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Press release content from Globe Newswire. The AP news staff was not involved in its creation.
PRESS RELEASE: Paid content from Globe Newswire
Press release content from Globe Newswire. The AP news staff was not involved in its creation.

NewAge, Inc. Announces Third Quarter 2021 Financial Results With Revenue Growth of 59%

November 9, 2021 GMT

DENVER, Nov. 09, 2021 (GLOBE NEWSWIRE) -- 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
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Management Commentary
Brent 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 Liquidity
The 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 Information
A 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 Statements
This 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.

EBITDA
EBITDA 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:

Investors
NewAge, Inc.
Lisa Mueller
VP, Investor Relations
ir@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)