NXGL - Earnings call 3 2023

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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's Third Quarter 2023 Earnings Conference Call.

I will now turn the call over to Valter Pinto, Managing Director of KCSA Strategic Communications, for introductions. Please go ahead.

Valter Pinto

operator. you, Thank welcome, Earnings and the Third NEXGEL Good Call. everyone, XXXX Conference Quarter afternoon, to I'm Adam today Financial joined by Officer Drapczuk, Officer; of Chief Adam NEXGEL. Levy, Chief Executive

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

For refer with of as uncertainties X-K the a the SEC. this the ongoing in the with discussion of periodically Form detailed some the well issued risks as company's you release filed on and business, press the and I'll company's evening SEC filed to reports

obligation by any or update statements, new disclaims any forward-looking result or required as events information, future company otherwise revise law. intention whether unless or a of -- to otherwise The

it's Adam my to that, call please the turn Adam, ahead. Levy. With to Mr. pleasure over go

Adam Levy

you, Thank quarter operating you, and us joining financial XXXX our for results. to everyone, discuss today third and Valter, thank

deliver $X.XX to second of pleased up exceeds increase in million XXXX. the X as full quarter note, in and last record revenue. revenue XXX% another $X.XX the quarters million, our are We an in QX of of to compared $X.X the slightly million year-over-year revenue for of of yet Of quarter XXXX revenue generated year

top have and which has be excellent line recently line growth an made accretive the into we on This contribution with in increase our is JV XX% investment manufacturing. from contributed benefits. bottom The in mutually a as an is of of Labs. second we beneficial acquisition interest by driven the CG to $XXX,XXX X contract to the was transaction year-over-year proved return the consecutive realized our which Growth to has well. It last and quarter materially revenue JV, on this the in quickly the payment

and have full come benefits to as margins also validated. that the to We yet realize installed the as will is equipment new

first We agreement of equipment AbbVie supplier recently gel Pulse Acoustic QX device. expect come supply Rapid the to the of announced their be to pads in with online for We the XXXX. executing

AbbVie done. of $XXX technology, cash demonstrated required acquired razor significant this our diligence from Soliton, many its XXXX, in razor of blade extensive be months, as chosen to owner model for RESONIC hydrogels December after million for cellulite. due its the of improvement each in the for appearance AbbVie In were After device to the procedure

of we of of. size to the us very the AbbVie standards uniqueness select is Our company and demonstrates are our a ability the high proud their meet technology that something fact would of

next We expect RESONIC be year. device the to launched

have this revenue significant making for been impactful to the ensure NEXGEL. for and prepared We potentially fully we necessary are preparations opportunity

cleared and year-over-year products burns. of This which and MRSA dressing to consumer quarter-over-quarter us, are and a hero have reviews. XX%. is be hydrogel led positive silver XX% consistently branded kill FDA This continues patches clinically for for sterile to popularity Our and by was gaining unique The XX% wounds grew and by a shown product STREP. been SilverSeal, product STAPH,

North messaging also resonated with wounds. Health behind-the-counter progress making has many consumers. good use They've America, for product in with a hospital to home are pain of reduce for device and was and Enigma we available shown SilverSeal distribution. years, been for now retail our our scarring In hospital-grade

traction market, to and we have for in Now gained leading our products time steady is audience have put that these it the the on vetted fully products shelves.

see by an and our we summer. with our update patch. we products on realistically active retailers shelves many provided amblyopia been on Last have well, Our leading coming discussions this could going quarter,

the and have and product ophthalmology offices has been thus feedback We have the positive. launched since to far shipped very XX approximately

We next the strategy. phase are of our reorder and monitoring rollout plan rates, adoption to feedback consumer currently

significant our also going XX% improving we to QX Gross profit margins in strides a the again from improving gross in made QX gross in have improved quarter. QX gross profit, QX. in sequentially and Importantly, to compared XX.X% loss a to prior in

QX Our also to in with in from continued the net in goal in our to quarter-over-quarter, $XXX,XXX QX third to trend loss QX. in $XXX,XXX quarter lower line XXXX profitable become $XXX,XXX in to

items. of Included $XXX,XXX quarter net $XX,XXX approximately for noncash loss the our in third are of

and equipment Our decrease to million investments. quarter $X.X and property, September cash XX, at June period and loss in million increase and net plant during an improved decreased XX, net at XXXX to the The cash over between our from cash $X.X related accounts the XXXX. the equivalents delta was receivables

period we business customers who mentioned typically closer of terms XX require by terms. customers Converting lengthier payment Packaging Therefore, terms. during quarter, core compared CG increased and Their to $XXX,XXX. as As the payment last XX-day to the days are NEXGEL's AR payment receive

equipment in and the invested plant during $XXX,XXX also property, We additional quarter.

be to the Before I for a turn we Adam, also us over lot QX was as about into have significant head a excited to we while -- year. quarter call next

inventory to growth expect increase automation and and line beyond. in our our branded and markets in into as retail product significant as hydrogels new we to equipment for capacity we XXXX strategically in meet to opportunity well have our the and Given proprietary invested customers, onboard increase the new demand in

year-over-year, continue We priority. is highest expansion expect towards to and which our net move our continue profitability, revenue as loss we always to the decrease to margin grow

like turn over call With the that, I our Adam? CFO, Drapczuk. would to Adam to

Adam Drapczuk

results. third Thank you, Adam. Today, highlights our I'll review XXXX financial of quarter

was the or totaled the compared $XXX,XXX year quarter quarterly third venture to formed the contribution CG of revenues for revenue joint to million, due The same Labs. in manufacturing year-over-year, $X.XX the increase with including from in primarily prior. overall growth products $XXX,XXX as period and XXX% of increase revenue branded an sales For XXXX, contract

quarter for the profit same prior of $XXX,XXX XXXX third of quarter to during of Gross margin the Gross XXXX. for for of profit the was third XX.X% Gross profit $XXX,XXX year a the year during XXXX compared before. the quarter of to period. for XX% the was to as the quarter second compared increased period same to margin compared sequentially XX.X% XX.X% XXXX gross third

expenses prior expenses, for months for operating total in and to expenses Total period. compared was million X XXXX, R&D year the R&D decreased to a the $X.XX September ended $XXX,XXX decrease The including and SG&A to XX, year-over-year attributable decrease SG&A period-over-period.

$XXX,XXX $X.XX $XXX,XXX XXXX. to of period Net to XXXX $X.XX loss diluted during XXXX. of Net improved the loss quarter third compared per second XX, quarter loss or ended share $XXX,XXX or for to and also as improved basic diluted the and XXXX, $X.X in the September of million net same compared basic to for the share per during sequentially quarter

XXXX, of XX, As September cash. of approximately million $X.X NEXGEL had

invested XXXX. expenditures for its at in and the company the During new capacity quarter, supply new facility to Texas agreements our increased execute capital equipment to in prepare the us

shares November had X,XXX,XXX common of NEXGEL XX, outstanding. XXXX, As of stock

to would now the I for call questions. like open Operator?

Operator

[Operator Instructions] Our Maxim Naz first with question from Rahman Group. comes

Nazibur Rahman

the potential in If the the agreement Congratulations 'XX? about and talk could RESONIC on few. more with you economics little on -- have AbbVie I supply start I a to bit opportunity progress. a NEXGEL the the market product, for could

Adam Levy

good Nav, again. you from Sure. to hear

NDA with under AbbVie. So look, we're

better But successful, control that I I of this. us. is couldn't launch. are partner So impactful a can can forecast. they and say say I not share And significant a like can't obviously in really ask in if obviously that revenue their you much product their for this We're for extremely

Nazibur Rahman

have Do by a Got for them. potential more could And any similar signed a it. also product? kind launch on you year hear of earlier this potential deal lines product product updates itself a you the any when about a you the on note, on with and do time Haleon Or launch? we have

Adam Levy

actually the little AbbVie product. than off bit product a further That Yes. is

on been certainly product. of So are kind targeting somewhere or that in guidance as mid think an has 'XX about for of 'XX our end -- probably the update that they always

Nazibur Rahman

Got helpful. That's it.

at happened, and in do with everything that's you So different points, very, or you and obviously about of a the a now of it's what like driver, had on. on a most think initiatives I've have XXXX, conversations internal and is then growth Based on least like significant had transformative strategic very potential those -- strategic lot high-level had X question going 'XX? you thinking more

Adam Levy

AbbVie. be staring in Unquestionably, but good that right X face. other going probably us is things, some it's There's to the

Nazibur Rahman

revenue Got it. of how much Do could that your you -- of much compromise? revenue that AbbVie have any on thoughts how

Adam Levy

that imagine investment. we they're out. they're Again, and significant, going look, have the kind million can't out can't go be -- this more any this I but is $XXX -- think. knowledge, for They to it I $X.X week going under I direct go product. I'm NDA, imagine billion, don't of to again, And than with will very paid

opportunity far, we that job that So -- do we if do that by can the if biggest on have. is, product, really they they that think the

Nazibur Rahman

Understood.

mainly Could provide more little what On And like And regarding the the either commented you you color I guess, or found you curious remarks, patch. patients physicians actual which launch. of are being in or also in that about of got new I on feedback percentages? terms the from prepared do amblyopia many of you terms they're the of idea given to, you have was is use any a patch, switches. new have the how patch patients

Adam Levy

great So question.

very are the They've eyes the to either as existing worst and being the complaining. are or with around so far, worst that got are rings given feedback blistering red were children issues has irritation were terrific. different a ones those the that using patch. as far been the So Generally, because they're patients patients The irritated. their

a giving So to as patients. they're giving those patients to doctors now to get and steadily be are set every foremost, offer reordering to in steadily it different and think I in. practice more it more first and And then people. other goes come through, to month are seem it to the who the They and going

to to don't exactly percentage picture we I patients their switch of yet, full think need what what going have this, is understand of are right? the to and

feels expensive it And use problems. we eye much it the that, can or that I and are about everybody buy just so else premium are worst It's better if a of going ones than defines to significant you patients the because need determine what to And slight more to on Amazon. size Actually, premium. is irritations something the the a it's like going market. or XX% course, the think the with really of worst it

lot resources put the should doing and some try talking want stories. that step how to tell And research. this getting that be, will determine a of lot from some great us thing. tell where ramp to patients we should feedback to us really the what doctors. our should We're we of We're next of kind a our we of So as

Nazibur Rahman

wholesale large That beyond have you orders very point amblyopia, any was helpful. reorders. on orders for And also inquiries on that the initial gotten potentially or

Adam Levy

no, don't a of the forces XXX like professional but before until practice mean, expensive orders, think we've X out what small large yet, of we're gotten I have overall a practices So those offices. things lot a you we're ready are that's and part might bunch of we of scheme trying get engage whole to that time more determine some at in those ordered to practices. of I quite sales boxes that still go doctors'

we're We plan X make cheap that understand understand is talk to But the and will a we definitely doing when like things not the our of around. engage want ready, to understand someone because we're product, what pitch about that. that's that

Nazibur Rahman

Understood.

I and initiatives XXX(k) But very update So devices provide development little of to the -- a bit Could and meeting progress I also your you're near-term you also pipeline. obviously, you ongoing working about on initiatives. have potential a a the want of on? talk lot

Adam Levy

Sure, sure.

that we effective have. the at that for devices thing pumps XXX(k) inability at that had and our manufacturing to we cost produce So and dies them off main an pushed to the was the them scale with currently

new the dive. well, going guys prototype very to tested those worked ordering come They and ahead very, we're have We in. now and

forward again. we XX XX testing probably it moving we're product so start will to days, for and in going to then those be And the next and submit manufacture ready products to

had Fortunately, it an of But out much as to X pick on only so as effectively. important despite delay, that project that that's we us, to for manufacture we've do soon think it project, work we are up back we and can several. it's going

Operator

[ . question next from Our Michalski] Instructions] Chris [Operator comes

Unknown Analyst

Congratulations results. on good very

Adam Levy

you, Thank Chris.

Unknown Analyst

yields? Are wouldn't So cash LD year this reach do you to statement? you profitability said need that conference, you given any cash -- during confirm this the next additional quarter's Micro you still

Adam Levy

Yes.

that something But there we financing that. could not point, we was to an any So would, cash accretive do going said reach or itself directly always that are need opportunity at to presented a I've we profitability. purchase that if tied to also that

have well right million. below our cash as we still was loss $X.X $XXX,XXX, and now, So of

some bigger go you're not companies Fortunately, ramping of payment like have, terms now when you you're dealing with that when these we retail. with into

a think But us if profitability allow and good that's going think we're any cash. scale we before do, the a to not cash. to be the We're we we of same out will about good cushion. cash we're means at of now. something now, to that to we okay I So and that reason in point, it right at hiccup run adding announce going there's right don't way as need pretty to have time, some unless that with there scale going projecting need that, But really a is we

Unknown Analyst

hear. to good very is This Okay.

as had correctly, SilverSeal good And business there was that sequential well -- sequentially, any if growth your part great as heard struck because you did that SilverSeal I on revenue not growth of much. grow very congratulations sequentially your annual. So and in

Adam Levy

Sequentially, grow much, always but work that revenues SilverSeal didn't grew. did out. that We have of couple get products you not that rid of a

you're our on test our we products profitability. compared when launching high very will advertising especially model, the have a rate new is products which those to when So product, a Amazon,

are So as And you the probably much various what we threshold, you we overall watch but XX% around than to then seem drop is then the they're to and lower the heroes then have reorders, because you product which you get subscribed start products really not popular tacos that, And our acquiring get a saves. be scaling. if to get XX% is to is do profitable and advertising customers. certain

we products dropping We put criteria. every product -- works, meet out all don't we're that the that every time, not

going a But limited SilverSeal drop. So part process. in yes, is market. come of on real Amazon calling growth growth there's products longer from the that a weeding that's to sequential few and That's we the no because

is going retail and next markets, foreign near for The the and coming future. us step what's that's to be in

Unknown Analyst

to year. the retail it's going And be Okay. sometime as said you next

Adam Levy

Yes.

think I around just that think time. through. it's retailers that reasonable the It's go to mid-summer, process

just probably There's meetings would not interest X extremely retail. several All lot products, on of Silver of have now have we because to think be our gone hero a X Seal at that well. products we viable

updates next have as on get when quarterly picture, we'll a we clearer marketplace. exactly I give And as you the we'll in call the products to think

Unknown Analyst

at Okay. a financially, undergoing least And seems that seems it the you that fit it profile company of strong growth. sequential

you're growing, money more receivable accounts investing Your in inventory.

are growth we comments any Or sequential So QX? going to again? for see

Adam Levy

the really We we that you're But strong large also to you as us. growth give tend from customers see tell don't that continue kick remember, to to very very going guidance will periodically. to quarters. in I had

a a like more look line flat doesn't up, it looks hill, like a So like staircase. straight it

new of can new general announced had sense? come and think customers that possible make then pattern always jumps. take are as we is kind quarter But you'll kind see of the quarter. going large this And quarter, I as kind it a Does So you a of that's that a description you things forward. have flat flat online,

Unknown Analyst

Yes. Yes.

Operator

reached have session. the We teleconference. for participation. Instructions] end concludes our you This of [Operator today's your Thank question-and-answer

may lines You disconnect your now.

NEXGEL (NXGL) 13 Nov 232023 Q3 Earnings call transcript