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ChromaDex(CDXC) - 2024 Q1 - Earnings Call Transcript
CDXCChromaDex(CDXC)2024-05-09 00:26
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Financial Data and Key Metrics - Q1 2024 revenue was 222million,a222 2 million, a 2% decline compared to Q1 2023, primarily driven by a 17% reduction in combined Watsons and other B2B sales [19] - Gross margins increased by 80 basis points to 60 7% compared to 59 9% in Q1 2023, driven by shifts in business mix with e-commerce sales constituting 58% of total net sales [20] - Adjusted EBITDA was positive at 0 7 million, marking the fourth consecutive quarter of positive adjusted EBITDA [13] - Net loss attributable to common stockholders for Q1 2024 was 05millionoralossof0 5 million or a loss of 0 01 per share, compared to a net loss of 19millionandalossof1 9 million and a loss of 0 03 per share in Q1 2023 [21] - The company ended Q1 with 276millionincashandnodebt[22]BusinessLineDataandKeyMetrics−E−commercesalesgrew527 6 million in cash and no debt [22] Business Line Data and Key Metrics - E-commerce sales grew 5% year-over-year in Q1 2024, continuing to be the largest and most reliable revenue source [14] - Tru Niagen sales declined 2% year-over-year, while Niagen ingredient sales grew moderately by 0 2 million, offset by a decline in sales of other ingredients [19] - The company is focusing on building a robust base of subscribers and optimizing influencer marketing, retention strategies, and social media presence [15] Market Data and Key Metrics - The company announced partnerships with Sprouts Farmers Market and Vitamin Shoppe, expanding Tru Niagen's availability to over 400 Sprouts locations and 700 Vitamin Shoppe locations [15] - Retail margins are lower than e-commerce margins, but pricing will be comparable [5] - The company expects a strong second half of 2024, with revenue ramping up due to new product launches and partnerships [23] Company Strategy and Industry Competition - The company is investing heavily in R&D, with Q1 R&D expenses increasing by 09millionyear−over−year,primarilyfornewverticalsandNADprecursordevelopment[21]−ChromaDexpositionsitselfasthegoldstandardintheNADindustry,withover30peer−reviewedhumanstudiesand100publishedscientificstudies[16]−Thecompanyisexploringnewverticalsbeyonddietarysupplements,includingskincareandpetsupplements,withpotentiallaunchesintheUS[17]ManagementCommentaryonOperatingEnvironmentandFutureOutlook−Managementreiteratedfull−yearrevenuegrowthguidanceofatleast160 9 million year-over-year, primarily for new verticals and NAD precursor development [21] - ChromaDex positions itself as the gold standard in the NAD industry, with over 30 peer-reviewed human studies and 100 published scientific studies [16] - The company is exploring new verticals beyond dietary supplements, including skincare and pet supplements, with potential launches in the US [17] Management Commentary on Operating Environment and Future Outlook - Management reiterated full-year revenue growth guidance of at least 16%, driven by new verticals, partnerships, and product launches [1] - The company expects heavier investments in the first half of 2024, particularly in R&D, with moderation in the second half [23] - Management is optimistic about the momentum built in Q1 and new revenue opportunities expected later in 2024 [23] Other Important Information - The company is involved in ongoing litigation with Elysium, with a potential liability disclosed in the 10-Q report, though no significant impact is expected on 2024 financials [22] - ChromaDex is working on expanding cross-border sales of Tru Niagen into China, with potential partnerships and product expansions [28] Q&A Session Summary Question: Revenue Growth and New Product Launches - Management confirmed that new product revenue will ramp up in the second half of 2024, with no significant acceleration expected in Q2 [1][3] Question: Retail Partnerships and Margins - Retail margins are lower than e-commerce margins, but pricing will be comparable [5] - The company is focusing on specialty retailers like Vitamin Shoppe and Sprouts, which align well with the Tru Niagen customer base and require less advertising investment [4] Question: R&D Expenses and New Vertical Development - R&D expenses increased by 0 9 million year-over-year, primarily for new verticals and NAD precursor development, with similar heavy investments expected in Q2 [6] Question: Gross Margin Evolution and E-commerce Contribution - Gross margins are trending between 60% and 61%, with higher margins in quarters with a higher e-commerce mix [33] - E-commerce margins are in the low 70s, while B2B margins are in the low to mid-50s [33] Question: Higher Dosage Forms of Tru Niagen - The 1,000 milligram SKU has been successful, with demand from both existing and new customers, and is expected to be revenue accretive [34][60] Question: Legal Spending and Litigation Impact - The potential liability from the Elysium litigation is not expected to significantly impact 2024 legal spending [41] Question: Retention Rates for 1,000 Milligram SKU - Early indications suggest higher retention rates for the 1,000 milligram SKU compared to other SKUs, though it is still early in the product lifecycle [66] Question: Vitamin Shoppe and Sprouts Distribution - Tru Niagen will be available in 700 Vitamin Shoppe stores and over 400 Sprouts locations, with revenue recognized in Q1 2024 [68]