Craft Brew Alliance Inc. reported a 20 percent increase in net sales and 17 percent increase in total beer shipments for the first quarter of 2014. Depletion volume grew 8 percent over the first quarter of 2013, and the company’s gross margin rate increased 260 basis points to 27 percent, which reflects the improved efficiencies of its breweries, primarily due to better capacity utilization. Capacity utilization increased to 68 percent in the first quarter of 2014 compared to 58 percent in the first quarter of 2013.
“Our solid first quarter performance is in line with our expectations and represents an important step forward as we continue to accelerate the power of CBA’s advantaged strategy,” said Andy Thomas, CEO of CBA. “This past quarter is the first under the company’s new executive leadership team, and the initial progress we made in continuing to grow revenue, synchronize our supply chain and increase our gross margin reflects the strong impact this team will make in the future.”
“In the first quarter, our double digit growth in net sales reflects the realization of a disciplined approach to our portfolio strategy, with particular momentum from Kona, Redhook and Omission,” Thomas continued. “Widmer Brothers kicked off 30th anniversary celebrations this year – becoming the second brand in our family to pass the 30-year mile marker. We believe that all of the anniversary activities planned throughout the year will lead to continued excitement and progress as Widmer Brothers enters its next chapter.”
Depletion growth estimate of 7 to 11 percent.
Average price increases of approximately 1 to 2 percent.
Growth in contract brewing revenue of 25 to 50 percent as a result of new partnerships.
Gross margin rate of 28.5 to 30.5 percent: “As we continue to optimize our brewing locations and improve our capacity utilization and efficiency, we expect our gross margin rate to expand 500 to 700 basis points over the next five years,” Thomas said.
Capital expenditures of approximately $15 to $20 million, continuing investments in capacity and efficiency improvements, quality initiatives and restaurant and retail.
“Our sales, margin and earnings performance for the quarter were consistent with our expectations and are consistent with our previously reported full year guidance,” said CFO Mark Moreland. “While the favorable comparisons to last year are buoyed by last year’s supply chain imbalances, we are pleased with this quarter’s continued strength in our brands’ depletions and our realization of brewery performance efficiencies. Lastly, with regards to the annual guidance, we will continue to focus on full-year estimates with the understanding that quarter-to-quarter performance will exhibit volatility.”