Craft Brew Alliance , Inc. (“CB A ”) (Nasdaq: BREW), an independent craft brewing company, reported net sales of $127.4 million and net income of $2.2 million for the nine months ended September 30, 2012, as compared with net sales of $114.3 million and net income of $9.4 million a year ago, which included an after-tax gain of $6.5 million from the sale of our minority interest in Fulton Street Brewery, LLC (“FSB”). Earnings per share (“EPS”) on a fully diluted basis for the year-to-date period were $0.12 as compared with $0.50 for the same period last year, which included $0.34 from the FSB sale.
Significant year-to-date highlights include:
- Net sales increased $13.1 million, or 11%, to $127.4 million versus last year
- Total beer shipments increased 6%, while depletions grew 5% for the period
- Gross profit percentage of 30.4% as compared to 31.0% last year
- Cash provided by operations increased to $10.0 million for the period compared to $5.0 million last year
- Introduction of Omission beer, the first craft beer brand in the United States focused exclusively on brewing great tasting traditional craft beers that are specially crafted to remove gluten
- Introduction of Kona Big Wave Golden Ale to the mainland, previously only available in Hawaii
- Introduction of two brands in 12-ounce aluminum cans
- Revised full year guidance calls for depletion growth of 6-8% and revenue growth of 11-13% with fully diluted EPS guidance of $0.12-$0.17
“We are pleased with the progress of our portfolio strategy and are looking forward to a strong 4 th quarter,” said Terry Michaelson, CB A ’s CEO. “While we had anticipated better financial performance during the third quarter, we feel strongly about our unique and advantaged strategy in the craft beer segment. Heading into the remainder of 2012, we are very encouraged by the current industry off-premise data which shows our Kona and Redhook brand families to be outpacing a number of our large craft beer competitors.”
Financial OutlookBased on year-to-date and anticipated future performance levels, we are updating components of our 2012 guidance as follows. Full year selling, general and administrative (“SG&A”) and capital expenditure guidance remains unchanged.
- Depletion growth estimate of 6% to 8%, reflecting the continued strength of the Kona, Redhook and Omission brands offset by softness in the Widmer Brothers brand. Previous guidance was 8% to 10%.
- Sales growth of approximately 11% to 13%. Previous guidance was 13% to 15%.
- Gross margin rate of minus 50 basis points to flat versus last year, reflecting brewery productivity and positive product mix offset by pressure from grain prices and distribution costs. Previous guidance was flat to plus 50 basis points.
- SG&A expense ranging from $43 million to $45 million, reflecting continued investment in sales and marketing initiatives. No change from previous guidance.
- Diluted EPS in the range of $0.12 to $0.17. Previous guidance was $0.20 to $0.25.
- Capital expenditures of approximately $8.5 million to $9.5 million, continuing our investments in capacity and efficiency improvements, and quality initiatives. No change from previous guidance.
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