Synergy CHC Corp. (Uplisting) Q4 2024 Earnings Report

Synergy CHC Corp. (Uplisting) EPS Results

• Actual EPS: $0.01
• Consensus EPS: $0.10
• Beat/Miss: Missed by -$0.09
• One Year Ago EPS: N/A

Synergy CHC Corp. (Uplisting) Revenue Results

• Actual Revenue: $10.30 million
• Expected Revenue: $10.55 million
• Beat/Miss: Missed by -$250.00 thousand
• YoY Revenue Growth: N/A

Synergy CHC Corp. (Uplisting) Announcement Details

• Quarter: Q4 2024
• Date: 3/31/2025
• Time: Before Market Opens
• Conference Call Date: Monday, March 31, 2025
• Conference Call Time: 9:00AM ET

Synergy CHC Corp. engages in the marketing and distribution of branded health and wellness products. The company was founded on December 29, 2010 and is headquartered in Westbrook, ME.

Synergy CHC Corp. (Uplisting) Q4 2024 Earnings Call Transcript

Key Takeaways

• Cynergy marked its eighth consecutive profitable quarter in Q4 2024 despite a 22% revenue decline from a temporary de-inventorying of Focus Factor products, and expects top- and bottom-line growth to resume in 2025.
• The company appointed Jamie Fickett as permanent CFO, completed its NASDAQ listing raising $6.2 million, rebranded Focus Factor, and expanded distribution to 267 BJ’s Wholesale Clubs and 1,200 supermarkets.
• In Q4, net revenue was $10.3 million (down 22%), adjusted EBITDA jumped 1,033% to $2.8 million, and debt was reduced by $4.5 million.
• For full-year 2024, revenue fell 19% to $34.8 million but adjusted EBITDA rose 21% to $7.4 million, operating expenses were cut by 16%, liabilities decreased by $6.5 million, and working capital improved 49%.
• Key growth initiatives for 2025 include seven new GLP-1 support products under the Flat Tummy brand, expanded ready-to-drink beverage distribution, and entry into three new international markets.

Presentation

[Operator]

Good morning, everyone, and thank you for participating in today's conference call to discuss Cynergy CHC Corp. Financial Results for the Fourth Quarter and Year Ended 12/31/2024. Joining us today are Cynergy CEO, Jack Ross CFO, Jamie Fickett and Greg Robles of Investor Relations. 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.

[Operator]

Robles as he reads the company's safe harbor statement. Greg, please go ahead.

[Greg Robles, Investor Relation at Synergy CHC]

Thanks, operator. Good morning, and thanks for joining our conference call to discuss our fourth quarter and full year twenty twenty four financial results. I'd like to remind everyone that this call is available for replay and via a live webcast that will be posted on our Investor Relations website at investors.synergychc.com. The information on this call contains forward looking statements. These statements are often characterized by terminologies such as believe, hope, may, anticipate, expect, will and other similar expressions.

[Greg Robles, Investor Relation at Synergy CHC]

Forward looking statements are not guarantees of future performance, and the actual results may be materially different from the results implied by forward looking statements. Factors that could cause results to differ materially from those implied herein include, but are not limited to, those factors disclosed in the company's SEC filings under the caption Risk Factors. The information on this call speaks only as of today's date, and the company disclaims any duty to update the information provided herein. Now, I would like to turn the call over to the CEO of Cynergy, Jack Ross. Jack?

[Jack Ross, Chief Executive Officer and Chairman at Synergy CHC]

Thank you, Greg. Thank you and good morning, everyone. Thank you for joining us today to discuss Cynergy's performance of the fourth quarter and full year 2024. Before diving into the results, I'd like to address the eight K filing we filed in conjunction with the earnings release. We are excited to announce the appointment of Jamie Fickett as our new permanent Chief Financial Officer.

[Jack Ross, Chief Executive Officer and Chairman at Synergy CHC]

Jamie has been with Cynergy for over ten years. She's previously served as the CFO of Focus Factor from 02/2006 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. We are pleased to report another fantastic year.

[Jack Ross, Chief Executive Officer and Chairman at Synergy CHC]

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, our fourth quarter results would be impacted by the same retailer de inventorying situation related to the rebranding of our Focus Factor products. This initiative required retailers to clear out existing inventory before restocking and the updated packaging, 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. Looking back at 2024, we took many important steps to position synergy for long term growth and success.

[Jack Ross, Chief Executive Officer and Chairman at Synergy CHC]

We successfully completed our listing on the NASDAQ raising over $6,200,000 in net proceeds and we finalized our rebranding of the Focus Factor brand, which we hadn't done since 2015. We also expanded our retail partnerships and footprint by adding two sixty seven BJ wholesale clubs and 1,200 public supermarkets to our distribution network. Our products are now available in all their 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. 2024 was a year of strategic transformation and solid execution.

[Jack Ross, Chief Executive Officer and Chairman at Synergy CHC]

We strengthened our financial position, 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. Before passing the call over to Jamie, I want to highlight a few key initiatives that we believe will drive growth in 2025. We continue to focus on organic growth by developing and launching new products. First, in the first quarter of twenty twenty five, we've already launched seven new products under our Flat Tummy brand in response to the growing interest in GLP-one support products. Second, we are aggressively working to expand our distribution for RTD beverages and shots following the successful tests in Canada and the Texas region, which should start seeing significant results early in the second quarter.

[Jack Ross, Chief Executive Officer and Chairman at Synergy CHC]

Third, we expect to be operating in three major new international markets in 2025. With that, I'd like to turn the call over to our Chief Financial Officer, Jamie Fickett. Jamie?

[Jaime Fickett, CFO at Synergy CHC]

Thank you, Jack. I'll now review our financial results. As Jack mentioned, we had another fantastic year. We had another full year of profitability, which marked our eighth consecutive profitable quarter. Beginning with the fourth quarter, net revenue was $10,300,000 compared to $13,200,000 in the year ago quarter, a 22% decrease versus the prior year.

[Jaime Fickett, CFO at Synergy CHC]

As Jack discussed, the decline was driven by new packaging for our Focus Factor products that led to a de inventorying dynamic at our retail partners, which caused them to pause their ordering while they sold through their existing inventory to reach acceptable reorder levels. Additionally, fourth quarter revenue was impacted by a one time $875,000 return related to our Vision SKU. And excluding this return, net revenue would have been $11,200,000 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.

[Jaime Fickett, CFO at Synergy CHC]

This variance was also impacted by a gain on a settlement with a supplier in 2023, which resulted in an increase to gross margin of $2,200,000 Without that gain, gross margin for 2023 would have been 65.3% in line with 2024. Operating expenses for the fourth quarter were $5,100,000 compared to $6,400,000 in the year ago quarter. The lower operating expenses were a result of the improved management of our operating costs. Income from operations decreased to $1,400,000 compared to $4,400,000 in the year ago quarter. Net income for the fourth quarter was $105,700 or $0.01 per diluted share compared to $2,600,000 or $0.35 per diluted share in the year ago quarter.

[Jaime Fickett, CFO at Synergy CHC]

EBITDA was $1,700,000 compared to $4,500,000 in the year ago quarter. Adjusted EBITDA was $2,800,000 compared to negative $300,000 in the year ago quarter, representing an increase of 1033%. Additionally, in the fourth quarter, we reduced our debt obligations by $4,500,000 dollars Now turning to our full year results. For the full year 2024, revenue was $34,800,000 compared to $42,800,000 in the year ago period, a 19% decrease versus the prior year. Gross margin for the full year 2024 was 67.9% compared to 75% a year ago, which was impacted by the same one time gain in 2023 of $2,200,000 Without that gain, gross margin in 2023 would have been 69.8%, which is in line with 2024.

[Jaime Fickett, CFO at Synergy CHC]

Operating expenses for the year were $17,800,000 compared to $21,300,000 a year ago, a decrease of $3,500,000 This represents a significant improvement of 16%. Income from operations decreased to $5,800,000 compared to $10,800,000 a year ago. Net income for the year was $2,100,000 or $0.28 per diluted share compared to $6,300,000 or $0.86 per diluted share a year ago. EBITDA was $6,500,000 compared to $10,800,000 a year ago. Adjusted EBITDA was $7,400,000 compared to $6,100,000 a year ago, an increase of $1,300,000 or 21%.

[Jaime Fickett, CFO at Synergy CHC]

Moving to our balance sheet and cash flow. As of 12/31/2024, we had cash and cash equivalents of $687,900 compared to $632,500 as of 12/31/2023. Inventory was $1,700,000 at the end of the fourth quarter compared to $3,700,000 at the end of twenty twenty three. At 12/31/2024, we had $33,000,000 in total liabilities, which compares to $39,500,000 in total liabilities on 12/31/2023. We're happy to report a decrease of 6,500,000 which equals a reduction of 16.5%.

[Jaime Fickett, CFO at Synergy CHC]

Additionally, our working capital position has improved by 49%. For the twelve months ended 12/31/2024, our cash used in operating activities was $4,800,000 compared to cash provided by operating activities of $421,700 in 2023. The decrease was primarily attributable to a reduction in our accounts payable and accrued liabilities of $2,900,000 an increase in our accounts receivable of $3,200,000 and an increase in prepaid expenses of $1,300,000 primarily relating to deposits on inventory. Now I will turn the call back to the operator.

[Operator]

Certainly. And I would now like to turn the call back to Jack for closing remarks.

[Jack Ross, Chief Executive Officer and Chairman at Synergy CHC]

Okay. Thank you. We'd like to thank everyone for joining the twenty twenty four earnings call and we look forward to speaking with you again when we report the first quarter results in May. Thank you. Thank you for the call.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Analysts

• Greg Robles, Investor Relation at Synergy CHC
• Jack Ross, Chief Executive Officer and Chairman at Synergy CHC
• Jaime Fickett, CFO at Synergy CHC