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

November 9, 2021

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

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 )