NewAge Announces Record Second Quarter Results: Net Revenue Increases 98% to $124 Million


DENVER, Aug. 09, 2021 (GLOBE NEWSWIRE) -- NewAge, Inc. (Nasdaq: NBEV), the Colorado-based direct-to-consumer (D2C) organic and healthy products company, today announced record financial results for the second quarter of 2021 with a net revenue of $124 million, net income of $17.4 million, adjusted EBITDA1 of $1.7 million, and basic earnings per share of $0.11.

For the three months ending June 30, 2021, net revenue was $124 million, an increase of $61 million or 98%. Gross profit for the quarter was $84 million, an increase of $46 million or 120%, resulting in a gross margin of 67.6%, compared to a 60.8% in the prior-year period, an increase of 6.8 percentage points. Net income was $17.4 million, an increase of $26.9 million compared ot a net loss of ($9.6) million in the prior-year period. Adjusted EBITDA was $1.7 million, an increase of $7.2 million compared to a loss of ($5.5) million in the prior-year period. Basic earnings per share was a positive $0.11, an increase of $0.21 compared to a loss of ($0.10) in the prior-year period.

Brent Willis, Chief Executive Officer of NewAge, commented, “The second quarter saw accelerated top and bottom-line results and continued income statement improvement. In the quarter, we completed the Aliven acquisition, had a very successful annual meeting, further integrated ARIIX capturing additional cost and revenue synergies, and continued expansion of our social selling initiatives worldwide. We strengthened our team and positioned NewAge for even further transformative performance as our strategy unfolds.”  

“This is our third consecutive quarter of positive adjusted EBITDA,” commented Kevin Manion, NewAge’s new Chief Financial Officer. “Financially, our focus is on developing, utilizing and driving consistent company-wide metrics to improve EBITDA margins through operational improvements and reducing SG&A costs, specifically from consolidating the recent acquisitions. With these activities, we are confident in continued growth throughout 2021 and thereafter. I see NewAge as extremely well positioned to deliver superior organic growth and transformative, accretive external growth. I have spent most of my career in the consumer goods industry and see the NewAge Social Selling Network and our D2C route-to-market as the new winning industry model that will deliver outsized returns for shareholders.”

Second Quarter 2021 Financial Results        

Net revenue was $124 million for the three months ending June 30, 2021, versus $63 million for the second quarter of the prior year, an increase of 98%. The growth in net revenue was driven by the acquisitions of ARIIX and Aliven. Leading the growth on a proforma basis was the combined European business that increased 24% and the United States business that increased 15%. These were offset by China, Japan and the impact of COVID-19 in a number of markets around the world.

Gross margin for the second quarter of 2021 was $84 million or 67.6% of net revenue compared with $38 million or 60.8% of net revenue for the prior-year period, a 120% increase of $46 million and an increase of 6.8 gross margin percentage points. The gross margin percentage increase was driven by higher net revenue from the Direct/Social Selling Division and the disposition of the retail brands’ business completed in September 2020. 

Net operating loss was ($9.6) million for the second quarter of 2021 compared to a loss of ($8.8) million for the prior-year period. Net income was $17.4 million, correlating to a positive basic EPS of $0.11 per share, an increase of 21 cents from the prior-year period. Adjusted EBITDA was $1.7 million, compared with ($5.5) million for the prior-year period, an improvement of $7.2 million.

The company ended the quarter with a strong balance sheet, with cash and cash equivalents of $92 million and debt of $31.5 million, exclusive of operating lease liabilities. Subsequent to the quarter-end, $9.7 million of debt was forgiven.

“Our second-quarter results demonstrated commendable progress converging our companies and capturing both revenue and cost synergies. Carrying this momentum forward, we expect continued strong results from operations throughout the year as we build out additional platforms and programs for our global sales force. We believe we are stronger and better positioned than we have ever been, with differentiated health and wellness brands and an on-trend D2C business system, with an expanding e-commerce Subscriber base and an increasing and strengthening team of exclusive Brand Partner influencers,” concluded Mr. Willis.

Conference Call

The company will host a live conference call and webcast today at 5:00 p.m. Eastern Time. Conference call details are provided below. Interested investors can dial into the conference call to hear the details of management's updates and participate in a question and answer session.

Date: Monday, August 9, 2021
Time: 5:00 p.m. ET
Toll-free dial-in number: 1-855-327-6838
International dial-in number: 1-604-235-2082
Conference ID: 10016023

The conference call will also be broadcast live and available for replay here and via the Investors section of the company’s website at newage.com. The webcast replay will be available for approximately 45 days following the call.

Please dial into the conference call 15 minutes prior to the start time due to increased demand for conference calls. You will be asked to register your name and organization.

A replay of the conference call will be available after 8:00 p.m. Eastern Time on the same day through Monday, August 16, 2021, 11:59 p.m.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 10016023

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 75 countries. The company competes in three major category platforms: Health and Wellness, Inner and Outer Beauty and Nutritional Performance and Weight Management — leading a network of more than 400,000 exclusive independent Brand Partners, empowered with the leading social selling tools and technology around the world.

The company operates the websites NewAge.com, MaVie.com and Zennoa.com.  

Safe Harbor Disclosure
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.

For investor inquiries about NewAge please contact:

NewAge Investor Relations:

Mindy Eardley
Director, Public and Investor Relations
Tel: 1-801-573-4818
Mindy_Eardley@NewAge.com


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NewAge, Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
      
 June 30,  December 31, 
ASSETS2021  2020 
      
Current assets:     
Cash and cash equivalents$          80,922  $           43,711 
Trade accounts receivable, net of allowance of $590 and $582, respectively10,470  12,341 
Inventories44,219  48,051 
Assets held for sale7,088  - 
Current portion of restricted cash5,568  10,000 
Prepaid expenses and other             13,086                13,032 
      
Total current assets161,353  127,135 
      
Long-term assets:     
Identifiable intangible assets, net of accumulated amortization164,093  169,611 
Goodwill55,281  54,993 
Right-of-use lease assets29,741  38,764 
Property and equipment, net of accumulated depreciation23,771  28,076 
Restricted cash, net of current portion5,969  11,524 
Deferred income taxes7,476  7,782 
Deposits and other               4,771                  5,297 
      
Total assets$         452,455  $          443,182 
      
LIABILITIES, REDEEMABLE COMMON STOCK, AND STOCKHOLDERS’ EQUITY     
Current liabilities:     
Accounts payable$          17,111  $           22,774 
Accrued liabilities65,009  70,007 
Operating lease liability related to right-of-use assets held for sale4,707  - 
Current portion of business combination liabilities1,140  11,750 
Current maturities of long-term debt             19,440                18,016 
      
Total current liabilities107,407  122,547 
      
Long-term liabilities:     
Business combination liabilities, net of current portion49,013  95,826 
Long-term debt, net of current maturities12,063  16,181 
Operating lease liabilities, net of current portion:     
Lease liability26,745  34,788 
Deferred lease financing obligation15,543  15,882 
Warrant derivative liability5,695  - 
Deferred income taxes5,091  5,391 
Other               8,295                  8,313 
      
Total liabilities           229,852              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, $0.001 par value per share. Authorized 400,000 and 200,000 shares as of June 30, 2021 and December 31, 2020, respectively; issued and outstanding 136,606 and 99,146 shares as of June 30, 2021 and December 31, 2020, respectively137  99 
Additional paid-in capital340,937  236,732 
Obligation to issue 14,551 and 19,704 shares of Common Stock as of June 30, 2021 and December 31, 2020, respectively30,263  54,186 
Note receivable for stock subscription-  (1,250)
Accumulated other comprehensive income3,478  4,201 
Accumulated deficit         (152,212)            (151,815)
Total stockholders' equity           222,603              142,153 
Total liabilities, redeemable Common Stock,  and stockholders' equity$         452,455  $          443,182 
      


NewAge, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
            
 Three Months Ended Six Months Ended
 June 30, June 30,
 2021  2020  2021  2020 
            
Net revenue$124,040  $62,637  $249,558  $126,330 
Cost of goods sold40,241  24,559  78,358  46,728 
            
Gross profit83,799  38,078  171,200  79,602 
            
Operating expenses:           
Commissions43,320  18,405  90,717  37,920 
Selling, general and administrative41,042  26,277  79,901  56,885 
Depreciation and amortization expense4,723  1,761  9,398  3,542 
Loss on disposal of Divested Business4,339  -  4,339  - 
Impairment of right-of-use assets-  400  -  400 
            
Total operating expenses93,424  46,843  184,355  98,747 
            
Operating loss(9,625) (8,765) (13,155) (19,145)
            
Non-operating income (expense):           
Interest expense(3,040) (600) (6,163) (1,172)
Gain (loss) from change in fair value of derivatives30,829  20  21,216  (306)
Interest and other income (expense), net(53) 342  (405) 725 
            
Income (loss) before income taxes18,111  (9,003) 1,493  (19,898)
Income tax expense(740) (551) (1,890) (1,274)
            
Net income (loss)$17,371  $(9,554) $(397) $(21,172)
            
Net income (loss) per share of Common Stock:           
Basic$0.11  $(0.10) $(0.00) $(0.24)
Diluted$(0.04) $(0.10) $(0.08) $(0.24)
            
Weighted average number of shares of Common Stock outstanding:           
Basic143,636  93,003  135,534  89,187 
Diluted170,609  93,003  166,323  89,187 
            

 

NewAge, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(In thousands)
      
 2021 2020
      
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net loss$          (397) $       (21,172)
Adjustments to reconcile net loss to net cash used in operating activities:     
Loss (gain) from change in fair value of derivatives, net(21,216) 306 
Depreciation and amortization9,596  3,752 
Non-cash lease expense6,244  2,792 
Loss on disposal of Divested Business-  - 
Accretion of debt discount4,372  302 
Stock-based compensation expense4,149  2,449 
Allowance for uncollectible note receivable from Divested Business2,701  - 
Impairment of right-of-use assets-  400 
Expense for make-whole premium and other-  - 
Deferred income tax benefit(149) (173)
Loss from sale of property and equipment60  66 
Other118  73 
Changes in operating assets and liabilities, net of effects of business combination:     
Accounts receivable(37) (2,276)
Inventories4,681  2,819 
Prepaid expenses, deposits and other1,640  517 
Accounts payable(5,840) (551)
Other accrued liabilities(11,482) (12,900)
      
Net cash used in operating activities(5,560) (23,596)
      
CASH FLOWS FROM INVESTING ACTIVITIES:     
Cash payments for Ariix business combination(10,000) - 
Proceeds from sale of equipment-  159 
Capital expenditures for property and equipment(765) (1,980)
Net cash used in investing activities(10,765) (1,821)
      
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 Stock14,128  - 
Residual fair value of 14,636 shares of Common Stock39,673  - 
Proceeds from borrowings-  6,868 
Principal payments on borrowings(6,000) (10,450)
Debt issuance costs paid(21) (85)
Proceeds from issuance of common stock-  25,122 
Payments for deferred offering costs(24) (94)
Proceeds from exercise of stock options528  4 
Principal payments on business combination obligations(4,496) (298)
Payments under deferred lease financing obligation(329) (319)
      
Net cash provided by financing activities43,459  20,748 
      
Effect of foreign currency translation changes90  (857)
      
Net change in cash, cash equivalents and restricted cash27,224  (5,526)
Cash, cash equivalents and restricted cash at beginning of period65,235  64,571 
      
Cash, cash equivalents and restricted cash at end of period$      92,459  $        59,045 


 Three Months Ended Six Months Ended
 June 30, June 30,
 2021 2020 2021 2020
            
Net income (loss)$     17,371  $    (9,554) $        (397) $    (21,172)
EBITDA Non-GAAP adjustments:           
Interest expense         3,040            600           6,163            1,172 
Income tax expense            740            551           1,890            1,274 
Depreciation and amortization  expense         4,822         1,873           9,596            3,752 
            
EBITDA       25,973        (6,530)        17,252        (14,974)
Adjusted EBITDA Non-GAAP adjustments:           
Stock-based compensation expense         2,187         1,092           4,149            2,449 
Loss on disposal of Divested Business         4,339                 -           4,339                    - 
Loss (gain) from change in fair value of derivatives      (30,829)            (20)      (21,216)              306 
            
Adjusted EBITDA $       1,670  $    (5,458) $       4,524  $    (12,219)
            

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.

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1EBITDA and Adjusted EBITDA are non-GAAP financial measures with reconciliations provided in the table below.