Q4 2024 Synergy CHC Corp Earnings Call
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Speaker Change: Good morning everyone and thank you for participating in today's conference call to discuss Synergy's CHC Corp's financial results for the fourth quarter in year-ended December 31, 2024.
Speaker Change: Joining us today are Synergy CEO Jack Ross, CFO , Jamie Fickett, and Greg Robles of Investor Relations.
Speaker Change: Following their remarks, we'll open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Robles as he reads the company's safe harbor statement. Greg, please go ahead.
Speaker Change: Thanks operator. Good morning and thanks for joining our conference call to discuss our fourth quarter and full year 2024 financial results.
Speaker Change: I'd like to remind everyone that this call is available for replay India Alive webcast that will be posted on our investor relations website at investors.synergychc.com
The information on this call contains forward-looking statements.
Speaker Change: These statements are often characterized by terminologies such as leave, hope, may, anticipate, expect, will, and other similar expressions. Forward-looking statements are not guaranteed the future performance, and the actual results may be materially different from the results implied by forward-looking statements.
Speaker Change: Factors that could cause results to differ materially from those applied here and include but are not limited to those factors disclosed in the company's SEC filings under the caption risk factors.
Speaker Change: The information on this call speaks only as of today's date and the company disclaims any duty to update information provided herein.
Speaker Change: Now I would like to turn the call over to the CEO of Synergy Jack Ross Jack. Thank you Greg Thank you and good morning everyone. Thank you for joining us today to discuss Synergy's performance of the fourth quarter in full year 2024
Speaker Change: Before diving into the results, I'd like to address the AK filing we filed in conjunction with the earnings release.
Speaker Change: We are excited to announce the appointment of Jamie Fickett as our new permanent Chief Financial Officer. Jamie has been with Synergy for over 10 years.
Speaker Change: She has previously served as the CFO of Focus Factor from 2006 until the acquisition of the brand in 2015. Her extensive financial expertise and deep knowledge of our business has been invaluable and we are confident in our ability to lead the financial strategy moving forward.
Now turning to the performance.
Speaker Change: We are pleased to report another fantastic year. We had another full year of profitability, marking our eighth consecutive profitable quarter. A testament to the strength of our business model and dedication of our team.
As we mentioned in our last earnings call
Speaker Change: Our fourth quarter results would be impacted by the same D, same retailer deementoring situation related to the rebranding of our focus factor products.
Speaker Change: This initiative required retailers to clear out existing inventory before restocking and the updated packaging
Speaker Change: which impacted short-term demand. I'm happy to report that this process is now behind us and we expect Synergy to return to both top line and bottom line growth in 2025.
Speaker Change: Looking back at 2024, we took many important steps to position Synergy for long-term growth and success.
Speaker Change: We successfully completed our listing on the NASDAQ raising over $6.2 million in that proceeds and we finalized our rebranding of the focus factor brand which we hadn't done since 2015.
Speaker Change: We also expanded our retail partnerships in footprint by adding 267 B.J. Health Sale Clubs and 1200 public supermarkets to our distribution network. Our products are now available in all their locations.
Speaker Change: locations significantly enhancing our market reach. Furthermore, we conducted another successful ready-to-drink product test in Canada yielding very strong results and bolstering our confidence in this emerging product line.
Speaker Change: 2024 was a year of strategic transformation and solid execution. We strengthened our financial position.
Speaker Change: Successfully rebranded focus factor and strategic growth with strategic growth initiatives already underway we are well positioned to drive sustainable growth and create long-term value for our shareholders.
Speaker Change: Beginning with the fourth quarter net revenue was $10 3 million compared to $13 2 million in the year ago quarter, a 22% decrease versus the prior year as Jack discussed the decline was driven by new packaging for our focus back to products that led to a D inventory dynamic at our retail partners, which caused them to pause their ordering while they sold through there.
Speaker Change: Existing inventory to reach acceptable reorder levels. Additionally, fourth quarter revenue was impacted by a onetime $875000 return related to our vision SKU and excluding this return net revenue would've been $11 2 million.
Speaker Change: Gross margin for the fourth quarter decreased to 63, 3% compared to 82, 3% a year ago. The decrease was primarily driven by the product mix sold within the quarter margins fluctuate from time to time due to the product mix being sold. This variance was also impacted by a gain on a settlement with a supplier in 2023.
Speaker Change: This resulted in an increase to gross margin of 2.2 million without that gain in gross margin for 2023 would've been 65, 3% in line with 2024.
Speaker Change: Operating expenses for the fourth quarter were $5 1 million compared to $6 4 million in the year ago quarter, the lower operating expenses wherever it's out of the improved management of our operating costs.
Speaker Change: Income from operations decreased to $1 4 million compared to $4 4 million in the year ago quarter net income for the fourth quarter was 105.7 thousand or one cent per diluted share compared to $2 6 million or 35 cents per diluted share in the year ago quarter.
Speaker Change: EBITDA was $1 7 million compared to $4 5 million in the year ago quarter. Adjusted EBITDA was $2 8 million compared to negative <unk> 3 million in the year ago quarter, representing an increase of 1033%. Additionally.
Speaker Change: Additionally, in the fourth quarter, we reduced our debt obligations by $4 5 million now.
Speaker Change: Now turning to our full year results.
Speaker Change: For the full year 2024 revenue was $34 8 million compared to $42 8 million in the year ago period, a 19% decrease versus the prior year.
Speaker Change: Gross margin for the full year 2024 was 67, 9% compared to 75% a year ago, which was impacted by the same onetime gain in 2023 of $2 2 million without that gain gross margin in 2023 would have been 69, 8%, which is in line with 2024.
Speaker Change: Operating expenses for the year were $17 8 million compared to $21 3 million a year ago, a decrease of $3 5 million. This represents a significant improvement of 16%.
Speaker Change: Income from operations decreased to $5 8 million compared to $10 8 million a year ago net income for the year was $2 1 million or 28 cents per diluted share compared to $6 3 million or <unk> 86 cents per diluted share a year ago.
EBITDA was $6 5 million compared to $10 8 million a year ago.
Speaker Change: Adjusted EBITDA was $7 4 million compared to $6 1 million a year ago, an increase of $1 3 million or 21%.
Speaker Change: Moving to our balance sheet and cash flow as of December 31, 2024, we had cash and cash equivalents of 687.9 thousand compared to 632 5000 as of December 31, 2023 inventory was $1 7 million at the end of the fourth quarter compared to $3 7 million at the end of 2020.
Speaker Change: Three.
Speaker Change: At December 31, 2024, we had 33 million and total liabilities, which compares to $39 5 million in total liabilities on December 31, 2023, we're happy to report a decrease of $6 5 million, which equals a reduction of 16, 5%. Additionally, our working capital position has improved by 49.
Speaker Change: Were sent.
Speaker Change: For the 12 months ended December 31, 2024, our cash used in operating activities was $4 8 million compared to cash provided by operating activities of $421 7000. In 2023. The decrease was primarily attributable to a reduction in our accounts payable and accrued liabilities of $2 9 million and in.
Speaker Change: Kris and our accounts receivable of $3 2 million and an increase in prepaid expenses of $1 3 million primarily relating to deposits on inventory now I will turn the call back to the operator.
Speaker Change: Certainly.
Speaker Change: As a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: Draw. Your question. Please press star one one again and please standby, while we compile the Q&A roster.
Speaker Change: Again as a reminder to ask a question. Please press star one one on your telephone.
Jack Ross: And I would now like to turn the call back to Jack for closing remarks.
Jack Ross: Okay. Thank you we'd like to thank everyone for joining us at the 2024 earnings call and we look forward to speaking with you again, when we report the first quarter results in May Thank you.
Jack Ross: Thank you for the call.
Jack Ross: This concludes today's conference call. Thank you for participating you may now disconnect.
Jack Ross: Yeah.
Jack Ross: [music].
Jack Ross: Okay.
Jack Ross: [music].