# National Beverage Corp: Form 10-Q for the period ended Oct 31, 2020

- Company: [National Beverage Corp](/companies/fizz.md) (CIK 69891)
- Form: 10-Q
- Filed: 2020-12-10
- Accepted by EDGAR: Dec 10, 2020, 22:11 ET
- Period: 2020-10-31
- Accession: 0001437749-20-025115
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/69891/000143774920025115/fizz20201031b_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/69891/000143774920025115/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-10-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2020-08-02 to 2020-10-31 | $271.8m | us-gaap:Revenues |
| Revenue | 6 months, 2020-05-03 to 2020-10-31 | $565.2m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2020-08-02 to 2020-10-31 | $163.8m | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2020-05-03 to 2020-10-31 | $339.9m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2020-08-02 to 2020-10-31 | $108.0m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2020-05-03 to 2020-10-31 | $225.3m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2020-08-02 to 2020-10-31 | $46.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2020-05-03 to 2020-10-31 | $97.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2020-08-02 to 2020-10-31 | $61.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2020-05-03 to 2020-10-31 | $128.3m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2020-08-02 to 2020-10-31 | $14.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2020-05-03 to 2020-10-31 | $30.3m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2020-08-02 to 2020-10-31 | $47.2m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2020-05-03 to 2020-10-31 | $98.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2020-08-02 to 2020-10-31 | $1.01 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2020-05-03 to 2020-10-31 | $2.10 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2020-08-02 to 2020-10-31 | $1.01 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2020-05-03 to 2020-10-31 | $2.11 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2020-08-02 to 2020-10-31 | 46,877 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2020-05-03 to 2020-10-31 | 46,816 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2020-05-03 to 2020-10-31 | $110.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2020-05-03 to 2020-10-31 | $10.4m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2020-10-31 | $405.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2020-10-31 | $565.3m | us-gaap:AssetsCurrent |
| Total assets | at 2020-10-31 | $751.0m | us-gaap:Assets |
| Current liabilities | at 2020-10-31 | $140.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2020-10-31 | $193.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2020-10-31 | $558.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 9,406 characters.

### Overview

National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks (Power+ Brands) and, to a lesser extent, Carbonated Soft Drinks. 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 than larger competitors who are burdened by legacy production and distribution complexity and costs.

The majority of our brands are geared to the active and health-conscious consumer including sparkling waters, energy drinks, and juices. Our portfolio of Power+ Brands includes LaCroix®, LaCroix Cúrate®, and LaCroix NiCola® sparkling water products; Clear Fruit® non-carbonated water beverages enhanced with fruit flavor; 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 130 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 further 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, changes in consumer purchasing habits and weather conditions. Beverage sales are seasonal with higher sales volume realized during the summer months 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, can distort quarter-to-quarter statistics and result in decision making that is not truly beneficial for investors and shareholders alike.

Traditional and typical are not a part of an innovator's vocabulary.

### RESULTS OF OPERATIONS

#### Three Months Ended October 31, 2020 (second quarter of fiscal 2021) compared to

#### Three Months Ended October 26, 2019 (second quarter of fiscal 2020)

Net sales for the second quarter of fiscal 2021 increased 8.0% to $271.8 million from $251.6 million for the second quarter of fiscal 2020. The increase in sales resulted primarily from a 7.4% increase in case volume. The volume increase includes a 11.1% increase of our Power+ Brands primarily attributable to increased consumer demand in the take-home channel. Average selling price per case increased slightly.

Gross profit for the second quarter of fiscal 2021 increased to $108.0 million from $92.8 million for the second quarter of fiscal 2020. The increase in gross profit is due to increased volume and reduced raw material costs. The cost of sales per case decreased 3.5% and gross margin increased to 39.8% from 36.9% for the second quarter of fiscal 2020.

Selling, general and administrative expenses for the second quarter of fiscal 2021 decreased $4.7 million to $46.5 million from $51.2 million for the second quarter of fiscal 2020. The decrease was primarily due to reduced marketing and selling costs. As a percent of net sales, selling, general and administrative expenses decreased to 17.1% from 20.3% for the second quarter of fiscal 2020.

Other income includes interest income of $112,000 for the second quarter of fiscal 2021 and $1.0 million for the second quarter of fiscal 2020. The decrease in interest income is due to lower return on investments.

The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.5% for the second quarter of fiscal 2021 and fiscal 2020. 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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#### Six Months Ended October 31, 2020 (first six months of fiscal 2021) compared to

#### Six Months Ended October 26, 2019 (first six months of fiscal 2020)

Net sales for the first six months of fiscal 2021 increased 9.7% to $565.2 million from $515.2 million for the first six months of fiscal 2020. The increase in sales resulted primarily from a 9.9% increase in case volume. The volume increase includes a 13.6% increase of our Power+ Brands primarily attributable to increased consumer demand in the take-home channel. Average selling price per case was flat.

Gross profit for the first six months of fiscal 2021 increased to $225.3 million from $189.4 million for the first six months of fiscal 2020. The increase in gross profit is due to increased volume and reduced raw material costs. The cost of sales per case decreased 5.2% and gross margin increased to 39.9% from 36.8% for the first six months of fiscal 2020.

Selling, general and administrative expenses for the first six months of fiscal 2021 decreased $6.2 million to $97.0 million from $103.2 million for the first six months of fiscal 2020. The decrease was primarily due to reduced marketing and selling costs. As a percent of net sales, selling, general and administrative expenses decreased to 17.2% from 20.0% for the first six months of fiscal 2020.

Other income includes interest income of $397,000 for the first six months of fiscal 2021 and $1.8 million for the first six months of fiscal 2020. The decrease in interest income is due to lower return on investments.

The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.5% for the first six months of fiscal 2021 and 23.6% for the first six months of fiscal 2020. 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 October 31, 2020, we maintained $100 million unsecured revolving credit facilities, under which no borrowings were outstanding and $3.4 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.

On November 24, 2020, the Company declared a cash dividend of $3.00 per share payable to shareholders of record on December 4, 2020. On December 2, 2020, the cash dividend was increased to $6.00 per share, approximately $280 million in the aggregate, which will be paid on or before February 2, 2021.

### Cash Flows

The Company’s cash position increased $100.9 million for the six months of fiscal 2021, which compares to an increase of $77.7 million for the six months of fiscal 2020.

Net cash provided by operating activities for the first six months of fiscal 2021 amounted to $110.9 million compared to $87.2 million for the six months of fiscal 2020. For the first six months of fiscal 2021, cash flow was principally provided by net income of $98.3 million, depreciation and amortization of $9.2 million, and amortization of operating right of use assets of $6.6 million, offset in part by changes in working capital and other accounts.

Net cash used in investing activities for the first six months of fiscal 2021 reflects capital expenditures of $10.4 million, compared to capital expenditures of $9.6 million for the first six months of fiscal 2020. We intend to continue production capacity and efficiency improvement projects in fiscal 2021, and expect capital expenditures to be comparable to total fiscal 2020 levels.

### Financial Position

At October 31, 2020, our working capital increased to $425.3 million from $319.0 million at May 2, 2020. The current ratio was 4.0 to 1 at October 31, 2020 compared to 3.3 to 1 at May 2, 2020. The $106.3 million increase in working capital was primarily due to higher cash and inventory, partially offset by higher accounts payable and accrued liabilities. Trade receivables decreased $2.1 million and days sales outstanding decreased from 32.2 to 27.7. Inventories increased $5.3 million and inventory turns improved to 9.4 times from 8.4 times.

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## Market risk

As filed, 144 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 May 2, 2020.

## Controls and procedures

As filed, 3,300 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 of our Company to be materially different from any future 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 and availability 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 demand and 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, 144 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 May 2, 2020.

Filed Dec 10, 2020.
Source: SEC EDGAR, the filing index for accession 0001437749-20-025115. Last ingested by Listed: Oct 24, 2026, 14:53 ET. No prices; not investment advice.