Craft Brew Alliance (BREW)
Q4 2012 Earnings Call
March 13, 2013 11:30 am ET
Terry E. Michaelson - Chief Executive Officer
Mark D. Moreland - Chief Financial Officer and Treasurer
Andrew J. Thomas - President of Commercial Operations
Anton Brenner - Roth Capital Partners, LLC, Research Division
Joseph P. Munda - Sidoti & Company, LLC
Previous Statements by BREW
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Terry E. Michaelson
Thank you, and good morning, everybody. I'm pleased to present the Craft Brew Alliance investor conference call to discuss our results for 2012. I will be addressing the general business environment; Andy Thomas, our President of Commercial Operations, will provide detailed commentary and insight into the industry; Mark Moreland, our Chief Financial Officer, will comment on the financial results. We will then open up the call for questions. Before we begin, I will ask Mark to read our Safe Harbor statement.
Mark D. Moreland
Thanks, Terry, and good morning, everybody. As a reminder, this call may contain forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those described in any such forward-looking statements. The risk factor section in our most recent Form 10-K lists some of the factors that could cause Craft Brew’s actual results to differ materially from those forward-looking statements made on this call. Craft Brew undertakes no obligation to update publicly any forward-looking statements except as required by law. Terry?
Terry E. Michaelson
Thanks, Mark. 2012 was an extremely important year in moving our national portfolio strategy forward and positioning CBA for long-term success. We introduced our national portfolio strategy in 2011, and after the second year of execution, we feel even stronger about us having an advantaged strategy in an advantaged segment.
The primary focus for CBA during these initial years of implementation of the national portfolio strategy has been on developing top line growth while strengthening each brand family's performance.
In 2012, we delivered 13.5% revenue growth, driven by the continued dynamic growth trend of the Kona brand, a positive improvement in the sales growth trend of Redhook and a continued repositioning of Widmer Brothers to higher revenue and higher profit brands. We also introduced some very strong new initiatives that will enhance our performance long term, including the Omission brand family, which is our gluten-free beer with real craft beer taste, and beginning our export program.
Although we accomplished our top priority of strong revenue growth and strengthened our portfolio of brands in 2012, we were disappointed to not deliver strong bottom line growth. We made some very aggressive investment decisions, both on the SG&A and margin sides of our business that we believe will pay off in 2013 and long term but had a negative impact on our earnings growth in 2012.
Our EBITDA performance of $13.1 million still allowed us to fund all capital expenditures out of cash flow and continued to put us in a strong position to grow our business in 2013. I want our shareholders to understand that we believe that the last 2 years of aggressive investments in brands, region development, new systems and building our organization has been critical in developing our strategy foundation, and we are now confident that we are positioned well to move from our strategy development phase to our strategy growth phase and deliver significant sales and profit growth for years to come.
In 2013, we look for sales and profit growth to be driven by continued growth from our core brands, introduction of exciting new Kona, Redhook and Widmer brands, regional expansion, further rollout of Omission and a full year of execution of our export strategy. We plan on all these initiatives contributing to strong 2013 financial performance, and more importantly, long-term value growth.
We know 2013 will be a very competitive year in the craft beer industry, with a new brewery opening every day, large regional craft breweries expanding and large national brewers continue to expand their presence in craft beer. We are confident that we have established a strategy that positions us well to compete in this environment and strengthen our position in the craft market. Our unique performance drivers of a diverse portfolio of authentic craft brands, aligned A-B national distribution network, a national sales organization and bicoastal breweries and pubs provide us with competitive advantages that separate us from our competition.
I want to thank our talented and committed team at CBA for their outstanding work in building our national portfolio strategy, and I look forward to a year of record-breaking sales and operating profits for CBA in 2013. Andy?
Andrew J. Thomas
Thanks, Terry, and good morning, everyone. As you read in our release, CBA finished a rocky 2012 by posting its strongest quarter of STR growth in company history. And even more encouraging than the overall numbers are the underlying drivers of performance, including continued strong STR growth on Kona, continued acceleration of Redhook, continued expansion and growth for Omission, a successful launch of our first cross-brand offering, the winter variety pack, and revenue strength on Widmer Brothers that belies the overall weakness of volumes.