NXGL - Earnings call 4 2022

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Operator

Good afternoon. I will be your conference operator today. At this time, I would like to welcome everyone to NEXGEL Inc.'s Fourth Quarter and Full Year 2022 Earnings Conference Call. Please be advised that today's call is being recorded. I will now turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications for introductions. ahead. go Please

Valter Pinto

Adam Good Quarter operator. I'm welcome, to Officer; everyone, today Officer. Thank Full evening, year Fourth and Executive Chief and Adam call. Chief XXXX NEXGEL's Financial by you, Levy, and Drapczuk, earnings joined conference

begin, of remind everyone may I'd Litigation of Private the today's safe made that statements forward-looking Reform to to be a uncertainties risks, factors. due XXXX, materially Securities results may harbor differ call deemed like and Act within we statements during of Before conference the actual other of meaning the variety and

otherwise, detailed result SEC business, the company law. Adam to ongoing as or I call Mr. information, on well Levy. future disclaims as Form a and reported release statements, forward-looking any risks over company's go to turn update of Adam, you evening the or whether otherwise any press X-K periodically The the intention or as in my For SEC. ahead. of some company's to with the pleasure new that, refer issued revise the discussion the it's unless and obligation filings with of required this a the to please uncertainties events With filed by

Adam Levy

our XXXX, and you, year results. multipronged vast grew a transformative fourth our today you, hydrogel We a first quarter a strategy Thank of Valter, year company, financial everyone, NEXGEL. confirming our was operating thank full steadily us to the successfully and XXXX business discuss platform. and for joining potential and full public for year year-over-year, executed proprietary as

increase, XX% products in revenue of growth and contract driven excess In consumer of XXXX, in by record we $X mostly XX.X%. branded million, XX.X% manufacturing a of achieved year-over-year revenues

of the our continuing year, gross processes nice did team reported refine a full margin to Throughout manage costs job profit appropriately. of we year, XX.X%. the our our a For and

foreseeable our expenses, the more revenues along year-over-year sales facility to further. will, runs, expect even continue to future, As with improving the larger margins grow for fixed we absorb the production increased of

fourth XXXX the results $XXX,XXX, of revenues flat quarter $XXX,XXX. of fourth For generated to quarter, the we of essentially

Sequentially, decreased slowdown within overall marketplace the branded which and an impacted saw This quarter reflects during from of revenues the consumer sales product XXXX we the $XX,XXX. Amazon overall sales by quarter, third our mix. sales

overall Our established in actually year-over-year, not ranking, share. sales in XX% that Amazon market and decrease a in the to decline improved product softness had lost indicating sales was but in due

we this condition. Amazon sales have so believe QX, temporary was a since rebounded in nicely

product the launches delays We experienced some impact QX. launches supply also -- not felt launch online impacted late be that to of QX. for these The the until full QX, late very in but chain new came of originally launches scheduled

quarter manufacturing lower-margin gross which affected of profit revenue higher contract The our quarter. X% margin, was contribution XXXX fourth also for the

to full strength As a business. continue for of direction generating our speaks macroeconomic challenging of backdrop, revenue business and navigate the at the year strategic we model XXXX, volumes record the

to line while getting contribution compared off each. launches Thus a in revenue normalized year-over-year, will branded product product seen allow to revenue of growth XX% QX a we about branded contract our in of the shifting to with products level revenue saw more be and to consumer QX, far, year-over-year have start. sales we normalize great more Amazon in new Both growth

Turning operations and corporate updates. to

effective bacteria, staph, solution risk infections. to Turfguard of turf group are been and so an making launched MRSA who FDA protect and dressing includes unique quarter, a a burn Turfguard, for During use approved is design wounds. turf silver, to -- turf athletic has athletes prone shown hydrogel kill been of on for have a skin product sterile and the by developed the we fourth patches that and burn. Turfguard Strep These XX%

Turf that a common injury artificial burn with into turf. when is come athletes occurs contact skin

seen We and our with product our well customers. resonate perform have

with proud Greg, Gurenlian, it are of Turfguard's athletes. to former into a we expand fact, and The the In player Major Beast, hands reach get partner to League help Lacrosse

Greg other are the to our at sports key one vertical various branded an cost. support as in of as well approaches efficient influencers product consumer of NEXGEL's growth

As fourth Packaging, CG earlier we I venture joint opportunistically CG we Subsequent LLC. Laboratories and XX% mentioned quarter, a acquired to of in end quarters, a interest to to Converting create invest prior and in will continue with the the

as within and of well joint we this to venture. for contributing are upgrades corporate of cash transaction, part the facility joint equipment purposes the a investment As purchase new general as venture the

CG division CG Labs also for one profitable transaction were customer a at for customers X increases alone, significant practical the or enough too years finished in not our combined improves of for and to capacity, the the streamlines past XX are us There between past our outreach. and already Converting be been largest operations, be of and our allowing This that is onboard margins successful synergies Packaging to for as well and large marketing the onboarding business supply good might NEXGEL. Labs, and large as has chain. customers immediately potential

XXXX. our be of second We agreement signed we beginning Healthcare we Haleon. the we at of closed of more After of accretive dialogue size and of very and transaction hydrogel, quarter the testing this with news, division, to the extensive Consumer March, GlaxoSmithKline's the expect company the earnings In work to stature to opportunity excited Haleon. services recent and a it with by are about

product a them As part we with of for supply agreement, scheduled the XXXX. material launch in tentatively will

its strong call beyond. Adam medical to XXXX manufacturing, products, white on enable developed our to branded execute will foundation have to devices label would a our grow that like strategies turn Drapczuk. year-over-year to segments I and contract With the in our over company that, CFO, We business now and

Adam Drapczuk

XXXX financial of Thank Today, results. and you, Adam. highlights I'll quarter full fourth review our year

pushed XXXX. branded consumer QX as and $XXX,XXX issues XXXX, due to in new fourth sales noted from of that revenue issues the early quarter QX and QX. earlier, originally This Adam product mentioned, quarter lower $XXX,XXX to for fourth launches into scheduled early compared the that Amazon supply late reflected For product was of chain the

were should QX, QX, our more Those in between QX branded another to and product seen sales to levels. In and drive date, which online products fully the expect return of come we launched XXXX, normalized we X to have products XXXX. sales mix throughout remainder

revenue a and As the for be product the closer mix XX-XX revenue of contract quarter product expect manufacturing XX% revenue versus fourth whereas contract result, manufacturing XX% branded to branded of was revenue. XXXX, to during we

$XXX,XXX manufacturing XX% full million $X.XX $X.XX to increase XX.X%, was or to XXXX. growth in The to XX.X% XXXX products revenues million the compared due branded for of in year by primarily and contract and Full respectively. increased both sales year revenues overall

margin for of Gross to in X%, lower-margin profit profit quarter for same XXXX. quarter. the $XX,XXX was the revenue Gross $XXX,XXX the during the quarter fourth period higher was of compared of contract XXXX fourth manufacturing for XXXX percentage a reflecting

from primarily over was year $XXX,XXX products for the and due branded increase year December ended year. is revenues The R&D increase increase was revenue. profit profit in for year-over-year to gross prior XXXX. Gross ended This from higher-margin to the the in the XX, compared X,XXX% XX, December a XXXX, $X,XXX

improvement margin XXXX, both XX, December XX, facility the gross continued for profit compared year XXXX. runs on to year ended company X.X% proven approximately larger margins revenue commercially expenses against Gross was December anticipates due XX.X% The fixed and increased the in ended for products. to production

company's The increase XXXX, the was $XXX,XXX to ended as the for compared of the ended quarter Cost XX.X% an to in year to increase or revenues the for $XXX,XXX XX, XX, of XX, December XXXX. XXXX, of quarter Cost XXXX. the $XXX,XXX was revenue of by $X.X December December cost compared revenues million to growth. million revenues December ended $XX,XXX XX, attributable ended $X.X for year increased for

revenues of ended company's prior to to year-over-year revenue for the XX, the as including R&D XXXX, year. December year million cost in growth. increase operating expenses, expenses, increased the and Total $X.X million for The SG&A compared $X.X reflects

delivery an professional other to increased to governance associated initiation requirements. public expenses franchise and increase company the investment and development and in technology drug cost The tax, administrative X utilizing hydrogel primarily of increase for with candidates research of was the studies fees proof-of-concept attributable related our

franchise tax to gross the exceptionally was high due IPO The company's assets. in increase and associated the

earnings be in $XX,XXX. third our quarter XXXX action during shares. in we we authorized estimate lower will call, took August now franchise to mentioned in result This As will XXXX, which corrective lower the substantially taxes

is increased proof-of-concept from earlier. for $XX,XXX Research year ended The studies XX, by ended XX, XXXX. the to mentioned $XXX,XXX XXXX, due December year the expenses to and for December $XXX,XXX the X I increase development

$X.XX as to to loss million December for year XX, totaled Net same the Interest year. the million the the year million $X.XX compared million compared ended prior period full XXXX, expense December ended as for was the of XX, XXXX. XXXX, for $X.XX full year $X.XX for

XXXX, up In of a And our result, interest our decrease this convertible majority in debt, off will makes paid expense as the which XXXX. all we interest expense. of dramatically

December had of which cash of in NEXGEL XXXX, cash $X.X and of XX, treasuries million. securities, investment an As million includes equivalents $X.X marketable and

NEXGEL XXXX, now call like for December outstanding. would Operator? X,XXX,XXX of open I common As to had of shares questions. the XX, stock

Operator

Instructions] [Operator

line Group. Our of with first the Naz from question Rahman Maxim comes

Nazibur Rahman

like slowed a decline. X% give margins. start I understand gross Congrats [indiscernible] had margins, almost on was Like, why Amazon, a is? on only the just sales, that to why sales color branded of the it XX% your on the you the just few. the but consumer down due total delta XQ kind from like as sales, the of quarter-over-quarter, to your full X percentage more Can about declined looks year. I in slowdown but to quarter-over-quarter I want

Adam Levy

we size dig to numbers about compared talking So smaller that that really into occur. could got because aberrations to you're

types. of contract different some are So margins product different the for manufacturing

that as the I would Amazon. as was imagine it the in reduction So well

was, a Amazon much business more high-margin and than us, for now it very So for second become has in example, quarter. the first so

there optimize Hero XX% We've now on to margin our products. our approaching spend able to been we're XX%, where advertising Amazon

a first are sense? because profitable make might now Does our the aspects produced quarter, in the quarters in that decline have such and it of whereas in business. So those X will margin-wise change margin that most dramatic X, not the

Nazibur Rahman

makes Yes. sense. That

manufacturing. confidence like number? and much how mentioned on visibility What contract for your also you point XXXX branded to that that the kind between at gives expect XX-XX products the Or of in have XX-XX? you be do you this You that XX-XX revenue

Adam Levy

more perhaps So addressing is think in number I and QX actually half of the first that QX. mix the

are I better things well attainable I that in as get think products, than we that with actually into QX Amblyopia, us move products, to the slew going new and manufacturing. is release even that of the QX contract higher-margin think of going whole it's move growth a past rates to

I So of then what think to you're and QX, XX-XX, first going But quarter probably that accurate for the had than see very probably we it third in see pretty is into probably is of half going product which our get or be the that later we better to XX-XX, schedule. so, the even XX-XX confident because release we move QX. in year. And we're quarters as

Nazibur Rahman

I Could what very recently. agreement, it. of Got a -- through want bit develop is there opportunity more product, agreement this give develop in? to the the little Haleon about of also, signed the the product on, be products potential market the partnership just or talk you I supply opportunities guess, sort color or to you additional launch to in And area used the guess, future? I an

Adam Levy

going So I'm the -- I'll -- try work backwards. to

there's the part last a always possibility. is So

sure. very But We have with. work been we off some They've there. relationship that's the early distance. Like we discussions, they've don't us, fantastic have team wonderful been good but know the and for with that to well into a stage to

trying I that. to comment working always of first calls, approached fish. us wouldn't land been in And They Haleon, had the We've and to 'XX. January bigger I previous to in want on on alluded

process know are this is difficult. to a audits point you for get So onboarding company the the even to long, of size that

product. caution a that opportunity pretty The I a is us, consumer huge intense. This it's really for represents testing really, but

So on to are the on depend success going long-term results the company the of and product. the effects

whenever revenues You will projections, that nice year first see their their just very increase comes. initial from order in and first

product not not whether you But and if sustained know, for out on success. consumer the you our a as commercial put or that's will, never a given. of products, depend transformative whether that or And course, is business

the to that excited for work think could tiny it's really of deal us, We an the company. size So product, the we're with bigger all a companies, this of selected them. company have even they Haleon used

proud very the us to depend product. it on going success that. volumes it our is the We're of So what to speaks of means But platform. to the ultimate, financially

So...

Nazibur Rahman

responsible commercialization guys Right. is And for cost? talk the the responsible that. about of the for Haleon just just this far supply as you all to product, want strictly commercialization as and are costs actual I

Adam Levy

actually Well, the It's so purchasing us. product. supply their they're from

Nazibur Rahman

CG with the it. forward product ability Got going the that future, you you've I'm see in kind labs you Haleon think Or venture to agreements the supply vary? joint more was what to extent, Haleon? Or to that impacted signed are think CG And -- will now of a assuming Labs, to do did somewhat the could future? in your you agreements your partnerships expect of size JV, we you or some And agreement. the do see range similar recent

Adam Levy

more with I'm speak they'll nothing the on and hoping for table us want right there's do projects but us, to can't I now. Well, so that with work Haleon.

Let's first and them then show make them great. deliver, get one that's there we go and from and the and happy can then through we'll

talked But have a that of fill before, look, size of And and in of for order order making terms don't capacity I've on packaging. about converting gel. clearly, our calls bottleneck even numerous be an would we to beyond that, the initial Haleon's

using We have very capacity of and gel. are huge capacity to make our little

packaging But of could manual, prior this deal was the too large and expensive, too we operation and converting not size. our CG handle orders to

so why where can Haleon with talked we're size that we've because label many first yes, big larger of service see is orders the So biggest the that's we white times is about we that's -- a that we that's did last customers year, deal customers. hoping custom, and is the CG, of for where and and that for reason many of kind again, -- But this the potential and what growth. is,

orders we for on able size. those want that growth potential as if and to of to see need orders And handle we the be to biggest and execute and produce that

packaging the orders we're having success even TURFGUARD, current with size products at we're anymore those of and SILVERSEAL converting the Additionally, and with NEXGEL. not

We outside CG, for them soon all were through that a well. are be equipment that. as third-party done flowing we'll But using upgrades the contractor business at as as

do as So the for things CG a outsourcing they stand even margin deal to collect lot products of on allows they're us already us and big because additional too now.

Nazibur Rahman

of in upcoming Amblyopia and of a bit largest kind view, talk launches. are? your through our about Could product to want just I it. Got walk little us you your launch the launch, what since one it's your promotional plans for

Adam Levy

Nelson, help, spokesperson of we have Ophthalmology So really for Leonard is of the be as the Wills Journal to to co-developer are well very the Director of the editor Institute, the and kind Dr. the to fortunate Pediatric of this. who as

lots Marriott conference, on pediatric have is practices. of the actually the in Marquis and out and going So the to at foray York, first public who lots be week Friday initial this at New occurring Thursday Saturday the of meeting APOS and and conference the ophthalmologists

is that model can their that and show nice that some by model using think we become of other we channel. way sell they superior Dr. actually believe that difficult really particular to devices market them patients, product of them in we supply product, And we some this a believe distribution and a can offer to a that, a unlike lot chain, is so to medical where is penetration -- allows Our we instance. have the Nelson, competition what there's our in

Nazibur Rahman

of the of MEDAGEL kind at just of you what a talk it. evaluate the know to its and line. services product sort on you'd kind different And it's your progression? about launch be of you than looking metrics Got type also launch, Could

Adam Levy

the you understand want evaluate we understand of to launch Amblyopia the to patch, how the question, So would that?

Nazibur Rahman

How Yes. would evaluate. you

Adam Levy

to anymore. XXX% better. a going rolling I'm XX going get child it it days real Once we're was about and same for this they to by Nelson. tackling have like and reorder product early is to XX talking products in tremendous. and adopting going able The patients the the practices crying would to practices. it's success quickly. and adopting any you My know the practices. go, be other continue introductions template offer My to relatively going issue in Dr. patients you We "Wow, blocking up The the be that those early already we And to made get to create use not and is get way then that's practices that into back face product come use to that any out. We're lined just looks this." And many other they we should when child's and practices, pattern. see through

Operator

Instructions] There Thank further conclude in questions are you conference. This for no does [Operator today's the participation. your call.

a You and day. have lines at may your time, this disconnect wonderful

NEXGEL (NXGL) 27 Mar 232022 Q4 Earnings call transcript