E-Malt.com News article: USA: Craft Brew Alliance reports 20% increase in Q1 net sales

Craft Brew Alliance, Inc. (CB(A)), an independent craft brewing company, on May 7 reported its financial results for the first quarter ended March 31, 2014. The results for the first quarter are in line with management's expectations, and the company confirms previously reported 2014 guidance, it said.

Net sales and total beer shipments increased 20% and 17%, respectively, in the first quarter due to the continued organic growth of the company’s complementary portfolio of time-tested and new beers such as Widmer Brothers Upheaval IPA, Redhook KCCO Black Lager, Kona Longboard Lager and Omission Beer.

Depletion volume grew 8% over the first quarter of 2013, which Craft Brewers Alliance attributes to the continued activation of its distinctive portfolio strategy.

The company’s gross margin rate increased 260 basis points to 27.0% in the first quarter, compared to 24.4% for the first quarter last year, which reflects the improved efficiencies of its breweries, primarily due to better capacity utilization, it said.

Capacity utilization increased to 68% in the first quarter of 2014 compared to 58% in the first quarter of 2013.

As a percentage of net sales, the brewery’s selling, general and administrative expense ("SG&A") decreased to 28% in the first quarter of 2014 from 32% in the first quarter of 2013, primarily due to the increase in its net sales.

Diluted loss per share for the first quarter of 2014 improved to $(0.01), compared to $(0.09) for the same period last year.

"Our solid first quarter performance is in line with our expectations and represents an important step forward as we continue to accelerate the power of CB(A) 's advantaged strategy," said Andy Thomas, Chief Executive Officer of CB(A) . "This past quarter is the first under the company's new executive leadership team, and the initial progress we made in continuing to grow revenue, synchronize our supply chain and increase our gross margin reflects the strong impact this team will make in the future."

Thomas continued, "In the first quarter, our double digit growth in net sales reflects the realization of a disciplined approach to our portfolio strategy, with particular momentum from Kona, Redhook and Omission. Widmer Brothers kicked off 30(th) Anniversary celebrations this year - becoming the second brand in our family to pass the 30-year mile marker. We believe that all of the anniversary activities planned throughout the year will lead to continued excitement and progress as Widmer Brothers enters its next chapter."

The company confirmed previously issued guidance regarding our anticipated full year 2014 results, as follows:

Depletion growth estimate of 7% to 11%, reflecting the continued strength of the Kona, Redhook and Omission brands and ongoing stabilization of the Widmer Brothers brand.

Average price increases of approximately 1% to 2%.

Growth in contract brewing revenue of 25% to 50% as a result of new partnerships.

Gross margin rate of 28.5% to 30.5%. “As we continue to optimize our brewing locations and improve our capacity utilization and efficiency, we expect our gross margin rate to expand 500-700 basis points over the next five years,” the company said.

SG&A expense of $52 million to $54 million, primarily reflecting reinvestment into sales and marketing infrastructure.

Capital expenditures of approximately $15 million to $20 million, continuing investments in capacity and efficiency improvements, quality initiatives and restaurant and retail.

"Our sales, margin and earnings performance for the quarter were consistent with our expectations and are consistent with our previously reported full year guidance," said Chief Financial Officer Mark Moreland. "While the favorable comparisons to last year are buoyed by last year's supply chain imbalances, we are pleased with this quarter's continued strength in our brands' depletions and our realization of brewery performance efficiencies. Lastly, with regards to the annual guidance, we will continue to focus on full-year estimates with the understanding that quarter-to-quarter performance will exhibit volatility."

CB(A) 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, CB(A) welcomed Kona Brewing Company in 2010, and then launched Omission beer in 2012 and Square Mile Cider Company in 2013.


09 May, 2014