NEWAGE (NASDAQ: NBEV), the Colorado-based healthy
products company, today announced financial results for the quarter
ended September 30, 2019. The Company achieved its highest recorded
sales, with net revenue reaching $69.8 million for the quarter
ended September 30, 2019 versus $13.2 million for the same period
of 2018, a growth rate of 427%.
KEY HIGHLIGHTS:
- Net revenue improved to $69.8 million, up 427%
over Q3 2018 and a 5% increase sequentially from the previous
quarter
- Gross margins increased significantly to 57.7%
versus 12.8% in Q3 2018
- Net loss was $10.7 million versus $3.5 million in
the prior year
- Achieved positive EBITDA of $37,000 on an
adjusted basis compared to loss of $2.6 million in Q3 2018
Brent Willis, Chief Executive Officer of NewAge,
commented, “We had our best performance ever at NewAge and continue
to build strength and momentum. Both China and Japan had their best
results of the year, with China finishing the month of September at
5% growth versus prior year, and 92% growth versus the prior month.
During the quarter, we closed on and began the integration of the
Brands Within Reach acquisition, while continuing to fully
integrate the Morinda operations into NewAge. All of these
initiatives are major undertakings and the team continues to do an
outstanding job in both driving performance and building out our
global platform at the same time.”
Q3 2019 FINANCIAL
RESULTS
For the three-month period ended September 30,
2019, net revenue was $69.8 million versus $13.2 million in the
prior year, an increase of 427%, and a sequential increase of 5.3%
versus the prior quarter. Gross revenue before deduction of
discounts, returns and billbacks reached $73.6 million versus $15.3
million in the prior year.
Gross profit in the third quarter reached $40.3
million versus $1.7 million in the prior year third quarter. Gross
margin was up significantly to 57.7% versus 12.8% in the prior year
third quarter, primarily due to the positive change in both product
and channel mix, especially with the growth in our e-commerce
business.
Total operating expenses for the quarter were
$43.3 million compared to $5.1 million for the prior year third
quarter primarily due to an increase in selling, general and
administrative expense and commission expenses associated with the
new scale of the business.
Net loss was $10.7 million, a loss of $0.14 per
share, which represented a $1.0 million improvement versus the
second quarter of 2019, and compares to a net loss of $3.5 million,
or $0.08 per share in the third quarter of the prior year. Adjusted
EBITDA improved by $2.6 million compared to the same quarter of the
prior year.
Cash and cash equivalents at September 30, 2019
totaled $68.4 million and working capital was $47.4 million. Total
assets as of September 30, 2019 increased to $313.7 million versus
$286.9 million at December 31, 2018.
Conference Call
The Company will host a live conference call and
web cast today at 8:00 a.m. ET. Conference call details are
provided at the end of this press release. 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: Thursday, November 14, 2019
Time: 8:00 a.m. Eastern time
Toll-free dial-in number: 1-866-221-1749
International dial-in number: 1-270-215-9924
Conference ID: 5449236
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.
Please call the conference telephone number 5-10
minutes prior to the start time. You will be asked to register your
name and organization. If you have any difficulty connecting to the
conference call, please contact Gateway Investor Relations at
1-949-574-3860.
A replay of the conference call will be
available after 11:00 a.m. Eastern time on the same day through
November 21, 2019.
Toll-free replay number:
1-855-859-2056International replay number:
1-404-537-3406Replay ID: 5449236
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 company with access to traditional retail, e-commerce,
direct-to-consumer, and medical channels across 60 countries around
the world. NewAge is also the only one-stop-shop of healthy
beverages and includes the brands Nestea, Illy Coffee, Volvic,
Evian, Tahitian Noni, TeMana, Búcha Live Kombucha, Marley, and
others. NewAge competes in the growth segments of the >$1
trillion-dollar non-alcoholic beverage industry and has become one
of the largest non-alcoholic healthy beverage companies in the
world.
The Company operates the websites
www.newagebev.com, www.newagebev.us, www.morinda.com,
www.bwrgroup.com, www.mybucha.com, www.xingtea.com,
www.drinkmarley.com, www.nhancedcbd.com, and www.cocolibre.com.
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.
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 include, but are not limited to, 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. These
statements are based on the beliefs and assumptions of NewAge’s
management based on information currently available to management.
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. Important factors that could cause actual
results to differ materially from the forward-looking statements
include, among others, the risks described in the section entitled
“Risk Factors” under Item 1A in NewAge’s Annual Report on Form 10-K
for the year ended December 31, 2018 and in subsequent periodic and
current filings with the Securities and Exchange Commission that
NewAge may make. Unless required by applicable law, NewAge
undertakes no obligation to update or revise any forward-looking
statements.
For investor inquiries about NewAge
Beverages Corporation please contact:
Media:Desiree Rosa,
MULTIPLYTel: 1-646-499-3306NewAgeBev@wearemultip.ly
Investor Relations Counsel:Cody
Slach, Gateway Investor RelationsTel:
1-949-574-3860NBEV@GatewayIR.com
NewAge Beverages
Corporation:Gregory A. GouldChief Financial OfficerTel:
1-303-566-3030Greg_Gould@NewAge.com
NEWAGE BEVERAGES CORPORATION Unaudited
Condensed Consolidated Balance Sheets (In thousands, except par
value per share amounts)
|
|
September 30, 2019 |
|
|
December 31, 2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
68,373 |
|
|
$ |
42,517 |
|
Accounts receivable, net of allowance of $191 and $134,
respectively |
|
|
12,573 |
|
|
|
9,837 |
|
Inventories |
|
|
38,242 |
|
|
|
37,148 |
|
Prepaid expenses and other |
|
|
9,452 |
|
|
|
6,473 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
128,640 |
|
|
|
95,975 |
|
|
|
|
|
|
|
|
|
|
Long-term
assets: |
|
|
|
|
|
|
|
|
Identifiable intangible assets, net |
|
|
66,489 |
|
|
|
67,830 |
|
Property and equipment, net |
|
|
26,639 |
|
|
|
57,281 |
|
Goodwill |
|
|
33,545 |
|
|
|
31,514 |
|
Right-of-use lease |
|
|
38,954 |
|
|
|
18,489 |
|
Deferred income taxes |
|
|
10,981 |
|
|
|
8,908 |
|
Restricted cash and other |
|
|
8,428 |
|
|
|
6,935 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
313,676 |
|
|
$ |
286,932 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
13,428 |
|
|
$ |
8,960 |
|
Accrued liabilities |
|
|
51,283 |
|
|
|
34,019 |
|
Current portion of business combination liabilities |
|
|
5,432 |
|
|
|
8,718 |
|
Current maturities of long-term debt |
|
|
11,090 |
|
|
|
3,369 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities Total current liabilities |
|
|
81,233 |
|
|
|
55,066 |
|
|
|
|
|
|
|
|
|
|
Long-term
liabilities: |
|
|
|
|
|
|
|
|
Business combination liabilities, net of current portion |
|
|
900 |
|
|
|
43,412 |
|
Long-term debt, net of current maturities |
|
|
13,149 |
|
|
|
1,325 |
|
Right-of-use liabilities, net of current portion: |
|
|
|
|
|
|
|
|
Lease liability |
|
|
35,475 |
|
|
|
13,686 |
|
Deferred lease financing obligation |
|
|
16,702 |
|
|
|
- |
|
Deferred income taxes |
|
|
7,290 |
|
|
|
9,747 |
|
Other |
|
|
8,880 |
|
|
|
9,160 |
|
|
|
|
|
|
|
|
|
|
Total liabilities Total liabilities |
|
|
163,629 |
|
|
|
132,396 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity: |
|
|
|
|
|
|
|
|
Common Stock; $0.001 par value. Authorized 200,000 shares; issued
and outstanding 78,274 and 75,067 shares as of September 30, 2019
and December 31, 2018, respectively |
|
|
78 |
|
|
|
75 |
|
Additional paid-in capital |
|
|
196,105 |
|
|
|
176,471 |
|
Accumulated other comprehensive income |
|
|
484 |
|
|
|
626 |
|
Accumulated deficit |
|
|
(46,620 |
) |
|
|
(22,636 |
) |
Total stockholders’ deficit Total stockholders’ equity |
|
|
150,047 |
|
|
|
154,536 |
|
Total liabilities and stockholders’ deficit Total liabilities and
stockholders’ equity |
|
$ |
313,676 |
|
|
$ |
286,932 |
|
NEWAGE BEVERAGES CORPORATION Consolidated
Statements of Operations (In thousands, except loss per share
amounts)
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
69,828 |
|
|
$ |
13,243 |
|
|
$ |
194,483 |
|
|
$ |
38,164 |
|
Cost of goods sold |
|
|
29,532 |
|
|
|
11,544 |
|
|
|
73,962 |
|
|
|
32,089 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
40,296 |
|
|
|
1,699 |
|
|
|
120,521 |
|
|
|
6,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions |
|
|
21,185 |
|
|
|
356 |
|
|
|
58,830 |
|
|
|
1,029 |
|
Selling, general and administrative |
|
|
26,104 |
|
|
|
4,338 |
|
|
|
81,121 |
|
|
|
12,736 |
|
Change in fair value of earnout obligations |
|
|
(6,244 |
) |
|
|
- |
|
|
|
(12,909 |
) |
|
|
100 |
|
Impairment of right-of-use lease assets |
|
|
- |
|
|
|
- |
|
|
|
1,500 |
|
|
|
- |
|
Depreciation and amortization expense |
|
|
2,241 |
|
|
|
416 |
|
|
|
6,494 |
|
|
|
1,454 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
43,286 |
|
|
|
5,110 |
|
|
|
135,036 |
|
|
|
15,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(2,990 |
) |
|
|
(3,411 |
) |
|
|
(14,515 |
) |
|
|
(9,244 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income
(expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) from sale of property and equipment |
|
|
(85 |
) |
|
|
- |
|
|
|
6,357 |
|
|
|
- |
|
Gain (loss) from change in fair value of derivatives |
|
|
(166 |
) |
|
|
- |
|
|
|
304 |
|
|
|
- |
|
Interest expense |
|
|
(727 |
) |
|
|
(44 |
) |
|
|
(3,129 |
) |
|
|
(225 |
) |
Other expense, net |
|
|
(48 |
) |
|
|
(49 |
) |
|
|
(233 |
) |
|
|
(53 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
(4,016 |
) |
|
|
(3,504 |
) |
|
|
(11,216 |
) |
|
|
(9,522 |
) |
Income tax expense |
|
|
(6,671 |
) |
|
|
- |
|
|
|
(12,768 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(10,687 |
) |
|
$ |
(3,504 |
) |
|
$ |
(23,984 |
) |
|
$ |
(9,522 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share
attributable to common stockholders (basic and diluted) |
|
$ |
(0.14 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.31 |
) |
|
$ |
(0.24 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of
shares of Common Stock outstanding (basic and diluted) |
|
|
78,076 |
|
|
|
43,346 |
|
|
|
76,550 |
|
|
|
39,492 |
|
Non-GAAP Financial Measures
The primary purpose of using non-GAAP financial
measures is to provide supplemental information that the Company
believes may prove useful to investors and to enable investors to
evaluate its results in the same way as management. The Company
also presents the non-GAAP financial measures because it believes
they assist investors in comparing its performance across reporting
periods on a consistent basis, as well as comparing its results
against the results of other companies, by excluding items that the
Company does not believe are indicative of its core operating
performance. Specifically, the Company uses these non-GAAP measures
as measures of operating performance; to prepare its annual
operating budget; to allocate resources to enhance the financial
performance of its business; to evaluate the effectiveness of its
business strategies; to provide consistency and comparability with
past financial performance; to facilitate a comparison of its
results with those of other companies, many of which use similar
non-GAAP financial measures to supplement their GAAP results; and
in communications with the Company’s board of directors concerning
its financial performance. Investors should be aware however, that
not all companies define these non-GAAP measures consistently. The
Company discloses the following non-GAAP financial measures:
Non-GAAP Gross Revenue. For the
calculation of Non-GAAP gross revenue, the Company excludes selling
discounts and allowances when evaluating the gross amount of its
revenue. The Company’s Non-GAAP gross revenue is an important
metric because this is how the Company believes investors and
competitors measure it and other beverage companies since, with
additional scale, distributors and retailers will have less ability
to force discounts and allowances on smaller companies in the
market.
EBITDA is net loss adjusted to
exclude interest expense, income tax expense, and depreciation and
amortization expense.
Adjusted EBITDA. For the
calculation of Adjusted EBITDA, the Company also excludes
stock-based compensation expense. The Company’s 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
the Company’s 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.
The tables provide below a reconciliation from
the most directly comparable GAAP financial measure to each
non-GAAP financial measure presented. The calculation of Non-GAAP
gross revenue is presented below for the three months ended
September 30, 2019 and 2018 (in thousands):
|
|
Three Months Ended |
|
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Net revenue |
|
$ |
69,828 |
|
|
$ |
13,243 |
|
Non-GAAP adjustment for
discounts and allowances |
|
|
3,799 |
|
|
|
2,080 |
|
|
|
|
|
|
|
|
|
|
Non-GAAP gross revenue |
|
$ |
73,627 |
|
|
$ |
15,323 |
|
The calculation of non-GAAP measures of EBITDA
and Adjusted EBITDA is presented below for the three months ended
September 30, 2019 and 2018 (in thousands):
|
|
Three Months Ended |
|
|
|
September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(10,687 |
) |
|
$ |
(3,504 |
) |
EBITDA Non-GAAP
adjustments: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
727 |
|
|
|
44 |
|
Income tax expense |
|
|
6,671 |
|
|
|
- |
|
Depreciation and amortization expense |
|
|
2,335 |
|
|
|
416 |
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
(954 |
) |
|
|
(3,044 |
) |
Adjusted EBITDA Non-GAAP
adjustment: |
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
991 |
|
|
|
489 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
37 |
|
|
$ |
(2,555 |
) |
- New Age Beverages Corporation
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