
Right-of-use assets
3,884
4,352
Other long-term assets
564
723
Total assets
$
46,613
$
57,840
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
10,197
$
10,423
Accrued expenses
6,696
6,481
Current maturities of operating lease
obligations
646
528
Current maturities of finance lease
obligations
13
20
Customer deposits
173
161
Total current liabilities
17,725
17,613
Deferred revenue
4,228
4,346
Operating lease obligations, less current
maturities
3,882
4,154
Total liabilities
25,835
26,113
Commitments and Contingencies
Equity
ChromaDex Corporation and subsidiaries
stockholders' equity:
Common stock, $0.001 par value; authorized
150,000 shares; 68,155 shares and 68,126 shares issued and
outstanding at June 30, 2022 and December 31, 2021,
respectively
68
68
Additional paid-in capital
203,798
200,614
Accumulated deficit
(183,090
)
(168,953
)
Cumulative translation adjustments
2
(2
)
Total stockholders’ equity
20,778
31,727
Total liabilities and stockholders’
equity
$
46,613
$
57,840
ChromaDex Corporation and
Subsidiaries
Unaudited Reconciliation of
Non-GAAP Financial Measures
(In thousands)
Reconciliation of Net Loss to Adjusted
EBITDA including legal expense and Adjusted EBITDA excluding legal
expense
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Net loss, as reported
$
(6,397
)
$
(7,740
)
$
(5,325
)
$
(8,856
)
$
(5,566
)
Adjustments:
Interest expense, net
10
8
9
15
12
Depreciation
212
201
211
232
226
Amortization of intangibles
50
49
51
53
61
Amortization of right of use assets
169
299
126
131
128
Share-based compensation
1,296
1,888
1,473
1,822
1,616
Severance and restructuring
17
821
6
342
13
Adjusted EBITDA including legal
expense
$
(4,643
)
$
(4,474
)
$
(3,449
)
$
(6,261
)
$
(3,510
)
Legal expense
1,727
2,341
1,626
5,640
4,150
Adjusted EBITDA excluding legal
expense
$
(2,916
)
$
(2,133
)
$
(1,823
)
$
(621
)
$
640
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 including legal expense
and Adjusted EBITDA excluding legal expense, both non-GAAP
financial measures. ChromaDex believes the presentation of these
non-GAAP financial measures 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 non-GAAP
financial measures has substance because the excluded expenses are
infrequent in nature, are variable in nature or do not represent
current cash expenditures. Further, these non-GAAP financial
measures are 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 these
non-GAAP financial measures provides investors with the same
information that management uses to understand the Company’s
economic performance year-over-year.
Adjusted EBITDA including legal expense and Adjusted EBITDA
excluding legal expense are 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) legal expense (in the case of Adjusted EBITDA
excluding legal expenses only). While ChromaDex believes that these
non-GAAP financial measures provide useful supplemental information
to investors, there are limitations associated with the use of
these measures. These measures are 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 including legal expense and Adjusted EBITDA
excluding expense 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 measures are 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/20220810005691/en/
Investor Relations Brianna Gerber SVP, Finance/Interim
Chief Financial Officer 949-419-0288 ext. 127
briannag@chromadex.com
Media Relations Kendall Knysch Director of Media
Relations 310-388-6706 ext. 689 kendall.knysch@chromadex.com
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