Craft Brew Alliance Announces First Quarter 2015 Results and Reconfirms 2015 Guidance

May. 6, 2015 4:01 pm

Craft Brew Alliance, Inc. (“CBA”) (Nasdaq:BREW), a leading craft brewing company, today reported its financial results for the first quarter ended March 31, 2015. The results for the first quarter are in line with management’s expectations, and the Company reconfirms previously reported 2015 guidance.

First quarter 2015 financial highlights include:

  • Depletion volume grew 1% over the first quarter of 2014, primarily due to the continued momentum for our core flagship brands, including Kona Longboard Lager, Widmer Brothers Hefeweizen, and Omission, our innovative craft beer brewed with traditional beer ingredients and specially crafted to remove gluten.
    • In our home markets of Hawaii, Oregon, and Washington, depletion volume grew 8% over the first quarter of 2014, which we attribute to the continued strategic focus on strengthening our core brands in their home states.
  • Net sales and total beer shipments decreased 5% and 8%, respectively, compared to the first quarter of 2014. The decreases reflect the higher-than-average sales and beer shipments reported in the first quarter of 2014 as we adjusted for out-of-stocks that challenged us in 2013.
    • As wholesaler depletions increased and shipments decreased in the first quarter, we lowered our wholesaler inventories, reflecting continued efforts to optimize wholesaler inventory levels.
  • Our beer gross margin rate increased 50 basis points to 29.7% in the first quarter, compared to 29.2% in the first quarter last year, due to increased pricing and lower distribution costs on a per barrel basis. The increase was partially offset by planned lower capacity utilization in our owned breweries as we fully integrated our Memphis operations. Our restaurant gross margin rate decreased by 350 basis points to 9.7%, compared to 13.2%, due to closures resulting from inclement weather during the first quarter and the closure of our Koko pub for a full remodel. As a result, our combined first quarter gross margin rate decreased 20 basis points to 26.8%, compared to 27.0% for the first quarter last year.
  • To address the wide variances in quarterly results and provide a more representative view into our financial performance, we are sharing trailing 12-month comparisons for the periods ended March 31, 2015 and March 31, 2014.
    • For those periods, our beer shipments increased 4%, depletions increased 5%, and net sales increased 6%.
    • Our beer gross margin expanded by 110 basis points to 31.9% and restaurant gross margin declined by 90 basis points to 12.6% for the same 12-month periods, for a combined gross margin expansion of 80 basis points to 29.3%, compared to 28.5%.
  • Owned capacity utilization decreased to 58% in the first quarter of 2015 compared to 68% in the first quarter of 2014, which reflects the addition of our brewing operations in Memphis, as well as continued efforts to balance and normalize inventories.
  • As a percentage of net sales, our selling, general and administrative expense (“SG&A”) increased to 31% in the first quarter of 2015 from 28% in the first quarter of 2014, primarily due to the decrease in our net sales.
  • Diluted loss per share for the first quarter of 2015 was $0.06, compared to $0.01 for the same period last year.

“Our first quarter net sales and shipments are in line with our internal plan and put us on track to deliver our full year guidance of 6% to 8% growth in shipment volume. While the first quarter was challenging, we made steady progress in key strategic areas, including 8% depletion growth in our brands’ home markets and 50 basis point improvement in our beer gross margins, reflecting strong underlying fundamentals,” said Andy Thomas, Chief Executive Officer, CBA. “We continue to believe that this momentum, coupled with the strategic investments in our home markets, will enable us to realize our vision for meaningful and sustained growth over the long term.”

Components of anticipated 2015 financial results and developments:

We are confirming previously issued guidance regarding our anticipated full year 2015 results, as follows:

  • Owned beer shipment growth between 6% and 8%. [Note: We are adjusting our guidance in response to analyst feedback and to align with industry practices. We will not provide annual depletion guidance in our financial press releases, but we will share actuals on analyst calls and in 10-K and 10-Q filings.]
  • Average price increase of 1% to 2%.
  • A range in contract brewing revenue, between growth of 10% to a decline of 10%, as we continue to manage the most efficient use of our owned capacity.
  • Gross margin rate of 30.5% to 31.5%. We continue to expect gross margin expansion to 35% in 2017, through ongoing efforts to optimize our brewing locations and improve our capacity utilization and efficiency.
  • SG&A expense ranging from $58 million to $62 million, primarily reflecting reinvestment into our sales and marketing infrastructure, as well as expanded consumer and trade programming.
  • Capital expenditures of approximately $17 million to $21 million, which will support the recently announced expansion project start-up costs, as well as continued investments in quality, safety, sustainability, capacity and efficiency.

Forward-Looking Statements

Statements made in this press release that state the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future, including shipments and sales growth, price increases, level of contract brewing revenue and gross margin rate improvement, the level or effect of SG&A expense and business development, the amount of capital spending, and the benefits or improvements to be realized from strategic initiatives and capital projects, are forward-looking statements. It is important to note that the Company’s 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 Company’s SEC filings, including, but not limited to, the Company’s report on Form 10-K for the year ended December 31, 2014. Copies of these documents may be found on the Company’s website,, or obtained by contacting the Company or the SEC.

About Craft Brew Alliance

CBA is a leading craft brewing company, which brews, brands and markets some of the world’s most respected and best-loved American craft beers.

The company is home to three of the earliest pioneers in craft beer: Redhook Ale Brewery, Washington’s largest craft brewery founded in 1981; Widmer Brothers Brewing, Oregon’s largest craft brewery founded in 1984; and Kona Brewing Company, Hawaii’s oldest and largest craft brewery founded in 1994. As part of Craft Brew Alliance, these craft brewing legends have expanded their reach across the U.S. and more than 15 international markets.

In addition to growing and nurturing distinctive brands rooted in local heritage, Craft Brew Alliance is committed to developing innovative new category leaders, such as Omission Beer, which is the #1 beer in the gluten free beer segment, and Square Mile Cider, a tribute to the early American settlers who purchased the first plots of land in the Pacific Northwest.

Publicly traded on NASDAQ under the ticker symbol BREW, Craft Brew Alliance is headquartered in Portland, OR and operates five breweries and five pub restaurants across the U.S. For more information about CBA and its brands, please visit

Craft Brew Alliance, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share amounts and shipments)
Three Months Ended
March 31,
  2015     2014  
Sales $ 44,619 $ 47,017
Less excise taxes   2,910     3,191  
Net sales 41,709 43,826
Cost of sales   30,547     31,986  
Gross profit 11,162 11,840
As percentage of net sales 26.8 % 27.0 %
Selling, general and administrative expenses   12,953     12,062  
Operating loss (1,791 ) (222 )
Interest expense (121 ) (101 )
Other income (expense), net   6     (6 )
Loss before income taxes (1,906 ) (329 )
Income tax benefit   (743 )   (128 )
Net loss $ (1,163 ) $ (201 )
Loss per share:
Basic and diluted net loss per share $ (0.06 ) $ (0.01 )
Weighted average shares outstanding:
Basic and diluted   19,115     18,976  
Total shipments (in barrels):
Core Brands 158,500 172,200
Contract Brewing   9,200     10,600  
Total shipments   167,700     182,800  
Change in depletions (1)   1 %   8 %
(1) Change in depletions reflects the period-over-period change in barrel volume sales of beer by wholesalers to retailers.
Craft Brew Alliance, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
March 31,
2015 2014
Current assets:
Cash and cash equivalents $ 1,056 $ 2,894
Accounts receivable, net 14,190 11,035
Inventories, net 23,833 18,490
Deferred income tax asset, net 2,443 1,553
Other current assets   4,404   4,047
Total current assets 45,926 38,019
Property, equipment and leasehold improvements, net 110,690 103,917
Goodwill 12,917 12,917
Intangible and other non-current assets, net   17,270   17,412
Total assets $ 186,803 $ 172,265
Current liabilities:
Accounts payable $ 18,026 $ 16,749
Accrued salaries, wages and payroll taxes 5,202 4,938
Refundable deposits 7,759 7,774
Other accrued expenses 1,870 1,685
Current portion of long-term debt and capital lease obligations   1,130   491
Total current liabilities 33,987 31,637
Long-term debt and capital lease obligations, net of current portion 18,493 11,088
Other long-term liabilities 19,868 18,347
Total common shareholders' equity   114,455   111,193
Total liabilities and common shareholders' equity $ 186,803 $ 172,265
Craft Brew Alliance, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three Months Ended
March 31,
  2015     2014  
Cash Flows From Operating Activities:
Net loss $ (1,163 ) $ (201 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization 2,288 2,096
Loss on sale or disposal of Property, equipment and leasehold improvements 215 23
Deferred income taxes (757 ) (326 )
Other, including stock-based compensation and excess tax benefit from employee stock plans 140 (215 )
Changes in operating assets and liabilities:
Accounts receivable (2,449 ) 336
Inventories (4,491 ) (1,353 )
Other current assets 9 (645 )
Accounts payable and other accrued expenses 4,409 2,228
Accrued salaries, wages and payroll taxes 88 322
Refundable deposits   (149 )   268  
Net cash provided by (used in) operating activities (1,860 ) 2,533
Cash Flows from Investing Activities:
Expenditures for property, equipment and leasehold improvements (3,228 ) (2,352 )
Proceeds from sale of property, equipment and leasehold improvements   385     -  
Net cash used in investing activities (2,843 ) (2,352 )
Cash Flows from Financing Activities:
Principal payments on debt and capital lease obligations (122 ) (152 )
Net borrowings under revolving line of credit 4,900 -
Proceeds from issuances of common stock - 46
Excess tax benefit from employee stock plans   -     93  
Net cash provided by (used in) financing activities   4,778     (13 )
Increase in cash and cash equivalents 75 168
Cash and cash equivalents, beginning of period   981     2,726  
Cash and cash equivalents, end of period $ 1,056   $ 2,894  

Business Wire
May 6, 2015 - 4:01 PM EDT

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  • Bob McCooey, Senior Vice President, NASDAQ Stock Market
    Craft Brew Alliance, Inc.
    Select Financial Information on a Trailing Twelve Month Basis
    (In thousands, except per share amounts and shipments)
    Twelve Months Ended
    March 31,
      2015     2014   Change % Change
    Net sales $ 197,905 $ 186,397 $ 11,508 6.2 %
    Gross profit $ 58,032 $ 53,158