Gross profit.
Gross profit was $115.69 per barrel for the thirteen weeks ended March 30, 2019,
as compared to $118.25 per barrel for the thirteen weeks ended March 31, 2018. Gross margin was 49.5% for the thirteen weeks ended March 30, 2019, as compared to 50.5% for the thirteen weeks ended March 31, 2018. The decrease in gross
profit per barrel of $2.56 was primarily the result of an increase in cost of goods sold per barrel and a decrease in net revenue per barrel.
The Company
includes freight charges related to the movement of finished goods from its manufacturing locations to Distributor locations in its advertising, promotional and selling expense line item. As such, the Companys gross margins may not be
comparable to those of other entities that classify costs related to distribution differently.
Advertising, promotional and selling.
Advertising,
promotional and selling expenses increased by $4.2 million, or 6.2%, to $71.7 million for the thirteen weeks ended March 30, 2019, as compared to $67.5 million for the thirteen weeks ended March 30, 2018. The increase was
primarily due to increased investments in media and production, higher salaries and benefits costs and increased freight to distributors due to higher volumes.
Advertising, promotional and selling expenses were 28.5% of net revenue, or $66.63 per barrel, for the thirteen weeks ended March 30, 2019, as compared
to 35.5% of net revenue, or $83.09 per barrel, for the thirteen weeks ended March 31, 2018. The Company invests in advertising and promotional campaigns that it believes will be effective, but there is no guarantee that such investments will
generate sales growth.
The Company conducts certain advertising and promotional activities in its Distributors markets, and the Distributors make
contributions to the Company for such efforts. These amounts are included in the Companys statements of comprehensive income as reductions to advertising, promotional and selling expenses. Historically, contributions from Distributors for
advertising and promotional activities have amounted to between 2% and 3% of net sales. The Company may adjust its promotional efforts in the Distributors markets if changes occur in these promotional contribution arrangements, depending on
industry and market conditions.
General and administrative.
General and administrative expenses increased by $4.0 million, or 20.9%, to
$23.4 million for the thirteen weeks ended March 30, 2019, as compared to $19.3 million for the thirteen weeks ended March 31, 2018. The increase was primarily due to increases in salaries and benefits costs and consulting costs.
Income tax expense.
During the thirteen weeks ended March 30, 2019, the Company recorded a net income tax expense of $6.1 million which
consists of $7.9 million income tax expenses partially offset by a $1.8 million tax benefit related to stock option exercises in accordance with ASU
2016-09.
The Companys
non-GAAP
effective tax rate for the thirteen weeks ended March 30, 2019, excluding the impact of the adoption of ASU
2016-09,
decreased to 26.5% from 28.0% for the
thirteen weeks ended March 31, 2018, primarily due to a decrease in
non-deductible
officer compensation under IRC Section 162(m).
LIQUIDITY AND CAPITAL RESOURCES
Cash decreased to
$102.9 million as of March 30, 2019 from $108.4 million as of December 29, 2018, reflecting cash used for purchases of property, plant and equipment, partially offset by cash provided by operating and financing activities.
Cash provided by operating activities consists of net income, adjusted for certain
non-cash
items, such as
depreciation and amortization, stock-based compensation expense, other
non-cash
items included in operating results, and changes in operating assets and liabilities, such as accounts receivable, inventory,
accounts payable and accrued expenses.
Cash provided by operating activities for the thirteen weeks ended March 30, 2019 was $13.6 million and
primarily consisted of net income of $23.7 million and
non-cash
items of $17.0 million, partially offset by a net increase in operating assets and liabilities of $27.1 million. Cash used in
operating activities for the thirteen weeks ended March 31, 2018 was $10.4 million and primarily consisted of a net increase in operating assets and liabilities of $34.4 million, partially offset by
non-cash
items of $14.7 million and net income of $9.3 million.
The Company used $22.1 million in
investing activities during the thirteen weeks ended March 30, 2019, as compared to $11.4 million during the thirteen weeks ended March 31, 2018. Investing activities primarily consisted of capital investments made mostly in the
Companys breweries to drive efficiencies and cost reductions, and support product innovation and future growth.
Cash provided by financing
activities was $2.9 million during the thirteen weeks ended March 30, 2019, as compared to $2.8 million provided by financing activities during the thirteen weeks ended March 31, 2018. The $0.1 million increase in cash
provided by financing activities in 2019 from 2018 is primarily due to a decrease in stock repurchases under the Companys Stock Repurchase program, partially offset by a decrease in proceeds from the exercise of stock options.
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