Strong Balance sheet with over $250 million in assets and cash of $61 million
Business transformation resulted in developing an infrastructure across 60 countries and a near 5-fold increase in full year revenue
DENVER, March 16, 2020 (GLOBE NEWSWIRE) -- 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, 2020
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: 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: 1-855-859-2056
International replay number: 1-404-537-3406
Replay 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 Disclosure
This 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 Winkle
ICR – Strategic Communications and Advisory
Tel: 1-646-277-1254/1-617-956-6736
newage@icrinc.com
NewAge Beverages Corporation:
Gregory A. Gould
Chief Financial Officer
Tel: 1-303-566-3030
Greg_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.