National Beverage Corp: Better Than Feared, But Thesis Unchanged; Stay Sell

Research evidence excerpt

National Beverage Corp: Better Than Feared, But Thesis Unchanged; Stay Sell

s.

due to stronger pricing (+6.6% vs. our forecast +5.5) as volumes fall marginally below

Q1E 0.62 0.60 -3 0.62

our forecast (-11.9% vs. UBSe -11.5%). Beyond the top line, gross margin was down -

Q2E 0.49 0.48 -1 0.49

143bps YOY to 34.7%, below our forecast of 36.2% heading into the print.

Q3E 0.42 0.42 -1 0.42

Meanwhile, SG&A of 17.8% of sales was more or less in-line with our expectations, and Q4E 0.48 0.44 -7 0.48

FIZZ recorded $2.8M of other income, predominantly owing to interest income. The 04/27E 2.01 1.95 -3 2.01

company's effective tax rate of 23.8% was slightly above our 23.5% estimate for the 04/28E 2.11 2.05 -3 2.11

quarter 04/29E 2.21 2.18 -2 -

Key Takeaways From Our Call With Management Peter Grom

Analyst

QTD Volume Started Weak, But Improving: Despite benefits from shipment peter.grom@ubs.com

timing related to a CostCo MVM, management noted that volume trends +1-212-713 3482

started 1Q under pressure which they believe was largely due to consumer

Arian Chakravarty

pressures more so than anything else. That said, the company has observed Associate Analyst

stronger trends in June and while they acknowledged some of these arian.chakravarty@ubs.com

headwinds appear to be dissipating they believe the improvement is largely +1-212-713 1474

driven by innovation/promotion.

Tristan How

Pricing: The company noted that price/mix was strong in 4Q but they have Associate Analyst

taken additional pricing in mid-May, which should drive a sequential tristan.how@ubs.com

+1-212-713 1081

acceleration in price/mix to start the year. The company noted that after a

period of meaningful promotional activity they are starting to see pricing

actions from others in the competitive set.