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Synergy CHC Corp. (SNYR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered ninth consecutive profitable quarter: revenue $8.17M, gross margin 75.4%, operating income $1.95M, net income $0.88M, diluted EPS $0.10; EBITDA $1.98M, with EBITDA margin expanding to 24.1% .
  • Versus consensus: EPS beat ($0.10 vs $0.07), while revenue missed ($8.17M vs $9.03M). The EPS beat was driven by lower OpEx and mix-driven margin expansion; the revenue miss reflects lapping a one-time sell-in that did not repeat in 2025 (bold indicates magnitude for traders) .
  • Strategic catalysts: $1.5M UAE licensing fee (Q1) with revenue expected to begin in Q4; Amazon POs of nearly $1M for RTD beverages in Q2 with full rollout in 2H; long-term supplier agreement for FOCUSfactor shifting inventory ownership to supplier, driving cost savings .
  • Balance sheet actions and outlook: entered term sheets to refinance debt, extending maturities to 2029 and expected to alleviate >$10M of principal payments in 2025, accelerating near‑term FCF; cash at quarter‑end was $0.18M; total liabilities reduced by $1.7M sequentially .

What Went Well and What Went Wrong

What Went Well

  • Margin and EPS execution: “30% growth in earnings per share year‑over‑year… expanded our EBITDA margins significantly to 24.1% vs. 19.7% in the prior year period” (CEO) .
  • Licensing and international expansion: $1.5M UAE license fee booked in Q1; Mexico subsidiary established with Costco/Walmart onboarding; Australia and Taiwan targeted for Q4 openings (Costco lead) .
  • RTD commercialization momentum: nearly $1M in Amazon POs in Q2 and >400 additional convenience stores opened in Canada; industry veteran hired to scale beverages .

What Went Wrong

  • Top-line decline and revenue miss vs. consensus: revenue fell 13% YoY to $8.17M due to a 2024 one-time sell-in not repeating; consensus had expected ~$9.03M (miss) .
  • Cash and working capital pressure: cash and equivalents declined to $0.18M; operating cash flow was negative $0.82M in Q1, driven by inventory build and reduction in payables .
  • Continued leverage and interest burden: interest expense was $1.10M in Q1; sequential liquidity tightness underscores urgency of refinancing .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD)$7,126,333 $10,300,000 $8,170,534
Gross Margin %67.2% 63.3% 75.4%
Operating Income ($USD)$1,050,875 $1,400,000 $1,947,703
Net Income ($USD)$783,593 $105,700 $876,264
Diluted EPS ($)$0.10 $0.01 $0.10
EBITDA ($USD)$1,300,000 $1,700,000 $1,980,000
EBITDA Margin %——24.1%

Segment/Revenue Composition (Q1 2025):

MetricQ1 2025
Product Sales ($USD)$6,670,534
License Revenue ($USD)$1,500,000
Total Revenue ($USD)$8,170,534

Balance Sheet KPIs (quarter-end):

KPIQ3 2024Q4 2024Q1 2025
Cash & Equivalents ($USD)$259,375 $687,920 $177,882
Inventory ($USD)$1,910,515 $1,716,552 $2,346,487
Total Liabilities ($USD)$37,339,045 $32,974,444 $31,295,408

Non-GAAP reconciliation (Q1 2025):

Reconciliation ItemQ1 2025
Net Income ($M)$0.88
Interest expense, net ($M)$1.08
Amortization of intangibles ($M)$0.03
Taxes expense (benefit) ($M)$(0.01)
EBITDA ($M)$1.98

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
RTD RevenueQ2 2025N/A~$2.0M expected in Q2; Amazon POs nearly $1M; full rollout in 2H 2025 New
International License Revenue (UAE)Q4 2025N/ARevenue to begin in Q4 following registration timeline New
Market Entries (Australia, Taiwan)Q4 2025N/AMarkets expected to open early Q4; Costco as lead customer New
Mexico Subsidiary RevenueQ3 2025N/ARevenue expected early Q3 with Costco/Walmart onboarding New
G&A ExpenseFY 2025N/AExpected flat as % of revenue despite minor headcount adds Maintained (qual.)
Supplier Agreement/COGSEffective Apr 2025N/ASupplier owns inventory and ships direct; expected significant cost savings New (cost down)
Debt Refinancing2025–2029Prior maturities (2025 principal heavy)Term sheets to extend maturity to 2029; alleviate >$10M of 2025 principal; accelerate near-term FCF Improved
Formal Financial Guidance (Rev/EPS/Margins)FY/Q2 2025None providedNone issued; qualitative outlook only —

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
RTD beverages commercializationPilots completed; minimal Q3 sales; 2M cans printed for early 2025 shipment Strong Canada/Texas pilots; scale in early Q2 2025 $30k Q1 RTD revenue; ~$2M Q2 expectation; Amazon POs nearly $1M; >400 convenience stores added; senior hire to drive growth Accelerating rollout 2H 2025
International expansionTarget Australia, Taiwan, Mexico in mid/late 2025 Reiterated 3 markets in 2025 UAE license signed ($1.5M fee); Mexico subsidiary incorporated; AU/TW timing early Q4 Advancing; initial monetization Q4
Retailer de‑inventorying/FOCUSfactor rebrandingSignificant Q3 impact (~$3M) Continued but diminishing in Q4 Behind them entering 2025; mix improved margins Residual impact fading
Debt reduction/refinancingReduced debt by $1.1M Q3, $3.1M post‑IPO Reduced debt by $4.5M Q4 Term sheets to extend to 2029; >$10M 2025 principal relief Material de‑risking pending
GLP‑1 support product expansion (Flat Tummy)Planned 7 SKUs for 2025 Launched 7 SKUs in Q1 2025 Continued expansion, leveraging social/media and retail partners Executing
Tariffs/macroNot discussedNot discussedMinimal expected impact due to local sourcing; potential ingredient impacts manageable Low risk currently

Management Commentary

  • “We are very pleased to report 30% growth in earnings per share year-over-year, marking our ninth consecutive quarter of profitability… expanded our EBITDA margins significantly to 24.1%” (CEO, Jack Ross) .
  • On RTD: “We received nearly $1 million of purchase orders from Amazon… expect to be in full rollout mode with Amazon and other major retailers in the back half of the year” .
  • On licensing: “We signed a licensee for the United Arab Emirates… we received a fee for $1.5 million… expect to start generating revenue in the fourth quarter” .
  • On cost structure: “Long-term supplier agreement… supplier now owning the inventory and shipping directly… significant cost saving benefits” .
  • On debt: “Entered into 2 term sheets to refinance… expected to accelerate free cash flow… alleviate more than $10 million of principal payments in 2025… extend maturity… into 2029” .

Q&A Highlights

  • RTD trajectory: Q1 RTD revenue ~$30k; $()$2M expected in Q2 driven by Amazon; focus on U.S./Canada convenience stores and existing retail network .
  • Expense framework: G&A expected to be “pretty flat” as a percentage, with minor headcount additions .
  • Licensing revenue: $1.5M UAE upfront fee recognized in Q1; future revenue based on sales in territory beginning Q4 .
  • Geographic clarifications: New markets targeted for Australia and Taiwan (not Thailand) .

Estimates Context

MetricConsensus*ActualResult
Revenue ($USD)$9,025,000*$8,170,534 Miss
Primary EPS ($)$0.07*$0.10 Beat
# of Estimates (Revenue)1*——
# of Estimates (EPS)1*——

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Execution drove an EPS beat despite revenue headwinds; margin expansion and OpEx discipline were decisive this quarter .
  • Near‑term trading catalyst: RTD commercialization (Amazon + convenience channels) and international licensing revenue commencement in Q4 provide tangible 2H acceleration vectors .
  • Structural cost improvements via supplier agreement should support sustained gross margin and reduce working capital intensity .
  • Balance sheet remains leveraged with low cash; successful refinancing (to 2029) would materially de‑risk 2025 cash needs and free cash flow trajectory .
  • Q1 revenue miss reflects non-recurring 2024 sell‑in; watch for sequential recovery as de‑inventorying is behind them and RTD ramps .
  • Flat Tummy’s GLP‑1 adjacency and retail expansion broaden growth optionality beyond core FOCUSfactor .
  • Estimates likely to adjust: upward on EPS (margin visibility, refinancing) and potentially lower/normalized on near‑term revenue until RTD ramps are evidenced in Q2/Q3 prints (consensus coverage is thin) .