New Age Beverages Corporation (Nasdaq: NBEV), the
Colorado-based healthy products company dedicated to inspiring and
educating the planet to “live healthy”, today announced financial
results for the first quarter ended March 31, 2020, reaching
its highest level of first quarter net revenue in its history at
$63.7 million.
Key Highlights
- Net revenue was $63.7 million versus $58.3 million in the prior
year quarter, an increase of $5.4 million or 9.2%
- Gross margin reached 65.2%, up 1,085 basis points sequentially
versus the fourth quarter of 2019
- Net loss was $11.6 million, or $0.14 per common share
“We saw growth in our core large markets and
core large category platforms during the quarter,” said Brent
Willis, Chief Executive Officer of NewAge. “Our Noni by
NewAge segment saw excellent growth led by China and the European
market. We also experienced renewed growth in Japan compared
to the first quarter of 2019 and our Direct Store Distribution
division had its best first quarter in history with double digit
growth.”
“We have had a number of business disruptions
and negative impacts from COVID-19 in markets worldwide, which has
continued into the second quarter of 2020. Sales and
distribution to on-premise and foodservice outlets are down over
70% between January and April. Many retailers have
significantly curtailed any new product initiatives, and in-store
merchandising has been virtually impossible. In our Noni by
NewAge segment, our ability to hold group meetings and engage in
peer-to-peer selling has dramatically changed, but despite all the
challenges, the organization has responded decisively to offset the
negative impacts. The incremental sales of our immunity
strengthening products, the rapid expansion of our e-commerce and
social selling tools, and other initiatives have not just offset
the negative revenue impacts, but also resulted in overall growth
worldwide of more than 9%. I am so proud of all of our
associates and business partners with how quickly they have
responded to the new operating environment.” Mr. Willis went on to
add, “We have focused intently on the health and safety of our
employees and partners and adjusted our operations to meet
recommended government guidelines. We sincerely appreciate the
efforts of all our associates in rapidly adapting and excelling in
these unprecedented times.”“We believe we are well-positioned to
emerge from the current environment and capitalize on current and
future opportunities given that the vast majority of our Noni by
NewAge segment’s revenue is ordered and fulfilled online and
delivered direct to consumer’s homes. We are seeing strong
response from our immunity products, our new Noni plus shots, and
our new Te Mana Shape intermittent fasting smoothies.
We still see challenges across our business from COVID-19, but
remain confident in both our near-term and long-term growth
outlooks,” continued Brent Willis, Chief Executive Officer of
NewAge.
First Quarter 2020 Financial
Results
During the first quarter of 2020, net revenue
increased 9.2% to $63.7 million compared to $58.3 million in the
first quarter of 2019. Gross profit in the first quarter of
2020 increased 7.6% to $41.5 million compared to $38.6 million in
the first quarter of 2019. Gross margin reached 65% for
the first quarter of 2020, compared to a gross margin of 66%, 63%,
58% and 54% respectively for each of the quarters in 2019.
The improvement in gross margin compared to the second
half of 2019 was due primarily to an improvement in product and
channel mix, with more business coming from higher margin Direct to
Consumer and E-commerce channels.
Net loss was $11.6 million, or $0.14 per share,
during the first quarter of 2020 compared to a net loss of $1.6
million, or $0.02 per share, in the first quarter of 2019. The
increase in net loss was significantly impacted by a gain of sale
of property of $6.4 million accounted for in the first quarter of
2019, as well as increased selling, general and administrative
(SG&A) expenses as a result of increased staffing, marketing
and professional fees. Adjusted EBITDA(1) was a loss of $7.1
million for the quarter, a significant sequential improvement
of $10.3 million compared to Q4 2019. The adjusted
EBITDA in the first quarter of 2019 was $3.9 which included the
gain on the sale of property of $6.4 million.
(1) Denotes a
non-GAAP financial measure. See “Non-GAAP Financial Measures" table
below. Conference
Call
The Company will host a live conference call and
webcast today at 8:00 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 11,
2020Time: 8:00 a.m. Eastern time Toll-free
dial-in number: 1-866-221-1749International
dial-in number: 1-270-215-9924Conference
ID: 7767947
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://newagebev.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 11:00 a.m. Eastern Time on the same day through
Monday, May 18, 2020.
Toll-free replay number:
1-855-859-2056International replay number:
1-404-537-3406Replay ID: 7767947
About New Age Beverages Corporation
(NASDAQ: NBEV)
NewAge is a Colorado based healthy products company dedicated to
inspiring and educating consumers to “Live Healthy.” The
Company is the only omni-channel distribution company with access
to traditional retail, e-commerce, direct-to-consumer, and medical
channels across 60 countries worldwide. NewAge markets a
portfolio of better-for-you products including the brands Tahitian
Noni, TeMana, Nestea, Volvic, Illy Coffee, Evian, Búcha Live
Kombucha, ‘Nhanced and others. The Company operates the
websites www.newage.com, www.noninewage.com, www.nestea.com,
www.volvic-na.com, www.illy.com, www.evian.com, and a number of
other individual brand websites.
Safe Harbor DisclosureThis
press release contains forward-looking statements that are made
pursuant to 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 current expectations regarding future results of
operations, economic performance, financial condition, the extent
and duration of COVID-19 on its business, and achievements of the
Company including statements regarding NewAge’s expectation to see
continued growth. The forward-looking statements are based on the
assumption that operating performance and results will continue in
line with historical results. Management believes these assumptions
to be reasonable but there is no assurance that they will prove to
be accurate. 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 New Age
Beverages Corporation please contact:
Investor Relations Counsel:John
Mills/Scott Van WinkleICR – Strategic Communications and
AdvisoryTel:
1-646-277-1254/1-617-956-6736newage@icrinc.com
New Age Beverages
Corporation:Gregory A. GouldChief Financial OfficerTel:
1-303-566-3030Greg_Gould@NewAge.com
NEW AGE
BEVERAGES CORPORATION |
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS |
(In
thousands, except par value per share amounts) |
|
|
|
|
|
March
31, |
|
December
31, |
ASSETS |
2020 |
|
2019 |
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
27,537 |
|
|
$ |
60,842 |
|
Accounts receivable, net of allowance of $717 and $535,
respectively |
|
11,535 |
|
|
|
11,012 |
|
Inventories |
|
33,657 |
|
|
|
36,718 |
|
Prepaid expenses and other |
|
6,036 |
|
|
|
4,384 |
|
Total current assets |
|
78,765 |
|
|
|
112,956 |
|
|
|
|
|
Long-term assets: |
|
|
|
Identifiable intangible assets, net |
|
42,546 |
|
|
|
43,443 |
|
Right-of-use lease assets |
|
38,261 |
|
|
|
38,458 |
|
Property and equipment, net |
|
28,716 |
|
|
|
28,443 |
|
Restricted cash, net of current portion |
|
17,230 |
|
|
|
3,729 |
|
Goodwill |
|
10,284 |
|
|
|
10,284 |
|
Deferred income taxes |
|
9,066 |
|
|
|
9,128 |
|
Deposits and other |
|
4,360 |
|
|
|
4,689 |
|
Total assets |
$ |
229,228 |
|
|
$ |
251,130 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
12,645 |
|
|
$ |
13,259 |
|
Accrued liabilities |
|
41,960 |
|
|
|
49,451 |
|
Current portion of business combination liabilities |
|
5,648 |
|
|
|
5,508 |
|
Current maturities of long-term debt |
|
1,504 |
|
|
|
11,208 |
|
Total current liabilities |
|
61,757 |
|
|
|
79,426 |
|
|
|
|
|
Long-term liabilities: |
|
|
|
Long-term debt, net of current maturities |
|
12,241 |
|
|
|
12,802 |
|
Operating lease liabilities, net of current portion: |
|
|
|
Lease liability |
|
35,135 |
|
|
|
35,513 |
|
Deferred lease financing obligation |
|
16,378 |
|
|
|
16,541 |
|
Deferred income taxes |
|
5,317 |
|
|
|
5,441 |
|
Other |
|
9,606 |
|
|
|
9,132 |
|
Total liabilities |
|
140,434 |
|
|
|
158,855 |
|
|
|
|
|
Stockholders’ equity: |
|
|
|
Common Stock; $0.001 par value. Authorized 200,000 shares; issued
and outstanding |
|
|
|
87,245 and 81,873 shares as of March 31, 2020 and December 31,
2019, respectively |
|
87 |
|
|
|
82 |
|
Additional paid-in capital |
|
213,385 |
|
|
|
203,862 |
|
Accumulated other comprehensive income (loss) |
|
(589 |
) |
|
|
802 |
|
Accumulated deficit |
|
(124,089 |
) |
|
|
(112,471 |
) |
Total stockholders' equity |
|
88,794 |
|
|
|
92,275 |
|
Total liabilities and stockholders' equity |
$ |
229,228 |
|
|
$ |
251,130 |
|
|
|
|
|
NEW AGE
BEVERAGES CORPORATION |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
THREE MONTHS
ENDED MARCH 31, 2020 AND 2019 |
(In
thousands, except loss per share amounts) |
|
|
|
|
|
2020 |
|
2019 |
|
|
|
|
Net revenue |
$ |
63,693 |
|
|
$ |
58,307 |
|
Cost of
goods sold |
|
22,169 |
|
|
|
19,731 |
|
Gross profit |
|
41,524 |
|
|
|
38,576 |
|
|
|
|
|
Operating
expenses: |
|
|
|
Commissions |
|
19,515 |
|
|
|
18,038 |
|
Selling, general and administrative |
|
30,608 |
|
|
|
26,842 |
|
Depreciation and amortization expense |
|
1,781 |
|
|
|
2,236 |
|
Total operating expenses |
|
51,904 |
|
|
|
47,116 |
|
Operating loss |
|
(10,380 |
) |
|
|
(8,540 |
) |
|
|
|
|
Non-operating income (expenses): |
|
|
|
Gain (loss) from sale of property and equipment |
|
(80 |
) |
|
|
6,442 |
|
Interest expense |
|
(572 |
) |
|
|
(1,646 |
) |
Gain (loss) from change in fair value of derivatives |
|
(326 |
) |
|
|
470 |
|
Interest and other income (expense), net |
|
463 |
|
|
|
(42 |
) |
Loss before income taxes |
|
(10,895 |
) |
|
|
(3,316 |
) |
Income tax
benefit (expense) |
|
(723 |
) |
|
|
1,700 |
|
Net loss |
$ |
(11,618 |
) |
|
$ |
(1,616 |
) |
Net loss per
share (basic and diluted) |
$ |
(0.14 |
) |
|
$ |
(0.02 |
) |
Weighted
average number of shares of Common Stock outstanding (basic and
diluted) |
|
85,371 |
|
|
|
75,226 |
|
|
|
|
|
NEW AGE
BEVERAGES CORPORATION |
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
THREE MONTHS
ENDED MARCH 31, 2020 AND 2019 |
(In
thousands) |
|
|
|
|
|
2020 |
|
2019 |
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net loss |
$ |
(11,618 |
) |
|
$ |
(1,616 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
1,879 |
|
|
|
2,236 |
|
Non-cash lease expense |
|
1,282 |
|
|
|
1,389 |
|
Stock-based compensation expense |
|
1,357 |
|
|
|
3,287 |
|
Loss (gain) from change in fair value of derivatives |
|
326 |
|
|
|
(470 |
) |
Accretion and amortization of debt discount and issuance costs |
|
140 |
|
|
|
1,113 |
|
Loss (gain) from sale of property and equipment |
|
80 |
|
|
|
(6,442 |
) |
Change in fair value of earnout obligations |
|
63 |
|
|
|
- |
|
Deferred income tax benefit |
|
(39 |
) |
|
|
(13,916 |
) |
Expense for make-whole premium |
|
- |
|
|
|
480 |
|
Changes in operating assets and liabilities: |
|
|
|
Accounts receivable |
|
(523 |
) |
|
|
387 |
|
Inventories |
|
3,068 |
|
|
|
(2,470 |
) |
Prepaid expenses, deposits and other |
|
85 |
|
|
|
122 |
|
Accounts payable |
|
(675 |
) |
|
|
2,231 |
|
Other accrued liabilities |
|
(8,946 |
) |
|
|
7,468 |
|
Net cash used in operating activities |
|
(13,521 |
) |
|
|
(6,201 |
) |
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Proceeds from sale of equipment |
|
174 |
|
|
|
- |
|
Capital expenditures for property and equipment |
|
(1,591 |
) |
|
|
(283 |
) |
Net proceeds from sale of land and building in Japan: |
|
|
|
Related to sale of property |
|
- |
|
|
|
35,873 |
|
Repair obligation |
|
- |
|
|
|
1,675 |
|
Security deposit under sale leaseback arrangement |
|
- |
|
|
|
(1,800 |
) |
Net cash provided by (used in) investing activities |
|
(1,417 |
) |
|
|
35,465 |
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Principal payments on borrowings |
|
(10,075 |
) |
|
|
(16,196 |
) |
Proceeds from borrowings |
|
- |
|
|
|
36,550 |
|
Proceeds from issuance of common stock |
|
8,288 |
|
|
|
- |
|
Proceeds from deferred lease financing obligation |
|
- |
|
|
|
17,640 |
|
Payments under deferred lease financing obligation |
|
(158 |
) |
|
|
- |
|
Proceeds from exercise of stock options |
|
4 |
|
|
|
418 |
|
Debt issuance costs paid |
|
(57 |
) |
|
|
(250 |
) |
Payments for deferred offering costs |
|
(2 |
) |
|
|
- |
|
Cash paid for make-whole premium |
|
- |
|
|
|
(480 |
) |
Net cash provided by (used in) financing activities |
|
(2,000 |
) |
|
|
37,682 |
|
|
|
|
|
Effect of
foreign currency translation changes |
|
(1,366 |
) |
|
|
566 |
|
|
|
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash |
|
(18,304 |
) |
|
|
67,512 |
|
Cash, cash
equivalents and restricted cash at beginning of period |
|
64,571 |
|
|
|
45,856 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
46,267 |
|
|
$ |
113,368 |
|
|
|
|
|
Non-GAAP Financial Measures
The 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.
We provide in the table below a reconciliation
from the most directly comparable GAAP financial measure to the
non-GAAP financial measures presented.
EBITDA and Adjusted EBITDA. The
calculation of our EBITDA and Adjusted EBITDA is presented below
(in thousands):
|
2020 |
|
2019 |
|
|
|
|
Net loss |
$ |
(11,618 |
) |
|
$ |
(1,616 |
) |
EBITDA Non-GAAP adjustments: |
|
|
|
Interest expense |
|
572 |
|
|
|
1,646 |
|
Income tax expense (benefit) |
|
723 |
|
|
|
(1,700 |
) |
Depreciation and amortization expense |
|
1,879 |
|
|
|
2,236 |
|
EBITDA |
|
(8,444 |
) |
|
|
566 |
|
Adjusted EBITDA Non-GAAP adjustment: |
|
|
|
Stock-based compensation expense |
|
1,357 |
|
|
|
3,287 |
|
Adjusted EBITDA |
$ |
(7,087 |
) |
|
$ |
3,853 |
|
|
|
|
|
EBITDA is defined as net income (loss) adjusted
to exclude GAAP amounts for interest expense, income tax expense
(benefit), and depreciation and amortization expense. For the
calculation of Adjusted EBITDA, we also exclude the following item
for the periods presented:
Stock-Based Compensation Expense: Our
compensation strategy includes the use of stock-based compensation
to attract and retain employees, directors and consultants. This
strategy is principally aimed at aligning the employee interests
with those of our stockholders and to achieve long-term employee
retention, rather than to motivate or reward operational
performance for any particular period. As a result, stock-based
compensation expense varies for reasons that are generally
unrelated to operational decisions and performance in any
particular period.
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