NATIONAL BEVERAGE CORP quarterly report, Q4 FY2001

Business Context and Reporting Period

Company: National Beverage Corp.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Six months ended October 27, 2001 (Fiscal 2002).
Business Overview: A vertically integrated holding company developing, manufacturing, and distributing beverage products (e.g., Shasta, Faygo, LaCroix) through a hybrid distribution network. The company focuses on branded products, allied brands for retailers, and expansion in the convenience channel.

Key Financial Metrics

Metric (in thousands) Six Months Ended Oct 27, 2001 Six Months Ended Oct 28, 2000
Net Sales $276,509 $260,986
Gross Profit $90,106 $84,970
Gross Margin 32.6% 32.6%
Net Income $11,205 $10,265
Diluted EPS $0.59 $0.55
Operating Cash Flow $6,168 $6,546
Cash and Equivalents (End of Period) $38,101 $34,389
Long-Term Debt $19,910 $24,136
Working Capital $71,697 $62,444

Note: Working Capital calculated as Total Current Assets ($113,375) minus Total Current Liabilities ($41,678).

Material Changes vs. Prior Period

  • Revenue Growth: Net sales increased 5.9% ($15.5 million) year-over-year, driven by improved pricing, volume growth in branded soft drinks, and sales from acquired brands (Ritz and Crystal Bay). Growth was partially offset by unfavorable product mix changes.
  • Profitability: Net income rose 9.2% to $11.2 million. Gross margin remained stable at 32.6%, supported by pricing and volume leverage on fixed costs, despite higher raw material costs.
  • Debt Reduction: Long-term debt decreased by approximately $4.2 million to $19.9 million. The company repaid $4.0 million on its line of credit and reduced term loan balances.
  • Working Capital: Improved significantly to $71.7 million from $62.4 million, primarily due to cash generation and a decrease in accounts payable.
  • EBITDA: Increased 5.5% to $24.5 million for the six-month period.

Guidance, Outlook, and Risks

  • Capital Expenditures: Management expects fiscal 2002 capital expenditures to be comparable to fiscal 2001. No material commitments currently exist.
  • Liquidity: The company maintains $46 million in available credit facilities. Management believes existing resources are sufficient for foreseeable requirements.
  • Accounting Changes: The company adopted SFAS No. 133 (Derivatives) and SFAS No. 142 (Goodwill) with no material impact. Adoption of EITF 00-14 and 00-25 (reclassifying sales incentives as revenue reductions) is planned for the fourth quarter of fiscal 2002; the impact is currently undetermined.
  • Risks: Key risks include fluctuations in raw material costs, competitive pricing, changes in consumer preferences, and the success of strategic alliances with retailers. Seasonality affects results, with peak volume in summer months.

Investor Verification Checklist

  • Debt Covenants: Verify continued compliance with financial ratios and minimum net worth requirements, though the filing states compliance as of Oct 27, 2001.
  • Accounting Impact: Monitor the fourth-quarter adoption of EITF 00-14 and 00-25, which will reclassify certain expenses as revenue reductions, potentially lowering reported sales and gross margins.
  • Convenience Channel Growth: Assess the success of new product introductions (e.g., VooDoo Rain, ClearFruit) in the convenience channel as a driver for future volume.
  • Raw Material Costs: Track input cost inflation, which management cites as an offset to pricing improvements.