Strong quarter with total net sales of $20.3
million, a gross margin of 60.8% and a net loss of $2.2 million
while achieving a positive Adjusted EBITDA of $0.2 million and
positive operating cash flows for the three months ended June 30,
2023.
ChromaDex Corp. (NASDAQ:CDXC) today announced financial results
for the second quarter of 2023.
Second Quarter 2023 and Recent Highlights
- Total net sales were $20.3 million, with $16.9 million from Tru
Niagen®, up 21% and 16% from the prior year quarter,
respectively.
- Strong gross margin of 60.8% and a $1.8 million reduction in
operating expenses.
- Sales and marketing expense as a percentage of net sales was
29.6%, an improvement of 1,830 basis points, compared to 47.9% from
the prior year quarter.
- Net loss was $2.2 million or $(0.03) per share, an improvement
of $4.2 million, or $0.06 per share, from the prior year
quarter.
- Adjusted EBITDA, a non-GAAP measure, was a positive $0.2
million, a $4.9 million improvement from the prior year
quarter.
- Two published abstracts, originally presented in April 2023,
highlighted the significance of NAD+ in glaucoma patients and that
supplementation with nicotinamide riboside, NR, shows promising
effects.(1)
- ChromaDex External Research Program (CERP™) celebrated its 10th
anniversary, signing more than 275 global research agreements with
over 235 independent, expert investigators to uncover the full
potential of NAD+ with Niagen®. This research has shown that the
health benefits of Niagen® translate from preclinical models to
human clinical studies for brain, heart and muscle health with
remarkable consistency. Looking to the next 10 years, there is
great anticipation for emerging benefits in sensory, infant,
maternal and reproductive health to be translated from preclinical
to human studies.
“This was another excellent quarter, delivering 21%
year-over-year revenue growth, positive Adjusted EBITDA of $0.2
million and positive operating cash flows for the second
consecutive quarter,” said ChromaDex Chief Executive Officer, Rob
Fried. “We are again raising our 2023 revenue outlook by 2.5% to at
least 15% growth, underscoring our commitment to consistent
profitable growth.”
(1) Refers to two independent clinical study abstracts
originally presented in April 2023 at the Association for Research
in Vision and Ophthalmology (ARVO) annual meeting and recently
published in the peer-reviewed ARVO journal, Investigative
Ophthalmology & Visual Science.
Results of operations for the three months ended June 30,
2023 compared to the prior year quarter
ChromaDex reported a net sales increase of 21%, or $3.6 million,
to $20.3 million. The increase in net sales was fueled by growth in
sales of Tru Niagen® and growth in Niagen® ingredient sales.
Gross margin percentage improved 80 basis points to 60.8%. The
improvement in gross margin percentage is primarily driven by
economies of scale and supply chain management optimization
efforts, partly offset by changes in business mix.
Operating expense decreased 11%, or $1.8 million, to $14.7
million driven by a $2.0 million reduction in sales and marketing
expense slightly offset by higher research and development expense
and general and administrative expense.
Net loss was $2.2 million, or $0.03 loss per share, compared to
a net loss of $6.4 million or $0.09 loss per share for the second
quarter of 2022. Adjusted EBITDA, a non-GAAP measure, was a
positive $0.2 million, a $4.9 million improvement from Q2 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 $6.1 million for
the six months ended June 30, 2023, showing a significant
improvement compared to a net cash outflow of $11.0 million in the
prior year. This improvement can be attributed to a $10.0 million
reduction in net loss, a positive impact of $4.9 million from
inventory management, as well as other favorable changes in working
capital.
2023 Full Year Outlook
Looking forward, for the full year, the Company expects at least
15.0% revenue growth year-over-year. The projected growth considers
only recurring, steady revenue growth from the e-commerce business
and established partnerships, as well as upside from newer
partnerships realized in the first half of the year. However,
potential upside which is not reflected in this growth, lies within
new partnerships, channels, and products. 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, mainly during the latter
half of the year, 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, August 9, 2023 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 9, 2023
through 11:59 p.m. Eastern time on August 16, 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 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(In thousands, except per share data)
Sales, net
$
20,323
$
16,732
$
42,879
$
33,991
Cost of sales
7,967
6,690
17,005
13,417
Gross profit
12,356
10,042
25,874
20,574
Operating expenses:
Sales and marketing
6,009
8,021
13,883
16,258
Research and development
1,365
1,245
2,558
2,323
General and administrative
7,298
7,163
13,717
16,112
Total operating expenses
14,672
16,429
30,158
34,693
Operating loss
(2,316
)
(6,387
)
(4,284
)
(14,119
)
Nonoperating income (expenses):
Interest income (expense), net
125
(10
)
191
(18
)
Net loss
$
(2,191
)
$
(6,397
)
$
(4,093
)
$
(14,137
)
Basic and diluted loss per share
attributable to common stockholders:
$
(0.03
)
$
(0.09
)
$
(0.05
)
$
(0.21
)
Basic and diluted weighted average common
shares outstanding
74,967
68,336
74,882
68,325
ChromaDex Corporation and
Subsidiaries
Unaudited Condensed
Consolidated Balance Sheets
(In thousands except par values, unless
otherwise indicated)
June 30, 2023
December 31, 2022
Assets
Current assets:
Cash and cash equivalents, including
restricted cash of $152 for both periods presented
$
26,406
$
20,441
Trade receivables, net of allowances of
$826 and $122, respectively; Including receivables from Related
Party of: $2.8 million and $3.1 million, respectively
6,118
8,482
Inventories
11,973
14,677
Prepaid expenses and other assets
1,885
2,967
Total current assets
46,382
46,567
Leasehold improvements and equipment,
net
2,501
2,799
Intangible assets, net
591
671
Right-of-use assets
3,179
3,523
Other long-term assets
518
497
Total assets
$
53,171
$
54,057
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
10,031
$
9,679
Accrued expenses
8,079
7,337
Current maturities of operating lease
obligations
775
680
Current maturities of finance lease
obligations
10
16
Customer deposits
166
157
Total current liabilities
19,061
17,869
Deferred revenue
3,806
3,955
Operating lease obligations, less current
maturities
3,137
3,539
Finance lease obligations, less current
maturities
17
22
Total stockholders’ equity
27,150
28,672
Total liabilities and stockholders’
equity
$
53,171
$
54,057
ChromaDex Corporation and
Subsidiaries
Unaudited Condensed
Consolidated Statements of Cash Flows
Six Months Ended June
30,
(In thousands)
2023
2022
Net cash provided by / (used
in):
Operating activities
$
6,072
$
(11,030
)
Investing activities
(96
)
(110
)
Financing activities
(11
)
(7
)
Net increase (decrease) in cash and cash
equivalents
5,965
(11,147
)
Cash and cash equivalents beginning of
period
20,441
28,219
Cash and cash equivalents at end of
period
$
26,406
$
17,072
ChromaDex Corporation and
Subsidiaries
Unaudited Reconciliation of
Non-GAAP Financial Measures
Reconciliation of Net Loss to Adjusted
EBITDA
(In thousands)
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Net loss, as reported
$
(2,191
)
$
(1,902
)
$
(1,418
)
$
(985
)
$
(6,397
)
Adjustments:
Interest (income) expense, net
(125
)
(66
)
(26
)
5
10
Depreciation
232
228
221
235
212
Amortization of intangibles
39
41
43
44
50
Amortization of right of use assets
173
171
191
170
169
Share-based compensation
1,324
1,273
1,326
1,229
1,296
Severance and restructuring
766
186
13
181
17
Other income - Employee Retention Tax
Credit
—
—
—
(2,085
)
—
Adjusted EBITDA
$
218
$
(69
)
$
350
$
(1,206
)
$
(4,643
)
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/20230809526989/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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