NewAge Inc (fka NBEVQ) (NBEVQ)

[NewJerichoMan]

$80M+ Run-Rate - post B Riley Conference


General Bucha said $80M run-rate at the conference. And, he gave us Slide 9, which implied that Coco Libre had a run-rate of $6M. To keep the reported $80M run-rate, I gave APP a $7.5M run-rate, which is the average of the range stated on the Q1 CC, as well as giving Xing a $1.5M bump.

All revenue streams, unless otherwise noted, are seasonally adjusted based on the following percentages: 21% for Q1, 29% for Q2, 28% for Q3, and 22% for Q4. Q2 and Q3 are the biggest quarters and vice versa. This follows historical patterns for both the company and the beverage industry in general.



1. Maxim explicitly stated that the DSD is about 30M per year, and it has a CAGR of 10%. In Q1, Chuck Ence reported it grew 9% YoY, April was the 4th best month in history of company, behind June, July, and August last year. We've added 500 new locations, added NSP products, and Essentia as well. DSD is rolling. Projected its run-rate at $32M.

2. Xing is tough. Per Statista, it did $13.5M in 2015. But if everything is growing double digits and the company isn't. Something is pulling down the average, and its Xing. They've added the PL deal and Chile / Jumbo. I've just projected at $11.5M.

3. Aspen Pure is 4% of the revenues per Maxim. It's rounded. It's growing 10% in 2016 (YoY) and grew 12% in Q1 (YoY). 10% growth on a $2M income stream is about 200K. I projected at $2M.

4. Bucha. We know it was ~$2.4M in 2015, grew 45% in 2016 (imputed $3.5M), and they have added two production lines for Q2. I projected another 45% increase in 2017. In big round numbers, that's $5M for 2017.

5. That puts the existing business run-rate at $50.5M.

6. Coco Libre is reported at $12M by Maxim. My DD uncovered $15M to $16M. 10Q pro forma imputes Coco did about $4.5M or $1.5M per month in Q1. But the CC stated they did $1.2M in April, from the tone it was a good performance, and that some of the sales might get recognized in May. $1.2M * 12 = $14.4M run-rate. Lots of incongruous info here. I projected at $6M for Q1. I've benchmarked to Slide 9, which implied under $16M run-rate and General Bucha explicitly stated that Marley was $9M to $10M.

7. Marley is reported at $9M to $10M. Marley is paying us a management fee of $1M. Suspect that is the difference between $9M and $10M. I projected Marley at $9M. The $1M management fee isn't accounted for in this projection.

8. PMC is unknown. The slide details $6M. Maxim is projecting at $4M. I think they are being conservative. I projected at $6M and did not seasonally adjust. Just a uniform $1.5M per quarter.

9. The acquisitions project to add $21M in revenue to our run-rate.

10. Aspen Pure Probiotics. Maxim is projecting $4M in 2017. General Bucha noted $5M to $10M as appropriate. I went with $7.5M and swagged the quarterly estimates. Could miss by wide margins in either direction.

11. Pedia Ade is just launched. I adopted Maxim's estimate of $1M. I recognized all the revenues in Q4. Could easily explode above projections.

12. New Products are expected to add $8.5M to the run-rate, or just over 10%. With no insight, this is hard to predict.

13. General Bucha said at the B Riley, $80M run-rate. I'm benchmarking to this.

If one "rips" out the $1.5M for PMC that calculates to a Q1 pro forma of $13.755M which is slightly less than the reported $14.1M on Slide 9. This fits pretty well IMO.

The risk here is we're projecting revenues to new products. However, I interviewed a Coco Libre employee and their reported run-rate was $15M to $16M. If we lose on one side of the equation, we might gain on the other.

The net-net is that management has reported an $80M run-rate on multiple occasions. This is the same management that has earned a lot of "equity" over the last year. They've earned the benefit of the doubt here.