National Beverage's Gross Margin Falls to 35.0% on Aluminum Costs
Net sales were $330.7 million in the first quarter of fiscal 2027 as a 7.1% price increase offset a 6.4% drop in case volume.
National Beverage Corp. (FIZZ) reported net sales of $330.7 million for the three fiscal months ended August 1, 2026, essentially unchanged from $330.5 million a year earlier, as a 7.1% increase in average selling price per case offset a 6.4% decline in case volume. Both Power+ Brands and carbonated soft drink brands were affected by the mix of higher prices and lower volume.
The volume decline continued a pattern that had already emerged in the third quarter of fiscal 2026, when sales fell 0.9% to $264.6 million on a 4.8% drop in cases. In the latest quarter, the price increase was large enough to hold the top line flat even as cases fell further.
Gross profit fell to $115.8 million from $125.5 million, and gross margin compressed to 35.0% from 38.0%. The change was primarily due to higher packaging and ingredients costs and the change in case volume, partially offset by the higher average selling price. Cost of sales per case increased 12.4%. Aluminum costs negatively affected gross margin by approximately 600 basis points.
Selling, general and administrative expenses rose $2.6 million to $57.3 million from $54.7 million, due to higher shipping costs, primarily from increased fuel costs, and higher marketing costs. As a percentage of net sales, SG&A increased to 17.3% from 16.5%.
Operating income declined to $58.5 million from $70.8 million. Net income fell to $47.0 million, or $0.50 a share, from $55.8 million, or $0.60 a share. Other income, net included interest income of $3.3 million, up from $2.2 million, primarily due to higher average invested balances. The effective income tax rate was 23.8%.
Cash and cash equivalents fell $242.4 million to $107.1 million after a special cash dividend of $304.2 million paid on July 30, 2026. Working capital dropped to $190.6 million from $457.8 million at May 2, 2026, and the current ratio fell to 2.4 from 4.4. The change was primarily due to the dividend. Inventories increased $4.9 million to $100.4 million, and inventory turns decreased to 7.7 times from 8.2 times. Days sales outstanding decreased to 29.1 days from 31.9 days.
Net cash provided by operating activities increased to $64.9 million from $59.1 million, primarily due to a net decrease in working capital excluding cash, partially offset by the decrease in net income. Capital expenditures were $3.1 million in each of the first quarters of fiscal 2027 and fiscal 2026. Fiscal 2027 capital expenditures are expected to be comparable to fiscal 2026 capital spending, which totaled $25.1 million.
At August 1, 2026, the company maintained unsecured revolving credit facilities and a loan facility totaling $150 million, under which no borrowings were outstanding and $2.7 million was reserved for standby letters of credit. The notional amount of outstanding aluminum swap contracts was $108.2 million. Assuming no change in commodity prices, $2.3 million of unrealized gain before tax is expected to be reclassified from accumulated other comprehensive income and recognized in earnings over the next 12 months. Cash-flow-hedge accumulated other comprehensive income swung to a $10.9 million net loss from a $4.2 million net gain a year earlier.
Beverage sales are seasonal, with higher sales volume realized during the summer months. The company operates as a single reportable segment, and its primary market focus is the United States, with certain beverages distributed on a limited basis in other countries.