NATIONAL BEVERAGE CORP

National Beverage Corp. operates in the highly competitive beverage industry, which includes sparkling waters, juices, energy drinks, and carbonated soft drinks. The industry is dominated by larger competitors such as The Coca-Cola Company, PepsiCo, Keurig Dr. Pepper, and Nestlé S.A., which have substantially greater financial, marketing, and distribution resources. Competitive factors include price and promotional activity, advertising and marketing programs, point-of-sale merchandising, retail space management, customer service, product differentiation, packaging innovations, and distribution methods. The company differentiates itself through novel innovation, focused social media, innovative flavor variety, attractive packaging, efficient distribution methods, and, for some product lines, value pricing.

LaCroix Sparkling Water is the number one premium domestic sparkling water throughout the United States. The company competes with bottlers and distributors of national, regional, and private label products. The company believes its points of differentiation include a focus on developing healthier beverages in response to a global shift in consumer buying habits, creative innovations building on a 135-year history of development with iconic brands such as Shasta and Faygo, an innovation ethic emphasizing cost-effective social media platforms and regionally-focused marketing, and the ability to respond faster and more creatively to consumer trends than competitors burdened by legacy production and distribution complexity and costs.

The company generates revenue through the sale of beverages, primarily in the United States, utilizing a hybrid distribution system that delivers products through three primary channels: take-home, convenience, and food-service. The take-home channel includes national and regional grocery stores, club stores, mass-merchandisers, wholesalers, e-commerce stores, drug stores, and dollar stores. The convenience channel consists of convenience stores, gas stations, and other smaller accounts. The food-service division distributes to independent, specialized distributors who sell to hospitals, schools, military bases, hotels, and food-service wholesalers. Revenue is recognized when the performance obligation is satisfied, and sales terms do not allow a right of return except in rare instances.

The company's portfolio of Power+ Brands includes LaCroix sparkling waters, Clear Fruit non-carbonated water beverages enhanced with fruit flavor, Rip It energy drinks and shots, and Everfresh, Everfresh Premier Varietals, and Mr. Pure 100% juice and juice-based products. LaCroix is the most significant brand, with zero calories, zero sweeteners, and zero sodium, and it leads the premium domestic sparkling water category. LaCroix has gained the support of national retailers in multiple channels, including mass-merchandisers, club stores, drug stores, mainstream supermarkets, and natural and specialty food retailers. In 2026, Newsweek, for the fourth consecutive year, named LaCroix as one of "The Most Trusted Brands in America." Recent flavor innovations for LaCroix include PineApple CocoNut, Sunshine launched in Summer 2025, and Strawberry Peach, which has quickly risen to among the fastest selling LaCroix flavors since its introduction in the latter half of Fiscal 2025.

The company also produces and distributes carbonated soft drinks including Shasta and Faygo, iconic brands whose consumer loyalty spans more than 100 years. Shasta offers multiple flavors and has earned consumer loyalty by delivering value and convenience with unique taste. Faygo includes numerous unique flavors such as Red Pop, Moon Mist, Cotton Candy, and Rock & Rye, along with newly introduced Super Pop and Bubble Pop. Many of the carbonated soft drink brands enjoy a regional identification that fosters long-term consumer loyalty. The company also produces Everfresh and Mr. Pure 100% juice and juice drinks available in a variety of flavors, with a signature package of a hot-filled, 16 oz. glass bottle designed for single-serve consumption. Clear Fruit is available in 13 offerings, including consumer favorites Cherry Blast, Strawberry Watermelon, and Fruit Punch, in 20-ounce and 16.9-ounce bottles with sports caps. Rip It Energy Fuel offers 17 unique flavors including three Zero Sugar options, and a 2 oz. sugar-free shot version in six flavors.

During Fiscal 2026, the company repurchased 20,000 ¹ shares of its common stock at an average price per share of $33.65 ² for a total cost of $0.7 million ³. The Board of Directors has authorized a program to repurchase 3.2 million ⁴ shares of common stock, of which approximately 1.9 million ⁵ shares remain available and authorized for repurchases. On July 1, 2026, the company's board of directors declared a special cash dividend of $3.25 ⁶ per share, payable on or before July 30, 2026 to shareholders of record on July 13, 2026. The company paid special cash dividends of $304.1 million ⁷ ($3.25 ⁸ per share) on July 24, 2024. The company also incurred fees to Corporate Management Advisors, Inc. of $11.8 million ⁹ and $12.0 million ¹⁰ for Fiscal 2026 and Fiscal 2025, respectively.

Net sales for Fiscal 2026 were $1,180.6 million ¹¹ compared to $1,201.4 million ¹² for Fiscal 2025. Gross profit for Fiscal 2026 was $437.3 million ¹³ compared to $443.9 million ¹⁴ for Fiscal 2025. Gross margin remained constant at 37.0% ¹⁵ for both Fiscal 2026 and Fiscal 2025. Operating income for Fiscal 2026 was $230.1 million ¹⁶ compared to $235.5 million ¹⁷ for Fiscal 2025. Net income for Fiscal 2026 was $183.6 million ¹⁸ compared to $186.8 million ¹⁹ for Fiscal 2025. The company's cash position increased $155.7 million ²⁰ in Fiscal 2026 compared to a decrease of $133.2 million ²¹ in Fiscal 2025.

The company is pursuing expansion of its LaCroix brand with additional flavors 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. The company is also pursuing options to expand distribution to other regions beyond the United States, where certain products are currently distributed on a limited basis. The company continues to increase its sponsorship of sporting events and has added partnerships with various women's professional soccer and basketball teams to existing agreements with men's professional soccer and hockey teams.

The company is focused on developing healthier beverages in response to the global shift in consumer buying habits and tailoring its beverage portfolio to the preferences of a diverse mix of 'crossover consumers' desiring a healthier alternative to artificially sweetened and high-caloric beverages. The company emphasizes unique flavor development and variety throughout its brands that appeal to multiple demographic groups, and maintains points of difference through innovative marketing, packaging, and consumer engagement. The company's strategy also includes responding faster and more creatively to changing consumer trends than larger competitors who are burdened by legacy production and distribution complexity and costs.

Gross margin remained constant at 37.0% ²² for both Fiscal 2026 and Fiscal 2025. The average cost of sales per case increased 5.0% ²³, but gross profit per case increased. The company's ability to recover increased costs through higher pricing may be limited by the competitive environment. The company uses derivative financial instruments to partially mitigate exposure to changes in certain raw material costs.

The company intends to continue to improve packaging capabilities and efficiencies at its production facilities in Fiscal 2027 and anticipates Fiscal 2027 capital expenditures to be comparable to Fiscal 2026 capital spending. The company's twelve strategically located production facilities are near major metropolitan markets across the continental United States, enabling efficient production and distribution to substantially all geographic markets, including the top 25 metropolitan statistical areas. The company employs approximately 1,677 ²⁴ people as of May 2, 2026, of which 378 ²⁵ are covered by collective bargaining agreements.

Capital expenditures for Fiscal 2026 were $25.1 million ²⁶, compared to $36.3 million ²⁷ for Fiscal 2025. Expenditures for property, plant and equipment in Fiscal 2026 were primarily for capital projects to expand capacity, enhance sustainability and packaging capabilities, and improve efficiencies at production facilities. The company had $349.5 million ²⁸ in cash and cash equivalents at May 2, 2026, and maintained unsecured revolving credit facilities totaling $150 million ²⁹, under which no borrowings were outstanding and $2.7 million ³⁰ was reserved for standby letters of credit. The company believes existing capital resources will be sufficient to meet liquidity and capital requirements for the next twelve months.

The company faces headwinds from the unprecedented disruption, government shutdowns, funding changes, inflation, and cautious consumer spending, which all impacted volume. A 6.7% ³¹ decline in case volume impacted both Power+ Brand and carbonated soft drink brands. The company is subject to supply chain disruptions and price volatility caused by numerous factors, including recent changes in trade policy and increased or threatened increases in tariffs on imported goods. Unfavorable weather conditions, changing weather patterns, and natural disasters could have an adverse impact on revenue and profitability.

The company is subject to various federal, state, and local laws and regulations, including those governing the production, packaging, quality, labeling, and distribution of beverage products and environmental laws. 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. Recent proposals to phase out synthetic dyes from the nation's food supply and to remove many sweetened products from the U.S. supplemental nutrition assistance program could result in increased costs and/or reduced demand for certain products.

The beverage industry is extremely competitive, with competitors such as The Coca-Cola Company, PepsiCo, Keurig Dr. Pepper, and Nestlé S.A. possessing substantially greater financial, marketing, and distribution resources, and discounting or other actions by these competitors could adversely affect the company's ability to sustain revenues and profits. The production of products is dependent on raw materials including aluminum, resin, corn, linerboard, carbon dioxide, water, and fruit juice, which are subject to supply chain disruptions and price volatility caused by factors including recent changes in trade policy and increased or threatened increases in tariffs on imported goods, and the company may be limited in its ability to pass these price increases on to customers. The retail customer base has been consolidating over many years, resulting in fewer customers with increased purchasing power that can limit the company's ability to increase pricing for its products. Unfavorable publicity or allegations of quality issues, even if false or unfounded, may tarnish the company's reputation and brand image and cause consumers to choose other products. A 6.7% ³² decline in case volume impacted both Power+ Brand and carbonated soft drink brands during Fiscal 2026.

Management's message emphasizes the company's transformation into an innovative, healthier refreshment company, converting consumers to a 'Better for You' thirst quencher. The strategic priorities for the period ahead include developing healthier beverages in response to the global shift in consumer buying habits, emphasizing unique flavor development and variety throughout brands, maintaining points of difference through innovative marketing, packaging, and consumer engagement, and responding faster and more creatively to changing consumer trends than larger competitors. Management states that the company is committed to its quest to innovate for the joy, benefit, and enjoyment of consumers' healthier lifestyle.