# National Beverage Corp: Form 10-Q for the period ended Jan 25, 2020

- Company: [National Beverage Corp](/companies/fizz.md) (CIK 69891)
- Form: 10-Q
- Filed: 2020-03-05
- Accepted by EDGAR: Mar 5, 2020, 22:23 ET
- Period: 2020-01-25
- Accession: 0001437749-20-004446
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/69891/000143774920004446/fizz20200125_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/69891/000143774920004446/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-01-25.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2019-10-27 to 2020-01-25 | $222.8m | us-gaap:Revenues |
| Revenue | 9 months, 2019-04-28 to 2020-01-25 | $738.0m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2019-10-27 to 2020-01-25 | $140.7m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2019-04-28 to 2020-01-25 | $466.5m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2019-10-27 to 2020-01-25 | $82.1m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2019-04-28 to 2020-01-25 | $271.5m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2019-10-27 to 2020-01-25 | $48.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2019-04-28 to 2020-01-25 | $152.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2019-10-27 to 2020-01-25 | $33.2m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2019-04-28 to 2020-01-25 | $119.4m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2019-10-27 to 2020-01-25 | $51.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2019-04-28 to 2020-01-25 | $151.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2019-10-27 to 2020-01-25 | $7.6m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2019-04-28 to 2020-01-25 | $28.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2019-10-27 to 2020-01-25 | $26.6m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2019-04-28 to 2020-01-25 | $93.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2019-10-27 to 2020-01-25 | $0.57 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2019-04-28 to 2020-01-25 | $2.00 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2019-10-27 to 2020-01-25 | $0.57 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2019-04-28 to 2020-01-25 | $2.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2019-10-27 to 2020-01-25 | 46,802 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2019-04-28 to 2020-01-25 | 46,853 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2019-04-28 to 2020-01-25 | $125.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2019-04-28 to 2020-01-25 | $15.8m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2019-04-28 to 2020-01-25 | $4.3m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2020-01-25 | $261.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2020-01-25 | $407.0m | us-gaap:AssetsCurrent |
| Total assets | at 2020-01-25 | $589.3m | us-gaap:Assets |
| Current liabilities | at 2020-01-25 | $109.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2020-01-25 | $167.1m | us-gaap:Liabilities |
| Shareholders' equity | at 2020-01-25 | $422.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 11,414 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 drinks 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 Curate®, 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. In addition, seasonal promotional packaging and the development of beverages for selective holidays and ceremonial dates further impact quarter-to-quarter comparisons.

We believe our highly innovative business should not be analyzed solely on the common three-month (quarterly) periods, traditionally found acceptable. 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.

### Corporate Information

Our principal executive offices are located at 8100 SW Tenth Street, Suite 4000, Fort Lauderdale, FL 33324. Our telephone number is (954) 581-0922. We maintain a website at www.nationalbeverage.com. The reference to our website address does not constitute incorporation by reference of the information contained on this website. We own numerous trademarks for our brands that are significant to our business. We intend to continue to maintain all registrations of our significant trademarks and use the trademarks in the operations of our businesses. Unless specified otherwise, the financial results in this Quarterly Report are those of the Company and its subsidiaries on a consolidated basis.

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### RESULTS OF OPERATIONS

#### Three Months Ended January 25, 2020 (third quarter of fiscal 2020) compared to Three Months Ended January 26, 2019 (third quarter of fiscal 2019)

Net sales for the third quarter of fiscal 2020 increased $1.9 million or .9% to $222.8 million compared to $220.9 million for the third quarter of fiscal 2019. The increase in sales resulted primarily from a 2.4% increase in case volume and a 1.5% decline in average selling price. The volume increase includes growth of 1.4% in Power+ Brands and 3.2% growth in Carbonated Soft Drinks. The volume growth was attributable to increased velocity while product mix impacted average price per case.

Gross profit for the third quarter of fiscal 2020 increased 1.8% to $82.0 million compared to $80.6 million for the third quarter of fiscal 2019. The increase in gross profit is primarily due to increased volume and reflects a 2.1% decline in cost of sales per case. Gross margin increased to 36.8% of sales from 36.5% for the third

quarter of fiscal 2019.

Selling, general and administrative expenses for the third quarter of fiscal 2020 were $48.9 million and $49.5 million for the third quarter of fiscal 2019. The decrease was primarily due to lower distribution, marketing and administrative costs partially offset by increased selling expenses. As a percent of net sales, selling, general and administrative expenses declined to 21.9% compared to 22.4% for the third quarter of fiscal 2019.

Other income,net includes interest income of $1.0 million for the third quarter of fiscal 2020 and $1.2 million for the third quarter of fiscal 2019. The decrease in interest income is due to lower investment yields.

The Company’s effective income tax rate, based upon estimated annual income tax rates, was 22.3% for the third quarter of fiscal 2020 and 23.0% for the third 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.

#### Nine Months Ended January 25.2020 (first nine months of fiscal 2020) compared to Nine Months Ended January 26, 2019 (first nine months of fiscal 2019)

Net sales for the first nine months of fiscal 2020 decreased 4.7% to $738.0 million compared to $774.2 million for the first nine months of fiscal 2019. The decrease in sales resulted primarily from a 4.1% decline in case volume and, to a lesser extent, a lower average selling price. The volume decline includes an 7.8% decline in Power+ Brands, partially offset by a 4.4% increase in Carbonated Soft Drinks. Average selling price per case declined .6% primarily due to changes in product mix.

Gross profit for the first nine months of fiscal 2020 decreased 9.5% to $271.4 million compared to $299.8 million for the first nine months of fiscal 2019. The decrease in gross profit is due to decreased volume and increased manufacturing costs. The cost of sales per case increased 2.5% and gross margin declined to 36.8% of sales compared to 38.7% for the first nine months of fiscal 2019.

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Selling, general and administrative expenses for the first nine months of fiscal 2020 decreased $1.6 million to $152.0 million from $153.6 million for the first nine months of fiscal 2019. The change in selling, general and administrative expenses was primarily due to increased marketing which was more than offset by decreased distribution and administration expenses. As a percent of net sales, selling, general and administrative expenses increased to 20.6% from 19.8%.

Other income,net includes interest income of $2.9 million for the first nine months of fiscal 2020 and $3.3 million for the first nine months of fiscal 2019. The decrease in interest income is due to changes in average investment balances and lower investment yields.

The Company’s effective income tax rate, based on estimated annual income tax rates, was 23.3% for the first nine months of fiscal 2020 and 23.2% for the first nine months 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.

### LIQUIDITY AND FINANCIAL CONDITION

### Liquidity and Capital Resources

Our principal source of funds is cash generated from operations. At January 25, 2020, we maintained $100 million unsecured revolving credit facilities, under which no borrowings were outstanding and $3.1 million of the credit facility 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 and equivalents position increased $105.5 million for the nine months ended January 25, 2020, which compares to an increase of $80.0 million for the nine months ended January 26, 2019.

#### Operating Activities

Net cash provided by operating activities for the first nine months of fiscal 2020 amounted to $125.2 million compared to $107.0 million for the first nine months of fiscal 2019. For the first nine months of fiscal 2020, cash flow was principally provided by net income of $93.8 million, a decrease in accounts receivable of $12.3 million, depreciation and amortization aggregating $13.4 million, and a decrease in inventory of $9.5 million offset by decreases in accounts payable and accruals of $4.0 million. For the first nine months of fiscal 2019, cash flow was primarily provided by net income of $114.7 million, a decrease in accounts receivable of $8.0 million, and depreciation and amortization aggregating $11.5 million offset by an increase in inventory of $11.2 million and decrease in accounts payable and accruals of $17.0 million.

#### Investing Activities

Net cash used in investing activities for the first nine months of fiscal 2020 reflects capital expenditures of $15.8 million compared to capital expenditures of $27.5 million for the first nine months of fiscal 2019. We intend to continue production capacity and efficiency improvement projects in fiscal 2020 but expect capital expenditures will decline from fiscal 2019 levels.

#### Financing Activities

Net cash used in financing activities for the first nine months of fiscal 2020 primarily reflects the repurchase of common shares of $4.3 million.

### Financial Position

During the first nine months of fiscal 2020, our working capital increased to $297.8 million from $224.4 million at April 27, 2019. The increase in working capital was due to an increase in cash generated by operations, seasonal reduction in accounts receivable, and in inventory offset by an increase in liabilities mainly related to the adoption of the new lease accounting standard *ASU 842 “Leases”.* Trade receivables declined, with days sales outstanding improving from 30.6 days to 29.6 days. Inventories decreased $9.5 million and inventory turnover improved to 8.8 from 9.3 times. At January 25, 2020, the current ratio was to 3.7 to 1 compared to 3.3 to 1 at April 27, 2019, primarily due to the increase in cash of $105.5 million partially offset by the $13.8 million lease liability recognized in conjunction with the adoption of the new lease standard. .

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## 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, 3,177 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.

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 Mar 5, 2020.
Source: SEC EDGAR, the filing index for accession 0001437749-20-004446. Last ingested by Listed: Oct 24, 2026, 14:53 ET. No prices; not investment advice.