Pyramid Breweries reports revenue and profit up in quarter - Weekly Specialty Beer Report - Brief Article

Modern Brewery Age, Nov 11, 2002

Pyramid Breweries Inc. has reported a net sales increase of 17% and a $454,000 improvement in net income. EBITDA (earnings before interest expense, taxes, depreciation, amortization, and stock compensation expense) increased 75% for the quarter to $1.0 million from $578,000.

Third quarter sales were $9.4 million, an increase of $1.4 million over the same quarter of the prior year. Beverage division net revenues were 13% ahead of the same period in 2001. Alehouse division sales were 28% over prior year, including $832,000 in sales at the new Walnut Creek Alehouse, which opened in May of 2002.

Net income for the third quarter was $463,000, an improvement of $454,000 over the $9,000 reported in the third quarter of 2001. The improved earnings resulted from a combination of increased Beverage division sales, improved Beverage division margins, and the opening of the Walnut Creek Alehouse. Cost of goods sold as a percentage of sales decreased from 77.5% in 2001 to 73.8% in 2002. Gross margin improved 36%, or $653,000, to $2.5 million from $1.8 million reported in 2001. The improved beverage division margins reflected more effective capacity utilization, efficiency improvements in the Seattle Brewery, and higher selling prices vs. 2001.

"Third quarter results were strong, but we recognize that comparisons to the third quarter of 2001 are affected by the 9/11 tragedy and the impact of the high energy costs we experienced last year. Nonetheless, we are pleased with our overall results from both a revenue and profit standpoint," said Martin Kelly, Chairman and CEO.

The Beverage Division reported a 13% rise in revenues to $6.3 million due to a 10% increase in shipments, and a 3% improvement in revenue per barrel. Total shipments for the third quarter were 44,500 barrels. Pyramid beer shipments increased 16% to 30,300 barrels. Thomas Kemper Soda shipments increased from 12,600 to 13,100 barrels. Thomas Kemper Beer shipments contributed 1,100 barrels, down 200 barrels.

Sales in the Alehouse Division, including the new Walnut Creek Alehouse, were up 28% to $3.1 million for the third quarter ended September 30, 2002. The Walnut Creek Alehouse contributed $832,000 in the quarter. The total Alehouse margin increased to $428,000, a 30% increase. Same store sales decreased $149,000, or 6%, while gross margin increased 18%, to $387,000, on a same store basis.

"The performance of the Pyramid brand has been very encouraging," added Kelly. "Our recent sales and marketing initiatives, including the launch of Pyramid Coastline Pilsner in the first quarter, appear to be paying dividends with the consumer. In fact, recent Neilsen results show an increase in market share in 6 of our 7 measured markets. We are also pleased by the rational pricing environment in beverages. The initial results from our new Walnut Creek Alehouse have also been very encouraging. Sales, profit contribution, and impact in the market have exceeded our expectations."

For the first nine months of the year, Pyramid's net sales increased 10% to $25.6 million. Beverage Division revenues were $17.7 million, up $1.0 million. Total shipments for the Beverage Division increased 4% to 123,900 barrels. Sales for the Alehouse Division were $7.9 million, up 20% on a year-to-date basis. Gross margin for the first nine months increased $585,000 to $6.5 million. Net income for the nine month period ended September 30, 2002, improved $701,000 to $289,000 compared to a net loss of $412,000 for the same period of the prior year.