Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 30, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 0-26542 | |
Entity Registrant Name | CRAFT BREW ALLIANCE, INC. | |
Entity Incorporation, State or Country Code | WA | |
Entity Tax Identification Number | 91-1141254 | |
Entity Address, Address Line One | 929 North Russell Street | |
Entity Address, City or Town | Portland | |
Entity Address, State or Province | OR | |
Entity Address, Postal Zip Code | 97227-1733 | |
City Area Code | 503 | |
Local Phone Number | 331-7270 | |
Title of 12(b) Security | Common Stock, $0.005 par value | |
Trading Symbol | BREW | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 19,545,308 | |
Entity Central Index Key | 0000892222 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 95 | $ 469 |
Accounts receivable, net | 21,453 | 17,492 |
Inventory, net | 23,004 | 19,142 |
Other current assets | 5,337 | 3,953 |
Total current assets | 49,889 | 41,056 |
Property, equipment and leasehold improvements, net | 116,030 | 113,337 |
Operating lease right-of-use assets | 23,184 | 23,513 |
Goodwill | 21,935 | 21,935 |
Trademarks | 44,240 | 44,240 |
Intangible and other assets, net | 5,316 | 5,304 |
Total assets | 260,594 | 249,385 |
Current liabilities: | ||
Accounts payable | 19,590 | 15,804 |
Accrued salaries, wages and payroll taxes | 3,784 | 5,675 |
Refundable deposits | 2,738 | 3,640 |
Deferred revenue | 3,248 | 3,251 |
Other accrued expenses | 5,196 | 9,623 |
Current portion of long-term debt and finance lease obligations | 1,430 | 1,415 |
Total current liabilities | 35,986 | 39,408 |
Deferred revenue, non-current | 18,676 | 19,488 |
Long-term debt and finance lease obligations, net of current portion | 46,895 | 32,920 |
Fair value of derivative financial instruments | 502 | 278 |
Deferred income tax liability, net | 7,740 | 6,966 |
Long-term operating lease liabilities | 23,806 | 24,037 |
Other liabilities | 983 | 983 |
Total liabilities | 134,588 | 124,080 |
Commitments and contingencies (Note 13) | ||
Common shareholders' equity: | ||
Common stock, $0.005 par value. Authorized 50,000,000 shares; issued and outstanding 19,545,308 and 19,495,907 | 98 | 97 |
Additional paid-in capital | 146,192 | 145,923 |
Accumulated other comprehensive loss | (374) | (207) |
Accumulated deficit | (19,910) | (20,508) |
Total common shareholders' equity | 126,006 | 125,305 |
Total liabilities and common shareholders' equity | $ 260,594 | $ 249,385 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Common shareholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Common stock, authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, issued (in shares) | 19,495,907 | 19,545,308 |
Common shares outstanding (in shares) | 19,495,907 | 19,545,308 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
Sales | $ 45,825 | $ 49,768 |
Less excise taxes | 1,924 | 2,776 |
Net sales | 43,901 | 46,992 |
Cost of sales | 28,718 | 30,809 |
Gross profit | 15,183 | 16,183 |
Selling, general and administrative expenses | 14,461 | 25,565 |
Operating income (loss) | 722 | (9,382) |
Interest expense | (267) | (308) |
Other expense, net | (18) | 0 |
Income (loss) before income taxes | 437 | (9,690) |
Income tax benefit | (161) | (2,326) |
Net income (loss) | $ 598 | $ (7,364) |
Basic and diluted net income (loss) per share (usd per share) | $ 0.03 | $ (0.38) |
Shares used in basic per share calculations (in shares) | 19,502 | 19,412 |
Shares used in diluted per share calculations (in shares) | 19,684 | 19,412 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 598 | $ (7,364) |
Unrealized loss on derivative hedge transactions, net of tax | (167) | (47) |
Comprehensive income (loss) | $ 431 | $ (7,411) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Balance (in shares) at Dec. 31, 2018 | 19,383,000 | ||||
Balance at Dec. 31, 2018 | $ 136,435 | $ 97 | $ 144,013 | $ (86) | $ (7,589) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation, net of shares withheld for tax payments (in shares) | 29,000 | ||||
Stock-based compensation, net of shares withheld for tax payments | 418 | 418 | |||
Unrealized gain (loss) on derivative financial instruments, net of tax | (47) | (47) | |||
Net income (loss) | (7,364) | (7,364) | |||
Balance (in shares) at Mar. 31, 2019 | 19,412,000 | ||||
Balance at Mar. 31, 2019 | $ 129,285 | $ 97 | 144,274 | (133) | (14,953) |
Balance (in shares) at Dec. 31, 2019 | 19,545,308 | 19,496,000 | |||
Balance at Dec. 31, 2019 | $ 125,305 | $ 97 | 145,923 | (207) | (20,508) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation, net of shares withheld for tax payments (in shares) | 40,000 | ||||
Stock-based compensation, net of shares withheld for tax payments | 447 | 447 | |||
Unrealized gain (loss) on derivative financial instruments, net of tax | (167) | (167) | |||
Tax payments related to stock-based awards | (270) | (270) | |||
Net income (loss) | $ 598 | 598 | |||
Balance (in shares) at Mar. 31, 2020 | 19,495,907 | 19,545,000 | |||
Balance at Mar. 31, 2020 | $ 126,006 | $ 98 | $ 146,192 | $ (374) | $ (19,910) |
CONSOLIDATED STATEMENTS OF SH_2
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | ||
Unrealized gains (losses) on derivative financial instruments, tax | $ 57 | $ 16 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 598 | $ (7,364) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 2,535 | 2,726 |
(Gain) loss on sale or disposal of Property, equipment and leasehold improvements | (87) | 8 |
Deferred income taxes | 831 | (2,341) |
Stock-based compensation | 447 | 418 |
Lease expense | 111 | 54 |
Other | (862) | 66 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (3,957) | 2,466 |
Inventories | (3,183) | (2,531) |
Other current assets | (1,384) | (2,406) |
Accounts payable and other accrued expenses | 368 | 12,493 |
Deferred revenue | (815) | (812) |
Accrued salaries, wages and payroll taxes | (1,891) | 745 |
Refundable deposits | 71 | (70) |
Net cash provided by (used in) operating activities | (7,218) | 3,452 |
Cash flows from investing activities: | ||
Expenditures for Property, equipment and leasehold improvements | (7,066) | (5,173) |
Proceeds from sale of Property, equipment and leasehold improvements | 97 | 16 |
Net cash used in investing activities | (6,969) | (5,157) |
Cash flows from financing activities: | ||
Principal payments on debt and finance lease obligations | (348) | (277) |
Net borrowings under revolving line of credit | 14,339 | 2,609 |
Proceeds from issuances of common stock | 92 | 0 |
Tax payments related to stock-based awards | (270) | (157) |
Net cash provided by financing activities | 13,813 | 2,175 |
Increase (decrease) in Cash and cash equivalents | (374) | 470 |
Cash and cash equivalents | ||
Beginning of period | 469 | 1,200 |
End of period | 95 | 1,670 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 273 | 335 |
Cash received for income taxes, net | 61 | 0 |
Cash paid for amounts included in measurement of lease liabilities | 752 | 742 |
Supplemental disclosure of non-cash information: | ||
Right-of-use assets obtained in exchange for operating lease obligations | 0 | 19,726 |
Right-of-use assets obtained in exchange for finance lease obligations | 0 | 2,538 |
Purchases of Property, equipment and leasehold improvements included in Accounts payable at end of period | $ 573 | $ 1,384 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Annual Report”). These consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements are unaudited but, in the opinion of management, reflect all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the periods presented. All such adjustments were of a normal, recurring nature. The results of operations for such interim periods are not necessarily indicative of the results of operations for the full year. Reclassifications Certain reclassifications have been made to the prior year's data to conform to the current year's presentation. None of the changes affect our previously reported consolidated Net sales, Gross profit, Operating income (loss), Net income (loss) or Basic and diluted net income (loss) per share. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ASU 2019-12 In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12 "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 eliminates certain exceptions to the general approach to the income tax accounting model, and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods. We are still evaluating the effect of the adoption of ASU 2019-12. ASU 2018-15 In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2018-15 on January 1, 2020 did not have a material effect on our financial position, results of operations or cash flows. ASU 2018-13 In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement." ASU 2018-13 removes, modifies and adds certain disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2018-13 on January 1, 2020 did not have a material effect on our financial position, results of operations or cash flows. ASU 2017-04 In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment." ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. The adoption of ASU 2017-04 on January 1, 2020 did not have a material effect on our financial position, results of operations or cash flows. |
Cash and Cash Equivalents
Cash and Cash Equivalents | 3 Months Ended |
Mar. 31, 2020 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents We maintain cash balances with financial institutions that may exceed federally insured limits. We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. As of March 31, 2020 and December 31, 2019, we did not have any cash equivalents. As part of our cash management system, we use a controlled disbursement account to fund cash distribution checks presented for payment by the holder. Checks issued but not yet presented to banks may result in overdraft balances for accounting purposes. As of March 31, 2020 and December 31, 2019, there were $1.2 million and $0.3 million, respectively, of bank overdrafts included in Accounts payable on our Consolidated Balance Sheets. Changes in bank overdrafts from period to period are reported in the Consolidated Statements of Cash Flows as a component of operating activities within Accounts payable and Other accrued expenses. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories are stated at the lower of standard cost or net realizable value. We regularly review our inventories for the presence of obsolete product attributed to age, seasonality and quality. If our review indicates a reduction in utility below the product’s carrying value, we reduce the product to a new cost basis. We record the cost of inventory for which we estimate we have more than a twelve-month supply as a component of Intangible and other assets, net on our Consolidated Balance Sheets. Inventories consisted of the following (in thousands): March 31, December 31, Raw materials $ 7,645 $ 8,435 Work in process 3,873 2,862 Finished goods 6,591 4,651 Packaging materials 3,481 1,981 Promotional merchandise 817 661 Brewpub food, beverages and supplies 597 552 $ 23,004 $ 19,142 Work in process is beer held in fermentation tanks prior to the filtration and packaging process. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | Leases We lease office space, restaurant and production facilities, warehouse and storage space, land and equipment under operating leases that expire at various dates through the year ending December 31, 2064. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices or scheduled adjustments. We exercise judgment in determining the reasonably certain lease term based on the provisions of the underlying agreement, the economic value of leasehold improvements and other relevant factors. Certain leases require us to pay for insurance, taxes and maintenance applicable to the leased property. Under the terms of the land lease for our New Hampshire Brewery, we hold a first right of refusal to purchase the property should the lessor decide to sell the property. We lease equipment under finance leases that expire at various dates through the year ending December 31, 2024. Ownership of the leased equipment transfers to us at the end of each lease term. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. Lease-related liabilities consisted of the following (in thousands): March 31, December 31, Operating lease liabilities: Current lease liabilities included in Other accrued expenses $ 896 $ 883 Long-term lease liabilities 23,806 24,037 Total operating lease liabilities 24,702 24,920 Financing lease liabilities: Current portion included in Current portion of long-term debt and finance lease obligations 299 296 Long-term portion of lease liabilities included in Long-term debt and finance lease obligations, net of current portion 728 804 Total financing lease liabilities 1,027 1,100 Total lease liabilities $ 25,729 $ 26,020 Weighted-average remaining lease term: Operating leases 24 years 24 years Finance leases 4 years 4 years Weighted-average discount rate: Operating leases 4.72 % 4.72 % Finance leases 3.72 % 3.70 % As of March 31, 2020, the maturities of our operating lease liabilities were as follows (in thousands): Operating Leases Remainder of 2020 $ 1,508 2021 2,036 2022 2,091 2023 1,958 2024 1,933 Thereafter 32,302 Total minimum lease payments 41,828 Less: present value adjustment (17,126) Operating lease liabilities $ 24,702 As of March 31, 2020, the maturities of our finance lease liabilities were as follows (in thousands): Finance Leases Remainder of 2020 $ 250 2021 266 2022 199 2023 199 2024 199 Thereafter — Total minimum lease payments 1,113 Less: present value adjustment (86) Finance lease liabilities $ 1,027 Components of lease cost were as follows (in thousands): Three Months Ended March 31, 2020 2019 Operating lease cost (1) $ 936 $ 874 Finance lease cost: Amortization of right-of-use asset 34 42 Interest on lease liabilities 10 13 Sublease income (72) — Total lease cost $ 908 $ 929 (1) Includes short-term, month-to-month lease and variable lease costs, which were immaterial. |
Leases | Leases We lease office space, restaurant and production facilities, warehouse and storage space, land and equipment under operating leases that expire at various dates through the year ending December 31, 2064. Certain leases contain renewal options for varying periods and escalation clauses for adjusting rent to reflect changes in price indices or scheduled adjustments. We exercise judgment in determining the reasonably certain lease term based on the provisions of the underlying agreement, the economic value of leasehold improvements and other relevant factors. Certain leases require us to pay for insurance, taxes and maintenance applicable to the leased property. Under the terms of the land lease for our New Hampshire Brewery, we hold a first right of refusal to purchase the property should the lessor decide to sell the property. We lease equipment under finance leases that expire at various dates through the year ending December 31, 2024. Ownership of the leased equipment transfers to us at the end of each lease term. Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets; we recognize lease expense for these leases on a straight-line basis over the lease term. Lease-related liabilities consisted of the following (in thousands): March 31, December 31, Operating lease liabilities: Current lease liabilities included in Other accrued expenses $ 896 $ 883 Long-term lease liabilities 23,806 24,037 Total operating lease liabilities 24,702 24,920 Financing lease liabilities: Current portion included in Current portion of long-term debt and finance lease obligations 299 296 Long-term portion of lease liabilities included in Long-term debt and finance lease obligations, net of current portion 728 804 Total financing lease liabilities 1,027 1,100 Total lease liabilities $ 25,729 $ 26,020 Weighted-average remaining lease term: Operating leases 24 years 24 years Finance leases 4 years 4 years Weighted-average discount rate: Operating leases 4.72 % 4.72 % Finance leases 3.72 % 3.70 % As of March 31, 2020, the maturities of our operating lease liabilities were as follows (in thousands): Operating Leases Remainder of 2020 $ 1,508 2021 2,036 2022 2,091 2023 1,958 2024 1,933 Thereafter 32,302 Total minimum lease payments 41,828 Less: present value adjustment (17,126) Operating lease liabilities $ 24,702 As of March 31, 2020, the maturities of our finance lease liabilities were as follows (in thousands): Finance Leases Remainder of 2020 $ 250 2021 266 2022 199 2023 199 2024 199 Thereafter — Total minimum lease payments 1,113 Less: present value adjustment (86) Finance lease liabilities $ 1,027 Components of lease cost were as follows (in thousands): Three Months Ended March 31, 2020 2019 Operating lease cost (1) $ 936 $ 874 Finance lease cost: Amortization of right-of-use asset 34 42 Interest on lease liabilities 10 13 Sublease income (72) — Total lease cost $ 908 $ 929 (1) Includes short-term, month-to-month lease and variable lease costs, which were immaterial. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As of March 31, 2020 and December 31, 2019, Anheuser-Busch, LLC ("A-B") owned approximately 31.1% of our outstanding common stock. Transactions with A-B, Ambev and Anheuser-Busch Worldwide Investments, LLC (“ABWI”) In December 2015, we partnered with Ambev, the Brazilian subsidiary of Anheuser-Busch InBev SA, to distribute Kona beers into Brazil. In August 2016, we also entered into an International Distribution Agreement with ABWI, an affiliate of A-B, pursuant to which ABWI distributes our malt beverage products in jurisdictions outside the United States, subject to the terms and conditions of our prior agreement with our other international distributor, CraftCan Travel LLC, and certain other limitations. Contract Brewing Arrangement with Anheuser-Busch Companies, LLC ("ABC") On January 30, 2018, we entered into a Contract Brewing Agreement (the “Brewing Agreement”) with ABC, an affiliate of A-B, pursuant to which we brew, package, and palletize certain malt beverage products of A-B's craft breweries at our Portland, Oregon, and Portsmouth, New Hampshire, breweries as selected by ABC. Under the terms of the Brewing Agreement, ABC pays us a per barrel fee that varies based on the annual volume of the specified product brewed by us, plus (a) our actual incremental costs of brewing the product and (b) certain capital costs and costs of graphics and labeling that we incur in connection with the brewed products. The Brewing Agreement expired on December 31, 2019, but the parties continue to operate under the same terms. The Brewing Agreement contains specified termination rights, including, among other things, the right of either party to terminate the Brewing Agreement if (i) the other party fails to perform any material obligation under the Brewing Agreement or any other agreement between the parties, subject to certain cure rights, or (ii) the Master Distributor Agreement is terminated. Transactions with A-B, Ambev, ABWI and ABC consisted of the following (in thousands): Three Months Ended 2020 2019 Gross sales to A-B and Ambev $ 36,704 $ 39,609 International distribution fee earned from ABWI 812 812 Cumulative international distribution fee from ABWI, recorded in Deferred revenue 21,924 5,172 Contract brewing fee earned from ABC 203 538 Margin fee paid to A-B, classified as a reduction of Sales 488 541 Inventory management and other fees paid to A-B, classified in Cost of sales 92 90 Amounts due to or from A-B and ABWI were as follows (in thousands): March 31, December 31, Amounts due from A-B related to beer sales pursuant to the A-B distributor agreement $ 14,816 $ 11,394 Refundable deposits due to A-B (936) (1,197) Amounts due to A-B for services rendered (6,359) (5,976) Net amount due from A-B and ABWI $ 7,521 $ 4,221 Related Party Operating Leases We lease our headquarters office space, banquet space and storage facilities located in Portland, land and certain equipment from two limited liability companies, both of whose members include our former Board Chair and his brother. This lease is included in the ROU asset and lease liabilities recorded on our Consolidated Balance Sheets. Lease payments to these lessors were as follows (in thousands): Three Months Ended 2020 2019 $ 42 $ 41 We hold lease and sublease obligations for certain office space and the land underlying the brewery and pub location in Kona, Hawaii, with a company whose owners have a charitable foundation that owns more than 5% of our common stock. The sublease contracts expire on various dates through 2020, with an extension at our option for two five Three Months Ended 2020 2019 $ 172 $ 168 |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Derivative Financial Instruments Interest Rate Swap Contract Our risk management objectives are to ensure that business and financial exposures to risk that have been identified and measured are minimized using the most effective and efficient methods to reduce, transfer and, when possible, eliminate such exposures. Operating decisions contemplate associated risks and management strives to structure proposed transactions to avoid or reduce risk whenever possible. We have assessed our vulnerability to certain business and financial risks, including interest rate risk associated with our variable-rate long-term debt. To mitigate this risk, effective January 23, 2014, we entered into an interest rate swap contract with BofA for 75% of the term loan ("Term Loan") balance, to hedge the variability of interest payments associated with our variable-rate borrowings under our Term Loan with BofA. The Term Loan contract and the interest rate swap terminate on September 30, 2023. The Term Loan contract had a total notional value of $6.2 million as of March 31, 2020. Through this swap agreement, we pay interest at a fixed rate of 2.86% and receive interest at a floating-rate of the one-month LIBOR, which was 0.92% at March 31, 2020. It is likely that LIBOR will no longer be used as a reference rate by most, if not all, financial institutions before year-end 2021. Since the interest rate swap hedges the variability of interest payments on variable rate debt with similar terms, it qualifies for cash flow hedge accounting treatment. As of March 31, 2020, an unrealized net loss of $0.5 million was recorded in Accumulated other comprehensive loss as a result of this hedge. The effective portion of the gain or loss on the derivative is reclassified into Interest expense in the same period during which we record Interest expense associated with the related debt. There was no hedge ineffectiveness during the first three months of 2020 or 2019. The fair value of our derivative instrument recorded as a component of Other liabilities on our Consolidated Balance Sheets was as follows (in thousands): March 31, December 31, Fair value of interest rate swap liability $ (502) $ (278) The effect of our interest rate swap contract that was accounted for as a derivative instrument on our Consolidated Statements of Operations was as follows (in thousands): Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Location of Loss Reclassified Amount of Loss Reclassified from Accumulated OCI into Three Months Ended 2020 $ (224) Interest expense $ 19 2019 $ (62) Interest expense $ 6 See also Note 8. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories: • Level 1 – quoted prices in active markets for identical securities as of the reporting date; • Level 2 – other significant directly or indirectly observable inputs, including quoted prices for similar securities, interest rates, prepayment speeds and credit risk; and • Level 3 – significant inputs that are generally less observable than objective sources, including our own assumptions in determining fair value. The factors or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following table summarizes liabilities measured at fair value on a recurring basis (in thousands): Fair Value at March 31, 2020 Level 1 Level 2 Level 3 Total Interest rate swap $ — $ (502) $ — $ (502) Fair Value at December 31, 2019 Interest rate swap $ — $ (278) $ — $ (278) We did not have any assets measured at fair value on a recurring basis at March 31, 2020 or December 31, 2019. The fair value of our interest rate swap was based on quarterly statements from the issuing bank. There were no changes to our valuation techniques during the three months ended March 31, 2020. We believe the carrying amounts of Cash and cash equivalents, Accounts receivable, Other current assets, Accounts payable, Accrued salaries, wages and payroll taxes, and Other accrued expenses are a reasonable approximation of the fair value of those financial instruments because of the nature of the underlying transactions and the short-term maturities involved. We had fixed-rate debt outstanding as follows (in thousands): March 31, December 31, Fixed-rate debt on Consolidated Balance Sheets $ 5,738 $ 5,973 Estimated fair value of fixed-rate debt 6,173 6,281 |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The following table disaggregates our Sales by major source (in thousands): Three Months Ended March 31, 2020 Beer Related (1) Brewpubs Total Product sold through distributor agreements (2) $ 38,859 $ — $ 38,859 Contract brewing fees 335 — 335 International distribution fees 812 — 812 Brewpubs (3) — 5,134 5,134 Other (4) 685 — 685 $ 40,691 $ 5,134 $ 45,825 Three Months Ended March 31, 2019 Beer Related (1) Brewpubs Total Product sold through distributor agreements (2) $ 41,128 $ — $ 41,128 Contract brewing fees 847 — 847 International distribution fees 812 — 812 Brewpubs (3) — 6,203 6,203 Other (4) 778 — 778 $ 43,565 $ 6,203 $ 49,768 (1) Beer Related sales include sales to A-B subsidiaries including Ambev, ABWI and ABC. Sales to wholesalers through the A-B distributor agreement in both the three-month period ended March 31, 2020 and 2019 represented 81.2% of our Sales. (2) Product sold through distributor agreements included domestic and international sales of owned and non-owned brands pursuant to terms in our distributor agreements. (3) Brewpub sales include sales of promotional merchandise and sales of beer directly to customers. (4) Other sales include sales of beer related merchandise, hops and spent grain. Revenue is recognized when obligations under the terms of a contract with our customers are satisfied; generally this occurs when the product arrives at distribution centers or when the wholesaler takes possession. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. We consider customer purchase orders, which in some cases are governed by a master agreement, to be the contracts with a customer. For each contract related to the production of beer, we consider the promise to transfer products, each of which is distinct, to be the identified performance obligation. The transaction price for each performance obligation is specifically identified within the contract with our customer and represents the fair standalone selling price. In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligation is distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined. Discounts are recognized as a reduction to Sales at the time we recognize the revenue. We generally do not grant return privileges, except in limited and specific circumstances. As of March 31, 2020, we had receivables related to contracts with customers of $21.5 million, net of the allowance for doubtful accounts of $25,000. As of December 31, 2019, we had receivables related to contracts with customers of $17.5 million, net of the allowance for doubtful accounts of $25,000. As of March 31, 2020 and December 31, 2019, contract liabilities, which consisted of obligations associated with our gift card programs, were $0.2 million and $0.2 million, respectively, and were included in Other accrued expenses on the Consolidated Balance Sheets. |
Segment Results and Concentrati
Segment Results and Concentrations | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Segment Results and Concentrations | Segment Results and Concentrations Our chief operating decision maker monitors Net sales and gross margins of our Beer Related operations and our Brewpubs operations. Beer Related operations include the brewing operations and related domestic and international beer and cider sales of our Kona, Widmer Brothers, Redhook, Omission, AMB, Cisco, and Wynwood beer brands and Square Mile cider brand. Brewpubs operations primarily include our brewpubs, some of which are located adjacent to our Beer Related operations. We do not track operating results beyond the gross margin level or our assets on a segment level. Net sales, Gross profit and gross margin information by segment was as follows (dollars in thousands): Three Months Ended March 31, 2020 Beer Brewpubs Total Net sales $ 38,767 $ 5,134 $ 43,901 Gross profit $ 14,982 $ 201 $ 15,183 Gross margin 38.6 % 3.9 % 34.6 % 2019 Net sales $ 40,789 $ 6,203 $ 46,992 Gross profit $ 15,508 $ 675 $ 16,183 Gross margin 38.0 % 10.9 % 34.4 % The segments use many of the same assets. For internal reporting purposes, we do not allocate assets by segment and, therefore, no asset by segment information is provided to our chief operating decision maker. In preparing this financial information, certain expenses were allocated between the segments based on management estimates, while others were based on specific factors such as headcount. These factors can have a significant impact on the amount of Gross profit for each segment. While we believe we have applied a reasonable methodology, assignment of other reasonable cost allocations to each segment could result in materially different segment Gross profit. Sales to wholesalers through the A-B distributor agreement represented the following percentage of our Sales: Three Months Ended March 31, 2020 2019 81.2 % 81.2 % Receivables from A-B and ABWI represented the following percentage of our Accounts receivable balance: March 31, December 31, 69.1 % 65.1 % |
Significant Stock-Based Plan Ac
Significant Stock-Based Plan Activity and Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Significant Stock-Based Plan Activity and Stock-Based Compensation | Significant Stock-Based Plan Activity and Stock-Based Compensation Stock-Based Compensation Stock-based compensation expense was recognized in our Consolidated Statements of Operations as follows (in thousands): Three Months Ended 2020 2019 Cost of sales $ (26) $ 48 Selling, general and administrative expense 473 370 Total stock-based compensation expense $ 447 $ 418 At March 31, 2020, we had total unrecognized stock-based compensation expense of $1.1 million, which will be recognized over the weighted average remaining vesting period of 1.7 years. In the first quarter of 2020, we reversed $39,000 in stock compensation expense from Cost of sales as a result of the termination of unvested awards. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The reconciliation between the number of shares used for the basic and diluted per share calculations, as well as other related information, is as follows (in thousands): Three Months Ended 2020 2019 Weighted average common shares used for basic EPS 19,502 19,412 Dilutive effect of stock-based awards 182 — Shares used for diluted EPS 19,684 19,412 Stock-based awards not included in diluted per share calculations as they would be antidilutive — 42 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The disclosure of purchase commitments in these consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2019. The disclosures below relate to legal commitments with significant events occurring during the three months ended March 31, 2020. We are in the process of assessing the impact the COVID-19 pandemic will have on our future commitments and contingencies and we do not believe that the future commitments will be materially adversely impacted. General We are subject to various claims and pending or threatened lawsuits in the normal course of business. Although we do not anticipate that the resolution of legal proceedings arising in the normal course of business or the proceedings described below will have a material adverse effect on our financial position, results of operations or cash flows, we cannot predict this with certainty. Legal On February 28, 2017 and March 6, 2017, respectively, two lawsuits, Sara Cilloni and Simone Zimmer v. Craft Brew Alliance, Inc., and Theodore Broomfield v. Kona Brewing Co. LLC, Kona Brew Enterprises, LLP, Kona Brewery LLC, and Craft Brew Alliance, Inc., were filed in the United States District Court for the Northern Division of California. On April 7, 2017, the two lawsuits were consolidated into a single complaint under the Broomfield case. The lawsuit alleges that the defendants misled customers regarding the state in which Kona Brewing Company beers are manufactured. On May 30, 2019, we announced our entry into a definitive settlement agreement, which received preliminary approval from the Court on June 14, 2019. The settlement claims period ended October 7, 2019, and the Court entered a Final Judgment on February 11, 2020. A notice of appeal of the final judgment was filed by an objector on March 3, 2020. We recorded a charge of $4.7 million on a pre-tax basis in the quarter ended March 31, 2019, based on our estimate of the probable costs of settling the litigation. The total cost of settling the litigation is expected to be approximately $4.4 million. In connection with the pending merger transaction with ABC, several lawsuits were filed on behalf of our shareholders. On January 3, 2020, a purported class action complaint brought on behalf of a putative class of our shareholders, captioned Kost et al. v. Craft Brew Alliance, Inc., et al., Case No. 20-2-00389-1 SEA, was filed in the Superior Court of Washington, King County (the “Kost Action”). On January 14, 2020, a second purported class action complaint brought on behalf of a putative class of our shareholders, captioned Birkby v. Craft Brew Alliance, Inc., et al., Case No. 20CV02867, was filed in the Circuit Court of the State of Oregon for the County of Multnomah (the “Birkby Action”). The Birkby and Kost Actions assert state law claims for alleged breaches of fiduciary duty against our company and our directors. The Kost Action also brings claims against our Chief Executive Officer and ABC, and includes allegations of material misstatements and omissions in our definitive proxy statement filed with the SEC on January 21, 2020 (the “Proxy Statement”). In addition, four complaints were filed in federal court asserting claims against our company and our directors under the federal securities laws and alleging material misstatements and omissions in the Proxy Statement: Sabatini et al. v. Craft Brew Alliance, Inc., et al., Case No. 1:20-cv-00138, filed in the United States District Court for the District of Delaware on January 29, 2020 on behalf of a putative class of our shareholders (the “Sabatini Action”), Halberstam v. Craft Brew Alliance, Inc., et al., Case No. 2:20-cv-01243, filed in the United States District Court for the Central District of California on February 7, 2020 on behalf of an individual shareholder (the “Halberstam Action”), Michael Roberts et al. v. Craft Brew Alliance, Inc., et al., Case No. 1:20-cv-00208, filed in the United States District Court for the District of Delaware on February 12, 2020 on behalf of a putative class of our shareholders (the “Michael Roberts Action”), and Dennis Roberts v. Craft Brew Alliance, Inc., et al., Case No. 1:20-cv-00337, filed in the United States District Court for the District of Colorado on February 10, 2020 on behalf of an individual shareholder (the “Dennis Roberts Action”). The Sabatini Action also asserts claims against ABC and a subsidiary of ABC. On February 18, 2020, we announced the resolution of claims with the plaintiffs in the Kost, Sabatini, Halberstam, and Michael Roberts Actions, whereby we filed supplemental disclosures and plaintiffs in the Kost, Sabatini, Halberstam, and Michael Roberts Actions dismissed their individual claims with prejudice, and plaintiffs in the Kost, Sabatini, and Michael Roberts Actions dismissed their class claims without prejudice. The Birkby and Dennis Roberts Actions have not been resolved. We did not view the supplemental disclosures as material or required by applicable law, but determined to make the disclosures in order to avoid the expense and risks inherent in further litigation. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events We began seeing the impact of the global COVID-19 pandemic on our business in early March 2020, and such impacts have continued into April. The primary impacts of the pandemic have been significantly reduced demand from the on-premise channel and the closure of our brewpubs on-premise business. We expect COVID-19 related impacts to continue as the situation remains dynamic and subject to rapid and possibly material changes. Additional impacts, including but not limited to, the ability to maintain compliance with our financial bank covenants as described in the liquidity and capital resources in Part I, Item 2."Management's Discussion and Analysis of Financial Condition and Results of Operations," may arise of which we are not currently aware. The nature and extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted. As a result of the unexpected shutdown of bars and restaurants due to COVID-19, we are actively working with our retail and wholesale partners to come to an agreement on how best to handle the kegs currently in the market that may go out of date before they can be used. We are not able to make a reasonable estimate of the impact of this situation at the time of our filing so no accrual has been recorded. |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ASU 2019-12 In December 2019, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2019-12 "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." ASU 2019-12 eliminates certain exceptions to the general approach to the income tax accounting model, and adds new guidance to reduce the complexity in accounting for income taxes. This guidance is effective for annual periods beginning after December 15, 2020, including interim periods within those annual periods. We are still evaluating the effect of the adoption of ASU 2019-12. ASU 2018-15 In August 2018, the FASB issued ASU 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract." ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2018-15 on January 1, 2020 did not have a material effect on our financial position, results of operations or cash flows. ASU 2018-13 In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement." ASU 2018-13 removes, modifies and adds certain disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The adoption of ASU 2018-13 on January 1, 2020 did not have a material effect on our financial position, results of operations or cash flows. ASU 2017-04 In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment." ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. The adoption of ASU 2017-04 on January 1, 2020 did not have a material effect on our financial position, results of operations or cash flows. |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following (in thousands): March 31, December 31, Raw materials $ 7,645 $ 8,435 Work in process 3,873 2,862 Finished goods 6,591 4,651 Packaging materials 3,481 1,981 Promotional merchandise 817 661 Brewpub food, beverages and supplies 597 552 $ 23,004 $ 19,142 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Lease-related Liabilities | Lease-related liabilities consisted of the following (in thousands): March 31, December 31, Operating lease liabilities: Current lease liabilities included in Other accrued expenses $ 896 $ 883 Long-term lease liabilities 23,806 24,037 Total operating lease liabilities 24,702 24,920 Financing lease liabilities: Current portion included in Current portion of long-term debt and finance lease obligations 299 296 Long-term portion of lease liabilities included in Long-term debt and finance lease obligations, net of current portion 728 804 Total financing lease liabilities 1,027 1,100 Total lease liabilities $ 25,729 $ 26,020 Weighted-average remaining lease term: Operating leases 24 years 24 years Finance leases 4 years 4 years Weighted-average discount rate: Operating leases 4.72 % 4.72 % Finance leases 3.72 % 3.70 % |
Maturities of Operating Lease Liabilities | As of March 31, 2020, the maturities of our operating lease liabilities were as follows (in thousands): Operating Leases Remainder of 2020 $ 1,508 2021 2,036 2022 2,091 2023 1,958 2024 1,933 Thereafter 32,302 Total minimum lease payments 41,828 Less: present value adjustment (17,126) Operating lease liabilities $ 24,702 |
Maturities of Finance Lease Liabilities | As of March 31, 2020, the maturities of our finance lease liabilities were as follows (in thousands): Finance Leases Remainder of 2020 $ 250 2021 266 2022 199 2023 199 2024 199 Thereafter — Total minimum lease payments 1,113 Less: present value adjustment (86) Finance lease liabilities $ 1,027 |
Components of Lease Cost | Components of lease cost were as follows (in thousands): Three Months Ended March 31, 2020 2019 Operating lease cost (1) $ 936 $ 874 Finance lease cost: Amortization of right-of-use asset 34 42 Interest on lease liabilities 10 13 Sublease income (72) — Total lease cost $ 908 $ 929 (1) Includes short-term, month-to-month lease and variable lease costs, which were immaterial. Three Months Ended 2020 2019 $ 42 $ 41 Three Months Ended 2020 2019 $ 172 $ 168 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Transactions with related parties | Transactions with A-B, Ambev, ABWI and ABC consisted of the following (in thousands): Three Months Ended 2020 2019 Gross sales to A-B and Ambev $ 36,704 $ 39,609 International distribution fee earned from ABWI 812 812 Cumulative international distribution fee from ABWI, recorded in Deferred revenue 21,924 5,172 Contract brewing fee earned from ABC 203 538 Margin fee paid to A-B, classified as a reduction of Sales 488 541 Inventory management and other fees paid to A-B, classified in Cost of sales 92 90 Amounts due to or from A-B and ABWI were as follows (in thousands): March 31, December 31, Amounts due from A-B related to beer sales pursuant to the A-B distributor agreement $ 14,816 $ 11,394 Refundable deposits due to A-B (936) (1,197) Amounts due to A-B for services rendered (6,359) (5,976) Net amount due from A-B and ABWI $ 7,521 $ 4,221 |
Lease payments to lessors | Components of lease cost were as follows (in thousands): Three Months Ended March 31, 2020 2019 Operating lease cost (1) $ 936 $ 874 Finance lease cost: Amortization of right-of-use asset 34 42 Interest on lease liabilities 10 13 Sublease income (72) — Total lease cost $ 908 $ 929 (1) Includes short-term, month-to-month lease and variable lease costs, which were immaterial. Three Months Ended 2020 2019 $ 42 $ 41 Three Months Ended 2020 2019 $ 172 $ 168 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value of derivative instrument | The fair value of our derivative instrument recorded as a component of Other liabilities on our Consolidated Balance Sheets was as follows (in thousands): March 31, December 31, Fair value of interest rate swap liability $ (502) $ (278) |
Effect of interest rate swap contract on Consolidated Statements of Operations | The effect of our interest rate swap contract that was accounted for as a derivative instrument on our Consolidated Statements of Operations was as follows (in thousands): Derivatives in Cash Flow Hedging Relationships Amount of Gain (Loss) Location of Loss Reclassified Amount of Loss Reclassified from Accumulated OCI into Three Months Ended 2020 $ (224) Interest expense $ 19 2019 $ (62) Interest expense $ 6 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and liabilities measured on recurring basis | The following table summarizes liabilities measured at fair value on a recurring basis (in thousands): Fair Value at March 31, 2020 Level 1 Level 2 Level 3 Total Interest rate swap $ — $ (502) $ — $ (502) Fair Value at December 31, 2019 Interest rate swap $ — $ (278) $ — $ (278) |
Fixed-rate debt | We had fixed-rate debt outstanding as follows (in thousands): March 31, December 31, Fixed-rate debt on Consolidated Balance Sheets $ 5,738 $ 5,973 Estimated fair value of fixed-rate debt 6,173 6,281 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table disaggregates our Sales by major source (in thousands): Three Months Ended March 31, 2020 Beer Related (1) Brewpubs Total Product sold through distributor agreements (2) $ 38,859 $ — $ 38,859 Contract brewing fees 335 — 335 International distribution fees 812 — 812 Brewpubs (3) — 5,134 5,134 Other (4) 685 — 685 $ 40,691 $ 5,134 $ 45,825 Three Months Ended March 31, 2019 Beer Related (1) Brewpubs Total Product sold through distributor agreements (2) $ 41,128 $ — $ 41,128 Contract brewing fees 847 — 847 International distribution fees 812 — 812 Brewpubs (3) — 6,203 6,203 Other (4) 778 — 778 $ 43,565 $ 6,203 $ 49,768 (1) Beer Related sales include sales to A-B subsidiaries including Ambev, ABWI and ABC. Sales to wholesalers through the A-B distributor agreement in both the three-month period ended March 31, 2020 and 2019 represented 81.2% of our Sales. (2) Product sold through distributor agreements included domestic and international sales of owned and non-owned brands pursuant to terms in our distributor agreements. (3) Brewpub sales include sales of promotional merchandise and sales of beer directly to customers. (4) Other sales include sales of beer related merchandise, hops and spent grain. |
Segment Results and Concentra_2
Segment Results and Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segment Reporting [Abstract] | |
Net sales, gross profit and gross margin by segment | Net sales, Gross profit and gross margin information by segment was as follows (dollars in thousands): Three Months Ended March 31, 2020 Beer Brewpubs Total Net sales $ 38,767 $ 5,134 $ 43,901 Gross profit $ 14,982 $ 201 $ 15,183 Gross margin 38.6 % 3.9 % 34.6 % 2019 Net sales $ 40,789 $ 6,203 $ 46,992 Gross profit $ 15,508 $ 675 $ 16,183 Gross margin 38.0 % 10.9 % 34.4 % |
Concentration risks | Sales to wholesalers through the A-B distributor agreement represented the following percentage of our Sales: Three Months Ended March 31, 2020 2019 81.2 % 81.2 % Receivables from A-B and ABWI represented the following percentage of our Accounts receivable balance: March 31, December 31, 69.1 % 65.1 % |
Significant Stock-Based Plan _2
Significant Stock-Based Plan Activity and Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based compensation expense | Stock-based compensation expense was recognized in our Consolidated Statements of Operations as follows (in thousands): Three Months Ended 2020 2019 Cost of sales $ (26) $ 48 Selling, general and administrative expense 473 370 Total stock-based compensation expense $ 447 $ 418 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of shares used for basic and diluted earnings per share | The reconciliation between the number of shares used for the basic and diluted per share calculations, as well as other related information, is as follows (in thousands): Three Months Ended 2020 2019 Weighted average common shares used for basic EPS 19,502 19,412 Dilutive effect of stock-based awards 182 — Shares used for diluted EPS 19,684 19,412 Stock-based awards not included in diluted per share calculations as they would be antidilutive — 42 |
Cash and Cash Equivalents (Deta
Cash and Cash Equivalents (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Cash and Cash Equivalents [Abstract] | ||
Cash equivalents | $ 0 | $ 0 |
Bank overdrafts | $ 1,200,000 | $ 300,000 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Inventories details [Abstract] | ||
Raw materials | $ 7,645 | $ 8,435 |
Work in process | 3,873 | 2,862 |
Finished goods | 6,591 | 4,651 |
Packaging materials | 3,481 | 1,981 |
Promotional merchandise | 817 | 661 |
Brewpub food, beverages and supplies | 597 | 552 |
Total inventories | $ 23,004 | $ 19,142 |
Leases - Lease-related Liabilit
Leases - Lease-related Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Operating lease liabilities: | ||
Current lease liabilities included in Other accrued expenses | $ 896 | $ 883 |
Long-term lease liabilities | 23,806 | 24,037 |
Total operating lease liabilities | 24,702 | 24,920 |
Financing lease liabilities: | ||
Current portion included in Current portion of long-term debt and finance lease obligations | 299 | 296 |
Long-term portion of lease liabilities included in Long-term debt and finance lease obligations, net of current portion | 728 | 804 |
Total financing lease liabilities | 1,027 | 1,100 |
Total lease liabilities | $ 25,729 | $ 26,020 |
Weighted-average remaining lease term: | ||
Operating leases | 24 years | 24 years |
Finance leases | 4 years | 4 years |
Weighted-average discount rate: | ||
Operating leases | 4.72% | 4.72% |
Finance leases | 3.72% | 3.70% |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Remainder of 2020 | $ 1,508 | |
2021 | 2,036 | |
2022 | 2,091 | |
2023 | 1,958 | |
2024 | 1,933 | |
Thereafter | 32,302 | |
Total minimum lease payments | 41,828 | |
Less: present value adjustment | (17,126) | |
Operating lease liabilities | $ 24,702 | $ 24,920 |
Leases - Maturities of Finance
Leases - Maturities of Finance Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
Remainder of 2020 | $ 250 | |
2021 | 266 | |
2022 | 199 | |
2023 | 199 | |
2024 | 199 | |
Thereafter | 0 | |
Total minimum lease payments | 1,113 | |
Less: present value adjustment | (86) | |
Finance lease liabilities | $ 1,027 | $ 1,100 |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Leases [Abstract] | ||
Operating lease cost | $ 936 | $ 874 |
Finance lease cost: | ||
Amortization of right-of-use asset | 34 | 42 |
Interest on lease liabilities | 10 | 13 |
Sublease income | (72) | 0 |
Total lease cost | $ 908 | $ 929 |
Related Party Transactions - Tr
Related Party Transactions - Transactions with Anheuser-Busch, LLC (A-B), Ambev and Anheuser-Busch Worldwide Investments, LLC (ABWI) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Anheuser-Busch, LLC (A-B) | Craft Brew Alliance, Inc | |||
Related Party Transaction [Line Items] | |||
Percentage of stock owned by A-B | 31.10% | 31.10% | |
Affiliated entity | Anheuser-Busch, LLC (A-B) and Ambev | Gross sales | |||
Related Party Transaction [Line Items] | |||
Sales revenue or fee earned from related party | $ 36,704 | $ 39,609 | |
Affiliated entity | Anheuser-Busch Worldwide Investments, LLC (ABWI) | International distribution fees earned | |||
Related Party Transaction [Line Items] | |||
Sales revenue or fee earned from related party | 812 | 812 | |
Affiliated entity | Anheuser-Busch Worldwide Investments, LLC (ABWI) | Cumulative international distribution fees recorded in Deferred revenue | |||
Related Party Transaction [Line Items] | |||
Cumulative international distribution fee, recorded as Deferred revenue | 21,924 | 5,172 | |
Affiliated entity | Anheuser-Busch Companies, LLC (ABC) | Contract Brewing fee earned | |||
Related Party Transaction [Line Items] | |||
Sales revenue or fee earned from related party | 203 | 538 | |
Affiliated entity | Anheuser-Busch, LLC (A-B) | Margin fee paid, classified as a reduction of Sales | |||
Related Party Transaction [Line Items] | |||
Fee paid to related party | 488 | 541 | |
Affiliated entity | Anheuser-Busch, LLC (A-B) | Inventory management and other fees paid, classified in Cost of sales | |||
Related Party Transaction [Line Items] | |||
Fee paid to related party | 92 | $ 90 | |
Affiliated entity | Anheuser-Busch, LLC (A-B) | Amounts due related to beer sales | |||
Amounts due to or from Anheuser-Busch, LLC [Abstract] | |||
Amount due from related parties | 14,816 | $ 11,394 | |
Affiliated entity | Anheuser-Busch, LLC (A-B) | Refundable deposits | |||
Amounts due to or from Anheuser-Busch, LLC [Abstract] | |||
Amounts due to related party | (936) | (1,197) | |
Affiliated entity | Anheuser-Busch, LLC (A-B) | Services rendered | |||
Amounts due to or from Anheuser-Busch, LLC [Abstract] | |||
Amounts due to related party | (6,359) | (5,976) | |
Affiliated entity | Anheuser-Busch Worldwide Investments, LLC (ABWI) And Anheuser Busch, LLC (A-B) | |||
Amounts due to or from Anheuser-Busch, LLC [Abstract] | |||
Net amount due from related party | $ 7,521 | $ 4,221 |
Related Party Transactions - Op
Related Party Transactions - Operating Leases (Details) - Affiliated entity $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)periodcompany | Mar. 31, 2019USD ($) | |
Operating lease, Portland, Oregon | ||
Related Party Transaction [Line Items] | ||
Number of limited liability companies | company | 2 | |
Lease payments to lessors [Abstract] | ||
Total lease payments to lessors | $ 42 | $ 41 |
Operating lease, Kona, Hawaii | ||
Lease payments to lessors [Abstract] | ||
Total lease payments to lessors | $ 172 | $ 168 |
Percentage of common stock held by lessor (in hundredths) | 5.00% | |
Number of additional lease renewal periods | period | 2 | |
Sublease contract option period | 5 years |
Derivative Financial Instrume_3
Derivative Financial Instruments (Details) - USD ($) | Jan. 23, 2014 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
Derivatives, Fair Value [Line Items] | ||||
Hedge ineffectiveness gain (loss) | $ 0 | $ 0 | ||
Fair value of interest rate swap liability | $ (502,000) | $ (278,000) | ||
Interest Rate Swap Contracts | ||||
Derivatives, Fair Value [Line Items] | ||||
Percentage of Term Loan balance covered under interest rate swap contract | 75.00% | |||
Termination of contract date | Sep. 30, 2023 | |||
Notional value | $ 6,200,000 | |||
Fixed interest rate (in hundredths) | 2.86% | |||
Unrealized net gains recorded in Accumulated other comprehensive loss | $ 500,000 | |||
Interest Rate Swap Contracts | One Month LIBOR | ||||
Derivatives, Fair Value [Line Items] | ||||
One month variable interest rate (in hundredths) | 0.92% | |||
Interest Rate Swap Contracts | Derivatives in Cash Flow Hedging Relationships | Interest Expense | ||||
Effect of interest rate swap contract accounted for derivative instrument on Consolidated Statements of Income [Abstract] | ||||
Amount of Gain (Loss) Recognized in Accumulated OCI (Effective Portion) | $ (224,000) | (62,000) | ||
Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion) | $ 19,000 | $ 6,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial liability recorded at fair value on a recurring basis [Abstract] | ||
Interest rate swaps | $ (502) | $ (278) |
Fixed-rate debt on Consolidated Balance Sheets | ||
Fixed-rate debt outstanding [abstract] | ||
Fixed-rate debt | 5,738 | 5,973 |
Estimated fair value of fixed-rate debt | ||
Fixed-rate debt outstanding [abstract] | ||
Fixed-rate debt | 6,173 | 6,281 |
Recurring | ||
Financial liability recorded at fair value on a recurring basis [Abstract] | ||
Interest rate swaps | (502) | (278) |
Recurring | Level 1 | ||
Financial liability recorded at fair value on a recurring basis [Abstract] | ||
Interest rate swaps | 0 | 0 |
Recurring | Level 2 | ||
Financial liability recorded at fair value on a recurring basis [Abstract] | ||
Interest rate swaps | (502) | (278) |
Recurring | Level 3 | ||
Financial liability recorded at fair value on a recurring basis [Abstract] | ||
Interest rate swaps | $ 0 | $ 0 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||
Sales | $ 45,825 | $ 49,768 |
Product sold through distributor agreements | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 38,859 | 41,128 |
Contract brewing fees | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 335 | 847 |
International distribution fees | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 812 | 812 |
Brewpubs | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 5,134 | 6,203 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 685 | 778 |
Beer Related | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 40,691 | 43,565 |
Beer Related | Product sold through distributor agreements | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 38,859 | 41,128 |
Beer Related | Contract brewing fees | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 335 | 847 |
Beer Related | International distribution fees | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 812 | 812 |
Beer Related | Brewpubs | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 0 | 0 |
Beer Related | Other | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 685 | 778 |
Brewpubs | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 5,134 | 6,203 |
Brewpubs | Product sold through distributor agreements | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 0 | 0 |
Brewpubs | Contract brewing fees | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 0 | 0 |
Brewpubs | International distribution fees | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 0 | 0 |
Brewpubs | Brewpubs | ||
Disaggregation of Revenue [Line Items] | ||
Sales | 5,134 | 6,203 |
Brewpubs | Other | ||
Disaggregation of Revenue [Line Items] | ||
Sales | $ 0 | $ 0 |
Sales | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of concentration | 81.20% | 81.20% |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) - USD ($) $ in Thousands | Aug. 23, 2019 | Mar. 31, 2020 | Dec. 31, 2019 |
Disaggregation of Revenue [Line Items] | |||
Receivables related to contracts with customers | $ 21,453 | $ 17,492 | |
Allowance for doubtful accounts | 25 | 25 | |
Contract liabilities | 200 | 200 | |
Anheuser-Busch, LLC (A-B) | |||
Disaggregation of Revenue [Line Items] | |||
Deferred revenue due to contract liabilities | 21,900 | $ 22,700 | |
One-time incentive payment received | $ 20,000 | ||
Deferred revenue recognized | $ 800 |
Revenue Recognition - Revenue P
Revenue Recognition - Revenue Performance Obligations (Details) - Anheuser-Busch, LLC (A-B) $ in Millions | Mar. 31, 2020USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 2.4 |
Remaining performance obligation, expected period of satisfaction | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 3.2 |
Remaining performance obligation, expected period of satisfaction | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation | $ 16.3 |
Remaining performance obligation, expected period of satisfaction |
Segment Results and Concentra_3
Segment Results and Concentrations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Net sales, gross profit and gross margin by segment [Abstract] | |||
Net sales | $ 43,901 | $ 46,992 | |
Gross profit | $ 15,183 | $ 16,183 | |
Gross margin (in hundredths) | 34.60% | 34.40% | |
Beer Related | Operating Segments | |||
Net sales, gross profit and gross margin by segment [Abstract] | |||
Net sales | $ 38,767 | $ 40,789 | |
Gross profit | $ 14,982 | $ 15,508 | |
Gross margin (in hundredths) | 38.60% | 38.00% | |
Brewpubs | Operating Segments | |||
Net sales, gross profit and gross margin by segment [Abstract] | |||
Net sales | $ 5,134 | $ 6,203 | |
Gross profit | $ 201 | $ 675 | |
Gross margin (in hundredths) | 3.90% | 10.90% | |
Sales | |||
Sales and receivables from Anheuser-Busch, LLC [Abstract] | |||
Percentage of concentration | 81.20% | 81.20% | |
Accounts Receivable | |||
Sales and receivables from Anheuser-Busch, LLC [Abstract] | |||
Percentage of concentration | 69.10% | 65.10% |
Significant Stock-Based Plan _3
Significant Stock-Based Plan Activity and Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Stock-Based Compensation Expense [Abstract] | ||
Total stock-based compensation expense | $ 447 | $ 418 |
Unrecognized stock-based compensation expense | $ 1,100 | |
Weighted average remaining vesting period | 1 year 8 months 12 days | |
Cost of sales | ||
Stock-Based Compensation Expense [Abstract] | ||
Total stock-based compensation expense | $ (26) | 48 |
Reversal of compensation expense as a result of unvested awards terminating | 39 | |
Selling, general and administrative expense | ||
Stock-Based Compensation Expense [Abstract] | ||
Total stock-based compensation expense | $ 473 | $ 370 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reconciliation of shares used for basic and diluted earnings per share [Abstract] | ||
Weighted average common shares used for basic EPS (in shares) | 19,502 | 19,412 |
Dilutive effect of stock-based awards (in shares) | 182 | 0 |
Shares used for diluted EPS (in shares) | 19,684 | 19,412 |
Stock-based awards not included in diluted per share calculations as they would be antidilutive (in shares) | 0 | 42 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Feb. 12, 2020claim | Feb. 11, 2020USD ($) | Mar. 06, 2017claim | Mar. 31, 2019USD ($) | Apr. 07, 2017claim |
Commitments and Contingencies Disclosure [Abstract] | |||||
Number of lawsuits filed | claim | 4 | 2 | |||
Number of lawsuits consolidated | claim | 1 | ||||
Incremental charge based on current estimate of probable cost of settling litigation, pre-tax | $ | $ 4.7 | ||||
Total expected cost of settling litigation | $ | $ 4.4 |