E-Malt.com News article: USA, OR: Craft Brew Alliance announces final financial results for last year

Craft Brew Alliance, Inc. (CBA), a leading craft brewing company, on March 4 announced final financial results for the fourth quarter and full year ended December 31, 2014, in line with preliminary results released February 5, 2015. The company also reconfirmed previously reported guidance for 2015, with a continued focus on driving sustained top line growth and strengthening its bottom line.

Highlights for the full year 2014

Net sales increased 12% over 2013 and exceeded $200 million for the first time in CBA’s history, reflecting continued momentum across its core brand families.

Shipments grew 10%, compared to 4% in 2013, reflecting increasing consumer demand in key markets and ongoing efforts to maintain optimum wholesaler inventory levels.

Full year Kona shipments grew 17%, Widmer Brothers shipments grew 6%, and Redhook shipments grew 3% over 2013.

Depletions grew 7%, compared to 11% in 2013, despite an approximate 25% reduction in SKUs.

Gross margin expanded by 130 basis points to 29.4% in 2014, compared to 28.1% in 2013, which highlights the brewery’s continued achievements in driving operational efficiencies and balancing production capabilities across its expanded brewing footprint in the U.S. as the company steers towards its long-term gross margin target of 35% in 2017.

Contract brewing and beer related sales increased by 33% over the prior year.

Selling, general and administrative expense (“SG&A”) grew by $6.5 million to $53.0 million, due to Kona television advertising, as well as higher-than-average costs related to employee benefits. At 26% of net sales, 2014 SG&A remained level with SG&A percentage of net sales in 2013.

Diluted earnings per share (“EPS”) increased to $0.16 compared to 2013 EPS of $0.10.

Capital expenditures were approximately $15.8 million, compared to $9.9 million in 2013, and primarily represent investments related to capacity, efficiency, and quality improvements, as well as a major investment in cooperage as part of its long-term gross margin focus.

Highlights for the fourth quarter 2014

Net sales and shipments grew 7% and 6%, respectively, over the fourth quarter in 2013, attributable to strong sales execution, as well as continued support from CBA’s national partners, wholesalers and retailers.

For the quarter, Kona shipments grew 9%; Widmer Brothers shipments grew 6%, with Hefe increasing 7% - its first increase in 16 quarters; and Redhook shipments grew 1%.

Depletions grew 2% in the fourth quarter, despite facing a tough comparable over the fourth quarter in 2013 and the planned rationalization of winter seasonals across the portfolio.

Fourth quarter gross margin increased by 280 basis points to 28.8%, compared to an atypical 100 basis point decrease for the fourth quarter last year. The fourth quarter 2014 gross margin expansion reflects ongoing focus on gross margin improvement and the benefit from the first full quarter of brewing in Memphis.

Fourth quarter SG&A expense was $12.2 million, an increase of 20% over the same period in 2013, primarily reflecting planned increases in in-market investments and unforeseen expenses related to previously referenced employee benefits costs.

EPS was $0.04 for both comparable quarters.

“I am extremely proud of the strong results we achieved in 2014, which are testament to the tremendous resolve and focus demonstrated by the CBA team,” said Andy Thomas, chief executive officer, CBA. “At the beginning of the year, we committed to driving continued and sustainable topline growth while reducing our SKUs by 25 percent, to expanding gross margin, and to bringing Memphis online by summer. Given that we accomplished each of these major priorities in an increasingly competitive market and during the first full year with the new executive leadership team in place, we are truly optimistic about the year ahead and our ability to achieve continued growth and long-term success.”

Anticipated financial highlights for 2015

Owned beer shipment growth between 6% and 8%. [Note: The company is adjusting its guidance in response to analyst feedback and to align with industry practices. It will not provide annual depletion guidance in financial press releases but will share actuals on analyst calls and in 10-K and 10-Q filings.]

Average price increase of 1% to 2%.

A growth of 10% to a decline of 10% in contract brewing revenue as the brewery continues to manage the most efficient use of its owned capacity.

Gross margin rate of 30.5% to 31.5%. Through ongoing efforts to optimize its brewing locations and improve its capacity utilization and efficiency, CBA continues to expect gross margin expansion to 35% in 2017.

SG&A expense ranging from $58 million to $62 million, primarily reflecting reinvestment into its sales and marketing infrastructure, as well as expanded consumer and trade programming.

Capital expenditures of approximately $17 million to $21 million, as CBA continues to make investments in quality, safety, sustainability, capacity and efficiency.


06 March, 2015