New Age Beverages Corporation
the Colorado-based healthy lifestyle company focused on becoming the world's leading healthy beverage company, today announced the results for the third quarter ended September 30, 2018.
KEY HIGHLIGHTS:
- Balance sheet significantly strengthened with $12 million credit line, elimination of all debt, cash balanced increased to ≈$28 million and total assets increased to >$100 million
- 3rd quarter revenue and gross margin impacted by the working capital shortfall throughout most of the third quarter
- CBD and Health Sciences products in production for launch before Christmas
Brent Willis, Chief Executive Officer of New Age mentioned, "New Age continued to progress its strategy to become the world's leading healthy beverage company in Q3. We significantly strengthened the Company's balance sheet and cash position. Now, with the distribution breadth of our core brands and our ability to fulfill demand, the impending launch of our CBD portfolio, and next steps with strategic growth opportunities, we are confident in our ability to continue to drive excellent return for shareowners."
On August 24, 2018, New Age completed an $11.8 million underwritten offering with Roth Capital Partners and Northland Capital Partners, that enabled the Company to: 1) eliminate all debt, including a previously installed $4.8 million term loan, 2) purchase inventory, and 3) trigger the implementation of a new $12 million line of credit. The inventory purchases replenished New Age's supply chain in the last week of the third and first few weeks of the fourth quarter.
New Age also implemented an At-The-Market offering which during the quarter increased the Company's cash balance to $28.6 million versus a prior year cash balance of $285 thousand. The proceeds of the now closed offering are envisioned to be used to pursue potential acquisitions and to further drive organic growth of the current and new CBD portfolio.
Greg Gould, newly appointed Chief Financial Officer of New Age Beverages commented, "For the first time in the Company's history, New Age has the scale to be profitable, and the balance sheet and the cash to drive organic growth of an excellent brand portfolio, as well as to pursue external growth opportunities. I was attracted to New Age because of the strength of its brand portfolio and the quality of the management team and board. Now, fully funded, we are in a tremendous position to drive real value for shareholders."
Q3 2018 FINANCIAL RESULTS
For the three-month period ended September 30, 2018, gross revenues reached $15.3 million versus $16.8 million in the prior year quarter. Net revenues less discounts, returns and billbacks reached $13.2 million versus $15.0 in the prior year quarter. The working capital shortfall that prohibited the Company's ability to meet demand during the majority of the quarter, which negatively impacted revenue between $5.8 and $6.2 million.
Gross profit was 16% of net sales versus 33% in the prior year, also reflective of the significant impact of the working capital limitations on production and shipping.
Total operating expenses for the quarter were $5.1 million compared to $4.4 million in the third quarter of 2017, due primarily to higher non-cash expenses including increased amortization on the $20 million of intangible assets added to the balance sheet, and the stock option and stock expense associated with the five acquisitions over the past two years. EBITDA on an adjusted basis for the three-month period ended September 30, 2018 was ($2.5 million), primarily as a result of the impact on revenue from the inventory shortfall.
