Craft Brew Alliance, a craft brewing rollup consisting mainly of Redhook Ale Brewery, Widmer Brothers Brewing and Kona Brewing, announced preliminary financial results for the fourth quarter and year-end 2014. The results underscore a record year and reflect the company’s progress in driving sustainable topline growth and strengthening its bottom line.
Net sales increased 12 percent over the prior year, exceeding the $200 million milestone.
Shipments grew 10 percent, compared to 4 percent in 2013, due primarily to increasing consumer demand in key markets and ongoing efforts to normalize wholesaler inventory levels.
Despite an approximate 25 percent reduction in SKUs, depletions grew 7 percent, compared to 11 percent in 2013. Contract brewing and beer related sales increased by 33 percen over the prior year.
Gross margin expanded by 130 basis points to 29.4 percent in 2014, compared to 28.1 percent in 2013, which keeps the company on-target for its long-term gross margin target of 35 percent in 2017.
Capital expenditures were approximately $15.8 million, compared to $9.9 million in 2013, and primarily represent capacity and efficiency improvements, quality initiatives and restaurant and retail enhancements.
“Across the board, 2014 was a milestone year for CBA, and I am incredibly proud of the entire team for their focus and commitment to achieving these record results in an increasingly competitive market,” said Andy Thomas, chief executive officer, CBA. “At the beginning of the year, we communicated two key focus areas — continue driving sustainable topline growth while meaningfully improving our gross margin. From passing the $200 million sales mark, to expanding our gross margin by 130 basis points, to successfully bringing our Memphis brewing operations online before summer, we demonstrated the exceptional results that we can achieve when the right focus, right team and right strategy are in place.”
Select preliminary results for the fourth quarter 2014:
- Net sales and beer shipments grew 7 percent and 6 percent, respectively, in the fourth quarter.
- Depletions grew 2 percent over the fourth quarter of 2013, which primarily reflects the SKU rationalization of seasonals across the portfolio.
- Fourth quarter gross margin increased by 280 basis points to 28.8 percent compared to the fourth quarter last year, reflecting the benefit of the first full quarter of brewing from the Memphis brewery, as well as procurement savings.
“For 2015, we remain focused on creating continued sustainable growth across our core business, further strengthening our bottom line and planting seeds in business development that will enable us to fully realize the benefits of CBA’s advantaged strategy well into the future,” Thomas said.
Anticipated financial highlights for 2015:
- Owned beer shipment growth between 6 percent and 8 percent.
- Average price increase of 1 percent to 2 percent.
- A growth of 10 percent to a decline of 10 percent in contract brewing revenue as the company continues to manage the most efficient use of its owned capacity.
- Gross margin rate of 30.5 percent to 31.5 percent. Through ongoing efforts to optimize brewing locations and improve capacity utilization and efficiency, the alliance continues to expect gross margin expansion to 35 percent in 2017.