Rockwell Medical, Inc.

Good morning and welcome to Rockwell Medical's second quarter 2024 results conference call and webcast. Please note this event is being recorded. At this time, I would like to turn the conference call over to Heather Hunter, Senior Vice President, Chief Corporate Affairs Officer at Rockwell Medical. Heather, please go ahead.

Good morning and thank you for joining us for this update on Rockwell Medical. Joining me on today's conference call are Dr. Mark Strobeck, Rockwell Medical's President and Chief Executive Officer, and Jesse Neary, Rockwell Medical's Senior Vice President of Finance. Before we begin, I would like to remind you that this conference call will contain forward-looking statements about Rockwell Medical within the meaning of the federal security clause, including but not limited to the types of statements identified as forward-looking in our annual report on Form 10-K and our subsequent periodic reports filed with the SEC. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions and expectations only as of today. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by, such forward-looking statements are discussed in greater detail in our periodic reports filed with the SEC. Rockwell Medical's quarterly report on Form 10-Q for the three months ended June 30, 2024, was filed prior to this call and provides a full analysis of the company's business strategy as well as the company's second quarter 2024 results. The reconciliation on non-GAAP measures we discussed on today's call can also be found in today's press release. Our Form 10-Q and other reports filed with the SEC, along with today's press release, our investor presentation, and a replay of today's conference call and webcast can be found on Rockwell Medical's website under the Investors section. Now I would like to turn the conference call over to Rockwell Medical's President and CEO, Dr. Mark Strobeck.

Thank you, Heather. Good morning, and thank you for joining us today for Rockwell Medical's second quarter 2024 results conference call and webcast. I'd like to start off this morning by reflecting on the last two years since I joined Rockwell and since we assembled the team we have now who are leading our organization through significant and transformative growth and change. When we presented our second quarter results to shareholders back in 2022, we laid out what we believed were lofty but attainable goals for Rockwell. For the first time in the company's history, we set out to put Rockwell Medical on a steady path to consistently grow revenue, drive the company to $100 million in annual sales, go from a gross loss on this business to an increasing gross profit, increase our gross margin from a negative number to a consistently greater positive number, attain sustained profitability, and significantly lower our debt burden. At the time, it was clear that shareholders were apprehensive, doubtful even, that we could and would achieve these objectives. Oftentimes, we would get asked, so how are you guys different? Why should we believe you? It was understandable. Over the years, Rockwell has had a lot of turnover. The company's financial results were not supporting growth or financial stability, and those circumstances damaged Rockwell's credibility with shareholders and stock performance suffered. I am proud and excited to share that we have delivered and continue to deliver on our promises. For the first time in recent memory, we achieved profitability on a cash flow and adjusted EBITDA basis for the second quarter 2024. We believe that this is a critical turning point for Rockwell, and we expect to build upon this momentum in the coming quarters. Let me walk you through some of the numbers that get us to this cash flow positive outcome for Rockwell. Net sales for the second quarter 2024 were once again the highest quarterly concentrate product sales generated to date for Rockwell. In the second quarter 2024, we generated net sales of $25.8 million, which was largely driven by our improved value-based pricing and increasing volumes. Annualizing our second quarter 2024 net sales would put us north of $100 million in revenue, a goal that we set out to achieve two years ago. Additionally, we continue to achieve consecutive quarters of improved gross profit and gross margins. having reported $4.6 million in gross profit and 18% gross margin for the second quarter of 2024. This quarter's results exceeded the gross margin guidance we projected for the full year of 2024 and is starting to approach the gross margin we expect to achieve in 2025. We believe gross margin will continue to improve and trend upward as we continue to streamline production, improve our processes, enhance our distribution capabilities, and further modernize our infrastructure. The combination of increased sales and greater gross margin has led to cash flow from operations of $1.4 million for the second quarter, and as a consequence, an increase in our cash balance. Our cash balance has gone from $8.6 million at the end of the first quarter to $10.2 million around the time we reported our first quarter earnings to $11.9 million at the end of the second quarter. We expect that our cash balance will continue to increase as we continue to be profitable. Jesse will have more to say on the numbers in a moment. At the end of the day, the success we have demonstrated and the objectives we set out to achieve have resulted from hard work and consistent execution. In addition to the objectives we presented two years ago, we were also determined to rebuild credibility with our shareholders. We believe it's paramount that shareholders feel confident that the team leading this company today is transparent about its plans and is executing against its plans. We are aware that reestablishing credibility doesn't happen overnight, but we believe that the results speak for themselves. For the past two years, we've said what we were going to do and we've done it. Collectively, our team has successfully turned this organization around and in turn continues to rebuild shareholder value. We wouldn't be here if we didn't believe we could execute our game plan and catalyze the success of this organization for years to come. So let's turn to what's next. For the remainder of 2024, we will continue to focus on optimizing our business to drive sustainable profitability and meaningful cash flow. We will continue to execute on the current business plan of growing revenue and adding new customers. We will continue to focus on expanding our Concentrate's products portfolio, which, as we announced yesterday, now includes a convenience pack, which will help us expand our presence in the at-home market. We expect to be able to provide you with a partnership announcement later this quarter. For the first time, we are enhancing our cash balance through the profits we are generating in our business and are beginning to reinvest those profits back into our business. We continue to reduce the cost to manufacture our products by adding new equipment and enhancing our infrastructure to more fully automate our processes. We expect to fully realize the benefits of these improvements beginning in the fourth quarter of this year. We are still planning to expand further into the West with a more permanent presence. We could have taken the approach of spending a lot of money to establish a new facility in the West, expecting the business would expand to catch up to the cost of the expansion. However, we are taking a different path, progressing the business in the West to a point that justifies finding a more permanent solution. and we believe we are getting to that point. We are currently evaluating various business development opportunities. This is taking time as we want to make sure we make the absolute right decision from a cost-benefit perspective. And finally, we are working to add a new product line to our portfolio outside of concentrates that can expand our overall business. We hope to have more to say on this in the coming quarters. As a result, we are increasing our guidance for the second time in 2024 across all metrics. Now we expect net sales for 2024 to be between $95 and $98 million, an increase from the previous net sales guidance of between $90 and $94 million. We now expect gross profit for 2024 to be between $14 and $16 million, an increase from between $13 and $15 million. We expect the top end of our gross margin range for 2024 to be 17% up from 16%. And we now expect to be profitable on an adjusted EBITDA basis between three quarters of a million dollars and one and a half million dollars, up from half a million dollars and one million dollars. All of these metrics represent significant increases in improvements over the results we achieved in 2023. For 2025 and beyond, we are focused on two areas, First, growing our concentrates business and making it more profitable as we work towards annual revenues north of $100 million in gross margins up to 30%, and second, expansion beyond concentrates. We plan to approach this in an accelerated and responsible way and in a capital-efficient manner. All of this supports our goal to become a major force in the nephrology space. With that, I will now turn the call over to Jesse to go into further detail about second quarter 2024 financial results.