WESTBROOK, Maine, Dec. 06, 2024 (GLOBE NEWSWIRE) -- Synergy CHC Corp. (NASDAQ: SNYR) ("Synergy" or the "Company"), a provider of consumer health care and lifestyle products, announced today its financial results for the three months ended September 30, 2024.
"We are excited to announce our seventh straight quarter of profitability and to officially be listed on NASDAQ (SNYR) as a public company, marking a significant milestone for Synergy," said Jack Ross, CEO of Synergy. "This not only brings us increased liquidity but also enhances our ability to execute our long-term growth strategy, positioning us well to capitalize on the opportunities ahead. While our third quarter results were impacted by retailer de-inventorying related to the new packaging rollout for our FOCUSfactor products, we are extremely pleased by adding new retailers during the quarter. The expansion of our retail partnerships, including BJ's Wholesale Clubs and Publix, have significantly increased our distribution footprint and visibility. These developments, coupled with the strength of our brand portfolio and the absence of re-branding and de-inventorying, position us well for growth and value creation as we move into 2025 and beyond."
"As we move into 2025, we are focused on expanding our current brands distribution footprint and entering new geographical markets. We believe the investments we've made in the re-branding of FOCUSfactor will drive long-term sustainable growth and value creation for our shareholders"
Third Quarter 2024 Financial Summary vs. Same Year-Ago Period
- Revenue of $7.1 million vs. $10.8 million.
- Gross margin of 67.2% vs. 72.0%.
- Income from operations of $1.1 million vs. $2.1 million.
- Net income of $0.8 million vs. $1.3 million.
- Earnings per share of $0.10 vs. $0.17.
- EBITDA, a non-GAAP financial measure, was $1.3 million vs. $2.2 million.
Recent Business Highlights
- Expanded partnerships with blue-chip retailers including BJ's Wholesale Clubs, now offering two FOCUSfactor products in all 267 locations, as well as Publix, where two of our products are now available in all 1,200 Publix grocery stores.
- During the third quarter, the Company reduced outstanding debt by $1.1 million.
- On October 24, 2024, Synergy announced the completion of its initial public offering of 1,150,000 shares of its common stock at $9.00. The shares of common stock began trading on the Nasdaq Global Market on October 23, 2024, under the ticker symbol "SNYR".
- Subsequent to the third quarter and the IPO, the Company reduced debt by $3.1 million.
- Subsequent to the third quarter, the Company added $6.2 million of net cash to its balance sheet at the completion of the IPO.
Third Quarter 2024 Financial Results
Revenue in the third quarter of 2024 was $7.1 million, down 34% compared to $10.8 million in the third quarter of 2023. This was largely driven by a re-branding of FOCUSfactor, which was the first re-branding since 2015. The result was due to the selling down and de-inventorying by retailers to an acceptable level of product with the old packaging before accepting product with the new packaging.
Gross margin in the third quarter of 2024 was 67.2%, down 476 basis points compared to 72.0% in the third quarter of 2023. The decrease in gross margin is driven by the product mix sold during the quarter.
Operating expenses in the third quarter of 2024 were $3.7 million, decreased 34% compared to $5.6 million in the third quarter of 2023. The improvement was driven by management of operating costs and the decrease in net revenue.
Income from operations for the third quarter of 2024 was $1.1 million compared to $2.1 million in the third quarter of 2023. The decline in operating income in the third quarter of 2024 was due to a decrease in net sales due to the re-branding.
Net income in the third quarter of 2024 was $783.6 thousand compared to net income of $1.3 million in the third quarter of 2023.
EBITDA (a non-GAAP financial measure) in the third quarter of 2024 was $1.3 million, down 38% compared to $2.2 million in the third quarter of 2023. The decrease was primarily due to the decrease in net revenue due to the re-branding.
Balance Sheet and Cash Flow
As of September 30, 2024, Synergy had approximately $259.4 thousand in cash and cash equivalents, compared to $632.5 thousand in cash and cash equivalents as of December 31, 2023. As of September 30, 2024, Synergy had $37.3 million in total liabilities, compared to $39.5 million in total liabilities as of December 31, 2023, an improvement of $2.2 million.
As of September 30, 2024, Synergy had $1.9 million in inventory, compared to $3.7 million of inventory as of December 31, 2023.
Cash used in operating activities for the nine months ended September 30, 2024 was $1.4 million compared to $2.8 million for the nine months ended September 30, 2023. The decrease in cash used from operating activities was primarily attributable to a reduction in accounts payable and accrued expenses.
Conference Call
In conjunction with this announcement, Synergy will host a conference call at 9:00 a.m. ET / 6:00 a.m. PT with the Company's Chief Executive Officer, Jack Ross, and the Company's Chief Financial Officer, Stacy Bieber. A live webcast of the call will be available on the Investor Relations section of Synergy's website. To access the call by phone, please go to this link (registration link) and you will be provided with dial in details. To avoid delays, we encourage participants to dial into the conference call 15 minutes ahead of the scheduled start time. A replay of the webcast will also be available for a limited time on the Company's website.
About Synergy CHC Corp.
Synergy CHC Corp. is a provider of consumer health care and lifestyle products. Synergy's current brand portfolio consists of two marquee brands, FOCUSfactor, a clinically-tested brain health supplement that has been shown to improve memory, concentration and focus, and Flat Tummy, a lifestyle and wellness brand that provides a suite of nutritional products to help women achieve their weight management goals.
Forward Looking Statements
Certain statements contained in this press release constitute "forward-looking statements." These forward-looking statements represent Synergy's expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved. These forward-looking statements are subject to risks, uncertainties and other factors, which are set forth in Synergy's registration statement on Form S-1, as amended, many of which are outside of Synergy's control, that could cause actual results to differ materially from the results discussed in the forward-looking statements.
Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Synergy does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for Synergy to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Synergy's filings with the SEC. The risk factors and other factors noted in Synergy's filings could cause its actual results to differ materially from those contained in any forward-looking statement.
Investor Relations
Gateway Group
Cody Slach and Alex Thompson
949.574.3860
SNYR@gateway-grp.com
| Synergy CHC Corp. Condensed Consolidated Balance Sheets | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 259,375 | $ | 632,534 | ||||
| Restricted cash | 100,000 | 100,000 | ||||||
| Accounts receivable, net | 4,072,030 | 2,106,094 | ||||||
| Loan receivable (related party) | 4,438,727 | 4,459,996 | ||||||
| Prepaid expenses (including related party amount of $570,000 and $501,321, respectively) | 1,072,639 | 797,985 | ||||||
| Inventory, net | 1,910,515 | 3,726,240 | ||||||
| Total Current Assets | 11,853,286 | 11,822,849 | ||||||
| Intangible assets, net | 316,667 | 416,667 | ||||||
| Total Assets | $ | 12,169,953 | $ | 12,239,516 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities (including related party payable of $129,091 and $26,885, respectively) | $ | 5,082,140 | $ | 11,727,490 | ||||
| Income taxes payable, net | 254,272 | 185,665 | ||||||
| Contract liabilities | 2,100 | 14,202 | ||||||
| Short term loans payable, related party | 2,915,692 | - | ||||||
| Current portion of long-term debt, net of debt discount and debt issuance cost, related party | 3,000,000 | - | ||||||
| Current portion of long-term debt, net of debt discount and debt issuance cost | 6,994,766 | 2,094,525 | ||||||
| Total Current Liabilities | 18,248,970 | 14,021,882 | ||||||
| Long-term Liabilities: | ||||||||
| Note payable, net of debt discount and debt issuance cost, related party | 9,333,053 | 12,426,997 | ||||||
| Notes payable | 9,757,022 | 13,096,610 | ||||||
| Total Long-term Liabilities | 19,090,075 | 25,523,607 | ||||||
| Total Liabilities | 37,339,045 | 39,545,489 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' Deficit: | ||||||||
| Common stock, $0.00001 par value; 300,000,000 shares authorized; 7,553,818 shares issued and outstanding | 76 | 76 | ||||||
| Additional paid in capital | 19,157,931 | 19,148,707 | ||||||
| Accumulated other comprehensive income (loss) | 5,881 | (102,467 | ) | |||||
| Accumulated deficit | (44,332,980 | ) | (46,352,289 | ) | ||||
| Total stockholders' deficit | (25,169,092 | ) | (27,305,973 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 12,169,953 | $ | 12,239,516 | ||||
| Synergy CHC Corp. Unaudited Condensed Consolidated Statements of Income | ||||||||||||||||
| For the three months ended | For the nine months ended | |||||||||||||||
| September 30, 2024 | September 30, 2023 | September 30, 2024 | September 30, 2023 | |||||||||||||
| Revenue | $ | 7,126,333 | $ | 10,805,735 | $ | 24,563,036 | $ | 29,559,440 | ||||||||
| Cost of sales | 2,335,901 | 3,028,023 | 7,421,930 | 8,351,645 | ||||||||||||
| Gross profit | 4,790,432 | 7,777,712 | 17,141,106 | 21,207,795 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Selling and marketing | 2,509,440 | 4,302,034 | 9,149,303 | 10,533,217 | ||||||||||||
| General and administrative | 1,196,784 | 1,326,864 | 3,449,007 | 4,294,634 | ||||||||||||
| Depreciation and amortization | 33,333 | - | 100,000 | - | ||||||||||||
| Total operating expenses | 3,739,557 | 5,628,898 | 12,698,310 | 14,827,851 | ||||||||||||
| Income from operations | 1,050,875 | 2,148,814 | 4,442,796 | 6,379,944 | ||||||||||||
| Other (income) expenses | ||||||||||||||||
| Other income | (252,405 | ) | - | (252,405 | ) | - | ||||||||||
| Interest expense, net | 704,707 | 885,548 | 2,559,454 | 2,605,320 | ||||||||||||
| Remeasurement (gain) loss on translation of foreign subsidiary | 7,279 | (7,555 | ) | 2,166 | (11,716 | ) | ||||||||||
| Total other expenses | 459,581 | 877,993 | 2,309,215 | 2,593,604 | ||||||||||||
| Net income before income taxes | 591,294 | 1,270,821 | 2,133,581 | 3,786,340 | ||||||||||||
| Income tax benefit (expense) | 192,299 | 13,366 | (114,272 | ) | (38,896 | ) | ||||||||||
| Net income after tax | $ | 783,593 | $ | 1,284,187 | $ | 2,019,309 | $ | 3,747,444 | ||||||||
| Net income per share - basic | $ | 0.10 | $ | 0.17 | $ | 0.27 | $ | 0.50 | ||||||||
| Net income per share - diluted | $ | 0.10 | $ | 0.17 | $ | 0.27 | $ | 0.50 | ||||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | 7,553,818 | 7,553,818 | 7,553,818 | 7,553,818 | ||||||||||||
| Diluted | 7,553,818 | 7,553,818 | 7,553,818 | 7,553,818 | ||||||||||||
| Synergy CHC Corp. Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||
| For the nine months ended | For the nine months ended | |||||||
| September 30, 2024 | September 30, 2023 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income | $ | 2,019,309 | $ | 3,747,444 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Amortization of debt issuance cost | 47,519 | 37,838 | ||||||
| Depreciation and amortization | 100,000 | - | ||||||
| Stock based compensation expense | 9,224 | - | ||||||
| Foreign currency transaction loss | 23,777 | 16,146 | ||||||
| Remeasurement loss on translation of foreign subsidiary | 2,166 | (11,716 | ) | |||||
| Non cash implied interest | 4,799 | 21,994 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (1,965,936 | ) | 102,649 | |||||
| Loan receivable, related party | 21,269 | 118,192 | ||||||
| Inventory | 1,815,725 | 3,829,729 | ||||||
| Prepaid expenses | (205,975 | ) | (1,029,858 | ) | ||||
| Prepaid expense, related party | (396,683 | ) | (143,106 | ) | ||||
| Income taxes receivable | - | 5,381 | ||||||
| Income taxes payable | 68,607 | - | ||||||
| Contract liabilities | (12,102 | ) | 3,434 | |||||
| Accounts payable and accrued liabilities | (3,011,384 | ) | (9,335,734 | ) | ||||
| Accounts payable, related party | 102,206 | (100,242 | ) | |||||
| Net cash used in operating activities | (1,377,479 | ) | (2,737,849 | ) | ||||
| Cash Flows from Investing Activities | - | - | ||||||
| Cash Flows from Financing Activities | ||||||||
| Advances from related party | 3,395,587 | 1,000,000 | ||||||
| Repayment of advances from related party | (157,425 | ) | - | |||||
| Repayment of notes payable, related party | (84,500 | ) | (73,500 | ) | ||||
| Proceeds from notes payable | 600,000 | 360,000 | ||||||
| Repayment of notes payable | (2,857,690 | ) | (733,010 | ) | ||||
| Net cash provided by financing activities | 895,972 | 553,490 | ||||||
| Effect of exchange rate on cash, cash equivalents and restricted cash | 108,348 | (4,257 | ) | |||||
| Net decrease in cash, cash equivalents and restricted cash | (373,159 | ) | (2,188,616 | ) | ||||
| Cash and restricted cash, beginning of year | 732,534 | 2,526,443 | ||||||
| Cash and restricted cash, end of period | $ | 359,375 | $ | 337,827 | ||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 2,432,653 | $ | 2,584,604 | ||||
| Income taxes | $ | 45,664 | $ | - | ||||
| Supplemental Disclosure of Noncash Investing and Financing Activities: | ||||||||
| Accounts payable converted to loan payable upon settlement | $ | 3,770,824 | $ | - | ||||
| Reduction of short term related party note payable by reduction of prepaid balance | $ | 328,003 | $ | - | ||||
