ChromaDex(US:CDXC)2022-03-10 02:34Financial Data and Key Metrics Changes - Full year net sales were $67.4 million, a 14% increase year-over-year [13] - Tru Niagen net sales were $56.7 million, a 20% increase year-over-year [13] - Gross margins were 61.5%, a 200 basis point increase versus last year [13] - Total operating loss was $5.3 million in Q4 2021, compared to $8.8 million in Q3 2021 [14][46] - Net loss attributable to common stockholders for Q4 2021 was $5.3 million or a loss of $0.08 per share, compared to a net loss of $8.9 million or a loss of $0.13 per share for Q3 2021 [46] Business Line Data and Key Metrics Changes - Tru Niagen net sales in Q4 2021 were down 5% sequentially [36] - Niagen ingredient sales were up 53% versus the prior quarter, driven by sales to Life Extension and a shipment to H&H Group [40] - E-commerce sales grew by 21% year-over-year [31] Market Data and Key Metrics Changes - Sales to Monte Cana were impacted by COVID-19 restrictions in Australia [37] - Watsons sales were $2.2 million in Q4 2021 compared to $2.6 million in Q3 2021 [38] - E-commerce business was up 6% sequentially, driven by promotions in the U.S. and China [39] Company Strategy and Development Direction - The company launched Tru Niagen in 3,800 Walmart stores, marking its first mass retail launch in the U.S. [9] - Partnerships with Sinopharm Xingsha and H&H Group were established to grow the Tru Niagen cross-border business and ingredient business [9][10] - The focus is on translating scientific research into marketing messages related to aging, heart health, and cellular health [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the market opportunity for Tru Niagen, despite challenges from COVID-19 and increased customer acquisition costs [64] - The company expects 15% to 20% growth in net sales for 2022, with continued investment in marketing and brand awareness [52][51] - Management noted that the majority of legal spending related to litigation is behind them, allowing for reinvestment in brand building [59] Other Important Information - The ChromaDex External Research Program (CERP) achieved its 100th published peer-reviewed study on Niagen [11] - The company has over 40 patents on NR and other NAD precursors, with a new patent granted that protects the manufacturing process through 2037 [12] Q&A Session Summary Question: Can you talk about marketing claims and outcomes on work being done now? - Management stated that they look at the total body of evidence to support claims, with clinical studies carrying the most weight [57] Question: What do you anticipate as legal expenses for 2022? - Legal expenses are expected to be around $4 million in 2022, with ongoing litigation costs anticipated to be less than $1 million each [58] Question: Why is the 2022 sales guidance below expectations? - Management indicated that macroeconomic changes and increased customer acquisition costs have led to a more conservative outlook [62][64] Question: What is happening with Nestle? - Management noted that Nestle is interested in expanding their relationship, but it must be done in a way that optimizes shareholder interests [74]