LOS ANGELES--(BUSINESS WIRE)--Nov 2, 2022--
ChromaDex Corp. (NASDAQ:CDXC) today announced financial results for the third quarter of 2022.
ThirdQuarter 2022 and Recent Highlights
“We approached cash flow break even in the third quarter and remain on track to achieve this important objective next quarter,” said ChromaDex CEO, Rob Fried. “We finalized key strategic partnerships in China and signed a long-term supply agreement with Nestlé Health Science. Our position as the world's leading NAD+ company is solid, supported by our strong and growing patent portfolio, our globally trusted consumer brand, Tru Niagen®, and our pipeline of future innovations.”
(1) Journal of the American College of Cardiology: Basic to Translational Science
Results of operations for the three months ended September 30, 2022 compared to the prior year quarter
For the three months ended September 30, 2022 (“Q3 2022”), ChromaDex reported net sales of $17.1 million, a decrease of $0.2 million or (1)% compared to the third quarter of 2021 (“Q3 2021”). The slight decline in Q3 2022 revenues compared to Q3 2021 was primarily attributable to lower business-to-business sales of Tru Niagen® as distributor partners continue to experience COVID-19 headwinds and other macroeconomic factors paired with lower demand for research and development services. Declines in net sales were partially offset by steady growth in e-commerce sales of Tru Niagen®.
Gross margin percentage declined to 59.8% in Q3 2022 compared to 61.1% in Q3 2021 primarily due to increases in supply chain headcount, including higher wages, and other inflationary pressures, partially offset by business mix.
Operating expense decreased $6.1 million to $13.3 million in Q3 2022, compared to $19.4 million in Q3 2021. The decline in operating expense was largely attributable to a $5.0 million decrease in general and administrative expense paired with a $1.4 million decrease in selling and marketing expense. During Q3 2022, selling and marketing expense was scaled back to focus on the most efficient channels and investments, which drove a 730 basis point improvement in selling and marketing expense as a percentage of net sales, compared to Q3 2021. The decline in general and administrative expense was primarily driven by a $4.4 million decrease in legal expense.
The net loss for Q3 2022 was $1.0 million or $(0.01) per share compared to a net loss of $8.8 million or $(0.13) per share for Q3 2021. Adjusted EBITDA including legal expense, a non-GAAP measure, was a loss of $1.2 million for Q3 2022, a $5.1 million improvement from Q3 2021. Adjusted EBITDA excluding legal expense, a non-GAAP measure, was a profit of $0.1 million for Q3 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 Q3 2022, net cash outflow from operating activities was $3.7 million, compared to $5.9 million in Q3 2021 largely due to improvements in net loss of $4.6 million excluding other income from the Employee Retention Tax Credit which was partially offset by changes in working capital.
2022Full Year Outlook
Looking forward, for the full year, the Company expects high single digit revenue growth, driven by its global e-commerce business and growth with partners. For the full year, the Company expects approximately 60% gross margin, lower selling and marketing expense as a percentage of net sales, approximately $1 million increase in R&D, and approximately $6 to $8 million decrease in general and administrative expense, as reported, driven by lower legal expense. The Company expects to 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, November 2, 2022 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 2, 2022 through 11:59 p.m. Eastern time on November 9, 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 September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Sales, net
$
17,063
$
17,308
$
51,054
$
49,690
Cost of sales
6,856
6,730
20,273
19,068
Gross profit
10,207
10,578
30,781
30,622
Operating expenses:
Sales and marketing
5,868
7,221
22,126
19,711
Research and development
1,224
996
3,547
2,787
General and administrative
6,180
11,202
22,292
29,881
Total operating expenses
13,272
19,419
47,965
52,379
Operating loss
(3,065
)
(8,841
)
(17,184
)
(21,757
)
Other income, net - Employee Retention Tax Credit
2,085
—
2,085
—
Interest expense, net
(5
)
(15
)
(23
)
(46
)
Net loss
$
(985
)
$
(8,856
)
$
(15,122
)
$
(21,803
)
Basic and diluted loss per share attributable to common stockholders:
$
(0.01
)
$
(0.13
)
$
(0.22
)
$
(0.33
)
Basic and diluted weighted average common shares outstanding
68,345
68,236
68,331
66,811
ChromaDex Corporation and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(In thousands except par values, unless otherwise indicated)
Sep 30, 2022
Dec 31, 2021
Assets
Current assets:
Cash and cash equivalents, including restricted cash of $0.2 million as of both dates
$
13,262
$
28,219
Trade receivables, net of allowances of $51 and $65, respectively; Including receivables from Related Party of: $2.4 million and $2.1 million, respectively
4,744
5,226
Inventories
15,636
13,601
Prepaid expenses and other assets
4,259
1,859
Total current assets
37,901
48,905
Leasehold improvements and equipment, net
2,791
3,003
Intangible assets, net
714
857
Right-of-use assets
3,714
4,352
Other long-term assets
545
723
Total assets
$
45,665
$
57,840
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$
9,119
$
10,423
Accrued expenses
6,756
6,481
Current maturities of operating lease obligations
684
528
Current maturities of finance lease obligations
10
20
Customer deposits
158
161
Total current liabilities
16,727
17,613
Deferred revenue
4,228
4,346
Operating lease obligations, less current maturities
3,687
4,154
Total liabilities
24,642
26,113
Commitments and Contingencies
Equity
ChromaDex Corporation and subsidiaries stockholders' equity:
Common stock, $0.001 par value; authorized 150,000 shares; 68,169 shares and 68,126 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively
68
68
Additional paid-in capital
205,027
200,614
Accumulated deficit
(184,075
)
(168,953
)
Cumulative translation adjustments
3
(2
)
Total stockholders’ equity
21,023
31,727
Total liabilities and stockholders’ equity
$
45,665
$
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
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Net loss, as reported
$
(985
)
$
(6,397
)
$
(7,740
)
$
(5,325
)
$
(8,856
)
Adjustments:
Interest expense, net
5
10
8
9
15
Depreciation
235
212
201
211
232
Amortization of intangibles
44
50
49
51
53
Amortization of right of use assets
170
169
299
126
131
Share-based compensation
1,229
1,296
1,888
1,473
1,822
Severance and restructuring
181
17
821
6
342
Other income - Employee Retention Tax Credit
(2,085
)
—
—
—
—
Adjusted EBITDA including legal expense
$
(1,206
)
$
(4,643
)
$
(4,474
)
$
(3,449
)
$
(6,261
)
Legal expense
1,257
1,727
2,341
1,626
5,640
Adjusted EBITDA excluding legal expense
$
51
$
(2,916
)
$
(2,133
)
$
(1,823
)
$
(621
)
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 (f) Other income from the Employee Retention Tax Credit and (g) 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/20221102005726/en/
CONTACT: Investor Relations
Thomas Shumaker
LifeSci Advisors, Managing Director
1-917-929-7600
tshumaker@lifesciadvisors.comMedia Relations
Kendall Knysch
Director of Media Relations
310-388-6706 ext. 689
kendall.knysch@chromadex.com
KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA
INDUSTRY KEYWORD: RESEARCH SENIORS GENETICS BIOTECHNOLOGY HEALTH CONSUMER PHARMACEUTICAL GENERAL HEALTH SCIENCE
SOURCE: ChromaDex Corporation
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PUB: 11/02/2022 04:02 PM/DISC: 11/02/2022 04:02 PM
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