CHROMADEX CORPORATION REPORTS 2019 FINANCIAL RESULTS
Fourth Quarter 2019 Highlights vs. Fourth Quarter 2018
●
Strong growth in net sales to $13.1 million, higher gross margins,
and significantly improved marketing efficiency
year-over-year.
●
TRU NIAGEN net sales of $10.2 million, a 57% increase
year-over-year.
●
Net loss per share of ($0.15) as reported, or non-GAAP net loss per
share of ($0.11) excluding a $0.04 per share charge related to the
non-cash write-off of Elysium receivable as bad debt
expense.
●
Expanded distribution rights with Matakana in Australia and secured
partnership with a leading health and beauty retailer to launch in
over 200 U.K. stores in 2020.
Full Year 2019 Highlights vs. Full Year 2018
●
Net sales of $46.3 million, a 47% increase year-over-year, with TRU
NIAGEN sales of $31.6 million.
●
Gross margins of 55.7%, a 480 basis point increase
year-over-year.
●
Lower selling and marketing expense as a percentage of net sales
(39.4% in 2019 versus 52.4% in 2018).
●
Expanded TRU NIAGEN
business globally with retail and e-commerce launches in Canada,
and cross border launches on TMall in China and Amazon in
Japan.
●
Achieved regulatory milestones with approvals in Europe and
Australia.
●
Built upon strong
foundation of science with 15 new research collaborations and the
addition of Dr. Brunie Felding to the ChromaDex Scientific Advisory
Board. Chief Scientific Advisor, Dr. Charles Brenner received
a research grant from the Bill & Melinda Gates
Foundation.
●
TRU NIAGEN awarded ‘Ingredient of the Year: Healthy
Aging’ by NutraIngredients-USA and ‘Most Favourite
Brand’ among Watsons Hong Kong Loyalty Members. ChromaDex
awarded Nutritional Outlook’s 2019 “Best of
Industry” Ingredient Supplier Award for NIAGEN.
LOS ANGELES, March 10, 2020 (GLOBE NEWSWIRE) - ChromaDex Corp. (NASDAQ:CDXC)
today
reported fourth quarter 2019 financial results.
“We
delivered strong performance across key metrics in 2019, secured
regulatory approval in the EU and Australia, and published the
sixth human clinical study demonstrating the safety and efficacy of
Niagen,” said ChromaDex CEO Rob Fried. “By achieving
these commercial, regulatory, and scientific milestones, we
continue to make great progress against our financial and strategic
goals.”
Results of operations for the three months ended December 31,
2019
For the
three months ended December 31, 2019 (“Q4 2019”),
ChromaDex reported net sales of $13.1 million, up 44% compared to
$9.1 million in the fourth quarter of 2018 ("Q4 2018"). The
increase in Q4 2019 revenues was driven by growth in sales of TRU
NIAGEN and NIAGEN ingredient
revenues.
Gross
margin increased by 510 basis points to 57.0% in Q4 2019 compared
to 52.0% in Q4 2018. The increase in gross margin was driven by the
positive impact of increased TRU NIAGEN consumer product sales.
Operating
expenses increased by $3.4 million to $16.3 million in Q4 2019,
compared to $13.0 million in Q4 2018. The increase in operating
expenses was driven by an increase of $3.1 million in general and
administrative expense, and an increase of $0.5 million of selling
and marketing expense, partially offset by $0.1 million of lower
R&D expense. The increase in general and administrative expense
was driven by $2.2 million of bad debt expense related to the
write-off of an Elysium receivable. This reflects conservative
accounting treatment and not the potential return on investment in
litigation matters.
The net
loss for Q4 2019 was ($8.9) million or ($0.15) per share as
reported compared to a net loss of ($8.2) million or ($0.15) per
share for Q4 2018 as reported. Non-GAAP net loss per share was
($0.11) excluding a $2.2 million, or $0.04 per share, non-cash
charge related to the write-off of the Elysium receivable as bad
debt in Q4 2019.
Adjusted
EBITDA excluding total legal expense, a non-GAAP measure, was a
loss of ($2.1) million for Q4 2019, compared to a loss of ($4.0)
million for Q4 2018, a $1.9 million improvement.
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, severance and
restructuring expense, bad debt expense related to Elysium Health
and total legal expense.
For Q4
2019, the net cash used in operating activities was ($0.6) million
versus ($5.1) million in Q4 2018.
Results of operations for the year ended December 31,
2019
For the
full year ended December 31, 2019 (“FY 2019”),
ChromaDex reported net sales of $46.3 million, up 47% compared to
$31.6 million in the full year ended December 31, 2018 ("FY 2018").
The increase in FY 2019 revenues was driven by growth in sales of
TRU NIAGEN.
Gross
margin increased by 480 basis points to 55.7% in FY 2019 compared
to 50.9% in FY 2018. The increase in gross margin was driven by the
positive impact of increased TRU NIAGEN consumer product sales.
Operating
expenses increased by $7.9 million to $57.1 million in FY 2019,
compared to $49.2 million in FY 2018. The increase in operating
expenses was driven by an increase of $7.2 million in general and
administrative expense, and an increase of $1.7 million of selling
and marketing expense, partially offset by $1.1 million of lower
R&D expense. The increase in general and administrative expense
was driven by $2.2 million of bad debt expense related to the
write-off of an Elysium receivable, higher legal costs of $1.5
million and higher royalty expense of $1.0 million.
The net
loss for FY 2019 was ($32.1) million or ($0.56) per share as
reported compared to a net loss of ($33.3) million or ($0.61) per
share for FY 2018 as reported. For FY 2019, the reported loss was
negatively impacted by a non-cash charge of $7.2 million related to
stock-based compensation and $2.2 million related to the write-off
of Elysium-related bad debt. Non-GAAP net loss per share was
($0.52) excluding a $2.2 million, or $0.04 per share, non-cash
charge related to the write-off of the Elysium receivable as bad
debt in Q4 2019.
Adjusted
EBITDA excluding total legal expense, a non-GAAP measure, was a
loss of ($8.8) million for FY 2019, compared to a loss of ($16.2)
million for FY 2018, a $7.4 million improvement. The $7.4 million
improvement was primarily driven by higher sales and gross margins,
partially offset by higher marketing and selling expense and
general and administrative expense.
For
full year 2019, the net cash used in operating activities was
($20.4) million versus ($20.9) million for the same period in the
prior year. The Company ended the year of 2019 with cash of $18.8
million.
2020 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 partners and
distributors in new international markets, including U.K. and
Australia, and new platforms, including Persona Nutrition, which
was recently acquired by Nestlé Health Science. The
Company expects continued gross margin improvement driven by a
higher mix of Tru Niagen® sales, product design changes
implemented in late 2019, and additional supply chain cost savings
initiatives in 2020. The Company expects lower selling, marketing
and advertising as well as general and administrative expenses as a
percentage of net sales driven by strong growth from returning
customers and scale on our fixed overhead costs driven by
organizational realignment initiatives, as well as new systems and
processes.
Investor Conference Call
ChromaDex
management will host an investor conference call to discuss the
fourth quarter results and provide a general business update on
Tuesday, March 10, 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., March 10, 2020
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: 7665464
Webcast link: ChromaDex Fourth
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: 7665464
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:
Adjusted
EBITDA excluding total legal expense excludes interest, income tax,
depreciation, amortization, non-cash share-based compensation
costs, severance and restructuring expense, bad debt expense
related to Elysium Health, and total legal expense. ChromaDex also
provides non-GAAP net loss per share, which excludes bad debt
expense related to Elysium Health. ChromaDex used these
non-GAAP measures when evaluating its financial results as well as
for internal resource management, planning and forecasting
purposes. ChromaDex believes the presentation of its non-GAAP
financial measures enhances the overall understanding of the
company’s historical financial performance. 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
and platforms, including Persona Nutrition, the expectations of
gross margin improvement, the expectations of lower selling,
marketing and advertising expenses and lower general and
administrative expenses as a percentage of net sales driven by
strong growth from returning customers and scale on fixed overhead
costs driven by organizational realignment initiatives, the
expectations of product design changes implemented in late 2019 and
additional supply chain cost savings initiatives in 2020 and the
outcome of ongoing litigation. 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 Global Corporate
Communications
310-388-6706
ext. 689
alexw@chromadex.com
ChromaDex
Corporation
ChromaDex Corporation and Subsidiaries
Consolidated Statements of Operations
Three Months Ended December 31, 2019 and December 31,
2018
(In thousands, except per share data)
|
|
Three
Months Ended
|
|
|
|
Dec. 31, 2019
|
Dec.
31, 2018
|
|
|
|
|
|
Sales,
net
|
$13,089
|
$9,067
|
|
Cost
of sales
|
5,624
|
4,356
|
|
|
|
|
|
Gross profit
|
7,465
|
4,711
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Sales
and marketing
|
5,108
|
4,658
|
|
Research
and development
|
1,139
|
1,275
|
|
General
and administrative
|
10,078
|
6,943
|
|
Other
|
-
|
75
|
|
Operating expenses
|
16,325
|
12,951
|
|
|
|
|
|
Operating loss
|
(8,860)
|
(8,240)
|
|
|
|
|
|
Nonoperating
income:
|
|
|
|
Interest
income, net
|
7
|
22
|
|
Nonoperating income
|
7
|
22
|
|
|
|
|
|
Net loss
|
(8,853)
|
(8,218)
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per common share:
|
$(0.15)
|
$(0.15)
|
|
|
|
|
|
Basic
and diluted weighted average common shares outstanding
|
59,650
|
55,203
|
See
Notes to Consolidated Financial Statements in Part II Item 8 of
ChromaDex's Annual Report
on
Form 10-K filed with Securities and Exchange Commission on March
10, 2020.
ChromaDex Corporation and Subsidiaries
Consolidated Statements of Operations
Years Ended December 31, 2019 and December 31, 2018
(In thousands, except per share data)
|
|
2019
|
2018
|
|
|
|
|
|
Sales,
net
|
$46,291
|
$31,557
|
|
Cost
of sales
|
20,522
|
15,502
|
|
|
|
|
|
Gross profit
|
25,769
|
16,055
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Sales
and marketing
|
18,216
|
16,537
|
|
Research
and development
|
4,420
|
5,478
|
|
General
and administrative
|
34,308
|
27,137
|
|
Other
|
125
|
75
|
|
Operating expenses
|
57,069
|
49,227
|
|
|
|
|
|
Operating loss
|
(31,300)
|
(33,172)
|
|
|
|
|
|
Nonoperating
expense:
|
|
|
|
Interest
expense, net
|
(847)
|
(79)
|
|
Other
|
-
|
(65)
|
|
Nonoperating expenses
|
(847)
|
(144)
|
|
|
|
|
|
Net loss
|
(32,147)
|
(33,316)
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per common share:
|
$(0.56)
|
$(0.61)
|
|
|
|
|
|
Basic
and diluted weighted average common shares outstanding
|
57,056
|
55,006
|
See
Notes to Consolidated Financial Statements in Part II Item 8 of
ChromaDex's Annual Report
on
Form 10-K filed with Securities and Exchange Commission on March
10, 2020.
ChromaDex Corporation and Subsidiaries
Consolidated Balance Sheets
December 31, 2019 and December 31, 2018
(In thousands, except per share data)
|
|
Dec. 31, 2019
|
Dec.
31, 2018
|
|
Assets
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
Cash,
including restricted cash of $0.2 million and $0.2 million,
respectively
|
$18,812
|
$22,616
|
|
Trade
receivables, net of allowances of $2.8 million and $0.5 million,
respectively;
|
|
|
|
Receivables
from Related Party: $0.8 million and $0.7 million,
respectively
|
2,175
|
4,359
|
|
Contract
assets
|
-
|
56
|
|
Receivable
held at escrow, net of allowance of $0.1 million
|
-
|
677
|
|
Inventories
|
11,535
|
8,249
|
|
Prepaid
expenses and other assets
|
996
|
577
|
|
Total current assets
|
33,518
|
36,534
|
|
|
|
|
|
Leasehold
Improvements and Equipment, net
|
3,765
|
3,585
|
|
Intangible
Assets, net
|
1,311
|
1,547
|
|
Right
of Use Assets
|
891
|
-
|
|
Other
Long-term Assets
|
762
|
566
|
|
|
|
|
|
Total assets
|
$40,247
|
$42,232
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
Accounts
payable
|
$9,626
|
$9,548
|
|
Accrued
expenses
|
4,415
|
4,444
|
|
Current
maturities of operating lease obligations
|
595
|
-
|
|
Current
maturities of finance lease obligations
|
258
|
173
|
|
Contract
liabilities and customer deposits
|
169
|
275
|
|
Total current liabilities
|
15,063
|
14,440
|
|
|
|
|
|
Deferred
Revenue
|
3,873
|
-
|
|
Operating
Lease Obligations, Less Current Maturities
|
848
|
-
|
|
Finance
Lease Obligations, Less Current Maturities
|
18
|
137
|
|
Deferred
Rent
|
-
|
477
|
|
|
|
|
|
Total liabilities
|
19,802
|
15,054
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
|
|
Common
stock, $.001 par value; authorized 150,000 shares;
|
|
|
|
issued
and outstanding December 31, 2019 59,562 shares and
|
|
|
|
December
31, 2018 55,089 shares
|
60
|
55
|
|
Additional
paid-in capital
|
142,285
|
116,876
|
|
Accumulated
deficit
|
(121,900)
|
(89,753)
|
|
Total stockholders' equity
|
20,445
|
27,178
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
$40,247
|
$42,232
|
See
Notes to Consolidated Financial Statements in Part II Item 8 of
ChromaDex's Annual Report
on
Form 10-K filed with Securities and Exchange Commission on March
10, 2020.
ChromaDex Corporation and Subsidiaries
Reconciliation of Non-GAAP Financial Measures
1. Adjusted EBITDA
Year ended December 31, 2019
|
|
Q1 2019
|
Q2 2019
|
Q3 2019
|
Q4 2019
|
Full Year 2019
|
|
(In
thousands)
|
|
|
|
|
|
|
Net
loss, as reported
|
$(8,337)
|
$(7,755)
|
$(7,202)
|
$(8,853)
|
$(32,147)
|
|
Adjustments:
|
|
|
|
|
|
|
Interest
(income) expense
|
(35)
|
575
|
314
|
(7)
|
847
|
|
Depreciation
|
173
|
190
|
196
|
203
|
762
|
|
Amortization
of intangibles
|
61
|
61
|
62
|
62
|
246
|
|
Amortization
of right of use assets
|
138
|
141
|
144
|
92
|
515
|
|
Share-based
compensation
|
2,029
|
1,759
|
1,687
|
1,697
|
7,172
|
|
Severance
and restructuring
|
-
|
-
|
-
|
200
|
200
|
|
Elysium-related
bad debt expense
|
-
|
-
|
-
|
2,233
|
2,233
|
|
Adjusted
EBITDA
|
$(5,971)
|
$(5,029)
|
$(4,799)
|
$(4,373)
|
$(20,172)
|
|
|
|
|
|
|
|
|
Total
legal expense
|
3,250
|
2,926
|
2,944
|
2,226
|
11,346
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA excluding total legal expense
|
$(2,721)
|
$(2,103)
|
$(1,855)
|
$(2,147)
|
$(8,826)
|
Year ended December 31, 2018
|
|
Q1 2018
|
Q2 2018
|
Q3 2018
|
Q4 2018
|
Full Year 2018
|
|
(In
thousands)
|
|
|
|
|
|
|
Net
loss, as reported
|
$(8,443)
|
$(8,050)
|
$(8,605)
|
$(8,218)
|
$(33,316)
|
|
Adjustments:
|
|
|
|
|
|
|
Interest
(income) expense
|
44
|
48
|
9
|
(22)
|
79
|
|
Depreciation
|
121
|
146
|
169
|
171
|
607
|
|
Amortization
of intangibles
|
58
|
58
|
59
|
60
|
235
|
|
Share-based
compensation
|
1,258
|
1,811
|
1,317
|
1,985
|
6,371
|
|
Adjusted
EBITDA
|
$(6,962)
|
$(5,987)
|
$(7,051)
|
$(6,024)
|
$(26,024)
|
|
|
|
|
|
|
|
|
Total
legal expense
|
2,973
|
2,079
|
2,723
|
2,045
|
9,820
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA excluding total legal expense
|
$(3,989)
|
$(3,908)
|
$(4,328)
|
$(3,979)
|
$(16,204)
|
2. Net loss per share
|
|
3 Months Ended
|
Year Ended
|
|
|
Dec. 31, 2019
|
Dec. 31, 2019
|
|
|
|
|
|
Net
loss per share, as reported
|
$(0.15)
|
$(0.56)
|
|
|
|
|
|
Net
loss per share related to $2.2 million write-off of the Elysium
receivable as bad debt
|
(0.04)
|
(0.04)
|
|
|
|
|
|
Net
loss per share, excluding $2.2 million write-off of the Elysium
receivable as bad debt
|
$(0.11)
|
$(0.52)
|
