E-Malt.com News article: USA, OR: Craft Brew Alliance announces first quarter 2013 financial results

Craft Brew Alliance, Inc. (“CBA”) reported on May, 8 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.

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 the company’s 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 supply chain processes to better align with the seasonality of sales, which impacted 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 mln inclusive of both continued investment in the company’s portfolio strategy and approximately $0.5 mln in costs associated with reorganizing 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 reorganization costs.

Capital additions of approximately $2.4 mln, reflecting updating of 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.”

“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.”

Developments and expectations for 2013 include: confidence in the continued growth in sales of Kona, Redhook and Omission, and clear positioning of Widmer Brothers offerings; expansion into new geographic markets for Kona and international expansion for all brand families; updates to packaging across all brand families, as well as introduction of unique can and bottle offerings; refined messaging on Omission beers, promoting the beer as specially crafted to remove gluten; exploration and introduction of new brands to the CBA portfolio including the new Redhook brand Game Changer developed in collaboration with Buffalo Wild Wings and introduction of the Square Mile cider brand; and continued development of cross brand packages, bringing the power of our portfolio to consumers in real and compelling ways.

CBA is an independent, publicly traded craft brewing company that was formed through the merger of leading Pacific Northwest craft brewers – Widmer Brothers Brewing and Redhook Ale Brewery – in 2008. With an eye toward preserving and growing one-of-a-kind craft beers and brands, CBA was joined by Kona Brewing Company in 2010. Craft Brew Alliance launched Omission beer in 2012.


15 May, 2013