UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended July 30,October 29, 2022
or
☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission file number 1-14170
NATIONAL BEVERAGE CORP.
(Exact name of registrant as specified in its charter)
Delaware | 59-2605822 |
(State of incorporation) | (I.R.S. Employer Identification No.) |
8100 SW Tenth Street, Suite 4000, Fort Lauderdale, FL 33324
(Address of principal executive offices including zip code)
(954) 581-0922
(Registrant’s telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $.01 per share | FIZZ | The NASDAQ Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☑☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑☒
The number of shares of registrant’s common stock outstanding as of September 7,December 5, 2022 was 93,338,246.93,352,946.
QUARTERLY REPORT ON FORM 10-Q
PART I - FINANCIAL INFORMATION
PART I - FINANCIAL INFORMATION
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data) |
July 30, | April 30, | October 29, | April 30, | |||||||||||||
2022 | 2022 | 2022 | 2022 | |||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and equivalents | $ | 56,061 | $ | 48,050 | $ | 92,626 | $ | 48,050 | ||||||||
Trade receivables - net | 100,273 | 93,592 | 100,445 | 93,592 | ||||||||||||
Inventories | 90,353 | 103,318 | 88,409 | 103,318 | ||||||||||||
Prepaid and other assets | 7,157 | 29,560 | 17,195 | 29,560 | ||||||||||||
Total current assets | 253,844 | 274,520 | 298,675 | 274,520 | ||||||||||||
Property, plant and equipment - net | 142,358 | 144,258 | 143,162 | 144,258 | ||||||||||||
Right of use assets - net | 38,555 | 29,251 | ||||||||||||||
Right of use assets | 38,791 | 29,251 | ||||||||||||||
Goodwill | 13,145 | 13,145 | 13,145 | 13,145 | ||||||||||||
Intangible assets | 1,615 | 1,615 | 1,615 | 1,615 | ||||||||||||
Other assets | 6,028 | 5,015 | 4,734 | 5,015 | ||||||||||||
Total assets | $ | 455,545 | $ | 467,804 | $ | 500,122 | $ | 467,804 | ||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 76,151 | $ | 95,299 | $ | 84,378 | $ | 95,299 | ||||||||
Accrued liabilities | 43,332 | 39,090 | 51,128 | 39,090 | ||||||||||||
Short-term lease obligations | 11,929 | 10,543 | 12,042 | 10,543 | ||||||||||||
Income taxes payable | 652 | 387 | 154 | 387 | ||||||||||||
Total current liabilities | 132,064 | 145,319 | 147,702 | 145,319 | ||||||||||||
Long-term debt | - | 30,000 | - | 30,000 | ||||||||||||
Deferred income taxes - net | 21,124 | 23,823 | 20,586 | 23,823 | ||||||||||||
Operating lease liability - non current | 28,627 | 20,703 | 28,801 | 20,703 | ||||||||||||
Other liabilities | 9,624 | 8,521 | 7,918 | 8,521 | ||||||||||||
Total liabilities | 191,440 | 228,366 | 205,007 | 228,366 | ||||||||||||
Shareholders' equity: | ||||||||||||||||
Preferred stock, $1 par value - 1,000,000 shares authorized: Series C - 150,000 shares issued | 150 | 150 | ||||||||||||||
Common stock, $.01 par value - 200,000,000 shares authorized; 101,712,358 shares issued July 30, 2022 and April 30, 2022 | 1,017 | 1,017 | ||||||||||||||
Preferred stock, $1 par value - 1,000,000 shares authorized: Series C - 150,000 shares issued | 150 | 150 | ||||||||||||||
Common stock, $.01 par value - 200,000,000 shares authorized; 101,726,258 shares issued (101,712,358 shares at April 30) | 1,017 | 1,017 | ||||||||||||||
Additional paid-in capital | 39,575 | 39,405 | 40,032 | 39,405 | ||||||||||||
Retained earnings | 251,635 | 216,181 | 287,681 | 216,181 | ||||||||||||
Accumulated other comprehensive (loss) income | (4,038 | ) | 6,918 | (9,532 | ) | 6,918 | ||||||||||
Treasury stock - at cost: | ||||||||||||||||
Series C preferred stock - 150,000 shares | (5,100 | ) | (5,100 | ) | (5,100 | ) | (5,100 | ) | ||||||||
Common stock - 8,374,112 shares | (19,133 | ) | (19,133 | ) | (19,133 | ) | (19,133 | ) | ||||||||
Total shareholders' equity | 264,106 | 239,438 | 295,115 | 239,438 | ||||||||||||
Total liabilities and shareholders' equity | $ | 455,545 | $ | 467,804 | $ | 500,122 | $ | 467,804 |
See accompanying Notes to Condensed Consolidated Financial Statements. |
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
NATIONAL BEVERAGE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
National Beverage Corp. develops, produces, markets and sells a distinctive portfolio of sparkling waters, juices, energy drinks and carbonated soft drinks primarily in the United States and Canada. Incorporated in Delaware in 1985, National Beverage Corp. is a holding company for various operating subsidiaries. When used in this report, the terms “we,” “us,” “our,” “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries.
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation The condensed consolidated financial statements include the accounts of National Beverage Corp. and its subsidiaries. Significant intercompany transactions and accounts have been eliminated.
The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States
The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the interim unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Results for the interim periods presented are not necessarily indicative of results which might be expected for the entire fiscal year. Inventories Inventories are stated at the lower of first-in, first-out cost or net realizable market. Inventories at Marketing Costs The Company utilizes a variety of marketing programs, including cooperative advertising programs with customers, to advertise and promote its products to consumers. Marketing costs are expensed when incurred, except for prepaid advertising and production costs, which are expensed when the advertising takes place. Marketing costs, which are included in selling, general and administrative expenses, 8 Shipping and Handling Costs Shipping and handling costs are reported in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. Such costs
2. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
Depreciation expense was $4.5 million for the three months ended
3. DEBT
At
On December 21, 2021, a subsidiary of the Company entered into an unsecured revolving term loan facility with a national bank aggregating $50 million
The Credit Facilities and Loan Facility require the subsidiary to maintain certain financial ratios, including debt to net worth and debt to EBITDA (as defined in the Credit Facilities), and contain other restrictions, none of which are expected to have a material effect on
9 4. STOCK-BASED COMPENSATION
During the
5. DERIVATIVE FINANCIAL INSTRUMENTS
From time to time,
As of
As of
10 6. LEASES
The Company has entered into various non-cancelable operating lease agreements for certain
The following is a summary of future minimum lease payments and related liabilities for all non-cancelable operating leases as of
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks (Power+ Brands) and, to a lesser extent, Carbonated Soft Drinks. We believe our creative product designs, innovative packaging and imaginative flavors, along with our corporate culture and philosophy, make National Beverage unique as a stand-alone entity in the beverage industry. Traditional and typical are not a part of an innovator’s vocabulary.
Our strategy seeks the profitable growth of our products by (i) developing healthier beverages in response to the global shift in consumer buying habits and tailoring our beverage portfolio to the preferences of a diverse mix of ‘crossover consumers’ – a growing group desiring a healthier alternative to artificially sweetened and high-caloric beverages; (ii) emphasizing unique flavor development and variety throughout our brands that appeal to multiple demographic groups; (iii) maintaining points of difference through innovative marketing, packaging and consumer engagement and (iv) responding faster and more creatively to changing consumer trends than larger competitors who are burdened by legacy production and distribution complexity and costs.
The majority of our brands are geared to the active and health-conscious consumer including sparkling waters, energy drinks, and juices. Our portfolio of Power+ Brands includes LaCroix®, LaCroix Cúrate®, and LaCroix NiCola® sparkling water products; Clear Fruit® non-carbonated water beverages enhanced with fruit flavor; Rip It® energy drinks and shots; and Everfresh®, Everfresh Premier Varietals™ and Mr. Pure® 100% juice and juice-based products. Additionally, we produce and distribute carbonated soft drinks including Shasta® and Faygo®, iconic brands whose consumer loyalty spans more than 130 years.
Presently, our primary market focus is the United States and Canada. Certain of our products are also distributed on a limited basis in other countries and options to expand distribution to other regions are being considered. To service a diverse customer base that includes numerous national retailers, as well as thousands of smaller “up-and-down-the-street” accounts, we utilize a hybrid distribution system consisting of warehouse and direct-store delivery. The warehouse delivery system allows our retail partners to further maximize their assets by utilizing their ability to pick up product at our warehouses, further lowering their/our product costs.
Our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, holiday and seasonal programming, changes in consumer purchasing habits and weather conditions. Beverage sales are seasonal with higher sales volume realized during the summer months when outdoor activities are more prevalent.
RESULTS OF OPERATIONS
Three Months Ended
Net sales for the
Gross profit for the
Selling, general and administrative expenses for the
Other
The Company’s effective income tax rate, based upon estimated annual income tax rates, was
Six Months Ended October 29, 2022 (first six months of fiscal 2023) compared to Six Months Ended October 30, 2021 (first six months of fiscal 2022) Net sales for the first six months of fiscal 2023 increased 3.8% to $617.8 million from $594.9 million for the first six months of fiscal 2022. The increase in sales resulted primarily from a 10.3% increase in average selling price per case with volume declining in total by 5.8% . Both Power+ Brands and carbonated soft drinks experienced volume declines. Gross profit for the first six months of fiscal 2023 decreased to $199.4 million from $226.3 million for the first six months of fiscal 2022. The decline in gross profit is due to increased packaging, ingredients and labor costs offset in part by increased average selling price. Cost of sales per case increased 6.4% and gross margin decreased to 32.3% from 38.0% for the first six months of fiscal 2022. Selling, general and administrative expenses for the first six months of fiscal 2023 increased $1.6 million to $106.0 million from $104.4 million for the first six months of fiscal 2022. The increase was primarily due to an increase in shipping and administrative costs partially offset by a decrease in marketing costs. As a percent of net sales, selling, general and administrative expenses decreased to 17.2% from 17.5% for the first six months of fiscal 2022. Other income includes interest income of $175 thousand for the first six months of fiscal 2023 and $97,000 for the first six months of fiscal 2022. The increase in interest income is due to a higher return on investments. The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.5% for the first six months of fiscal 2023 and 23.6% for the first six months of fiscal 2022. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes. LIQUIDITY AND FINANCIAL CONDITION
Liquidity and Capital Resources Our principal source of funds is cash generated from operations. At
Cash Flows The Company’s cash position increased
Net cash provided by operating activities for the first
Net cash used in investing activities for the first
Financial Position At
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risks from those reported in our Annual Report on Form 10-K for the fiscal year ended April 30, 2022.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective to ensure information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
FORWARD-LOOKING STATEMENTS
National Beverage Corp. and its representatives may make written or oral statements relating to future events or results relative to our financial, operational and business performance, achievements, objectives and strategies. These statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 and include statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our stockholders. Certain statements including, without limitation, statements containing the words “believes,” “anticipates,” “intends,” “plans,” “expects,” and “estimates” constitute “forward-looking statements” and involve known and unknown risk, uncertainties and other factors that may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: general economic and business conditions, pricing of competitive products, success of new product and flavor introductions, fluctuations in the costs and availability of raw materials and packaging supplies, ability to pass along cost increases to our customers, labor strikes or work stoppages or other interruptions in the employment of labor, continued retailer support for our products, changes in brand image, consumer demand and preferences and our success in creating products geared toward consumers’ tastes, success in implementing business strategies, changes in business strategy or development plans, government regulations, taxes or fees imposed on the sale of our products, unfavorable weather conditions and other factors referenced in this report, filings with the Securities and Exchange Commission and other reports to our stockholders. We disclaim an obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained herein to reflect future events or developments.
PART II - OTHER INFORMATION
There have been no material changes in risk factors from those reported in our Annual Report on Form 10-K for the fiscal year ended April 30, 2022.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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