New Age Beverage reported its best-ever Q1 revenue numbers over the last three months, despite headwinds from the global COVID-19 pandemic.
In an earnings summary released today, the Denver, Colo.-based company reported net revenue increased 9.2% during the quarter, reaching $63.7 million versus $58.3 million in the prior year.
Net loss totaled $11.6 million, around $10 million higher than the same period last year ($1.6 million in losses). The increase was impacted by a $6.4 million property sale and increased selling, general and administrative (SG&A) expenses. The company said that it had taken steps at the end of the quarter to reduce SG&A expenses that will result in $5 million to $7 million in savings on a full year basis.
Adjusted EBITDA was a loss of $7.1 million, compared to $10.3 million in Q4 2019.
“We saw growth in our core large markets and core large category platforms during the quarter,” said CEO Brent Willis in a press release. “Our Noni by New Age segment saw excellent growth led by China and the European market. We also experienced renewed growth in Japan compared to the first quarter of 2019 and our Direct Store Distribution division had its best first quarter in history with double digit growth.”
Willis also noted that on-premise and foodservice business fell 70% between January and April. The estimated negative impact of the coronavirus across New Age’s entire business could be as much as 10% of total revenue.
However, he said the company was in a strong position to successfully navigate through economic turbulence in the months ahead, having built a platform in which 80% of revenue comes from online direct-to-consumer sales. The company ended the quarter with $27.5 million in cash.
During the conference call, COO David Vanderveen took time to address New Age’s application for and receipt of government assistance under the Paycheck Protection Program (PPP) established to assist small businesses impacted by the COVID-19 pandemic. Vanderveen said that the $6.9 million that New Age received, first reported last week, prevented “a significant reduction in our workforce.”
“Here are the facts: we met all the requirements of the PPP loan program,” he said. “We applied quickly and accurately and were granted the funds. We didn’t circumvent, quibble, skirt or do anything even remotely tricky or untoward to receive the funds. We qualified, received the funds and used them as intended.”
As the world battles the coronavirus, products offering immune system support have experienced a surge in consumer demand, and much of New Age’s short-term growth plans center around similarly positioned products marketed under the Noni by New Age banner, which includes ready-to-drink beverages as well as cosmetics, topical products and supplements.
On the call, Chief Marketing Officer Julie Garlikov announced the company will be releasing Noni-branded immunity shots later this year, following a key market pilot test in June. The brand’s website was recently overhauled to be more “consumer friendly” and Garlikov said the company’s social media team have been empowered with new tools to boost digital promotion initiatives.
With its attention focused on Noni, Willis confirmed that, following the announcement of exploratory discussions in March, New Age has engaged a banking investment group to formally begin the process of divesting some of its core portfolio of beverage brands — including Aspen Pure, Bucha, Coco Libre, Marley, and Xing Tea — that have underperformed at retail in the U.S. Willis said the company was seeking to secure a deal quickly, potentially as early as this summer, but also at a time to bring the maximum benefit to shareholders.
“Those were conscious choices to make those investments before, but we just have too many other highly profitable opportunities in front of us right now,” he said.