From Craft Brew Alliance:
PORTLAND, OR.--(mbb)--Craft Brew Alliance, Inc., an independent craft brewing company, reported its financial results for the first quarter ended March 31, 2013 and confirmed 2013 guidance. CBA’s focus on building a national portfolio strategy has positioned the Company to expect strong sales and profit growth in 2013 and take advantage of the dynamic craft segment to achieve long-term value for its shareholders. The results for the first quarter ended March 31, 2013 were in line with management’s expectations, and the Company confirms 2013 guidance.
“First quarter results were in-line with our expectations, which included promising depletion growth and supply chain adjustments to better match production to the seasonality of our sales”
Significant financial highlights for the quarter ended March 31, 2013 include:
- Depletion volume growth of 5% compared to last year’s first quarter, reflecting the continued success of our portfolio strategy.
- As expected, a decrease in net sales and non-contract shipments of 4.9% and 3.3%, respectively, compared with the same quarter of 2012, as a result of optimizing our supply chain processes to better align with the seasonality of our sales, which impacted our brewing and shipping volumes during the quarter.
- Gross margin rate of 24.4%, a decline of 600 basis points from 2012 driven by lower shipment volume and lower capacity utilization.
- Selling, general and administrative expense (“SG&A”) of $11.8 million inclusive of both continued investment in our portfolio strategy and approximately $0.5 million in costs associated with reorganizing our sales and marketing group. Exclusive of reorganization costs, SG&A growth has moderated to 9% during the quarter.
- Loss per share of $(0.09) versus 2012 diluted earnings per share of $0.04; the $(0.09) loss per share in the first quarter of 2013 includes a $(0.02) net loss per share for our reorganization costs.
- Capital additions of approximately $2.4 million, reflecting updating of our pubs and continued investments in beer-related capacity, efficiency and quality initiatives.
“First quarter results were in-line with our expectations, which included promising depletion growth and supply chain adjustments to better match production to the seasonality of our sales,” said Terry Michaelson, CBA’s CEO. “Further, we are reconfirming that we expect meaningful growth in both revenue and earnings in 2013 resulting from the overall strength of our portfolio strategy, operating expense leverage and SG&A leverage. The next phase of our portfolio strategy is focused on leveraging our recent investments, brand momentum and breadth, together with geographic expansion to deliver improved sales and profit growth. We remain committed to delivering long-term value growth to our shareholders.”
Components of anticipated 2013 results and developments
We are confirming previously issued guidance regarding our anticipated full year 2013 results, as follows:
- Depletion growth estimate of 7% to 11%, reflecting the continued strength of the Kona, Redhook and Omission brands and further stabilization of the Widmer Brothers brand.
- Average price increases of approximately 1% to 2%.
- Contract brewing revenue for 2013 at approximately half of the 2012 level as a result of the termination of the Goose Island contract brewing arrangement.
- Gross margin rate of 28.5% to 30.5%, reflecting pressure from distribution and packaging component costs, partially offset by improved brewery productivity.
- SG&A expense of $47 million to $49 million, reflecting leverage from the foundation built by more aggressive spending in prior years.
- Capital expenditures of approximately $11 million to $13 million, continuing our investments in capacity and efficiency improvements, quality initiatives and restaurant and retail remodeling projects.
“As anticipated during the quarter, we experienced a marked difference between our depletion volume growth of 5%, which is the best indicator of consumer demand, and our non-contract shipments which declined by 3.3%,” said Mark Moreland, CBA’s CFO. “This imbalance during the quarter drove significantly lower margin rates and occurred as a result of our effort to optimize our supply chain processes to more closely align production with the seasonality of our beer sales. The reduction in both brewing and shipping volumes in the quarter is reflected in our lower capacity utilization of 58% versus 76% last year. Going forward, we expect a significantly closer relationship between depletions and shipments, which will drive materially improved financial performance for the full year.”
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