Advertising, promotional and selling expenses were 31.4% of net revenue, or $72.66 per barrel, for the
thirty-nine weeks ended September 29, 2018, as compared to 28.2% of net revenue, or $64.56 per barrel, for the thirty-nine weeks ended September 30, 2017. 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.
General and administrative.
General and administrative
expenses increased by $11.6 million, or 21.4%, to $66.0 million for the thirty-nine weeks ended September 29, 2018, as compared to $54.3 million for the thirty-nine weeks ended September 30, 2017. The increase was primarily
due to increases in salaries and benefits and stock compensation costs.
Income tax expense.
During the thirty-nine weeks ended September 29,
2018, the Company recorded a net income tax expense of $16.5 million which consists of $25.0 million income tax expenses partially offset by a $4.5 million
one-time
impact related to tax
accounting method changes and $4.0 million tax benefit related to stock option exercises in accordance with ASU
2016-09.
The Companys
non-GAAP
effective tax
rate for the thirty-nine weeks ended September 29, 2018, excluding the impact of the adoption of ASU
2016-09,
decreased to 23.4% from 36.7% for the thirty-nine weeks ended September 30, 2017,
primarily due to the favorable impact of the Tax Cuts and Jobs Act of 2017 including a favorable one-time impact due to accounting method changes reported in the current period.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased to
$68.9 million as of September 29, 2018 from $65.6 million as of December 30, 2017, reflecting cash provided by operating activities that was only partially offset by cash used for purchases of property, plant and equipment and
cash used in 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
thirty-nine weeks ended September 29, 2018 was $108.1 million and primarily consisted of net income of $70.9 million and
non-cash
items of $59.3 million, partially offset by a net increase
in operating assets and liabilities of $22.1 million. Cash provided by operating activities for the thirty-nine weeks ended September 30, 2017 was $108.2 million and primarily consisted of net income of $68.5 million and
non-cash
items of $41.6 million, partially offset by a net increase in operating assets and liabilities of $1.9 million.
The Company used $38.6 million in investing activities during the thirty-nine weeks ended September 29, 2018, as compared to $23.4 million
during the thirty-nine weeks ended September 30, 2017. Investing activities primarily consisted of capital investments made mostly in the Companys breweries to drive efficiencies and cost reductions, support product innovation and future
growth.
Cash used in financing activities was $66.2 million during the thirty-nine weeks ended September 29, 2018, as compared to
$105.8 million used in financing activities during the thirty-nine weeks ended September 30, 2017. The $39.6 million decrease in cash used in financing activities in 2018 from 2017 is primarily due to a decrease in stock repurchases
under the Companys Stock Repurchase program, partially offset by an increase in proceeds from the exercise of stock options.
During the thirty-nine
weeks ended September 29, 2018 and the period from September 30, 2018 through October 20, 2018, the Company repurchased approximately 350,000 shares of its Class A Common Stock for an aggregate purchase price of approximately
$88.3 million. As of October 20, 2018, the Company had repurchased a cumulative total of approximately 13.8 million shares of its Class A Common Stock for an aggregate purchase price of $840.7 million and had approximately
$90.3 million remaining on the $931.0 million stock repurchase expenditure limit set by the Board of Directors.
The Company expects that its
cash balance as of September 29, 2018 of $68.9 million, along with future operating cash flow and the Companys unused line of credit of $150.0 million, will be sufficient to fund future cash requirements. The Companys
$150.0 million credit facility has a term not scheduled to expire until March 31, 2023. As of the date of this filing, the Company was not in violation of any of its covenants to the lender under the credit facility and there were no
amounts outstanding under the credit facility.
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