ChromaDex Corp. (NASDAQ:CDXC) today reported third quarter 2019
financial results.
“We had another strong quarter with total net
sales of $12.1 million, up 9% sequentially and 48% year-over-year,”
said ChromaDex CEO Rob Fried. “In addition, we improved the gross
margin and expanded our global footprint.”
Results of operations for the three
months ended September 30, 2019
For the three months ended September 30, 2019
(“Q3 2019”), ChromaDex reported net sales of $12.1 million, up 48%
compared to $8.1 million in the third quarter of 2018 ("Q3 2018").
The increase in Q3 2019 revenues was driven by growth in sales of
TRU NIAGEN.
Gross margin increased by 230 basis points to
56.0% for Q3 2019 compared to 53.7% in Q3 2018. The increase
in gross margin was driven by the positive impact of TRU NIAGEN
consumer product sales.
Operating expenses increased by $0.7 million to
$13.6 million in Q3 2019, compared to $13.0 million in Q3 2018. The
increase in operating expenses was driven by an increase of $1.2
million of general and administrative expense, partially offset by
$0.3 million of lower R&D expense and $0.2 million of lower
advertising and marketing expense. The increase in general
and administrative expense was driven by higher legal expense,
higher share-based compensation and higher royalties to patent
holders.
The net loss for the third quarter of 2019 was
$7.2 million or ($0.12) per share as compared to a net loss of $8.6
million or ($0.16) per share for the third quarter of 2018.
For Q3 2019, the reported loss was negatively impacted by a
non-cash charge of $1.7 million related to equity-based
compensation and $0.3 million of debt discounts related to $10.0
million of convertible notes issued to certain investors which were
recorded as interest expense.
Adjusted EBITDA excluding total legal expense, a
non-GAAP measure, was ($1.9) million for Q3 2019, compared to
($4.3) million for Q3 2018, a $2.5 million improvement.
Sequentially, Adjusted EBITDA excluding total legal expense
improved by $0.2 million compared to ($2.1) million for the three
months ended June 30, 2019. The $0.2 million improvement was
primarily driven by higher gross margins and higher
sales.
ChromaDex defines Adjusted EBITDA excluding
total legal expense as net income or (loss) which is adjusted for
interest, income tax, depreciation, amortization, non-cash stock
compensation costs and total legal expense.
For the third quarter of 2019, the net cash used
in operating activities was $7.8 million versus $5.2 million for
the same period in the prior year. The Company ended the
third quarter of 2019 with cash of $18.9 million.
2019 Outlook
Looking forward, the Company expects revenue
growth to be driven primarily by its U.S. ecommerce and Watsons
international business, as well as the launch of TRU NIAGEN® with
other distributors in certain new international markets. The
Company expects continued gross margin improvement and lower
selling, marketing and advertising as well as general and
administrative expenses as a percentage of net sales.
Investor Conference Call
ChromaDex management will host an investor
conference call to discuss the third quarter results and provide a
general business update on Tuesday, November 12, at 4:30pm ET.
Participants should call in at least 10 minutes prior to the
call. The dial-in information is as follows:
Date: Tue., November 12, 2019 Time: 4:30 p.m. Eastern
time (1:30 p.m. Pacific time) Toll-free dial-in number:
(866) 211-3191 International dial-in number: (647) 689-6604
Conference ID: 9475087 Webcast link: ChromaDex Third Quarter
2019 Earnings Conference Call
The conference call will be broadcast live and
available for replay here and via the investor relations
section of the Company’s website at www.chromadex.com.
A replay of the conference call will be
available after 7:30 p.m. ET.
Toll-free replay number: (800) 585-8367 Replay ID: 9475087
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, income tax, depreciation, amortization, non-cash
share-based compensation costs and total legal expense for adjusted
EBITDA excluding total legal expense. 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 a science-based integrated 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 quotation from ChromaDex’s Chief Executive
Officer, and statements related to future revenue growth being
driven by ChromaDex’s U.S. ecommerce and Watsons’ international
business, launching TRU NIAGEN in certain new international
markets, the expectations of gross margin improvement, and the
expectations of lower selling, marketing and advertising expenses
and lower general and administrative expenses as a percentage of
net sales. 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:
Brianna Gerber, Vice President of FP&A and Investor
Relations
949-419-0288 ext. 127
briannag@chromadex.com
ChromaDex Media Contact:
Alex Worsham, Senior Director of Strategic Partnerships
310-388-6706 ext. 689
alexw@chromadex.com
ChromaDex Corporation
|
ChromaDex Corporation and
Subsidiaries |
Condensed Consolidated Statements of
Operations |
For the
Three Month Periods Ended September 30, 2019 and September 30,
2018 |
(In
thousands, except per share
data) |
|
|
|
|
|
|
Three Months Ended |
|
|
Sep. 30, 2019 |
|
Sep. 30, 2018 |
|
|
|
|
|
|
Sales, net |
$ |
12,053 |
|
$ |
8,120 |
|
Cost
of sales |
5,304 |
|
3,759 |
|
|
|
|
|
|
Gross profit |
6,749 |
|
4,361 |
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
Sales and marketing |
4,626 |
|
4,837 |
|
Research and development |
1,044 |
|
1,350 |
|
General and administrative |
7,967 |
|
6,770 |
|
Operating expenses |
13,637 |
|
12,957 |
|
|
|
|
|
|
Operating loss |
(6,888 |
) |
(8,596 |
) |
|
|
|
|
|
Nonoperating expense |
|
|
|
|
Interest expense, net |
(314 |
) |
(9 |
) |
Nonoperating expense |
(314 |
) |
(9 |
) |
|
|
|
|
|
Net loss |
$ |
(7,202 |
) |
$ |
(8,605 |
) |
|
|
|
|
|
Basic
and diluted loss per common share |
$ |
(0.12 |
) |
$ |
(0.16 |
) |
|
|
|
|
|
Basic
and diluted weighted average |
|
|
|
|
common shares outstanding |
57,658 |
|
55,068 |
|
|
|
|
|
|
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 November 12, 2019. |
|
|
|
|
ChromaDex
Corporation and
Subsidiaries |
Condensed
Consolidated Balance
Sheets |
September 30, 2019 and December 31,
2018 |
(In thousands, except per share
data) |
|
|
|
|
|
|
Sep. 30, 2019 |
|
Dec. 31, 2018 |
|
Assets |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
Cash, including restricted cash of $0.2 million and $0.2 million,
respectively |
$ |
18,879 |
|
$ |
22,616 |
|
Trade receivables, net of allowances of $0.5 million and $0.5
million, respectively; |
|
|
|
|
Receivables from Related Party: $1.9 million and $0.7 million,
respectively |
5,953 |
|
4,359 |
|
Contract assets |
89 |
|
56 |
|
Receivable held at escrow, net of allowance of $0.2 million and
$0.1 million, repectively |
553 |
|
677 |
|
Inventories |
9,820 |
|
8,249 |
|
Prepaid expenses and other assets |
1,071 |
|
577 |
|
Total current assets |
36,365 |
|
36,534 |
|
|
|
|
|
|
Leasehold Improvements and Equipment, net |
3,696 |
|
3,585 |
|
Intangible Assets, net |
1,373 |
|
1,547 |
|
Right of Use Assets |
1,045 |
|
- |
|
Other Long-term Assets |
660 |
|
566 |
|
|
|
|
|
|
Total assets |
$ |
43,139 |
|
$ |
42,232 |
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
Accounts payable |
$ |
6,168 |
|
$ |
9,548 |
|
Accrued expenses |
3,693 |
|
4,444 |
|
Current maturities of operating lease obligations |
620 |
|
- |
|
Current maturities of finance lease obligations |
281 |
|
173 |
|
Contract liabilities and customer deposits |
261 |
|
275 |
|
Total current liabilities |
11,023 |
|
14,440 |
|
|
|
|
|
|
Deferred Revenue |
3,873 |
|
- |
|
Operating Lease Obligations,
Less Current Maturities |
1,031 |
|
- |
|
Finance Lease Obligations,
Less Current Maturities |
70 |
|
137 |
|
Deferred Rent |
- |
|
477 |
|
|
|
|
|
|
Total liabilities |
15,997 |
|
15,054 |
|
|
|
|
|
|
Commitments and
Contingencies |
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
Common stock, $.001 par value; authorized 150,000 shares; |
|
|
|
|
issued and outstanding September 30, 2019 59,383 shares and |
|
|
|
|
December 31, 2018 55,089 shares |
59 |
|
55 |
|
Additional paid-in capital |
140,130 |
|
116,876 |
|
Accumulated deficit |
(113,047 |
) |
(89,753 |
) |
Total stockholders' equity |
27,142 |
|
27,178 |
|
|
|
|
|
|
Total liabilities and stockholders' equity |
$ |
43,139 |
|
$ |
42,232 |
|
|
|
|
|
|
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 November 12, 2019. |
|
|
|
|
ChromaDex Corporation and
Subsidiaries |
Reconciliation of Non-GAAP Financial
Measures |
(In
thousands) |
|
|
Three months ended |
|
Mar. 31, 2018 |
|
Jun. 30, 2018 |
|
Sep. 30, 2018 |
|
Dec. 31, 2018 |
|
Mar. 31, 2019 |
|
Jun. 30, 2019 |
|
Sep. 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss, as reported |
$ |
(8,443 |
) |
$ |
(8,050 |
) |
$ |
(8,605 |
) |
$ |
(8,218 |
) |
$ |
(8,337 |
) |
$ |
(7,755 |
) |
$ |
(7,202 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income) expense |
44 |
|
48 |
|
9 |
|
(22 |
) |
(35 |
) |
575 |
|
314 |
|
Depreciation |
121 |
|
146 |
|
169 |
|
171 |
|
173 |
|
190 |
|
196 |
|
Amortization of intangibles |
58 |
|
58 |
|
59 |
|
60 |
|
61 |
|
61 |
|
62 |
|
Amortization of right of use assets |
- |
|
- |
|
- |
|
- |
|
138 |
|
141 |
|
144 |
|
Share-based compensation |
1,258 |
|
1,811 |
|
1,317 |
|
1,985 |
|
2,029 |
|
1,759 |
|
1,687 |
|
Adjusted EBITDA |
$ |
(6,962 |
) |
$ |
(5,987 |
) |
$ |
(7,051 |
) |
$ |
(6,024 |
) |
$ |
(5,971 |
) |
$ |
(5,029 |
) |
$ |
(4,799 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total legal expense |
2,973 |
|
2,079 |
|
2,723 |
|
2,045 |
|
3,250 |
|
2,926 |
|
2,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA excluding total legal expense |
$ |
(3,989 |
) |
$ |
(3,908 |
) |
$ |
(4,328 |
) |
$ |
(3,979 |
) |
$ |
(2,721 |
) |
$ |
(2,103 |
) |
$ |
(1,855 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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