Categories Consumer, Earnings

Q4 earnings preview: New Age Beverages to benefit from CBD-infused beverages

New Age Beverages (NBEV) is set to report its Q4 and full-year 2018 results on Friday, March 29 before market opens. Analysts estimate the beverage company to post a loss of 4 cents per share on revenue of $13.54 million for the fourth quarter ended December 31, 2018. Shares of New Age Beverages dropped 1.14% to $5.19 on Tuesday.

On December 21, 2018, New Age closed the merger with Morinda Holdings, which it acquired for $85 million ($75 million in cash and $10 million in stock). This merger provides infrastructure and market access for New Age’s Health Sciences products and portfolio of CBD-infused beverages worldwide.

Since announcement of the merger on December 3, 2018, New Age and Morinda teams have been working on convergence including capturing more than $10 million in anticipated cost and revenue synergies.

Morinda division’s Noni+Collagen product recorded $4 million in revenue in the initial test markets of Japan, Taiwan, and the US. Now, the brand is expanding globally to 50+ additional countries in Europe, Latin American, and the Asia Pacific markets.

Also read: New Age Beverages (NBEV) stock soars as the House passes 2018 Farm Bill

For the three-month ended September 30, 2018 quarter, New Age reported a loss of 8 cents per share on revenue of $13.2 million. This compares to a loss of 1 cent on revenue of $15 million in the prior-year quarter.

In Q3 earnings conference call, the company had stated that working capital will be used in the future on its core business and CBD and health sciences businesses, and for targeted external growth opportunities like alliances or acquisitions.

The Colorado and Utah-based organic and natural beverage company had predicted revenue to be more than $320 million, gross margin of greater than 50% and EBITDA of $15 million for 2019.

Recently, cannabis industry has been witnessing many deals and partnerships. AB InBev (BUD) and Canadian cannabis giant Tilray (TLRY) inked a $100 million deal. Tilray also partnered with Sandoz to make new medical marijuana products and co-brand some non-combustible products. In December 2018, Canadian weed firm Aurora Cannabis (ACB) acquired the sole Mexican importer THC products for an undisclosed amount.

According to Zenith Global, a global food and drink consulting firm, US sales of cannabis-based drinks jumped to $86 million in 2018. The US CBD drinks market is expected to surge to over $1 billion in 2022 and $1.4 billion in 2023, even with some regulatory restrictions remaining.

New Age Beverages stock has been flattish since the beginning of this year and it had more than doubled over the past year.

 

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