# National Beverage Corp: Form 10-Q for the period ended Jul 27, 2019

- Company: [National Beverage Corp](/companies/fizz.md) (CIK 69891)
- Form: 10-Q
- Filed: 2019-09-05
- Accepted by EDGAR: Sep 5, 2019, 21:24 ET
- Period: 2019-07-27
- Accession: 0001437749-19-017951
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/69891/000143774919017951/fizz20190727_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/69891/000143774919017951/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2019-07-27.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2019-04-28 to 2019-07-27 | $263.6m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2019-04-28 to 2019-07-27 | $167.0m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2019-04-28 to 2019-07-27 | $96.6m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2019-04-28 to 2019-07-27 | $52.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Interest expense | 3 months, 2019-04-28 to 2019-07-27 | $50.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2019-04-28 to 2019-07-27 | $10.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2019-04-28 to 2019-07-27 | $34.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2019-04-28 to 2019-07-27 | $74.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2019-04-28 to 2019-07-27 | $74.00 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2019-04-28 to 2019-07-27 | 46,880,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2019-04-28 to 2019-07-27 | $50.6m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2019-04-28 to 2019-07-27 | $4.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2019-07-27 | $202.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2019-07-27 | $366.8m | us-gaap:AssetsCurrent |
| Total assets | at 2019-07-27 | $550.2m | us-gaap:Assets |
| Current liabilities | at 2019-07-27 | $117.4m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2019-07-27 | $366.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 8,235 characters.

### Overview

National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks and, to a lesser degree, carbonated soft drink brands. Our carbonated soft drink brands continue to be modified as we endeavor to make them more adaptable to changing consumer preferences. 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.

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 that larger competitors who are burdened by legacy production, distribution complexity and costs cannot quickly adapt to.

Our brands consist of beverages geared to the active and health-conscious consumer (“Power+ Brands”) including sparkling waters, energy drinks, and juices. Our portfolio of Power+ Brands includes LaCroix®, LaCroix Cúrate®, LaCroix NiCola® and Shasta® Sparkling Water products; 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 125 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 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 and weather conditions. While prior years witnessed more seasonality, higher sales are realized during the summer when outdoor activities are more prevalent.

Our highly innovative business, where new beverages are developed and produced for selective holidays and ceremonial dates, should not be analyzed on the common three-month (quarterly) periods, traditionally found acceptable. Today, costly development projects and seasonal weather periods plus promotional packaging, make quarter-to-quarter comparisons unworthy statistics which forces companies into decision making that is not truly beneficial for investors and shareholders alike. Traditional and typical are not a part of an innovator's vocabulary.

National Beverage Corp. is incorporated in Delaware 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.

### RESULTS OF OPERATIONS

#### Three Months Ended July 27, 2019 (first quarter of fiscal 2020) compared to Three Months Ended July 28, 2018 (first quarter of fiscal 2019)

Net sales for the first quarter of fiscal 2020 decreased 9.9% to $263.6 million compared to $292.6 million for the first quarter of fiscal 2019. The decrease in sales resulted primarily from a 10.6% decrease in case volume, offset in part by higher average selling price. The volume decrease includes a 16.2% decline of our Power+ Brands, partially offset by 3.6% growth in Carbonated Soft Drinks. The reduction in Power+ Brands volume is primarily attributable to increased competition within the sparkling water category. Average selling price per case increased by .9% due to previous price increases as a result of increased aluminum costs.

Gross profit for the first quarter of fiscal 2020 decreased to $96.6 million compared to $115.7 million for the first quarter of fiscal 2019. The decrease in gross profit is due to decreased volume and increased manufacturing costs. The cost of sales per case increased 2.1% and gross margin declined to 36.6% from 39.5% for the first quarter of fiscal 2019.

Selling, general and administrative expenses for the first quarter of fiscal 2020 decreased $693,000 to $52.0 million from $52.7 million for the first quarter of fiscal 2019. The decrease was primarily due to reduced distribution and administrative costs partially offset by increased selling and marketing spending. As a percent of net sales, selling, general and administrative expenses increased to 19.7% compared to 18.0% for the first quarter of fiscal 2019.

Other income includes interest income of $814,000 for the first quarter of fiscal 2020 and $871,000 for the first quarter of fiscal 2019. The decrease in interest income is due to changes in average invested balances offset in part by higher return on investments.

The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.8% for the first quarter of fiscal 2020 and 23.4% for the first quarter of fiscal 2019. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes.

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### LIQUIDITY AND FINANCIAL CONDITION

### Liquidity and Capital Resources

Our principal source of funds is cash generated from operations. At July 27, 2019, we maintained $100 million unsecured revolving credit facilities, under which no borrowings were outstanding and $3.2 million was reserved for standby letters of credit. We believe 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 increased $46.5 million for the first quarter of fiscal 2020, which compares to an increase of $53.0 million for the first quarter of fiscal 2019.

Net cash provided by operating activities for the first quarter of fiscal 2020 amounted to $50.6 million compared to $59.3 million for the first quarter of fiscal 2019. For the first quarter of fiscal 2020, cash flow was principally provided by net income of $34.5 million, an increase in accrued and other liabilities of $12.0 million and depreciation and amortization aggregating $4.4 million, offset in part by seasonal and sales volume related increases in trade receivables and inventory.

Net cash used in investing activities for the first quarter of fiscal 2020 reflects capital expenditures of $4.2 million, compared to capital expenditures of $6.2 million for the first quarter of fiscal 2019. We intend to continue production capacity expansion projects in fiscal 2020, but expect capital expenditures will decline from fiscal 2019 levels.

### Financial Position

During the first quarter of fiscal 2020, our working capital increased to $249.3 million from $222.4 million at April 27, 2019. The increase in working capital was due to higher cash, and inventory, partially offset by higher accrued liabilities, the recognition of the current portion of operating lease liabilities and income taxes payable. Trade receivables decreased $9.9 million compared to the first quarter of 2019 due to decreased sales, while days sales outstanding declined to 29.3 days from 29.4 days. Inventories increased $5.6 million compared to the first quarter of 2019 as a result of the Company maintaining higher inventory levels to support sales. Inventory turns declined to 9.1 from 10.4 times. At July 27, 2019, the current ratio was 3.12 to 1 compared to 3.3 to 1 at April 27, 2019.

## Market risk

As filed, 147 characters.

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 27, 2019.

## Controls and procedures

As filed, 3,179 characters.

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.

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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 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 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 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.

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## Risk factors

As filed, 147 characters.

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 27, 2019.

Filed Sep 5, 2019.
Source: SEC EDGAR, the filing index for accession 0001437749-19-017951. Last ingested by Listed: Oct 24, 2026, 14:53 ET. No prices; not investment advice.