Shares of LaCroix maker plunge 12% in two days as SEC questions sales measurements

• The SEC asked National Beverage to explain how “velocity per outlet” (VPO) and “velocity per capita” (VPO) work. The two metrics were referred to by CEO Nick Caporella in back-to back press releases last year.
• National Beverage, which makes popular fizzy water LaCroix, declined to provide this information to the regulator.

A can of LaCroix Sparkling Water produced by National Beverage Corp.

Brittany Greeson | The Washington Post | Getty Images

Shares of National Beverage, the maker of the popular seltzer water brand LaCroix, dropped more than 8 percent on Wednesday as the Securities and Exchange Commission raised questions about some of the company’s sales measurements.

The stock closed at $100.19 and has fallen more than 12 percent over the past two days.

According to correspondence between the SEC and the company, the agency asked National Beverage to explain the company's internal performance measures for sales, “velocity per outlet” (VPO) and “velocity per capita” (VPO). The two measurements were referenced by CEO Nick Caporella in press releases dated May 4 and 5 of 2017.

Caporella said in the May 4 press release that VPO and VPC help National Beverage create growth “never before thought possible.” On May 5, Caporella said VPO was “flashing solid green numbers as we bring FY2017 to a close.”

These comments raised eyebrows at the SEC, which wants the fizzy water maker to put the numbers into context. “To the extent that VPO and VPC are key performance indicators used in managing your business, please include a discussion of these measures along with comparative period amounts or explain why you do not believe this disclosure is necessary.”

National Beverage declined SEC's request. Gregory Cook, the chief accounting officer and controller, responded that the information “is as secretive as the formulas of our beverages and should not be disclosed to our competition.”

“The metrics that Mr. Caporella referenced are used to establish goals for certain customers, but are not utilized to manage the overall executional side of our business,” Cook added. “VPO and VPC therefore are not key performance indicators that would give readers a view of the Company through the ‘eyes of management.’”

Caporella, the octogenarian billionaire chief executive, is known for his colorful remarks in press releases. In an Oct. 19, 2017, release, Caporella said: “FIZZ revenues have grown 60% over the last ten years – ALL ORGANIC GROWTH – NO ACQUISITIONS! Organic growth has now ACCELERATED!”

He has also lashed out against the company’s critics. In the same release from last October, Caporella said short sellers of the stock were in a “stampede aboard" the passive trading wagon,” adding: "If you have the opinion that I, Nick Caporella, am angrily exercised while extremely fortunate to be guiding FIZZ, your opinion is quite accurate!"

National Beverage did not immediately respond to CNBC's request for comment.