New Age Beverages (NBEV) stirs up some powerful emotions for investors. Motley Fool contributor Rick Munarriz wrote in May that "everybody hates New Age Beverages stock" based on its record-high level of short interest. But only a month later, Compass Point analyst Rommel Dionisio expressed optimism about New Age, setting a lofty one-year price target for the stock.
Both optimists and haters found reasons to justify their emotions when New Age Beverages announced its second-quarter results before the market opened on Thursday. Here are the highlights from the company's Q2 update.
Image source: New Age Beverages.
By the numbers
New Age announced Q2 net revenue of $66.3 million, a 397% increase from the $13.4 million reported in the same quarter of the previous year. This figure topped the average analysts' revenue estimate of $64.43 million.
The company reported a net loss in the second quarter of $11.7 million, or $0.15 per share, based on generally accepted accounting principles (GAAP). This reflected deterioration from New Age's net loss of $3.4 million, or $0.09 per share, in the prior-year period. It was also worse than the consensus analysts' estimate of a net loss of $0.03 per share.
New Age ended the second quarter with cash, cash equivalents, and short-term investments of $83.6 million. This represented a nice jump from the $42.5 million on hand as of the end of 2018.
Behind the numbers
The great news for New Age Beverages was that its net revenue reached an all-time high in Q2. New Age's 14% quarter-over-quarter increase in net revenue appears to show that consumer demand for its products is gaining momentum.
But what about that worsening bottom line? The problem was that New Age's spending increased even faster than its revenue did. New Age's operating expenses skyrocketed by 792% over the prior-year period. This huge increase was primarily driven by higher selling, general, and administrative expenses associated with its merger with Morinda.
However, New Age Beverages reported positive adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.2 million. This was in line with what the company anticipated. The positive adjusted EBITDA benefited from backing out a little over $1 million in stock-based compensation expense.
The company also announced in the second quarter that it was acquiring Brands Within Reach (BWR). BWR is a New York-based marketing, sales, and distribution company that owns licensing or distribution rights to beverage brands including Nestea, Illy Ready-to-Drink Coffee, and Volvic and Evian premium waters. The acquisition closed in July.
Looking ahead
New Age Beverages CEO Brent Willis predicted "good organic growth in the second half of 2019." He said, "With the strength of our balance sheet and the improved sales and market capabilities that we have added with the Brands Within Reach acquisition, we believe we are building excellent momentum for continued improved operating performance in the back half of the year."
Investors will especially want to monitor the progress of New Age's integration of BWR. The company expects BWR's portfolio will add more than $15 million in net revenue on an annualized basis.
