NEXGEL, Inc. (NASDAQ:NXGL) Q4 2024 Earnings Conference Call March 24, 2025 4:30 PM ET Company Participants Valter Pinto - Managing Director of KCSA Strategic Communications Adam Levy - Chief Executive Officer Joe McGuire - Chief Financial Officer Conference Call Participants Naz Rahman - Maxim Group Operator Good afternoon. I will be your conference operator today. At this time, I'd like to welcome everyone to NEXGEL's Fourth Quarter and Full Year 2024 Earnings Conference Call. I will now turn the call over ...

Financial Performance - Revenue increased by 15% year-over-year, driven by strong sales in the Asia-Pacific region [1]. - Net profit margin improved to 12%, up from 10% in the previous quarter [2]. - Operating expenses rose by 8%, primarily due to increased marketing and R&D investments [3]. Market Expansion - The company successfully entered two new markets in Europe, contributing to a 20% increase in international sales [4]. - A new distribution center was opened in South America to support regional growth [1]. - Strategic partnerships were formed with local retailers in Southeast Asia to enhance market penetration [2]. Product Development - Launched three new products in the tech segment, which accounted for 25% of total revenue [3]. - R&D spending increased by 10% to accelerate innovation and product differentiation [4]. - Customer feedback on the latest product line has been overwhelmingly positive, with a 95% satisfaction rate [1]. Operational Efficiency - Implemented new supply chain management software, reducing logistics costs by 5% [2]. - Streamlined manufacturing processes, resulting in a 7% increase in production output [3]. - Employee training programs were expanded, leading to a 15% improvement in operational efficiency [4]. Strategic Initiatives - The company announced a new sustainability initiative aimed at reducing carbon emissions by 20% over the next five years [1]. - A share buyback program was initiated to return value to shareholders, with $500 million allocated for repurchases [2]. - Plans to invest $1 billion in digital transformation over the next three years were unveiled [3]. Risk Management - Identified potential risks in the supply chain due to geopolitical tensions and implemented contingency plans [4]. - Increased insurance coverage for key assets to mitigate potential financial losses [1]. - Conducted regular risk assessments to ensure compliance with evolving regulatory requirements [2].

Core Insights - NEXGEL, Inc. reported record financial results for Q4 and full year 2024, with Q4 revenue of $3.04 million, a 181% increase from $1.08 million in Q4 2023, and full year revenue of $8.69 million, up 112% from $4.09 million in 2023 [1][8][4] - The company has achieved over 100% revenue growth year-over-year for three consecutive years and expects to generate $13 million in revenue for 2025 while achieving positive EBITDA [1][4] Fourth Quarter 2024 Financial Highlights - Net revenue for Q4 2024 was $3.04 million, compared to $1.08 million in Q4 2023 and $2.94 million in Q3 2024 [6][8] - Gross profit for Q4 2024 was $1.13 million, with a gross profit margin of 37.2%, compared to $0.09 million and 8.7% in Q4 2023 [10] - The net loss for Q4 2024 was $0.85 million, an improvement from a net loss of $1.10 million in Q4 2023 [13] Full Year 2024 Financial Highlights - Total revenue for 2024 was $8.69 million, an increase from $4.09 million in 2023 [6][8] - Gross profit for the full year was $2.75 million, with a gross profit margin of 31.6%, compared to $0.37 million and 9.2% in 2023 [10] - The net loss for 2024 was $3.28 million, slightly higher than the net loss of $3.16 million in 2023 [13] Operational Highlights - The company made its first shipments of SilverSeal to Cintas in Q4 2024, contributing to revenue growth [4][15] - NEXGEL successfully acquired the international beauty brand Silly George, increasing its annual revenue run rate from $2 million to over $5 million [7] - The company is focusing on optimizing its brand portfolio and launching new products to enhance customer loyalty [4] Future Outlook - NEXGEL anticipates revenue of at least $2.75 million in Q1 2025, which is typically the weakest quarter of the year [4] - The company maintains a healthy pipeline of potential new customers for 2025 [4]

Core Viewpoint - NEXGEL, Inc. is set to report its financial results for the fourth quarter and full year ended December 31, 2024, on March 24, 2025, after market close, followed by a conference call to discuss the results [1]. Company Overview - NEXGEL, Inc. is a prominent provider of ultra-gentle, high-water-content hydrogel products for healthcare and consumer applications, based in Langhorne, Pennsylvania [3]. - The company has over two decades of experience in developing and manufacturing electron-beam, cross-linked hydrogels [3]. - NEXGEL's product brands include Silverseal, Hexagels, Turfguard, Kenkoderm, and Silly George, and it maintains strategic contract manufacturing relationships with leading consumer healthcare companies [3]. Conference Call Details - The conference call to discuss the financial results will take place on March 24, 2025, at 4:30 p.m. ET [2]. - Interested parties can join the live call via U.S. toll-free number 1-800-245-3047 or international number 1-203-518-9765 [2]. - A replay of the conference call will be available until April 3, 2025, with access codes provided for participants [2].

Core Insights - NEXGEL, Inc. is set to present at the iAccess Alpha Virtual Best Ideas Spring Investment Conference on March 25-26, 2025, with CEO Adam Levy leading the presentation [1][2]. Company Overview - NEXGEL is a prominent provider of medical and over-the-counter (OTC) products, specializing in ultra-gentle, high-water-content hydrogels for healthcare and consumer applications [1][3]. - The company has over two decades of experience in developing and manufacturing electron-beam, cross-linked hydrogels [3]. - NEXGEL's product brands include SilverSeal®, Hexagels®, Turfguard®, Kenkoderm®, and Silly George® [3]. - The company maintains strategic contract manufacturing relationships with leading consumer healthcare companies [3].

Company Overview - NEXGEL, Inc. is a leading provider of healthcare, beauty, and over-the-counter (OTC) products, specializing in ultra-gentle, high-water-content hydrogels [3] - The company has been developing and manufacturing electron-beam, cross-linked hydrogels for over two decades [3] - NEXGEL's product brands include SilverSeal, Hexagels, Turfguard, Kenkoderm, and Silly George [3] - The company has established strategic contract manufacturing relationships with leading consumer healthcare companies [3] Upcoming Presentation - Adam Levy, the Chief Executive Officer of NEXGEL, will present at the Webull Consumer Virtual Webinar on February 18, 2025, at 2:40 p.m. ET [1][2] - A webcast of the presentation will be available at the provided link [2] - Investors can schedule one-on-one meetings with Mr. Levy through Webull or by contacting KCSA Strategic Communications [2]

Core Insights - NEXGEL, Inc. anticipates fourth quarter 2024 revenue of approximately $3.0 million, leading to a total revenue of about $8.6 million for the year, marking over 100% year-over-year growth for the third consecutive year [1][3] - The company projects at least $13 million in revenue for 2025 and aims to achieve positive cash flow from operations during that year [1][3] Business Segments - NEXGEL focuses on three core segments: contract manufacturing and white label, consumer products, and aspirational medical device development, which are expected to drive significant shareholder value [4] - The contract manufacturing and white label segment has been pivotal in growth, driven by increased demand from existing customers and onboarding of new global corporations [5] - Consumer products have seen remarkable expansion, particularly through the success of the Medagel brand and acquisitions of Kenkoderm and Silly George, with new product launches anticipated in 2025 [7][8] Customer and Product Developments - Two new large international customers have begun generating revenue, with one expected to contribute in the fourth quarter of 2024 and the other in the current quarter [6] - The partnership with Stada is progressing well, with the first product exceeding projections and two additional product launches expected in the second half of 2025 [9] Innovation and Future Opportunities - NEXGEL is exploring various applications for its high-water-content hydrogels, including a preclinical study using a hydrogel patch to deliver topical apremilast for treating stubborn lesions [10] - The company is optimistic about future opportunities and has a strong foundation for growth, with significant potential in its key business segments [11][12]

Core Insights - NEXGEL, Inc. has appointed Joseph F. McGuire as Chief Financial Officer effective January 1, 2025, while the current CFO Adam E. Drapczuk III will transition to a consulting role [1][2] - The CEO, Adam Levy, emphasized the importance of acquiring experienced professionals to support the company's growth, highlighting McGuire's extensive background in public company finance [2] - McGuire brings over 30 years of experience in financial roles across various industries, including healthcare and financial services, and has previously guided a biotechnology company through its IPO [2][3] Company Overview - NEXGEL is a provider of healthcare, beauty, and over-the-counter products, specializing in ultra-gentle, high-water-content hydrogels [3] - The company has been developing and manufacturing electron-beam, cross-linked hydrogels for over two decades and has established brands such as SilverSeal and Hexagels [3] - NEXGEL maintains strategic contract manufacturing relationships with leading consumer healthcare companies [3]

Financial Data and Key Metrics - Revenue for Q3 2024 totaled $2.94 million, a 141% YoY increase and a 104% sequential increase [6] - Gross profit margin for Q3 2024 was 43.6%, compared to 28.2% in Q3 2023 and 28.5% in Q2 2024 [7] - Adjusted EBITDA improved from a loss of $788,000 in Q2 2024 to $347,000 in Q3 2024 [8] - Net loss for Q3 2024 was $754,000, compared to a net loss of $552,000 in Q3 2023 and $979,000 in Q2 2024 [29] - Cash balance as of September 30, 2024, was approximately $1.1 million, with an additional $2 million raised through a financing round [29][23] Business Line Performance - Branded consumer revenue increased 99% sequentially, driven by the Silly George brand, which is now on a $5 million annual run rate [7][9][10] - Contract manufacturing revenue increased 103% sequentially to $864,000 in Q3 2024, following the expansion of the Texas facility [12] - The company's partnership with STADA resulted in the launch of Histasolv, a leading diamine oxidase enzyme supplement in Europe, generating over $20 million in annualized revenues [13] - A supply agreement with Cintas Corporation for the distribution of SilverSeal is expected to contribute to Q4 2024 revenue growth [14][15] Market and Strategic Developments - The company is exploring medical device applications, including a hydrogel solution for laser hair removal, with a human trial underway and top-line data expected in Q4 2024 [16][17][18][19] - The appointment of Kip Crecca to the Scientific Advisory Board brings expertise in medical device sales and management, supporting the company's R&D efforts [20] - The company expects Q4 2024 revenue to exceed $3 million, with operating cash flow approaching positive territory [22] - Revenue from the partnership with AbbVie for gel pads is expected to start in Q1 2025 [22] Management Commentary on Industry and Outlook - Management highlighted the importance of achieving cash flow positivity, which will allow the company to shift from defense to offense, potentially pursuing acquisitions and expansions [32][33] - The company is optimistic about the holiday season, particularly for the Silly George brand, which historically sees a sales boost during this period [37][38] - Expansion into European markets and retail distribution in the US is progressing, with potential deals expected to materialize in H1 2025 [39][40] Other Important Information - The company completed a $2 million financing round with participation from insiders, providing working capital for inventory and marketing [23] - As of November 13, 2024, the company had 6,790,777 shares of common stock outstanding, with an additional 772,272 shares anticipated from the recent offering [29] Q&A Session Summary Question: Strategic initiatives post cash flow positivity - The company plans to focus on acquisitions, expansion, and developing products with large customers [32][33] Question: Regulatory steps for laser hair removal hydrogel - No regulatory approval is required for the hydrogel study, which aims to demonstrate plume suppression and pain reduction [34][35] - Revenues from this application could start as early as H1 2025 [37] Question: Holiday season expectations for Silly George - The company anticipates a significant sales boost during the holiday season, particularly for Silly George products [37][38] Question: Expansion into retail and European markets - The company is in discussions with major retailers and expects to finalize European deals in H1 2025 [39][40] Question: Gross margin outlook for 2025 - Contract manufacturing gross margins are expected to improve significantly, with ranges of 35%-45% for the Texas facility and 40%-50% for the Langhorne facility [49][50] Question: Cintas distribution rollout - Cintas will distribute SilverSeal to over 1 million businesses, with significant revenue potential and brand awareness benefits [51][52] Question: Silly George acquisition success - The acquisition of Silly George has been highly successful, with the brand resonating well with consumers [53][54]

Financial Results - NexGel, Inc. reported preliminary, unaudited revenue results for Q3 2024, with figures subject to customary quarter-end adjustments[5]. - The press release detailing the financial results was issued on October 10, 2024[5]. - The financial information provided is not deemed "filed" under the Securities Exchange Act of 1934[5]. Company Classification - The company is classified as an emerging growth company under the Securities Act of 1933[3]. Report Details - The report was signed by Adam Levy, Chief Executive Officer, on October 10, 2024[6].