ChromaDex(CDXC)2023-11-09 02:02Financial Data and Key Metrics - The company ended Q3 2023 with $26.8 million in cash and no debt, reflecting strong fiscal discipline [14] - Total net sales for Q3 2023 were $19.5 million, up 14% year-over-year, with robust gross margins of 61.4% [25] - Adjusted EBITDA for Q3 2023 was positive $0.5 million, a $1.7 million improvement year-over-year [25] - Year-to-date net sales are up 22%, with adjusted EBITDA of $0.7 million and positive operating cash flow of $6.5 million [25] - E-commerce net revenue increased by 13% year-over-year, driven by marketing initiatives [14] - Watson's contributed $3.1 million in Q3 2023, a 19% increase year-over-year [16] - Niagen ingredient sales decreased by 21% year-over-year, partially offset by increased Tru Niagen sales [27] Business Line Performance - E-commerce remains the largest and most consistent revenue source, with a 13% year-over-year growth [14] - Watson's revenue grew 19% year-over-year, driven by the stacking concept of combining Tru Niagen products [16] - The partnership with iHerb has seen 80% of Tru Niagen sales coming from international consumers [17] - Zesty Paws partnership has led to a second order of Niagen, indicating early success in the pet supplement space [18] - Tru Niagen Pro 1000 mg product line launched, offering a clinical strength dose with proven safety and efficacy [19] Market Performance - The company is focusing on optimizing its website and increasing advertising revenues to drive growth [1] - The partnership with Sinopharm in China continues, with Tru Niagen being featured as the best NR supplement in 2023 [36] - The company is exploring opportunities to expand the stacking concept in other markets [16] - The pet supplement market is growing rapidly, with the global market approaching $2 billion [86] Strategic Direction and Industry Competition - The company is investing in R&D and marketing to position itself for accelerated growth in 2024 and beyond [15][53] - ChromaDex is leveraging its scientific foundation and partnerships to maintain its position as a leader in NAD research [20] - The company is defending its intellectual property, with recent patents protecting NR IP for at least the next decade [23] - The partnership with Nestle Health Science has led to the launch of Solgar cellular nutrition products featuring Niagen [38] Management Commentary on Operating Environment and Future Outlook - Management is confident in setting the stage for further growth opportunities in 2024 and beyond [20] - The company expects to achieve close to breakeven adjusted EBITDA for the full year 2023 [53] - Management highlighted the potential of NAD precursors beyond NR, protected by ChromaDex's IP portfolio [24] - The company is optimistic about the partnership with Zesty Paws and future innovations in the pet supplement space [18] Other Important Information - The company announced two published peer-reviewed clinical studies on Parkinson's disease, with a third study recently completed [22] - ChromaDex continues to defend its achievements and inventions, with a favorable court decision against Elysium Health [43] - The company has extended its 10-year collaboration with W.R. Grace to continue delivering high-quality NAD precursors [69] Q&A Session Summary Question: Revenue Guidance and Seasonality - The company expects a sequential uptick in Q4 2023, driven by seasonally higher Niagen ingredient sales and growth from long-term partners [82] - Management anticipates some seasonality in 2024 but sees building blocks for accelerated growth [83] Question: Expansion into the Pet Supplement Market - The company expects the pet supplement market to go beyond canine, with a global market approaching $2 billion [86] - Zesty Paws has already placed a second order, indicating strong initial performance [86] Question: Watson's Store Expansion - Watson's is currently operating in Hong Kong, Singapore, and Taiwan, with potential for expansion within existing stores [64] - The company is optimistic about further growth but notes that Watson's operates as independently managed businesses [64] Question: Tru Niagen Pro Product Rollout - The Tru Niagen Pro 1000 mg product is targeted at consumers looking to take aging into their own hands, with professional athletes and teams already using it [66][100] - The product has been certified for Sport by NSF International, and the company is leading with MLB and NHL [92] Question: Website Performance and Growth Expectations - The company is seeing improvements in key performance indicators for its website, with a high conversion rate but a need for increased traffic [103] - Management expects significant growth in website sales by Q1 2024 [103] Question: E-commerce Growth and Efficiency - E-commerce growth remains strong, with Amazon performing well, while the website is taking longer to turn around [59] - The company is focusing on scaling its website spend while maintaining targeted efficiencies [52]