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What changed in NATIONAL BEVERAGE CORP's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of NATIONAL BEVERAGE CORP's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+72 added−81 removedSource: 10-K (2023-06-28) vs 10-K (2022-06-29)

Top changes in NATIONAL BEVERAGE CORP's 2023 10-K

72 paragraphs added · 81 removed · 59 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAll our beverage products are produced in the U.S., providing thousands of jobs in local communities and boasting a lower carbon footprint than imported brands. In addition, the majority of our products are delivered through the warehouse distribution system which provides more efficient and lower greenhouse gas emissions than direct-store delivery competitors.
Biggest changeWe continue to monitor the health and safety of our work force. SUSTAINABILITY National Beverage Corp. is dedicated to sustainable operations and responsible business initiatives. All our beverage products are produced in the U.S., providing thousands of jobs in local communities and boasting a lower carbon footprint than imported brands.
Since we control all national production, distribution and marketing of our brands, we believe we can more effectively manage quality control and consumer appeal while responding quickly to changing market conditions. 5 Table of Contents DISTRIBUTION 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 to deliver our products through three primary distribution channels: take-home, convenience and food-service.
Since we control all production, distribution and marketing of our brands, we believe we can more effectively manage quality control and consumer appeal while responding quickly to changing market conditions. 5 Table of Contents DISTRIBUTION 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 to deliver our products through three primary distribution channels: take-home, convenience and food-service.
Substantially all of the materials and ingredients we purchase are presently available from several suppliers, although strikes, weather conditions, utility shortages, governmental control or regulations, national emergencies, quality, price or supply fluctuations or other events outside our control could adversely affect the supply of specific materials.
Substantially all of the materials and ingredients we purchase are available from several suppliers, although strikes, weather conditions, utility shortages, governmental control or regulations, national emergencies, quality, price or supply fluctuations or other events outside our control could adversely affect the supply of specific materials.
In addition, our Code of Ethics is available on our website. The information on the Company’s website is not part of this Annual Report on Form 10-K or any other report that we file with, or furnish to, the Securities and Exchange Commission. 10 Table of Contents
In addition, our Code of Ethics is available on our website. The information on the Company’s website is not part of this Annual Report on Form 10-K or any other report that we file with, or furnish to, the Securities and Exchange Commission.
Additionally, we use derivative financial instruments to partially mitigate our exposure to changes in certain raw material costs. 7 Table of Contents SEASONALITY COMPETITION While LaCroix Sparkling Water is the brand of choice as the number one premium domestic sparkling water throughout the United States, the beverage industry is highly competitive and our competitive position may vary by market area.
Additionally, we use derivative financial instruments to partially mitigate our exposure to changes in certain raw material costs. SEASONALITY COMPETITION While LaCroix Sparkling Water is the brand of choice as the number one premium domestic sparkling water throughout the United States, the beverage industry is highly competitive and our competitive position may vary by market area.
In June 2022, PEOPLE Magazine recognized LaCroix Cherry Blossom as the winner of the Flavored Water Category in the PEOPLE's Food Awards 2022. PEOPLE described Cherry Blossom as "spring in a can...with fruity, lightly floral notes." Cherry Blossom joins the innovative trio of Beach Plum, Black Razzberry and Guava São Paulo launched in the fourth quarter of fiscal year 2021.
In June 2022, PEOPLE Magazine recognized LaCroix Cherry Blossom as the winner of the Flavored Water Category in the PEOPLE’s Food Awards 2022. PEOPLE described Cherry Blossom as “spring in a can…with fruity, lightly floral notes.” Cherry Blossom joined the innovative trio of Beach Plum, Black Razzberry and Guava São Paulo launched in the fourth quarter of fiscal year 2021.
Clear Fruit Clear Fruit is a crisp, clear, non-carbonated water beverage enhanced with fruit flavors. Clear Fruit is available in 14 delicious flavors, including consumer favorites Cherry Blast, Strawberry Watermelon, and Fruit Punch. Clear Fruit is available in 20-ounce and 16.9-ounce bottles with consumer-favored sports caps.
Clear Fruit is available in 14 delicious flavors, including consumer favorites Cherry Blast, Strawberry Watermelon, and Fruit Punch. Clear Fruit is available in 20-ounce and 16.9-ounce bottles with consumer-favored sports caps.
Several competitors, including those that dominate the beverage industry, such as Nestlé S.A., PepsiCo and The Coca-Cola Company, have greater financial resources than we have and aggressive promotion of their products may adversely affect sales of our brands.
Several competitors, including those that dominate the beverage industry, such as Nestlé S.A., PepsiCo and The Coca-Cola Company, have greater financial resources than we have and aggressive promotion of their products may adversely affect sales of our brands. 8 Table of Contents TRADEMARKS We own numerous trademarks for our brands that are significant to our business.
Additionally, we produce and distribute carbonated soft drinks (“CSDs”) including Shasta and Faygo ® , iconic brands whose consumer loyalty spans more than 130 years. 2 Table of Contents Power+ Brands – LaCroix During the fourth quarter of fiscal year 2022, LaCroix introduced the unique flavor of Cherry Blossom – a botanical twist of sweet and just a ‘kiss’ of tart.
Additionally, we produce and distribute carbonated soft drinks (“CSDs”) including Shasta® and Faygo®, iconic brands whose consumer loyalty spans more than 130 years. 2 Table of Contents Power+ Brands – LaCroix Continual flavor and packaging innovations for LaCroix in recent years include the unique flavor of Cherry Blossom – a botanical twist of sweet and just a ‘kiss’ of tart.
AVAILABLE INFORMATION Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports are available free of charge on our website at www.nationalbeverage.com as soon as reasonably practicable after such reports are electronically filed with the Securities and Exchange Commission.
Each of our facilities has programs in place designed to minimize the use of water, energy, and other natural resources. 10 Table of Contents AVAILABLE INFORMATION Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports are available free of charge on our website at www.nationalbeverage.com as soon as reasonably practicable after such reports are electronically filed with the Securities and Exchange Commission.
Key to these efforts are data analysis and preventative actions. We measure and benchmark lost-time incident rate, a reliable indication of total recordable injuries rate and severity, and use a risk- reduction process that thoroughly analyzes injuries and near misses. During the COVID-19 pandemic, we took comprehensive measures to safeguard the well-being of our employees.
We measure and benchmark lost-time incident rate, a reliable indication of total recordable injuries rate and severity, and use a risk- reduction process that thoroughly analyzes injuries and near misses. During the COVID-19 pandemic, we took comprehensive measures to safeguard the well-being of our employees. These measures included enhanced sanitation procedures, physical distancing, and other health protocols.
Our take-home, convenience and food-service operations use vending machines and glass-door coolers as marketing and promotional tools for our brands. We provide vending machines and coolers on a placement or purchase basis to our customers.
Also, our Company-owned direct-store delivery fleet distributes products to schools and food-service locations. 6 Table of Contents Our take-home, convenience and food-service operations use vending machines and glass-door coolers as marketing and promotional tools for our brands. We provide vending machines and coolers on a placement or purchase basis to our customers.
Everfresh Premier Varietals™, a unique theme from Everfresh, is positioned as a stand-alone brand for display in the produce section of supermarkets. Everfresh Premier Varietals is a premium line of apple juice derived from a variety of apples specific to the taste of the varietal, such as Granny Smith, McIntosh, Honey Crisp, Golden Delicious, Fuji and Pink Lady.
Everfresh Premier Varietals is a premium line of apple juice derived from a variety of apples specific to the taste of the varietal, such as Granny Smith, McIntosh, Honey Crisp, Golden Delicious, Fuji and Pink Lady. Clear Fruit is a crisp, clear, non-carbonated water beverage enhanced with fruit flavors.
We utilize a mix of short-term incentive programs throughout the organization and provide long-term incentive programs to more senior employees generally through stock-based compensation programs. We offer competitive employee benefits that are effective in attracting and retaining talent and are designed to support the physical, mental and financial health of our employees.
Our compensation programs are designed to ensure we attract and retain talent while maintaining alignment with market compensation. We utilize a mix of short-term incentive programs throughout the organization and provide long-term incentive programs to more senior employees generally through stock-based compensation programs.
Water is critical to our business and we periodically conduct water quality assessments on a variety of measurements. All of our packaging is recyclable and we continually focus on reducing packaging content. More than 80% of our products are in aluminum cans, which generally contain approximately 73% recycled material.
In addition, the majority of our products are delivered through the warehouse distribution system which provides more efficient and lower greenhouse gas emissions than direct-store delivery systems. Water is critical to our business, and we periodically conduct water quality assessments on a variety of measurements. All of our packaging is recyclable and we continually focus on reducing packaging content.
Our employee benefits program includes comprehensive health, dental, life and disability, and profit sharing benefits. Our operating philosophy emphasizes the health and safety of our employees. Our operations personnel, supplemented by risk management professionals, review all aspects of employee tasks and work environment to minimize risk. We strive to achieve an injury-free work environment in our operations.
Our operations personnel, supplemented by risk management professionals, review all aspects of employee tasks and work environment to minimize risk. We strive to achieve an injury-free work environment in our operations. Key to these efforts are data analysis and preventative actions.
We believe these agreements can be renegotiated on terms satisfactory to us as they expire and we believe we maintain good relationships with our employees and their representative organizations. We support a culture of diversity and inclusion that mirrors the markets we serve.
These collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years. We believe these agreements can be renegotiated on terms satisfactory to us as they expire and we believe we maintain good relationships with our employees and their representative organizations.
By consolidating the purchasing function for our production facilities, we believe we procure more competitive arrangements with our suppliers, thereby enhancing our ability to compete as an efficient producer of beverages.
By consolidating the purchasing function for our production facilities, we believe we procure more competitive arrangements with our suppliers, thereby enhancing our ability to compete as an efficient producer of beverages. 7 Table of Contents The products we produce and sell are made from various materials including aluminum cans, glass and plastic bottles, water, carbon dioxide, juice and flavor concentrates, sweeteners, cartons and closures.
We take a comprehensive view of diversity and inclusion across different races, ethnicities, religions and expressions of gender and sexual identity.
We support a culture of diversity and inclusion that mirrors the markets we serve. We take a comprehensive view of diversity and inclusion across different races, ethnicities, religions and expressions of gender and sexual identity. Approximately 62 percent and 24 percent of our employee base identify as persons of color or female, respectively.
Compliance with these provisions has not had any material adverse effect on our financial or competitive position. We believe our current practices and procedures for the control and disposition of toxic or hazardous substances comply in all material respects with applicable law.
Compliance with these provisions has not had any material adverse effect on our financial or competitive position.
We believe vending and cooler equipment expands on-site visual trial, thereby increasing sales and enhancing brand awareness. 6 Table of Contents SALES AND MARKETING We sell and market our products through an internal sales force as well as specialized broker networks.
We believe vending and cooler equipment expands on-site visual trial, thereby increasing sales and enhancing brand awareness. SALES AND MARKETING Our marketing emphasizes programs designed to reach consumers directly through innovative digital marketing, digital social marketing, social media engagement, sponsorships and creative content.
LaCroix’s dynamic ‘theme’ LaCroix Cúrate ® (‘Cure Yourself’) celebrates French sophistication with Spanish zest and bold flavor pairings.NiCola ® by LaCroix, an innovative sparkling water, captures the ‘crossover’ cola consumers with its ‘ innocent ’ effect of no calories, sodium, sweetener or any other ingredient that the health-conscious consumer avoids.
LaCroix’s dynamic ‘theme’ LaCroix Cúrate® (‘Cure Yourself’) celebrates French sophistication with Spanish zest and bold flavor pairings.
Products sold through the direct-store delivery system are distributed directly to the customer’s retail outlets by our direct-store delivery fleet and by independent distributors. Our food-service division distributes products to independent, specialized distributors who sell to hospitals, schools, military bases, airlines, hotels and food-service wholesalers. Also, our Company-owned direct-store delivery fleet distributes products to schools and food-service locations.
Products sold through the direct-store delivery system are distributed directly to the customer’s retail outlets by our direct-store delivery fleet and by independent distributors. We distribute our products to the convenience channel through our own direct-store delivery fleet and those of independent distributors. The convenience channel consists of convenience stores, gas stations and other smaller “up-and-down-the-street” accounts.
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These innovative new varieties are part of the LaCroix family of 31 refreshingly innocent flavors.
Added
Other successful LaCroix additions include Hi-Biscus, a unique flavor that adds the delicate essence of the hibiscus flower to sparkling water; the enticing savor of LimonCello, which instantly transports fans to the Italian Riviera; and the refreshing taste of Pastèque, which captures the lusciousness of a sweet picnic watermelon.
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Our LaCroix NiCola theme includes traditional La Cola along with Coconut Cola, Cubana (Mojito), and Coffea Exotica (Sumatra coffee and cola). Additional LaCroix themes are in development that feature unique packaging and ground-breaking flavor concepts designed to capitalize on LaCroix brand loyalty and growth of the sparkling water category. 3 Table of Contents Everfresh ® and Mr.
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Packaged in sleek 12 oz. tall cans, popular flavors include Cerise Limón, which pairs sweet cherry with tangy lime for a tasteful infusion that tickles the senses; Piña Fraise, an aromatic combination of pineapple and ripe strawberries that creates a tropical blend delight; and Múre Pepino, which combines sweet and sour blackberry notes with crisp cucumber to create a sensory and taste sensation. 3 Table of Contents Additional LaCroix flavors are in development that will continue to feature unique packaging and flavor concepts designed to capitalize on LaCroix brand loyalty and popularity of the sparkling water category.
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Pure ® 100% juice and juice drinks are available in a variety of flavors, from such classics as Orange, Cranberry and flavored lemonades to exotics that include Premium Papaya, Pineapple Mango, Peach Watermelon and Island Punch. The brands’ signature package is a hot-filled, 16 oz. glass bottle designed for single-serve consumption.
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Everfresh and Mr. Pure Everfresh Premier Varietals, a unique theme from Everfresh, is positioned as a stand-alone brand for display in the produce section of supermarkets.
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Rip It 4 Carbonated Soft Drinks – Shasta ® has been recognized as a bottling industry pioneer and innovator for more than 130 years. Shasta features multiple flavors and has earned consumer loyalty by delivering value and convenience with such unique tastes as Raspberry Crème, Tiki Punch, and California Dreamin’.
Added
Rip It 4 Table of Contents Carbonated Soft Drinks – Many of our carbonated soft drink brands enjoy a regional identification that we believe fosters long-term consumer loyalty and makes them more competitive as a consumer choice. In addition, products produced locally often generate retailer-sponsored promotional activities and receive media exposure through community activities rather than costly national advertising.
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The take-home distribution channel consists of national and regional grocery stores, club stores, mass-merchandisers, wholesalers, e-commerce stores, drug stores and dollar stores. We distribute our products to this channel primarily through the warehouse distribution system and, to a lesser extent, the direct-store delivery system.
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Because of the higher retail prices and margins that typically prevail, we have developed packaging and graphics specifically targeted to this market. Our food-service division distributes products to independent, specialized distributors who sell to hospitals, schools, military bases, hotels and food-service wholesalers.
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Our sales force is organized to serve a specific market, focusing on one or more geographic territories, distribution channels or product lines. We believe this focus allows our sales group to provide high level, responsive service and support to our customers and markets.
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We are focused on increasing our digital presence and capabilities to further enhance the consumer experience across our brands. We periodically retain agencies to assist with social media content creative and platform selection for our brands.
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Principal methods of competition in the beverage industry are price and promotional activity, advertising and marketing programs, point-of-sale merchandising, retail space management, customer service, product differentiation, packaging innovations and distribution methods.
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We craft a substantial portion of our flavors and concentrates while purchasing the remaining raw materials from multiple suppliers.
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We believe our Company differentiates itself through novel innovation, key brand recognition, focused social media, innovative flavor variety, attractive packaging, efficient distribution methods, and, for some product lines, value pricing. 8 Table of Contents TRADEMARKS We own numerous trademarks for our brands that are significant to our business.
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We believe our current practices and procedures for the control and disposition of toxic or hazardous substances comply in all material respects with applicable law. 9 Table of Contents HUMAN CAPITAL As of April 29, 2023, we employed approximately 1,593 people, of which 374 are covered by collective bargaining agreements.
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HUMAN CAPITAL At April 30, 2022, we employed approximately 1,580 people, of which 368 are covered by collective bargaining agreements. These collective bargaining agreements generally address working conditions, as well as wage rates and benefits, and expire over varying terms over the next several years.
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We offer competitive employee benefits that are effective in attracting and retaining talent and are designed to support the physical, mental and financial health of our employees. Our employee benefits program includes comprehensive health, dental, life and disability, and profit-sharing benefits. Our operating philosophy emphasizes the health and safety of our employees.
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Approximately 58 percent and 23 percent of our employee base identify as persons of color or female, respectively. 9 Table of Contents Our compensation programs are designed to ensure we attract and retain talent while maintaining alignment with market compensation.
Added
More than 80% of our products are in aluminum cans, which generally contain approximately 73% recycled material.
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These measures included enhanced sanitation procedures, physical distancing, and other health protocols. We continue to monitor the pandemic and its variants to insure the health and safety of our work force. SUSTAINABILITY National Beverage Corp. is dedicated to sustainable operations and responsible business initiatives.
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Each of our facilities has programs in place designed to minimize the use of water, energy, and other natural resources.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur investments in social media and marketing as well as our strong commitment to product quality are intended to have a favorable impact on brand image and consumer preferences. Unfavorable publicity, or allegations of quality issues, even if false or unfounded, may tarnish our reputation and brand image and cause consumers to choose other products.
Biggest changeOur beverage portfolio is comprised of a number of unique brands with reputations and consumer loyalty that have been built over time. Our investments in social media and marketing as well as our strong commitment to product quality are intended to have a favorable impact on brand image and consumer preferences.
Our inability to adapt to customer requirements could lead to a loss of business and adversely affect our financial results. Raw materials and energy. The production of our products is dependent on certain raw materials, including aluminum, resin, corn, linerboard, water and fruit juice.
Our inability to adapt to customer requirements could lead to a loss of business and adversely affect our financial position. Raw materials and energy. The production of our products is dependent on certain raw materials, including aluminum, resin, corn, linerboard, water and fruit juice.
In addition, the production and distribution of our products is dependent on energy sources, including natural gas, fuel and electricity. These items are subject to supply chain disruptions and price volatility caused by numerous factors. Commodity price increases ultimately result in a corresponding increase in the cost of raw materials and energy.
In addition, the production and distribution of our products is dependent on energy sources, including natural gas, diesel fuel, carbon dioxide and electricity. These items are subject to supply chain disruptions and price volatility caused by numerous factors. Commodity price increases ultimately result in a corresponding increase in the cost of raw materials and energy.
In addition, various governmental agencies have enacted or are considering changes in corporate tax laws as well as, additional taxes on soft drinks and other sweetened beverages. Compliance with or changes in existing laws or regulations could require material expenses and negatively affect our financial results. 11 Table of Contents Sustained increases in the cost of employee wages and benefits.
In addition, various governmental agencies have enacted or are considering changes in corporate tax laws as well as additional taxes on soft drinks and other sweetened beverages. Compliance with or changes in existing laws or regulations could require material expenses and negatively affect our financial position. Sustained increases in the cost of employee wages and benefits.
If raw materials or energy costs increase, or their availability is limited, our financial results could be adversely affected. Governmental regulation. Our business and properties are subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality, labeling and distribution of beverage products.
If raw materials or energy costs increase, or their availability is limited, our financial position could be adversely affected. 11 Table of Contents Governmental regulation. Our business and properties are subject to various federal, state and local laws and regulations, including those governing the production, packaging, quality, labeling and distribution of beverage products.
In addition, if we do not adequately anticipate and react to changing demographics, consumer trends, health concerns and product preferences, our financial results could be adversely affected. Competition. The beverage industry is extremely competitive.
Unfavorable publicity, or allegations of quality issues, even if false or unfounded, may tarnish our reputation and brand image and cause consumers to choose other products. In addition, if we do not adequately anticipate and react to changing demographics, consumer trends, health concerns and product preferences, our financial position could be adversely affected. Competition. The beverage industry is extremely competitive.
Additional risks and uncertainties, including risks and uncertainties not presently known to the Company, or that the Company currently deems immaterial, may also impair our business and financial results. Brand image and consumer preferences. Our beverage portfolio is comprised of a number of unique brands with reputations and consumer loyalty that have been built over time.
Additional risks and uncertainties, including risks and uncertainties not presently known to the Company, or that the Company currently deems immaterial, may also impair our business, financial position, results of operations and cash flows. Brand image and consumer preferences.
We use information technology and third-party service providers to support our business processes and activities.
If we lose key personnel or are unable to recruit qualified personnel, our operations and ability to manage our business may be adversely affected. Dependence on information technology and third-party service providers. We use information technology and third-party service providers to support our business processes and activities.
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If we lose key personnel or are unable to recruit qualified personnel, our operations and ability to manage our business may be adversely affected. COVID-19 pandemic. The magnitude and duration of COVID-19 is uncertain and may impact our operations by events beyond our control.
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Such events could include disruptions in our manufacturing operations or supply arrangements caused by the loss or disruption of essential manufacturing materials, supplies and services, transportation resources, workforce availability, or other manufacturing and distribution capability. Such events could adversely impact our business and financial results. Dependence on information technology and third-party service providers.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe our facilities are generally in good condition and sufficient to meet our present needs. 12 Table of Contents The production of beverages is capital intensive but is not characterized by rapid technological change.
Biggest changeWe believe our facilities are generally in good condition and sufficient to meet our present needs. The production of beverages is capital intensive but is not characterized by rapid technological change.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The Company has been named in certain legal proceedings, including those containing derivative and class action allegations. The Company is vigorously defending all legal proceedings and believes litigation will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II
Biggest changeITEM 3. LEGAL PROCEEDINGS The Company has been named in certain legal proceedings, including those containing class action allegations. The Company is vigorously defending all legal proceedings and believes litigation will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeFinancial Statements and Supplementary Data 22 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 42 ITEM 9A. Controls and Procedures 42 ITEM 9B. Other Information 43
Biggest changeFinancial Statements and Supplementary Data 22 ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 41 ITEM 9A. Controls and Procedures 41

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIn the last five fiscal years, the Company paid special cash dividends on Common Stock as follows: ● $280.0 million ($3.00 per share) on December 29, 2021; ● $279.9 million ($3.00 per share) on January 29, 2021; ● $135.2 million ($1.45 per share) on January 29, 2019; and ● $69.9 million ($.75 per share) on August 4, 2017. 13 Table of Contents On February 5, 2021, the Company's Board of Directors declared a one-for-one stock split in the form of a stock dividend.
Biggest changeIn the last five fiscal years, the Company paid special cash dividends on Common Stock as follows: ● $280.0 million ($3.00 per share) on December 29, 2021; ● $279.9 million ($3.00 per share) on January 29, 2021; and ● $135.2 million ($1.45 per share) on January 29, 2019; Our Board of Directors has authorized a program to repurchase 3.2 million shares of our common stock of which approximately 1.9 million shares remain available and authorized for repurchases. 13 Table of Contents Performance Graph The following graph shows a comparison of the five-year cumulative return of an investment of $100 cash on April 28, 2018, assuming reinvestment of dividends, of our Common Stock with the NASDAQ Composite Index, the Dow Jones US Soft Drinks Index and the S&P 500 Index.
At June 17, 2022, there were approximately 41,400 holders of our Common Stock, the majority of which hold their shares in the names of banks, brokers and other financial institutions.
At June 16, 2023, there were approximately 40,200 holders of our Common Stock, the majority of which hold their shares in the names of banks, brokers and other financial institutions.
Legend Total Returns Index For: 4/29/2017 4/28/2018 4/27/2019 5/02/2020 5/01/2021 4/30/2022 National Beverage Corp. 100.00 102.96 68.17 59.37 122.57 118.11 NASDAQ Composite - Total Return 100.00 118.98 137.41 146.95 240.30 213.67 Dow Jones US Soft Drinks Index 100.00 101.08 121.63 123.23 149.98 178.96 S&P 500 Index - Total Return 100.00 114.20 128.28 126.04 189.28 189.68 14 Table of Contents
Total Returns Index For: 4/28/2018 4/27/2019 5/02/2020 5/01/2021 4/30/2022 4/29/2023 National Beverage Corp. 100.00 66.22 57.66 119.05 114.71 129.34 NASDAQ Composite - Total Return 100.00 115.49 123.51 201.97 179.59 179.63 Dow Jones US Soft Drinks Index 100.00 120.32 121.91 148.37 177.04 191.45 S&P 500 Index - Total Return 100.00 112.33 110.37 165.75 166.10 170.53 14 Table of Contents
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This dividend was distributed on February 19, 2021 to shareholders of record on February 16, 2021. Share information and earnings per share have been retroactively adjusted to reflect the stock split. Our Board of Directors has authorized a program to repurchase 3.2 million shares of our common stock of which approximately 1.9 million shares remain available and authorized for repurchases.
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Performance Graph The following graph shows a comparison of the five-year cumulative returns of an investment of $100 cash on April 29, 2017, assuming reinvestment of dividends, of our Common Stock with the NASDAQ Composite Index, the S&P 500 Index and the Dow Jones US Soft Drinks Index.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeHowever, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales. See Note 1 of Notes to the Consolidated Financial Statements. Selling, General and Administrative Expenses Selling, general and administrative expenses were $209.9 million for Fiscal 2022, increasing $16.2 million from Fiscal 2021.
Biggest changeGross profit per case was flat. Shipping and handling costs are included in selling, general and administrative expenses, the classification of which is consistent with many beverage companies. However, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales. See Note 1 of Notes to the Consolidated Financial Statements.
For these policies, we caution that future events rarely develop exactly as estimated and the best estimates routinely require adjustment. 19 Table of Contents Credit Risk We sell products to a variety of customers and extend credit based on an evaluation of each customer’s financial condition, generally without requiring collateral.
For these policies, we caution that future events rarely develop exactly as estimated and the best estimates routinely require adjustment. Credit Risk We sell products to a variety of customers and extend credit based on an evaluation of each customer’s financial condition, generally without requiring collateral.
Discussions of fiscal year ended May 2, 2020 (Fiscal 2020) items and year-to-year comparisons between Fiscal 2021 and Fiscal 2020 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended May 1, 2021, which is available free of charge on our website at www.nationalbeverage.com .
Discussions of fiscal year ended May 1, 2021 (Fiscal 2021) items and year-to-year comparisons between Fiscal 2022 and Fiscal 2021 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended April 30, 2022, which is available free of charge on our website at www.nationalbeverage.com .
Annual contributions were $4.0 million for Fiscal 2022 and $3.7 million for Fiscal 2021. See Note 11 of Notes to Consolidated Financial Statements. We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures.
Annual contributions were $3.8 million for Fiscal 2023 and $4.0 million for Fiscal 2022. See Note 11 of Notes to Consolidated Financial Statements. We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures.
Goodwill and intangible assets not subject to amortization are evaluated for impairment annually or sooner if management believes such assets may be impaired. An impaired asset is written down to its estimated fair market value based on discounted future cash flows. Income Taxes The Company’s effective income tax rate is based on estimates of taxes which will ultimately be payable.
Goodwill and intangible assets not subject to amortization are evaluated for impairment annually or sooner if we believe such assets may be impaired. An impairment loss is written down to its estimated fair market value based on discounted future cash flows. Income Taxes The Company’s effective income tax rate is based on estimates of taxes which will ultimately be payable.
Traditional and typical are not a part of an innovator’s vocabulary. 16 Table of Contents RESULTS OF OPERATIONS The following section generally discusses the fiscal years ended April 30, 2022 (Fiscal 2022) and May 1, 2021 (Fiscal 2021) items and year-to-year comparisons between Fiscal 2022 and Fiscal 2021.
Traditional and typical are not a part of an innovator’s vocabulary. 16 Table of Contents RESULTS OF OPERATIONS The following section generally discusses the fiscal years ended April 29, 2023 (Fiscal 2023) and April 30, 2022 (Fiscal 2022) items and year-to-year comparisons between Fiscal 2023 and Fiscal 2022.
Standby letters of credit aggregating $2.5 million have been issued in connection with our self-insurance programs. These standby letters of credit expire through June 2023 and are expected to be renewed.
Standby letters of credit aggregating $2.2 million have been issued in connection with our self-insurance programs. These standby letters of credit expire through March 2024 and are expected to be renewed.
Income Taxes Our effective tax rate was 23.6% for Fiscal 2022 and 23.7% for Fiscal 2021. The differences between the effective rate and the federal statutory rate were primarily due to the effects of state income taxes. 17 Table of Contents LIQUIDITY AND FINANCIAL CONDITION Liquidity and Capital Resources Our principal source of funds is cash generated from operations.
The differences between the effective rate and the federal statutory rate of 21% were primarily due to the effects of state income taxes. 17 Table of Contents LIQUIDITY AND FINANCIAL CONDITION Liquidity and Capital Resources Our principal source of funds is cash generated from operations.
Included in current liabilities were amounts due CMA of $4.0 million at April 30, 2022 and $3.8 million at May 1, 2021. See Note 6 of Notes to the Consolidated Financial Statements. Cash Flows During Fiscal 2022, $133.1 million was provided by operating activities, $29 million was used in investing activities and $249.7 million was used in financing activities.
Included in current liabilities were amounts due CMA of $2.9 million at April 29, 2023 and $4.0 million at April 30, 2022. See Note 6 of Notes to the Consolidated Financial Statements. Cash Flows During Fiscal 2023, $161.7 million was provided by operating activities, $22.0 million was used in investing activities and $29.7 million was used in financing activities.
Fiscal 2022 and Fiscal 2021 both consisted of 52 weeks. Net Sales Net sales for Fiscal 2022 increased 6.1% to $1,138 million compared to $1,072 million for Fiscal 2021. The increase in sales resulted from a 7.6% increase in average selling price offset in part by a 1.4% decline in case volume, primarily in carbonated soft drinks.
Net Sales Net sales for Fiscal 2023 increased 3.1% to $1,173 million compared to $1,138 million for Fiscal 2022. The increase in sales resulted from a 8.4% increase in average selling price offset in part by a 4.9% decline in case volume, which impacted both Power+Brands and carbonated soft drinks.
Impairment of Long-Lived Assets All long-lived assets, excluding goodwill and intangible assets not subject to amortization, are evaluated for impairment on the basis of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
We monitor our exposure to credit losses and maintain allowances for anticipated losses based on our experience with past due accounts, collectability and our analysis of customer data. 19 Table of Contents Impairment of Long-Lived Assets All long-lived assets, excluding goodwill and intangible assets not subject to amortization, are evaluated for impairment on the basis of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
At April 30, 2022, the current ratio was 1.9 to 1 compared to 2.5 to 1 at May 1, 2021. 18 Table of Contents CONTRACTUAL OBLIGATIONS Contractual obligations at April 30, 2022 are payable as follows: (In thousands) Total 1 Year Or less 2 to 3 Years 4 to 5 Years More Than 5 Years Operating leases $ 33,207 $ 11,315 $ 13,646 $ 5,722 $ 2,524 Long-term debt 30,000 - 30,000 - - Purchase commitments 23,784 19,525 3,210 1,049 - Total $ 86,991 $ 30,840 $ 46,856 $ 6,771 $ 2,524 We contribute to certain pension plans under collective bargaining agreements and to a discretionary profit sharing plan.
At April 29, 2023, the current ratio was 2.5 to 1 compared to 1.9 to 1 at April 30, 2022. 18 Table of Contents CONTRACTUAL OBLIGATIONS Contractual obligations at April 29, 2023 are payable as follows: (In thousands) Total 1 Year Or less 2 to 3 Years 4 to 5 Years More Than 5 Years Operating leases $ 44,674 $ 12,798 $ 17,903 $ 10,304 $ 3,669 Purchase commitments 19,535 19,535 - - - Total $ 64,209 $ 32,333 $ 17,903 $ 10,304 $ 3,669 We contribute to certain pension plans under collective bargaining agreements and to a discretionary profit sharing plan.
As a percent of net sales, selling, general and administrative costs increased to 18.4% in Fiscal 2022 from 18.1% in Fiscal 2021 Other (Expense) Income - Net Other (expense) income, net is primarily interest expense offset in part by interest income. In Fiscal 2022, interest expense increased by $.2 million while interest income declined due to reduced average investment balances.
As a percent of net sales, selling, general and administrative expenses declined to 17.9% from 18.4% in Fiscal 2022. Other (Expense) Income - Net Other (expense) income, net includes interest income of $2.3 million for Fiscal 2023 and $.1 million for Fiscal 2022. The increase in interest income is due to increased average invested balances and higher return on investments.
Expenditures for property, plant and equipment amounted to $29.0 million for Fiscal 2022 primarily for capital projects to expand our production capacity, enhance packaging capabilities or improve efficiencies at our production facilities. We intend to continue production capacity and efficiency improvement projects in Fiscal 2023 and expect capital expenditures to be comparable to Fiscal 2022.
See Note 5 of Notes to the Consolidated Financial Statements. Expenditures for property, plant and equipment amounted to $22.0 million for Fiscal 2023 primarily for capital projects to expand our capacity, enhance sustainability and packaging capabilities and improve efficiencies at our production facilities.
At April 30, 2022, we had $48.1 million in cash and cash equivlents and we maintained $150 million in unsecured revolving credit facilities, under which $30 million in borrowings were outstanding and $2.5 million was reserved for standby letters of credit.
At April 29, 2023, we had $158.1 million in cash and cash equivalents and maintained $150 million in unsecured revolving credit facilities, under which no borrowings were outstanding and $2.2 million was reserved for standby letters of credit. We believe that existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months.
Exposure to credit losses varies by customer principally due to the financial condition of each customer. We monitor our exposure to credit losses and maintain allowances for anticipated losses based on our experience with past due accounts, collectability and our analysis of customer data.
Exposure to credit losses varies by customer principally due to the financial condition of each customer.
Inventories increased $31.8 million as a result of the increased cost of finished goods and raw materials, and higher stock levels maintained as a safeguard against possible supply chain disruptions. Annual inventory turns decreased to 8.2 from 9.6 times.
Trade receivables increased $11.3 million and days sales outstanding was 33.3 days at April 29, 2023 compared to 30 days at April 30, 2022. Inventories decreased $9.7 million as a result of the reduced quantities of finished goods and raw materials. Annual inventory turns decreased to 7.9 from 8.2 times.
Power+ brands grew slightly in Fiscal 2022. Gross Profit Gross profit for Fiscal 2022 was $417.8 million compared to $421.6 million for Fiscal 2021. The average cost per case increased due to increases in packaging, ingredients and freight costs, as well as availability of raw materials and labor which impacted manufacturing efficiency.
Gross Profit Gross profit for Fiscal 2023 was $396.8 million compared to $417.8 million for Fiscal 2022. The average cost per case increased 13.4% and gross margin decreased to 33.8% from 36.7% for Fiscal 2022. The decrease in gross margin is due to increases in packaging, ingredients and freight costs offset in part by increased average selling price.
Cash provided by operating activities decreased $60.7 million primarily due to increased working capital requirements as a result of inflationary cost increases. Cash used in investing activities increased $3.7 million due to higher capital expenditures.
Cash provided by operating activities increased $28.5 million due to reduced net working capital other than cash, change in deferred taxes offset in part by lower net income. Cash used in investing activities decreased $7.1 million due to lower capital expenditures. Cash used in financing activities includes a $30 million repayment of our Loan Facility.
While prior years witnessed more seasonality, higher sales are realized during the summer when outdoor activities are more prevalent. Our highly innovative business, where new beverages are developed and produced for selective holidays and ceremonial dates, should not be analyzed on the common three-month (quarterly) periods, traditionally found acceptable.
While prior years witnessed more seasonality, higher sales are realized during the summer when outdoor activities are more prevalent.
The Company paid special cash dividends of approximately $280 million ($3.00 per share) on each of December 29, 2021 and January 29, 2021. Pursuant to a management agreement, we incurred a fee to Corporate Management Advisors, Inc. (CMA) of $11.4 million for Fiscal 2022 and $10.7 million for Fiscal 2021.
We intend to continue capacity and efficiency improvement projects in Fiscal 2024 and expect capital expenditures to be comparable to Fiscal 2022. Pursuant to a management agreement, we incurred a fee to Corporate Management Advisors, Inc. (CMA) of $11.9 million for Fiscal 2023 and $11.4 million for Fiscal 2022.
Removed
Today, costly development projects and seasonal weather periods plus promotional packaging often make quarter-to-quarter comparisons unworthy statistics that force companies to decision making that is not truly beneficial for investors and shareholders alike.
Added
Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $210 million for both Fiscal 2023, and Fiscal 2022. Marketing and shipping costs declined and were offset by increased administrative costs. The decline in marketing costs was primarily due to reduced programs with retail partners.
Removed
Increased average selling price more than offset the increased costs, resulting in a slight increase in gross profit per case. Gross margin was 36.7% for Fiscal 2022 compared to 39.3% in Fiscal 2021. Shipping and handling costs are included in selling, general and administrative expenses, the classification of which is consistent with many beverage companies.
Added
Income Taxes Our effective tax rate was 23.7% for Fiscal 2023 and 23.6% for Fiscal 2022.
Removed
Selling, general and administrative expenses increased due to increased shipping and marketing costs, partially offset by decreased administrative costs. Increased shipping costs are primarily the result of higher fuel costs and reduced availability of transportation. The increase in marketing reflects the resumption of various on-site trade and consumer events as the country recovered from the pandemic.
Added
Financial Position During Fiscal 2023, our working capital increased $92.9 million to $222.1 million. The increase in working capital resulted from increased cash and equivalents generated by operations, increased trade receivables offset in part by lower inventories and reduced income tax prepayments.
Removed
We believe that existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months. See Note 5 of Notes to the Consolidated Financial Statements.
Removed
Cash used in financing activities primarily consists of the $280 million ($3.00 per share) special cash dividend paid on December 29, 2021 offset in part by the $30 million in net borrowings during the year. Financial Position During Fiscal 2022, our working capital declined $90.6 million to $129.2 million.
Removed
The decrease in working capital reflects lower cash and equivalents due to the December 2021 cash dividend, partially offset by increased inventories, prepaid expenses and trade receivables. Trade receivables increased $7.1 million or 8.3% and days sales outstanding was 30 days at April 30, 2022 compared to 30.1 days at May 1, 2021.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed3 unchanged
Biggest changeInterest Rates At April 30, 2022, the Company had $30 million in borrowings outstanding. Based on a 1 percentage point increase, interest rates would have increased interest expense by $.1 million. We are also subject to interest rate risk related to our investment in highly liquid short duration investment securities.
Biggest changeInterest Rates At April 29, 2023, the Company had no borrowings outstanding. Based on a 1 percentage point increase, interest rates would have increased interest expense by $.1 million in Fiscal 2023. We are also subject to interest rate risk related to our investment in highly liquid short duration investment securities.

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