E-Malt.com News article: USA, OR: Craft Brew Alliance net sales increase by 12% in the first half of this year

Craft Brew Alliance reported net sales of $82.8 mln and net income of $1.3 mln for the six months ended June 30, 2012, as compared with net sales of $73.8 mln and net income of $8.2 mln a year ago, which included an after-tax gain of $6.5 mln from the sale of its minority interest in Fulton Street Brewery, LLC (“FSB”), beerpulse.com reported on August, 9.

Earnings per share on a fully diluted basis for the year-to-date period were $0.07 as compared with $0.43 for the same period last year, which included $0.34 earnings per share from the FSB sale.

“While we would have preferred second quarter depletion growth above 3%, the result was in keeping with our expectations of quarterly volatility as we grow on a geographic and brand basis. We remain confident that our core strategy provides a compelling platform for long term-growth,” said Terry Michaelson, CBA’s CEO.

“We have a model that is unique to the craft beer segment and provides unparalleled benefits that include four distinct authentic craft-beer brands, bi-coastal brewing capabilities, an established national sales and marketing footprint with seamless distribution, and pubs to interact intimately with customers. As we continue to grow our brands on a national basis, we expect to experience volatility in our results from quarter-to-quarter. Our year-to-date results demonstrate the ongoing success of our strategy while the standalone quarter, when compared with the second quarter of 2011, demonstrates the volatility. We are confident that we will deliver long-term profit growth for our shareholders by continuing to invest in the underlying strengths of our brands.”

Net sales for the six months ended June 30, 2012 were $82.8 mln, an increase of $9.0 mln, or 12%, from net sales of $73.8 mln for the same period of 2011. A combination of factors drove the increase, including increased shipments, a decrease in master distributor fees, price increases for the beers sold to wholesalers and an increase in revenues earned from the pubs.

Net sales for the quarter ended June 30, 2012 were $44.3 mln, an increase of $2.8 mln, or 7%, from net sales of $41.5 mln for the same quarter last year, primarily as a result of a decrease in master distributor fees, price increases for the beers sold to wholesalers and an increase in revenues earned from the pubs. Net income for the quarter ended June 30, 2012 was $0.6 mln, or $0.03 per diluted share. This was a decrease of $7.6 mln from the net income of $8.2 mln, or $0.43 per diluted share, for the same quarter in 2011, primarily as a result of the $6.5 mln net-of-tax gain, or $0.34 per diluted share, on the sale of FSB.

Total shipments for the six-month period ended June 30, 2012 grew 6% to 360,400 barrels, an increase of 21,400 barrels, from 339,000 barrels for the same period of 2011, primarily reflecting the increase in shipments to wholesalers and growth in the contract brewing business. Total shipments for the quarter were basically flat from last year primarily as a result of significant programing timing variances, opportunities to align pricing in certain markets, and increasing competition for on-premise sales.

Cost of sales as a percentage of net sales declined 48 basis points for the six months ended June 30, 2012, reflecting increased distribution and grain costs in the first six months of 2012 as compared with the same period of 2011. These unfavorable factors were partially offset by decreased distributor fees and increased selling prices for the beers. Overall, gross margin rate is trending ahead of the full year guidance of negative 100 basis points versus last year.

SG&A expense of $22.6 mln for the six-month period ended June 30, 2012 increased $2.6 mln, or 13%, from $20.0 mln for the same period of 2011. This increase reflects company’s investment in selling and marketing initiatives, higher benefits costs and the absence in 2012 of a reimbursement for legal fees received in 2011.

“Our year-to-date 6% shipment growth and 12% revenue growth, in contrast to the quarterly results, demonstrates that while the business remains healthy, it will also exhibit some quarterly volatility as we grow,” said Mark Moreland, CBA’s CFO. “Underscoring our confidence in the business’ performance, we are reaffirming our full year EPS guidance of $0.20 to $0.25 and increasing revenue guidance to a growth rate of 13% to 15%. We continue to invest in our brands and sales capabilities and expect those investments to generate sustained long-term revenue and profit growth.”

Company’s cash and cash equivalent balance was $5.4 mln, an increase of $4.6 mln for the year-to-date. Cash provided by operating activities was $9.1 mln for the six months ended June 30, 2012 compared with $3.6 mln for the same period of 2011. The $5.5 mln increase was primarily due to improved working capital. Capital expenditures for the six-month periods ended June 30, 2012 and 2011 were $4.6 mln and $3.7 mln, respectively. Capital expenditures in both periods included projects designed to increase the capacity and improve efficiency.

CBA is an independent, publicly traded craft brewing company that was formed with 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 August, 2012