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10-Q - FORM 10-Q - CRAFT BREW ALLIANCE, INC. | v56609e10vq.htm |
EX-31.1 - EX-31.1 - CRAFT BREW ALLIANCE, INC. | v56609exv31w1.htm |
EX-10.1 - EX-10.1 - CRAFT BREW ALLIANCE, INC. | v56609exv10w1.htm |
EX-10.5 - EX-10.5 - CRAFT BREW ALLIANCE, INC. | v56609exv10w5.htm |
EX-10.4 - EX-10.4 - CRAFT BREW ALLIANCE, INC. | v56609exv10w4.htm |
EX-10.3 - EX-10.3 - CRAFT BREW ALLIANCE, INC. | v56609exv10w3.htm |
EX-10.2 - EX-10.2 - CRAFT BREW ALLIANCE, INC. | v56609exv10w2.htm |
EX-31.2 - EX-31.2 - CRAFT BREW ALLIANCE, INC. | v56609exv31w2.htm |
EX-32.1 - EX-32.1 - CRAFT BREW ALLIANCE, INC. | v56609exv32w1.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
CRAFT BREWERS ALLIANCE
REPORTS SECOND QUARTER 2010 RESULTS
REPORTS SECOND QUARTER 2010 RESULTS
Award-Winning Craft Brewer Increases Operating Income by 14 Percent;
Sees Gross Margin Improvement of Three Percentage Points
Sees Gross Margin Improvement of Three Percentage Points
Portland,
Ore. (August 13, 2010) Craft Brewers Alliance, Inc. (CBA) (Nasdaq: HOOK), an
independent craft brewing company, reported net sales for the second quarter of 2010 of $37.2
million, reflecting growth of four percent as compared to the second quarter of 2009. Operating
income grew 14 percent to $2.9 million as compared to $2.5 million in the second quarter of 2009.
Significant financial highlights for the second quarter of 2010 and recent developments include:
| Operating profit increased by 14 percent | ||
| Gross margin improved by three percentage points | ||
| Total shipments increased by five percent to 170,900 barrels | ||
| Year-to-date cash flow from operations grew 146 percent, driving a 22 percent reduction in total debt | ||
| Favorable modification to CBAs primary loan agreement was executed. | ||
| Company announces merger with Kona Brewing Co., Inc. |
CBA
generated net income of $1.7 million, or $0.10 basic and diluted
per share in the second quarter of 2010, equaling last years record net
income and earnings per share performance. The 2009 results were bolstered by the positive impact of reversal of a tax
valuation allowance. Excluding the valuation allowance reversals on deferred tax assets, the
adjusted earnings per share would have been $0.08 for the second quarter of 2009 compared with
$0.10 for same quarter of 2010.
We are delighted that we continued to generate strong sales, earnings and cash flow improvements
over last year. We remain committed to our strategy of targeting our most profitable markets with
exceptional brands and in-market execution, said Terry Michaelson, CBAs CEO. We believe that
our portfolio of brands uniquely positions us in the craft beer segment. We will continue to
increase our sales and marketing investment toward further enhancing our brands, which we believe
will drive profitable market share growth.
Operating Results
CBAs operating profit for the second quarter of 2010 was $2.9 million, a $355,000 increase, or 14
percent, from $2.5 million for the second quarter a year ago. The increase in operating profit was
due primarily to improved margin of three percentage points and a reduction of merger-related
Craft Brewers Alliance Reports Second Quarter 2010 Results
|
Page 2 of 3 |
expenses, partially offset by an increase in selling, general and administrative expense for the
2010 period.
Total shipments for the quarter were 170,900 barrels, a five percent increase over last year,
reflecting strength in the Kona brand and growth in the companys contract brewing business.
Depletion growth for the second quarter was one percent.
Cost of sales at $26.8 million for the second quarter was flat with last year despite the increase
in total product shipments, resulting in 17 percent improvement in gross margin. CBA experienced
cost decreases in its core production inputs, raw materials and packaging materials, cooperage
costs and depreciation. The average revenue per barrel increased by two percent for shipments of
beer through the A-B distribution network from the second quarter of 2009 to the second quarter of
this year.
Selling, general and administration expense for the second quarter of 2010 increased 21 percent to
$7.6 million from $6.3 million for the second quarter of 2009. The increase was primarily due to a
significant increase in sales and marketing costs, principally promotions, festivals, sampling and
sponsorship activity, point of sale and related trade merchandise.
With our continued solid financial performance, we have been able to create a business platform
that not only provides for our current operating and capital requirements, but allows us to make
longer-term investments in brand development, sales and marketing expenditures, said Mark
Moreland, CBAs CFO. These investments will strengthen our brands to drive revenue, income and
cash flow growth over the long term.
Cash Flow and Liquidity
Year-to-date
cash provided by operating activities improved 146 percent to $6.8 million from $2.8
million for the six months ended 2009. CBA utilized the cash provided by operations for the six
months ended June 30, 2010, primarily to pay down its borrowing under its line of credit and to
fund its capital expenditures for the period. CBAs debt as a percentage of total capitalization
(total debt and common stockholders equity) was 20 percent and 25 percent at June 30, 2010 and
December 31, 2009, respectively.
At June 30, 2010, CBA had $1.3 million outstanding under its line of credit with $13.7 million of
availability for further cash borrowing or issuance of letters of credit. As of June 30, 2010,
available liquidity was $14.5 million, comprised of accessible cash and cash equivalents and
further borrowing capacity.
Modification to Loan Agreement
CBA and its lender executed a modification to its loan agreement effective June 1, 2010 as a result
of the improvement in CBAs financial position. The significant provisions of the amendment were to
reduce the marginal rates for borrowings under the loan agreement, reduce the quarterly fees on the
unused portion of the line of credit, and eliminate certain of the requirements associated with its
financial covenants and monthly reporting packages.
Merger with Kona Brewing Co., Inc.
Craft Brewers Alliance Reports Second Quarter 2010 Results
|
Page 3 of 3 |
On August 3, 2010, CBA announced that it entered into a merger agreement that will strengthen a
nine-year partnership with Kona Brewing Co. (Kona). As a result of the merger agreement, Kona will
become a wholly owned subsidiary of CBA and have the opportunity to expand its brand and
distribution while maintaining its craft brewery operations in Hawaii.
Forward-Looking Statements
Statements made in this press release that state the Companys or managements intentions, hopes,
beliefs, expectations or predictions of the future are forward-looking statements. It is important
to note that the Companys actual results could differ materially from those projected in such
forward-looking statements. Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking statements is contained from time to
time in the Companys SEC filings, including, but not limited to, the Companys report on Form 10-Q
for the quarter ended June 30, 2010. Copies of these documents may be found on the Companys
website, www.craftbrewers.com, or obtained by contacting the Company or the SEC.
About Craft Brewers Alliance
Craft Brewers Alliance operates the Widmer Brothers brewery in Portland, Ore., and Redhook
breweries in Woodinville, Wash., and Portsmouth, N.H. The company distributes its award-winning
brews and those of Kona and Goose Island throughout the U.S. via a network of wholesale
distributors. Redhook, at the forefront of the domestic craft brewing segment since its formation
in 1981, is widely recognized for brewing excellence at domestic and international brewing
competitions. Widmer Brothers, founded by brothers Kurt and Rob Widmer in 1984, was among the first
to introduce U.S. consumers to the American wheat beer style largely through the popularity of its
award-winning flagship beer, Widmer Hefeweizen, an unfiltered wheat beer typically served with a
lemon. For more information, visit www.craftbrewers.com.
Media Contact:
|
Investor Contact: | |
Ted Lane
|
Patrick Green | |
LANE PR
|
(503) 331-7275 | |
(503)
546-7891 Ted@lanepr.com |
Patrick.green@craftbrewers.com |
###
Craft Brewers Alliance, Inc.
Condensed Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Condensed Statements of Operations
(in thousands, except per share amounts)
(Unaudited)
Three Months | Six Months | |||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Sales |
$ | 39,645 | $ | 37,959 | $ | 68,967 | $ | 67,680 | ||||||||
Less excise taxes |
2,406 | 2,323 | 4,276 | 4,306 | ||||||||||||
Net sales |
37,239 | 35,636 | 64,691 | 63,374 | ||||||||||||
Cost of sales |
26,841 | 26,766 | 47,446 | 49,247 | ||||||||||||
Gross profit |
10,398 | 8,870 | 17,245 | 14,127 | ||||||||||||
27.9 | % | 24.9 | % | 26.7 | % | 22.3 | % | |||||||||
Selling, general and administrative expenses |
7,545 | 6,259 | 13,750 | 12,026 | ||||||||||||
Merger-related expenses |
| 113 | | 225 | ||||||||||||
Operating income |
2,853 | 2,498 | 3,495 | 1,876 | ||||||||||||
Interest expense |
(409 | ) | (571 | ) | (808 | ) | (1,137 | ) | ||||||||
Income from equity investments, interest and other, net |
413 | 178 | 551 | 298 | ||||||||||||
Income before income taxes |
2,857 | 2,105 | 3,238 | 1,037 | ||||||||||||
Income tax provision |
1,123 | 366 | 1,295 | 373 | ||||||||||||
Net income |
$ | 1,734 | $ | 1,739 | $ | 1,943 | $ | 664 | ||||||||
Earnings per share: |
||||||||||||||||
Basic and diluted earnings per share |
$ | 0.10 | $ | 0.10 | $ | 0.11 | $ | 0.04 | ||||||||
Weighted average shares outstanding: |
||||||||||||||||
Basic |
17,084 | 16,967 | 17,079 | 16,957 | ||||||||||||
Diluted |
17,131 | 16,991 | 17,113 | 16,962 |
Craft Brewers Alliance, Inc.
Condensed Balance Sheets
(in thousands)
(Unaudited)
Condensed Balance Sheets
(in thousands)
(Unaudited)
June 30, | ||||||||
2010 | 2009 | |||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 11 | $ | 247 | ||||
Accounts receivable, net |
15,544 | 12,996 | ||||||
Inventories |
9,242 | 10,769 | ||||||
Deferred income tax asset, net |
991 | 909 | ||||||
Other current assets |
2,208 | 5,107 | ||||||
Total current assets |
27,996 | 30,028 | ||||||
Property, equipment and leasehold improvements, net |
95,221 | 100,161 | ||||||
Intangible and other non-current assets, net |
18,907 | 18,535 | ||||||
Total assets |
$ | 142,124 | $ | 148,724 | ||||
Current liabilities: |
||||||||
Accounts payable |
$ | 18,676 | $ | 16,574 | ||||
Accrued salaries, wages, severance and payroll taxes |
3,321 | 3,305 | ||||||
Refundable deposits |
5,854 | 6,610 | ||||||
Other accrued expenses |
1,948 | 1,460 | ||||||
Current portion of long-term debt and capital lease obligations |
1,526 | 1,438 | ||||||
Total current liabilities |
31,325 | 29,387 | ||||||
Long-term debt and capital lease obligations, net |
18,774 | 30,570 | ||||||
Other long-term liabilities |
9,461 | 8,532 | ||||||
Total common stockholders equity |
82,564 | 80,235 | ||||||
Total liabilities and common
stockholders equity |
$ | 142,124 | $ | 148,724 | ||||
Craft Brewers Alliance, Inc.
Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
Six Months | ||||||||
Ended June 30, | ||||||||
2010 | 2009 | |||||||
Cash Flows From Operating Activities: |
||||||||
Net income |
$ | 1,943 | $ | 664 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
3,589 | 3,700 | ||||||
Income from equity investments |
(424 | ) | (128 | ) | ||||
Deferred income taxes |
1,109 | 362 | ||||||
Other, including provision for inventory obsolescence |
331 | 132 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(4,397 | ) | (532 | ) | ||||
Inventories |
(257 | ) | (1,385 | ) | ||||
Income tax receivable and other current assets |
1,713 | (274 | ) | |||||
Other assets |
39 | 40 | ||||||
Accounts payable and other accrued expenses |
4,816 | 641 | ||||||
Accrued salaries, wages, severance and payroll taxes |
(1,111 | ) | (92 | ) | ||||
Refundable deposits |
(538 | ) | (355 | ) | ||||
Net cash provided by operating activities |
6,813 | 2,773 | ||||||
Cash Flows from Investing Activities: |
||||||||
Expenditures for property, equipment and leasehold improvements |
(1,090 | ) | (1,431 | ) | ||||
Proceeds from sale of property, equipment and leasehold improvements and other |
85 | 28 | ||||||
Net cash used in investing activities |
(1,005 | ) | (1,403 | ) | ||||
Cash Flows from Financing Activities: |
||||||||
Principal payments on debt and capital lease obligations |
(731 | ) | (687 | ) | ||||
Net repayments under revolving line of credit |
(5,100 | ) | (500 | ) | ||||
Issuance of common stock |
23 | 53 | ||||||
Net cash used in financing activities |
(5,808 | ) | (1,134 | ) | ||||
Increase in cash and cash equivalents |
| 236 | ||||||
Cash and cash equivalents,
beginning of period |
11 | 11 | ||||||
Cash and cash equivalents, end of period |
$ | 11 | $ | 247 | ||||