Replies to post #3258 on NewAge Inc (fka NBEVQ) (NBEVQ)

[wrigleyriley]

I've been following this board for awhile, but haven't made many posts. There is alot of emotion from the longs and the shorts. Quite frankly, there are elements to truth in both camps. The CEO definitely has overseen some failures, albeit most (with the exception of Cott) are in unrelated industries where he didn't have any experience. Brent has been in the beverage industry his whole career and is well regarded from people who have worked with him in that capacity. He is an important part of the story, but this isn't a 1 man band. He also has a fire in his a$s to make sure this works. NBEV has assembled a collection of 2nd tier brands in the best categories of beverages, where the industry is supported by robust growth and the tailwinds aren't going to end. They have dramatically improved the cost structure of these subscale independent brands, and leveraged purchasing power, overhead synergies, and DSD relationships to gain revenue and cost synergies. But given the size of the revenue base, there are so many ways to win. Distribution expansion and product innovation can easily double the size of this company over the next 2-3 years,and they can do so while generating FCF, unlike virtually all of the other small brands. The value of tuck-in M&A will hopefully add to the opportunity, and the market will likely value the optionality even higher once they see the synergies from the recent round of deals flow through. Sell-side numbers are way too low for 2018, and I think they will be doing $125mm+ in rev next year vs enterprise value of $175mm today. The valuation is simply too cheap vs the organic growth of the business, and they have several chunky $5-$20mm opportunities at their fingertips (national chain wins, new product launches, etc). Based on our diligence, cash slotting fees have been minimal and retailers are actively resetting shelf space to gain access to better for you beverage categories. The short case simply doesn't pan out, even though certain of your points are correct. Good luck to all