National Beverage (FIZZ) - 2022 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flows, for the periods ended October 30, 2021, and October 31, 2020 Condensed Consolidated Financial Statements Total assets grew to $635.4 million by October 30, 2021, driven by cash, while six-month net sales increased to $594.9 million, though net income slightly decreased to $93.1 million Condensed Consolidated Balance Sheets | Metric | Oct 30, 2021 (in thousands) | May 1, 2021 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $450,484 | $364,942 | | Total Assets | $635,428 | $557,237 | | Total Current Liabilities | $139,758 | $147,194 | | Total Liabilities | $188,582 | $201,240 | | Total Shareholders' Equity | $446,846 | $355,997 | Condensed Consolidated Statements of Income | Metric | Six Months Ended Oct 30, 2021 (in thousands) | Six Months Ended Oct 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net Sales | $594,870 | $565,176 | | Gross Profit | $226,256 | $225,267 | | Operating Income | $121,889 | $128,261 | | Net Income | $93,100 | $98,328 | | Diluted EPS | $0.99 | $1.05 | Condensed Consolidated Statements of Cash Flows | Metric | Six Months Ended Oct 30, 2021 (in thousands) | Six Months Ended Oct 31, 2020 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $85,964 | $110,877 | | Net cash used in investing activities | $(6,627) | $(10,354) | | Net cash provided by financing activities | $111 | $403 | | Net Increase in Cash and Equivalents | $79,448 | $100,926 | Notes to Condensed Consolidated Financial Statements Key accounting policies and financial items are detailed, noting $100 million unsecured credit facilities with no outstanding borrowings, no aluminum swap contracts, and a $3.00 per share cash dividend declared post-period - The company maintains unsecured revolving credit facilities aggregating $100 million, with no borrowings outstanding as of October 30, 2021. $97.5 million was available for borrowing[28] - The company periodically uses aluminum swap contracts as cash flow hedges to mitigate exposure to aluminum can cost changes. No such contracts were outstanding as of October 30, 2021[33][34] - On December 2, 2021, the board of directors declared a cash dividend of $3.00 per share, totaling approximately $280 million, payable by February 11, 2022[39] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial performance, highlighting sales growth from pricing, margin pressure from increased costs, and the company's strong liquidity and capital resources, including a significant upcoming dividend Overview National Beverage Corp. focuses on developing healthier sparkling waters, juices, and energy drinks, employing unique flavors and innovative marketing to target health-conscious consumers in North America - The company's strategy focuses on developing healthier beverages, unique flavor development, and innovative marketing to appeal to 'crossover consumers' seeking alternatives to sugary drinks[42] - The brand portfolio is divided into Power+ Brands (LaCroix, Clear Fruit, Rip It) and carbonated soft drinks (Shasta, Faygo)[43] Results of Operations Net sales increased for both three and six-month periods due to higher pricing, but gross margins declined as increased packaging, ingredient, and freight costs outpaced price increases, while SG&A also rose Three Months Ended October 30, 2021 | Metric | Q2 FY2022 | Q2 FY2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $283.2M | $271.8M | +4.2% | | Gross Profit | $101.5M | $108.0M | -6.0% | | Gross Margin | 35.8% | 39.8% | -4.0 ppt | Six Months Ended October 30, 2021 | Metric | Six Months FY2022 | Six Months FY2021 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $594.9M | $565.2M | +5.3% | | Gross Profit | $226.3M | $225.3M | +0.4% | | Gross Margin | 38.0% | 39.9% | -1.9 ppt | - The primary drivers for decreased gross profit and margins were increased costs for packaging, ingredients, and freight, along with supply chain disruptions affecting manufacturing efficiencies[47][52] Liquidity and Financial Condition The company maintains a strong financial condition with cash from operations as its primary liquidity source, working capital increasing to $310.7 million, no outstanding debt, and a $3.00 per share cash dividend declared post-quarter - Net cash from operating activities was $86.0 million for the first six months of fiscal 2022, a decrease from $110.9 million in the prior-year period[59] - Capital expenditures for the first six months of fiscal 2022 were $6.6 million, down from $10.4 million in the prior year[60] Working Capital and Current Ratio | Metric | Oct 30, 2021 | May 1, 2021 | | :--- | :--- | :--- | | Working Capital | $310.7M | $217.7M | | Current Ratio | 3.2 to 1 | 2.5 to 1 | Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risks have occurred since the disclosures in the Annual Report on Form 10-K for the fiscal year ended May 1, 2021 - There have been no material changes in market risks from those reported in the Annual Report on Form 10-K for the fiscal year ended May 1, 2021[62] Item 4. Controls and Procedures Management, including the CEO and Principal Financial Officer, concluded that disclosure controls and procedures were effective as of October 30, 2021, with no material changes to internal controls over financial reporting during the quarter - The Chief Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[63] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[64] PART II - OTHER INFORMATION Item 1A. Risk Factors No material changes in risk factors have occurred from those disclosed in the Annual Report on Form 10-K for the fiscal year ended May 1, 2021 - There have been no material changes in risk factors from those reported in the Annual Report on Form 10-K for the fiscal year ended May 1, 2021[69] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including Sarbanes-Oxley Act certifications from the CEO and Principal Financial Officer, and financial data files in iXBRL format - Exhibits filed include Sarbanes-Oxley Act certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and financial information formatted in iXBRL (Exhibit 101)[70] Signature Signature Details The Form 10-Q report was signed on December 9, 2021, by George R. Bracken, Executive Vice President – Finance and Principal Financial Officer of National Beverage Corp - The report was signed on December 9, 2021, by George R. Bracken, Executive Vice President – Finance (Principal Financial Officer)[72]