E-Malt.com News article: USA, OR: Craft Brew Alliance announces third quarter results

Craft Brew Alliance, Inc. (“CBA”), an independent craft brewing company, reported its financial results for the third quarter ended September 30, 2014, brewbound.com reported on November, 5.

The results for the third quarter are in line with management’s expectations, and the Company reconfirms previously tightened 2014 full year guidance as reported in a press release issued October 28.

“Our third quarter results represent another deliberate step forward in CBA’s long-term quest to continue sustainably growing our topline while driving significant gross margin improvements,” said Andy Thomas, chief executive officer, CBA. “In fact, taking into account the Memphis start-up costs and the tough comparisons over last year’s third quarter, our gross margin rate was in line with our expectations and shows solid growth, allowing us to tighten and even accelerate our long-term gross margin guidance by a full year.”

Depletion volume grew 6% from the third quarter in 2013, and 8% for the nine months ended compared to the same period last year, which is squarely within company’s tightened full year depletion growth estimate of 7-9.

Net sales and total beer shipments increased 6% and 4%, respectively, for the quarter. Nine months ended net sales and total beer shipments grew to 13% and 11%, respectively, over the same period of 2013.

Third quarter gross margin rate declined 200 basis points to 28.1% from the third quarter in 2013, primarily due to startup costs associated with the launch of Memphis operations. The impact of decreased production, as a result of using buffer stock brewed in the second quarter to cover any challenges as Memphis started up, and higher shipment costs represented approximately $1.4 mln, or $840,000 after tax. This resulted in a negative impact on gross margin of 270 basis points for the quarter.

Gross margin rate for the nine months ended September 30, 2014 improved 80 basis points to 29.5% over the same period of 2013, reflecting the improved operating efficiencies in company’s breweries during the first half of the year. The benefit from the improved efficiencies were partially offset in the third quarter by the additional costs related to initiating brewing in Memphis that, for the nine-month period ended September 30, 2014, totalled approximately $0.7 mln, or $420,000 after tax, and had a negative impact on gross margin of 50 basis points.

As a percentage of net sales, selling, general and administrative expense (“SG&A”) increased to 26% in the third quarter, compared to 24% for the third quarter of last year. SG&A growth of 12% to $40.8 mln for the first nine months of 2014 reflects the planned increases in SG&A spending, primarily for Kona television advertising in select markets.

Diluted earnings per share (“EPS”) for the third quarter were $0.03, compared to $0.10 for the third quarter last year. EPS for the nine months ended September 30, 2014 was $0.12 compared to $0.06 for the same period of 2013.

“Our third quarter results are consistent with our expectations as reflected in our tightened full year guidance ranges, giving us further confidence in the long term,” said Chief Financial Officer Mark Moreland. “As we stated earlier in the year, quarterly volatility is to be expected given the challenging operating environment and increased competition in our market.”



07 November, 2014