National Beverage (FIZZ) - 2024 Q4 - Annual Report

PART I ITEM 1. Business National Beverage Corp. offers diverse healthier beverages, including sparkling waters and CSDs, emphasizing innovation and vertical integration - National Beverage Corp. focuses on developing healthier beverages, responding to a global shift in consumer preferences towards 'crossover consumers' seeking alternatives to artificially sweetened or high-calorie drinks[13][104] - The company's production model is vertically integrated, crafting a substantial portion of its flavors and concentrates and operating twelve strategically located production facilities across the continental United States[35][37] - LaCroix Sparkling Water is the most significant brand, leading the premium domestic sparkling water category with zero calories, zero sweeteners, and zero sodium. It was named one of 'The Most Trusted Brands in America' by Newsweek in 2024[19] General The company differentiates through healthier beverages, creative innovations, cost-effective marketing, and dynamic consumer responsiveness - The company's differentiation points include a focus on 'Healthy Transformation' by developing healthier beverages, 'Creative Innovations' in flavors and packaging, an 'Innovation Ethic' utilizing cost-effective social media and regional marketing, and 'Creative Dynamics' for rapid response to consumer trends[13][14][15][16] - Primary market focus is the United States and Canada, with consideration for expanding distribution to other regions[17] Brands The brand portfolio includes 'Power+ Brands' (sparkling waters, juices, energy drinks) and CSDs like Shasta and Faygo, with healthier reformulations - The brand portfolio is divided into 'Power+ Brands' (sparkling waters, energy drinks, juices) and Carbonated Soft Drinks (CSDs)[18] - LaCroix Sparkling Water is the most significant brand, leading the premium domestic sparkling water category with zero calories, zero sweeteners, and zero sodium. New flavors like Mojito and Cherry Blossom were recently launched[19][20] - Shasta and Faygo CSDs, with over 135 years of history, have introduced Zero Sugar options for popular flavors, reflecting a continuous effort to make drinks healthier while maintaining iconic taste profiles[31][33] Production The company uses a vertically integrated production model across twelve facilities for efficient distribution, quality control, and R&D - Production philosophy emphasizes vertical integration, covering raw material procurement, flavor crafting, and finished product production[35] - Twelve production facilities are strategically located near major metropolitan markets across the continental U.S., enabling efficient distribution[35] - Controlling all production, distribution, and marketing allows for effective quality control, consumer appeal management, and quick response to market changes[36] Distribution A hybrid distribution system serves take-home, convenience, and food-service channels, utilizing warehouse and direct-store delivery - A hybrid distribution system serves a diverse customer base through three primary channels: take-home, convenience, and food-service[38] - The take-home channel primarily uses a warehouse distribution system, allowing retailers to maximize assets and lower product costs, while direct-store delivery is used for smaller accounts and the convenience channel[39][40][41] - Vending machines and glass-door coolers are utilized as marketing and promotional tools to expand on-site visual trial and enhance brand awareness[44] Sales and Marketing Sales and marketing leverage an internal force, broker networks, and innovative digital engagement to build brand recognition and loyalty - Sales and marketing are conducted through an internal sales force and specialized broker networks, focused on specific markets, channels, or product lines[45] - Marketing emphasizes innovative digital and social media engagement, sponsorships, and creative content to reach consumers directly[46] - Consumer brand recognition and loyalty are maintained through regional events, special event marketing, endorsements, coupon distribution, product sampling, and in-store promotional activities with 'BrandED' ambassadors[47] Raw Materials Centralized procurement manages raw materials, which are commodity-derived, with derivative instruments partially mitigating price risks - Centralized procurement manages relationships with numerous suppliers for ingredients and packaging, aiming for competitive arrangements[48] - Raw materials like aluminum cans, plastic bottles, high fructose corn syrup, and juice concentrates are commodity-derived, leading to price and availability fluctuations[50] - Derivative financial instruments are used to partially mitigate exposure to changes in certain raw material costs[50] Seasonality Operating results are seasonal, with higher beverage sales volumes typically occurring during the summer months - Beverage sales are seasonal, with higher volume realized during summer months when outdoor activities are more prevalent[52] Competition The beverage industry is highly competitive, with the company differentiating through innovation, brand recognition, and efficient distribution - The beverage industry is highly competitive, with products competing against a broad range of liquid refreshments from companies with greater financial resources[53] - LaCroix Sparkling Water is the number one premium domestic sparkling water in the United States[53] - Competitive differentiation is achieved through novel innovation, key brand recognition, focused social media, innovative flavor variety, attractive packaging, efficient distribution methods, and value pricing for some product lines[54] Trademarks The company owns numerous significant trademarks for its brands and intends to maintain their registrations and use them in its business - The company owns numerous trademarks for its brands that are significant to its business and intends to maintain all registrations[55] Governmental Regulation Operations are subject to federal, state, and local regulations; the company believes it complies and new rules won't materially impact business - Production, distribution, and sale of products are subject to various federal, state, and local laws, including the Federal Food, Drug and Cosmetic Act, Occupational Safety and Health Act, and environmental statutes[56] - The company believes it is in compliance, in all material respects, with existing legislation[56] - Compliance with environmental provisions has not had any material adverse effect on financial or competitive position[59] Human Capital As of April 27, 2024, the company employed 1,559 people, fostering diversity and offering competitive compensation and benefits - As of April 27, 2024, the company employed approximately 1,559 people, with 392 covered by collective bargaining agreements[60] - The company supports a culture of diversity and inclusion, with approximately 62% of employees identifying as persons of color and 24% as female[61] - Compensation programs include short-term incentives and long-term stock-based compensation for senior employees, along with competitive benefits (health, dental, life, disability, profit-sharing) and a focus on employee health and safety[62][63] Sustainability The company commits to sustainability through U.S.-produced products, electric forklifts, renewable electricity, and recyclable packaging - All beverage products are produced in the U.S., contributing to a lower carbon footprint than imported brands[64] - Sustainability measures include transitioning from LP gas to electric powered forklifts and purchasing electricity from renewable sources[64] - All packaging is recyclable, and over 80% of products are in aluminum cans, which generally contain approximately 73% recycled material[65] Available Information Annual, quarterly, and current reports, proxy statements, and the Code of Ethics are available free on the company's website - Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and amendments are available free of charge on the company's website[66] ITEM 1A. Risk Factors The company faces risks from brand image shifts, intense competition, raw material cost volatility, regulations, and internal control weaknesses - Key risks include adverse effects on brand image and consumer preferences due to unfavorable publicity or failure to adapt to changing demographics and health concerns[69] - The highly competitive beverage industry, customer consolidation, and price volatility of raw materials and energy sources (aluminum, resin, corn, natural gas, diesel fuel) pose significant financial risks[70][71][72] - The company identified a material weakness in internal control over financial reporting related to certain review processes and disclosure controls and procedures as of April 27, 2024[82][83] ITEM 1B. Unresolved Staff Comments There are no unresolved staff comments - No unresolved staff comments were reported[84] ITEM 1C. Cybersecurity The company employs a multi-tier cybersecurity risk management strategy overseen by the Audit Committee, with no material risks identified in Fiscal 2024 - Cybersecurity risk management strategy includes multi-tier systems, an experienced internal security team, external service providers, and employee awareness training[86] - The Board's Audit Committee oversees management's implementation of the cybersecurity risk management program[88] - During Fiscal 2024, no identified cybersecurity risks or threats had, or were reasonably likely to have, a material effect on the business strategy, results of operations, or financial condition[87] ITEM 2. Properties Principal properties include twelve production facilities, mostly owned, in good condition, and sufficient for current needs, with incremental tech advances - Principal properties include twelve production facilities (ten owned, two leased) aggregating approximately two million square feet, located in ten states[89] - Facilities are generally in good condition and sufficient to meet present needs[89] - The production of beverages is capital intensive but not characterized by rapid technological change, with advances being incremental cost-saving[90] ITEM 3. Legal Proceedings The company is involved in legal proceedings, including class action allegations, but expects no material adverse effect on its financials - The company is named in certain legal proceedings, including class action allegations[92] - The company believes litigation will not have a material adverse effect on its financial position, cash flows, or results of operations[92] ITEM 4. Mine Safety Disclosures This item is not applicable to National Beverage Corp - Mine Safety Disclosures are not applicable to the company[93] PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Common stock (FIZZ) is listed on NASDAQ, with a recent special cash dividend declared and an ongoing share repurchase program - Common stock (FIZZ) is listed on The NASDAQ Global Select Market[94] - As of June 17, 2024, there were approximately 41,700 holders of common stock[94] - A special cash dividend of $3.25 per share was declared on June 12, 2024, payable by July 24, 2024[95] - Approximately 1.9 million shares remain available for repurchase under the authorized program[96] Five-Year Cumulative Total Returns (as of April 27, 2024) | Index | 4/27/2019 | 5/02/2020 | 5/01/2021 | 4/30/2022 | 4/29/2023 | 4/27/2024 | | :----------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | :-------- | | National Beverage Corp. | $100.00 | $87.08 | $179.79 | $173.24 | $195.33 | $171.20 | | NASDAQ Composite - Total Return | $100.00 | $106.94 | $174.88 | $155.50 | $155.53 | $204.22 | | Dow Jones US Soft Drinks Index | $100.00 | $101.32 | $123.31 | $147.14 | $159.11 | $156.16 | | S&P 500 Index - Total Return | $100.00 | $98.25 | $147.55 | $147.87 | $151.80 | $188.57 | ITEM 6. Reserved This item is reserved and contains no information ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews Fiscal 2024 and 2023 operations, financial condition, and liquidity, noting increased sales, gross profit, and a restatement of cash flows - National Beverage Corp. has transformed into an innovative, healthier refreshment company, committed to 'Better for You' thirst quenchers[102] - The company's strategy focuses on developing healthier beverages, emphasizing unique flavor development, innovative marketing, and rapid response to consumer trends[104] - The company's operating results are affected by raw material costs, supply chain disruptions, holiday/seasonal programming, and weather conditions, with higher sales volume in summer months[106] OVERVIEW National Beverage Corp. is a Delaware-incorporated company focused on healthier refreshment, emphasizing innovation and a hybrid distribution system in the US and Canada - National Beverage Corp. is an innovative, healthier refreshment company with a distinctive portfolio of sparkling waters, juices, energy drinks (Power+ Brands), and carbonated soft drinks[101][103] - The company's strategy aims for profitable growth by developing healthier beverages, emphasizing unique flavor variety, innovative marketing, and rapid response to changing consumer trends[104] - Primary market focus is the United States and Canada, utilizing a hybrid distribution system (warehouse and direct-store delivery)[105] RESULTS OF OPERATIONS Fiscal 2024 saw net sales increase by 1.6% to $1,191.7 million and gross profit rise to $428.5 million (36.0% gross margin) due to higher prices and lower costs Fiscal Year 2024 vs. 2023 Financial Highlights | Metric | Fiscal 2024 (in millions) | Fiscal 2023 (in millions) | Change (%) | | :-------------------------------------- | :------------------------ | :------------------------ | :--------- | | Net Sales | $1,191.7 | $1,172.9 | +1.6% | | Gross Profit | $428.5 | $396.8 | +8.0% | | Gross Margin | 36.0% | 33.8% | +2.2 pp | | Selling, General & Administrative Expenses | $209.9 | $210.1 | -0.1% | | Other Income (Expense), net | $11.3 | $(0.2) | N/A | | Effective Tax Rate | 23.1% | 23.7% | -0.6 pp | - The increase in Net Sales was primarily due to a 1.8% increase in average selling price per case, partially offset by a 0.2% decline in case volume, mainly impacting Power+ Brands[109] - Gross margin increased to 36.0% from 33.8% in Fiscal 2023, driven by increased average selling price per case and a decline in packaging costs[110] LIQUIDITY AND FINANCIAL CONDITION Liquidity is strong, with cash and cash equivalents increasing by $169.0 million to $327.0 million, and working capital rising significantly Liquidity and Cash Flow Summary (Fiscal 2024 vs. 2023) | Metric | Fiscal 2024 (in millions) | Fiscal 2023 (in millions) | Change (YoY) | | :-------------------------------------- | :------------------------ | :------------------------ | :----------- | | Cash and Cash Equivalents (End of Period) | $327.0 | $158.1 | +$168.9 | | Net Cash Provided by Operating Activities | $197.9 | $161.7 | +$36.2 | | Capital Expenditures | $30.2 | $22.0 | +$8.2 | | Working Capital | $398.9 | $222.0 | +$176.9 | | Current Ratio | 3.9 to 1 | 2.5 to 1 | +1.4 | - The company had $327.0 million in cash and cash equivalents and $150 million in unsecured revolving credit facilities with no outstanding borrowings at April 27, 2024[116] - Capital expenditures in Fiscal 2024 were primarily for expanding capacity, enhancing sustainability, and improving packaging capabilities and efficiencies[119] CONTRACTUAL OBLIGATIONS Total contractual obligations were $100.3 million as of April 27, 2024, primarily operating leases and purchase commitments, mostly due within one year Contractual Obligations at April 27, 2024 (in thousands) | Category | Total | 1 Year Or less | 2 to 3 Years | 4 to 5 Years | More Than 5 Years | | :----------------- | :------- | :------------- | :----------- | :----------- | :---------------- | | Operating leases | $61,169 | $15,068 | $25,229 | $12,716 | $8,156 | | Purchase commitments | $39,106 | $39,007 | $99 | - | - | | Total | $100,275 | $54,075 | $25,328 | $12,716 | $8,156 | - Annual contributions to pension plans under collective bargaining agreements and a discretionary profit-sharing plan were $3.8 million for Fiscal 2024 and Fiscal 2023[121] - The company maintains self-insured and deductible programs for certain liability, medical, and workers' compensation exposures, with $2.2 million in standby letters of credit[123] OFF-BALANCE SHEET ARRANGEMENTS AND ESTIMATES The company has no material off-balance sheet arrangements; financial statements rely on management's significant estimates and assumptions - The company does not have any off-balance sheet arrangements that have a current or future material effect on its financial condition[124] - Financial statements rely on management's estimates and assumptions, which may ultimately differ from actual results[125] CRITICAL ACCOUNTING POLICIES AND ESTIMATES Critical accounting policies involve significant estimates for credit risk, asset impairment, income taxes, insurance, and revenue recognition - Critical accounting policies include estimates for credit risk, impairment of long-lived assets (goodwill and intangibles), income taxes, insurance programs, and revenue recognition[126][127][128][129][130] - Revenue is recognized upon delivery, with estimates and reserves for credit losses and sales incentives based on historical experience and customer data[130][131] RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS New FASB ASUs on Income Taxes and Segment Reporting are effective soon, but the company expects no material impact upon adoption - ASU 2023-09 (Income Taxes) requires specific categories in rate reconciliation and disaggregation of income taxes paid and expense, effective for annual periods after December 15, 2024[170] - ASU 2023-07 (Segment Reporting) requires additional disclosure of significant segment expenses, effective for fiscal years beginning after December 15, 2023[171] - The company does not expect a material impact from the adoption of these new accounting standards[170][171] FORWARD-LOOKING STATEMENTS Statements about future events are forward-looking and subject to known and unknown risks, with no obligation for the company to update them - Statements about future events or results are 'forward-looking' and involve known and unknown risks, uncertainties, and other factors[134] - Risk factors include general economic conditions, competitive pricing, new product success, raw material costs, labor issues, retailer support, changes in brand image, consumer demand, technology failures/cyberattacks, government regulations, weather conditions, and climate change[134] - The company disclaims any obligation to update forward-looking statements[134] ITEM 7A. Quantitative and Qualitative Disclosure About Market Risk The company faces market risks from commodity price fluctuations and interest rate changes, mitigated by supplier agreements and derivative instruments - The company is exposed to commodity price risk for raw materials like aluminum cans, plastic bottles, high fructose corn syrup, and juice concentrates[135] - Exposure to commodity price risk is managed through supplier pricing agreements and derivative financial instruments (aluminum swap contracts)[135] - Interest rate risk relates to investments in highly liquid short-duration investment securities, managed under a policy prioritizing principal loss minimization and limiting exposure to any one issue[136] ITEM 8. Financial Statements and Supplementary Data This section presents consolidated financial statements and notes, including a restatement of cash flows and an auditor's report noting a material weakness - The financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows for the periods presented, in conformity with GAAP[215] - The 2023 and 2022 financial statements have been restated to correct misstatements in the consolidated statements of cash flows, as detailed in Note 14[217][211] - The independent auditor's report expressed an opinion that the Company had not maintained effective internal control over financial reporting as of April 27, 2024, due to a material weakness[216] Consolidated Balance Sheets Total assets increased significantly to $770.2 million in Fiscal 2024, driven by cash, with total liabilities and shareholders' equity also rising Consolidated Balance Sheet Highlights (in thousands) | Metric | April 27, 2024 | April 29, 2023 | | :-------------------------- | :------------- | :------------- | | Cash and cash equivalents | $327,047 | $158,074 | | Total current assets | $536,872 | $366,405 | | Total assets | $770,153 | $574,342 | | Total current liabilities | $137,927 | $144,321 | | Total liabilities | $210,641 | $201,855 | | Total shareholders' equity | $559,512 | $372,487 | - Cash and cash equivalents increased by $168.973 million from April 29, 2023, to April 27, 2024[138] - Total shareholders' equity increased by $187.025 million, from $372.487 million in Fiscal 2023 to $559.512 million in Fiscal 2024[138] Consolidated Statements of Income Fiscal 2024 net sales increased to $1,191.7 million, with net income reaching $176.7 million and basic/diluted EPS rising to $1.89 Consolidated Statements of Income Highlights (in thousands, except per share) | Metric | Fiscal Year Ended April 27, 2024 | Fiscal Year Ended April 29, 2023 | Fiscal Year Ended April 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net sales | $1,191,694 | $1,172,932 | $1,138,013 | | Cost of sales | $763,243 | $776,143 | $720,208 | | Gross profit | $428,451 | $396,789 | $417,805 | | Operating income | $218,510 | $186,684 | $207,856 | | Income before income taxes | $229,848 | $186,442 | $207,596 | | Net income | $176,732 | $142,164 | $158,512 | | Basic EPS | $1.89 | $1.52 | $1.70 | | Diluted EPS | $1.89 | $1.52 | $1.69 | - Net income increased by $34.568 million (24.3%) from Fiscal 2023 to Fiscal 2024[140] - Basic and diluted EPS both increased from $1.52 in Fiscal 2023 to $1.89 in Fiscal 2024[140] Consolidated Statements of Comprehensive Income Comprehensive income significantly increased to $184.8 million in Fiscal 2024, driven by higher net income and positive cash flow hedges Consolidated Statements of Comprehensive Income Highlights (in thousands) | Metric | Fiscal Year Ended April 27, 2024 | Fiscal Year Ended April 29, 2023 | Fiscal Year Ended April 30, 2022 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net income | $176,732 | $142,164 | $158,512 | | Cash flow hedges (net of tax) | $7,910 | $(10,130) | $3,882 | | Other (net of tax) | $186 | $27 | $19 | | Comprehensive income | $184,828 | $132,061 | $162,413 | - Comprehensive income increased by $52.767 million (39.9%) from Fiscal 2023 to Fiscal 2024[142] - Cash flow hedges, net of tax, showed a significant positive swing, from a loss of $10.130 million in Fiscal 2023 to a gain of $7.910 million in Fiscal 2024[142] Consolidated Statements of Shareholders' Equity Total shareholders' equity rose substantially to $559.5 million in Fiscal 2024, primarily due to increased retained earnings and cash flow hedges Consolidated Statements of Shareholders' Equity Highlights (in thousands) | Metric | Fiscal Year Ended April 27, 2024 | Fiscal Year Ended April 29, 2023 | Fiscal Year Ended April 30, 2022 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Common Stock (shares) | 101,942 | 101,727 | 101,712 | | Common Stock (amount) | $1,019 | $1,017 | $1,017 | | Additional Paid-In Capital | $42,588 | $40,393 | $39,405 | | Retained Earnings | $535,077 | $358,345 | $216,181 | | Accumulated Other Comprehensive Income (Loss) | $4,911 | $(3,185) | $6,918 | | Total Shareholders' Equity | $559,512 | $372,487 | $239,438 | - Retained earnings increased by $176.732 million in Fiscal 2024, reflecting the Net Income for the period[144] - Accumulated other comprehensive income (loss) shifted from a loss of $3.185 million in Fiscal 2023 to a gain of $4.911 million in Fiscal 2024, primarily due to cash flow hedges[144] Consolidated Statements of Cash Flows Net cash increased by $169.0 million in Fiscal 2024, driven by operating activities, with investing activities using $30.2 million Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Fiscal Year Ended April 27, 2024 | Fiscal Year Ended April 29, 2023 (As Restated) | Fiscal Year Ended April 30, 2022 (As Restated) | | :-------------------------------------- | :------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net income | $176,732 | $142,164 | $158,512 | | Net cash provided by operating activities | $197,907 | $161,665 | $133,133 | | Net cash used in investing activities | $(30,248) | $(21,952) | $(29,004) | | Net cash provided by (used in) financing activities | $1,314 | $(29,689) | $(249,668) | | Net Increase (Decrease) in Cash and Equivalents | $168,973 | $110,024 | $(145,539) | | Cash and Cash Equivalents - End of Year | $327,047 | $158,074 | $48,050 | - Net cash provided by operating activities increased by $36.242 million (22.4%) from Fiscal 2023 to Fiscal 2024[146] - Cash proceeds from exercises of stock options were $1.314 million in Fiscal 2024, compared to $0.311 million in Fiscal 2023[146] Notes to Consolidated Financial Statements Notes detail accounting policies, financial instrument fair values, asset/liability components, and a restatement of prior cash flow statements - The company operates as a single operating segment and prepares financial statements in accordance with GAAP, using estimates and assumptions[150][151] - A material weakness in internal controls over the review of Consolidated Statements of Cash Flows and operating lease disclosures led to a restatement of Fiscal 2023 and Fiscal 2022 cash flow statements[211] - The company uses aluminum swap contracts as cash flow hedges to mitigate exposure to changes in aluminum container costs, with $5.7 million of unrealized gain expected to be reclassified to earnings over the next 12 months as of April 27, 2024[186] 1. SIGNIFICANT ACCOUNTING POLICIES Policies cover GAAP, single segment reporting, estimates, fair value, cash, receivables, inventory, PPE, leases, intangibles, and revenue recognition - The company operates as a single operating segment and prepares consolidated financial statements in accordance with GAAP[149][150] - Derivative financial instruments (aluminum swap contracts) are used to partially mitigate raw material cost exposure and are recorded at fair value as cash flow hedges[152] - Revenue is recognized upon delivery to customers, with sales incentives accounted for as a reduction of sales[163] Changes in Allowance for Credit Losses (in thousands) | Metric | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | | :-------------------------- | :---------- | :---------- | :---------- | | Balance at beginning of year | $523 | $559 | $1,140 | | Net charge (credit) to expense | $427 | $11 | $(581) | | Net charge-off | $(82) | $(47) | - | | Balance at end of year | $868 | $523 | $559 | 2. PROPERTY, PLANT AND EQUIPMENT, NET Net property, plant, and equipment increased to $159.7 million in Fiscal 2024, primarily due to machinery additions, with $18.9 million depreciation Property, Plant and Equipment, Net (in thousands) | Category | 2024 | 2023 | | :------------------------ | :-------- | :-------- | | Land | $9,835 | $9,835 | | Buildings and improvements | $71,754 | $70,615 | | Machinery and equipment | $314,079 | $289,567 | | Total | $395,668 | $370,017 | | Less: accumulated depreciation | $(235,938) | $(221,594) | | Property, plant and equipment, net | $159,730 | $148,423 | - Depreciation expense was $18.9 million for Fiscal 2024, an increase from $17.7 million in Fiscal 2023[172] 3. ACCRUED LIABILITIES Accrued liabilities slightly decreased to $46.6 million at April 27, 2024, primarily comprising promotions, compensation, recycling deposits, and insurance Accrued Liabilities (in thousands) | Category | 2024 | 2023 | | :------------------- | :------ | :------ | | Accrued promotions | $18,826 | $15,865 | | Accrued compensation | $13,920 | $13,036 | | Recycling deposits | $5,743 | $5,123 | | Accrued insurance | $2,687 | $2,498 | | Accrued freight | $2,262 | $2,819 | | Other | $3,127 | $7,977 | | Total | $46,565 | $47,318 | - Accrued promotions increased by $2.961 million, while 'Other' accrued liabilities decreased by $4.850 million[174] 4. LEASES The company leases office, warehouse, machinery, and equipment, with operating lease cost at $15.9 million in Fiscal 2024 and a 4.80-year average term - Operating lease cost was $15.9 million in Fiscal 2024, an increase from $14.4 million in Fiscal 2023[175] - As of April 27, 2024, the weighted-average remaining lease term for operating leases was 4.80 years, and the weighted average discount rate was 4.30%[175] Future Minimum Lease Payments for Operating Leases at April 27, 2024 (in thousands) | Fiscal Year | Amount | | :---------- | :-------- | | Fiscal 2025 | $15,068 | | Fiscal 2026 | $13,382 | | Fiscal 2027 | $11,847 | | Fiscal 2028 | $6,946 | | Fiscal 2029 | $5,770 | | Thereafter | $8,156 | | Total minimum lease payments including interest | $61,168 | | Less: Amounts representing interest | $(6,401) | | Present value of minimum lease payments | $54,767 | | Less: Current portion of operating lease liabilities | $(13,079) | | Non-current portion of operating lease liabilities | $41,688 | 5. DEBT As of April 27, 2024, the company had no outstanding borrowings under its $100 million credit facilities and was compliant with covenants - At April 27, 2024, the company had unsecured revolving credit facilities totaling $100 million and an unsecured revolving term loan facility of $50 million[177][178] - No borrowings were outstanding under either facility at April 27, 2024, or April 29, 2023[177][178] - The company was in compliance with all loan covenants as of April 27, 2024[179] 6. CAPITAL STOCK AND TRANSACTIONS WITH RELATED PARTIES A special cash dividend of $3.25 per share was declared, and management fees of $11.9 million were paid to CMA, a related party - A special cash dividend of $3.25 per share was declared on June 12, 2024[209] - The company has a management agreement with Corporate Management Advisors, Inc. (CMA), owned by its Chairman and CEO, for senior corporate functions and creative services[181][182] - Management fees incurred to CMA were $11.9 million for Fiscal 2024, $11.7 million for Fiscal 2023, and $11.4 million for Fiscal 2022[184] 7. DERIVATIVE FINANCIAL INSTRUMENTS Aluminum swap contracts are used as cash flow hedges, resulting in a $7.9 million gain to AOCI in Fiscal 2024, with a $5.7 million derivative asset - The company enters into aluminum swap contracts as cash flow hedges to mitigate exposure to changes in aluminum container costs[186] Derivative Financial Instruments - Gains (Losses) Recognized (in thousands) | Metric | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | | :-------------------------------------- | :---------- | :---------- | :---------- | | Recognized in AOCI (net) | $(314) | $(16,053) | $11,492 | | Reclassified from AOCI to cost of sales (net) | $(8,224) | $(5,923) | $7,610 | | Net change to AOCI | $7,910 | $(10,130) | $3,882 | - As of April 27, 2024, the fair value of the derivative asset was $5.7 million, included in prepaid and other assets[187] 8. INCOME TAXES The Fiscal 2024 income tax provision was $53.1 million, with an effective rate of 23.1%, and unrecognized tax benefits totaled $2.1 million Provision for Income Taxes (in thousands) | Category | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | | :------- | :---------- | :---------- | :---------- | | Current | $49,683 | $48,287 | $42,555 | | Deferred | $3,433 | $(4,009) | $6,529 | | Total | $53,116 | $44,278 | $49,084 | Effective Income Tax Rate Reconciliation | Item | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | | :---------------------------------- | :---------- | :---------- | :---------- | | Statutory federal income tax rate | 21.0% | 21.0% | 21.0% | | State income taxes, net of federal benefit | 2.8% | 2.9% | 2.9% | | Other differences | (0.7)% | (0.2)% | (0.3)% | | Effective income tax rate | 23.1% | 23.7% | 23.6% | - At April 27, 2024, the gross amount of unrecognized tax benefits was $2.1 million, with accrued interest of $0.3 million[189] 9. LEGAL PROCEEDINGS The company is involved in class action allegations but expects no material adverse effect on its financial position or operations - The company has been named in certain legal proceedings, including those containing class action allegations[191] - The company believes litigation will not have a material adverse effect on its financial position, cash flows, or results of operations[191] 10. STOCK-BASED COMPENSATION Stock-based compensation programs exist, with no options granted in Fiscal 2024, and $0.9 million expense, plus $9.1 million intrinsic value from exercises - Stock-based compensation programs include the Omnibus Incentive Plan, Special Stock Option Plan, and Key Employee Equity Partnership Program (KEEP Program)[194][195][196] - No stock options were granted in Fiscal 2024 or Fiscal 2023[197] Stock Option Activity for Fiscal 2024 | Metric | Number of Shares | Price (Weighted average exercise price) | | :------------------------------ | :--------------- | :-------------------------------------- | | Options outstanding, beginning of year | 521,300 | $18.13 | | Exercised | (215,000) | $6.12 | | Forfeited or cancelled | (6,400) | $31.49 | | Options outstanding, end of year | 299,900 | $25.48 | | Options vested and exercisable, end of year | 164,580 | $23.40 | - Stock-based compensation expense was $0.9 million for Fiscal 2024, and the total intrinsic value for stock options exercised was $9.1 million[199][200] 11. PENSION PLANS Annual pension contributions were $3.8 million, with participation in multi-employer plans, including CSSS Fund ('Red' zone) and WCT Fund ('Green' zone) - Annual contributions to pension plans were $3.8 million for Fiscal 2024 and Fiscal 2023[202] - The company participates in three multi-employer defined benefit pension plans, including the CSSS Fund (Red zone status) and the WCT Fund (Green zone status)[203][205] Multi-Employer Pension Plan Contributions (in millions) | Pension Fund | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | | :---------------------------- | :---------- | :---------- | :---------- | | CSSS Fund | $1.6 | $1.6 | $1.5 | | WCT Fund | $0.8 | $0.8 | $0.8 | | Other multi-employer pension funds | $0.2 | $0.2 | $0.2 | | Total | $2.6 | $2.6 | $2.5 | 12. COMMITMENTS AND CONTINGENCIES As of April 27, 2024, purchase commitments totaled $35.4 million for raw materials and $3.7 million for plant and equipment - At April 27, 2024, the company had purchase commitments for raw materials of $35.4 million through 2026[207] - Purchase commitments for plant and equipment totaled $3.7 million, anticipated to be completed in Fiscal 2025[208] 13. SUBSEQUENT EVENT On June 12, 2024, a special cash dividend of $3.25 per share was declared, payable by July 24, 2024 - On June 12, 2024, a special cash dividend of $3.25 per share was declared, payable by July 24, 2024[209] 14. RESTATEMENT Cash flow statements for Fiscal 2023 and 2022 were restated due to internal control deficiencies, without impacting overall cash or financial position - Corrections were required for consolidated statements of cash flows for Fiscal 2023 and Fiscal 2022, and all quarterly periods within the three-year period ended April 27, 2024[211] - The corrections were due to controls not operating at a level precise enough to detect errors in certain calculations and the presentation of right-of-use assets[211] - These corrections did not impact the company's overall cash position, consolidated balance sheets, income statements, comprehensive income, or shareholders' equity[211] ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There are no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure were reported[222] ITEM 9A. Controls and Procedures Disclosure controls were ineffective due to a material weakness in cash flow and lease disclosure reviews, with remediation efforts underway - Disclosure controls and procedures were not effective as of April 27, 2024, due to an identified material weakness[223] - A material weakness was identified in internal financial reporting controls over the review of Consolidated Statements of Cash Flows, including operating lease disclosures and presentation[227] - Remediation efforts include implementing additional review procedures, hiring financial professionals, and enhancing quarter-end reviews of operating lease liabilities[228] ITEM 9B. Other Information This item is not applicable - This item is not applicable[240] ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to National Beverage Corp - This item is not applicable[241] PART III ITEM 10. Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[243] Key Officers of National Beverage Corp. (as of April 27, 2024) | Name | Age | Position with Company | | :--------------- | :-- | :------------------------------------------ | | Nick A. Caporella | 88 | Chairman of the Board and Chief Executive Officer | | Joseph G. Caporella | 63 | President | | George R. Bracken | 78 | Executive Vice President – Finance | - Officers are normally appointed annually and can be removed by the Board of Directors[245] ITEM 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[246] ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Security ownership and equity compensation plan information is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[247] ITEM 13. Certain Relationships and Related Transactions, and Director Independence Information on related party transactions and director independence is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[249] ITEM 14. Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the company's 2024 Proxy Statement - Information is incorporated by reference from the 2024 Proxy Statement[250] PART IV ITEM 15. Exhibits, Financial Statement Schedules This section lists financial statements, the independent auditor's report, and a comprehensive Exhibit Index of corporate documents - The report includes Consolidated Balance Sheets, Statements of Income, Comprehensive Income, Shareholders' Equity, Cash Flows, and Notes to Consolidated Financial Statements[252] - A Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) is included[252] - A comprehensive Exhibit Index details various corporate documents, agreements, and certifications[256] ITEM 16. Form 10-K Summary No Form 10-K Summary is provided - No Form 10-K Summary is provided[253] SIGNATURES The report is signed by key officers, including the Principal Financial Officer and CEO, on June 26, 2024 - The report is signed by George R. Bracken, Executive Vice President – Finance (Principal Financial Officer and Principal Accounting Officer)[261] - Other signatories include Nick A. Caporella (Chairman of the Board and Chief Executive Officer) and Joseph G. Caporella (President and Director)[262] - The report was signed on June 26, 2024[261][262]