FIZZ's Q2 Net Income Edges Up Despite Sales Dip

TL;DR

**FIZZ is squeezing out profits despite flat sales, but they need to find a way to grow the top line or risk getting watered down by bigger rivals.**

AI Summary

NATIONAL BEVERAGE CORP (FIZZ) reported a slight increase in net income for the three fiscal months ended November 1, 2025, reaching $46.364 million, up from $45.637 million in the prior year, a 1.6% increase. However, net sales for the same period decreased marginally to $288.331 million from $291.202 million, a 1.0% decline. For the six fiscal months, net income saw a minor dip to $102.124 million from $102.417 million, while net sales also decreased to $618.846 million from $620.675 million. The company's cash and cash equivalents significantly increased to $269.314 million as of November 1, 2025, from $193.835 million on May 3, 2025. Operating income for the three fiscal months rose slightly to $58.046 million from $57.867 million. The company continues to manage raw material cost exposure through aluminum swap contracts, with cash flow hedges contributing $5.311 million to accumulated other comprehensive income for the six fiscal months ended November 1, 2025. Inventories increased to $95.869 million from $85.109 million, indicating potential build-up or strategic stocking.

Why It Matters

This mixed performance from National Beverage Corp. signals a challenging environment for beverage companies, where cost management is paramount even as top-line growth stagnates. For investors, the slight net income increase despite declining sales suggests effective operational efficiency, but the sales dip could raise concerns about market share in a highly competitive sector dominated by giants like Coca-Cola and PepsiCo. Employees might see stable operations, while customers could benefit from continued product availability. The broader market will watch if FIZZ can reignite sales growth, especially with its focus on sparkling waters and energy drinks, which are competitive categories.

Risk Assessment

Risk Level: medium — The risk level is medium due to declining net sales for both the three and six fiscal months ended November 1, 2025, dropping to $288.331 million and $618.846 million respectively, from $291.202 million and $620.675 million in the prior year. This indicates potential market share erosion or reduced demand. Additionally, inventories increased by $10.760 million for the six fiscal months, which could lead to obsolescence or increased carrying costs if sales do not pick up.

Analyst Insight

Investors should hold FIZZ, monitoring future sales reports closely for signs of revenue stabilization or growth. The company's strong cash position of $269.314 million and effective cost control are positives, but sustained sales declines could signal deeper competitive issues. Consider if the current valuation adequately reflects the risk of stagnant top-line performance.

Financial Highlights

debt To Equity

0.36

revenue

$618.846M

operating Margin

20.8%

total Assets

$748.974M

total Debt

$68.449M

net Income

$102.124M

eps

$1.09

gross Margin

38.0%

cash Position

$269.314M

revenue Growth

-0.3%

Key Numbers

• $288.331M — Net Sales (3 months) (Decreased from $291.202M in prior year, a 1.0% decline)
• $46.364M — Net Income (3 months) (Increased from $45.637M in prior year, a 1.6% increase)
• $618.846M — Net Sales (6 months) (Decreased from $620.675M in prior year)
• $102.124M — Net Income (6 months) (Slightly decreased from $102.417M in prior year)
• $269.314M — Cash and Cash Equivalents (Increased from $193.835M on May 3, 2025)
• $95.869M — Inventories (Increased from $85.109M on May 3, 2025)
• $5.311M — Cash Flow Hedges (Recognized in AOCI for the six fiscal months ended November 1, 2025)
• 93,632,102 — Common Stock Outstanding (As of December 8, 2025)

Key Players & Entities

• NATIONAL BEVERAGE CORP (company) — registrant
• FIZZ (company) — trading symbol
• Securities and Exchange Commission (regulator) — filing authority
• The NASDAQ Global Select Market (regulator) — exchange where common stock is registered
• FASB (regulator) — accounting standards setter
• Coca-Cola (company) — competitor
• PepsiCo (company) — competitor
• Delaware (company) — state of incorporation

FAQ

Risk Factors

• Competition and Market Saturation [high — market]: The beverage industry is highly competitive, with numerous established players and emerging brands. Increased competition, particularly in the sparkling water and energy drink segments where FIZZ has significant presence, could lead to pricing pressures and reduced market share. The company's reliance on a few key brands like LaCroix means that shifts in consumer preferences or successful competitive product launches could materially impact sales.
• Supply Chain and Raw Material Costs [medium — operational]: FIZZ is exposed to fluctuations in the cost of raw materials, particularly aluminum for its cans. While the company utilizes aluminum swap contracts to manage this exposure, significant price volatility could still impact profitability. The increase in inventories to $95.869 million from $85.109 million may indicate efforts to mitigate supply chain disruptions or a response to rising input costs.
• Consumer Preferences and Health Trends [medium — market]: The company's portfolio is increasingly focused on health-conscious consumers. Changes in consumer preferences towards healthier or alternative beverages, or negative perceptions regarding specific ingredients or product categories, could adversely affect demand for FIZZ's products. The success of its Power+ Brands is contingent on aligning with evolving health and wellness trends.
• Regulatory and Compliance Changes [low — regulatory]: The beverage industry is subject to various regulations concerning product safety, labeling, marketing, and environmental impact. Changes in these regulations, or failure to comply, could result in increased costs, fines, or reputational damage. For example, evolving regulations around sugar content or ingredient disclosures could necessitate product reformulation or marketing adjustments.

Industry Context

National Beverage Corp. operates in the highly dynamic non-alcoholic beverage industry, with a strategic focus on sparkling waters, energy drinks, and juices, targeting health-conscious consumers. The market is characterized by intense competition from both large, diversified beverage companies and smaller, niche brands. Key trends include a growing demand for healthier alternatives, innovative flavors, and sustainable packaging, alongside evolving consumer preferences that can shift rapidly.

Regulatory Implications

The company faces ongoing regulatory scrutiny common to the food and beverage sector, including product labeling, ingredient disclosures, and marketing practices. Compliance with evolving health and safety standards, as well as potential environmental regulations related to packaging and production, are critical. Any missteps in compliance could lead to fines, product recalls, or damage to brand reputation.

What Investors Should Do

1. Monitor inventory levels and cost of goods sold.
2. Analyze the performance of Power+ Brands.
3. Evaluate the impact of hedging strategies.
4. Observe cash flow generation and deployment.

Key Dates

• 2025-11-01: End of the three and six fiscal months reporting period — Provides the latest financial results, showing a slight increase in net income but a marginal decrease in net sales for the three-month period, and a slight dip in both for the six-month period.
• 2025-05-03: Previous balance sheet date — Used as a comparison point for the current balance sheet, highlighting a significant increase in cash and cash equivalents from $193.835M to $269.314M.
• 2025-12-08: Common stock outstanding reported — Indicates the number of shares outstanding as of a recent date, relevant for per-share calculations and market capitalization.

Glossary

Accumulated other comprehensive income

Represents unrealized gains and losses that are not included in net income but are reported in shareholders' equity. For FIZZ, this includes $5.311 million from cash flow hedges. (Shows the impact of financial instruments like hedging contracts on the company's overall equity, separate from its operating performance.)

Operating lease right-of-use assets, net

Assets recognized under accounting standards for leases, representing the right to use an asset for a specified period. FIZZ's decreased from $70.286M to $64.364M. (Reflects the company's long-term rental commitments for facilities or equipment, impacting its asset base and liabilities.)

Weighted average common shares outstanding

The average number of common shares outstanding during a reporting period, used to calculate earnings per share (EPS). FIZZ reported 93,622,000 basic shares for the six-month period. (Crucial for understanding the profitability on a per-share basis, which is a key metric for investors.)

Aluminum swap contracts

Financial derivative contracts used to hedge against fluctuations in aluminum prices. FIZZ uses these to manage its exposure to raw material cost volatility. (Demonstrates a specific strategy employed by the company to mitigate financial risks associated with commodity prices.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, National Beverage Corp. has experienced a slight decline in net sales for both the three-month period (-1.0% to $288.331M) and the six-month period (-0.3% to $618.846M). However, net income has seen a marginal increase for the three-month period (+1.6% to $46.364M) but a slight decrease for the six-month period (-0.2% to $102.124M). The company's balance sheet shows a substantial improvement in liquidity, with cash and cash equivalents surging by over 38% to $269.314M. Inventories have also increased, indicating a potential build-up or strategic stocking in response to market conditions.

Filing Documents

• fizz20251025_10q.htm (10-Q) — 628KB
• ex_895874.htm (EX-31.1) — 11KB
• ex_895875.htm (EX-31.2) — 11KB
• ex_895876.htm (EX-32.1) — 4KB
• ex_895877.htm (EX-32.2) — 4KB
• 0001437749-25-037558.txt ( ) — 3153KB
• fizz-20251101.xsd (EX-101.SCH) — 25KB
• fizz-20251101_cal.xml (EX-101.CAL) — 39KB
• fizz-20251101_def.xml (EX-101.DEF) — 188KB
• fizz-20251101_lab.xml (EX-101.LAB) — 197KB
• fizz-20251101_pre.xml (EX-101.PRE) — 213KB
• fizz20251025_10q_htm.xml (XML) — 307KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Page Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited) 3 Condensed Consolidated Balance Sheets as of November 1, 2025 and May 3, 2025 3 Condensed Consolidated Statements of Income for the Three and Six Fiscal Months Ended November 1, 2025 and October 26, 2024 4 Condensed Consolidated Statements of Comprehensive Income for the Three and Six Fiscal Months Ended November 1, 2025 and October 26, 2024 5 Condensed Consolidated Statements of Shareholders' Equity for the Three and Six Fiscal Months Ended November 1, 2025 and October 26, 2024 6 Condensed Consolidated Statements of Cash Flows for the Six Fiscal Months Ended November 1, 2025 and October 26, 2024 7 Notes to Condensed Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 16 Item 4.

Controls and Procedures

Controls and Procedures 16

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1A.

Risk Factors

Risk Factors 17 Item 5. Other Information 17 Item 6. Exhibits 17 Signature 18 2 Table of Contents

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data) November 1, May 3, 2025 2025 Assets Current assets: Cash and cash equivalents $ 269,314 $ 193,835 Trade receivables, net 93,157 104,157 Inventories 95,869 85,109 Prepaid and other current assets 33,097 23,827 Total current assets 491,437 406,928 Property, plant and equipment, net 173,703 175,586 Operating lease right-of-use assets, net 64,364 70,286 Goodwill 13,145 13,145 Intangible assets 1,615 1,615 Other assets 4,710 5,300 Total assets $ 748,974 $ 672,860 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 63,825 $ 82,448 Accrued liabilities 35,429 43,521 Operating lease liabilities 15,026 14,533 Income taxes payable 410 - Total current liabilities 114,690 140,502 Deferred income taxes, net 24,576 23,010 Operating lease liabilities 51,168 57,591 Other liabilities 7,281 7,758 Total liabilities 197,715 228,861 Commitments and contingencies Shareholders' equity: Preferred stock, $ 1 par value - 1,000,000 shares authorized Series C - 150,000 shares issued 150 150 Common stock, $ .01 par value - 200,000,000 shares authorized; 102,006,214 and 101,994,358 shares issued, respectively 1,020 1,020 Additional paid-in capital 44,206 43,708 Retained earnings 519,874 417,750 Accumulated other comprehensive income 10,915 5,604 Treasury stock - at cost: Series C preferred stock - 150,000 shares ( 5,100 ) ( 5,100 ) Common stock - 8,394,112 and 8,374,112 shares, respectively ( 19,806 ) ( 19,133 ) Total shareholders' equity 551,259 443,999 Total liabilities and shareholders' equity $ 748,974 $ 672,860 See accompanying Notes to Condensed Consolidated Financial Statements. 3 Table of Contents NATIONAL BEVERAGE CORP. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In th

MANAGEMENT ' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 2. MANAGEMENT ' S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW National Beverage Corp. innovatively refreshes America with a distinctive portfolio of sparkling waters, juices, energy drinks (Power+ Brands) and, to a lesser extent, carbonated soft drinks. We believe our creative product designs, innovative packaging and imaginative flavors, along with our corporate culture and philosophy, make National Beverage unique as a stand-alone entity in the beverage industry. The majority of our brands are geared to the active and health-conscious consumer including sparkling waters, energy drinks and juices. Our portfolio of Power+ Brands includes LaCroix sparkling water; 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. Additionally, we produce and distribute carbonated soft drinks including Shasta and Faygo, iconic brands whos

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