E-Malt.com News article: USA, OR: Craft Brew Alliance reports full year 2011 results

Craft Brew Alliance, Inc., an independent craft brewing company, reported net sales of $149.2 mln and net income of $9.7 mln for the year ended December 31, 2011 as compared with net sales of $131.7 mln and net income of $1.7 mln a year ago, Marketwatch.com reported on March, 14.

Adjusted net income for 2011 was $3.2 mln, excluding the one-time gain on sale of Fulton Street Brewery, LLC ("FSB"), of $6.5 mln, net of tax. The company reported $0.51 earnings per share on a fully diluted basis for the year as compared with $0.10 per share last year. Adjusted earnings per share for 2011 were $0.17, excluding the one-time gain on sale of FSB of $0.34 per share.

"We are pleased to see our 2011 top and bottom line results reflect improvements in our business driven by our significant investments in our innovative portfolio of beers and our marketing and sales capabilities. Our primary focus remains to be true to our customers, by delivering the most diverse portfolio of high quality beers and brands in the industry, that provide unique beer experiences for all occasions," said Terry Michaelson, CBA's CEO. "While the full year results indicate that our strategy has gained traction with consumers, we believe that there are further underlying strengths in our brands and strategy that have yet to be realized and will drive long-term profitable growth."

Net sales for the year ended December 31, 2011 were $149.2 mln, an increase of $17.5 mln, or 13 percent, from net sales of $131.7 mln for 2010. A combination of factors drove the increase, including increased shipments to wholesalers, a decrease in master distributor fees, price increases for the beers sold to wholesalers and an increase in revenues earned from the restaurants and pubs following the merger with Kona Brewing Co., Inc. ("KBC Merger").

Total shipments for the year ended December 31, 2011 were 672,600 barrels, an increase of 64,800 barrels, or 11 percent, from 607,800 barrels for 2010, primarily reflecting the increase in shipments to wholesalers and growth in the contract brewing business. Shipments growth excluding contract shipments was 7 percent.

Cost of sales as a percentage of net sales improved 470 basis points for the year ended December 31, 2011, reflecting the increased volumes, decreased distributor fees, elimination of costs related to the Kona Brewing alternating proprietorship, improved quality and capacity utilization and an increased selling price for the company’s beers. These favorable factors were partially offset by increased shipping costs due to higher fuel prices in 2011 as compared with 2010.

Selling, general and administrative ("SG&A") expense of $39.7 mln for 2011 increased $9.8 mln, or 33 percent, from $29.9 mln for 2010. This increase reflects the investment in critical new selling and marketing initiatives that have led to sales and profit growth. The overall SG&A increase was also driven by costs related to the operations acquired in the KBC Merger. The company expects that the rate of increase in SG&A spending for 2012 will not be as significant as that seen during 2011.

"The full year 2011 results present a solid statement not only about our ability to drive brand development and sales capabilities, but also the CBA team's ability to balance aggressive top line growth and investment while controlling overall spending to generate improved profitability," said Mark Moreland, CBA's CFO. "We believe the current overall health of the business and our new marketing and sales initiatives will drive continued top and bottom line improvement for 2012."

Cash provided by operating activities was $6.7 mln for the year ended December 31, 2011 compared with $10.8 mln for 2010. The $4.1 mln decrease was primarily due to a one-time working capital fluctuation related to the sale of the company’s investment in Fulton Street Brewery in May 2011 and increased inventory levels resulting from anticipated increases in demand. Capital expenditures for the years ended December 31, 2011 and 2010 were $8.5 mln and $4.7 mln, respectively. The capital expenditures for 2011 included projects designed to enhance the ability to provide a variety of package options in order to target company’s core brand offerings in its breweries, and improve its quality assurance and information technology systems, including continuing investments towards a company-wide demand planning and order management system.

About Craft Brew Alliance

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. Kona Brewing was founded in 1994 by the father and son team of Cameron Healy and Spoon Khalsa.


16 March, 2012