Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
FIZZ > SEC Filings for FIZZ > Form 10-Q on 5-Mar-2014All Recent SEC Filings

Show all filings for NATIONAL BEVERAGE CORP

Form 10-Q for NATIONAL BEVERAGE CORP


5-Mar-2014

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

National Beverage Corp. is an acknowledged leader in the development, manufacturing, marketing and sale of a diverse portfolio of flavored beverage products. Our primary market focus is the United States, but our products are also distributed in Canada, Mexico, the Caribbean, Latin America, the Pacific Rim, Asia, Europe and the Middle East. A holding company for various operating subsidiaries, National Beverage Corp. was incorporated in Delaware in 1985 and began trading as a public company on the NASDAQ Stock Market in 1991. In this report, the terms "we," "us," "our," "Company" and "National Beverage" mean National Beverage Corp. and its subsidiaries unless indicated otherwise.

Our brands consist of (i) carbonated soft drinks in a variety of flavors as well as regular, diet and reduced-calorie options, and (ii) beverages geared toward the active and health-conscious consumer ("Power+ Brands"), including energy drinks and shots, juices, sparkling waters and enhanced beverages. In addition, we produce soft drinks for certain retailers ("Allied Brands") that endorse the concept ("Strategic Alliance") of having our brands and the Allied Brands marketed to produce the effect of enhanced growth of both. We employ a philosophy that emphasizes vertical integration; our vertically-integrated manufacturing model unites the procurement of raw materials and production of concentrates with the manufacture of finished products in our twelve manufacturing facilities. To service a diverse customer base that includes numerous national retailers as well as hundreds of smaller "up-and-down-the-street" accounts, we have developed a hybrid distribution system that promotes and utilizes customers' warehouse distribution facilities and our own direct-store delivery fleet plus the direct-store delivery systems of independent distributors and wholesalers.

We consider ourselves to be a leader in the development and sale of flavored beverage products. Our carbonated soft drink flavor development spans over 100 years originating with our flagship brands, Shasta® and Faygo®, and includes our Ritz® and Big Shot® brands along with St. Nick's® holiday soft drinks. Our portfolio of products we refer to as Power+ Brands are targeted to consumers seeking healthier and functional alternatives to complement their active lifestyles, and include LaCroix®, Crystal Bay® and Clear Fruit® flavored, sparkling and spring water products; Rip It® energy drinks and shots; Mega Sport® isotonic sports drinks; Everfresh®, Home Juice® and Mr. Pure® 100% juice and juice-based products and Ohana® fruit-flavored non-carbonated fruit drinks, lemonades and teas.

Our strategy emphasizes the growth of our products by (i) offering a beverage portfolio of proprietary flavors with distinctive packaging and broad demographic appeal, (ii) supporting the franchise value of regional brands,
(iii) appealing to the "quality-value" expectations of the family consumer, (iv) responding to demographic trends by developing innovative products designed to expand distribution in higher-margin channels, and (v) expanding our focus on healthier and functional beverages tailored toward healthy, active lifestyles.

The majority of our sales are seasonal with the highest volume typically realized during the summer months. As a result, our operating results from one fiscal quarter to the next may not be comparable. Additionally, our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, changes in consumer preference for beverage products, competitive pricing in the marketplace and weather conditions.


RESULTS OF OPERATIONS

Three Months Ended January 25, 2014 (third quarter of fiscal 2014) compared to Three Months Ended January 26, 2013 (third quarter of fiscal 2013)

Net sales for the third quarter of fiscal 2014 decreased 5.5% to $136.8 million compared to $144.7 million for the third quarter of fiscal 2013. The lower sales resulted from an 8.8% decline in carbonated soft drink volume, principally due to unfavorable weather conditions and industry-wide consumption decline. This decline was partially offset by case volume growth of 9.2% for our Power+ Brands.

Gross profit approximated 32.7% of net sales for the third quarter of fiscal 2014 compared to 32.0% of net sales for the third quarter of fiscal 2013. The gross profit margin improvement was due to favorable product mix changes and lower raw material costs. Cost of sales per unit declined 2.6%.

Selling, general & administrative expenses were $34.5 million or 25.2% of net sales for the third quarter of fiscal 2014 compared to $33.9 million or 23.4% of net sales for the third quarter of fiscal 2013. The increase in expenses was due to higher selling and marketing expenses.

Interest expense increased to $153,000 for the third quarter of fiscal 2014, primarily due to increased borrowings under credit facilities. Other expense includes interest income of $3,000 for the third quarter of fiscal 2014 and $9,000 for the third quarter of fiscal 2013.

The Company's effective income tax rate, based upon estimated annual income tax rates, was 30.6% for the third quarter of fiscal 2014 and 31.5% for the third quarter of fiscal 2013. The difference between the effective rate and the federal statutory rate of 35% was primarily due to the effect of state income taxes and the manufacturing deduction.

Nine Months Ended January 25, 2014 (first nine months of fiscal 2014) compared to Nine Months Ended January 26, 2013 (first nine months of fiscal 2013)

Net sales for the first nine months of fiscal 2014 decreased 3.5% to $476.8 million compared to $494.1 million for the nine months of fiscal 2013. The lower sales resulted from an 8.2% decline in carbonated soft drink volume, principally due to unfavorable weather conditions and industry-wide consumption decline. This decline was partially offset by case volume growth of 7.1% for our Power+ Brands and a .5% improvement in unit pricing related to favorable product mix changes.

Gross profit approximated 34.0% of net sales for the first nine months of fiscal 2014 compared to 32.2% of net sales for the first nine months of fiscal 2013. The gross profit improvement is due to favorable product mix changes and higher unit pricing mentioned above. Cost of sales per unit declined 2.2%.

Selling, general & administrative expenses were $114.2 million or 24.0% of net sales for the first nine months of fiscal 2014 compared to $106.3 million or 21.5% of net sales for the first nine months of fiscal 2013. The increase in expenses was due to higher selling and marketing expenses.

Interest expense increased to $515,000 for the first nine months of fiscal 2014, primarily due to increased borrowings under credit facilities. Other expense includes interest income of $10,000 for the first nine months of fiscal 2014 and $34,000 for the first nine months of fiscal 2013.


The Company's effective income tax rate, based upon estimated annual income tax rates, was 33.5% for the first nine months of fiscal 2014 and 33.8% for the first nine months of fiscal 2013. The difference between the effective rate and the federal statutory rate of 35% was primarily due to the effect of state income taxes and the manufacturing deduction.

LIQUIDITY AND FINANCIAL CONDITION

Liquidity and Capital Resources

Our principal sources of funds are cash generated from operations and borrowings under our credit facilities. At January 25, 2014, we maintained $100 million unsecured revolving credit facilities of which $35 million of borrowings were outstanding and $2.3 million was used for standby letters of credit. We believe that existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months.

Cash Flows

The Company's cash position for the first nine months of fiscal 2014 increased $8.8 million from April 27, 2013, which compares to a decrease of $17.1 million for the similar 2013 fiscal period. Fiscal 2013 includes a common stock cash dividend of $118.1 million paid on December 27, 2012.

Net cash provided by operating activities for the first nine months of fiscal 2014 amounted to $32.3 million compared to $27.0 million for the similar 2013 fiscal period. For the first nine months of fiscal 2014, cash flow was principally provided by net income of $31.7 million and depreciation and amortization of $8.9 million, offset in part by an increase in inventory and decline in liabilities.

Net cash used in investing activities for the first nine months of fiscal 2014, consisting of capital expenditures, amounted to $8.0 million compared to $6.0 million for the similar 2013 fiscal period.

Net cash used in financing activities for the first nine months of fiscal 2014 amounted to $15.5 million, which included $15 million in principal payments under Credit Facilities.

Financial Position

During the first nine months of fiscal 2014, working capital increased $16.1 million to $83.6 million. The increase in working capital consisted of higher cash and inventory levels and seasonal decreases in trade receivables and current liabilities. Days sales outstanding declined from 34.7 days at April 27, 2013 to 34.1 days at January 25, 2014. Inventories increased $3.2 million primarily due to higher inventory levels related to new products and to support planned customer promotions. The current ratio was 2.7 to 1 at January 25, 2014 compared to 2.1 to 1 at April 27, 2013.

  Add FIZZ to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for FIZZ - All Recent SEC Filings
Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.