New Age Reports $15.2M In Q2 Revenue

New Age Beverages reported revenues of $15.2 million for the second quarter of 2018, a 2 percent decrease from the same period last year, in an earnings call yesterday.

The Denver-based company, created in 2016, has amassed a wide portfolio of better-for-you functional beverage brands through a series of mergers and acquisitions. These include búcha live kombucha, XingTea, Coco Libre, Aspen Pure and Marley Beverage, which launched a new line of canned cold brew coffee last month.

For the three months ending on June 30, New Age posted a consolidated gross revenue of $15.2 million, an increase of 19 percent over the prior quarter. However, net revenue was $13.4 million, down from $15.1 million the prior year.

During the call, New Age CFO Chuck Ence said that sales were negatively impacted by approximately $2.7 million to $3.2 million due to working capital constraints, which “severely constricted inventory levels and the company’s ability to meet the demands of major distributors and retailers.” Without the inventory impact, Ence said revenue would have been up approximately 13 percent over the prior year.

However, New Age announced it has secured a new asset-backed $12 million line of credit from Colorado-based Siena Lending Group. The agreement is for a three-year term secured with up to 85 percent of accounts receivable and 60 percent of inventory. Alliance Global Partners/AGP facilitated the loan, after New Age’s previous commitment from PNC fell through.

New Age enjoyed strong growth from its international division, which grew by 300 percent during the quarter, according to the company. Ence also specifically praised the performance of búcha live kombucha both domestically and overseas.

“Not only have we transformed [búcha] from a cost structure standpoint, going from a 16 percent gross margin to 47 percent, while we do see net selling price, but the brand is leading the kombucha category growth with over 250 percent growth versus the segment average of 35 percent,” Ence said during the earnings call, according to a transcript.

CEO Brent Willis highlighted the strides New Age has made in distribution. In the past six months, the company has “penetrated 14 of the top 50 retailers in North America” and added over 100,000 points of distribution in the second quarter. Yet he also noted that New Age was “still only about 10% done with the universe of our distribution expansion.”

Willis said the company has also begun testing trials for its “enhanced recovery after surgery” beverage, a product in development by New Age’s Health Sciences Division that he called “a big part of our future.”

“We just gain insight that with a new preoperative beverage that 70 percent of patients taking it in this trial were out of the hospital faster,” he said, according to a transcript. “That is fantastic news, and we’ll have influence on the nearly 50 major hospital systems across the country evaluating our Enhanced Recovery product.”

Willis also emphasized that, despite the spat of recent acquisitions, New Age plans to focus on growing its existing properties rather than accumulating more of them.

“We had to build the entry point of the brands into the growth categories that we wanted to compete, but we don’t believe we need new brands,” he said. “We’re actually focusing primarily on driving the organic growth of innovation within our four core brands… And we believe we have the brands and distribution, and now the working capital to be able to effectuate that.”

In related news, New Age today announced the appointment of John C. Price as the company’s new CFO and administrative officer. Price, who joins New Age from his previous role as CFO at MusclePharm and Alliance MMA, will lead the company’s finance and accounting operations, human resources, investor relations, and information technology, and will report to Willis.

“I can’t imagine a more opportune time to join New Age,” Price said in a press release. “Brent and his team are making history with the New Age healthy beverage platform, and I am excited to be part of the early stages of the such a market transformative company. Like many small companies, New Age recently faced some short-term financing roadblocks. Now solved, I believe their potential to deliver industry leading growth and profitability is unobstructed.”

Ence, who served as CFO since 2016, will remain with New Age and report to Price as Vice President of Finance and Corporate Controller.