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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