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CST: 21/05/2019 09:39:44   

ChromaDex Corporation Reports 2018 Financial Results

74 Days ago

- Full Year 2018 Net Revenues Increased by 49% to $31.6 Million and Fourth Quarter 2018 Net Revenues Increased by 20% to $9.1 Million -

Fourth Quarter 2018 Highlights vs. Fourth Quarter 2017

  • Entered into a global license and supply agreement with Nestlé Health Science (“NHSc”), which provides NHSc with the exclusive right to include TRU NIAGEN® in its branded medical nutrition products and co-exclusive rights to include TRU NIAGEN in its protein based ready to drink or loose powder beverages;
  • Received regulatory approval to sell TRU NIAGEN across all channels in Canada, with initial launch on www.truniagen.ca and to healthcare practitioners at Fullscript Canada; and
  • Net sales for the fourth quarter of 2018 were $9.1 million, an increase of 20% compared to $7.5 million in the fourth quarter of 2017.

Full Year 2018 Highlights vs. Full Year 2017

  • Net sales for the full year 2018 were a record $31.6 million, an increase of 49% compared to $21.2 million for the full year 2017;
  • TRU NIAGEN net sales for the full year 2018 were $18.5 million, an increase of 238% compared to $5.5 million for the full year 2017; and
  • United States Patent Trademark Office confirmed the validity of the patents company exclusively licenses for NIAGEN®, and company is prepared to vigorously prosecute its pending infringement action.

LOS ANGELES, March 07, 2019 (GLOBE NEWSWIRE) -- ChromaDex Corp. (NASDAQ:CDXC) today reported fourth quarter and full year 2018 financial results.

“Our momentum continues with another strong quarter, and a strong year overall.  In 2018, we successfully focused on the fundamentals, continuing to grow our business and strengthen our patents, while assembling a visionary leadership team, enhancing brand awareness, expanding our global reach, and securing a supply and license agreement with another great global partner, Nestlé Health Science,” said Rob Fried, ChromaDex Chief Executive Officer.

Results of operations for the three months ended December 31, 2018

For the three months ended December 31, 2018 (“Q4 2018”), ChromaDex reported net sales of $9.1 million, up 20% compared to $7.5 million in the fourth quarter of 2017 ("Q4 2017"). The increase in Q4 2018 revenues was driven by growth in sales of TRU NIAGEN.

Gross margin as a percentage of net sales improved by 110 basis points to 52.0% for Q4 2018 compared to 50.9% versus the prior year.  We experienced better gross margins due to the positive impact of TRU NIAGEN consumer product sales, which was partially offset by a negative impact of 140 basis points related to our decision to wind down sales for two ingredients in our ingredients segment.

Operating expenses were $13.0 million in Q4 2018, compared to $12.6 million in the same period for 2017. The increase of $0.4 million in operating expenses was the result of the Company’s strategic decision to invest $2.3 million more in advertising and marketing to build out the TRU NIAGEN brand, offset by $1.8 million of lower general and administrative spending and $0.2 million lower R&D expenses.  The lower general and administrative expenses was primarily due to lower equity-based compensation expenses, which decreased by $1.6 million, from $3.4 million to $1.8 million.

The net loss for the fourth quarter of 2018 was $8.2 million or ($0.15) per share as compared to a net loss of $8.8 million or ($0.17) per share for the fourth quarter of 2017.  For Q4 2018, the reported loss was negatively impacted by a non-cash charge of $2.0 million related to equity-based compensation.

Results of operations for the year ended December 31, 2018

For full year 2018, net revenues were $31.6 million, up 49% compared to $21.2 million from continuing operations for full year 2017, fueled by the growth of TRU NIAGEN.  TRU NIAGEN net revenues increased by 238%, from $5.5 million to $18.5 million and represented 58% of the total company’s revenues.

Gross margin as a percentage of net sales improved for full year 2018 by 150 basis points to 50.9% compared to 49.4% for the same period in 2017.  We experienced better margins due to the positive impact of TRU NIAGEN consumer product sales.

Operating expenses were $49.2 million for full year 2018, compared to $26.9 million from continuing operations in the same period for 2017. The increase of $22.3 million in operating expenses for full year 2018 was the result of the Company’s strategic decision to invest $12.1 million more in advertising and marketing to build the TRU NIAGEN brand, as well as higher R&D expenses of $1.5 million, higher legal costs of $4.7 million, and higher equity-based compensation of $1.0 million in general and administrative expenses. Excluding legal and equity-based compensation expenses, general and administrative expenses were $11.7 million, up by $3.8 million as compared to the prior year.

The net loss for full year 2018 was $33.3 million or ($0.61) per share as compared to a loss from continuing operations of $16.5 million or ($0.37) per share for full year 2017. For full year 2018, the reported loss was negatively impacted by a non-cash charge of $6.4 million related to equity-based compensation.

For full year 2018, the net cash used in operating activities was $20.9 million versus $9.8 million in the prior year.  The Company ended the year of 2018 with a solid balance sheet with cash of $22.6 million, which does not include the $4 million upfront payment from Nestlé since the payment was received in the first quarter of 2019.

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 in absolute dollars as well as general and administrative expenses as a percentage of net sales.

Based on these drivers, we continue to expect the Company to be cash flow breakeven by the fourth quarter of 2019 or early 2020.

Investor Conference Call

ChromaDex management will host an investor conference call to discuss the year end results and provide a general business update on Thursday, March 7, at 4:30pm ET.

Participants should call in at least 10 minutes prior to the call. The dial-in information is as follows:

Date: Thursday, March 7, 2019
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: 1-866-327-8118
International dial-in number: 1-678-509-7526
Conference ID: 5675308
Webcast link: https://edge.media-server.com/m6/p/h5vfpb7m

The webcast replay will be available after the completion of the call on the Investor Relations section of the Company website, www.chromadex.com.

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 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, the expectations of lower selling, marketing and advertising expenses in absolute dollars, the expectations of lower general and administrative expenses as a percentage of net sales and the expectations of future cash flow. 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, Sr. Director of FP&A and Investor Relations
(949) 344-3782
briannag@chromadex.com

ChromaDex Media Contact:
Alex Worsham, Director of Strategic Partnerships
(949) 648-3775
alexw@chromadex.com

ChromaDex Corporation

ChromaDex Corporation and Subsidiaries

Consolidated Statements of Operations
Three Months Ended December 31, 2018 and December 30, 2017
(In thousands, except per share data)

  Q4 2018 Q4 2017
     
Sales, net $     9,067   $ 7,531  
Cost of sales     4,356     3,696  
     
Gross profit     4,711     3,835  
     
Operating expenses:    
Sales and marketing     4,658     2,401  
Research and development     1,275     1,453  
General and administrative     6,943     8,759  
Other     75     -  
Operating expenses     12,951     12,613  
     
Operating loss     (8,240 )   (8,778 )
     
Nonoperating income (expense):    
Interest income (expense), net     22     (44 )
Nonoperating income (expenses)     22     (44 )
     
Net loss $     (8,218 ) $ (8,822 )
     
Basic and diluted loss per common share $     (0.15 ) $   (0.17 )
     
Basic and diluted weighted average common shares outstanding     55,203       51,179  
     

See Notes to Consolidated Financial Statements in Part II of ChromaDex's Annual Report on Form 10-K filed with Securities and Exchange Commission on March 7, 2019.

ChromaDex Corporation and Subsidiaries

Consolidated Statements of Operations
Years Ended December 31, 2018 and December 30, 2017
(In thousands, except per share data)

  2018 2017
     
Sales, net $     31,557   $ 21,201  
Cost of sales     15,502     10,724  
     
Gross profit     16,055     10,477  
     
Operating expenses:    
Sales and marketing     16,537     4,459  
Research and development     5,478     4,007  
General and administrative     27,137     17,642  
Other     75     746  
Operating expenses     49,227     26,854  
     
Operating loss     (33,172 )   (16,377 )
     
Nonoperating expense:    
Interest expense, net     (79 )   (153 )
Other     (65 )   -  
Nonoperating expenses     (144 )   (153 )
     
Loss from continuing operations     (33,316 )   (16,530 )
     
Loss from discontinued operations     -     (315 )
Gain on sale of discontinued operations     -     5,467  
Income from discontinued operations, net     -     5,152  
     
Net loss $     (33,316 ) $ (11,378 )
     
Basic and diluted earnings (loss) per common share:    
Loss from continuing operations $     (0.61 ) $ (0.37 )
Earnings from discontinued operations $     -   $ 0.11  
     
Basic and diluted loss per common share $     (0.61 ) $ (0.26 )
     
Basic and diluted weighted average common shares outstanding     55,006     44,599  
     

See Notes to Consolidated Financial Statements in Part II of ChromaDex's Annual Report on Form 10-K filed with Securities and Exchange Commission on March 7, 2019.

ChromaDex Corporation and Subsidiaries

Consolidated Balance Sheets
December 31, 2018 and December 30, 2017
(In thousands, except per share data)

  Dec. 31, 2018 Dec. 30, 2017
Assets    
     
Current Assets    
Cash, including restricted cash of $0.2 million and $0, respectively $     22,616   $ 45,389  
Trade receivables, net of allowances of $0.5 million and $0.7 million, respectively;    
Receivables from Related Party: $0.7 million and $1.0 million, respectively     4,359     5,338  
Contract assets     56     -  
Receivable held at escrow, net of allowance of $0.1 million     677     -  
Inventories     8,249     5,796  
Prepaid expenses and other assets     577     655  
Total current assets     36,534     57,178  
     
Leasehold Improvements and Equipment, net     3,585     2,872  
Deposits     243     272  
Receivable Held at Escrow     -     750  
Intangible Assets, net     1,547     1,652  
Other Long-term Assets     323     -  
     
Total assets $     42,232   $ 62,724  
     
Liabilities and Stockholders' Equity    
     
Current Liabilities    
Accounts payable $     9,548   $ 3,719  
Accrued expenses     4,313     3,645  
Current maturities of capital lease obligations     173     196  
Contract liabilities and customer deposits     275     314  
Deferred rent, current     131     114  
Due to officer     -     100  
Total current liabilities     14,440     8,088  
     
Capital Lease Obligations, Less Current Maturities     137     310  
Deferred Rent, Less Current     477     492  
     
Total liabilities     15,054     8,890  
     
Commitments and Contingencies    
     
Stockholders' Equity    
Common stock, $.001 par value; authorized 150,000 shares; issued and outstanding December 31, 2018 55,089 shares and December 30, 2017 54,697 shares     55     55  
Additional paid-in capital     116,876     110,380  
Accumulated deficit     (89,753 )   (56,601 )
Total stockholders' equity     27,178     53,834  
     
Total liabilities and stockholders' equity $     42,232   $ 62,724  
     

See Notes to Consolidated Financial Statements in Part II of ChromaDex's Annual Report on Form 10-K filed with Securities and Exchange Commission on March 7, 2019.

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