10-K: National Beverage Corp. Reports Fiscal Year 2024 Results, Announces Special Dividend

National Beverage Corp. announces a 1.6% increase in net sales for fiscal year 2024 and declares a special cash dividend of $3.25 per share.

Summary

• National Beverage Corp.'s net sales for fiscal year 2024 increased by 1.6% to $1,191.7 million, compared to $1,172.9 million in fiscal year 2023.
• The increase in sales was driven by a 1.8% increase in the average selling price per case, partially offset by a 0.2% decline in case volume.
• Gross profit for fiscal year 2024 increased to $428.5 million, compared to $396.8 million in fiscal year 2023, primarily due to increased average selling prices and lower packaging costs.
• The gross margin increased to 36.0% from 33.8% in the previous year.
• Selling, general, and administrative expenses decreased slightly to $209.9 million.
• Net income for fiscal year 2024 was $176.7 million, compared to $142.1 million for fiscal year 2023.
• Earnings per share were $1.89 basic and diluted.
• The company's cash position increased by $169.0 million.
• On June 12, 2024, the board of directors declared a special cash dividend of $3.25 per share, payable on or before July 24, 2024, to shareholders of record on June 24, 2024.
• The company identified corrections required to be made to its consolidated statements of cash flows for Fiscal 2023 and Fiscal 2022 and all quarterly periods within each of the three year period ended April 27, 2024, as the controls did not operate at a level precise enough to detect errors in certain calculations within the Consolidated Statements of Cash Flows and the presentation of right-of-use assets obtained in exchange for lease liabilities as supplemental non-cash items.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to increased sales and gross profit, along with the special dividend announcement. However, the identified material weakness in internal controls tempers the overall positive outlook.

Positives

• Net sales increased by 1.6% year-over-year.
• Gross profit increased due to higher average selling prices and lower packaging costs.
• Gross margin improved to 36.0%.
• The company declared a special cash dividend of $3.25 per share.
• The company's cash position significantly increased by $169.0 million.
• Annual inventory turns increased to 8.6 times from 7.9 times.

Negatives

• Case volume declined slightly by 0.2%.
• The company identified a material weakness in internal financial reporting controls over the review of the Consolidated Statements of Cash Flows, including operating lease disclosures and presentation at January 27, 2024, October 28, 2023 and July 29, 2023, and for Fiscal 2023, Fiscal 2022.

Risks

• The company acknowledges risks related to brand image, competition, customer relationships, raw material and energy costs, governmental regulation, employee wages and benefits, unfavorable weather conditions, dependence on key personnel, cyber incidents, and material weaknesses in internal control over financial reporting.
• The company identified a material weakness in internal financial reporting controls over the review of the Consolidated Statements of Cash Flows, including operating lease disclosures and presentation at January 27, 2024, October 28, 2023 and July 29, 2023, and for Fiscal 2023, Fiscal 2022.

Future Outlook

The company intends to continue capital projects to expand capacity, enhance sustainability and packaging capabilities, and improve efficiencies at production facilities, with anticipated capital expenditures in Fiscal 2025 comparable to Fiscal 2024.

Management Comments

• National Beverage Corp., in recent years, has transformed into an innovative, healthier refreshment company.
• From our corporate philosophy, development of products and marketing to manufacturing, we are converting consumers to a Better for You thirst quencher that compassionately cares for their nutritional health.
• We are committed to our quest to innovate for the joy, benefit and enjoyment of our consumers healthier lifestyle.

Industry Context

The beverage industry is highly competitive, with National Beverage Corp. competing against larger companies like Nestl S.A., PepsiCo, and The Coca-Cola Company. The company differentiates itself through innovation, brand recognition, social media, flavor variety, packaging, and efficient distribution.

Comparison to Industry Standards

• It's difficult to directly compare National Beverage Corp.'s performance without specific competitor data for the same period.
• However, the company's focus on healthier beverages aligns with a broader industry trend.
• Gross margin of 36% is competative with other beverage companies.
• Keurig Dr Pepper reported a gross margin of 55.4% in Q1 2024, while Coca-Cola reported a gross profit margin of 61.4% in Q1 2024.
• PepsiCo's Q1 2024 gross margin was 55.4%.

Corporate Governance

Legal Proceedings

• The Company has been named in certain legal proceedings, including those containing class action allegations.
• The Company is vigorously defending all legal proceedings and believes litigation will not have a material adverse effect on the Company's financial position, cash flows or results of operations.

Related Party Transactions

• The company is party to a management agreement with Corporate Management Advisors, Inc. (CMA), a corporation owned by the Chairman and Chief Executive Officer.
• We incurred management fees to CMA of $11.9 million, $11.7 million and $11.4 million for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.

Stakeholder Impact

• Shareholders will receive a special cash dividend of $3.25 per share.
• Employees may be affected by changes in internal control procedures.
• The company's focus on sustainability may positively impact the environment and local communities.

Next Steps

• The company intends to continue capital projects to expand capacity, enhance sustainability and packaging capabilities, and improve efficiencies at production facilities.
• The company will continue to monitor the applicable controls for a sufficient period of time to determine that these controls are operating effectively.

Key Dates

Keywords

National Beverage Corp, LaCroix, Net Sales, Gross Profit, Special Dividend, Financial Results, Sparkling Water, Beverage Industry