NATIONAL BEVERAGE CORP (FIZZ)

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 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. Additionally, we produce and distribute carbonated soft drinks including Shasta® and Faygo®, iconic brands whose consumer loyalty spans more than 135 years.

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Our strategy seeks the profitable growth of our products by (i) developing healthier beverages in response to the global shift in consumer buying habits and tailoring our beverage portfolio to the preferences of a diverse mix of ‘crossover consumers’ – a growing group desiring a healthier alternative to artificially sweetened and high-caloric beverages; (ii) emphasizing unique flavor development and variety throughout our brands that appeal to multiple demographic groups; (iii) maintaining points of difference through innovative marketing, packaging and consumer engagement and (iv) responding faster and more creatively to changing consumer trends than larger competitors who are burdened by legacy production and distribution complexity and costs.

Presently, our primary market focus is the United States. Certain of our beverages are also distributed on a limited basis in other countries and options to expand distribution to other regions are being pursued. To service a diverse customer base that includes numerous national retailers, as well as thousands of smaller “up-and-down-the-street” accounts, we utilize a hybrid distribution system consisting of warehouse and direct-store delivery. The warehouse delivery system allows our retail partners to further maximize their assets by utilizing their ability to pick up beverages at our warehouses, further lowering their/our product costs.

Our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, supply chain disruptions, holiday and seasonal programming and weather conditions. Beverage sales are seasonal with higher sales volume realized during the summer months.

RESULTS OF OPERATIONS

Three Fiscal Months Ended January 31, 2026 (third quarter of fiscal 2026) compared to

Three Fiscal Months Ended January 25, 2025 (third quarter of fiscal 2025)

Net sales for the third quarter of fiscal 2026 decreased 0.9% to $264.6 million from $267.1 million for the third quarter of fiscal 2025. The decrease in sales resulted primarily from a 4.8% decrease in case volume, partially offset by a 4.4% increase in average selling price per case. The decrease in case volume impacted both Power + Brands and carbonated soft drink brands.

Gross profit for the third quarter of fiscal 2026 increased to $99.6 million from $99.0 million for the third quarter of fiscal 2025 and gross margin increased to 37.6% from 37.1% The increase in gross margin was primarily due to the increase in average selling price per case, partially offset by increased packaging costs and the effects of reduced case volume. The average cost of sales per case increased 3.4%.

Selling, general and administrative expenses for the third quarter of fiscal 2026 remained constant at $48.4 million for the third quarter of fiscal 2026 and fiscal 2025. As a percentage of net sales, selling, general and administrative expenses increased to 18.3% for the third quarter of fiscal 2026 compared to 18.1% for the third quarter of fiscal 2025.

Other income, net includes interest income of $2.8 million for the third quarter of fiscal 2026 and $1.4 million for the third quarter of fiscal 2025. The increase in interest income is due primarily to increased average invested balances.

The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.6% for the third quarter of fiscal 2026 and 23.7% for the third quarter of fiscal 2025. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes.

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Nine Fiscal Months Ended January 31, 2026 (first nine months of fiscal 2026) compared to

Nine Fiscal Months Ended January 25, 2025 (first nine months of fiscal 2025)

Net sales for the first nine months of fiscal 2026 decreased 0.5% to $883.4 million from $887.7 million for the first nine months of fiscal 2025. The decrease in sales resulted primarily from a 4.9% decrease in case volume, partially offset by a 4.7% increase in average selling price per case. The decrease in case volume impacted both Power + Brands and carbonated soft drink brands.

Gross profit for the first nine months of fiscal 2026 increased to $334.3 million from $330.7 million for the first nine months of fiscal 2025 and gross margin increased to 37.8% from 37.3%. The increase in gross margin was primarily due to the increase in average selling price per case, partially offset by an increase in packaging and ingredient costs and the effects of reduced case volume. The average cost of sales per case increased 3.7%

Selling, general and administrative expenses for the first nine months of fiscal 2026 increased $1.5 million to $154.3 million from $152.8 million for the first nine months of fiscal 2025. The increase was primarily due to an increase in marketing and selling costs. As a percentage of net sales, selling, general and administrative expenses increased to 17.5% for the first nine months of fiscal 2026 compared to 17.2% for the first nine months of fiscal 2025.

Other income, net includes interest income of $7.7 million for the first nine months of fiscal 2026 and $7.4 million for the first nine months of fiscal 2025. The increase in interest income is due primarily to increased average invested balances.

The Company’s effective income tax rate, based upon estimated annual income tax rates, was 23.6% for the first nine months of fiscal 2026 and 23.4% for the first nine months of fiscal 2025. The difference between the effective rate and the federal statutory rate of 21% was primarily due to the effects of state income taxes.

LIQUIDITY AND FINANCIAL CONDITION

Liquidity and Capital Resources

The Company’s principal sources of liquidity are its existing cash and cash-equivalents, cash generated from operating activities and borrowing capacity. At January 31, 2026, we maintained unsecured revolving Credit Facilities and the Loan Facility totaling $150 million, under which no borrowings were outstanding and $2.7 million was reserved for standby letters of credit. We believe existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months.

Cash Flows

The Company’s cash position increased $120.1 million for the first nine months of fiscal 2026 compared to a decrease of $177.8 million for the first nine months of fiscal 2025 primarily due to the special cash dividend of $304.1 million paid on July 24, 2024.

Net cash provided by operating activities for the first nine months of fiscal 2026 was $135.7 million compared to $146.6 million for the first nine months of fiscal 2025. For the first nine months of fiscal 2026, cash flow provided by operating activities decreased primarily due to a net increase in working capital, excluding cash.

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Net cash used in investing activities for the first nine months of fiscal 2026 reflects capital expenditures of $15.2 million, compared to capital expenditures of $20.8 million for the first nine months of fiscal 2025. Certain production capacity and efficiency improvement projects are in progress and we anticipate fiscal 2026 capital expenditures will not exceed fiscal 2025 capital spending.

Net cash used in financing activities for the first nine months of fiscal 2026 primarily reflects the repurchase of common shares for $0.7 million.

Financial Position

At January 31, 2026, working capital increased $149.6 million to $416.0 million from $266.4 million at May 3, 2025. The current ratio was 4.4 to 1 at January 31, 2026 compared to 2.9 to 1 at May 3, 2025. The increase in working capital and current ratio was due primarily to an increase in cash and cash equivalents of $120.1 million, a decrease in accounts payable and accrued liabilities of $19.6 million, and other net working capital increases of $9.8 million. Trade receivables decreased $6.7 million and days sales outstanding increased to 33.5 days from 32.5 days. Inventories increased $11.0 million and inventory turns decreased to 8.3 times from 8.7 times.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The following Management’s Discussion and Analysis of Operations is intended to provide information about the Company’s operations and business environment and should be read in conjunction with our Consolidated Financial Statements and the accompanying Notes contained in Item 8 of this report.

National Beverage Corp. is incorporated in Delaware and began trading as a public company on the NASDAQ Stock Market in 1991. In this report, the terms “we,” “us,” “our,” “Company” and “National Beverage” mean National Beverage Corp. and its subsidiaries unless indicated otherwise.

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.

National Beverage Corp., in recent years, has transformed into an innovative, healthier refreshment company. From our corporate philosophy to product development and marketing, we are converting consumers to a ‘Better for You’ thirst quencher that cares compassionately for their nutritional health. We are committed to our quest to innovate for the joy, benefit and enjoyment of our consumers’ healthier lifestyle.

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 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. Additionally, we produce and distribute carbonated soft drinks including Shasta® and Faygo®, iconic brands whose consumer loyalty spans more than 135 years.

Our strategy seeks the profitable growth of our products by (i) developing healthier beverages in response to the global shift in consumer buying habits and tailoring our beverage portfolio to the preferences of a diverse mix of ‘crossover consumers’ – a growing group desiring a healthier alternative to artificially sweetened and high-caloric beverages; (ii) emphasizing unique flavor development and variety throughout our brands that appeal to multiple demographic groups; (iii) maintaining points of difference through innovative marketing, packaging and consumer engagement and (iv) responding faster and more creatively to changing consumer trends than larger competitors who are burdened by legacy production and distribution complexity and costs.

Presently, our primary market focus is the United States. Certain of our beverages are also distributed on a limited basis in other countries and options to expand distribution to other regions are being pursued. To service a diverse customer base that includes numerous national retailers, as well as thousands of smaller “up-and-down-the-street” accounts, we utilize a hybrid distribution system consisting of warehouse and direct-store delivery. The warehouse delivery system allows our retail partners to further maximize their assets by utilizing their ability to pick up beverages at our warehouses, further lowering their/our product costs.

Our operating results are affected by numerous factors, including fluctuations in the costs of raw materials, supply chain disruptions, holiday and seasonal programming and weather conditions. Beverage sales are seasonal with higher sales volume realized during the summer months. See “Item 1A. Risk Factors” in Part I of this report for additional information about risks and uncertainties facing our Company.

RESULTS OF OPERATIONS

The following section generally discusses the fiscal years ended May 2, 2026 (“Fiscal 2026”) and May 3, 2025 (“Fiscal 2025”) results and year-to-year comparisons between Fiscal 2026 and Fiscal 2025. Discussions of fiscal year ended April 27, 2024 (“Fiscal 2024”) results and year-to-year comparisons between Fiscal 2025 and Fiscal 2024 can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended May 3, 2025, which is available free of charge on our website at www.nationalbeverage.com. Fiscal 2026 and Fiscal 2024 both consisted of 52 weeks. Fiscal 2025 consisted of 53 weeks.

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Net Sales

Net sales for Fiscal 2026 were $1,180.6 million compared to $1,201.4 million for Fiscal 2025. Sales were impacted primarily from one less selling week. Average selling price per case increased by 5.2%. A 6.7% decline in case volume impacted both Power+ Brand and carbonated soft drink brands. The unprecedented disruption, government shutdowns, funding changes, inflation and cautious consumer spending all impacted volume.

Gross Profit

Gross profit for Fiscal 2026 was $437.3 million compared to $443.9 million for Fiscal 2025. The change in gross profit was primarily due to an increase in packaging and ingredient costs and the change in case volume, partially offset by the increase in average selling price per case. Although the average cost of sales per case increased 5.0%, gross profit per case increased and gross margin remained constant at 37.0% for both Fiscal 2026 and Fiscal 2025.

Shipping and handling costs are included in selling, general and administrative expenses, the classification of which is consistent with many beverage companies. However, our gross margin may not be comparable to companies that include shipping and handling costs in cost of sales. See Note 1-Significant Accounting Policies, of Notes to the Consolidated Financial Statements.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for Fiscal 2026 decreased $1.3 million to $207.2 million from $208.5 million for Fiscal 2025. The decrease was primarily due to a decrease in administrative and shipping and handling costs, partially offset by an increase in marketing and selling costs. As a percentage of net sales, selling, general and administrative expenses increased to 17.5% compared to 17.4% in Fiscal 2025.

Other Income, net

Other income, net is primarily comprised of interest income of $10.6 million for Fiscal 2026 and $9.3 million for Fiscal 2025. The increase in interest income is primarily due to increased average invested balances, partially offset by lower yields.

Income Taxes

For Fiscal 2026 and Fiscal 2025, our effective tax rates were 23.7% and 23.6%, respectively. The differences between the effective rate and the federal statutory rate of 21% were primarily due to the effects of state income taxes.

LIQUIDITY AND FINANCIAL CONDITION

Liquidity and Capital Resources

Our principal sources of liquidity are our existing cash and cash-equivalents, cash generated from operations and borrowing capacity available under our revolving credit facilities. At May 2, 2026, we had $349.5 million in cash and cash equivalents and maintained unsecured revolving credit facilities totaling $150 million, under which no borrowings were outstanding and $2.7 million was reserved for standby letters of credit. We believe that existing capital resources will be sufficient to meet our liquidity and capital requirements for the next twelve months. See Note 5 - Debt, of Notes to the Consolidated Financial Statements.

Pursuant to a management agreement, we incurred fees to Corporate Management Advisors, Inc. (“CMA”) of $11.8 million and $12.0 million for Fiscal 2026 and Fiscal 2025, respectively. At May 2, 2026 and May 3, 2025, current liabilities included amounts due to CMA of $3.0 million and $2.1 million, respectively. See Note 6 - Capital Stock and Transactions with Related Parties, of Notes to the Consolidated Financial Statements.

Cash Flows

The Company’s cash position increased $155.7 million in Fiscal 2026 compared to a decrease of $133.2 million in Fiscal 2025 primarily due to the payment of a special cash dividend of $304.1 million in the first quarter of Fiscal 2025. Net cash provided by operating activities for Fiscal 2026 was $181.3 million compared to $206.7 million for Fiscal 2025. For Fiscal 2026, cash flow provided by operating activities decreased primarily due to a net increase in working capital excluding cash.

Net cash used in investing activities for Fiscal 2026 reflects capital expenditures of $25.1 million, compared to capital expenditures of $36.3 million for Fiscal 2025. Expenditures for property, plant and equipment in Fiscal 2026 were primarily for capital projects to expand our capacity, enhance sustainability and packaging capabilities and improve efficiencies at our production facilities. We intend to continue to improve packaging capabilities and efficiencies at our production facilities in Fiscal 2027 and anticipate Fiscal 2027 capital expenditures to be comparable to Fiscal 2026 capital spending.

Net cash used in financing activities for Fiscal 2026 primarily reflects the repurchase of common shares for $0.7 million.

Financial Position

During Fiscal 2026, our working capital increased $191.4 million to $457.8 million. The increase in working capital was primarily due to an increase in cash and cash equivalents of $155.7 million, an increase in inventory of $10.4 million, an increase in the derivative asset of $8.6 million, an increase in income tax receivable of $5.1 million, a decrease in accounts payable and accrued liabilities of $5.2 million, and other net working capital increases of $6.4 million. Trade receivables increased $0.1 million to $104.3 million and days sales outstanding was 31.9 days at May 2, 2026 compared to 32.5 days at May 3, 2025. Inventories increased $10.4 million as a result of increased quantities of finished goods. Annual inventory turns decreased to 8.2 times from 8.7 times. At May 2, 2026, the current ratio was 4.4 to 1 compared to 2.9 to 1 at May 3, 2025.

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CONTRACTUAL OBLIGATIONS

Contractual obligations at May 2, 2026 are payable as follows:

We contribute to certain pension plans under collective bargaining agreements and to a discretionary profit-sharing plan. Annual contributions were $4.2 million for both Fiscal 2026 and Fiscal 2025. See Note 11- Pension Plans, of Notes to Consolidated Financial Statements.

We maintain self-insured and deductible programs for certain liability, medical and workers’ compensation exposures. Other long-term liabilities include known claims and estimated incurred but not reported claims not otherwise covered by insurance based on actuarial assumptions and historical claims experience. Since the timing and amount of claim payments vary significantly, we are not able to reasonably estimate future payments for specific periods and therefore such payments have not been included in the table above. Standby letters of credit aggregating $2.7 million have been issued in connection with our self-insurance programs. These standby letters of credit expire through June 2027 and are expected to be renewed.

OFF-BALANCE SHEET ARRANGEMENTS AND ESTIMATES

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition.

CRITICAL ACCOUN

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