EX-99.1 2 cdxc_ex991.htm PRESS RELEASE DATED AUGUST 7, 2019 Blueprint
 
 
Exhibit 99.1
 
 
CHROMADEX CORPORATION REPORTS SECOND QUARTER 2019 FINANCIAL RESULTS
 
- Second Quarter 2019 Net Revenues Increased by 42% to $11.1 Million -
 
 
Second Quarter 2019 Highlights vs. Second Quarter 2018
 
●
Strong growth in net sales to $11.1 million, significantly higher gross margins, and improved marketing efficiency year-over-year
●
TRU NIAGEN net sales of $8.7 million, a 17% increase sequentially and a 134% increase year-over-year
●
Global expansion continued with initial cross-border sales in China and Japan, and new Canadian retail distribution in Whole Foods Ontario locations
●
New clinical study further demonstrated safety of sustained NIAGEN supplementation at recommended daily serving as well as statistically significant sustained blood NAD+ levels
 
LOS ANGELES, August 7, 2019 (GLOBE NEWSWIRE) - ChromaDex Corp. (NASDAQ:CDXC) today reported second quarter 2019 financial results.
 
 “We successfully continue to build our global TRU NIAGEN brand and consequentially had another quarter strengthening our business momentum, economics and brand foundation,” said ChromaDex CEO Rob Fried.
 
Results of operations for the three months ended June 30, 2019
 
For the three months ended June 30, 2019 (“Q2 2019”), ChromaDex reported net sales of $11.1 million, up 42% compared to $7.8 million in the second quarter of 2018 ("Q2 2018"). The increase in Q2 2019 revenues was driven by growth in sales of TRU NIAGEN.
 
Gross margin increased by 700 basis points to 56.3% for Q2 2019 compared to 49.3% in Q2 2018. The increase in gross margin was driven by the positive impact of TRU NIAGEN consumer product sales.
 
Operating expenses increased by $1.7 million to $13.4 million in Q2 2019, compared to $11.8 million in Q2 2018. The increase in operating expenses was driven by an increase of $0.5 million of advertising and marketing and $1.3 million of general and administrative expense, partially offset by $0.3 million of lower R&D expense. The increase in general and administrative expense was driven by higher royalties to patent holders and higher legal expense.
 
The net loss for the second quarter of 2019 was $7.8 million or ($0.14) per share as compared to a net loss of $8.1 million or ($0.15) per share for the second quarter of 2018. For Q2 2019, the reported loss was negatively impacted by a non-cash charge of $1.8 million related to equity-based compensation and $0.6 million of costs related to the issuance of $10.0 million convertible notes to certain investors which were recorded as a debt discount and amortized as interest expense.
 
Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was ($2.1) million for Q2 2019, compared to ($3.9) million for Q2 2018. Sequentially, Adjusted EBITDA excluding total legal expense improved by $0.6 million compared to ($2.7) million for the three months ended March 31, 2019. The $0.6 million improvement was primarily driven by higher gross margins and higher sales. Adjusted EBITDA excluding total legal expense for the three months ended December 31, 2018 and September 30, 2018 were ($4.0) million and ($4.3) million, respectively.
 
 
 
 
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 second quarter of 2019, the net cash used in operating activities was $9.0 million versus $6.5 million for the same period in the prior year. The Company ended the second quarter of 2019 with cash of $19.8 million, which includes the $10.0 million of proceeds from the issuance of convertible notes.
 
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 second quarter results and provide a general business update on Wednesday, August 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: Wed., August 7, 2019
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time) 
Toll-free dial-in number: 1-866-211-3191
International dial-in number: 1-647-689-6604
Conference ID: 3774159
Webcast link: ChromaDex Q2 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: 1-800-585-8367
International replay number: 1-416-621-4642
Replay ID: 3774159
 
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, Sr. Director of FP&A and Investor Relations
949-419-0288 ext. 127
briannag@chromadex.com
 
ChromaDex Media Contact:
 
Alex Worsham, 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 June 30, 2019 and June 30, 2018
 
(In thousands, except per share data)
 
 
 
 
 
June 30, 2019
 
 
June 30, 2018
 
 
 
 
 
 
 
 
Sales, net
 $11,101 
 $7,803 
Cost of sales
  4,847 
  3,957 
 
    
    
Gross profit
  6,254 
  3,846 
 
    
    
Operating expenses:
    
    
Sales and marketing
  4,308 
  3,773 
Research and development
  1,069 
  1,414 
General and administrative
  7,932 
  6,596 
Other
  125 
  - 
Operating expenses
  13,434 
  11,783 
 
    
    
Operating loss
  (7,180)
  (7,937)
 
    
    
Nonoperating income (expense):
    
    
Interest expense, net
  (575)
  (48)
Other
  - 
  (65)
Nonoperating income (expense):
  (575)
  (113)
 
    
    
Net loss
 $(7,755)
 $(8,050)
 
    
    
Basic and diluted loss per common share
 $(0.14)
 $(0.15)
 
    
    
Basic and diluted weighted average common shares outstanding
  55,539 
  54,892 
 
See Notes to Condensed Consolidated Financial Statements in Part I of ChromaDex's Quarterly Reporton Form 10-Q filed with Securities and Exchange Commission on August 7, 2019.  
 
 
 
 
 
ChromaDex Corporation and Subsidiaries
 
 
 
 
 
Condensed Consolidated Balance Sheets
 
 
June 30, 2019 and December 31, 2018
 
 
(In thousands, except per share data)
 
 
 
 
 
Jun. 30, 2019
 
 
Dec. 31, 2018
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
Cash, including restricted cash of $0.2 million and $0.2 million, respectively
 $19,760 
 $22,616 
Trade receivables, net of allowances of $0.5 million and $0.5 million, respectively;
    
    
   Receivables from Related Party: $1.6 million and $0.7 million, respectively
  5,740 
  4,359 
Contract assets
  52 
  56 
   Receivable held at escrow, net of allowance of $0.2 million and $0.1 million, repectively
  553 
  677 
Inventories
  10,714 
  8,249 
Prepaid expenses and other assets
  706 
  577 
Total current assets
  37,525 
  36,534 
 
    
    
Leasehold Improvements and Equipment, net
  3,737 
  3,585 
Intangible Assets, net
  1,434 
  1,547 
Right of Use Assets
  1,190 
  - 
Other Long-term Assets
  656 
  566 
 
    
    
Total assets
 $44,542 
 $42,232 
 
    
    
Liabilities and Stockholders' Equity
    
    
 
    
    
Current Liabilities
    
    
Accounts payable
 $9,323 
 $9,548 
Accrued expenses
  3,643 
  4,444 
Convertible notes
  9,987 
  - 
Current maturities of operating lease obligations
  662 
  - 
Current maturities of finance lease obligations
  303 
  173 
Contract liabilities and customer deposits
  293 
  275 
Total current liabilities
  24,211 
  14,440 
 
    
    
Deferred Revenue
  3,873 
  - 
Operating Lease Obligations, Less Current Maturities
  1,192 
  - 
Finance Lease Obligations, Less Current Maturities
  121 
  137 
Deferred Rent
  - 
  477 
 
    
    
Total liabilities
  29,397 
  15,054 
 
    
    
Commitments and Contingencies
    
    
 
    
    
Stockholders' Equity
    
    
Common stock, $.001 par value; authorized 150,000 shares;
    
    
   issued and outstanding June 30, 2019 55,384 shares and
    
    
   December 31, 2018 55,089 shares
  55 
  55 
Additional paid-in capital
  120,935 
  116,876 
Accumulated deficit
  (105,845)
  (89,753)
Total stockholders' equity
  15,145 
  27,178 
 
    
    
Total liabilities and stockholders' equity
 $44,542 
 $42,232 
 
    
    


 
See Notes to Condensed Consolidated Financial Statements in Part I of ChromaDex's Quarterly Reporton Form 10-Q filed with Securities and Exchange Commission on August 7, 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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss, as reported
 $(8,443)
 $(8,050)
 $(8,605)
 $(8,218)
 $(8,337)
 $(7,755)
   Adjustments:
    
    
    
    
    
    
     Interest (income) expense
  44 
  48 
  9 
  (22)
  (35)
  575 
     Depreciation
  121 
  146 
  169 
  171 
  173 
  190 
     Amortization of intangibles
  58 
  58 
  59 
  60 
  61 
  61 
     Amortization of right of use assets
  - 
  - 
  - 
  - 
  138 
  141 
     Share-based compensation
  1,258 
  1,811 
  1,317 
  1,985 
  2,029 
  1,759 
Adjusted EBITDA
 $(6,962)
 $(5,987)
 $(7,051)
 $(6,024)
 $(5,971)
 $(5,029)
 
    
    
    
    
    
    
     Total legal expense
  2,973 
  2,079 
  2,723 
  2,045 
  3,250 
  2,926 
 
    
    
    
    
    
    
Adjusted EBITDA excluding total legal expense
 $(3,989)
 $(3,908)
 $(4,328)
 $(3,979)
 $(2,721)
 $(2,103)