Portland, Ore. (November 5, 2014) – Craft Brew Alliance, Inc. (“CBA”) (Nasdaq: BREW), an independent craft brewing company, today announced that Mark D. Moreland, chief financial officer, will transition out of the CFO role effective December 31, 2014 and will assist the Company in a consultant capacity through the middle of 2015.
“During the past six years, Mark has played an instrumental role in helping evolve CBA to the healthy and growing company that we are today,” said Andy Thomas, chief executive officer, CBA. “From the initial merger between Widmer Brothers and Redhook, to the addition of Kona Brewing in 2010, and most recently, the expanded operations in Memphis, his leadership and financial expertise have been indispensable. On behalf of the entire company, I am deeply grateful for Mark’s many contributions, as well as his passion and commitment to CBA’s success during these years. We wish him the very best in his next endeavor.”
Mr. Moreland has served as the principal financial officer of the Company since 2008. He initially joined Widmer Brothers Brewing as CFO in April 2008 in preparation for the merger of Widmer Brothers and Redhook and has served as CBA’s chief financial officer since the merger in July 2008. Before joining the company, Mr. Moreland was Executive Vice President and Chief Financial Officer of Knowledge Learning Corporation and held various senior-level finance positions, including interim CFO, with Movie Gallery, Inc. and Hollywood Entertainment Corporation, which Movie Gallery acquired in 2005. Mr. Moreland received an MBA from the University of Michigan and a B.S. in Economics from the University of Texas at Arlington.
“I have been very fortunate to have had the opportunity to help CBA nearly double its revenue, while significantly improving its financial health over the last six years. I am confident CBA will continue to set itself apart in an increasingly competitive market,” said Moreland. “I look forward to helping the team continue to advance the company’s strategy in the first half of next year, and am also excited to pursue new opportunities in my professional career.”
Mr. Moreland will continue to direct the company’s finance organization through the end of the year. Beginning January 1, 2015, he will serve as a senior consultant to assist in the CFO transition through May 31, 2015. The Company is initiating the search for a new CFO and will make an announcement when an appointment is made.
3rd quarter financial results Portland, Ore. (November 5, 2014) – Craft Brew Alliance, Inc. (“CBA”) (Nasdaq: BREW), an independent craft brewing company, today reported its financial results for the third quarter ended September 30, 2014. The results for the third quarter are in line with management’s expectations, and the Company reconfirms previously tightened 2014 full year guidance as reported in a press release issued October 28. “Our third quarter results represent another deliberate step forward in CBA’s long-term quest to continue sustainably growing our topline while driving significant gross margin improvements,” said Andy Thomas, chief executive officer, CBA. “In fact, taking into account the Memphis start-up costs and the tough comparisons over last year’s third quarter, our gross margin rate was in line with our expectations and shows solid growth, allowing us to tighten and even accelerate our long-term gross margin guidance by a full year.” Significant third quarter and nine months ended financial highlights include:
- Depletion volume grew 6% from the third quarter in 2013, and 8% for the nine months ended compared to the same period last year, which is squarely within our tightened full year depletion growth estimate of 7-9%.
- Net sales and total beer shipments increased 6% and 4%, respectively, for the quarter. Nine months ended net sales and total beer shipments grew to 13% and 11%, respectively, over the same period of 2013.
- Our third quarter gross margin rate declined 200 basis points to 28.1% from the third quarter in 2013, primarily due to startup costs associated with the launch of Memphis operations. The impact of decreased production, as a result of using buffer stock brewed in the second quarter to cover any challenges as Memphis started up, and higher shipment costs represented approximately $1.4 million, or $840,000 after tax. This resulted in a negative impact on our gross margin of 270 basis points for the quarter.
- Our gross margin rate for the nine months ended September 30, 2014 improved 80 basis points to 29.5% over the same period of 2013, reflecting the improved operating efficiencies in our breweries during the first half of the year. The benefit from the improved efficiencies were partially offset in the third quarter by the additional costs related to initiating brewing in Memphis that, for the nine-month period ended September 30, 2014, totaled approximately $0.7 million, or $420,000 after tax, and had a negative impact on our gross margin of 50 basis points.
- As a percentage of net sales, our selling, general and administrative expense (“SG&A”) increased to 26% in the third quarter, compared to 24% for the third quarter of last year. SG&A growth of 12% to $40.8 million for the first nine months of 2014 reflects the planned increases in SG&A spending, primarily for Kona television advertising in select markets.
- Diluted earnings per share (“EPS”) for the third quarter were $0.03, compared to $0.10 for the third quarter last year. EPS for the nine months ended September 30, 2014 was $0.12 compared to $0.06 for the same period of 2013.
Components of anticipated 2014 financial results and developments Based
on year-to-date financial results in line with expectations, and the successful launch of Memphis, CBA tightened its full year 2014 guidance ranges and accelerated its long-range gross margin guidance by a full year:
- Depletion growth estimate of 7% to 9%.
- Average price increases of approximately 1.5%.
- Growth in contract brewing revenue of approximately 40%.
- Gross margin rate of 29% to 30%. As we continue to optimize our brewing locations and further leverage our Memphis operation, we expect a long-range guidance target of 35% in 2017.
- SG&A expense of $52 million to $53 million.
- Capital expenditures of approximately $16 million to $18 million.
“Our third quarter results are consistent with our expectations as reflected in our tightened full year guidance ranges, giving us further confidence in the long term,” said Chief Financial Officer Mark Moreland. “As we stated earlier in the year, quarterly volatility is to be expected given the challenging operating environment and increased competition in our market.”
In a separate press release issued today, CBA announced that Mark Moreland will be transitioning out of the role of chief financial officer at the end of the year. He will remain as a senior consultant to the company through the first half of 2015.
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