New Age Beverages recorded a 397% increase in net revenue and a net loss of $11.7 million in the second quarter of 2019, according to financial results released by the company on Thursday.
“Overall, I would say we performed to expectations in the quarter,” New Age CEO Brent Willis told investors during a conference call today, according to a transcript.
Net revenue was $66.3 million, against $13.4 million during the same period one year prior. Sales during the second quarter were up 14% over the first quarter of this year. New Age did not disclose sales data for individual brands; however, the company said its New Age group grew 7% organically, with shelf-stable kombucha line Búcha continuing to be its best performer for the quarter and year-to-date.
Gross profit was $41.7 million for the quarter, a 2,268% increase over $1.8 million in the prior year. Total operating expenses were down $2.5 million from the first quarter to $44.6 million.
Looking ahead, New Age is projecting revenues in the $70 million range for the third quarter and in the high $200 million range for the entire year. New Age CFO Gregory Gould noted that there “could be some upside to this guidance,” such as the company’s performance in China, positive impact from its acquisition of Brands Within Reach, and a change in U.S. Food and Drug Administration (FDA) guidance on CBD as an approved ingredient in food and beverage products.
As part of the deal with BWR, the group’s founder, Olivier Sonnois, has been named president of North America for New Age.
With its acquisition of Morinda in December 2017, New Age set itself up to be a player in the CBD product market. Sales for Morinda were up 2% over the last year in Japan, the brand’s largest market, but growth in China was hindered by government restrictions that were recently lifted. In all other markets, Morinda sales were up 40% organically in the quarter over the same period last year.
But despite releasing infused topicals in the U.S. this spring, Willis noted that the company’s rollout of CBD-infused drinks, originally scheduled to occur shortly after the passage of the 2018 Farm Bill in December, has yet to happen.
Willis also elaborated on distribution challenges related to New Age’s launch at Walmart and 7-Eleven, despite landing in the planograms of both retailers. Both chains, he said, have had different issues with execution and driving traffic and awareness for its products, but the company remains confident in its long-term prospects.
“We’re doing some things now directly with Walmart in terms of rollbacks and promotional incentives inside the store to build awareness and availability of the Marley brand,” Willis said.