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☒
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QUARTERLY REPORT
PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Washington
|
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91-1141254
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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929 North Russell Street
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|
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Portland, Oregon
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|
97227-1733
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer ☐
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Accelerated filer ☒
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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Securities Registered pursuant to Section 12(b) of the Act:
|
|
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Title of each class
|
Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.005 par value
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BREW
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The NASDAQ Stock Market LLC
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PART I - FINANCIAL INFORMATION
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Page
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Item 1.
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Financial Statements
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Item 2.
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Item 3.
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Item 4.
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PART II ‑ OTHER INFORMATION
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Item 1.
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||
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Item 1A.
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Item 6.
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March 31,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
1,670
|
|
|
$
|
1,200
|
|
Accounts receivable, net
|
27,831
|
|
|
29,998
|
|
||
Inventory, net
|
19,748
|
|
|
17,216
|
|
||
Other current assets
|
5,310
|
|
|
3,121
|
|
||
Total current assets
|
54,559
|
|
|
51,535
|
|
||
Property, equipment and leasehold improvements, net
|
111,602
|
|
|
113,189
|
|
||
Operating lease right-of-use assets
|
19,390
|
|
|
—
|
|
||
Goodwill
|
21,935
|
|
|
21,986
|
|
||
Trademarks
|
44,245
|
|
|
44,289
|
|
||
Intangible and other assets, net
|
5,999
|
|
|
5,048
|
|
||
Total assets
|
$
|
257,730
|
|
|
$
|
236,047
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
23,408
|
|
|
$
|
17,552
|
|
Accrued salaries, wages and payroll taxes
|
6,379
|
|
|
5,635
|
|
||
Refundable deposits
|
4,093
|
|
|
4,123
|
|
||
Deferred revenue
|
5,176
|
|
|
6,015
|
|
||
Other accrued expenses
|
8,534
|
|
|
3,618
|
|
||
Current portion of long-term debt and finance lease obligations
|
829
|
|
|
919
|
|
||
Total current liabilities
|
48,419
|
|
|
37,862
|
|
||
Long-term debt and finance lease obligations, net of current portion
|
48,996
|
|
|
46,573
|
|
||
Fair value of derivative financial instruments
|
178
|
|
|
116
|
|
||
Deferred income tax liability, net
|
10,025
|
|
|
12,381
|
|
||
Long-term operating lease liabilities
|
19,607
|
|
|
—
|
|
||
Other liabilities
|
1,220
|
|
|
2,680
|
|
||
Total liabilities
|
128,445
|
|
|
99,612
|
|
||
Commitments and contingencies (Note 15)
|
|
|
|
|
|
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Common shareholders' equity:
|
|
|
|
|
|
||
Common stock, $0.005 par value. Authorized 50,000,000 shares; issued and outstanding 19,411,870 and 19,382,641
|
97
|
|
|
97
|
|
||
Additional paid-in capital
|
144,274
|
|
|
144,013
|
|
||
Accumulated other comprehensive loss
|
(133
|
)
|
|
(86
|
)
|
||
Accumulated deficit
|
(14,953
|
)
|
|
(7,589
|
)
|
||
Total common shareholders' equity
|
129,285
|
|
|
136,435
|
|
||
Total liabilities and common shareholders' equity
|
$
|
257,730
|
|
|
$
|
236,047
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Sales
|
$
|
49,768
|
|
|
$
|
50,085
|
|
Less excise taxes
|
2,776
|
|
|
2,598
|
|
||
Net sales
|
46,992
|
|
|
47,487
|
|
||
Cost of sales
|
30,809
|
|
|
32,416
|
|
||
Gross profit
|
16,183
|
|
|
15,071
|
|
||
Selling, general and administrative expenses
|
25,565
|
|
|
14,748
|
|
||
Operating income (loss)
|
(9,382
|
)
|
|
323
|
|
||
Interest expense
|
(308
|
)
|
|
(134
|
)
|
||
Other income, net
|
—
|
|
|
34
|
|
||
Income (loss) before income taxes
|
(9,690
|
)
|
|
223
|
|
||
Income tax provision (benefit)
|
(2,326
|
)
|
|
62
|
|
||
Net income (loss)
|
$
|
(7,364
|
)
|
|
$
|
161
|
|
Basic and diluted net income (loss) per share
|
$
|
(0.38
|
)
|
|
$
|
0.01
|
|
Shares used in basic per share calculations
|
19,412
|
|
|
19,310
|
|
||
Shares used in diluted per share calculations
|
19,412
|
|
|
19,488
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
(7,364
|
)
|
|
$
|
161
|
|
Unrealized gain (loss) on derivative hedge transactions, net of tax
|
(47
|
)
|
|
83
|
|
||
Comprehensive income (loss)
|
$
|
(7,411
|
)
|
|
$
|
244
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Loss |
|
|
|
Total
Common Shareholders' Equity |
|||||||||||||
|
|
Shares
|
|
Par Value
|
|
|
|
Accumulated Deficit
|
|
||||||||||||||
Balance at December 31, 2017
|
|
19,310
|
|
|
$
|
96
|
|
|
$
|
142,196
|
|
|
$
|
(164
|
)
|
|
$
|
(11,337
|
)
|
|
$
|
130,791
|
|
Adoption of accounting standard ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(394
|
)
|
|
(394
|
)
|
|||||
Stock-based compensation
|
|
—
|
|
|
—
|
|
|
485
|
|
|
—
|
|
|
—
|
|
|
485
|
|
|||||
Unrealized gain on derivative financial instruments, net of tax of $29
|
|
—
|
|
|
—
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
83
|
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
161
|
|
|
161
|
|
|||||
Balance at March 31, 2018
|
|
19,310
|
|
|
$
|
96
|
|
|
$
|
142,681
|
|
|
$
|
(81
|
)
|
|
$
|
(11,570
|
)
|
|
$
|
131,126
|
|
|
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Accumulated
Other Comprehensive Loss |
|
|
|
Total
Common Shareholders' Equity |
|||||||||||||
|
|
Shares
|
|
Par Value
|
|
|
|
Accumulated Deficit
|
|
||||||||||||||
Balance at December 31, 2018
|
|
19,383
|
|
|
$
|
97
|
|
|
$
|
144,013
|
|
|
$
|
(86
|
)
|
|
$
|
(7,589
|
)
|
|
$
|
136,435
|
|
Stock-based compensation, net of shares withheld for tax payments
|
|
29
|
|
|
—
|
|
|
418
|
|
|
—
|
|
|
—
|
|
|
418
|
|
|||||
Unrealized loss on derivative financial instruments, net of tax of $16
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(47
|
)
|
|
—
|
|
|
(47
|
)
|
|||||
Tax payments related to stock-based awards
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|
—
|
|
|
—
|
|
|
(157
|
)
|
|||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,364
|
)
|
|
(7,364
|
)
|
|||||
Balance at March 31, 2019
|
|
19,412
|
|
|
$
|
97
|
|
|
$
|
144,274
|
|
|
$
|
(133
|
)
|
|
$
|
(14,953
|
)
|
|
$
|
129,285
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(7,364
|
)
|
|
$
|
161
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
2,726
|
|
|
2,736
|
|
||
(Gain) loss on sale or disposal of Property, equipment and leasehold improvements
|
8
|
|
|
(516
|
)
|
||
Deferred income taxes
|
(2,341
|
)
|
|
(605
|
)
|
||
Stock-based compensation
|
418
|
|
|
485
|
|
||
Lease expense
|
54
|
|
|
—
|
|
||
Other
|
66
|
|
|
73
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
2,466
|
|
|
(285
|
)
|
||
Inventories
|
(2,531
|
)
|
|
(1,791
|
)
|
||
Other current assets
|
(2,406
|
)
|
|
1,128
|
|
||
Accounts payable, deferred revenue and other accrued expenses
|
11,681
|
|
|
3,015
|
|
||
Accrued salaries, wages and payroll taxes
|
745
|
|
|
(1,185
|
)
|
||
Refundable deposits
|
(70
|
)
|
|
(475
|
)
|
||
Net cash provided by operating activities
|
3,452
|
|
|
2,741
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Expenditures for Property, equipment and leasehold improvements
|
(5,173
|
)
|
|
(1,104
|
)
|
||
Proceeds from sale of Property, equipment and leasehold improvements
|
16
|
|
|
22,456
|
|
||
Restricted cash from sale of Property, equipment and leasehold improvements
|
—
|
|
|
515
|
|
||
Net cash provided by (used in) investing activities
|
(5,157
|
)
|
|
21,867
|
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Principal payments on debt and finance lease obligations
|
(277
|
)
|
|
(174
|
)
|
||
Net borrowings (repayments) under revolving line of credit
|
2,609
|
|
|
(22,199
|
)
|
||
Tax payments related to stock-based awards
|
(157
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
2,175
|
|
|
(22,373
|
)
|
||
Increase in Cash, cash equivalents and restricted cash
|
470
|
|
|
2,235
|
|
||
|
|
|
|
||||
Cash, cash equivalents and restricted cash:
|
|
|
|
|
|
||
Beginning of period
|
1,200
|
|
|
579
|
|
||
End of period
|
$
|
1,670
|
|
|
$
|
2,814
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||
Cash paid for interest
|
$
|
335
|
|
|
$
|
178
|
|
Cash paid for income taxes, net
|
—
|
|
|
1
|
|
||
Supplemental disclosure of non-cash information:
|
|
|
|
|
|
||
Right-of-use assets obtained in exchange for operating lease obligations
|
$
|
19,726
|
|
|
$
|
—
|
|
Right-of-use assets obtained in exchange for finance lease obligations
|
$
|
2,538
|
|
|
$
|
—
|
|
Purchases of Property, equipment and leasehold improvements included in Accounts payable at end of period
|
1,384
|
|
|
203
|
|
•
|
elected the package of three practical expedients available under the transition provisions which allowed us to: (i) not reassess whether expired or existing contracts were or contained leases, (ii) not reassess the lease classification for expired or existing leases, and (iii) not reassess initial direct costs for existing leases.
|
•
|
determined the land easement practical expedient was not applicable.
|
•
|
as applicable, used hindsight for specified determinations and assessments in applying the new leases guidance.
|
•
|
did not separate lease and associated non-lease components for transitioned leases, but instead are accounting for them together as a single lease component.
|
•
|
elected to utilize the recognition exemption for short-term leases of one year or less at inception
|
|
|
Balance at
December 31, 2018 |
|
Adjustments due to
ASC 842 |
|
Balance at
January 1, 2019 |
||||||
Assets
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
$
|
29,998
|
|
|
$
|
300
|
|
|
$
|
30,298
|
|
Other current assets
|
|
3,121
|
|
|
(216
|
)
|
|
2,905
|
|
|||
Property, equipment and leasehold improvements, net
|
|
113,189
|
|
|
(2,538
|
)
|
|
110,651
|
|
|||
Operating lease right-of-use assets
|
|
—
|
|
|
19,726
|
|
|
19,726
|
|
|||
Intangible and other assets, net
|
|
5,048
|
|
|
1,140
|
|
|
6,188
|
|
|||
|
|
|
|
|
|
|
||||||
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
||||||
Other accrued expenses
|
|
3,618
|
|
|
269
|
|
|
3,887
|
|
|||
Long-term lease liabilities
|
|
—
|
|
|
18,143
|
|
|
18,143
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Raw materials
|
$
|
7,137
|
|
|
$
|
7,146
|
|
Work in process
|
3,483
|
|
|
3,219
|
|
||
Finished goods
|
6,676
|
|
|
4,319
|
|
||
Packaging materials
|
1,186
|
|
|
891
|
|
||
Promotional merchandise
|
760
|
|
|
1,139
|
|
||
Brewpub food, beverages and supplies
|
506
|
|
|
502
|
|
||
|
$
|
19,748
|
|
|
$
|
17,216
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Operating lease liabilities:
|
|
|
|
||||
Current lease liabilities included in Other accrued expenses
|
$
|
933
|
|
|
$
|
—
|
|
Long-term lease liabilities
|
19,607
|
|
|
—
|
|
||
Total operating lease liabilities
|
20,540
|
|
|
—
|
|
||
Financing lease liabilities:
|
|
|
|
||||
Current portion included in Current portion of long-term debt and finance lease obligations
|
385
|
|
|
477
|
|
||
Long-term portion of lease liabilities in Long-term debt and finance lease obligations, net of current portion
|
1,028
|
|
|
1,101
|
|
||
Total financing lease liabilities
|
1,413
|
|
|
1,578
|
|
||
Total lease liabilities
|
$
|
21,953
|
|
|
$
|
1,578
|
|
Weighted-average remaining lease term:
|
|
|
|
||||
Operating leases
|
27 years
|
|
|
|
|||
Finance leases
|
5 years
|
|
|
|
|||
Weighted-average discount rate:
|
|
|
|
||||
Operating leases
|
4.91
|
%
|
|
|
|||
Finance leases
|
3.55
|
%
|
|
|
|
Operating Leases
|
||
2019
|
$
|
1,490
|
|
2020
|
1,689
|
|
|
2021
|
1,713
|
|
|
2022
|
1,705
|
|
|
2023
|
1,496
|
|
|
Thereafter
|
29,181
|
|
|
Total minimum lease payments
|
37,274
|
|
|
Less: present value adjustment
|
(16,734
|
)
|
|
Operating lease liabilities
|
$
|
20,540
|
|
|
Finance Leases
|
||
2019
|
$
|
348
|
|
2020
|
333
|
|
|
2021
|
266
|
|
|
2022
|
199
|
|
|
2023
|
199
|
|
|
Thereafter
|
199
|
|
|
Total minimum lease payments
|
1,544
|
|
|
Less: present value adjustment
|
(131
|
)
|
|
Finance lease liabilities
|
$
|
1,413
|
|
|
Three Months Ended
March 31, 2019 |
||
Operating lease cost
(1)
|
$
|
874
|
|
Finance lease cost
|
|
||
Amortization of right-of-use asset
|
42
|
|
|
Interest on lease liabilities
|
13
|
|
|
Total lease cost
|
$
|
929
|
|
|
Operating Lease Obligations
|
|
Capital Lease Obligations
|
||||
2019
|
$
|
11,208
|
|
|
$
|
529
|
|
2020
|
1,937
|
|
|
333
|
|
||
2021
|
1,863
|
|
|
266
|
|
||
2022
|
1,793
|
|
|
199
|
|
||
2023
|
1,465
|
|
|
199
|
|
||
Thereafter
|
25,446
|
|
|
199
|
|
||
|
$
|
43,712
|
|
|
1,725
|
|
|
Amount representing interest
|
|
|
(148
|
)
|
|||
|
|
|
$
|
1,577
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Gross sales to A-B and Ambev
|
$
|
39,609
|
|
|
$
|
37,568
|
|
International distribution fee earned from ABWI
|
812
|
|
|
850
|
|
||
International distribution fee from ABWI, recorded in Deferred revenue
|
—
|
|
|
650
|
|
||
Contract brewing fee earned from ABC
|
538
|
|
|
463
|
|
||
Margin fee paid to A-B, classified as a reduction of Sales
|
541
|
|
|
518
|
|
||
Inventory management and other fees paid to A-B, classified in Cost of sales
|
90
|
|
|
90
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Amounts due from A-B related to beer sales pursuant to the A-B distributor agreement
|
$
|
22,275
|
|
|
$
|
17,946
|
|
Amounts due from ABWI and A-B related to international distribution fee and media reimbursement
|
—
|
|
|
6,000
|
|
||
Refundable deposits due to A-B
|
(3,335
|
)
|
|
(2,840
|
)
|
||
Amounts due to A-B for services rendered
|
(7,702
|
)
|
|
(5,140
|
)
|
||
Net amount due from A-B and ABWI
|
$
|
11,238
|
|
|
$
|
15,966
|
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Master distributor fee earned
|
$
|
—
|
|
|
$
|
7
|
|
Share of loss, classified as a component of Other income (expense), net
|
—
|
|
|
23
|
|
||
Refund of investment, classified as a reduction in the carrying value of the equity method investment
|
—
|
|
|
23
|
|
Three Months Ended
March 31, |
||||||
2019
|
|
2018
|
||||
$
|
41
|
|
|
$
|
41
|
|
Three Months Ended
March 31, |
||||||
2019
|
|
2018
|
||||
$
|
168
|
|
|
$
|
143
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||
Term loan, due September 30, 2023
|
$
|
8,711
|
|
|
$
|
8,823
|
|
Line of credit, due September 30, 2023
|
39,701
|
|
|
37,092
|
|
||
|
48,412
|
|
|
45,915
|
|
||
Less current portion, term loan
|
(444
|
)
|
|
(442
|
)
|
||
|
$
|
47,968
|
|
|
$
|
45,473
|
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Fair value of interest rate swaps - asset (liability)
|
$
|
(178
|
)
|
|
$
|
(116
|
)
|
Derivatives in Cash Flow Hedging Relationships
|
|
Amount of Gain (Loss)
Recognized in Accumulated OCI (Effective Portion)
|
|
Location of Loss Reclassified
from Accumulated OCI into
Income (Effective Portion)
|
|
Amount of Loss Reclassified from Accumulated OCI into
Income (Effective Portion)
|
||||
Three Months Ended
March 31, |
|
|
|
|
|
|
||||
2019
|
|
$
|
(62
|
)
|
|
Interest expense
|
|
$
|
6
|
|
2018
|
|
$
|
112
|
|
|
Interest expense
|
|
$
|
22
|
|
•
|
Level 1 – quoted prices in active markets for identical securities as of the reporting date;
|
•
|
Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds and credit risk; and
|
•
|
Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value.
|
Fair Value at March 31, 2019
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Interest rate swap
|
|
$
|
—
|
|
|
$
|
(178
|
)
|
|
$
|
—
|
|
|
$
|
(178
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Fair Value at December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
$
|
—
|
|
|
$
|
(116
|
)
|
|
$
|
—
|
|
|
$
|
(116
|
)
|
|
March 31,
2019 |
|
December 31,
2018 |
||||
Fixed-rate debt on Consolidated Balance Sheets
|
$
|
1,413
|
|
|
$
|
1,577
|
|
Estimated fair value of fixed-rate debt
|
1,421
|
|
|
1,591
|
|
|
|
Three Months Ended March 31, 2019
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||||
|
|
Beer Related
1
|
|
Brewpubs
|
|
Total
|
|
Beer Related
1
|
|
Brewpubs
|
|
Total
|
||||||||||||
Product sold through distributor agreements
2
|
|
$
|
41,128
|
|
|
$
|
—
|
|
|
$
|
41,128
|
|
|
$
|
39,667
|
|
|
$
|
—
|
|
|
$
|
39,667
|
|
Alternating proprietorship and contract brewing fees
3
|
|
847
|
|
|
—
|
|
|
847
|
|
|
2,710
|
|
|
—
|
|
|
2,710
|
|
||||||
International distribution fees
|
|
812
|
|
|
—
|
|
|
812
|
|
|
850
|
|
|
—
|
|
|
850
|
|
||||||
Brewpubs
4
|
|
—
|
|
|
6,203
|
|
|
6,203
|
|
|
—
|
|
|
6,011
|
|
|
6,011
|
|
||||||
Other
5
|
|
778
|
|
|
—
|
|
|
778
|
|
|
847
|
|
|
—
|
|
|
847
|
|
||||||
|
|
$
|
43,565
|
|
|
$
|
6,203
|
|
|
$
|
49,768
|
|
|
$
|
44,074
|
|
|
$
|
6,011
|
|
|
$
|
50,085
|
|
(1)
|
Beer Related sales include sales to A-B subsidiaries including Ambev, ABWI and ABC. Sales to wholesalers through the A-B distributor agreement in the
three
-month periods ended
March 31, 2019
and
2018
represented
81.2%
and
76.6%
of our Sales, respectively.
|
(2)
|
Product sold through distributor agreements included domestic and international sales of owned and non-owned brands pursuant to terms in our distributor agreements.
|
(3)
|
Alternating proprietorship fees ceased in the fourth quarter of 2018.
|
(4)
|
Brewpub sales include sales of promotional merchandise and sales of beer directly to customers.
|
(5)
|
Other sales include sales of beer related merchandise, hops, spent grain and an export manager fee.
|
Three Months Ended March 31,
|
||||
2019
|
|
2018
|
||
81.2
|
%
|
|
76.6
|
%
|
March 31,
2019 |
|
December 31,
2018 |
||
80.0
|
%
|
|
79.8
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Cost of sales
|
$
|
48
|
|
|
$
|
52
|
|
Selling, general and administrative expense
|
370
|
|
|
433
|
|
||
Total stock-based compensation expense
|
$
|
418
|
|
|
$
|
485
|
|
|
Three Months Ended
March 31, |
||||
|
2019
|
|
2018
|
||
Weighted average common shares used for basic EPS
|
19,412
|
|
|
19,310
|
|
Dilutive effect of stock-based awards
|
—
|
|
|
178
|
|
Shares used for diluted EPS
|
19,412
|
|
|
19,488
|
|
|
|
|
|
|
|
Stock-based awards not included in diluted per share calculations as they would be antidilutive
|
42
|
|
|
—
|
|
Three Months Ended March 31,
|
|
Net sales
|
|
Net income (loss)
|
|
Number of
barrels sold |
2019
|
|
$47.0 million
|
|
$(7.4) million
|
|
169,500
|
2018
|
|
$47.5 million
|
|
$0.2 million
|
|
167,000
|
|
Three Months Ended
March 31, |
||||
|
2019
|
|
2018
|
||
Sales
|
105.9
|
%
|
|
105.5
|
%
|
Less excise taxes
|
(5.9
|
)
|
|
(5.5
|
)
|
Net sales
|
100.0
|
|
|
100.0
|
|
Cost of sales
|
65.6
|
|
|
68.3
|
|
Gross profit
|
34.4
|
|
|
31.7
|
|
Selling, general and administrative expenses
|
54.4
|
|
|
31.1
|
|
Operating income (loss)
|
(20.0
|
)
|
|
0.7
|
|
Interest expense
|
(0.7
|
)
|
|
(0.3
|
)
|
Other income, net
|
—
|
|
|
0.1
|
|
Income (loss) before income taxes
|
(20.6
|
)
|
|
0.5
|
|
Income tax provision (benefit)
|
(4.9
|
)
|
|
0.1
|
|
Net income (loss)
|
(15.7
|
)%
|
|
0.3
|
%
|
(1)
|
Percentages may not add due to rounding.
|
|
|
Three Months Ended March 31,
|
||||||||||
2019
|
|
Beer
Related |
|
Brewpubs
|
|
Total
|
||||||
Net sales
|
|
$
|
40,789
|
|
|
$
|
6,203
|
|
|
$
|
46,992
|
|
Gross profit
|
|
$
|
15,508
|
|
|
$
|
675
|
|
|
$
|
16,183
|
|
Gross margin
|
|
38.0
|
%
|
|
10.9
|
%
|
|
34.4
|
%
|
|||
|
|
|
|
|
|
|
||||||
2018
|
|
|
|
|
|
|
|
|
|
|||
Net sales
|
|
$
|
41,476
|
|
|
$
|
6,011
|
|
|
$
|
47,487
|
|
Gross profit
|
|
$
|
14,710
|
|
|
$
|
361
|
|
|
$
|
15,071
|
|
Gross margin
|
|
35.5
|
%
|
|
6.0
|
%
|
|
31.7
|
%
|
|
|
Three Months Ended March 31,
|
|
Dollar
|
|
|
|||||||||
Sales by Category
|
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
A-B and A-B related
(1)
|
|
$
|
40,418
|
|
|
$
|
38,363
|
|
|
$
|
2,055
|
|
|
5.4
|
%
|
Contract brewing and beer related
(2)
|
|
3,147
|
|
|
5,711
|
|
|
(2,564
|
)
|
|
(44.9
|
)%
|
|||
Excise taxes
|
|
(2,776
|
)
|
|
(2,598
|
)
|
|
(178
|
)
|
|
6.9
|
%
|
|||
Net beer related sales
|
|
40,789
|
|
|
41,476
|
|
|
(687
|
)
|
|
(1.7
|
)%
|
|||
Brewpubs
(3)
|
|
6,203
|
|
|
6,011
|
|
|
192
|
|
|
3.2
|
%
|
|||
Net sales
|
|
$
|
46,992
|
|
|
$
|
47,487
|
|
|
$
|
(495
|
)
|
|
(1.0
|
)%
|
(1)
|
A-B and A-B related includes domestic and international sales of our owned brands sold through A-B and Ambev, as well as non-owned brands sold pursuant to master distribution agreements, fees earned pursuant to the Brewing Agreement with ABC and the international distribution fees earned from ABWI.
|
(2)
|
Beer related includes international sales of our beers, and brands, not sold through A-B or Ambev, as well as fees earned through alternating proprietorship agreements.
|
(3)
|
Brewpubs sales include sales of promotional merchandise and sales of beer directly to customers.
|
Three Months Ended March 31,
|
|
2019 Shipments
|
|
2018 Shipments
|
|
Increase
(Decrease) |
|
%
Change |
|
Change in
Depletions (1) |
|||||
A-B and A-B related
(2)
|
|
154,600
|
|
|
146,500
|
|
|
8,100
|
|
|
5.5
|
%
|
|
(5
|
)%
|
Contract brewing and beer related
(3)
|
|
13,100
|
|
|
18,700
|
|
|
(5,600
|
)
|
|
(29.9
|
)%
|
|
|
|
Brewpubs
|
|
1,800
|
|
|
1,800
|
|
|
—
|
|
|
—
|
%
|
|
|
|
Total
|
|
169,500
|
|
|
167,000
|
|
|
2,500
|
|
|
1.5
|
%
|
|
|
|
(1)
|
Change in depletions reflects the year-over-year change in barrel volume sales of beer by wholesalers to retailers.
|
(2)
|
A-B and A-B related includes domestic and international shipments of our owned brands distributed through A-B and Ambev, as well as non-owned brands distributed pursuant to master distribution agreements and shipments pursuant to the Brewing Agreement with ABC.
|
(3)
|
Beer related includes international shipments of our beers, and brands, not distributed through A-B or Ambev.
|
Three Months Ended March 31,
|
|
2019 Shipments
|
|
2018 Shipments
|
|
Increase
(Decrease) |
|
%
Change |
|
Change in
Depletions |
|||||
Kona
|
|
108,800
|
|
|
99,000
|
|
|
9,800
|
|
|
9.9
|
%
|
|
1
|
%
|
Widmer Brothers
|
|
21,600
|
|
|
23,300
|
|
|
(1,700
|
)
|
|
(7.3
|
)%
|
|
(17
|
)%
|
Redhook
|
|
14,800
|
|
|
18,600
|
|
|
(3,800
|
)
|
|
(20.4
|
)%
|
|
(23
|
)%
|
Omission
|
|
9,100
|
|
|
10,300
|
|
|
(1,200
|
)
|
|
(11.7
|
)%
|
|
(10
|
)%
|
All other
(1)
|
|
10,100
|
|
|
9,400
|
|
|
700
|
|
|
7.4
|
%
|
|
7
|
%
|
Total
(2)
|
|
164,400
|
|
|
160,600
|
|
|
3,800
|
|
|
2.4
|
%
|
|
(5
|
)%
|
(1)
|
All other includes the shipments and depletions from our Square Mile brand family, as well as the previously non-owned AMB, Cisco Brewers, and Wynwood brand families, shipped by us pursuant to distribution agreements.
|
(2)
|
Total shipments by brand include international shipments and exclude shipments produced under our contract brewing arrangements.
|
|
|
Three Months Ended March 31,
|
||||||||||
|
|
2019
|
|
2018
|
||||||||
|
|
Shipments
|
|
% of Total
|
|
Shipments
|
|
% of Total
|
||||
Draft
|
|
37,500
|
|
|
22.8
|
%
|
|
39,200
|
|
|
24.4
|
%
|
Packaged
|
|
126,900
|
|
|
77.2
|
%
|
|
121,400
|
|
|
75.6
|
%
|
Total
|
|
164,400
|
|
|
100.0
|
%
|
|
160,600
|
|
|
100.0
|
%
|
|
Three Months Ended March 31,
|
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Beer Related
|
$
|
25,281
|
|
|
$
|
26,766
|
|
|
$
|
(1,485
|
)
|
|
(5.5
|
)%
|
Brewpubs
|
5,528
|
|
|
5,650
|
|
|
(122
|
)
|
|
(2.2
|
)%
|
|||
Total
|
$
|
30,809
|
|
|
$
|
32,416
|
|
|
$
|
(1,607
|
)
|
|
(5.0
|
)%
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2018
|
||
Capacity Utilization
|
47
|
%
|
|
52
|
%
|
|
Three Months Ended March 31,
|
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Beer Related
|
$
|
15,508
|
|
|
$
|
14,710
|
|
|
$
|
798
|
|
|
5.4
|
%
|
Brewpubs
|
675
|
|
|
361
|
|
|
314
|
|
|
87.0
|
%
|
|||
Total
|
$
|
16,183
|
|
|
$
|
15,071
|
|
|
$
|
1,112
|
|
|
7.4
|
%
|
|
Three Months Ended
March 31, |
|
Dollar
|
|
|
|||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Selling, general and administrative expenses
|
$
|
25,565
|
|
|
$
|
14,748
|
|
|
$
|
10,817
|
|
|
73.3
|
%
|
As a % of Net sales
|
54.4
|
%
|
|
31.1
|
%
|
|
|
|
|
Three Months Ended
March 31, |
|
Dollar
|
|
|
|||||||||
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
$
|
308
|
|
|
$
|
134
|
|
|
$
|
174
|
|
|
129.9
|
%
|
|
Three Months Ended
March 31, |
||||
|
2019
|
|
2018
|
||
Average debt outstanding
|
$44,880
|
|
$16,554
|
||
Average interest rate
|
2.69
|
%
|
|
2.70
|
%
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
3,452
|
|
|
$
|
2,741
|
|
Net cash provided by (used in) investing activities
|
(5,157
|
)
|
|
21,867
|
|
||
Net cash provided by (used in) financing activities
|
2,175
|
|
|
(22,373
|
)
|
||
Increase in Cash, cash equivalents and restricted cash
|
$
|
470
|
|
|
$
|
2,235
|
|
Employment Agreement between the Registrant and Christine Perich, dated March 26, 2019
|
|
Second Amendment to Amended and Restated Credit Agreement dated May 7, 2019 between Craft Brew Alliance, Inc. and Bank of America, N.A.
|
|
Certification of Chief Executive Officer of Craft Brew Alliance, Inc. pursuant to Exchange Act Rule 13a-14(a)
|
|
Certification of Chief Financial Officer of Craft Brew Alliance, Inc. pursuant to Exchange Act Rule 13a-14(a)
|
|
32.1
*
|
Certification pursuant to Exchange Act Rule 13a-14(b) and 18 U.S.C. Section 1350
|
99.1
*
|
Press Release dated May 8, 2019
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
CRAFT BREW ALLIANCE, INC.
|
|
|
|
|
|
|
May 8, 2019
|
By:
|
/s/ Edwin A. Smith
|
|
|
|
Edwin A. Smith
|
|
|
|
Corporate Controller and
Principal Accounting Officer
|
|
12.
|
Survival
. The terms of this Agreement survive the termination of Employee's employment.
|
Applicable Rate
|
||||||
Level
|
Consolidated Leverage Ratio
|
Eurodollar Floating Rate/
Eurodollar Fixed Rate
|
Base Rate
|
Commitment Fee
|
Letter of Credit Fees
|
|
1
|
>
3.50:1.00
|
2.00
|
1.00
|
0.40
|
2.00
|
|
2
|
< 3.50:1.00 but
>
3.00:1.00
|
1.75
|
0.75
|
0.30
|
1.75
|
|
3
|
< 3.00:1.00 but
>
2.50:1.00
|
1.25
|
0.25
|
0.20
|
1.25
|
|
4
|
< 2.50:1.00 but
>
2.00:1.00
|
1.00
|
0.00
|
0.15
|
1.00
|
|
5
|
< 2.00:1.00
|
0.75
|
0.00
|
0.15
|
0.75
|
Period
|
|
January 1, 2019 through June 30, 2019
|
5.50 to 1.00
|
July 1, 2019 and each fiscal quarter thereafter
|
3.50 to 1.00
|
|
CRAFT BREW ALLIANCE, INC.
, as the Borrower
By:
/s/Andrew J. Thomas
Name:Andrew J. Thomas
Title:Chief Executive Officer
|
|
KONA BREWERY LLC
, as a Guarantor
By:
/s/Andrew J. Thomas
Name:Andrew J. Thomas
Title:Manager
|
|
CRAFT VENTURES, LLC
, as a Guarantor
By: Craft Brew Alliance, Inc., its Manager
By:
/s/Andrew J. Thomas
Name:Andrew J. Thomas
Title:Chief Executive Officer
|
|
WYNWOOD BREWING COMPANY LLC
, as a Guarantor
By:
/s/Andrew J. Thomas
Name:Andrew J. Thomas
Title:Manager
|
|
BANK OF AMERICA, N.A., as Lender
By:
/s/Michael Snook
Name:Michael Snook Title:Senior Vice President |
|
1.
|
I have reviewed this quarterly report on Form 10−Q of Craft Brew Alliance, Inc. (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a−15(f) and 15d−15(f)) for the Registrant and we have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date:
|
May 8, 2019
|
|
|
|
|
By:
|
/s/ Andrew J. Thomas
|
|
|
Andrew J. Thomas
|
|
|
Chief Executive Officer
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10−Q of Craft Brew Alliance, Inc. (the “Registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a−15(e) and 15d−15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a−15(f) and 15d−15(f)) for the Registrant and we have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
Date:
|
May 8, 2019
|
|
|
|
|
By:
|
/s/ Christine N. Perich
|
|
|
Christine N. Perich
|
|
|
Chief Financial Officer
|
|
|
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Date:
|
May 8, 2019
|
|
|
|
|
BY:
|
/s/ Andrew J. Thomas
|
|
|
Andrew J. Thomas
|
|
|
Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
BY:
|
/s/ Christine N. Perich
|
|
|
Christine N. Perich
|
|
|
Chief Financial Officer
|
|
|
•
|
Total shipments grew 1.5% over the first quarter in 2018, which includes a 10% increase in shipments for Kona and a collective 13% increase in total shipments for newly acquired brands Appalachian Mountain Brewery, Cisco Brewers, and Wynwood Brewing.
|
•
|
Core beer sales increased more than 3%, driven by increased shipment volume and a 1.6% increase in revenue per barrel over the first quarter last year.
|
•
|
Total company gross margin expanded 270 basis points to 34.4%, driven by increased shipment volume, pricing, and cost efficiencies. Beer gross margin expanded 250 basis points to 38.0%.
|
•
|
SG&A was $25.6 million for the first quarter, which reflects our largest-ever national marketing investment to fuel Kona’s growth in 2019, as well as a one-time event that resulted in the accrual of a pre-tax expense of $4.7 million related to the settlement of the Kona class action lawsuit.
|
•
|
As a result of the unanticipated $4.7 million expense referenced above, EPS was a loss of $0.38 per share on a GAAP basis. Excluding the expense, EPS was a loss of $0.19 per share on a non-GAAP adjusted basis.
|
•
|
Total Kona shipments increased by 10% in the first quarter, contributing to a 1.5% increase in total CBA shipments over the first quarter in 2018.
|
◦
|
Domestic shipment growth of 14% for Kona and 12% for newly acquired brands contributed to a 4.5% increase in domestic CBA owned shipments over the first quarter last year.
|
•
|
Total Kona depletions increased by 1.4% in the first quarter, while CBA depletions decreased by 4.5%, primarily attributed to Redhook and Widmer Brothers, as well as a timing-related decrease in international depletions.
|
◦
|
Domestic Kona depletions increased by 5% and 13% for newly acquired brands, while total domestic CBA depletions decreased by 3% compared to the first quarter in 2018.
|
◦
|
Fueled by our first quarter heavy-up marketing investment, Kona’s growth has continued in April, with depletions up 16%, driving a total CBA depletions increase of 8% over the same month last year.
|
•
|
Our core beer sales increased 3.1% over the same quarter last year. Total net sales of $47 million, a 1% decrease from the first quarter in 2018, reflect a reduction of $1.8 million in alternating proprietorship fees that we received in 2018 but not in 2019 due to the change in ownership structure of AMB, Cisco and Wynwood.
|
•
|
Total company gross margin expanded by 270 basis points to 34.4%, compared to 31.7% in the first quarter of 2018, reflecting pricing improvements and a 5% decrease in overall cost of goods sold.
|
◦
|
Beer gross margin expanded by 250 basis points to 38%, compared to 35.5% in the first quarter of 2018, reflecting pricing increases and shipment growth, as well as ongoing improvements in operating efficiency and sourcing.
|
◦
|
Brewpub gross margin expanded 490 basis points to 10.9%, reflecting continued strong performance from our Kona pubs in Hawaii and the addition of our newly acquired AMB and Wynwood brewpub operations.
|
•
|
Selling, general and administrative expense (“SG&A”) increased by $10.8 million to $25.6 million.
|
◦
|
The increase is primarily due to the planned $4.6 million investment to launch our largest national marketing campaign behind fueling Kona’s growth throughout the spring and summer selling season and the accrual of an unanticipated $4.7 million pre-tax expense related to the class action settlement.
|
•
|
On a GAAP basis, we recorded a net loss of $7.4 million in the first quarter as a result of the increased SG&A expense.
|
◦
|
On an adjusted non-GAAP basis and excluding the $4.7 million pre-tax expense related to the one-time event, or $3.6 million after the tax effect of $1.1 million, our first quarter net loss was $3.8 million.
|
•
|
On a GAAP basis, we recorded a net loss per share of $0.38 in the first quarter as a result of the increased SG&A expense.
|
◦
|
On an adjusted non-GAAP basis and excluding the $4.7 million pre-tax expense related to the one-time event, our loss per share was $0.19.
|
•
|
Maintaining depletions and shipments each ranging between an increase of 5% to an increase of 8%, reflecting a significant increase in commercial investments and insights from our consumer research.
|
•
|
Maintaining average price increases of 1% to 2%, reflecting improved revenue management capabilities.
|
•
|
Maintaining gross margin rate of 34.5% to 36.5%, reflecting increases in net revenue per barrel, continued improvements in brewery operations, lower fixed overhead, and ongoing efforts to stabilize our pub operations.
|
•
|
Updating SG&A range to between $75 million and $79 million, primarily reflecting the incremental expense related to the Kona settlement.
|
•
|
Updating capital expenditures range to between $13 million and $17 million, due to a timing shift of certain expenses related to our new Kona brewery, now set to go online the first quarter of 2020.
|
•
|
Updating effective tax rate of 25%, reflecting the impact of the Kona class action lawsuit settlement.
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Sales
|
$
|
49,768
|
|
|
$
|
50,085
|
|
Less excise taxes
|
2,776
|
|
|
2,598
|
|
||
Net sales
|
46,992
|
|
|
47,487
|
|
||
Cost of sales
|
30,809
|
|
|
32,416
|
|
||
Gross profit
|
16,183
|
|
|
15,071
|
|
||
As percentage of net sales
|
34.4
|
%
|
|
31.7
|
%
|
||
Selling, general and administrative expenses
|
25,565
|
|
|
14,748
|
|
||
Operating income (loss)
|
(9,382
|
)
|
|
323
|
|
||
Interest expense
|
(308
|
)
|
|
(134
|
)
|
||
Other income, net
|
—
|
|
|
34
|
|
||
Income (loss) before income taxes
|
(9,690
|
)
|
|
223
|
|
||
Income tax provision (benefit)
|
(2,326
|
)
|
|
62
|
|
||
Net income (loss)
|
$
|
(7,364
|
)
|
|
$
|
161
|
|
|
|
|
|
||||
Basic and diluted net income (loss) per share
|
$
|
(0.38
|
)
|
|
$
|
0.01
|
|
Weighted average shares outstanding:
|
|
|
|
||||
Basic
|
19,412
|
|
|
19,310
|
|
||
Diluted
|
19,412
|
|
|
19,488
|
|
||
Total shipments (in barrels):
|
|
|
|
||||
Core Brands
|
164,400
|
|
|
160,600
|
|
||
Contract Brewing
|
5,100
|
|
|
6,400
|
|
||
Total shipments
|
169,500
|
|
|
167,000
|
|
||
Change in depletions
(1)
|
(5
|
)%
|
|
(4
|
)%
|
(1)
|
Change in depletions reflects the period-over-period change in barrel volume sales of beer by wholesalers to retailers.
|
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Current assets:
|
|
|
|
||||
Cash, cash equivalents and restricted cash
|
$
|
1,670
|
|
|
$
|
2,814
|
|
Accounts receivable, net
|
27,831
|
|
|
28,569
|
|
||
Inventory, net
|
19,748
|
|
|
15,910
|
|
||
Other current assets
|
5,310
|
|
|
2,508
|
|
||
Total current assets
|
54,559
|
|
|
49,801
|
|
||
Property, equipment and leasehold improvements, net
|
111,602
|
|
|
104,394
|
|
||
Operating lease right-of-use assets
|
19,390
|
|
|
—
|
|
||
Goodwill
|
21,935
|
|
|
12,917
|
|
||
Trademarks
|
44,245
|
|
|
14,415
|
|
||
Intangible and other assets, net
|
5,999
|
|
|
6,364
|
|
||
Total assets
|
$
|
257,730
|
|
|
$
|
187,891
|
|
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
23,408
|
|
|
$
|
15,012
|
|
Accrued salaries, wages and payroll taxes
|
6,379
|
|
|
4,692
|
|
||
Refundable deposits
|
4,093
|
|
|
4,291
|
|
||
Deferred revenue
|
5,176
|
|
|
4,035
|
|
||
Other accrued expenses
|
8,534
|
|
|
3,742
|
|
||
Current portion of long-term debt and finance lease obligations
|
829
|
|
|
802
|
|
||
Total current liabilities
|
48,419
|
|
|
32,574
|
|
||
Long-term debt and finance lease obligations, net of current portion
|
48,996
|
|
|
10,124
|
|
||
Other long-term liabilities
|
31,030
|
|
|
14,067
|
|
||
Total common shareholders' equity
|
129,285
|
|
|
131,126
|
|
||
Total liabilities and common shareholders' equity
|
$
|
257,730
|
|
|
$
|
187,891
|
|
|
Three Months Ended March 31,
|
||||||
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
(7,364
|
)
|
|
$
|
161
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
2,726
|
|
|
2,736
|
|
||
(Gain) loss on sale or disposal of Property, equipment and leasehold improvements
|
8
|
|
|
(516
|
)
|
||
Deferred income taxes
|
(2,341
|
)
|
|
(605
|
)
|
||
Other, including stock-based compensation
|
538
|
|
|
558
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable, net
|
2,466
|
|
|
(285
|
)
|
||
Inventories
|
(2,531
|
)
|
|
(1,791
|
)
|
||
Other current assets
|
(2,406
|
)
|
|
1,128
|
|
||
Accounts payable, deferred revenue and other accrued expenses
|
11,681
|
|
|
3,015
|
|
||
Accrued salaries, wages and payroll taxes
|
745
|
|
|
(1,185
|
)
|
||
Refundable deposits
|
(70
|
)
|
|
(475
|
)
|
||
Net cash provided by operating activities
|
3,452
|
|
|
2,741
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Expenditures for Property, equipment and leasehold improvements
|
(5,173
|
)
|
|
(1,104
|
)
|
||
Proceeds from sale of Property, equipment and leasehold improvements
|
16
|
|
|
22,456
|
|
||
Restricted cash from sale of Property, equipment and leasehold improvements
|
—
|
|
|
515
|
|
||
Net cash provided by (used in) investing activities
|
(5,157
|
)
|
|
21,867
|
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Principal payments on debt and finance lease obligations
|
(277
|
)
|
|
(174
|
)
|
||
Net borrowings (repayments) under revolving line of credit
|
2,609
|
|
|
(22,199
|
)
|
||
Tax payments related to stock-based awards
|
(157
|
)
|
|
—
|
|
||
Net cash provided by (used in) financing activities
|
2,175
|
|
|
(22,373
|
)
|
||
Increase in Cash, cash equivalents and restricted cash
|
470
|
|
|
2,235
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
1,200
|
|
|
579
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
1,670
|
|
|
$
|
2,814
|
|
|
Twelve Months Ended
|
|
|
|
|
|||||||||
|
March 31,
|
|
|
|||||||||||
|
2019
|
|
2018
|
|
Change
|
|
% Change
|
|||||||
Net sales
|
$
|
205,691
|
|
|
$
|
210,641
|
|
|
$
|
(4,950
|
)
|
|
(2.3
|
)%
|
Gross profit
|
$
|
69,435
|
|
|
$
|
67,660
|
|
|
$
|
1,775
|
|
|
2.6
|
%
|
As percentage of net sales
|
33.8
|
%
|
|
32.1
|
%
|
|
170
|
|
bps
|
|
|
|||
Selling, general and administrative expenses
|
73,389
|
|
|
59,742
|
|
|
13,647
|
|
|
22.8
|
%
|
|||
Operating income
|
$
|
(3,954
|
)
|
|
$
|
7,918
|
|
|
$
|
(11,872
|
)
|
|
(149.9
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Net income
|
$
|
(3,383
|
)
|
|
$
|
11,471
|
|
|
$
|
(14,854
|
)
|
|
(129.5
|
)%
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|||||||
Income per share:
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
$
|
(0.17
|
)
|
|
$
|
0.59
|
|
|
$
|
(0.76
|
)
|
|
(128.8
|
)%
|
Diluted
|
$
|
(0.17
|
)
|
|
$
|
0.59
|
|
|
$
|
(0.76
|
)
|
|
(128.8
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Total shipments (in barrels):
|
|
|
|
|
|
|
|
|
|
|
|
|||
Core Brands
|
723,200
|
|
|
743,000
|
|
|
(19,800
|
)
|
|
(2.7
|
)%
|
|||
Contract Brewing
|
26,900
|
|
|
19,500
|
|
|
7,400
|
|
|
37.9
|
%
|
|||
Total shipments
|
750,100
|
|
|
762,500
|
|
|
(12,400
|
)
|
|
(1.6
|
)%
|
|||
Change in depletions
(1)
|
(2
|
)%
|
|
(2
|
)%
|
|
|
|
|
|
|
(1)
|
Change in depletions reflects the period-over-period change in barrel volume sales of beer by wholesalers to retailers.
|
|
Three Months Ended
March 31, |
||||||
|
2019
|
|
2018
|
||||
Net income (loss)
|
$
|
(7,364
|
)
|
|
$
|
161
|
|
Interest expense
|
308
|
|
|
134
|
|
||
Income tax provision (benefit)
|
(2,326
|
)
|
|
62
|
|
||
Depreciation expense
|
2,601
|
|
|
2,693
|
|
||
Amortization expense
|
125
|
|
|
43
|
|
||
Stock-based compensation
|
418
|
|
|
485
|
|
||
Loss on disposal of assets
|
8
|
|
|
(516
|
)
|
||
Kona class action expense
|
5,586
|
|
|
—
|
|
||
Adjusted EBITDA
|
$
|
(644
|
)
|
|
$
|
3,062
|
|