New Age Beverages Corporation (NASDAQ:NBEV) Q2 2019 Earnings Conference Call - Final Transcript

Aug 08, 2019 • 08:30 am ET

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New Age Beverages Corporation (NASDAQ:NBEV) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen, and welcome to the New Age Beverages Corporation Q2 2019 Earnings Conference Call. [Operator Instructions]

I would now like to introduce your host for today's conference Mr. Cody Slach. Mr. Slach, you may begin.

Executive
Cody Slach

Thanks and good morning. Thank you for joining New Age Beverage Corporation's 2019 second quarter financial results investor call. I'm Cody Slach with Gateway, the IR counsel for New Age. I'd like to welcome you all to the call today and thank you all for joining. On today's call, we will have Brent Willis, CEO of New Age Beverages; Greg Gould, CFO; and Olivier Sonnois, President of North America and the Founder of the Brands Within Reach Group, that New Age recently acquired just after the close of the second quarter.

I'd like to remind everyone this call may contain certain forward-looking statements reflecting management's current expectations regarding future results of operations, economic performance, financial condition and achievements of the company. Forward-looking statements, specifically those concerning future performance, are subject to risks and uncertainties. The transcript of today's call will be available on the company's website within the Investors section at newagebev.com.

I'd now like to turn the call over to Greg Gould, Chief Financial Officer. Greg?

Executive
Gregory A. Gould

Thanks, Cody. For the second quarter of 2019, we delivered net revenue of $66.3 million, an increase of 397% versus the second quarter of 2018. The second quarter results were also up sequentially 14% versus Q1, particularly important given the seasonality in our Morinda business is very limited.

Within our segments, our New Age group was up 7% organically in Q2 versus the second quarter of 2018. All brands performed reasonably equally with Bucha, continuing to be our best performer both during the quarter and year-to-date. Our direct-to-store distribution continues to expand and we have added a number of new brands to the group, in addition to expanding the breadth and depth of the division. Morinda also performed extremely well across most markets. Our largest market Japan was up 2% in the quarter versus prior year, and in the month of June was up 9% versus prior year. China had a difficult quarter due to the government restrictions on the industry that were only recently lifted. In all other markets, including Latin America, South East Asia and Europe, Morinda was up 40% organically in the quarter versus prior year.

Gross profit. The firm delivered $41.7 million for the quarter ended June 30, 2019 versus $1.8 million in the second quarter of the prior year, an increase of 2,268%. As a percentage of sales, this equated to a 63% gross margin versus 13% in the prior year. This reflects a shift in the mix of our business.

Total operating expenses were $44.6 million, down $2.5 million versus the first quarter of 2019, but up versus the second quarter of 2018, due to the increased SG&A associated with the Morinda acquisition that closed on December 21st, 2018. Also included in this amount was an unrealized gain of