NewAge, Inc. (Nasdaq: NBEV), the Colorado-based
organic and healthy products company intending to become the
world’s leading social selling and distribution company, today
announced record financial results for the first quarter of 2021
with net revenue of $125.5 million, almost double its net
revenue in the first quarter of 2020.
For the three months ended March 31, 2021, net
revenue reached $125.5 million, an increase of $61.8 million or
97%, primarily due to the acquisition of ARIIX, and the combined
company organic growth, which on a pro forma basis grew 12.5% from
the previous period, assuming ARIIX had been acquired on January 1,
2020. Gross profit for the quarter was $87.4 million, an increase
of $45.9 million or 111%, resulting in a gross margin of 70%,
compared to 65% in the prior year period. Net loss from operations
improved $6.9 million to ($3.5) million compared to a loss of
($10.4) million in the first quarter of the prior year. Adjusted
EBITDA1 increased $9.7 million versus the three months ended March
31, 2020 reaching positive $2.9 million compared to a loss of
($6.8) million in the prior year period.
Brent Willis, Chief Executive Officer of NewAge
commented, “The first quarter saw accelerated top and bottom-line
results as we focused on converging ARIIX and driving organic
growth within our direct/social selling division. This on-trend,
direct-to-consumer route to market is led by our hundreds of
thousands of exclusive global Brand Partners using our social
selling technology to disrupt the industry. Our direct/social
selling business experienced a year-over-year sales increase of
128% in the quarter, fueled by record growth in Western Europe,
Mexico and the United States.”
Mr. Willis continued, “Along with the
double-digit organic growth we are experiencing, we believe we are
also well positioned financially to pursue additional industry
consolidation that will positively benefit our shareholders. We
have entered into a letter of intent to acquire Aliven in
Japan, which is expected to further our momentum and immediately
return positive EBITDA in this core market for NewAge. Given the
global shift in consumer behavior, we believe the NewAge Social
Selling Network™ coupled with our direct route-to-consumer market
is the winning model within the consumer packaged goods (CPG)
industry. We intend to continue to expand that model throughout
2021, deliver further cost synergies accruing from the ARIIX
acquisition, and pursue strategic acquisitions and collaboration
opportunities that will drive value for all of our value-added
stakeholders.”
First Quarter 2021 Financial
Results
Net revenue reached $125.5 million for the three
months ended March 31, 2021, versus $63.7 million for the first
quarter of the prior year, an increase of 97%. The growth in net
revenue was primarily due to the acquisition of ARIIX, driven by
their growth in the US, Latin America, and in Italy and France
that were both up triple digits organically.
Gross margin for the three months ended March
31, 2021 reached $87.4 million or 70% of net revenue. This
compared with $41.5 million or 65% of net revenue in the same
period of the prior year, a 111% increase of $45.9 million and an
increase of five gross margin percentage points. The gross margin
percentage increase was driven by higher net revenue from our
Direct/Social Selling Division and the disposition of the retail
brands business that was completed in September 2020.
Net operating loss improved $6.9 million to a
loss of ($3.5) million compared to a loss of ($10.4) million in the
prior year period. Net loss was ($17.8) million primarily due
to a non-cash loss from the change in fair value of the derivative
liability associated with the ARIIX acquisition. Adjusted EBITDA1
was positive $2.9 million for the first quarter of 2021, compared
with a negative ($6.8) million for the first quarter of 2020, an
improvement in Adjusted EBITDA of nearly $10 million. The
Company was impacted by a severance expense that would have further
increased EBITDA by $1.4 million.
The company ended the quarter with a strong
balance sheet, with total cash of $102 million and $33 million in
debt.
“Our first quarter results exceeded our internal
expectations as we continue to make significant progress converging
our companies and capturing both revenue and cost synergies.
Carrying this momentum forward, we expect continued strong
results from operations in the second quarter and throughout the
year as we build out additional platforms and programs for our
global sales force. We believe we are stronger and better
positioned than we have ever been, with differentiated health and
wellness brands and an on-trend direct route-to-market, led by an
army of more than 400,000 micro influencers and Brand Partners,”
concluded Mr. Willis.
Conference Call
The Company will host a live conference call and
webcast today at 8:30 a.m. ET. Conference call details are provided
below. Interested investors can dial into the conference call to
hear the details of management's update and participate in a
question and answer session.
Date: Monday, May 10,
2021Time: 8:30 a.m. Eastern Time Toll-free
dial-in number: 1-877-407-3982International
dial-in number: 1-201-493-6780Conference
ID: 13719620
The conference call will also be broadcast live
and available for replay here and via the investors section of the
Company’s website at https://newage.com/en-us/our-story/investors.
The webcast replay will be available for approximately 45 days
following the call.
Please dial into the conference call 15 minutes
prior to the start time due to increased demand for conference
calls. You will be asked to register your name and
organization.
A replay of the conference call will be
available after 11:30 a.m. Eastern Time on the same day through
Monday, May 17, 2021.
Toll-free replay number:
1-844-512-2921International replay number:
1-412-317-6671Replay ID: 13719620
About NewAge, Inc. (NASDAQ:
NBEV)NewAge is a purpose-driven
firm intending to become the world’s leading social selling and
distribution company. Colorado-based NewAge commercializes a
portfolio of organic and healthy products worldwide through
primarily a direct route-to-market system. The Company competes in
three major category platforms including health and wellness,
healthy appearance, and nutritional performance and leads a network
of more than 400,000 exclusive independent distributors and brand
partners around the world.
The Company operates the
websites NewAge.com, Noninewage.com, Ariix.com,
Mavie.com, Thelimucompany.com, Zennoa.com and a number of other
individual brand websites.
Safe Harbor DisclosureThis
press release contains forward-looking statements that are made
under the safe harbor provisions within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements are any statement reflecting management's expectations
regarding future results of operations, economic performance, and
financial condition, including statements related to operating
margins, the acquisition and integration of ARIIX and cost
synergies and operational efficiencies related thereto, the
acquisition of additional businesses, the impact of the coronavirus
(“COVID-19”) pandemic, and plans for Company growth.
Forward-looking statements, specifically those concerning future
performance, are subject to certain risks and uncertainties, and
actual results may differ materially. NewAge competes in a rapidly
growing and transforming industry, and risk factors, including
those disclosed in the Company's filings with the Securities and
Exchange Commission, might affect the Company's operations. Unless
required by applicable law, the Company undertakes no obligation to
update or revise any forward-looking statements.
For investor inquiries about
NewAge please contact:
NewAge Investor Relations:Riley
Timmer Vice President, Investor Relations Tel: 1-801-870-8685
Riley_Timmer@NewAge.com
Non-GAAP Financial MeasuresThe
primary purpose of using non-GAAP financial measures is to provide
supplemental information that we believe may be useful to investors
and to enable investors to evaluate our results in the same way we
do. We also present the non-GAAP financial measures because we
believe they assist investors in comparing our performance across
reporting periods on a consistent basis, as well as comparing our
results against the results of other companies, by excluding items
that we do not believe are indicative of our core operating
performance. Specifically, we use these non-GAAP measures as
measures of operating performance; to prepare our annual operating
budget; to allocate resources to enhance the financial performance
of our business; to evaluate the effectiveness of our business
strategies; to provide consistency and comparability with past
financial performance; to facilitate a comparison of our results
with those of other companies, many of which use similar non-GAAP
financial measures to supplement their GAAP results; and in
communications with our board of directors concerning our financial
performance. Investors should be aware, however, that not all
companies define these non-GAAP measures consistently.
1 EBITDA and Adjusted EBITDA are non-GAAP
financial measures with reconciliations provided in the table
below.
NewAge, Inc. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands, except per share amounts) |
|
|
March 31, |
|
|
December 31, |
|
ASSETS |
2021 |
|
|
2020 |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
90,552 |
|
|
$ |
43,711 |
|
Trade accounts receivable, net of allowance of $547 and $582,
respectively |
12,183 |
|
|
12,341 |
|
Inventories |
42,944 |
|
|
48,051 |
|
Current portion of restricted cash |
- |
|
|
10,000 |
|
Prepaid expenses and other |
11,384 |
|
|
13,032 |
|
|
|
|
|
|
|
Total current assets |
157,063 |
|
|
127,135 |
|
|
|
|
|
|
|
Long-term
assets: |
|
|
|
|
|
Identifiable intangible assets, net of accumulated
amortization |
165,876 |
|
|
169,611 |
|
Goodwill |
54,993 |
|
|
54,993 |
|
Right-of-use lease assets |
35,423 |
|
|
38,764 |
|
Property and equipment, net of accumulated depreciation |
26,889 |
|
|
28,076 |
|
Restricted cash, net of current portion |
11,484 |
|
|
11,524 |
|
Deferred income taxes |
7,505 |
|
|
7,782 |
|
Deposits and other |
6,274 |
|
|
5,297 |
|
|
|
|
|
|
|
Total assets |
$ |
465,507 |
|
|
$ |
443,182 |
|
|
|
|
|
|
|
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’
EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
16,309 |
|
|
$ |
22,774 |
|
Accrued liabilities |
67,381 |
|
|
70,007 |
|
Current portion of business combination liabilities |
3,154 |
|
|
11,750 |
|
Current maturities of long-term debt |
23,015 |
|
|
18,016 |
|
|
|
|
|
|
|
Total current liabilities |
109,859 |
|
|
122,547 |
|
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
|
Business combination liabilities, net of current portion |
103,679 |
|
|
95,826 |
|
Long-term debt, net of current maturities |
10,342 |
|
|
16,181 |
|
Operating lease liabilities, net of current portion: |
|
|
|
|
|
Lease liability |
31,873 |
|
|
34,788 |
|
Deferred lease financing obligation |
15,713 |
|
|
15,882 |
|
Warrant derivative liability |
12,402 |
|
|
- |
|
Deferred income taxes |
5,232 |
|
|
5,391 |
|
Other |
8,221 |
|
|
8,313 |
|
|
|
|
|
|
|
Total liabilities |
297,321 |
|
|
298,928 |
|
|
|
|
|
|
|
Redeemable Common
Stock, 800 shares as of December 31, 2020 |
- |
|
|
2,101 |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
Preferred stock, $0.001 par value per share. Authorized 1,000
shares; no shares issued |
- |
|
|
- |
|
Common Stock, $0.001 par value per share. Authorized 200,000
shares; issued and outstanding |
|
|
|
|
|
135,399 and 99,146 shares as of March 31, 2021 and December 31,
2020, respectively |
135 |
|
|
99 |
|
Additional paid-in capital |
336,128 |
|
|
236,732 |
|
Obligation to issue 19,704 shares of Common Stock as of December
31, 2020 |
- |
|
|
54,186 |
|
Note receivable for stock subscription |
(1,250 |
) |
|
(1,250 |
) |
Accumulated other comprehensive income |
2,756 |
|
|
4,201 |
|
Accumulated deficit |
(169,583 |
) |
|
(151,815 |
) |
Total stockholders' equity |
168,186 |
|
|
142,153 |
|
Total liabilities, redeemable Common Stock, and stockholders'
equity |
$ |
465,507 |
|
|
$ |
443,182 |
|
|
NewAge, Inc. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
THREE MONTHS ENDED MARCH 31, 2021 AND 2020 |
(In thousands) |
|
|
|
|
|
|
|
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
|
$ |
(17,768 |
) |
|
$ |
(11,618 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
Loss from change in fair value of derivatives, net |
|
9,613 |
|
|
326 |
|
Depreciation and amortization |
|
4,774 |
|
|
1,879 |
|
Non-cash lease expense |
|
3,952 |
|
|
1,282 |
|
Accretion and amortization of debt discount and issuance costs |
|
2,294 |
|
|
140 |
|
Stock-based compensation expense |
|
1,962 |
|
|
1,357 |
|
Deferred income tax expense (benefit) |
|
(44 |
) |
|
(39 |
) |
Other |
|
(3 |
) |
|
143 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
217 |
|
|
(523 |
) |
Inventories |
|
4,554 |
|
|
3,068 |
|
Prepaid expenses, deposits and other |
|
509 |
|
|
85 |
|
Accounts payable |
|
(6,493 |
) |
|
(675 |
) |
Other accrued liabilities |
|
(5,708 |
) |
|
(8,946 |
) |
|
|
|
|
|
|
|
Net cash used in operating activities |
|
(2,141 |
) |
|
(13,521 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Cash payments for Ariix business combination |
|
(10,000 |
) |
|
- |
|
Proceeds from sale of equipment |
|
- |
|
|
174 |
|
Capital expenditures for property and equipment |
|
(287 |
) |
|
(1,591 |
) |
Net cash used in investing activities |
|
(10,287 |
) |
|
(1,417 |
) |
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from private placement of Units, net of placement
fee: |
|
|
|
|
|
|
Fair value of warrants to purchase 7,318 shares of Common
Stock |
|
14,128 |
|
|
- |
|
Residual fair value of 14,636 shares of Common Stock |
|
39,673 |
|
|
- |
|
Principal payments on borrowings |
|
(2,000 |
) |
|
(10,075 |
) |
Debt issuance costs paid |
|
(20 |
) |
|
(57 |
) |
Proceeds from issuance of common stock |
|
- |
|
|
8,288 |
|
Payments for deferred offering costs |
|
(24 |
) |
|
(2 |
) |
Proceeds from exercise of stock options |
|
485 |
|
|
4 |
|
Principal payments on business combination obligations |
|
(2,143 |
) |
|
- |
|
Payments under deferred lease financing obligation |
|
(164 |
) |
|
(158 |
) |
|
|
|
|
|
|
|
Net cash provided by (used in) financing activities |
|
49,935 |
|
|
(2,000 |
) |
|
|
|
|
|
|
|
Effect of foreign currency
translation changes |
|
(706 |
) |
|
(1,366 |
) |
|
|
|
|
|
|
|
Net change in cash, cash equivalents and restricted cash |
|
36,801 |
|
|
(18,304 |
) |
Cash, cash equivalents and
restricted cash at beginning of period |
|
65,235 |
|
|
64,571 |
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
102,036 |
|
|
$ |
46,267 |
|
|
NewAge, Inc. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts) |
|
|
Three Months Ended |
|
March 31, |
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
Net revenue |
$ |
125,518 |
|
|
$ |
63,693 |
|
Cost of goods sold |
38,117 |
|
|
22,169 |
|
|
|
|
|
|
|
Gross profit |
87,401 |
|
|
41,524 |
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
Commissions |
47,397 |
|
|
19,515 |
|
Selling, general and administrative |
38,859 |
|
|
30,608 |
|
Depreciation and amortization expense |
4,675 |
|
|
1,781 |
|
|
|
|
|
|
|
Total operating expenses |
90,931 |
|
|
51,904 |
|
|
|
|
|
|
|
Operating loss |
(3,530 |
) |
|
(10,380 |
) |
|
|
|
|
|
|
Non-operating income
(expense): |
|
|
|
|
|
Interest expense |
(3,123 |
) |
|
(572 |
) |
Loss from change in fair value of derivatives, net |
(9,613 |
) |
|
(326 |
) |
Interest and other income (expense), net |
(352 |
) |
|
383 |
|
|
|
|
|
|
|
Loss before income taxes |
(16,618 |
) |
|
(10,895 |
) |
Income tax expense |
(1,150 |
) |
|
(723 |
) |
|
|
|
|
|
|
Net loss |
$ |
(17,768 |
) |
|
$ |
(11,618 |
) |
|
|
|
|
|
|
Net loss per share attributable to common stockholders (basic and
diluted) |
$ |
(0.14 |
) |
|
$ |
(0.14 |
) |
|
|
|
|
|
|
Weighted average number of shares of Common Stock |
|
|
|
|
|
outstanding (basic and diluted) |
127,257 |
|
|
85,371 |
|
|
NewAge, Inc. |
ADJUSTED EBITDA CALCULATION |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, |
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
Net loss |
$ |
(17,768 |
) |
|
$ |
(11,618 |
) |
EBITDA Non-GAAP adjustments: |
|
|
|
|
|
Interest expense |
3,123 |
|
|
572 |
|
Income tax expense |
1,150 |
|
|
723 |
|
Depreciation and amortization expense |
4,774 |
|
|
1,879 |
|
|
|
|
|
|
|
EBITDA |
(8,721 |
) |
|
(8,444 |
) |
Adjusted EBITDA Non-GAAP adjustments: |
|
|
|
|
|
Stock-based compensation expense |
1,962 |
|
|
1,357 |
|
Loss from change in fair value of derivatives, net |
9,613 |
|
|
326 |
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
2,854 |
|
|
$ |
(6,761 |
) |
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