National Beverage (FIZZ) - 2025 Q3 - Quarterly Report

PART I - FINANCIAL INFORMATION This section details the unaudited financial statements, notes, and management's analysis of National Beverage Corp's performance and financial position ITEM 1. FINANCIAL STATEMENTS (Unaudited) This section presents the unaudited condensed consolidated financial statements of National Beverage Corp. for the periods ended January 25, 2025, and January 27, 2024, including balance sheets, income statements, comprehensive income statements, shareholders' equity statements, and cash flow statements, along with detailed notes on significant accounting policies, property, plant and equipment, leases, debt, derivative financial instruments, related party transactions, and cash dividends Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (In thousands): | Item | January 25, 2025 | April 27, 2024 | | :-------------------------------- | :--------------- | :------------- | | Total Assets | $594,020 | $770,153 | | Total Liabilities | $193,784 | $210,641 | | Total Shareholders' Equity | $400,236 | $559,512 | | Cash and cash equivalents | $149,222 | $327,047 | | Trade receivables, net | $90,903 | $102,837 | | Inventories | $85,032 | $84,603 | | Total current assets | $352,570 | $536,872 | | Total current liabilities | $119,614 | $137,927 | - Total assets decreased by $176.1 million (22.9%) from April 27, 2024, to January 25, 2025, primarily driven by a significant reduction in cash and cash equivalents[6] - Total shareholders' equity decreased by $159.3 million (28.5%) over the same period, largely due to the special cash dividend paid[6] Condensed Consolidated Statements of Income This section outlines the company's revenues, expenses, and net income over specific reporting periods Condensed Consolidated Statements of Income (In thousands, except per share amounts): | Item | 3 Months Ended Jan 25, 2025 | 3 Months Ended Jan 27, 2024 | YoY Change (3M) | 9 Months Ended Jan 25, 2025 | 9 Months Ended Jan 27, 2024 | YoY Change (9M) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------------------- | :-------------- | | Net sales | $267,050 | $270,065 | -1.1% | $887,725 | $894,379 | -0.7% | | Gross profit | $98,950 | $97,031 | +2.0% | $330,733 | $319,370 | +3.6% | | Operating income | $50,577 | $48,181 | +5.0% | $177,959 | $165,585 | +7.5% | | Net income | $39,643 | $39,592 | +0.1% | $142,060 | $133,011 | +6.8% | | Basic EPS | $0.42 | $0.42 | 0.0% | $1.52 | $1.42 | +7.0% | | Diluted EPS | $0.42 | $0.42 | 0.0% | $1.52 | $1.42 | +7.0% | - For the three months ended January 25, 2025, net sales decreased by 1.1% while gross profit increased by 2.0% and operating income increased by 5.0%. Net income remained relatively flat[7] - For the nine months ended January 25, 2025, net sales decreased by 0.7%, but gross profit, operating income, and net income all saw increases of 3.6%, 7.5%, and 6.8% respectively, indicating improved profitability despite slightly lower sales[7] Condensed Consolidated Statements of Comprehensive Income This section details net income and other comprehensive income components, reflecting total changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Income (In thousands): | Item | 3 Months Ended Jan 25, 2025 | 3 Months Ended Jan 27, 2024 | YoY Change (3M) | 9 Months Ended Jan 25, 2025 | 9 Months Ended Jan 27, 2024 | YoY Change (9M) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------- | :-------------------------- | :-------------------------- | :-------------- | | Net income | $39,643 | $39,592 | +0.1% | $142,060 | $133,011 | +6.8% | | Cash flow hedges (net of tax) | $237 | $2,732 | -91.3% | $1,832 | $3,376 | -45.7% | | Comprehensive income | $39,880 | $42,324 | -5.7% | $143,892 | $136,387 | +5.5% | - Other comprehensive income from cash flow hedges significantly decreased for both the three-month and nine-month periods, impacting the overall comprehensive income trend[9] Condensed Consolidated Statements of Shareholders' Equity This section tracks changes in the company's equity accounts, including retained earnings and common stock, over time Condensed Consolidated Statements of Shareholders' Equity (In thousands): | Item | Jan 25, 2025 (9M) | Jan 27, 2024 (9M) | | :-------------------------------- | :---------------- | :---------------- | | Retained Earnings (Beginning) | $535,077 | $358,345 | | Net income | $142,060 | $133,011 | | Common stock cash dividend | $(304,148) | $- | | Retained Earnings (End) | $372,989 | $491,356 | | Total Shareholders' Equity (End) | $400,236 | $510,221 | - A significant common stock cash dividend of $304.1 million was paid during the nine months ended January 25, 2025, which substantially reduced retained earnings and total shareholders' equity compared to the prior year period where no such dividend was paid[11] Condensed Consolidated Statements of Cash Flows This section categorizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows (In thousands, Nine Months Ended): | Item | January 25, 2025 | January 27, 2024 | YoY Change | | :-------------------------------- | :--------------- | :--------------- | :--------- | | Net cash provided by operating activities | $146,621 | $137,465 | +6.7% | | Net cash used in investing activities | $(20,813) | $(19,419) | +7.2% | | Net cash (used in) provided by financing activities | $(303,633) | $841 | -36190.0% | | Net (Decrease) Increase in Cash and Cash Equivalents | $(177,825) | $118,887 | -249.5% | | Cash and Cash Equivalents - End of Period | $149,222 | $276,961 | -46.2% | - Net cash provided by operating activities increased by 6.7% to $146.6 million for the nine months ended January 25, 2025[12] - The company experienced a significant net decrease in cash and cash equivalents of $177.8 million, primarily due to $304.1 million in dividends paid on common stock, contrasting with a net increase of $118.9 million in the prior year period[12] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and additional information supporting the condensed consolidated financial statements 1. SIGNIFICANT ACCOUNTING POLICIES This section describes the key accounting principles and methods used in preparing the financial statements - The Company operates as a single operating segment, developing, producing, marketing, and selling sparkling waters, juices, energy drinks, and carbonated soft drinks primarily in the United States and Canada[13][16] - Recently issued accounting pronouncements include ASU 2024-03 (Expense Disaggregation), ASU 2023-09 (Income Tax Disclosures), and ASU 2023-07 (Segment Reporting), with the Company currently evaluating their impact, but not expecting a material impact from ASU 2023-09 and ASU 2023-07[25][27][28] Key Accounting Policy Data (In thousands): | Item | January 25, 2025 | April 27, 2024 | | :-------------------------------- | :--------------- | :------------- | | Trade Receivables, Net (Allowance for credit losses) | $1,300 | $900 | | Inventories (Finished goods) | $46,100 | $50,300 | | Inventories (Raw materials) | $38,900 | $34,300 | Shipping and Handling Costs (In millions): | Period | January 25, 2025 | January 27, 2024 | | :-------------------------------- | :--------------- | :--------------- | | Three Months Ended | $17.5 | $17.7 | | Nine Months Ended | $55.5 | $58.3 | Marketing Costs (In millions): | Period | January 25, 2025 | January 27, 2024 | | :-------------------------------- | :--------------- | :--------------- | | Three Months Ended | $10.1 | $11.0 | | Nine Months Ended | $33.2 | $35.1 | 2. PROPERTY, PLANT AND EQUIPMENT, NET This section details the company's tangible long-term assets, their depreciation, and capital investments Property, Plant and Equipment, Net (In thousands): | Item | January 25, 2025 | April 27, 2024 | | :-------------------------------- | :--------------- | :------------- | | Total Property, Plant and Equipment | $416,010 | $395,668 | | Less: Accumulated Depreciation | $(250,425) | $(235,938) | | Property, Plant and Equipment, Net | $165,585 | $159,730 | | Construction-in-progress | $42,000 | $32,500 | Depreciation Expense (In millions): | Period | January 25, 2025 | January 27, 2024 | | :-------------------------------- | :--------------- | :--------------- | | Three Months Ended | $4.9 | $4.8 | | Nine Months Ended | $15.0 | $14.0 | - Net property, plant and equipment increased by $5.8 million, with construction-in-progress rising by $9.5 million, indicating ongoing capital investments[29] 3. LEASES This section outlines the company's lease agreements, associated costs, and future payment obligations Operating Lease Costs (In millions): | Period | January 25, 2025 | January 27, 2024 | | :-------------------------------- | :--------------- | :--------------- | | Three Months Ended | $4.2 | $4.1 | | Nine Months Ended | $12.5 | $11.8 | Operating Lease Metrics: | Metric | January 25, 2025 | April 27, 2024 | | :-------------------------------- | :--------------- | :------------- | | Weighted-average remaining lease term | 4.85 years | 4.80 years | | Weighted average discount rate | 4.50% | 4.30% | Future Minimum Lease Payments (In thousands, as of Jan 25, 2025): | Fiscal Year | Amount | | :-------------------------------- | :----- | | 2025 (Remaining quarter) | $3,720 | | 2026 | $15,120 | | 2027 | $13,613 | | 2028 | $8,769 | | 2029 | $7,640 | | Thereafter | $13,238 | | Total minimum lease payments | $62,100 | | Present value of minimum lease payments | $55,332 | - Operating lease costs increased slightly for both the three-month and nine-month periods. The weighted-average remaining lease term and discount rate also saw minor increases[30] 4. DEBT This section describes the company's credit facilities and borrowing arrangements, including availability and compliance - The Company maintains unsecured revolving credit facilities totaling $100 million and an unsecured revolving term loan facility of $50 million, with no outstanding borrowings under either facility as of January 25, 2025, or April 27, 2024[33][34] - As of January 25, 2025, $97.8 million was available for borrowings under the credit facilities, and the subsidiary was in compliance with all loan covenants[33][35] 5. DERIVATIVE FINANCIAL INSTRUMENTS This section explains the company's use of derivatives for hedging and their impact on financial results - The Company uses aluminum swap contracts as cash flow hedges to mitigate exposure to changes in aluminum costs, with gains/losses reported in accumulated other comprehensive income (AOCI) and reclassified to cost of sales[37] Derivative Financial Instruments - Net Change to AOCI (In thousands): | Period | January 25, 2025 | January 27, 2024 | | :-------------------------------- | :--------------- | :--------------- | | Three Months Ended | $237 | $2,732 | | Nine Months Ended | $1,832 | $3,376 | Fair Value of Derivative Instruments (In thousands, as of Jan 25, 2025): | Item | Amount | | :-------------------------------- | :----- | | Notional amount of outstanding aluminum swap contracts | $73,000 | | Fair value of derivative asset | $8,200 | | Fair value of derivative liability | $100 | - As of January 25, 2025, the notional amount of outstanding aluminum swap contracts was $73.0 million, with an unrealized gain of $6.7 million before tax expected to be reclassified to earnings over the next 12 months[37] 6. RELATED PARTIES This section discloses transactions and agreements with entities or individuals closely related to the company - The Company has a management agreement with Corporate Management Advisors, Inc. (CMA), owned by its Chairman and CEO, for an annual base fee of one percent of consolidated net sales[39] Management Fees to CMA (In millions): | Period | January 25, 2025 | January 27, 2024 | | :-------------------------------- | :--------------- | :--------------- | | Three Months Ended | $2.7 | $2.7 | | Nine Months Ended | $8.9 | $9.0 | Amounts Due to CMA (In millions): | Date | Amount | | :-------------------------------- | :----- | | January 25, 2025 | $1.6 | | April 27, 2024 | $3.0 | 7. CASH DIVIDEND This section details the special cash dividend declared and paid by the company during the period - On June 12, 2024, the Company declared a special cash dividend of $3.25 per share, totaling $304.1 million, which was paid on July 24, 2024[41] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on the Company's financial performance and condition, highlighting key operational results for the three and nine months ended January 25, 2025, compared to the prior year, and discussing liquidity, capital resources, cash flows, and financial position OVERVIEW This section provides a general introduction to National Beverage Corp.'s business, products, market strategy, and operational influences - National Beverage Corp. focuses on a distinctive portfolio of sparkling waters, juices, energy drinks, and carbonated soft drinks, primarily in the US and Canada, with a strategy geared towards health-conscious consumers and innovative product development[42][43][44] - The Company utilizes a hybrid distribution system (warehouse and direct-store delivery) to service a diverse customer base and is exploring options to expand distribution to other regions[45] - Operating results are influenced by raw material costs, supply chain, seasonality (higher sales in summer), and weather conditions[46] RESULTS OF OPERATIONS This section analyzes the company's financial performance, comparing key revenue and profitability metrics across periods Three Months Ended January 25, 2025 compared to Three Months Ended January 27, 2024 This section compares the company's financial performance for the third quarter of fiscal 2025 against the prior year's third quarter Results of Operations (Three Months Ended): | Item | January 25, 2025 | January 27, 2024 | Change | | :-------------------------------- | :--------------- | :--------------- | :----- | | Net sales | $267.1 million | $270.1 million | -1.1% | | Case volume | -3.4% | N/A | -3.4% | | Average selling price per case | +2.2% | N/A | +2.2% | | Gross profit | $99.0 million | $97.0 million | +2.0% | | Gross margin | 37.1% | 35.9% | +1.2 pp | | Selling, general and administrative expenses | $48.4 million | $48.9 million | -1.0% | | Other income, net | $1.4 million | $1.8 million | -22.2% | | Effective income tax rate | 23.7% | 21.0% | +2.7 pp | - Net sales decreased by 1.1% due to a 3.4% decrease in case volume, primarily impacting Power+ Brands, partially offset by a 2.2% increase in average selling price per case[48] - Gross profit increased by 2.0% and gross margin improved to 37.1% from 35.9%, driven by higher average selling prices and lower packaging costs[49] Nine Months Ended January 25, 2025 compared to Nine Months Ended January 27, 2024 This section compares the company's financial performance for the first nine months of fiscal 2025 against the prior year's first nine months Results of Operations (Nine Months Ended): | Item | January 25, 2025 | January 27, 2024 | Change | | :-------------------------------- | :--------------- | :--------------- | :----- | | Net sales | $887.7 million | $894.4 million | -0.7% | | Case volume | -2.3% | N/A | -2.3% | | Average selling price per case | +1.7% | N/A | +1.7% | | Gross profit | $330.7 million | $319.4 million | +3.6% | | Gross margin | 37.3% | 35.7% | +1.6 pp | | Selling, general and administrative expenses | $152.8 million | $153.8 million | -0.7% | | Other income, net | $7.4 million | $5.8 million | +27.6% | | Effective income tax rate | 23.4% | 22.8% | +0.6 pp | - Net sales decreased by 0.7% due to a 2.3% decrease in case volume, affecting both Power+ Brands and carbonated soft drink brands, partially offset by a 1.7% increase in average selling price per case[52] - Gross profit increased by 3.6% and gross margin improved to 37.3% from 35.7%, primarily due to lower packaging costs and higher average selling prices[53] LIQUIDITY AND FINANCIAL CONDITION This section assesses the company's ability to meet short-term obligations and its overall financial health Liquidity and Capital Resources This section discusses the company's sources of cash and its capacity to fund ongoing operations and investments - The Company's primary liquidity sources are existing cash, cash generated from operations, and $150 million in unsecured credit facilities, with no outstanding borrowings as of January 25, 2025[58] - Management believes current capital resources are sufficient to meet liquidity and capital requirements for the next twelve months[58] Cash Flows This section analyzes the movement of cash from operating, investing, and financing activities - The Company's cash position decreased by $177.8 million for the first nine months of fiscal 2025, primarily due to a $304.1 million special cash dividend, contrasting with a $118.9 million increase in the prior year[59] - Net cash provided by operating activities increased to $146.6 million from $137.5 million, driven by higher net income[60] - Capital expenditures for the first nine months were $20.8 million, with fiscal 2025 capital expenditures anticipated to be in the range of $25 to $30 million[61] Financial Position This section evaluates the company's balance sheet health, including working capital and key financial ratios Financial Position Metrics: | Metric | January 25, 2025 | April 27, 2024 | Change | | :-------------------------------- | :--------------- | :------------- | :----- | | Working capital | $233.0 million | $398.9 million | -41.7% | | Current ratio | 2.9 to 1 | 3.9 to 1 | -1.0 | | Trade receivables decrease | $11.9 million | N/A | N/A | | Days sales outstanding | 31.0 days | 31.5 days | -0.5 days | | Inventories increase | $0.4 million | N/A | N/A | | Inventory turns | 8.6 times | 8.6 times | 0.0 | - Working capital and the current ratio decreased significantly, primarily due to the $304.1 million cash dividend payment[63] - Subsequent to January 25, 2025, renewed and new leases will increase operating lease right-of-use assets and liabilities by approximately $18 million[63] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in market risks from those reported in the Company's Annual Report on Form 10-K for the fiscal year ended April 27, 2024 - No material changes in market risks were reported compared to the previous annual report[65] ITEM 4. CONTROLS AND PROCEDURES Management, including the CEO and Principal Financial Officer, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective. No material changes in internal control over financial reporting occurred during the quarter - The Chief Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of January 25, 2025[66] - There were no material changes in the Company's internal control over financial reporting during the most recent fiscal quarter[67] FORWARD-LOOKING STATEMENTS This section outlines the nature of forward-looking statements made by National Beverage Corp., emphasizing that they involve known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from projections. The Company disclaims any obligation to update these statements - Statements in the report are 'forward-looking' and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[68] - Key risk factors include general economic conditions, competitive pricing, new product success, raw material costs, supply chain disruptions, labor issues, retailer support, changes in consumer demand, business strategy, technology failures, government regulations, and weather conditions[68] - The Company disclaims any obligation to update forward-looking statements to reflect future events or developments[68] PART II - OTHER INFORMATION This section includes additional disclosures not covered in the financial statements, such as risk factors and exhibits ITEM 1A. RISK FACTORS There have been no material changes in risk factors from those reported in the Company's Annual Report on Form 10-K for the fiscal year ended April 27, 2024 - No material changes in risk factors were reported compared to the previous annual report[71] ITEM 6. EXHIBITS This section lists the exhibits filed with the Form 10-Q, including an amendment to a loan agreement, certifications from the CEO and Principal Financial Officer under Sarbanes-Oxley, and financial information formatted in iXBRL - Key exhibits include an Amendment to Loan Agreement (10.17), CEO and PFO certifications under Sections 302 and 906 of Sarbanes-Oxley (31.1, 31.2, 32.1, 32.2), and iXBRL formatted financial statements (101, 104)[72] SIGNATURE The report was duly signed on behalf of National Beverage Corp. by George R. Bracken, Executive Vice President – Finance and Principal Financial Officer, on March 6, 2025 - The report was signed by George R. Bracken, Executive Vice President – Finance (Principal Financial Officer) on March 6, 2025[75]