National Beverage Corp. — Form 10-Q Summary
Reporting period: Third quarter and first nine months of fiscal 2016, ended January 30, 2016; comparable periods ended January 31, 2015. National Beverage develops, manufactures, markets, and sells beverages, primarily in North America, including LaCroix and other Power+ brands, carbonated soft drinks, and Allied Brands. Amounts below are in U.S. dollars.
Financial performance
| Metric | Quarter ended Jan. 30, 2016 | Prior-year quarter | Nine months ended Jan. 30, 2016 | Prior-year nine months |
|---|---|---|---|---|
| Net sales | $161.7 million | $143.0 million | $525.8 million | $481.2 million |
| Gross profit / margin | $52.6 million / 32.5% | $46.1 million / 32.2% | $176.1 million / 33.5% | $163.7 million / 34.0% |
| Net income | $11.2 million | $8.8 million | $43.7 million | $37.1 million |
| Diluted EPS | $0.24 | $0.19 | $0.93 | $0.79 |
- Quarterly sales rose 13.1%, reflecting 12.3% higher case volume and a 0.6% increase in average selling price. Power+ brand volume grew 34.9%.
- Nine-month sales increased 9.3%, from 8.3% higher case volume and a 0.9% increase in average selling price. Power+ volume grew 29%, partly offset by declines in branded carbonated soft drinks and Allied Brands.
- Quarterly gross profit increased 14%; cost of sales per case was approximately unchanged. For the nine months, cost of sales per case rose 1.6%, principally due to product mix, and gross margin declined.
- SG&A was $35.4 million, or 21.9% of quarterly sales, versus $32.6 million, or 22.8%. Nine-month SG&A was $109.5 million, or 20.8% of sales, versus $108.2 million, or 22.5%.
- Interest expense decreased to $40,000 for the quarter and $153,000 for the nine months. Prior-year nine-month other income included a $1.3 million gain on property sale.
Cash flow, balance sheet, and liquidity
- Nine-month operating cash flow was $49.8 million, versus $36.7 million; capital expenditures were $7.8 million, versus $7.2 million. Cash increased $33.6 million to $86.1 million.
- Financing cash outflow was $8.4 million, including $10.0 million of credit-facility repayments. The company reported no outstanding borrowings at January 30, 2016, versus $10.0 million at May 2, 2015.
- The company had $97.8 million available under its $100 million unsecured revolving facilities, with $2.2 million reserved for standby letters of credit. It was in compliance with loan covenants.
- Working capital increased to $136.2 million from $101.5 million; the current ratio rose to 3.1:1 from 2.5:1. Total current assets were $201.7 million and current liabilities $65.4 million.
- Total shareholders’ equity was $192.9 million, compared with $147.8 million at May 2, 2015. No dividend on common stock is reported in the supplied filing text.
Outlook, risks, and notable items
- Management said existing capital resources should meet liquidity and capital requirements for the next 12 months. The filing gives no specific sales, earnings, or margin guidance.
- Management identifies raw-material costs, consumer preferences, competitive pricing, retailer support, new-product performance, weather, and regulation among factors that could affect results. Sales are seasonal, generally highest in summer. No material changes to previously reported risk factors or market risks were disclosed.
- The company uses aluminum swaps to partially hedge can-cost exposure, not for trading. At period-end, outstanding swaps had an $18.6 million notional amount; assuming commodity prices do not change, $4.2 million of unrealized pre-tax loss was expected to be reclassified from accumulated other comprehensive loss into earnings over the next 12 months.
- The company guaranteed up to $4.5 million of residual value on leased equipment; the lease terminates August 1, 2017. Management expected no loss on the guarantee.
- Disclosure controls were assessed as effective, with no material change in internal control over financial reporting reported during the quarter.
Key facts for investors to verify
- Whether Power+ growth continues and offsets declines in carbonated soft drinks and Allied Brands.
- Whether product mix and raw-material costs affect gross margin, and how aluminum-hedge losses flow into cost of sales.
- Whether cash generation and available credit remain sufficient as seasonal working-capital needs change.
- The potential outcome of the $4.5 million leased-equipment residual-value guarantee and the timing and impact of new accounting standards.