NewAge 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 year ended December 31, 2019 with revenue growth of
386%.
Highlights for Full Year 2019 Compared
to Full Year 2018:
- Net revenue increased 386% to $253.7 million versus prior year
of $52.2 million
- Gross margins increased to 60.2% compared to 17.8% in the prior
year
- Net loss was $89.8 million, driven primarily by a non-cash
impairment charge
- Adjusted EBITDA* loss improved by $1.7 million to $13.4 million
from $15.2 million in 2018
* Adjusted EBITDA is a non-GAAP financial
measure. See the discussion and reconciliation of non-GAAP
financial measures below.
Brent Willis, Chief Executive Officer of NewAge
commented, “In 2019 we increased our scale five times, evolving
from a $50 million company to one with net revenue above $250
million. Whilst doing so, we gained access to a range of new
channels and opportunities across our infrastructure that now spans
60 countries worldwide. We also added global iconic brands like
Nestea, Volvic, Illy, and Evian to our portfolio, strengthened our
platform worldwide and made important investments in our leadership
team. We believe there is no better time to be in the
business of healthy products, with a system like ours that
primarily delivers directly to consumers’ homes. We are
extremely well positioned to address consumer concerns for staying
healthy around the world with our unique portfolio of healthy
products and omnichannel route to market.”
Full Year 2019 Financial
Results
In 2019, net revenue was $253.7 million compared
to $52.2 million in 2018, an increase of 386%.
Gross profit for 2019 increased 16-fold to
$152.7 million compared to $9.3 million in 2018. Gross margin
increased to 60.2% for 2019 compared to 17.8% for 2018, which
reflects a significant improvement in product portfolio,
penetration of more profitable channels, and access to new, more
profitable markets.
Net loss was $89.8 million, or $1.16 per share,
during 2019 compared to a net loss of $12.1 million, or $0.26 per
share, in 2018. The increase in net loss during 2019 was
significantly impacted by the $44.9 million non-cash impairment
charge taken during the year related to our U.S. retail brands
business. Adjusted EBITDA loss improved by $1.7 million to
$13.4 million from $15.2 million in the prior year period.
Gregory A. Gould, Chief Financial Officer,
commented, “I believe we are well positioned for 2020 following our
business transformation during 2019. We have a strong balance
sheet with over $60 million of cash and over $250 million in assets
with less than $30 million of debt, as well as a scale and revenue
base that is almost five times the size we were in the prior year.
Growing at this pace is always a challenge, but in the process we
have kept our balance sheet and capital structure strong, providing
us with flexibility for our next steps in 2020. We have
impaired a majority of our U.S. retail business as we focus our
efforts on our strongest and most profitable assets, which we
expect to drive a meaningful improvement on our EBITDA in
2020.”
Fourth Quarter 2019 Financial
Results
During the fourth quarter of 2019, net revenue
increased 323% to $59.2 million compared to $14.0 million in the
fourth quarter of 2018.
Gross profit in the fourth quarter of 2019
increased 10-fold to $32.2 million compared to $3.2 million in the
fourth quarter of 2018. Gross margin increased to 54.3% for the
fourth quarter of 2019 compared to 23.0% for the fourth quarter of
2018, reflecting the positive change in both product and channel
mix, especially with our direct-to-consumer business.
Net loss was $65.9 million, or $0.83 per share,
during the fourth quarter of 2019 compared to a net loss of $2.6
million, or $0.04 per share, in the fourth quarter of 2018. The
increase in net loss was significantly impacted by the $44.9
million non-cash impairment charge taken during the fourth quarter
of 2019.
Adjusted EBITDA was a loss of $17.4 million
compared to an adjusted EBITDA loss of $8.7 million in the prior
year period. The increased adjusted EBITDA loss was due primarily
to the impact of the U.S. retail brands that are under strategic
review, as well as continued softness in China that have been a
consistent industry challenge since government intervention in the
early part of 2019.
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, March 16,
2020Time: 8:00 a.m. Eastern time Toll-free
dial-in number: 1-866-221-1749International
dial-in number: 1-270-215-9924Conference
ID: 7818277
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 call the conference telephone number 5-10
minutes prior to the start time. 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, March 23, 2020.
Toll-free replay number:
1-855-859-2056International replay number:
1-404-537-3406Replay ID: 7818277
About NewAge 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 distributed 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, and
others. The Company operates the websites www.newage.com,
www.nonibynewage.com, www.nestea.com, www.volvic.com, www.illy.com,
www.evian.com, and a number of other individual brand
websites.
NewAge has exclusively partnered with the
world's 5th largest water charity, WATERisLIFE, to end the world
water crisis with the most innovative technologies available.
Donate at WATERisLIFE.com to help us #EnditToday.
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/4c780b76-2ca5-4b01-b4ad-329a9f9b5ef1
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 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 NewAge
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
NewAge Beverages
Corporation:Gregory A. GouldChief Financial OfficerTel:
1-303-566-3030Greg_Gould@NewAge.com
NEW AGE BEVERAGES CORPORATION |
CONSOLIDATED BALANCE SHEETS |
DECEMBER 31, 2019 AND 2018 |
(In thousands, except per share amounts) |
|
|
|
|
|
|
ASSETS |
2019 |
|
|
2018 |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
60,842 |
|
|
$ |
42,517 |
|
Accounts receivable, net of allowance of $535 and $134,
respectively |
11,012 |
|
|
9,837 |
|
Inventories |
36,718 |
|
|
37,148 |
|
Prepaid expenses and other |
4,384 |
|
|
6,473 |
|
|
|
|
|
|
|
Total current assets |
112,956 |
|
|
95,975 |
|
|
|
|
|
|
|
Long-term
assets: |
|
|
|
|
|
Identifiable intangible assets, net |
43,443 |
|
|
67,830 |
|
Property and equipment, net |
28,443 |
|
|
57,281 |
|
Goodwill |
10,284 |
|
|
31,514 |
|
Right-of-use lease assets |
38,458 |
|
|
18,489 |
|
Deferred income taxes |
9,128 |
|
|
8,908 |
|
Restricted cash and other |
8,418 |
|
|
6,935 |
|
|
|
|
|
|
|
Total assets |
$ |
251,130 |
|
|
$ |
286,932 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
13,259 |
|
|
$ |
8,960 |
|
Accrued liabilities |
49,451 |
|
|
34,019 |
|
Current portion of business combination liabilities |
5,508 |
|
|
8,718 |
|
Current maturities of long-term debt |
11,208 |
|
|
3,369 |
|
|
|
|
|
|
|
Total current liabilities |
79,426 |
|
|
55,066 |
|
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
|
Business combination liabilities, net of current portion |
|
|
|
43,412 |
|
Long-term debt, net of current maturities |
12,802 |
|
|
1,325 |
|
Operating lease liabilities, net of current portion: |
|
|
|
|
|
Lease liability |
35,513 |
|
|
13,686 |
|
Deferred lease financing obligation |
16,541 |
|
|
|
|
Deferred income taxes |
5,441 |
|
|
9,747 |
|
Other |
9,132 |
|
|
9,160 |
|
|
|
|
|
|
|
Total liabilities |
158,855 |
|
|
132,396 |
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
Common Stock; $0.001 par value. Authorized 200,000 shares; issued
and outstanding |
|
|
|
|
|
81,873 and 75,067 shares as of December 31, 2019 and 2018,
respectively |
82 |
|
|
75 |
|
Additional paid-in capital |
203,862 |
|
|
176,471 |
|
Accumulated other comprehensive income |
802 |
|
|
626 |
|
Accumulated deficit |
(112,471 |
) |
|
(22,636 |
) |
Total stockholders' equity |
92,275 |
|
|
154,536 |
|
Total liabilities and stockholders' equity |
$ |
251,130 |
|
|
$ |
286,932 |
|
|
|
|
|
|
|
NEW AGE BEVERAGES CORPORATION |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(In thousands, except per share amounts) |
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
$ |
59,225 |
|
|
$ |
13,996 |
|
|
$ |
253,708 |
|
|
$ |
52,160 |
|
Cost of goods sold |
27,039 |
|
|
10,776 |
|
|
101,001 |
|
|
42,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
32,186 |
|
|
3,220 |
|
|
152,707 |
|
|
9,295 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Commissions |
17,131 |
|
|
1,752 |
|
|
75,961 |
|
|
2,781 |
|
Selling, general and administrative |
33,861 |
|
|
7,552 |
|
|
114,982 |
|
|
20,288 |
|
Business combination expense (gain): |
|
|
|
|
|
|
|
|
|
|
|
Financial advisor and other transaction costs |
- |
|
|
3,189 |
|
|
- |
|
|
3,189 |
|
Change in fair value of earnout obligations |
(900 |
) |
|
- |
|
|
(13,809 |
) |
|
100 |
|
Long-lived asset impairment expense: |
|
|
|
|
|
|
|
|
|
|
|
Goodwill and identifiable intangible assets |
44,925 |
|
|
- |
|
|
44,925 |
|
|
- |
|
Right-of-use assets |
765 |
|
|
- |
|
|
2,265 |
|
|
- |
|
Depreciation and amortization expense |
1,888 |
|
|
856 |
|
|
8,382 |
|
|
2,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
97,670 |
|
|
13,349 |
|
|
232,706 |
|
|
28,668 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
(65,484 |
) |
|
(10,129 |
) |
|
(79,999 |
) |
|
(19,373 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
Gain from sale of property and equipment |
8 |
|
|
- |
|
|
6,365 |
|
|
- |
|
Interest expense |
(548 |
) |
|
(843 |
) |
|
(3,677 |
) |
|
(1,068 |
) |
Gain (loss) from change in fair value of derivatives, net |
67 |
|
|
(470 |
) |
|
371 |
|
|
(470 |
) |
Interest and other income (expense), net |
6 |
|
|
(98 |
) |
|
(227 |
) |
|
(151 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
(65,951 |
) |
|
(11,540 |
) |
|
(77,167 |
) |
|
(21,062 |
) |
Income tax benefit
(expense) |
100 |
|
|
8,927 |
|
|
(12,668 |
) |
|
8,927 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(65,851 |
) |
|
$ |
(2,613 |
) |
|
$ |
(89,835 |
) |
|
$ |
(12,135 |
) |
Net loss per share attributable to |
|
|
|
|
|
|
|
|
|
|
|
common stockholders (basic and diluted) |
$ |
(0.83 |
) |
|
$ |
(0.04 |
) |
|
$ |
(1.16 |
) |
|
$ |
(0.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of |
|
|
|
|
|
|
|
|
|
|
|
Common Stock outstanding (basic and diluted) |
79,351 |
|
|
67,077 |
|
|
77,252 |
|
|
46,448 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NEW AGE BEVERAGES CORPORATION |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
YEARS ENDED DECEMBER 31, 2019 AND 2018 |
(In thousands) |
|
|
|
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
Net loss |
$ |
(89,835 |
) |
|
$ |
(12,135 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
Long-lived asset impairment expense |
47,190 |
|
|
- |
|
Depreciation and amortization |
8,759 |
|
|
2,310 |
|
Non-cash lease expense |
7,086 |
|
|
413 |
|
Stock-based compensation expense |
6,388 |
|
|
2,533 |
|
Accretion and amortization of debt discount and issuance costs |
1,937 |
|
|
780 |
|
Expense for make-whole premium |
480 |
|
|
176 |
|
Issuance of common stock for acquisition expenses in business
combination |
- |
|
|
1,166 |
|
Change in fair value of earnout obligations |
(13,809 |
) |
|
100 |
|
Gain from sale of property and equipment |
(6,365 |
) |
|
- |
|
Deferred income tax benefit |
(4,944 |
) |
|
(8,927 |
) |
(Gain) loss from change in fair value of derivatives |
(371 |
) |
|
470 |
|
Changes in operating assets and liabilities, net of effects of
business combinations: |
|
|
|
|
|
Accounts receivable |
(501 |
) |
|
1,286 |
|
Inventories |
2,792 |
|
|
(3,374 |
) |
Prepaid expenses, deposits and other |
902 |
|
|
(1,777 |
) |
Accounts payable |
907 |
|
|
(3,583 |
) |
Other accrued liabilities |
7,583 |
|
|
(1,269 |
) |
|
|
|
|
|
|
Net cash (used in) operating activities |
(31,801 |
) |
|
(21,831 |
) |
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
Net proceeds from sale of land and building in Japan: |
|
|
|
|
|
Related to sale of property |
35,873 |
|
|
- |
|
Repair obligation |
1,675 |
|
|
- |
|
Capital expenditures for property and equipment |
(5,357 |
) |
|
(744 |
) |
Security deposit under sale leaseback arrangement |
(1,799 |
) |
|
- |
|
Cash paid for business combinations, net of cash acquired |
(963 |
) |
|
(28,694 |
) |
|
|
|
|
|
|
Net cash provided by (used in) investing activities |
29,429 |
|
|
(29,438 |
) |
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
Proceeds from borrowings |
61,288 |
|
|
9,526 |
|
Principal payments on borrowings |
(43,887 |
) |
|
(9,955 |
) |
Proceeds from issuance of common stock |
20,102 |
|
|
99,857 |
|
Proceeds from deferred lease financing obligation |
17,640 |
|
|
- |
|
Proceeds from exercise of stock options |
624 |
|
|
- |
|
Principal payments on business combination obligations |
(34,000 |
) |
|
- |
|
Debt issuance costs paid |
(951 |
) |
|
(634 |
) |
Make-whole premium on early prepayment of debt |
(480 |
) |
|
(176 |
) |
Payments for deferred offering costs |
(479 |
) |
|
(2,217 |
) |
Payments under deferred lease financing obligation |
(463 |
) |
|
- |
|
|
|
|
|
|
|
Net cash provided by financing activities |
19,394 |
|
|
96,401 |
|
|
|
|
|
|
|
Effect of foreign currency
translation changes |
1,693 |
|
|
439 |
|
|
|
|
|
|
|
Net change in cash, cash
equivalents and restricted cash |
18,715 |
|
|
45,571 |
|
Cash, cash equivalents and
restricted cash at beginning of year |
45,856 |
|
|
285 |
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of year |
$ |
64,571 |
|
|
$ |
45,856 |
|
|
|
|
|
|
|
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 each
non-GAAP financial measure presented.
EBITDA and Adjusted EBITDA. The
calculation of our EBITDA and Adjusted EBITDA is presented below
(in thousands):
NEW AGE BEVERAGES CORPORATION |
ADJUSTED EBITDA CALCULATION |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
December 31, |
|
December 31, |
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(65,851 |
) |
|
$ |
(2,613 |
) |
|
$ |
(89,835 |
) |
|
$ |
(12,135 |
) |
EBITDA Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
548 |
|
|
843 |
|
|
3,677 |
|
|
1,068 |
|
Income tax expense (benefit) |
(100 |
) |
|
(8,927 |
) |
|
12,668 |
|
|
(8,927 |
) |
Depreciation and amortization expense |
1,983 |
|
|
856 |
|
|
8,759 |
|
|
2,310 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
(63,420 |
) |
|
(9,841 |
) |
|
(64,731 |
) |
|
(17,684 |
) |
Adjusted EBITDA Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
1,110 |
|
|
1,146 |
|
|
6,388 |
|
|
2,533 |
|
Impairment of goodwill and identifiable intangible assets |
44,925 |
|
|
- |
|
|
44,925 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
(17,385 |
) |
|
$ |
(8,695 |
) |
|
$ |
(13,418 |
) |
|
$ |
(15,151 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA is defined as net income (loss) adjusted
to exclude GAAP amounts for interest expense, income tax expense,
and depreciation and amortization expense. For the calculation of
Adjusted EBITDA, we also exclude the following items 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.
Impairment of goodwill and identifiable
intangible assets: We have excluded impairment write-downs related
to goodwill and identifiable intangible assets since these non-cash
charges are not indicative of our core operating performance.
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