EX-99.1 2 ex99-1.htm PRESS RELEASE Blueprint
 
 
Exhibit 99.1
 
CHROMADEX CORPORATION REPORTS THIRD QUARTER 2019 FINANCIAL RESULTS
 
 
Third Quarter 2019 Highlights vs. Third Quarter 2018
 
●
Strong growth in net sales to $12.1 million, improved gross margin, and significantly improved marketing efficiency year-over-year.
●
TRU NIAGEN net sales of $9.7 million, an 11% increase sequentially and an 86% increase year-over-year.
●
Strengthened balance sheet with $7 million private placement of common stock. Additionally, $10 million of convertible notes were converted into common stock.
●
Received positive opinion on Nicotinamide Riboside as a novel food from world-leading European Food Safety Authority (EFSA); a milestone step in the EU regulatory process with commercialization expected in mid-2020.
●
In November 2019, secured a $7 million committed line of credit to help manage working capital investments.
 
LOS ANGELES, November 12, 2019 (GLOBE NEWSWIRE) - ChromaDex Corp. (NASDAQ:CDXC) today reported third quarter 2019 financial results.
 
“We had another strong quarter with total net sales of $12.1 million, up 9% sequentially and 48% year-over-year,” said ChromaDex CEO Rob Fried. “In addition, we improved the gross margin and expanded our global footprint.”
 
Results of operations for the three months ended September 30, 2019
 
For the three months ended September 30, 2019 (“Q3 2019”), ChromaDex reported net sales of $12.1 million, up 48% compared to $8.1 million in the third quarter of 2018 ("Q3 2018"). The increase in Q3 2019 revenues was driven by growth in sales of TRU NIAGEN.
 
Gross margin increased by 230 basis points to 56.0% for Q3 2019 compared to 53.7% in Q3 2018. The increase in gross margin was driven by the positive impact of TRU NIAGEN consumer product sales.
 
Operating expenses increased by $0.7 million to $13.6 million in Q3 2019, compared to $13.0 million in Q3 2018. The increase in operating expenses was driven by an increase of $1.2 million of general and administrative expense, partially offset by $0.3 million of lower R&D expense and $0.2 million of lower advertising and marketing expense. The increase in general and administrative expense was driven by higher legal expense, higher share-based compensation and higher royalties to patent holders.
 
The net loss for the third quarter of 2019 was $7.2 million or ($0.12) per share as compared to a net loss of $8.6 million or ($0.16) per share for the third quarter of 2018. For Q3 2019, the reported loss was negatively impacted by a non-cash charge of $1.7 million related to equity-based compensation and $0.3 million of debt discounts related to $10.0 million of convertible notes issued to certain investors which were recorded as interest expense.
 
Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was ($1.9) million for Q3 2019, compared to ($4.3) million for Q3 2018, a $2.5 million improvement. Sequentially, Adjusted EBITDA excluding total legal expense improved by $0.2 million compared to ($2.1) million for the three months ended June 30, 2019. The $0.2 million improvement was primarily driven by higher gross margins and higher sales.
 
 
 
 
 
 
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 third quarter of 2019, the net cash used in operating activities was $7.8 million versus $5.2 million for the same period in the prior year. The Company ended the third quarter of 2019 with cash of $18.9 million.
 
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 third quarter results and provide a general business update on Tuesday, November 12, 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., November 12, 2019
 
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: 9475087
 
Webcast link: ChromaDex Third 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: 9475087
 
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, Vice President of FP&A and Investor Relations
 
949-419-0288 ext. 127
 
briannag@chromadex.com
 
ChromaDex Media Contact:
 
Alex Worsham, Senior 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 September 30, 2019 and September 30, 2018
(In thousands, except per share data)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
Sep. 30, 2019
 
 
Sep. 30, 2018
 
 
 
 
 
 
 
 
Sales, net
 $12,053 
 $8,120 
Cost of sales
  5,304 
  3,759 
 
    
    
Gross profit
  6,749 
  4,361 
 
    
    
Operating expenses:
    
    
Sales and marketing
  4,626 
  4,837 
Research and development
  1,044 
  1,350 
General and administrative
  7,967 
  6,770 
Operating expenses
  13,637 
  12,957 
 
    
    
Operating loss
  (6,888)
  (8,596)
 
    
    
Nonoperating expense
    
    
Interest expense, net
  (314)
  (9)
Nonoperating expense
  (314)
  (9)
 
    
    
Net loss
 $(7,202)
 $(8,605)
 
    
    
Basic and diluted loss per common share
 $(0.12)
 $(0.16)
 
    
    
Basic and diluted weighted average
    
    
common shares outstanding
  57,658 
  55,068 
 
 
 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 November 12, 2019.
 
 
 
 
 
 
ChromaDex Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
 
 
September 30, 2019 and December 31, 2018
 
 
(In thousands, except per share data)
 
 
 
 
 
 
 
 
Sep. 30, 2019
 
 
Dec. 31, 2018
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Current Assets
 
 
 
 
 
 
Cash, including restricted cash of $0.2 million and $0.2 million, respectively
 $18,879 
 $22,616 
Trade receivables, net of allowances of $0.5 million and $0.5 million, respectively;
    
    
Receivables from Related Party: $1.9 million and $0.7 million, respectively
  5,953 
  4,359 
Contract assets
  89 
  56 
Receivable held at escrow, net of allowance of $0.2 million and $0.1 million, repectively
  553 
  677 
Inventories
  9,820 
  8,249 
Prepaid expenses and other assets
  1,071 
  577 
Total current assets
  36,365 
  36,534 
 
    
    
Leasehold Improvements and Equipment, net
  3,696 
  3,585 
Intangible Assets, net
  1,373 
  1,547 
Right of Use Assets
  1,045 
  - 
Other Long-term Assets
  660 
  566 
 
    
    
Total assets
 $43,139 
 $42,232 
 
    
    
Liabilities and Stockholders' Equity
    
    
 
    
    
Current Liabilities
    
    
Accounts payable
 $6,168 
 $9,548 
Accrued expenses
  3,693 
  4,444 
Current maturities of operating lease obligations
  620 
  - 
Current maturities of finance lease obligations
  281 
  173 
Contract liabilities and customer deposits
  261 
  275 
Total current liabilities
  11,023 
  14,440 
 
    
    
Deferred Revenue
  3,873 
  - 
Operating Lease Obligations, Less Current Maturities
  1,031 
  - 
Finance Lease Obligations, Less Current Maturities
  70 
  137 
Deferred Rent
  - 
  477 
 
    
    
Total liabilities
  15,997 
  15,054 
 
    
    
Commitments and Contingencies
    
    
 
    
    
Stockholders' Equity
    
    
Common stock, $.001 par value; authorized 150,000 shares;
    
    
   issued and outstanding September 30, 2019 59,383 shares and
    
    
   December 31, 2018 55,089 shares
  59 
  55 
Additional paid-in capital
  140,130 
  116,876 
Accumulated deficit
  (113,047)
  (89,753)
Total stockholders' equity
  27,142 
  27,178 
 
    
    
Total liabilities and stockholders' equity
 $43,139 
 $42,232 
 

 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 November 12, 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
 
 
Sep. 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss, as reported
 $(8,443)
 $(8,050)
 $(8,605)
 $(8,218)
 $(8,337)
 $(7,755)
 $(7,202)
   Adjustments:
    
    
    
    
    
    
    
     Interest (income) expense
  44 
  48 
  9 
  (22)
  (35)
  575 
  314 
     Depreciation
  121 
  146 
  169 
  171 
  173 
  190 
  196 
     Amortization of intangibles
  58 
  58 
  59 
  60 
  61 
  61 
  62 
     Amortization of right of use assets
  - 
  - 
  - 
  - 
  138 
  141 
  144 
     Share-based compensation
  1,258 
  1,811 
  1,317 
  1,985 
  2,029 
  1,759 
  1,687 
Adjusted EBITDA
 $(6,962)
 $(5,987)
 $(7,051)
 $(6,024)
 $(5,971)
 $(5,029)
 $(4,799)
 
    
    
    
    
    
    
    
     Total legal expense
  2,973 
  2,079 
  2,723 
  2,045 
  3,250 
  2,926 
  2,944 
 
    
    
    
    
    
    
    
Adjusted EBITDA excluding total legal expense
 $(3,989)
 $(3,908)
 $(4,328)
 $(3,979)
 $(2,721)
 $(2,103)
 $(1,855)