On August 6, 2020 ChromaDex Corp. (NASDAQ:CDXC) reported second quarter 2020 financial results (Press release, ChromaDex, AUG 6, 2020, View Source [SID1234568251]).
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"We achieved record net sales of $15.3 million in the second quarter while maintaining our focus on the science, announcing our 200th research agreement and tenth published human trial on Niagen," says ChromaDex CEO Rob Fried. "Business adjustments at the onset of the pandemic and continued marketing efficiencies allowed us to reach a financial goal of positive Adjusted EBITDA excluding total legal expenses."
Results of operations for the three months ended June 30, 2020
For the three months ended June 30, 2020 ("Q2 2020"), ChromaDex reported net sales of $15.3 million, up 38% compared to $11.1 million in the second quarter of 2019 ("Q2 2019"). The increase in Q2 2020 revenues was driven by growth in sales of Tru Niagen and Niagen ingredient revenues.
Gross margin increased by 310 basis points to 59.4% in Q2 2020 compared to 56.3% in Q2 2019. The increase in gross margin was largely driven by the positive impact of increased Tru Niagen consumer product sales and product cost saving initiatives, including a benefit of approximately 110 basis points related to savings from prior year initiatives that were recognized in Q2 2020.
Operating expenses decreased by $0.7 million to $12.8 million in Q2 2020, compared to $13.4 million in Q2 2019. The decrease in operating expenses was driven by a decrease of $1.1 million in general and administrative expense, and a decrease of $0.1 million of research and development expense, partially offset by $0.7 million of higher selling and marketing expense. The decrease in general and administrative expense was driven by $1.1 million of lower legal expenses.
The net loss for Q2 2020 was ($3.7) million or ($0.06) per share compared to a net loss of ($7.8) million or ($0.14) per share for Q2 2019.
Adjusted EBITDA excluding total legal expense, a non-GAAP measure, was a profit of $0.5 million for Q2 2020, compared to a loss of ($2.1) million for Q2 2020, a $2.6 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 Q2 2020, the net cash used in operating activities was ($1.6) million versus ($9.0) million in Q2 2019.
2020 Outlook
Looking forward, the impact of COVID-19 on revenues is difficult to predict and the Company is managing expenses to mitigate the bottom-line impact. The Company does not expect any supply chain disruption at this time and, based on trends-to-date, expects continued revenue growth this year. Based on the Company’s current financial outlook, revenue growth will be driven by its U.S. ecommerce business, new international market launches with its partners and distributors, such as in the U.K. and Australia, new online platforms, including Persona Nutrition, a Nestlé Health Science company, and the Company’s new product, Tru Niagen Beauty. 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 first quarter results and provide a general business update on Thursday, August 6, at 4:30pm ET.
Participants should call in at least 10 minutes prior to the call. The dial-in information is as follows:
Date: Thurs., August 6, 2020
Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)
Toll-free dial-in number: (833) 979-2703
International dial-in number: (236) 714-2223
Conference ID: 1563949
Webcast link: ChromaDex Second Quarter 2020 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: 1563949
The earnings press release, and its accompanying financial exhibits, will be available on the Investor Relations section of the Company website, www.chromadex.com.