NATIONAL BEVERAGE CORP

Quarterly Report • Dec 7, 2023

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

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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, — 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.

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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)

	Three Months Ended — October 28,	October 29,	Six Months Ended — 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.

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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
(In thousands)

	Three 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.

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NATIONAL BEVERAGE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(In thousands)

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.

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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.

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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.

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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.

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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.

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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:

Fiscal 2024 – Remaining two quarters	(In thousands) — $ 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.

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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.

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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.

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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.

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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)

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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)

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