I’d now like to turn the call over to Greg Gould, Chief Financial Officer. Greg?
Gregory 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 Búcha, 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 increase SG&A associated with the Morinda acquisition that closed on December 21, 2018. Also included in this amount was an unrealized gain of $6.7 million from the change in fair value of the Morinda earnout obligation, which was partially offset by$ 3.1 million in non-cash expenses and a $1.5 million impairment charge.
We had a net loss of $11.7 million or $0.15 per share in the second quarter of 2019 versus a net loss of $3.4 million or $0.09 per share in the second quarter of 2018. Adjusted EBITDA for the second quarter of 2019 was positive $14,000 versus a loss of $2.2 million in the second quarter of the prior year.
Reviewing the balance sheet, as of June 30, 2019 we had $86.6 million in cash and $57.8 million in working capital as compared to $42.5 million in cash and $40.9 million in working capital at December 31, 2018. At the end of June, we had $331.7 million in total assets compared to $286.9 million at the end of December 2018, an increase of 16%.
Beyond the improved financial results for the business, we expanded our brands with the Marley family, completed the Brands Within Reach acquisition and amended our East West Bank loan agreement affixing our interest rate at 5.39% for the remainder of the term.
Also this quarter, we continued to strengthen our team and enhance our public company, corporate governance and financial reporting, which will lay a foundation for future organic growth and potential acquisition integration.
And with that I’d like to pass the call back to Brent.
Brent Willis
Thank you, Greg.
Overall, I would say we performed to expectations in the quarter. There are a lot of very good things happening in some continual challenges both of which I’d like to discuss on the call today.
First, let’s address some of the negatives. Number one, we only did $66.3 million in revenue. Yes, it is up dramatically versus prior year and yes, it’s up sequentially versus the prior quarter of 14% and yes, it’s above the consensus estimate. But I feel we could have done better.
We had a number of markets where we just did not get shipments out before the end of the quarter, so that revenue gets pushed into Q3 and overall, a few of that we just missed out and too many of the opportunities for growth.
Number two, the brand, New Age was up 7% organically but only 7%, and again I feel we could have done better. Yes, we began our first ever national brand sales with Walmart. Yes , we began our first ever national brand sales with 7-Eleven. But there is a big difference between getting authorization and beginning shipments which we did and ultimately getting on all of the store shelves and getting all of the franchise owners and individual stores at 7-Eleven for example to comply. It just did not happened yet and as a result total revenue from these two changes, honestly way under where we expected them to be. It will happen, it’s just slower than anticipated.
Number three, CBD, yes, we did launch CBD in the U.S. and in Hong Kong, China. Yes, it’s already contributing revenue but our CBD infused beverages are not out yet. When we were first planning on this, already had our samples and already had commitments from major retailers, in Q4 of last year, we expected to be able to execute shortly after the passing of the Farm Bill.
What we did not proceed with the FDA completely making navigation as murky as The Strait’s of Hormuz, and to add [indiscernible] they are allowing thousands of other small companies to get out there first, not public enterprises that are compelled to comply with federal law so it slows it down the U.S. it would already been a much more substantial impact and allows all these literally thousands of other smaller competitors to get out there first in the U.S. and beverages.
And number four, China. Yes, New Age still has a great and super high potential operation there but the impact of the government restrictions on the industry in the first half of the year were draconian and we too were affected and to make matters worse, given the U.S. such a I would say, globally integrated economy with China, the whole Paris stances also had a negative effect on our business.
Not only these are our aluminum and our glass prices go up significantly, but especially recently the highly charged negative rhetoric I would say against the U.S. going on now within Mainland China, also puts a significant short-term damper on our business.
Notwithstanding those opportunities for improvement, there also a number of positives. The Japan growth and momentum with all our independent product distributors has taken six months but they are doing very well. Mind you are Japan business has not grown for almost 10 years so turning this around as we have in the first half after 10 years of decline is a major accomplishment and credit to our Japanese team.
Number two, in U.S. we just started shipping are keys in a brand product partnership with Circle K and they are indeed getting it out to the stores and it is having the expected impact so far. And in addition because we did they added Bucha in two of their largest regions for us into their assortment. And while we are talking about the New Age brands we have just completed the registration of the first wave of our brand in 33 countries and shipments have already begun to these market and the Health Sciences products also are now contributing both revenue and profit.
The next positive acquisition integration and synergy capture, we are now six months but really only six months into the acquisition of Morinda and its integration and the impact of the human resources on New Age overall I would say has been profound. We are ahead of our projected costs in revenue synergy expectations and in the quarter. We completed a major transportation and logistics optimization initiatives that capture just over $1 million in annual savings.
We also just completed the installation of Oracle enterprise business system throughout New Age and to frame a reference the last time I put it in the ERP system like this it cost me more than $1 million in implementation fees and took two years. Here we did at no cost 100% with internal resources and it went live July 1, the two quicker sides on the Morinda acquisition and acquisitions overall.
Number one, integration and synergy capture is actually not that easy, but we at New Age I think we have it down. And number two something I just don’t understand for example when I was at AB InBev in helping to build that company. No one ever talk to us about what percentage of my growth was coming from organic versus external growth they just wanted to grow. And here at this derivation of InBev I get asked that question all the time.
And I think – the point that I’d like to articulate is we will continue to both execute organically and selectively maybe very – selectively pursue external growth as long as the initiatives are accretive for shareholders and support the platform we are looking to build ultimately gain competitive advantage. And this takes me to the last positive that I want to talk about on today’s call.
The BWR acquisition, this acquisition was incredibly accretive and a great value for the New Age shareholders with the shortest created fear and doubt and the stock went down as a result. Look, we just added some of the world’s best beverage brands to New Age. The Nestea license is the exact one we used to have at Coke and now we New Age we have the brand and relative to other brands as much as it’s difficult for me to say comparing the New Age brands to Nestea, Illy Coffee, Volvic, which is the world second largest water Evian well, honestly this is just not a legitimate comparison. So that’s Olivier Sonnois, the founder of the brands within Reach Group to join New Age’s as part of the acquisition to provide some insight into how he is framing the opportunity. Olivier?
Olivier Sonnois
Thank Brent, good morning everybody.
As a main of introduction I have spent the past 25 years in the beverage industry at Danone for many years, the [indiscernible] organic food company which was sold to [indiscernible]. And then I founded and sell funded BWR more than 12 years ago. And here is a simple perspective I have on the beverage industry. There are only about 50 companies over $100 million in revenue in the sector. And there are more than 10,000 which are under $10 million.
Why? Well it is just very challenging to scale and even more challenging to scale in a profitable manner. So I thought it would be good to share with you why I chose to do the deal with New Age. First and foremost I really like the people and I really liked the culture it is a perfect match. We have the same committed culture at BWR dedicated to bringing something different to the category and providing healthy products for consumers.
The cultural and team integration has been so easy really effortless as we had been operating together all along since day one. Number two it solves my scale and resources challenges, there is only so much you can do on your own and New Age with Morinda could bring the size and resources to build this fantastic globally iconic brands bigger, better, broader and faster. And number three I think we also solve the challenge the fall for New Age.
They have great brands in their portfolio, but not any like Nestea for example which has almost 90% consumer awareness and that is a great and important segment for New Age. They most likely needed us at this stage. Number four is they needed us not just for the brand but also for the very well orchestrated infrastructure and sales teams, our systems, our processes we’ve been putting in place for the past 12 years.
The New Age team was just getting started on people and processes just because they were so new and we had been out there for 12 years. They could have done it, but we acted as a huge infrastructure and an organizational capability segment for them. It is those processes that enabled us to be breakeven on our own even as a very small beverage company one of the very few in sight and if not the only profitable one which under $100 million in revenue and now New Age has all.
And lastly, I would say selfishly we also wanted the New Age stocks because we believe and rather we know it has huge potential even greater now with the addition of the BWR global branch in their system. So essentially that’s why I did it. Now what I have seen so far well it’s still early days 30 days since the close, but I’m very optimistic and I see huge upside potential and lots of low hanging fruits.
There so many key accounts and distribution of window across all channels added to the support of a wealth management and marketing opportunities for the New Age brands. Similarly there are equal upside and maybe even more for the BWR brands to New Age key accounts through their e-commerce system which is very impressive and through their Colorado DSD system which is near instant impact from brands and probably one of the best managed I have seen.
Our brand partners are just very excited and I am now very excited to build even more competitive advantage with our unique Omnichannel system which the Board and Brent have asked me to lead as a new President for North America. As part of my own boarding I had the chance to be with the Board of Directors at the last board meeting in Japan.
Well I have to say they’re not just strategic like any Board should be, but they’re very involved, they are engaged, they are now faced, and they’re very demanding but above all they are amazing. I was very impressed as you can tell as we have exceptional strength in our Board of Directors. I also expect us to build competitive advantage with CBD across all channels and in a number of product forms.
Like Brent said would I have like to have our CBD beverages out already of course, but having the option to prepare our launch more strategically and build a range a product forms across a range of channels might in fact an even greater opportunity. Because that is something we can uniquely do at New Age because we have this Omnichannel capabilities which opens up even more opportunities for us that I’m not sure everyone comprehend yet and the future will tell.
So like I said it’s still early days that I’m very excited for BWR the company I created to have join forces with New Age. And we are indeed going to build a force to be reckoned with under my leadership and with our merge teams and I really think we’re just getting started.
Brent, back to you.
Brent Willis
