NewAge, Inc. (Nasdaq: NBEV), the Colorado-based direct-to-consumer
(D2C) organic and healthy products company, today announced
financial results for the third quarter of 2021.
Third Quarter 2021 Highlights |
|
- |
Net revenue increased 59% to $100 million compared to $63 million
in the third quarter of 2020 |
|
- |
Gross profit was $66 million compared to $37 million in the prior
year third quarter, an increase of $29 million |
|
- |
Gross margin reached 66.3% of net revenue compared to 59.8% of
revenue in the prior year third quarter, up 6.5 points |
|
- |
Net income improved $11.4 million to ($2.7) million, or ($0.02) per
basic share |
|
- |
Adjusted EBITDA1 improved $4.0 million to ($4.4) million versus
($8.4) million in the prior year third quarter |
Management CommentaryBrent
Willis, Chief Executive Officer of NewAge, commented, “We continue
to build NewAge into a leading social selling machine, and I am
encouraged by the operational progress we made during the quarter,
setting us up well for the rest of the year and beyond. This
quarter we made investments in our systems, launched new products,
and unveiled new social selling tools and technology, all of which
are critical foundational components and will act as a springboard
for growth. Our results in the third quarter for revenue, gross
margin, net income and adjusted EBITDA all improved year over year,
and we expect our future results to benefit substantially from all
the actions we have taken in the quarter and earlier in the
year.
“Our healthy products portfolio is on trend and
we continue to strengthen our offerings and our systems around the
world, supported by a robust supply chain. Our inventory levels and
our D2C route to market help to alleviate many of the supply chain
concerns plaguing the wider consumer goods market. We have a lot of
confidence in our direct-to-consumer and social selling business
model, and are excited as our proposition and financial results
begin to unfold,” concluded Mr. Willis.
Third Quarter 2021 Financial
Results Net revenue was $100 million for the three months
ending September 30, 2021, versus $63 million for the third quarter
of the prior year, an increase of 59%. The year-over-year growth in
net revenue was driven by the acquisitions of ARIIX and Aliven.
Sequentially, net revenue decreased versus the previous quarter,
due in part to the impact of COVID-19 in a number of markets around
the world, and a planned systems consolidation which caused
disruptions in the selling cycle.
Gross profit for the third quarter of 2021 was
$66 million, or 66.3% of net revenue, compared with $37 million, or
59.8% of net revenue, for the prior-year period, representing a 76%
increase of $29 million and an increase of 6.5 gross margin
percentage points. The gross margin percentage increase was driven
by a higher mix of net revenue from the Direct/Social Selling
segment, which has a higher margin than the Direct Store
segment.
Selling, general and administrative (SG&A)
expense for the third quarter totaled $39 million, or 39.2% of
revenue, compared to $28 million, or 44.6% of revenue, for the
prior-year period. The year-over-year improvement in SG&A
expense as a percentage of net revenue primarily reflects the
benefits of a growing business and elimination of redundant
positions and offices.
Operating loss was $30.4 million for the third
quarter of 2021 compared to a loss of $13.1 million for the
prior-year period. Net loss was $2.7 million, or $0.02 per basic
share, compared to a net loss of $14.1 million, or $0.14 per basic
share, in the prior-year period. Adjusted EBITDA improved $4.0
million to a loss of $4.4 million, compared to a loss of $8.4
million in the prior-year period.
Balance Sheet and LiquidityThe
Company ended the quarter with a strong balance sheet, with total
cash and cash equivalents of $62.3 million and debt of $17.6
million, exclusive of operating lease liabilities.
Conference Call InformationA
conference call and audio webcast with analysts and investors will
be held today at 5:00 p.m. Eastern Time/3:00 p.m. Mountain Time to
discuss the results and answer questions.
- Live conference call: 1-800-926-9801 (domestic) or
1-303-223-0113 (international) with conference ID: 21998666.
- Conference call replay available through November 16, 2021:
1-844-512-2921 (domestic) or 1-412-317-6671 (international) with
replay access code: 21998666.
- Live and archived webcast will be available on the Conference
Calls page of NewAge’s investor relations website at
https://newage.com/investors.
1EBITDA and Adjusted EBITDA are non-GAAP financial measures with
reconciliations provided in the accompanying financial tables.
About NewAge, Inc.NewAge is a
purpose-driven firm dedicated to inspiring the planet to Live
Healthy™. Colorado-based NewAge commercializes a portfolio of
organic and healthy products worldwide through primarily a
direct-to-consumer (D2C) route to market distribution system across
more than 50 countries. The company competes in three major
category platforms including health and wellness, inner and outer
beauty, and nutritional performance and weight management — through
a network of exclusive independent Brand Partners, empowered with
the leading social selling tools and technology available
worldwide. More information on the Company can be found at
NewAge.com.
Forward Looking StatementsThis
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 acquisitions and integrations of ARIIX and Aliven 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.
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 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.
EBITDAEBITDA is defined as net
income (loss) adjusted to exclude amounts recorded under GAAP 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:
Loss (gain) from change in fair value of
derivatives: We have excluded derivative gains and losses since
they can be highly volatile from period to period based on factors
that are outside the control of our core business activities.
Specifically, the variations that impact fair value heavily depend
on the trading price of our Common Stock and global interest rates.
As a result, gains and losses from changes in the fair value of
derivatives vary for reasons that are generally unrelated to
operational decisions and performance in any particular period.
Gain from forgiveness of PPP Loans and accrued
interest: We have excluded the gain from forgiveness of PPP Loans
and accrued interest due to the unique terms of this U.S.
governmental assistance which is unrelated to operational
performance.
Impairment of long-lived assets: We have
excluded charges for impairment of long-lived assets that were
primarily triggered by an amendment to our business combination
agreement that is unrelated to ongoing operational decisions and
performance.
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 shareholders 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.
Employee severance and office closure expenses:
We have excluded charges for employee severance and office closure
expenses that are typically incurred to enable us to realize
synergies in merger and divestiture transactions, and to execute
our other strategies designed to improve performance.
Loss on disposal of Divested Business: We have
excluded losses related to our disposal of the Divested Business
since those losses are unrelated to current operational decisions
and performance.
Contact:
InvestorsNewAge, Inc.Lisa MuellerVP, Investor
Relationsir@newage.com
|
NewAge, Inc. |
UNAUDITED CONDENSED CONSOLIDATED BALANCE
SHEETS |
(In thousands, except per share amounts) |
|
|
|
|
|
September 30, |
|
December 31, |
ASSETS |
2021 |
|
2020 |
|
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
46,829 |
|
|
$ |
43,711 |
|
Trade accounts receivable, net of allowance of $918 and $582,
respectively |
|
8,873 |
|
|
|
12,341 |
|
Inventories |
|
48,876 |
|
|
|
48,051 |
|
Prepaid expenses and other |
|
15,123 |
|
|
|
13,032 |
|
Current portion of restricted cash |
|
12,000 |
|
|
|
10,000 |
|
Assets held for sale |
|
6,884 |
|
|
|
- |
|
|
|
|
|
Total current assets |
|
138,585 |
|
|
|
127,135 |
|
|
|
|
|
Long-term assets: |
|
|
|
Identifiable intangible assets, net of accumulated
amortization |
|
144,539 |
|
|
|
169,611 |
|
Goodwill |
|
54,621 |
|
|
|
54,993 |
|
Right-of-use lease assets |
|
29,580 |
|
|
|
38,764 |
|
Property and equipment, net of accumulated depreciation |
|
22,786 |
|
|
|
28,076 |
|
Deferred income taxes |
|
7,404 |
|
|
|
7,782 |
|
Deposits and other |
|
4,621 |
|
|
|
5,297 |
|
Restricted cash, net of current portion |
|
3,514 |
|
|
|
11,524 |
|
|
|
|
|
Total assets |
$ |
405,650 |
|
|
$ |
443,182 |
|
|
|
|
|
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Accounts payable |
$ |
17,997 |
|
|
$ |
22,774 |
|
Accrued liabilities |
|
56,533 |
|
|
|
70,007 |
|
Current maturities of long-term debt |
|
17,636 |
|
|
|
18,016 |
|
Operating lease liability related to right-of-use assets held for
sale |
|
4,503 |
|
|
|
- |
|
Current portion of business combination liabilities |
|
1,140 |
|
|
|
11,750 |
|
|
|
|
|
Total current liabilities |
|
97,809 |
|
|
|
122,547 |
|
|
|
|
|
Long-term liabilities: |
|
|
|
Business combination liabilities, net of current portion |
|
28,222 |
|
|
|
95,826 |
|
Long-term debt, net of current maturities |
|
- |
|
|
|
16,181 |
|
Operating lease liabilities, net of current portion: |
|
|
|
Lease liability |
|
27,054 |
|
|
|
34,788 |
|
Deferred lease financing obligation |
|
15,372 |
|
|
|
15,882 |
|
Deferred income taxes |
|
5,019 |
|
|
|
5,391 |
|
Warrant derivative liability |
|
1,782 |
|
|
|
- |
|
Other |
|
8,284 |
|
|
|
8,313 |
|
|
|
|
|
Total liabilities |
|
183,542 |
|
|
|
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 400,000 and
200,000 shares as |
|
|
|
of September 30, 2021 and December 31, 2020, respectively; issued
and outstanding 146,816 and |
|
147 |
|
|
|
99 |
|
99,146 shares as of September 30, 2021 and December 31, 2020,
respectively |
|
|
|
Additional paid-in capital |
|
363,205 |
|
|
|
236,732 |
|
Obligation to issue 4,551 and 19,704 shares of Common Stock as of
September 30, 2021 |
|
|
|
and December 31, 2020, respectively |
|
9,464 |
|
|
|
54,186 |
|
Note receivable for stock subscription |
|
- |
|
|
|
(1,250 |
) |
Accumulated other comprehensive income |
|
4,204 |
|
|
|
4,201 |
|
Accumulated deficit |
|
(154,912 |
) |
|
|
(151,815 |
) |
Total stockholders' equity |
|
222,108 |
|
|
|
142,153 |
|
Total liabilities, redeemable Common Stock, and stockholders'
equity |
$ |
405,650 |
|
|
$ |
443,182 |
|
|
NewAge, Inc. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Net revenue |
$ |
99,553 |
|
|
$ |
62,719 |
|
|
$ |
349,111 |
|
|
$ |
189,049 |
|
Cost of goods sold |
|
33,567 |
|
|
|
25,224 |
|
|
|
111,925 |
|
|
|
71,952 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
65,986 |
|
|
|
37,495 |
|
|
|
237,186 |
|
|
|
117,097 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Commissions |
|
36,823 |
|
|
|
17,458 |
|
|
|
127,540 |
|
|
|
55,378 |
|
Selling, general and administrative |
|
39,027 |
|
|
|
27,983 |
|
|
|
118,928 |
|
|
|
84,868 |
|
Impairment of long-lived assets |
|
16,186 |
|
|
|
- |
|
|
|
16,186 |
|
|
|
400 |
|
Depreciation and amortization expense |
|
4,385 |
|
|
|
1,751 |
|
|
|
13,783 |
|
|
|
5,293 |
|
Loss on disposal of Divested Business |
|
- |
|
|
|
3,446 |
|
|
|
4,339 |
|
|
|
3,446 |
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
96,421 |
|
|
|
50,638 |
|
|
|
280,776 |
|
|
|
149,385 |
|
|
|
|
|
|
|
|
|
Operating loss |
|
(30,435 |
) |
|
|
(13,143 |
) |
|
|
(43,590 |
) |
|
|
(32,288 |
) |
|
|
|
|
|
|
|
|
Non-operating income (expense): |
|
|
|
|
|
|
|
Gain (loss) from change in fair value of derivatives |
|
19,498 |
|
|
|
(86 |
) |
|
|
40,714 |
|
|
|
(392 |
) |
Gain from forgiveness of PPP Loans and accrued interest |
|
9,751 |
|
|
|
- |
|
|
|
9,751 |
|
|
|
- |
|
Interest and other income, net |
|
1,397 |
|
|
|
229 |
|
|
|
992 |
|
|
|
954 |
|
Interest expense |
|
(2,526 |
) |
|
|
(521 |
) |
|
|
(8,689 |
) |
|
|
(1,693 |
) |
|
|
|
|
|
|
|
|
Loss before income taxes |
|
(2,315 |
) |
|
|
(13,521 |
) |
|
|
(822 |
) |
|
|
(33,419 |
) |
Income tax expense |
|
(385 |
) |
|
|
(612 |
) |
|
|
(2,275 |
) |
|
|
(1,886 |
) |
|
|
|
|
|
|
|
|
Net loss |
$ |
(2,700 |
) |
|
$ |
(14,133 |
) |
|
$ |
(3,097 |
) |
|
$ |
(35,305 |
) |
|
|
|
|
|
|
|
|
Net loss per share of Common Stock: |
|
|
|
|
|
|
|
Basic |
$ |
(0.02 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.02 |
) |
|
$ |
(0.38 |
) |
Diluted |
$ |
(0.11 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares of Common Stock outstanding: |
|
|
|
|
|
|
|
Basic |
|
151,411 |
|
|
|
97,819 |
|
|
|
140,894 |
|
|
|
92,087 |
|
Diluted |
|
170,251 |
|
|
|
97,819 |
|
|
|
167,657 |
|
|
|
92,087 |
|
|
NewAge, Inc. |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
NINE MONTHS ENDED SEPTEMBER 2021 AND 2020 |
(In thousands) |
|
|
|
|
|
2021 |
|
2020 |
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net loss |
$ |
(3,097 |
) |
|
$ |
(35,305 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Loss (gain) from change in fair value of derivatives, net |
|
(40,714 |
) |
|
|
392 |
|
Gain from forgiveness of PPP Loans and accrued interest |
|
(9,751 |
) |
|
|
- |
|
Impairment of long-lived assets |
|
16,186 |
|
|
|
400 |
|
Depreciation and amortization |
|
14,077 |
|
|
|
5,607 |
|
Non-cash lease expense |
|
7,381 |
|
|
|
3,913 |
|
Accretion of debt discount |
|
6,171 |
|
|
|
414 |
|
Stock-based compensation expense |
|
5,624 |
|
|
|
3,415 |
|
Allowance for uncollectible note receivable and accrued interest
from Divested Business |
|
2,701 |
|
|
|
- |
|
Deferred income tax expense (benefit) |
|
490 |
|
|
|
(442 |
) |
Loss from sale of property and equipment |
|
332 |
|
|
|
128 |
|
Other |
|
118 |
|
|
|
73 |
|
Loss on disposal of Divested Business |
|
- |
|
|
|
3,446 |
|
Changes in operating assets and liabilities, net of effects of
business combination: |
|
|
|
Trade accounts receivable |
|
240 |
|
|
|
(932 |
) |
Inventories |
|
(87 |
) |
|
|
2,741 |
|
Prepaid expenses, deposits and other |
|
117 |
|
|
|
519 |
|
Accounts payable |
|
(4,915 |
) |
|
|
(484 |
) |
Other accrued liabilities |
|
(20,486 |
) |
|
|
(13,738 |
) |
|
|
|
|
Net cash used in operating activities |
|
(25,613 |
) |
|
|
(29,853 |
) |
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Cash payments for Ariix business combination |
|
(10,000 |
) |
|
|
- |
|
Capital expenditures for property and equipment |
|
(1,267 |
) |
|
|
(2,108 |
) |
Cash advance under unsecured promissory note |
|
- |
|
|
|
(1,250 |
) |
Proceeds from sale of equipment |
|
4 |
|
|
|
231 |
|
Proceeds received from buyer of Divested Businesses, net of cash
conveyed of $209 |
|
- |
|
|
|
381 |
|
Net cash used in investing activities |
|
(11,263 |
) |
|
|
(2,746 |
) |
|
|
|
|
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 |
|
|
|
- |
|
Proceeds from exercise of stock options |
|
530 |
|
|
|
34 |
|
Proceeds from issuance of common stock |
|
- |
|
|
|
25,122 |
|
Proceeds from borrowings |
|
- |
|
|
|
6,868 |
|
Principal payments on borrowings |
|
(12,000 |
) |
|
|
(10,825 |
) |
Principal payments on business combination obligations |
|
(9,702 |
) |
|
|
(5,761 |
) |
Payments under deferred lease financing obligation |
|
(495 |
) |
|
|
(480 |
) |
Debt issuance costs paid |
|
(21 |
) |
|
|
(95 |
) |
Payments for deferred offering costs |
|
(24 |
) |
|
|
(164 |
) |
Purchase and retirement of 780 shares of Common Stock |
|
- |
|
|
|
(1,193 |
) |
|
|
|
|
Net cash provided by financing activities |
|
32,089 |
|
|
|
13,506 |
|
|
|
|
|
Effect of foreign currency translation changes |
|
1,895 |
|
|
|
(247 |
) |
|
|
|
|
Net change in cash, cash equivalents and restricted cash |
|
(2,892 |
) |
|
|
(19,340 |
) |
Cash, cash equivalents and restricted cash at beginning of
period |
|
65,235 |
|
|
|
64,571 |
|
|
|
|
|
Cash, cash equivalents and restricted cash at end of period |
$ |
62,343 |
|
|
$ |
45,231 |
|
|
NewAge, Inc. |
ADJUSTED EBITDA CALCULATION |
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
|
|
Net loss |
$ |
(2,700 |
) |
|
$ |
(14,133 |
) |
|
$ |
(3,097 |
) |
|
$ |
(35,305 |
) |
EBITDA Non-GAAP adjustments: |
|
|
|
|
|
|
|
Interest expense |
|
2,526 |
|
|
|
521 |
|
|
|
8,689 |
|
|
|
1,693 |
|
Income tax expense |
|
385 |
|
|
|
612 |
|
|
|
2,275 |
|
|
|
1,886 |
|
Depreciation and amortization expense |
|
4,481 |
|
|
|
1,855 |
|
|
|
14,077 |
|
|
|
5,607 |
|
|
|
|
|
|
|
|
|
EBITDA |
|
4,692 |
|
|
|
(11,145 |
) |
|
|
21,944 |
|
|
|
(26,119 |
) |
Adjusted EBITDA Non-GAAP adjustments: |
|
|
|
|
|
|
|
Loss (gain) from change in fair value of derivatives |
|
(19,498 |
) |
|
|
86 |
|
|
|
(40,714 |
) |
|
|
392 |
|
Gain from forgiveness of PPP Loans and accrued interest |
|
(9,751 |
) |
|
|
- |
|
|
|
(9,751 |
) |
|
|
- |
|
Impairment of long-lived assets |
|
16,186 |
|
|
|
- |
|
|
|
16,186 |
|
|
|
400 |
|
Employee severance and office closure expenses |
|
2,520 |
|
|
|
1,658 |
|
|
|
4,217 |
|
|
|
2,543 |
|
Stock-based compensation expense |
|
1,475 |
|
|
|
966 |
|
|
|
5,624 |
|
|
|
3,415 |
|
Loss on disposal of Divested Business |
|
- |
|
|
|
- |
|
|
|
4,339 |
|
|
|
3,446 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
(4,376 |
) |
|
$ |
(8,435 |
) |
|
$ |
1,845 |
|
|
$ |
(15,923 |
) |
|
|
|
|
|
|
|
|
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