Earnings call transcript: Synergy CHC Q2 2025 Reports Strong Profitability Growth

Synergy CHC Corporation (SNYR) has reported a robust second quarter for 2025, showcasing significant improvements in key financial metrics and strategic expansions. The company achieved a net income increase of 125% year-over-year, with net revenue reaching $8.1 million, marking a 1% rise. With a market capitalization of $34.79 million and impressive gross profit margins of 68.56%, InvestingPro data shows the company maintains strong operational efficiency. Despite a slight dip in stock price during pre-market trading, the company remains optimistic about future growth, particularly with planned international expansions.

Key Takeaways

• Net income soared by 125% year-over-year.
• Gross margin improved to 76.7% from 69.5%.
• The company secured major distribution deals in North America.
• Synergy CHC is expanding into new international markets, including Australia and Taiwan.

Company Performance

Synergy CHC continues to demonstrate strong performance, marking its tenth consecutive quarter of profitability. The company has effectively capitalized on its leadership in the brain health supplement category, enhancing its distribution network across North America. Notably, the company has expanded its FocusVactor brand licensing to the UAE and Turkey, and established a new subsidiary in Mexico, underlining its commitment to international growth.

Financial Highlights

• Revenue: $8.1 million, a 1% increase year-over-year.
• Net Income: $1.47 million, up 125% year-over-year.
• Earnings per share: $0.17, an 86% increase.
• Gross Margin: 76.7%, up from 69.5%.
• EBITDA: $3.8 million, a 136% increase.
• Cash and Cash Equivalents: $1.5 million, up from $687,900.

Market Reaction

Synergy CHC’s stock experienced a 1.24% decline post-earnings, with pre-market trading showing a further 5.96% drop. The current stock price stands at $3.63, down from a previous close of $3.86. This movement places the stock within its 52-week range, which has seen highs of $10 and lows of $1.19. Despite the dip, the company’s long-term growth prospects remain promising.

Outlook & Guidance

Looking ahead, Synergy CHC expects revenue acceleration in the latter half of 2025, driven by new market entries in Australia and Taiwan, and continued pursuit of international licensing partnerships. InvestingPro analysts anticipate strong sales growth this year, with the company maintaining healthy liquidity ratios (current ratio: 1.91). The company has provided EPS forecasts for upcoming quarters, with expectations of $0.1 for Q3 2025 and $0.19 for Q4 2025. Revenue forecasts for these periods are $12.1 million and $16 million, respectively. [Get access to 12 additional exclusive InvestingPro Tips for SNYR and detailed financial analysis through the Pro Research Report.]

Executive Commentary

CEO Jack Ross expressed satisfaction with the company’s performance, stating, "We are very pleased to report that the quarter marked our tenth consecutive quarter of profitability." He also highlighted the significance of recent retail wins, noting, "These retail wins are a clear signal that our expanding reach and growing relevance with both consumers and retail partners." Ross emphasized the importance of the company’s refinancing efforts, saying, "We view this refinancing as a major milestone that enhances financial flexibility."

Risks and Challenges

• The company faces potential challenges with international market entry, including regulatory hurdles and cultural differences.
• Supply chain disruptions could impact product availability and distribution efficiency.
• Macroeconomic pressures, such as currency fluctuations, could affect international revenue.
• Increased competition in the brain health supplement category may pressure market share.
• Higher professional expenses due to public company status could impact profitability.

Synergy CHC Corporation remains focused on scaling its beverage and supplement businesses, leveraging its strong distribution network and expanding global footprint to drive future growth.

Full transcript - Synergy CHC Corp (SNYR) Q2 2025:

Lisa, Conference Call Moderator: Good morning, everyone, and thank you for participating in today’s conference call to discuss Synergy’s CHC Corporation’s financial results for the second quarter ended 06/30/2025. Joining us today are Synergy’s CEO, Jack Ross CFO, Jamie Thicket and Greg Robles with Investor Relations. Following their remarks, we’ll open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Robles as he reads the company’s safe harbor statement.

Greg, please go ahead.

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

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

Jack Ross, CEO, Synergy CHC Corporation: Thank you, Greg. Good morning, everyone. Thank you for joining us today to discuss Synergy’s performance for the 2025. We are very pleased to report that the quarter marked our tenth consecutive quarter of profitability, a significant milestone that reflects our continued operational discipline and focused execution. Revenue, gross profit, net income, earnings per share all grew year over year, underscoring the strength of our platform as we continue scaling profitability.

Before we get into the results, let me touch on a few key developments across our business. First, an update on our international expansion. Following last quarter’s announcement of a license agreement for The UAE, we have expanded that agreement to now include Turkey, further extending our global footprint for the FocusVactor brand. These agreements allow us to enter high potential international markets in a capital efficient way, and we expect both regions to begin generating additional revenue before the end of this year. We continue to pursue additional partner licensing partnerships in markets where we do not intend to establish a direct footprint.

We have completed a formation of a new wholly owned subsidiary in Mexico. We are actively engaging manufacturing partners and customers. We expect to be shipping our first two new customers, Costco Mexico and Walmart Mexico, late in the third quarter or early in the 2025. We still plan on entering Australia and Taiwan markets early in the 2025, with Costco being the lead customer in both regions. Next, I would like to update you on the functional beverage business momentum that continues to build both operationally and organizationally.

During the second quarter, we’ve assembled a high caliber leadership team to drive Synergy’s beverage strategy and growth. Their decades of collective experience across CPG, convenience and global retail development will position us to scale quickly and effectively. In fact, the growth is already translating to shelf. During the second quarter, we secured some of the most significant distribution wins in Synergy’s history, which will meaningfully expand access to both Focus Factor supplements and Focus and Energy beverages across North America. A few highlights on the beverage side, Core Mark, a division of Performance Food Group, one of North America’s largest food and beverage distributors, granted national item authorization for the focus factor, focus and energy, unlocking access to sell to over 50,000 retail locations across The U.

S. And Canada. On the supplement side, Walmart Canada will be launching two SKUs nationally in Q4, marking a major milestone for us. This placement builds on our eighteen year relationship with Walmart U. S.

And further affirms Hocus Factor’s leadership in growing the brain health category. In parallel, McKesson Canada, the country’s largest pharmaceutical distributors, has signed a national distribution agreement that gives us access to thousands of pharmacies and wellness retailers across Canada. These retail wins are a clear signal that our expanding reach and growing relevance with both consumers and retail partners, combined with strong execution from our leadership team, we expect the momentum to accelerate into the second half and beyond. Before passing the call over to Jamie, our CFO, I want to touch briefly on our debt refinancing, which we announced we completed in June. We entered into a new $20,000,000 term loan credit facility, of which we’ve drawn down $17,500,000 of that facility to pay out previous facilities.

This extends our debt maturity date into 2029, which includes interest only payments through the ’5. The transaction immediately improves our balance sheet by eliminating all short term debt obligations and providing growth capital to support our strategic initiatives. We view this refinancing as a major milestone that enhances financial flexibility, increases free cash flow in the near term and better aligns our capital structure with Synergy’s long term growth strategy. With those updates, I’d like to turn the call over to our Chief Financial Officer, Jamie Pickman. Jamie?

Jamie Pickman, CFO, Synergy CHC Corporation: Thank you, Jack. I’ll now review our financial results. For the 2025, net revenue was $8,100,000 compared to $8,000,000 in the year ago quarter, reflecting an increase of 1%. We also generated $1,400,000 in license fee revenue during the quarter. Gross margin for the second quarter was 76.7% compared to 69.5% in the same quarter last year.

The increase in gross margin was primarily driven by license revenue. Operating expenses for the second quarter were $4,600,000 compared to $4,000,000 in the year ago quarter. The increase in operating expenses was primarily due to the incremental costs associated with being a public company. Income from operations was $1,620,000 up 2.5% from $1,580,000 compared to the 2024. Net income for the second quarter was $1,470,000 compared to $655,000 in the year ago quarter, representing an increase of 125%.

Earnings per share for the second quarter was $0.17 per diluted share compared to zero nine dollars per diluted share in the year ago quarter, representing an increase of 86%. These increases reflect the successful execution of our strategic growth initiatives and cost management. EBITDA for the second quarter was $3,800,000 up 136% compared to $1,610,000 in the 2024. Moving to our balance sheet. As of 06/30/2025, we had cash and cash equivalents of $1,500,000 compared to $687,900 as of 12/31/2024.

Inventory was $2,400,000 at the end of the second quarter compared to $1,700,000 at 12/31/2024. At 06/30/2025, we had 32,100,000.0 in total liabilities, which compares to 33,000,000 in total liabilities at 12/31/2024, which is a decrease of 869,000 in the second quarter. Subsequent to the quarter end, we’ve also reduced our outstanding notes payable by an additional 1,800,000 At 06/30/2025, we had a working capital surplus of $12,400,000 compared to a working capital deficit of $1,120,000 as of 12/31/2024. For the six months ended 06/30/2025, our cash used in operating activities was $899,700 compared to cash used in operating activities of 1,100,000.0 at 06/30/2024. The decrease primarily reflects higher net income, partially offset by changes in working capital, including increases in accounts receivable and inventory.

Now I will turn the call back to the operator.

Lisa, Conference Call Moderator: Thank you, ma’am. At this time, if you would like to ask a question, please press 11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, press 11 again. We also ask that you wait for your name and company to be announced before proceeding with your question.

One moment for the first question. And the first question that I have today is coming from the line of Sean McGowan of ROTH Capital Partners. Please proceed.

Sean McGowan, Analyst, ROTH Capital Partners: Hi, good morning, Jack. Good morning, Jamie. How are you?

Jack Ross, CEO, Synergy CHC Corporation: Good morning, Sean. How are you today?

Sean McGowan, Analyst, ROTH Capital Partners: Good. A couple of questions on the RTD. So did you were you able to book much revenue in the quarter? Or is that still to come?

Jack Ross, CEO, Synergy CHC Corporation: Mostly still to come, but we did see a significant improvement on our Amazon sell through, relatively speaking. Quarter over quarter, last quarter, I think we sold $41,000 on Amazon. This quarter, it was three times that. It was 148,000 if you will. So as you know, the minute that we closed our financing round, our debt restructuring, and we could utilize the capital to start growing our RTD business in a meaningful way, we instantly switched and started adding team and started signing retail partners.

So more to come on RTDs very quickly in the third and fourth quarter.

Sean McGowan, Analyst, ROTH Capital Partners: Okay. So besides Amazon, what retailers currently have the product on shelf right now?

Jack Ross, CEO, Synergy CHC Corporation: Multiple retailers in Canada. You know, I’d have to get you a list of them, Sean, but multiple retailers in Canada, if you will.

Sean McGowan, Analyst, ROTH Capital Partners: I’m just wondering, like, we started to see that revenue or is that not yet showing up? I’m trying to get a sense of how much was in the quarter.

Jack Ross, CEO, Synergy CHC Corporation: Dollars 148,000 in the quarter.

Sean McGowan, Analyst, ROTH Capital Partners: Okay, thank you on that. And I assume that the licensing revenue is basically 100% gross margin?

Jack Ross, CEO, Synergy CHC Corporation: Correct.

Sean McGowan, Analyst, ROTH Capital Partners: Would you expect the licensing revenue to, I’m not sure how the deals are constructed, is it strictly a percentage of sales or do you get kind of, you know, steady payments? What should we expect that line to do? Is that going to grow slowly or is it going to be lumpy?

Jack Ross, CEO, Synergy CHC Corporation: Yeah, so, you know, it’s going to grow slowly. We are talking to other groups in other countries. Again, we only plan to do those deals where we don’t intend to put a sales team or our own organization to sell the retail. So we are talking to some other groups, but we don’t really expect anything in the third quarter for license and revenue. So it might get a little bumpy, if you will.

Sean McGowan, Analyst, ROTH Capital Partners: Okay. Got it. Jamie, could you talk about any expenses, that hit the quarter that you would say are kind of unusual or non recurring? Is there anything of that nature?

Jamie Pickman, CFO, Synergy CHC Corporation: We did have a lot of professional fees and legal expenses that were higher than normal, again, due to being a public market company. Selling and operations was in line. I would say that would be the only one timers or unusual in the quarter.

Sean McGowan, Analyst, ROTH Capital Partners: Okay. But those professional I mean, the costs of being public are going to persist, right?

Jack Ross, CEO, Synergy CHC Corporation: Yes, correct. But they didn’t index against last year. That’s all she’s saying.

Sean McGowan, Analyst, ROTH Capital Partners: Right. All right. And then Mexico, will that be accounted for as a revenue or a license deal? That’s revenue, right?

Jack Ross, CEO, Synergy CHC Corporation: That’s revenue. We have our own footprint there. We have our own company there. Really anywhere Costco is, we’ll have our own sales teams and have our own revenue, if you will. Okay.

Sean McGowan, Analyst, ROTH Capital Partners: And are you was there were you able to book any flat tummy revenue in this quarter?

Jack Ross, CEO, Synergy CHC Corporation: A flat tummy is, you know, is staying pretty steady, but we’ll call nothing new to report at this point in time.

Sean McGowan, Analyst, ROTH Capital Partners: All right. Thank you very much.

Jack Ross, CEO, Synergy CHC Corporation: Thank you, Sean.

Lisa, Conference Call Moderator: Thank you. And this does conclude today’s Q and A session, and I would like to go ahead and turn the call back over to Mr. Ross for closing remarks. Please go ahead.

Jack Ross, CEO, Synergy CHC Corporation: Thank you, Lisa. We’d like to thank everyone for joining the earnings call today, and we look forward to speaking with you when we report the third quarter results in November. Thank you.

Lisa, Conference Call Moderator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.

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