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E-Malt.com News article: USA: Craft Brew Alliance reports Q2 financial results
Brewery news

Craft Brew Alliance, Inc., an independent craft brewing company, on August 6 reported its financial results for the quarter ended June 30, 2014.

The results for the second quarter are in line with management's expectations, and the company confirms previously reported 2014 guidance, it said.

CBA's distinctive portfolio strategy continued to drive depletion growth in the second quarter, resulting in a 9% increase in depletions for the first half of 2014.

Increased demand for CBA's well-loved brands, including Kona Brewing, Redhook Brewery and Omission, and the introduction of new favorite beers, such as Redhook KCCO Black Lager, led to a 17% increase in net sales and a 15% increase in total beer shipments in the first six months.

The brewer’s gross margin rate increased by 230 basis points to 32.8% in the second quarter, which contributed to a 240 basis point increase and 30.3% gross margin rate year-to-date. CBA attributes the increase to significant advancements in its brewery efficiency and utilization and supply chain.

Year to date 2014 financial highlights

Depletion volume grew 9% over the first six months of 2013.

Net sales and total beer shipments grew 17% and 15%, respectively, in the six-month period ended June 30, 2014 compared to the first six months of 2013.

Gross margin rate increased 240 basis points to 30.3% over the comparable period in 2013.

Capacity utilization increased to 78% in the first half of 2014, compared to 68% in the first half of 2013.

As a percentage of net sales, the brewery’s selling, general and administrative expense ("SG&A") decreased to 27.1% in the six-month period ended June 30, 2014 from 28.9% in the same period of 2013, primarily due to the increase in its net sales.

Diluted earnings per share for the first six months of 2014 improved to $0.09, compared to a loss per share of $(0.04) for the same period last year.

Based on year-to-date financial results in line with expectations, CBA are confirming previously issued guidance regarding its anticipated full year 2014 results, as follows:

Depletion growth estimate of 7% to 11%, reflecting the continued strength of the Kona, Redhook and Omission brands and ongoing stabilization of the Widmer Brothers brand.

Average price increases of approximately 1% to 2%.

Growth in contract brewing revenue of 25% to 50% as a result of new partnerships.

Gross margin rate of 28.5% to 30.5%. “As we continue to optimize our brewing locations and improve our capacity utilization and efficiency, we expect our gross margin rate to expand 500-700 basis points over the next five years,” the company said.

SG&A expense of $52 million to $54 million, primarily reflecting reinvestment into the company’s sales and marketing infrastructure.

Capital expenditures of approximately $15 million to $20 million, continuing CBA’s investments in capacity and efficiency improvements, quality initiatives and restaurant and retail.

"We are pleased the business continues to generate strong sales and earnings trends consistent with our expectations and our full year guidance," said Chief Financial Officer Mark Moreland.

"While we still have work to do on our brewery and supply chain operations, we have made significant progress from last year's first half, which has positively impacted our performance. Looking forward, we continue to expect quarterly volatility in our results and will continue to focus on and provide guidance for our full-year performance."

CB(A) is an independent, publicly traded craft brewing company that was formed through 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, CB(A) welcomed Kona Brewing Company in 2010, and then launched Omission beer in 2012 and Square Mile Cider Company in 2013.

08 August, 2014

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