National Beverage Corp. (FIZZ) - 10-Q Summary
Business Context and Reporting Period
This filing covers the quarterly period ended November 1, 2025 (Fiscal Q2 2026). National Beverage Corp. operates as a single segment, developing, producing, and marketing sparkling waters (LaCroix), juices, energy drinks (Rip It), and carbonated soft drinks (Shasta, Faygo). The company utilizes a hybrid distribution system and focuses on the U.S. market.
Key Financial Metrics
| Metric | Three Months Ended Nov 1, 2025 | Six Months Ended Nov 1, 2025 |
|---|---|---|
| Net Sales | $288.3 million | $618.8 million |
| Gross Profit | $109.2 million | $234.6 million |
| Gross Margin | 37.9% | 37.9% |
| Operating Income | $58.0 million | $128.8 million |
| Net Income | $46.4 million | $102.1 million |
| Diluted EPS | $0.49 | $1.09 |
| Cash and Equivalents | $269.3 million | $269.3 million (Balance Sheet) |
| Operating Cash Flow (6mo) | $84.8 million | |
| Debt Outstanding | $0 (No borrowings under $150M facilities) |
Material Changes vs. Prior Period
- Revenue Decline: Net sales decreased 1.0% in Q2 and 0.3% for the six-month period compared to the prior year. This was driven by a 6.0% (Q2) and 4.9% (6mo) decrease in case volume, partially offset by a 5.3% (Q2) and 4.8% (6mo) increase in average selling price.
- Margin Expansion: Gross margin improved to 37.9% in both Q2 and the six-month period (up from 37.6% and 37.3% respectively), aided by price increases despite higher packaging and ingredient costs.
- Expense Management: SG&A expenses decreased slightly in Q2 ($51.2M vs $51.5M) due to lower marketing costs, but increased for the six-month period ($105.8M vs $104.4M) due to higher marketing spend.
- Liquidity Improvement: Cash and cash equivalents increased by $75.5 million to $269.3 million. Working capital rose to $376.7 million, and the current ratio improved to 4.3:1.
Outlook, Risks, and Unusual Items
- Capital Allocation: The company repurchased 20,000 shares of common stock in Q2 for $0.7 million. No dividends were paid in the current six-month period, contrasting with a $304.1 million special dividend paid in the prior year.
- Capital Expenditures: CapEx for the first six months was $8.9 million, down from $10.6 million in the prior year. Management anticipates fiscal 2026 spending will not exceed fiscal 2025 levels.
- Derivatives: The company holds aluminum swap contracts (notional value $17.5M) to hedge raw material costs. As of November 1, 2025, there was an unrealized gain of $13.4 million in AOCI expected to be reclassified to earnings over the next 12 months.
- Risks: Key risks include fluctuations in raw material costs (aluminum, packaging), supply chain disruptions, weather conditions affecting seasonal sales, and competitive pricing pressures. No material changes to risk factors were reported.
Investor Verification Checklist
- Volume vs. Price Mix: Verify if the 6% volume decline is a temporary seasonal fluctuation or a structural shift in consumer demand for LaCroix and other core brands.
- Cost Inflation: Monitor the trajectory of packaging and ingredient costs to ensure gross margin expansion is sustainable without further price hikes.
- Working Capital Efficiency: Note the increase in inventory ($10.8M) and decrease in inventory turns (8.1x vs 8.7x); verify if this indicates overstocking or strategic buildup.
- Debt Capacity: Confirm the status of the $150 million credit facilities, which remain fully available with no outstanding borrowings.