On May 10, 2023 ChromaDex Corp. (NASDAQ:CDXC) reported financial results for the first quarter of 2023 (Press release, ChromaDex, MAY 10, 2023, View Source [SID1234631347]).
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First Quarter 2023 and Recent Highlights
Total net sales were $22.6 million, up 31% from the prior year quarter, with $17.6 million from Tru Niagen.
Strong gross margin of 59.9% and a $2.8 million reduction in operating expenses, reflecting financial discipline.
Selling and marketing expense as a percentage of net sales was 34.9% versus 47.7%, an improvement of 1,280 basis points from the prior year quarter, while investing in a strategic brand building event.
General and administrative expense decreased $2.5 million from the prior year quarter.
Net loss was $1.9 million or $(0.03) per share, an improvement of $0.08 per share from the prior year quarter.
Adjusted EBITDA, a non-GAAP measure, was a loss of only $0.1 million, a $4.4 million improvement from the prior year quarter.
"In the first quarter of fiscal 2023, we achieved $22.6 million in revenue and generated $2.8 million in positive operating cash flows," said ChromaDex Chief Executive Officer, Rob Fried. "We raised the conservative end of our 2023 revenue outlook to 12.5% growth and, importantly, are seeing significant opportunities for future growth that are not reflected in this outlook."
Results of operations for the three months ended March 31, 2023 compared to the prior year quarter
ChromaDex reported a net sales increase of 31%, or $5.3 million, to $22.6 million. The increase in net sales was largely driven by growth in sales of Tru Niagen and growth in Niagen ingredient sales.
Gross marginpercentagedeclined 110 basis points to 59.9%. The decline in gross margin percentage is largely attributable to a shift in business mix as well as modest cost inflation, partially offset by overall scale.
Operating expensedecreased 15%, or $2.8 million, to $15.5 million driven by a $2.5 million reduction in general and administrative expense due to lower legal fees, share-based compensation and severance and restructuring costs.
Net loss was $1.9 million, or $0.03 loss per share, compared to a net loss of $7.7 million or $0.11 loss per share for the first quarter of 2022. Adjusted EBITDA, a non-GAAP measure, approached break-even with a loss of only $0.1 million, a $4.4 million improvement from Q1 2022. See "Reconciliation of Non-GAAP Financial Measures" for a reconciliation of non-GAAP Adjusted EBITDA to net loss, the most directly comparable GAAP measure.
Net cash inflow from operating activities was $2.8 million compared to a cash outflow of $7.2 million in the prior year quarter, largely due to improvements in net loss of $5.8 million paired with changes in working capital.
2023 Full Year Outlook
Looking forward, for the full year, the Company expects at least 12.5% revenue growth year-over-year. The conservative end of the Company’s outlook reflects prevailing macroeconomic uncertainty and only considers recurring, steady revenue growth from the e-commerce business and established partnerships, as well as upside from new partnerships realized in the first quarter. However, potential upside lies within new partnerships, channels, and products. The Company projects that gross margin will remain stable year over year as cost savings initiatives are expected to largely offset continued inflationary pressures. Moreover, further optimization, coupled with new and focused customer acquisition strategies are expected to result in reduced selling and marketing expense as a percentage of net sales. The Company plans to increase investments in research and development to drive innovation and expects a reduction in general and administrative expense of $1 to $2 million year over year.
Investor Conference Call
A live webcast will be held Wednesday, May 10, 2023 at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss ChromaDex’s first-quarter financial results and provide a general business update.
To listen to the webcast, or to view the earnings press release and its accompanying financial exhibits, please visit the Investors Relations section of ChromaDex’s website at View Source The toll-free dial-in information for this call is 1-888-330-2446 with Conference ID: 4126168.
The webcast will be recorded, and will be available for replay via the website from 7:30 p.m. Eastern time on May 10, 2023 through 11:59 p.m. Eastern time on May 17, 2023. The replay of the call can also be accessed by dialing 800-770-2030, using the Replay ID: 4126168.