SNOA - Earnings call transcript Q3 2018 | Sonoma Pharmaceuticals, Inc.

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Operator

Good afternoon, and welcome to the Sonoma Fiscal Third Quarter 2018 Conference Call. My name is Amanda, and I'll be your coordinator for today's call. At this time, all participants are in a listen-only mode. At the end of the call, we will be holding a question-and-answer session with company management.

As a reminder, this call is being recorded for replay purposes. the to turn now will call Mr. over I Schutz. Jim Please proceed, sir.

James Schutz

and and on the the Thank Animal Miller, of With Officer; Vice Chief scratchy been good bug for us throat, several Investor is days. McFadden, me Officer. travelling. is Amanda, normally Relations, and Sonoma's Umscheid, Growth I've Strategy on President Financial calls, Bob everyone. who And our last are afternoon, and you, Dan our today the Chief Marc with Health these apologies for a call

discussion the For I'll quarter prescription call for minutes financial upcoming financials call product ending milestones. of several and open We'll today's quarter fastest look December Bob our and our in the three-year will the track XXXX; review this dermatology few key record market. a for Q&A. the finally then from Ceramax; quarter, to thorough then results up spend our last selling follow our XX, a ahead on with

quarterly start, and for to our the time meet cash Litigation Before that standards; become results and funding; of benefits other Exchange annual ability regulatory highlight expand, and Securities progress applications reports. forward-looking for in identified for are of the products; ability of existing company harbor would related applications commercialization Securities that Private words do the community including let by discussion our anticipate, and the these infer These to cause XXXX only to and uncertainties materially such timing Identified involve Commission, indications. to is These forward regulatory release our not actual differ use development capital to the products; our today provisions discussed and and those earlier statements expectations could risks we others. required and time by filings and expect, future with call, of we intended from of gears, potential to future product press today's to including had looking-statements the our are of additional approvals risks predictions of effectiveness the programs risks call contains among future relied our and the or our in forward-looking filed marketing as ability that profitable; statements that to investment from and within today's Act date events to safe we needs our in uses quarter. the reserves; our and/or this products; except not of statements our Reform heck of conference any update our and remind you upon PowerPoint disclaims development as the Switching be and a Sonoma me speak products of inherent and potential obtain of of our detailed the a supplemental should these as use obligation law. our the and as such

We versus is many up was of whiteboards, plans huge Slide then a period flush out to the and front eventually March back Even was on to for said, I in in any of at you is $X.XXX September versus revenue Once think revenue then period PowerPoint, U.S. history. Directors. light, go our product a started revenue to hard Sonoma see scribbling our the dermatology the we're quarter a gave and the all Bob our $X.XXX especially last they just the our Board working. event, actually in our PowerPoints. the September. for out thoughts whiteboards, the three out into $X.XXX was in up period work was team And we're year. company process. the do it, pleased finally can XX% and the moved thank our loss million, gratifying you and up of to up We that you and working, and paper, of last of the a started revenue a which was a And XX%, plan. that million really U.S. of those team highest same and in million. the single in an and XX. very we computer see that order. X healthy actually detailed was terrific they thought ending getting by board and XXXX, way hiring just total cash sheet started. helpful and just well up were plan all big no, right. the same that many, credit on then goals the It year For to XX% drew number really versus XXXX our plan details, took to revenue In key the hit computer, was people to we green the Product the objectives years And XX% amazingly

For and computers, those we Slide active building for foundation during PowerPoint of growth. very milestones, you our calendar XXXX in our future were supplemental outlines which current X front of year of your

And regulatory we partnering news Brazil. of seven approvals in you ANVISA, or process Brazil Looking sales received soon for news hope November share forward for efforts, to Brazilian upcoming on on remember, may XXXX. good we selection in our our to partner milestones, our stay-tuned interesting

our is include Ceramax promised, announce product And finally, data spring. On about. Loyon sales fickle, our as product on fair be an compelling. news psoriasis. to you our A summer for very excited the FDA This this side, the we're we product, that can the approval a stay tuned FDA expanded very FDA warning, next queue hope we team tell in that that FDA on new indication was seeking can submitted back but we to the

filled counter Ceramax for quarter into team fastest at product our Speaking of sales almost the in doubled turned Prescriptions of pharmacy Ceramax quarter the September to December the in our supplemental the XX. the when Slide compared X growing quarter. PowerPoint, ending

approved is eczema FDA indicated or You Ceramax Swedish skin-barrier we that Ceramax for a and may a remember dermatitis. atopic product formulator. as in-licensed repair from

it you fastest It's get in your product. tried doctor patients. our factors. ask our a If Ceramax great about was reviews we due to glowing And haven't December yet, seller Ceramax. from several

First, Ceramax has cholesterol market of the acids fatty ceramides, and that the highest skin concentration on craves, today. our

skin every in think Second, the diseases. with way, barrier the every day inflammatory skin skin We dermatologists is patient disrupted inflammatory has see or this patients shape form. some product. sky And with limit disease

And to make that, for itch. in out the hand go in great patient. a has program meaning of it you. we then, finally, with month every America And bring Ceramax microphone And have the affordable Ceramax, I'll on addressing we rebate North winter Third, clinical Bob, to way our to great itch. winter

Robert Miller

Okay. Thank you, Jim.

same the in quarter Over to our dermatology the ended XXXX next the results quarter. December minutes, of XX, the XX-plus I discuss recent last and the December track and last compared will updated quarter, year for period financial record financial three-year

operating Looking in and details which financial revenue, cover of quarter results results includes driving the the a of results, I the will EBITDA position. the will business this at mention and XX, the key the company, to financial are these cash prescription More we the will focus the be high-level metrics discussed December the for the results us release expenses, - ended results cash press for is will since profitability. we Even overall dermatology on which though the for growth driving upcoming business, XX-Q. and the

earnings PDF the as call. mentioned presentation PowerPoint a supplement earlier, we to in Jim As form have distributed a

December Slide quarter on table only Looking the X, the XXXX is December compared of XXXX, to not September of XX, there year, quarter also results last metrics a the but showing quarter. key the

was XX% strong compared in mostly This and discussed. product quarter which by to some was $X.X Latin net revenue United are the from Some the million, million in quarter. the already same the up a key or of and States, $X.X by growth Total offset the December for Jim these Asia Middle last decline metrics revenue the period XX% in America East. September up following, of the partially and increases driven year

These revenue was the product to in from dermatology representing our However, net business total same from health. period quarter, our of in the our quarter. prescription same last of up dermatology XX% and The up over product and year, strong highest and U.S. product was total of ever quarter acute produced $XXX,XXX up XX% in dermatology million, growth continues $X.X best and animal strong representing results product or Sonoma million, with the $X.X revenue the the $XXX,XXX quarter-over-quarter growth the over market. September this net revenue revenue period $X.X XX% our XX% or and September extend revenue, care is the our XX% history Oculus. million dermatology, year, or XX% in last up

a expense total, fiscal margins gross revenue The business as our cash to from factors XX% of returns. facility, Invekra rebates, are lower period inventory. or quarter year America to the compensation rebates for the sales from up The expenses expect Invekra, to only their last for these In percentage when of product in ended the stop X% those cash the with with at September. price, the which we the revenue fee due the partner, quarter Latin year expenses. calculating the for were same of onetime $XXX,XXX sold dermatology the $XXX,XXX The operating of December units during wholesaler improvement The up gross cost in former million, $X.X were in sometime increase were the September returns, marketing minus quarter manufacture their reserve operating and at and the a than will gross costs important starts occur wholesaler XX and in ended of higher net XXXX. the $XXX,XXX i.e., and revenue cost in to

or mentioned. partially the The million offset operating to on considering buy December year, in million, EBITDA the was from operations $X.X earlier to June XX. the which strong loss, good institutional September the same cash from $XX up million, by cash million expenses December $X.X to $X million, to buy from next September, investors the expenses, quarter funding minus hold ending expenses, an a increase $X.X and due at in $X.X that The non-cash period by million, for I excluding terms. $XXX,XXX cash shareholder should from the cash expect due or December million. mentioned and year, $X.X cash the as primarily $X.X Jim was X% decrease Over quarter $X.X in the our We operating on from of of position and quarter remain maintain million one-time just cash was the $XXX,XXX loss for operating plan position investment million down hold X% down quarter. last the with The we range best XX attractive from

to track of three-year now discussion our the in Moving Sonoma's dermatology. record

starting Jim treatment our sales with strategy revenue effective, This earlier, and years board while zero and mentioned severe dermatology management atopic grown our three of non-steroidal filled a the adopted products. and non-antibiotic shown the in two, and the force. mostly comprising and products strategy national on is de-scaling. the are the direct skin still focus, best-in-class ago, growing years sales infections, As reps, focus launched managers market dollars repair, skin estimated six shareholders, have is derm for procedures, surgical following new while and In our have sales, experienced have have appearance by the which To scar we and to execute strategy, unique, These sales completed this demand drives direct we our dermatology the we we and seborrheic action starting actions. force. Number of number five some One, reps the XX sales past, of Symphony. with with XX plans. dermatitis, three ago prescriptions and acne, prescription now

with we our consistent you unit is the feel GAAP prescription distributors However, to dollars accounting real the our treatment. prescription and providing that with shipped more

not have sales and this included direct at We relatively physician amounts the to time. are small these

the of pharmacy presentation. average our that total. X the the number last that on in eight It record June shows prescription the dollar unit the distributors track shipped to each products on and the December of prescription the three-year the the shipped importance highlights over slide have prescription which also Slide prescription also in investor the total quarterly supplemental XX% or sales Slide is to have quarters the distributor quarters. new dollar X sell The for shows quarter-over-quarter products. pharmacy weaker displayed six for. last shows we quarters. distributors PowerPoint of quarter-over-quarter to quarters. price and distributors, shows the stronger months the calculated two last shipped Slide the times grown by the on Our products units grown the seasonally sales, is to eight tend quarter by for quarterly four be launching the March X years and It than on multiplying for prescription pharmacy the This XX% of #X, September graphs the average units to two number

As you had to we we launched growth another product. can the new each see, layer as

the another product to have consistent, line add prescriptions pattern six current that of demonstrate products These results we room addition to three-year In our or we products, shipped. extensions growth of four to portfolio. a high, long-term believe

quality consistent to and R&D earlier, high very leadership mentioned quarter team and XXXX sales December prescription manufacturing track and a record our one, and effective dermatology prescription What the the year the growth? number, highs unit quarter dollars. are is the extends trade this three reasons shipped record As and departments. a and responsive Number regulatory for of new of

new quarter, of on price the the hired number we June growth can an #X, September from revenue salespeople quarters. Number derm most increases. two, example, For the on early growth and the impact of XXXX Slide three products; the And and and these sales XX of as the in see and had June reps timeframe. the launch graph in March you

our departments. track sales, is record trade, are very finance of year R&D, efforts to Sonoma staff proud of team, a other three manufacturing, the testimony We regulatory, the marketing, including and and

mentioned based and before. the on this team efforts for We of reasons will continue grow to the

three to sale America record track funding the In from assets. accomplished business, has dermatology the of addition, used been Ruthigen including of dilution, have predominately grow we this minimal with valuable non-diluted prescription stock Latin year sale and this funding

market three the conduit to in against is and quarter-over-quarter our importantly dermatology demonstrates future, which consistent our in driver the strong year leading prescription and the More track growth ability profitability. record primary to us execute

America and the and from low attractive lucrative As a and the business. of the the margins a sale transitioned the in the the as with this a dermatology product prescription revenue revenue higher Latin Sonoma company business, a our percentage prescription market. total specifically, revenue XXXX XX% grown U.S. XX% revenue predominately last in in current result U.S. of very three December of company with strong dermatology in has and growth XX% product quarter to More years quarter has a December dermatology from international gross with over to

a of As company. in be we closer get total the profitability closer percentage U.S. of that to revenue should about play dermatology the of the XX% to pure range

the dermatology revenue America takes that quickest and representing before mentioned businesses on business, As revenue product slow would year, estimate the Europe profitability. comments Q&A. rate manufacturing. the prescription revenue X% we XX% current and $XX received One range, from quickly hand world shown quarter-over-quarter we of year-over-year number will to annualized the cash relatively over our four, business and rest And to our derm we or was loss U.S. general of non-derm we to grow XX% current when XXXX be to at that graph. Latin open the these Latin as revenue decided the I of in a of to it million year of grow The from rate. the as over rate the financial new run will There profitability, offset the primary the are growth growth achieve at EBITDA sale achieve America. profitability it our the this to Q&A some Early fiscal in as product fiscal hire rapid growth XX% possible. will up past, our way a representing about growth U.S. The XX after we achieve in sales reps is goal

about As current rate reported our is annualized million. revenue run $XX

timing the will to will to quarter-over-quarter mentioned open on of units growth the I As profitability. back derm of expenses flat questions. that we and call Sonoma now growth sold. should operator depend turn The dermatology cash the remain profitability to the it the the the drive expect revenue prescription for relatively of reaching before, up should operating

Operator

the first of Maxim. you. is Instructions] from [Operator Jason And of line Thank your question Kolbert

Your line is open.

Jason Kolbert

can look are versus What that Hi, is the Celacyn, accretive, But, the understand quarter to specifically the $X.X a breakeven. understand kind to margin. be as one order How in kind you. to quarter comparison as out going I you mix Loyon. margins agree be we then, growth. forward? change see be almost thinking area in should is the at $X.X And very Thank Mondoxyne, question and of the they're sales quarters margins sequential also reps remarks, idea of guys. How the at reported should XXXX, I to revenues at you profiles margins And about help from adding about SG&A long going about you SebuDerm, million. thinking forward. high towards to going Congratulations. And I current ahead? the looking may at how margins Really, going in like one that your of The us - shift pretty we as XQ really with should had that how to want we going of SG&A It Alevicyn, this intrinsic Ceramax, but the how number in forward? the product we be figure product to I keys $X.X I'd like talked million focus me on million. seems answered that margin you listen, really

Robert Miller

That's number questions. a few of Okay. quite

the range. ranging mentioned, which level I we cash is $X.X one Let this in We compensation handle which mostly $X.X the moved charge, of I'm got should - we June million quarter expenses we dropping expense. expense above the actually don't it $X.X that of - size expenses, be cash XXX,XXX. me be think - let we the this operating another quarter. that that had first. about quarter expenses, as back other the in than We which should million, $X.X where now, talking from be me - And should And other should or XXX,XXX the operating that's, see operating to million increased onetime and we million, - deducting into accounting our the And was that some have is we little quarter we range. a were think number

the expenses. operating that's So

of terms - we of - it's of margins. an with margin, In that have gross gross have range mix interesting very businesses wide

We have it's them. we we can make tiny themselves And our a a business business, number, where until agreed make for Mexico product only to we a very X% to have it margin. them sold to for profitability they because

We Most businesses, be to tend we are the to XX% margin other gross also businesses. then of the range, international have in XX%-plus. the in have U.S. them which and XX%

the Some but of little in less, XX% business. are acute bit a them mostly, prescription care and

we XX% going highest what's year. fiscal is probably X% margins disappear to - to later sometime think from I time the going margin doubt that growth the to as be as growth. So pop this mentioned, seen we've next gross And the that overall without in mentioned, are margins. we we clear the represent up the a And year that think happen that business, is over going will

be Celacyn, it's the me when lines relating in markets. communicated reasonable be are to of expect say similar little larger somewhat expect past margins. The got would the between and the the reasonably your I bit third little margins. get level, is one businesses, most we a them this let low-XX%s we've And to similar Jason? question should fair terms margin. that SebuDerm be questions we've in now bit - same our we of grow frankly size, sizes. Did see I in there would margins. We to you've than product smaller - miss And to relatively got of similar think Mondoxyne themselves. we the to quite the So that, Alevicyn the But in other them Maybe a breakeven a and

Jason Kolbert

No, really did question. answer you my

million of thank going just you are forward? reps reps it's let the very into between, and a So you, it, flow? burning going So very - At point the the me adding with help we'll magic continue as on what kind quarter, that's How understand to that and continuing sales me clear under positive add million cash with in helpful. call to do top-line $X.X push sales balance that you revenues. and $XX sales-force translates consolidate to versus $X current build million sheet you cash towards sales-force

Robert Miller

we now right full-time XX we Yeah, to our with XX. Currently, equivalents, of the level, get have the we range some to in can is expect which to XX target that profitability something but our XX. in XX

range lot So business. be the additional people. gave you we our probably about we - cash by why XX% a fair close number to don't That's in sold We need expense Latin I get loaded America when operating that falling We then. a should still that increased that point. sales-force of to sales that to before, as

Jason Kolbert

perfect makes It Okay. sense.

So for of in with pick last this you their sales-force additional them would put be, my attractive bag. very question to one become products to up kind

existing that looking franchise? be complementary to product are opportunistically for So the you acquisitions would currently

Robert Miller

you actively I Jim, do are And, to know product you…? looking that, We because acquisitions. want something for about say

James Schutz

voice. the sales-force good pretty the funny a to we hear your and saying. this been dance has growing are. He's sudden Cincinnati. girl never from with Yeah, to He's all Jason, Bob before

So see sales-forces we're growing and expertise can European if more with and our we starting their FDA evaluate to asking companies more Asian and product.

is stuff products. the to and sales-force more sell hungry exciting So

Jason Kolbert

meaningful deck provided. very done. you. very the well really All Thanks. the concise clear, very concise, And slide you've great on call, a very very I right, It's guys. Congratulations the quarter. appreciate by way, Thank tight,

Robert Miller

you, Jason. thank Yeah,

James Schutz

Thanks, Jason.

Operator

Thank you.

line the Capital. Laura Stonegate of Engle from is question of next Our

Your line open. is

Laura Engle

on the Good Congratulations afternoon. quarter.

Robert Miller

Thank Laura. you,

Laura Engle

contractual Invekra there limit set? well but follow-up, deal to the on an is as how end into to there is said date that, far so that's related Just XXXX, and a you affecting as margins,

Robert Miller

October end end an is And it's year. and date, of this not… but the - date is There

Laura Engle

anniversary? two-year the So

Robert Miller

Yeah.

Laura Engle

Okay.

Robert Miller

means what no point And but to exactly. Yeah, may manufacture, in margin. we're though obliged a with us is ask to still - we X% it still is longer may time they manufacture at that

Laura Engle

Right, okay. Great.

Robert Miller

So I line in first will be to… the

Laura Engle

Ratchet that up, right.

Robert Miller

them motivation over that's But good think so. switch I to for too

Laura Engle

Right.

And on year that great. touching profitability? reaching for see as needs coming as do Okay, then, current far any what positive you cash and again burn, versus flow levels funding versus cash

Robert Miller

Well, to get June obviously, to breakeven expect no hopefully we September that that and we burn the that - to when significantly. pretty quarters point, of hoping go especially, burn obviously, And guarantees. as is down reduce to zero. no best closer But look quarters our you We're would going couple the probably forecast, our our over quarters the quarters. at are next

So hope Does see growth that our question? continued some burn. your and to that answer arena in reduction of we would

Laura Engle

yeah. yeah, Yeah, Thank you.

- point last then, will And prohibitive are the at products. looking UAE, you thoughts are recent will those them of Microcyn Why cost just - one all in related based areas Is what any just over-the-counter those look products. looks or are one Some the I think to different and be type it approvals for that? approval? with your kind be, on - Okay. the of like or U.S. in more

James Schutz

one? you me do that Bob, take want to

Robert Miller

Yeah, great. be it'd

James Schutz

but looking That's holding at us spent are breath. approval the And FDA none here indications close thanks attention products. for some obviously States, would get love paying of that. in you to time those for We on our so similar

and that the body. benefit with strong And notified of come profile in We to us a relatively safety give really UAE have they've broad approval. understand the

would love Laura, probably get same the going it's but in U.S., we So happen. not to the to

Laura Engle

congrats questions back my Thanks will taking Okay, queue. the okay, I well, in quarter. on again the for and get

Robert Miller

you. thank Yeah,

James Schutz

you. Thank

Operator

you. Thank

Raymond next Our from of Benchmark. Myers the with line question is

line open. is Your

Raymond Myers

Thank you quarter. congratulations on the questions for taking and the

you and ask ramping me it. Let about the the of sales-force productivity

when look XX year, that months, productivity the of reach to XX how say, through, last hired would you gain you productivity much get additional As new give they they what visibility you productivity? you sales after as the they months expect tenure, reps full at does

Robert Miller

point, XXX% prescription I same at had with salespeople salespeople when look had, So XXX%. look say, XX and XX we a and then and XX taking that's we just and would if the you percentage growth that's from the on And back that you start - added let's you XX go if basis, the XX to to time more, at we been then that about went increase.

the we we grow think the our and point. is grow, our the that actually growth - And they'll their have the that but really a six using by for salespeople thing way that's - that that at probably level people, still bit little still but telephone great flexibility other But we in we four people. spaces, so the and the another pattern part telephone using that probably we to area. or three with looking at to faster this the they're on in probably support revenue more, We we're we white we're care filling in particular, where a or have and and So to acute hired. don't start have two sales may at point, mentioned, months out in XX as add or

is we our So that way a continue growth. to that, good think

Raymond Myers

in The strong about for future? Sounds that achieve us was per prescription good. did trends the U.S. quarter. September dermatology does you very and the that revenue How what tell

Robert Miller

The dermatology revenue per…

Raymond Myers

Prescription.

Robert Miller

Okay.

in terms amount? of mean you the dollars So

Raymond Myers

per were recognized prescription high. Yeah. - prescription the quite The dollars

Robert Miller

Yeah, yeah.

been our to - we And pricing have is of prices, per the our basis in reasons that lower to gram that. our - increase you prices. we just a in able competitors, And but base, been the because are per a So - we increase in we've able is on see below pricing. below that's most gram lower and probably are a - one a lower especially per not a of

Raymond Myers

of Okay. be to prescription to future? the this you type expect per rate that dollars That's continue, you'd of great. where trend able Do hold in

Robert Miller

look and top what my off to could sure at back rate it looks And to I'm it see head. that go not to answer do question have that of I I exact the like. right and the what is

Raymond Myers

on the you spot. Okay. mean to put I didn't

Robert Miller

an remember for interesting That's the time. though question next it I'll and

Raymond Myers

nice a you it. on it's well Well, are doing Thanks. metric,

is give On then a in I it the Yeah, quarter? total why million you And no, right? quarterly have in $X.X R&D expense? yeah, million the OpEx? the was was high SG&A guidance quarter - that bit expense, more detail could bit Does to around, high the include it forecast. did goes Or that it expense to $X.X a that that

Robert Miller

and we OpEx, will, one-time - our is if total were cash one-time high, expense taking we that $X.X from that's noncash see - That hopefully go above operating chart. would not million quarter. above operating that $XXX,XXX see expenses June than came and you - stock the would compensation - our - would cash out especially than not but marketing comp other the That's go that a expenses the And expenses, the not some items, expenses some about our higher one-time the continue.

Raymond Myers

Excellent.

Can might you look us what and What little And this about that Good. like? the potential be us contribute? tell teased And what bit the partnership at a Brazil might for products. this new spring? beginning might you Okay. more product new example, about anything -

James Schutz

Brazil Marc, question? you want to take the

Marc Umscheid

yet, U.S. down would with last negotiations this we've to a similar we're quarter, I now spaces to the dermatological it's liberty We're pretty very advanced And in partner been disclose there. and not It looking the saying those strong at full in Yeah. discussions in said and great. be but

So on we shortly to news have hope that.

Raymond Myers

And… Great.

James Schutz

we But our us guru regulatory the us share that to for tuned surprises he approval earlier, April is soon stay broadened later. the telling it as we I out step rate, get spring, sometimes next and March, it. think we'll just as And sometimes

Raymond Myers

what was question would the psoriasis Can last talk impact then And that about about good. you have? expansion the label. to Very

James Schutz

FDA Yeah. indication got got Germany start. ours in their and data it pharma to We that it's currently from their we've product now - the compelling a in risk L-O-Y-O-N. psoriasis company queue, U.S. sold took we UK. in-licensed repetition, Germany Loyon, have than very, data. and U.S. the clinical for brand, a is broader the in terrific very back in clinical indication The of UK and They German In into the the is being and Europe,

are we official on Bob, the that. get saying we'll that timing? next line crossed within months, fingers our have XX we what's So our

Robert Miller

FDA been assay we've subject, saying, all obvious, That's [ph]. the to Yeah.

James Schutz

market currently it's We Europe. Yeah, footsteps big XX to the exactly. those hope clinicals follow terrific that But in to U.S. next in on being the sold with months. the indication within

Raymond Myers

you. Thank good. Very

James Schutz

Ray. Thank you,

Operator

you. Thank

Our Kolbert the line next of question Jason Maxim. from of is

is line open. Your

Jason Kolbert

going to going when the about you're that at rate million? $XX when just Hi, and me kind wanted follow-up lower through were you reason little why rate thinking just on of go run robust guidance. ex-U.S. Help to business you the And of million And rate I And you that is, heard guys. were derma rate $XX see to much growth annualized expect ultimately I'm run asking qualify a run the of larger? not stopping an on at more saying, the of to U.S. you bit talking kind business. be on a a we approaching I to with what because you were kind $XX understand, annualized mid-single-digits what million.

of that, kind you provide of rest clarity did on what little the correct? versus If of could the about bit world, were get you a I saying timing U.S. and more

Robert Miller

the did U.S. about versus rest correct. of you world. Yeah, is That

times which dollars. first or of that and multiply million, X.X breakeven. we $XX some a is… provided plus terms - taken just In the to That's million would minus be four, is That guidance $XX range the that know. you The about about at we our is general range say $XX all, I it that know, of our

Jason Kolbert

Okay.

Robert Miller

in end we could our where That's not years… limit of terms X in up

Jason Kolbert

course, not. Of

Robert Miller

That's get a Yeah. by that of and sort rate… could to divide you quarterly about we where would run four

Jason Kolbert

figure I No, that out. Sure. can

the putting what higher on year. I terms next my So and the calculations where now see can do U.S. growth a year let change in question the for percentage of is just of for this kind rate I given kind and growth to me of might

As which in-sight, towards is you that now breakeven, is of kind work fair?

Robert Miller

Yes.

international… you and - math have you're take our the still you well, it's, then that really and go to at, through So, do doing look - can

Jason Kolbert

have pilot, really right? former good a vision, I'm I

Robert Miller

a even know, I it pilot, you're better. which former makes Marine

in, pick and growth March June. of a going just tends and growing So it take then graph looking we've you And business comes rates, just quarter are back to that at you've growth say X, got the September be at see going to single-digit but down which win, on then we business or simple. of to let's it we're the at It's year-over-year. - out the think lower a rate, anyway I a as XX% but but and showing Page that to anyway make and it's that showed - another I quarter-over-quarter does the to quarter-over-quarter if got - of can X% range was the - XX% really let's you XX% December X%,

of XX%, to me numbers something than you that the probably the range probably even to So time. quarter-over-quarter X% better can it's you do these of it. in are you're over But guessing in range if want

Given…

Jason Kolbert

but we quarter. growth last I the to long fundamentals saw I what driving from can mean, the and growth see quarter that this that as Yeah, are as sequential

long And that how among prescribers. are really recognition could is point get more - you momentum, you're tipping matter critical As you where and a start I some company thing effort. brand into shareholder. awareness forecasting physician a just it's the and time numbers point intact, a a that? that's as those of reach fundamentals saying as as not not in move should is Do But of that? that math, terms and the really translate about to higher? we at You're win, of going wonder to And

Robert Miller

market And products our the seeing areas, scar whole into non-derm brand. treatment love prescription scar with to market. market, brand a think, we we're current Alevicyn only two market. two on would it of has We agree, expansion the even brands. already of additional the We number a - because being see on applications there the prescribed, the Celacyn big

to we coming growth back this brands but see yes, historically, for it's salespeople. So key the expand, expect additional the to a reason

to be the much. is had are very would have be bit the of this the point. And basically increase there get two, the bit not more little number sales And indicate that slower growth a growth achieve. people numbers that at larger than we've - things are rates difficult two a maybe that a little what as will So we're going to

So…

Jason Kolbert

it's understand why salespeople, this that though So long is but nervous as not keep thought they pretty accretive, one them? and clear being a huge more is adding about are adding market I as

Robert Miller

dermatology. think is the current grow actually sales somebody, white you high the them the that costly Yeah, are and that for with expenses telephonic return think this supporting high bigger add more also is, markets. can working the a will spaces, and help in we the some we money these bigger because money is and salesperson have the feet street of as return some the return not on nearly and give can salespeople. as covering can, the for We and as But nearly the really the us

Jason Kolbert

Okay.

I to Thanks allowing for good. Sounds me it. all appreciate ask the questions.

Robert Miller

Thank you, Jason.

James Schutz

Jason. you, Thank

Operator

Thank you.

is question [ph] private from line next of Our Panzig, a the investor. Eric

Your open. line is

Unidentified Analyst

Good afternoon, gentlemen. a general good one, questions; for and question. quarter. Thanks technical Two,

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people attract out get name. So word the how both we're and the to to going

James Schutz

me to want You it? clarify

Robert Miller

you Sure, yeah. do can it,

James Schutz

the We in Yeah. trying do a We us - terrific to attend down, the and just have a Denver, We're find about execute head that Eric, certainly you says, terrific do Wall sage advices months who you. that do keep that. Street gave conferences. your XX we conferences ago investor IR will some referenced, have investor We firm.

and But about investor hit you, talk then pleasing you on like side. somewhat is that. the to most are active numbers I'll these with relations to We tell to guys

Unidentified Analyst

Go I'm fair Okay, enough. ahead. sorry.

Robert Miller

terrible, interested. And small or pretty active just at James. do arena. people our most We like but were the and down at want just me key that the We We conferences most we Noble. not would liquidity we increase in we're Dawson that go to that [Fire Let of will to hit is have We telling of went add - the We We've to let if were And [ph] hit We West] you me story. the more company the done our key. microcaps, yes, LA. microcap conferences. Sidoti. were at even Rodman. something in it's

do how ideas you So we're to that. open on

Unidentified Analyst

issuing releases material, Yeah, shows, press I when those is and think road you objective. they're of attending materiality, course, can, that when

And they sometimes release before call. an companies choose to on get earnings to press their sales

there or feel press at notice. about So out yet is that release can people another least there good

guess, day's couldn't there So are number I if of the things, a sell. trading shares support couple wanted of as to volume I

for to out dilution out. lower at is, don't are to mean enough in. to isn't it reflecting the folks be all So the me. to stock point, no like I understand undervalued, call potential. educated rate at we raised - I can It's get at There's But the and I you but market if price, cash have raise greater And and want runs think that go this going to a I'm money. way the

shares that people would of because be So, of invest yeah, a won't that it. number that about on about that trade saying other concerned think daily by And concerned just companies in just our I it. there basis. end who And the I'm topic I would are folks certain

So shame, it's a shame. it's a

you So that. you anything - knew that just helpful. some be do can on note, color noticed I can On would give I

quarter of book something noticed I after investor, X%, I'm on quarter, And you about quarter on number And $X going sorry? there, So mentioned the X%. an million. institutional shares the X%, what's

Robert Miller

up We restricted may have be programs. stock or X%? do we question, type programs. we it of option thing - X% that why that do up. go But That your have is does Well, stock going

Unidentified Analyst

they transaction you X I well, on had an a was a - institutional transactions. was certainly quarter million Yeah, are, investor the there that X, regarding But X-Ks whatever this something, investor, call mentioned $X [indiscernible]. thought regarding the insider I'm there that particular sorry, I see the the

Robert Miller

ruling that okay. us. in because yeah, Yeah, of they into to was they'd indicated put additional And us money through came ATM, put That shareholders - yeah, And the one they're our to are it did better they the using they like tax some to their money market. do and like they that - at XXXX.

somebody hold - that tax thought was five if we And a - it that. us. pay from that years, get improved for an a deal for they they is don't we they So have benefit - good there they - to are

Unidentified Analyst

Okay, that appreciate that. and explains I okay, so

Lastly, and to have a guy to finance I'm - the excuse technical the you'll needs…

Robert Miller

That's too. okay, I am

Unidentified Analyst

here. know but, me kill I Bob, to going you're

or XX%. as Margins, the as numbers in XX% up XX% up up in all up - revenues in of QX XX%, cases. are QX QX QX a year-over-year. yippee year-over-year; a FY QX percentage talking we're the of Revenues, FY, a XX%, as revenues percentage XX% revenues Those of year-over-year; current Okay. revenues percentage QX

increases of then get bigger I the in XXX% a QX your $XXX,XXX Mexico X.XX So impact $XXX,XXX. divide revenue X% spreadsheet, margin margins QX went dollar of the my Excel on in out come But a to what If heard I Mexico, from dialog I the actually to a in that XX% than I that's to to terms, from increase. if number, throw might if difference XX% That's margin. your Mexico the by to XX%. to revenue deal. be portion

Robert Miller

quarters, have the I to lot each double comparisons of respond prior the of of check. each to can't that I'd A and one back go

Unidentified Analyst

Sure, right. ahead. Go

Robert Miller

the particular had what divided include we we what - accounting had when up I'm for - when and revenue trying those that you Mexico not have need each not pretty to changes rules in discontinued how may take and to And to one you and seem we to undertake that sold relating of to may And out. It's normal but make that did go double-check a - Latin expenses regimented to question. asset and follow. But to take complex, number a some be produced of assumptions rational I'd we I'd… really that and to respond we that COGS that. we back analyst. in change into the your out, have America to

Unidentified Analyst

Okay, and I won't the on spot. - I you put won't

Robert Miller

be do happy Yeah, to that. that… I'd And do I'd to be happy

Unidentified Analyst

- the generally Mexico Bob. I from at QX guess, spot. increase apologize, or my I outside is all QX I would your on to actually did of the look the [is the question be it] But question generally, revenue put [ph]? you No, won't deal presentations. I

Robert Miller

is took Mexico all QX from QX the yeah, Oh, accounting to place.

Mexico, in especially, it year. it talking go in the for then we back instance, the when discontinued And prior a to excluding of effect in modify about comparison where accounting. occur Most revenue the the were fiscal a of where prior at All XXXX to and when the to difficult expenses of lot disappeared. look the P&L year, we you're had a discrepancies compared year in looking comparison makes and XXXX that's

Unidentified Analyst

Well… Okay.

Robert Miller

believe Now, our that in QX maybe much this from But at it, else's QX, not probably QX a - I without of your and my terms different the numbers talk to were worth margins COGS. to point, QX and the in taking to change I'll confirming - everybody happy and And be it's this and time. it I'd you at offline. look take taking to

Unidentified Analyst

Bye-bye. you thank I'll much, again. Great, your patience I questions. well, - appreciate thank my great. with you Bob. Well, so

Robert Miller

Bye.

James Schutz

you, Thank Thanks. Eric.

Operator

at Bob this you. like showing further the remarks. closing time. turn Thank questions Miller no I'd for conference I'm to

Robert Miller

Yes.

everybody thank all, for First you of joining our call.

results that robust thank you effectively several support. ever non-antibiotic we've effective this of Sonoma that proud for shape for product continuing your and strong turnaround particularly team, of we is feel One executed strategy market, the the reasons. - is been quarter. are product non-steroidal, Sonoma a in in the We team and We for pipeline. And for unique very has Sonoma a experience a with attractive portfolio growing a dermatology sales best in

have strong three demonstrated last of time dermatology a over on, years, lot we've in quarter the the of track quarter market. a prescription spent as growth Over record we

plan, have our revenue we the progress place a three-year products launching our XX profitability efforts foundation you to which through consistent products commercial blocks It very profitability. all next reps, the in to the is we the achieve you with for products. of point, record. comparable With track with look is thank a quarter. that, and sales building believe you. our simple, growth EBITDA of of increases current and growth extension and the an continued we price forward call. EBITDA new of this And Our Thank We at sharing with our includes on

Operator

your participation the for does you thank conclude gentlemen, and conference. program. This in Ladies today's

have day. a Everyone, disconnect. great now may You

Sonoma Pharmaceuticals (SNOA) 7 Feb 182018 Q3 Earnings call transcript