EX-99.1 2 ex99-1.htm PRESS RELEASE DATED AUGUST 9, 2018 Exhibit 99.1
 
Exhibit 99.1
 
CHROMADEX CORPORATION REPORTS SECOND QUARTER 2018 FINANCIAL RESULTS
 
-Second Quarter 2018 Net Revenues Increased by 85% to $7.8 Million -
 
IRVINE, Calif., August 9, 2018 (GLOBE NEWSWIRE) - ChromaDex Corp. (NASDAQ:CDXC), an integrated, science-based, nutraceutical company devoted to improving the way people age with its flagship ingredient NIAGEN® and consumer product TRU NIAGEN®, announced today second quarter 2018 financial results.
 
Second Quarter 2018 Highlights vs. Second Quarter 2017
 
● 
Net sales up 85%, fueled by growth of TRU NIAGEN®;
 
● 
TRU NIAGEN sales at 66% of NIAGEN-related sales, up from 7%;
 
● 
NIAGEN®-related sales at 73% of total sales, up from 50%;
 
● 
Gross profit as a percentage of net sales nearly flat at approximately 49%; and
 
● 
International expansion continued with launch of TRU NIAGEN on Amazon in UK and appointment of Matakana Superfoods (MSF) as exclusive distributor of TRU NIAGEN in New Zealand.
 
“The TRU NIAGEN brand continued to grow worldwide in the second quarter of 2018, and sales growth once again exceeded our plan,” said Rob Fried, Chief Executive Officer. “We are continuing to make necessary marketing, legal and R&D investments, and we remain encouraged by our progress.”
 
Frank Jaksch, Jr., Executive Chairman and co-founder of ChromaDex commented: “The success we have seen with TRU NIAGEN in our sales growth reflects the accelerating expansion of published science, backed by human clinical data, around NIAGEN and its benefits to human health and wellness.”
 
Results of operations for the three months ended June 30, 2018
 
For the three months ended June 30, 2018 (“Q2 2018”), ChromaDex reported net sales of $7.8 million, up 85% compared to $4.2 million from continuing operations in the second quarter of 2017 ("Q2 2017"). The increase in second quarter revenues was driven by growth in sales of TRU NIAGEN.
 
Gross margin as a percentage of sales remained nearly flat at 49.3% for Q2 2018 compared to 50.0% for Q2 2017. In 2018, we elected to account for shipping and handling activities performed as cost of sales under a fulfillment cost and not as sales adjustments. The impact of such election for Q2 2018 was approximately $0.4 million, which had a negative impact of approximately 290 basis points on the gross margin rate for Q2 2018. Excluding the impact of the election to account for shipping and handling activities as a cost of sales, we experienced better gross margins due to the positive impact of TRU NAIGEN consumer product sales, which we anticipate will continue.
 
Operating expenses were $11.8 million in the second quarter of 2018, compared to $4.8 million from continuing operations in the same period for 2017. The increase of $7.0 million in operating expenses for second quarter was the result of the Company’s strategic decision to invest $2.8 million in advertising and marketing to build out the TRU NIAGEN brand, higher R&D expenses of $0.5 million as well as higher legal costs of $1.3 million, and higher stock-based compensation expense of $1.4 million. Excluding legal and equity-based compensation expenses, general and administrative expenses were $2.9 million, up by $1.5 million as compared to the prior year.
 
The net loss for the second quarter of 2018 was $8.1 million or ($0.15) per share as compared to a net loss from continuing operations of $2.7 million or ($0.06) per share for Q2 2017. The higher losses in the second quarter were
 
the result of the strategic decision to invest ahead of growth including higher stock-based compensation expense related to the hiring of senior executives, and higher legal fees, partially offset by higher sales volume and gross profits.
 
For the second quarter of 2018, the reported loss was negatively impacted by a non-cash charge of $1.8 million related to stock-based compensation.
 
Adjusted EBITDA, a non-GAAP measure, was ($6.0) million for Q2 2018, compared to adjusted EBITDA of ($2.1) million for Q2 2017. ChromaDex defines Adjusted EBITDA as net income (loss) adjusted for income tax, interest, depreciation, amortization and non-cash stock compensation costs. The Basic and Diluted Adjusted EBITDA per share for Q2 2018 was ($0.11) versus ($0.05) for Q2 2017.
 
In the first half of 2018, the net cash used in operating activities was $10.5 million versus $5.6 million in the prior year. The Company ended the second quarter of 2018 with a solid balance sheet with cash of $33.4 million.
 
 
 
 
Outlook
 
For 2018, the Company expects to realize continued growth in TRU NIAGEN sales driven by our U.S. ecommerce and Watsons’ international business, as well as the launch of TRU NIAGEN in certain new international markets. The Company will continue to invest in marketing expenditures to build out the TRU NIAGEN brand and new capabilities to support growth.
 
For the second half of the year, and full year, we currently expect working capital to be a positive source of cash of $3 to $5 million for the full year, as we expect our net losses to moderate in the second half of the year and as we continue to tightly manage working capital for the balance of the year.
 
We expect the company will generate positive cash flow by the end of 2019/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, August 9, 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, August 9, 2018
 
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: 4997875
 
Webcast link: https://edge.media-server.com/m6/p/nonz226e
 
  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 Non-GAAP Financial Measures
 
ChromaDex’s non-GAAP financial measures exclude interest, tax, depreciation, amortization and share-based compensation for adjusted EBITDA. 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 an integrated, global 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 quotations from ChromaDex’s Chief Executive Officer and Executive Chairman and statements regarding the future growth of TRU NIAGEN sales and for Watsons’ international business, launching TRU NIAGEN in certain new international markets, whether the Company will continue to invest in marketing expenditures and the expectations of future working capital, cash flow and net loss. 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:
 
Andrew Johnson, Director of Investor Relations
 
949-419-0288
 
andrewj@chromadex.com
 
 
ChromaDex Media Contact:
 
Alex Worsham, Director of Strategic Partnerships
 
949-648-3775
 
alexw@chromadex.com
 
 
 
 
ChromaDex Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Operations
 
 
 
 
 
 
For the Three Month Periods Ended June 30, 2018 and July 1, 2017
 
 
 
 
 
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30,
2018
 
 
July 1,
2017
 
 
 
 
 
 
 
 
Sales, net
 $7,803 
 $4,218 
Cost of sales
  3,957 
  2,109 
 
    
    
Gross profit
  3,846 
  2,109 
 
    
    
Operating expenses:
    
    
Sales and marketing
  3,773 
  550 
Research and development
  1,414 
  850 
General and administrative
  6,596 
  2,613 
Other
  - 
  746 
Operating expenses
  11,783 
  4,759 
 
    
    
Operating loss
  (7,937)
  (2,650)
 
    
    
Nonoperating expense:
    
    
Interest expense, net
  (48)
  (36)
Other
  (65)
  - 
Nonoperating expenses
  (113)
  (36)
 
    
    
Loss from continuing operations
  (8,050)
  (2,686)
 
    
    
Loss from discontinued operations
  - 
  (78)
 
    
    
Net loss
 $(8,050)
 $(2,764)
 
    
    
Basic and diluted loss per common share:
    
    
    Loss from continuing operations
 $(0.15)
 $(0.06)
    Loss from discontinued operations
 $- 
 $(0.01)
 
    
    
Basic and diluted loss per common share
 $(0.15)
 $(0.07)
 
    
    
Basic and diluted weighted average common shares outstanding
  54,892 
  42,121 
 
    
    
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 August 9, 2018.
 
 
 
 
 
 
ChromaDex Corporation and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Balance Sheets
 
 
 
 
 
 
June 30, 2018 and December 30, 2017
 
 
 
 
 
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2018
 
 
December 30, 2017
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
Cash
 $33,389 
 $45,389 
    Trade receivables, net of allowances of $0.5 million and $0.7 million, respectively;
 
    
Receivables from Related Party: $0.9 million and $1.5 million, respectively
  5,130 
  5,338 
Contract assets
  62 
  - 
Receivable held at escrow
  751 
  - 
Inventories
  6,526 
  5,796 
Prepaid expenses and other assets
  627 
  655 
Total current assets
  46,485 
  57,178 
 
    
    
Leasehold Improvements and Equipment, net
  3,878 
  2,872 
Deposits
  269 
  272 
Receivable Held at Escrow
  - 
  750 
Intangible Assets, net
  1,536 
  1,652 
 
    
    
Total assets
 $52,168 
 $62,724 
 
    
    
Liabilities and Stockholders' Equity
    
    
 
    
    
Current Liabilities
    
    
Accounts payable
 $6,757 
 $3,719 
Accrued expenses
  3,684 
  3,645 
Current maturities of capital lease obligations
  191 
  196 
Contract liabilities and customer deposits
  185 
  314 
Deferred rent, current
  139 
  114 
Due to officer
  - 
  100 
Total current liabilities
  10,956 
  8,088 
 
    
    
Capital Lease Obligations, Less Current Maturities
  219 
  310 
Deferred Rent, Less Current
  493 
  492 
 
    
    
Total liabilities
  11,668 
  8,890 
 
    
    
Commitments and Contingencies
    
    
 
    
    
Stockholders' Equity
    
    
Common stock, $.001 par value; authorized 150,000 shares;
    
    
   issued and outstanding June 30, 2018 54,870 shares and
    
    
   December 30, 2017 54,697 shares
  55 
  55 
Additional paid-in capital
  113,375 
  110,380 
Accumulated deficit
  (72,930)
  (56,601)
Total stockholders' equity
  40,500 
  53,834 
 
    
    
Total liabilities and stockholders' equity
 $52,168 
 $62,724 
 
    
    
 
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 August 9, 2018.
 
 
 
 
 
Consolidated Statements of Operations, Unaudited      
Effects of Charges associated with Interest, Tax, Depreciation,
Consolidated Statements of Operations, Adjusted EBITDA
(US GAAP)         
Amortization and Share-based Compensation Expense      
Excluding Interest, Tax, Depreciation, Amortization and      
          
          
 Share-based Compensation (Non-GAAP Presentation)      
Three Months Ended June 30, 2018 and July 1, 2017      
Three Months Ended June 30, 2018 and July 1, 2017      
Three Months Ended June 30, 2018 and July 1, 2017      
(In thousands, except per share data)         
(In thousands, except per share data)         
(In thousands, except per share data)         
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Q2 2018
 Q2 2017
 
 Q2 2018
 Q2 2017
 
 Q2 2018
 Q2 2017
 
    
    
 
    
    
 
    
    
Sales, net
 $7,803 
 $4,218 
Sales, net
 $- 
 $- 
Sales, net
 $7,803 
 $4,218 
Cost of sales
  3,957 
  2,109 
Cost of sales
  (89)
  (37)
Cost of sales
  3,868 
  2,072 
 
    
    
 
    
    
 
    
    
Gross profit
  3,846 
  2,109 
Gross profit
  89 
  37 
Gross profit
  3,935 
  2,146 
 
    
    
 
    
    
 
    
    
Operating expenses:
    
    
Operating expenses:
    
    
Operating expenses:
    
    
Sales and marketing
  3,773 
  550 
Sales and marketing
  (76)
  - 
Sales and marketing
  3,697 
  550 
Research and development
  1,414 
  850 
Research and development
  (136)
  - 
Research and development
  1,278 
  850 
General and administrative
  6,596 
  2,613 
General and administrative
  (1,714)
  (500)
General and administrative
  4,882 
  2,113 
Other
  - 
  746 
Other
  - 
  - 
Other
  - 
  746 
Operating expenses
  11,783 
  4,759 
Operating expenses
  (1,926)
  (500)
Operating expenses
  9,857 
  4,259 
 
    
    
 
    
    
 
    
    
Operating loss
  (7,937)
  (2,650)
Operating income
  2,015 
  537 
Operating loss
  (5,922)
  (2,113)
 
    
    
 
    
    
 
    
    
Nonoperating expense:
    
    
Nonoperating income:
    
    
Nonoperating income (expense):
    
    
Interest expense, net
  (48)
  (36)
Interest expense, net
  48 
  36 
Interest expense, net
  - 
  - 
Other
  (65)
  - 
Other
  - 
  - 
Other
  (65)
  - 
Nonoperating expenses
  (113)
  (36)
Nonoperating income
  48 
  36 
Nonoperating expenses
  (65)
  - 
 
    
    
 
    
    
 
    
    
Loss from continuing operations
  (8,050)
  (2,686)
Income from continuing operations
  2,063 
  573 
Loss from continuing operations
  (5,987)
  (2,113)
 
    
    
 
    
    
 
    
    
Income from discontinued operations
  - 
  (78)
Income from discontinued operations
  - 
  73 
Income from discontinued operations
  - 
  (5)
 
    
    
 
    
    
 
    
    
Net loss
 $(8,050)
 $(2,764)
Effects of adjusted EBITDA
 $2,063 
 $646 
Adjusted EBITDA
 $(5,987)
 $(2,118)
 
    
    
 
    
    
 
    
    
Basic and diluted loss per common share:
 
 
Effects of adjusted EBITDA per common share: 
 
 
Basic and diluted adjusted EBITDA per common share:
 
 
    Loss from continuing operations
 $(0.15)
 $(0.06)
    From continuing operations
 $0.04 
 $0.01 
    From continuing operations
 $(0.11)
 $(0.05)
    Earnings from discontinued operations
 $- 
 $(0.01)
    From discontinued operations
 $- 
 $0.01 
    From discontinued operations
 $- 
 $(0.00)
 
    
    
 
    
    
 
    
    
Basic and diluted loss per common share
 $(0.15)
 $(0.07)
Effects of adjusted EBITDA per common share
 $0.04 
 $0.02 
Basic and diluted adjusted EBITDA per common share
 $(0.11)
 $(0.05)
 
    
    
 
    
    
 
    
    
Weighted average common shares outstanding
    
    
Weighted average common shares outstanding
    
    
Weighted average common shares outstanding
    
    
    Basic and diluted
  54,892 
  42,121 
    Basic and diluted
  54,892 
  42,121 
    Basic and diluted
  54,892 
  42,121