NATIONAL BEVERAGE CORP 10-Q

fizz20231028_10q.htm   Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-Q   ☑ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended October 28, 2023 or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934   Commission file number 1-14170   NATIONAL BEVERAGE CORP. (Exact name of registrant as specified in its charter)     Delaware 59-2605822     (State of incorporation) (I.R.S. Employer Identification No.)     8100 SW Tenth Street, Suite 4000 , Fort Lauderdale , FL 33324 (Address of principal executive offices including zip code)   ( 954 ) 581-0922 (Registrant’s telephone number including area code) Securities registered pursuant to Section 12(b) of the Act:   Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $.01 per share FIZZ The NASDAQ Global Select Market     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐   Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes ☑ No ☐   Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐   If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐   Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑   The number of shares of registrant’s common stock outstanding as of December 4, 2023 was 93,392,746 .     Table of Contents       NATIONAL BEVERAGE CORP. QUARTERLY REPORT ON FORM 10-Q INDEX       PART I - FINANCIAL INFORMATION   Item 1. Financial Statements (Unaudited) Page     Condensed Consolidated Balance Sheets as of October 28, 2023 and April 29, 2023 3     Condensed Consolidated Statements of Income for the Three and Six Months Ended October 28, 2023 and October 29, 2022 4     Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended October 28, 2023 and October 29, 2022 5     Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended October 28, 2023 and October 29, 2022 6     Condensed Consolidated Statements of Cash Flows for the Six Months Ended October 28, 2023 and October 29, 2022 7     Notes to Condensed Consolidated Financial Statements 8     Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 11     Item 3. Quantitative and Qualitative Disclosures about Market Risk 14     Item 4. Controls and Procedures 14     PART II - OTHER INFORMATION     Item 1A. Risk Factors 15     Item 6. Exhibits 15     Signature 16   2 Table of Contents     PART I - FINANCIAL INFORMATION     ITEM 1.     FINANCIAL STATEMENTS NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data)       October 28,     April 29,       2023     2023   Assets                 Current assets:                 Cash and equivalents   $ 247,679     $ 158,074   Trade receivables - net     100,223       104,918   Inventories     92,774       93,578   Prepaid and other assets     15,807       9,835   Total current assets     456,483       366,405   Property, plant and equipment - net     151,886       148,423   Right-of-use assets     44,462       39,506   Goodwill     13,145       13,145   Intangible assets     1,615       1,615   Other assets     5,295       5,248   Total assets   $ 672,886     $ 574,342                     Liabilities and Shareholders' Equity                 Current liabilities:                 Accounts payable   $ 80,003     $ 85,106   Accrued liabilities     48,870       47,318   Operating lease obligations     13,483       11,745   Income taxes payable     194       152   Total current liabilities     142,550       144,321   Deferred income taxes - net     24,145       19,814   Operating lease obligations     31,630       29,782   Other liabilities     7,391       7,938   Total liabilities     205,716       201,855   Shareholders' equity:                 Preferred stock, $ 1 par value - 1,000,000 shares authorized:                 Series C - 150,000 shares issued     150       150   Common stock, $ .01 par value - 200,000,000 shares authorized; 101,766,058 shares issued ( 101,727,658 shares at April 29)     1,018       1,017   Additional paid-in capital     41,012       40,393   Retained earnings     451,764       358,345   Accumulated other comprehensive loss     ( 2,541 )     ( 3,185 ) Treasury stock - at cost:                 Series C preferred stock - 150,000 shares     ( 5,100 )     ( 5,100 ) Common stock - 8,374,112 shares     ( 19,133 )     ( 19,133 ) Total shareholders' equity     467,170       372,487   Total liabilities and shareholders' equity   $ 672,886     $ 574,342     See accompanying Notes to Condensed Consolidated Financial Statements.   3 Table of Contents     NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts)       Three Months Ended     Six Months Ended       October 28,     October 29,     October 28,     October 29,       2023     2022     2023     2022                                     Net sales   $ 300,074     $ 299,633     $ 624,314     $ 617,750                                     Cost of sales     192,216       199,637       401,975       418,353                                     Gross profit     107,858       99,996       222,339       199,397                                     Selling, general and administrative expenses     53,559       53,073       104,935       105,996                                     Operating income     54,299       46,923       117,404       93,401                                     Other income - net     2,716       86       4,778       2                                     Income before income taxes     57,015       47,009       122,182       93,403                                     Provision for income taxes     13,227       10,963       28,763       21,903                                     Net income   $ 43,788     $ 36,046     $ 93,419     $ 71,500                                     Earnings per common share:                                 Basic   $ .47     $ .39     $ 1.00     $ .77   Diluted   $ .47     $ .39     $ 1.00     $ .76                                     Weighted average common shares outstanding:                                 Basic     93,360       93,344       93,357       93,341   Diluted     93,604       93,602       93,607       93,601     See accompanying Notes to Condensed Consolidated Financial Statements.   4 Table of Contents     NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (In thousands)       Three Months Ended     Six Months Ended       October 28,     October 29,     October 28,     October 29,       2023     2022     2023     2022                                     Net income   $ 43,788     $ 36,046     $ 93,419     $ 71,500                                     Other comprehensive income (loss), net of tax:                                 Cash flow hedges     855       ( 5,494 )     644       ( 16,450 )                                   Comprehensive income   $ 44,643     $ 30,552     $ 94,063     $ 55,050     See accompanying Notes to Condensed Consolidated Financial Statements.   5 Table of Contents     NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) (In thousands)       Three Months Ended     Six Months Ended       October 28, 2023     October 29, 2022     October 28, 2023     October 29, 2022       Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount   Series C Preferred Stock                                                                 Beginning and end of period     150     $ 150       150     $ 150       150     $ 150       150     $ 150                                                                     Common Stock                                                                 Beginning of period     101,727       1,017       101,712       1,017       101,727       1,017       101,712       1,017   Stock options exercised     39       1       14       -       39       1       14       -   End of Period     101,766       1,018       101,726       1,017       101,766       1,018       101,726       1,017                                                                     Additional Paid-In Capital                                                                 Beginning of period             40,561               39,575               40,393               39,405   Stock options exercised             278               285               278               285   Stock-based compensation             173               172               341               342   End of period             41,012               40,032               41,012               40,032                                                                     Retained Earnings                                                                 Beginning of period             407,976               251,635               358,345               216,181   Net income             43,788               36,046               93,419               71,500   End of period             451,764               287,681               451,764               287,681                                                                     Accumulated Other Comprehensive (Loss) Income                                                           Beginning of period             ( 3,396 )             ( 4,038 )             ( 3,185 )             6,918   Cash flow hedges, net of tax             855               ( 5,494 )             644               ( 16,450 ) End of period             ( 2,541 )             ( 9,532 )             ( 2,541 )             ( 9,532 )                                                                   Treasury Stock - Series C Preferred                                                                 Beginning and end of period     150       ( 5,100 )     150       ( 5,100 )     150       ( 5,100 )     150       ( 5,100 )                                                                   Treasury Stock - Common                                                                 Beginning and end of period     8,374       ( 19,133 )     8,374       ( 19,133 )     8,374       ( 19,133 )     8,374       ( 19,133 )                                                                   Total Shareholders' Equity           $ 467,170             $ 295,115             $ 467,170             $ 295,115     See accompanying Notes to Condensed Consolidated Financial Statements.   6 Table of Contents     NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)       Six Months Ended       October 28,     October 29,       2023     2022   Operating Activities:                 Net income   $ 93,419     $ 71,500   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation and amortization     9,941       10,436   Deferred income tax provision     4,134       1,147   Gain on sale of property, plant and equipment, net     3       -   Stock-based compensation     341       342   Amortization of operating right-of-use assets     6,921       6,592   Changes in assets and liabilities:                 Trade receivables     4,695       ( 6,853 ) Inventories     804       14,909   Operating lease right-of-use assets     ( 11,877 )     (16,132 ) Prepaid and other assets     ( 600 )     3,187   Accounts payable     ( 5,103 )     ( 10,921 ) Accrued and other liabilities     ( 4,205 )     ( 1,566 ) Operating lease obligation     3,586       9,597   Net cash provided by operating activities     102,059       82,238                     Investing Activities:                 Additions to property, plant and equipment     ( 12,760 )     ( 7,974 ) Proceeds from sale of property, plant and equipment     28       27   Net cash used in investing activities     ( 12,732 )     ( 7,947 )                   Financing Activities:                 Proceeds from stock options exercised     278       285   Repayments of Loan Facility     -       ( 30,000 ) Net cash provided by (used in) financing activities     278       ( 29,715 )                   Net Increase in Cash and Equivalents     89,605       44,576                     Cash and Equivalents - Beginning of Period     158,074       48,050                     Cash and Equivalents - End of Period   $ 247,679     $ 92,626                     Other Cash Flow Information:                 Interest paid   $ 146     $ 224   Income taxes paid   $ 30,514     $ 21,373     See accompanying Notes to Condensed Consolidated Financial Statements.   7 Table of Contents   NATIONAL BEVERAGE CORP. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)   National Beverage Corp. develops, produces, markets and sells a distinctive portfolio of sparkling waters, juices, energy drinks and carbonated soft drinks primarily in the United States and Canada. Incorporated in Delaware in 1985, National Beverage Corp. is a holding company for various operating subsidiaries. When used in this report, the terms “we,” “us,” “our,” “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries.   1. SIGNIFICANT ACCOUNTING POLICIES     Basis of Presentation The condensed consolidated financial statements include the accounts of National Beverage Corp. and its subsidiaries. Significant intercompany transactions and accounts have been eliminated.   The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles and rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all information and notes presented in the annual consolidated financial statements. The condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and accompanying notes included in our Annual Report on Form 10 -K for the fiscal year ended April 29, 2023. The accounting policies used in these interim unaudited condensed consolidated financial statements are consistent with those used in the annual consolidated financial statements.   The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the interim unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In our opinion, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Results for the interim periods presented are not necessarily indicative of results which might be expected for the entire fiscal year.   Inventories Inventories are stated at the lower of first -in, first -out cost or net realizable market. Inventories at October 28, 2023 were comprised of finished goods of $ 55.1 million and raw materials of $ 37.7 million. Inventories at April 29, 2023 were comprised of finished goods of $ 54.3 million and raw materials of $ 39.2 million.   Marketing Costs The Company utilizes a variety of marketing programs, including cooperative advertising programs with customers, to advertise and promote its beverages to consumers. Marketing costs are expensed when incurred, except for prepaid advertising and production costs, which are expensed when the advertising takes place. Marketing costs, which are included in selling, general and administrative expenses, were $ 13.3 million and $ 10.3 million for the three months ended October 28, 2023 and October 29, 2022, respectively. Marketing costs were $ 24.1 million and $ 20.6 million for the six months ended October 28, 2023 and October 29, 2022, respectively.   8 Table of Contents   Shipping and Handling Costs Shipping and handling costs are reported in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. Such costs were $ 19.7 million and $ 22.0 million for the three months ended October 28, 2023 and October 29, 2022, respectively. Shipping and handling costs were $ 40.6 million and $ 45.6 million for the six months ended October 28, 2023 and October 29, 2022, respectively. Although our classification is consistent with many beverage companies, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales.     2. PROPERTY, PLANT AND EQUIPMENT   Property, plant and equipment consist of the following:       (In thousands)       October 28, 2023     April 29, 2023   Land   $ 9,835     $ 9,835   Buildings and improvements     71,012       70,615   Machinery and equipment     300,946       289,567   Total     381,793       370,017   Less: accumulated depreciation     ( 229,907 )     ( 221,594 ) Property, plant and equipment – net   $ 151,886     $ 148,423     Depreciation expense was $ 4.7 million and $ 4.5 million for the three months ended October 28, 2023 and October 29, 2022, respectively. Depreciation expense was $ 9.3 million and $ 9.0 million for the six months ended October 28, 2023 and October 29, 2022, respectively.     3. DEBT   At October 28, 2023, a subsidiary of the Company maintained unsecured revolving credit facilities with banks aggregating $ 100 million (the “Credit Facilities”). The Credit Facilities expire from October 28, 2024 to May 30, 2025 and any borrowings would currently bear interest at 1.05 % above the Secured Overnight Financing Rate (SOFR). There were no borrowings outstanding under the Credit Facilities at October 28, 2023 or April 29, 2023. At October 28, 2023, $ 2.2 million of the Credit Facilities was reserved for standby letters of credit and $ 97.8 million was available for borrowings.   On December 21, 2021, a subsidiary of the Company entered into an unsecured revolving term loan facility with a national bank aggregating $ 50 million (the “Loan Facility”). There were no borrowings outstanding under the Loan Facility at October 28, 2023 or April 29, 2023. The Loan Facility expires December 31, 2025 and any borrowings would bear interest at 1.05 % above the adjusted daily SOFR.   The Credit Facilities and Loan Facility require the subsidiary to maintain certain financial ratios, including debt to net worth and debt to EBITDA (as defined in the credit agreements), and contain other restrictions, none of which are expected to have a material effect on operations or financial position. At October 28, 2023, the subsidiary was in compliance with all loan covenants.   9 Table of Contents     4. STOCK OPTIONS   During the six months ended October 28, 2023, no options were granted and options to purchase 38,400 shares were exercised at a weighted average exercise price of $ 7.26 . At October 28, 2023, options to purchase 478,500 shares at a weighted average exercise price of $ 19.68 per share were outstanding and stock-based awards to purchase 5,391,405 shares of common stock were available for grant.     5. DERIVATIVE FINANCIAL INSTRUMENTS   From time to time, we enter into aluminum swap contracts to partially mitigate our exposure to changes in the cost of aluminum containers. Such financial instruments are designated and accounted for as cash flow hedges. Accordingly, gains or losses attributable to the effective portion of the cash flow hedge are reported in accumulated other comprehensive income (loss) (“AOCI”) and reclassified into cost of sales in the period in which the hedged transaction affects earnings. The ineffective portion of the change in fair value of our cash flow hedge was immaterial. The following summarizes the gains (losses) recognized in the Condensed Consolidated Statements of Income and AOCI:       (In thousands)       Three Months Ended     Six Months Ended       October 28, 2023     October 29, 2022     October 28, 2023     October 29, 2022   Recognized in AOCI:                                 Loss before income taxes   $ ( 2,341 )   $ ( 10,327 )   $ ( 6,381 )   $ ( 25,337 ) Less: income tax benefit     ( 560 )     ( 2,470 )     ( 1,526 )     ( 6,061 ) Net     ( 1,781 )     ( 7,857 )     ( 4,855 )     ( 19,276 ) Reclassified from AOCI to cost of sales:                                 Loss before income taxes     ( 3,464 )     ( 3,106 )     ( 7,227 )     ( 3,714 ) Less: income tax benefit     ( 828 )     ( 743 )     ( 1,728 )     ( 888 ) Net     ( 2,636 )     ( 2,363 )     ( 5,499 )     ( 2,826 ) Net change to AOCI   $ 855     $ ( 5,494 )   $ 644     $ ( 16,450 )   As of October 28, 2023, the notional amount of our outstanding aluminum swap contracts was $ 89.1 million and, assuming no change in commodity prices, $ 4.1 million of unrealized loss before tax will be reclassified from AOCI and recognized in earnings over the next 12 months.   As of October 28, 2023 and April 29, 2023 the fair value of the derivative liability, which was included in accrued liabilities, was $ 4.1 million and $ 4.6 million, respectively. Such valuation does not entail a significant amount of judgment and the inputs that are significant to the fair value measurement are Level 2 as defined by the fair value hierarchy as they are observable market based inputs or unobservable inputs that are corroborated by market data.   10 Table of Contents     6. LEASES   The Company has entered into various non-cancelable operating lease agreements for certain offices, buildings and machinery and equipment which expire at various dates through July 2035. The Company does not assume renewals in the determination of the lease term unless the renewals are deemed to be reasonably assured at lease commencement. Lease agreements generally do not contain material residual value guarantees or material restrictive covenants. Operating lease costs were $ 4.0 million and $ 3.7 million for the three months ended October 28, 2023 and October 29, 2022, respectively. Operating lease costs were $ 7.7 million and $ 7.1 million for the six months ended October 28, 2023 and October 29, 2022, respectively. As of October 28, 2023, the weighted-average remaining lease term and weighted average discount rate of operating leases was 4.16 years and 3.74 %, respectively. As of April 29, 2023, the weighted-average remaining lease term and weighted average discount rate of operating leases was 4.34 years and 3.30 %, respectively. Cash payments were $ 4.1 million and $ 3.7 million for operating leases for the three months ended October 28, 2023 and October 29, 2022, respectively. Cash payments were $ 7.8 million and $ 7.1 million for the six months ended October 28, 2023 and October 29, 2022, respectively.   The following is a summary of future minimum lease payments and related liabilities for all non-cancelable operating leases as of October 28, 2023:       (In thousands)   Fiscal 2024 – Remaining two quarters   $ 7,478   Fiscal 2025     13,051   Fiscal 2026     10,627   Fiscal 2027     8,957   Fiscal 2028     3,910   Thereafter     4,779   Total minimum lease payments including interest     48,802   Less: amounts representing interest     ( 3,689 ) Present value of minimum lease payments     45,113   Less: current portion of lease obligations     ( 13,483 ) Non-current portion of lease obligations   $ 31,630       ITEM 2. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   OVERVIEW   National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks (Power+ Brands) and, to a lesser extent, carbonated soft drinks. We believe our creative product designs, innovative packaging and imaginative flavors, along with our corporate culture and philosophy, make National Beverage unique as a stand-alone entity in the beverage industry. Traditional and typical are not a part of an innovator’s vocabulary.   Our strategy seeks the profitable growth of our products by (i) developing healthier beverages in response to the global shift in consumer buying habits and tailoring our beverage portfolio to the preferences of a diverse mix of ‘crossover consumers’ – a growing group desiring a healthier alternative to artificially sweetened and high-caloric beverages; (ii) emphasizing unique flavor development and variety throughout our brands that appeal to multiple demographic groups; (iii) maintaining points of difference through innovative marketing, packaging and consumer engagement and (iv) responding faster and more creatively to changing consumer trends than larger competitors who are burdened by legacy production and distribution complexity and costs.   11 Table of Contents   The majority of our brands are geared to the active and health-conscious consumer including sparkling waters, energy drinks, and juices. Our portfolio of Power+ Brands includes LaCroix®, LaCroix Cúrate®, and LaCroix NiCola® sparkling water beverages; Clear Fruit® non-carbonated water beverages enhanced with fruit flavor; Rip It® energy drinks and shots; and Everfresh®, Everfresh Premier Varietals™ and Mr. Pure® 100% juice and juice-based beverages. Additionally, we produce and distribute carbonated soft drinks including Shasta® and Faygo®, iconic brands whose consumer loyalty spans more than 130 years.   Presently, our primary market focus is the United States and Canada. Certain of our beverages are also distributed on a limited basis in other countries and options to expand distribution to other regions are being considered. To service a diverse customer base that includes numerous national retailers, as well as thousands of smaller “up-and-down-the-street” accounts, we utilize a hybrid distribution system consisting of warehouse and direct-store delivery. The warehouse delivery system allows our retail partners to further maximize their assets by utilizing their ability to pick up beverages at our warehouses, further lowering their/our costs.   Our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, holiday and seasonal programming, changes in consumer purchasing habits and weather conditions. Beverage sales are seasonal with higher sales volume realized during the summer months when outdoor activities are more prevalent.     RESULTS OF OPERATIONS   Three Months Ended October 28, 2023 (second quarter of fiscal 2024) compared to Three Months Ended October 29, 2022 (second quarter of fiscal 2023)   Net sales for the second quarter of fiscal 2024 increased $0.5 million to $300.1 million from $299.6 million for the second quarter of fiscal 2023. The increase in sales resulted primarily from a 3.2% increase in average selling price per case, partially offset by a 3.6% decline in case volume. The volume decline primarily impacted Power+ Brands, partially offset by an increase in carbonated soft drink brands.   Gross profit for the second quarter of fiscal 2024 increased to $107.9 million from $100.0 million for the second quarter of fiscal 2023. The increase in gross profit is primarily due to the increased average selling price. The cost of sales per case decreased slightly and gross margin increased to 35.9% from 33.4% for the second quarter of fiscal 2023.   Selling, general and administrative expenses for the second quarter of fiscal 2024 increased $0.5 million to $53.6 million from $53.1 million for the second quarter of fiscal 2023. The increase was primarily due to an increase in marketing costs, partially offset by declines in shipping and administrative costs. As a percent of net sales, selling, general and administrative expenses increased to 17.8% for the second quarter of fiscal 2024 from 17.7% for the second quarter of fiscal 2023.     12 Table of Contents   Other income – net includes interest income of $2.2 million for the second quarter of fiscal 2024 and $0.2 million for the second quarter of fiscal 2023. The increase in interest income is due to increased average invested balances and higher yields.   The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.2% for the second quarter of fiscal 2024 and 23.3% for the second quarter of fiscal 2023. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes.   Six Months Ended October 28, 2023 (first six months of fiscal 2024) compared to Six Months Ended October 29, 2022 (first six months of fiscal 2023)   Net sales for the first six months of fiscal 2024 increased $6.5 million to $624.3 million from $617.8 million for the first six months of fiscal 2023. The increase in sales resulted primarily from a 3.4% increase in average selling price per case, partially offset by a 2.7% decline in case volume. The volume decline primarily impacted Power+ Brands, partially offset by an increase in carbonated soft drink brands.   Gross profit for the first six months of fiscal 2024 increased to $222.3 million from $199.4 million for the first six months of fiscal 2023. The increase in gross profit is due to the increased average selling price and a decline in packaging and ingredient costs. The cost of sales per case decreased 1.8% and gross margin increased to 35.6% from 32.3% for the first six months of fiscal 2023.   Selling, general and administrative expenses for the first six months of fiscal 2024 decreased $1.1 million to $104.9 million from $106.0 million for the first six months of fiscal 2023. The decrease was primarily due to a decrease in shipping and administrative costs, partially offset by an increase in marketing costs. As a percent of net sales, selling, general and administrative expenses decreased to 16.8% from 17.2% for the first six months of fiscal 2023.   Other income – net includes interest income of $4.0 million for the first six months of fiscal 2024 and $0.2 million for the first six months of fiscal 2023. The increase in interest income is due to increased average invested balances and higher yields.   The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.5% for the first six months of fiscal 2024 and the first six months of fiscal 2023. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes.     LIQUIDITY AND FINANCIAL CONDITION   Liquidity and Capital Resources Our principal source of funds is cash generated from operations. At October 28, 2023, we maintained unsecured revolving credit facilities totaling $150 million, under which no borrowings were outstanding and $2.2 million was reserved for standby letters of credit. We believe existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months.   13 Table of Contents   Cash Flows The Company’s cash position increased $89.6 million for the first six months of fiscal 2024 compared to an increase of $44.6 million for the first six months of fiscal 2023.   Net cash provided by operating activities for the first six months of fiscal 2024 was $102.1 million compared to $82.2 million for the six months of fiscal 2023. For the first six months of fiscal 2024, cash flow provided by operating activities was principally provided by net income of $93.4 million, depreciation and amortization of $9.9 million, and amortization of operating lease right-of-use assets of $6.9 million, partially offset by changes in working capital and other accounts.   Net cash used in investing activities for the first six months of fiscal 2024 reflects capital expenditures of $12.8 million, compared to capital expenditures of $8.0 million for the first six months of fiscal 2023. Certain production capacity and efficiency improvement projects are in progress and we anticipate fiscal 2024 capital expenditures will be in the range of $25 to $30 million.   Financial Position At October 28, 2023, our working capital increased to $313.9 million from $222.1 million at April 29, 2023. The current ratio was 3.2 to 1 at October 28, 2023 compared to 2.5 to 1 at April 29, 2023. Trade receivables - net decreased $4.7 million and days sales outstanding improved to 30.4 from 30.5 days. Inventories decreased $0.8 million and inventory turns declined to 8.4 times from 9.2 times.   ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK   There have been no material changes in market risks from those reported in our Annual Report on Form 10-K for the fiscal year ended April 29, 2023.   ITEM 4. CONTROLS AND PROCEDURES   As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective to ensure information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (2) accumulated and communicated to our management, including our Chief Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.   There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.   FORWARD-LOOKING STATEMENTS   National Beverage Corp. and its representatives may make written or oral statements relating to future events or results relative to our financial, operational and business performance, achievements, objectives and strategies. These statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995 and include statements contained in this report and other filings with the Securities and Exchange Commission and in reports to our stockholders. Certain statements including, without limitation, statements containing the words “believes,” “anticipates,” “intends,” “plans,” “expects,” and “estimates” constitute “forward-looking statements” and involve known and unknown risk, uncertainties and other factors that may cause the actual results, performance or achievements of our Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the following: general economic and business conditions, pricing of competitive beverages, success of new product and flavor introductions, fluctuations in the costs and availability of raw materials and packaging supplies, ability to pass along cost increases to our customers, labor strikes or work stoppages or other interruptions in the employment of labor, continued retailer support for our beverages, changes in brand image, consumer demand and preferences and our success in creating beverages geared toward consumers’ tastes, success in implementing business strategies, changes in business strategy or development plans, government regulations, taxes or fees imposed on the sale of our beverages, unfavorable weather conditions and other factors referenced in this report, filings with the Securities and Exchange Commission and other reports to our stockholders. We disclaim an obligation to update any such factors or to publicly announce the results of any revisions to any forward-looking statements contained herein to reflect future events or developments.   14 Table of Contents     PART II - OTHER INFORMATION     ITEM 1A. RISK FACTORS   There have been no material changes in risk factors from those reported in our Annual Report on Form 10-K for the fiscal year ended April 29, 2023.   ITEM 6. EXHIBITS   Exhibit No. Description   10.15 Amendment to Loan Agreement between NewBevCo, Inc. and lender therein dated November 15, 2023   31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002   32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   32.2 Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   101 The following financial information from National Beverage Corp. Quarterly Report on Form 10-Q for the quarterly period ended October 28, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Income; (iii) Condensed Consolidated Statements of Comprehensive Income; (iv) Condensed Consolidated Statements of Shareholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.   104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)   15 Table of Contents   SIGNATURE   Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.   Date: December 7, 2023     National Beverage Corp.       (Registrant)             By: /s/  George R. Bracken       George R. Bracken         Executive Vice President – Finance         (Principal Financial Officer)     16