BOSTON, July 27,
2023 /PRNewswire/ --- The Boston Beer Company, Inc.
(NYSE: SAM), today reported financial results for its second
quarter that ended July 1, 2023. Key
results were:
Second Quarter 2023 Summary:
- Depletions decreased 3%
- Shipments decreased 4.5%
- Net revenue decreased 2.1% to $603.3
million
- Gross margin increased 230 basis points to 45.4%
- Net income increased 8.8% to $58.0
million
- Diluted income per share increased 9.5% to $4.72
Capital Structure
- Generated $119.0 million in
operating cash flow in the second quarter
- Ended the second quarter with $207.8
million in cash and no debt
- Repurchased $52.5 million in
shares from January 3, 2023 to
July 21, 2023
"We saw improvement in our financial performance and our volume
benefited from the timing of the July
4th holiday in the second quarter, as we continue to execute
our operational plans. We are proud to have just been named the
number one beer industry supplier in the Tamarron Survey, the
annual poll of beer distributors conducted by Tamarron Consulting,
for the sixth year in a row," said Chairman and Founder
Jim Koch. "Our highly
cash-generative business and strong balance sheet will not only
fuel our 2023 brand investments, but have also enabled us to
repurchase over $50 million in shares
year-to-date."
"As we expected, our second quarter performance reflected strong
growth in Twisted Tea, offset by continuing challenges in the hard
seltzer category, and we are reiterating our 2023 depletion and
shipment expectations as well as our earnings guidance," said
President and CEO Dave Burwick.
"Based on our second quarter financial performance, we plan to
increase our balance of year spend behind both the Truly and
Twisted Tea brands as we believe our messaging is effective and the
business will respond over the short-and longer-term to these
investments. We are focused on enhancing our productivity to
continue to improve our gross margin and in turn incrementally
invest to further strengthen our brands."
Details of the results were as follows:
Second Quarter 2023 (13 weeks ended July 1, 2023) Summary of Results
Net revenue of $603.3 million
decreased 2.1% compared to the prior year.
Depletions in the second quarter decreased 3% from the prior
year, reflecting decreases in the Company's Truly Hard Seltzer,
Angry Orchard, Hard Mountain Dew and Samuel Adams brands, partially
offset by increases in its Twisted Tea and Dogfish Head brands.
Shipment volume for the quarter was approximately 2.3 million
barrels, a 4.5% decrease from the prior year, reflecting decreases
in the Company's Truly Hard Seltzer, Angry Orchard, Samuel Adams,
Hard Mountain Dew and Dogfish Head brands, partially offset by
increases in its Twisted Tea brand.
The timing of the July 4th holiday
relative to the Company's 2023 and 2022 fiscal calendars resulted
in a depletion and shipment volume benefit in the second quarter of
2023. This volume benefit was the most significant factor in the
difference between depletions and shipments on a fiscal calendar
basis compared to a comparable weeks basis. On a comparable weeks
basis, depletions declined approximately 7% and shipments declined
4.8%.
The Company believes distributor inventory as of July 1, 2023 averaged approximately three weeks
on hand and was at an appropriate level for each of its brands,
except for certain Twisted Tea brand packages that were below
targeted levels due to higher than forecasted consumer demand.
Gross margin of 45.4% increased 230 basis points from the 43.1%
margin realized in the prior year. Gross margin primarily benefited
from strong price realization and procurement savings, which more
than offset increased inflationary costs.
Advertising, promotional and selling expenses for the second
quarter of 2023 decreased $5.5
million or 3.6% from the second quarter of 2022, due to
decreased freight to distributors of $15.7
million from lower rates and volumes, partially offset by an
increase in brand and selling costs of $10.2
million, mainly driven by higher salaries and benefits
costs, increased consulting costs and increased media
investments.
General and administrative expenses increased by $6.1 million or 15.6% from the second quarter of
2022, primarily due to increased consulting and legal costs and
higher salaries and benefits costs.
The Company incurred impairment costs for brewery equipment of
$1.5 million in the second quarter of
2023.
The Company's effective tax rate for the second quarter was
27.5% compared to 24.7% in the prior year. In the second quarters
of 2023 and 2022, the Company recorded a tax benefit of
$0.03 and $0.08 per diluted share, respectively, resulting
from the Accounting Standard "Employee Share-Based Payment
Accounting" ("ASU 2016-09").
Year-to-date 2023 (26 weeks ended July
1, 2023) Summary of Results
Net revenue year-to-date of $1.013
billion decreased 3.2% compared to year-to-date 2022.
Depletions year-to-date decreased 4% from year-to-date 2022,
reflecting decreases in the Company's Truly Hard Seltzer, Angry
Orchard, Dogfish Head, and Samuel Adams brands, partially offset by
increases in its Twisted Tea and Hard Mountain Dew brands.
Comparable weeks depletions year-to-date decreased 7%.
Shipment volume year-to-date was approximately 3.9 million
barrels, a 5.8% decrease from year-to-date 2022, reflecting
decreases in the Company's Truly Hard Seltzer, Angry Orchard,
Dogfish Head, and Samuel Adams brands, partially offset by
increases in its Twisted Tea and Hard Mountain Dew brands.
Comparable weeks shipments year-to-date decreased 7.6%.
Gross margin year-to-date of 42.4% increased from the 41.9%
gross margin realized in year-to-date 2022, primarily due to price
increases partially offset by higher inventory obsolescence costs,
primarily related to rebranding Truly Vodka Seltzer to Truly Vodka
Soda, and a non-recurring payment to a third-party contract
brewery. Increased inflationary costs were offset by procurement
savings.
Advertising, promotional and selling expenses year-to-date
decreased $10.7 million or 3.8% from
year-to-date 2022, primarily due to decreased freight to
distributors of $28.3 million from
lower rates and volumes, partially offset by an increase in brand
investments of $17.6 million, mainly
driven by increased salaries and benefits costs and higher
investments in local marketing.
General and administrative expenses year-to-date increased by
$10.0 million or 12.8% from
year-to-date 2022, primarily due to increased consulting and legal
costs.
In 2022, the Company recorded $5.3
million in contract termination costs, most of which was
recorded in the first quarter, as a result of further negotiations
with suppliers that eliminated certain future shortfall fees.
The Company's effective tax rate year-to-date was 27.5% compared
to 25.1% year-to-date 2022. Year-to-date 2023 and 2022, the Company
recorded tax benefit of $0.01 per
diluted share and a tax benefit of $0.05 per diluted share, respectively, resulting
from ASU 2016-09.
Net income year-to-date of $49.1
million or $3.98 per share,
represented a decrease of $2.3
million or $0.17 per diluted
share compared to year-to-date 2022. This decrease between periods
was primarily driven by lower revenue, partially offset by higher
gross margins and lower operating expenses.
The Company expects that its July 1,
2023 cash balance of $207.8
million, together with its projected future operating cash
flows and the unused balance on its $150.0
million line of credit, will be sufficient to fund future
cash requirements.
During the 26-week period ended July 1,
2023 and the period from July 2,
2023 through July 21, 2023,
the Company repurchased its Class A Common Stock in the amounts of
$46.7 million and $5.8 million, respectively, for a total of
$52.5 million year to date. As of
July 21, 2023, the Company had
approximately $307.0 million
remaining on the $1.2 billion share
buyback expenditure limit set by the Board of Directors.
Depletions Estimate
Year-to-date depletions through the 29-week period ended
July 22, 2023 are estimated by the
Company to have decreased approximately 6% from the prior year
fiscal period.
Full-Year 2023 Projections
The Company is maintaining the full year volume and earnings
guidance previously communicated in its April 25, 2023 Earnings Release and increasing
its Advertising, Promotion and Selling Expense guidance. The
Company experienced lower than expected freight costs year to date,
which in addition to gross margin performance allows it to further
support its brands. The Company's actual 2023 results could vary
significantly from the current projection and are highly sensitive
to changes in volume projections particularly related to the hard
seltzer category and supply chain performance as well as
inflationary impacts. The 2023 fiscal year includes 52 weeks
compared to the 2022 fiscal year which included 53 weeks.
Full Year
2023
|
Current
Guidance
|
Prior
Guidance
|
Depletions
Decreases
|
(2%) to (8%)
|
(2%) to (8%)
|
Shipments
Decreases
|
(2%) to (8%)
|
(2%) to (8%)
|
Price
Increases
|
1% to 3%
|
1% to 3%
|
Gross
Margin
|
41% to 43%
|
41% to 43%
|
Advertising,
Promotion, and Selling Expense YoY Change ($
million)
|
$20 to $40
|
($5) to $15
|
Effective Tax
Rate
|
28 %
|
28 %
|
EPS
|
$6.00 to
$10.00
|
$6.00 to
$10.00
|
Capital Spending
($ million)
|
$100 to $140
|
$100 to $140
|
Underlying the Company's current 2023 projections are the
following full-year estimates and targets:
- The Company's guidance on depletions and shipments includes the
estimated negative impact of approximately 1.0 percentage point due
to the fact that fiscal 2022 had 53 weeks and fiscal 2023 will have
52 weeks. On a 52-week comparable basis the Company expects
depletions and shipments to decrease 1% to 7%.
- As anticipated, the Company finished the first half at the
lower end of shipment guidance range on a comparable weeks basis.
The Company estimates that second half shipments will benefit from
the expected continued growth of Twisted Tea which is its largest
brand, the lapping of last year's Truly Margarita launch and
additional investments in advertising spend in the second half of
the year.
- The Company's guidance incorporates an expectation of shortfall
fees, which primarily impact the fourth quarter. Therefore, the
Company expects year-over-year gross margin improvement to be lower
in the fourth quarter relative to earlier quarters.
- The advertising, selling and promotional expense projection
does not include any changes in freight costs for the shipment of
products to the Company's distributors.
Forward-Looking Statements
Statements made in this press release that state the Company's
or management's intentions, hopes, beliefs, expectations or
predictions of the future are forward-looking statements. It is
important to note that the Company's actual results could differ
materially from those projected in such forward-looking statements.
Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking
statements is contained from time to time in the Company's SEC
filings, including, but not limited to, the Company's report on
Form 10-K for the year ended December 31,
2022 and subsequent reports filed by the Company with the
SEC on Forms 10-Q and 8-K. Copies of these documents are available
from the SEC and may be found on the Company's website,
www.bostonbeer.com. You should not place undue reliance on
forward-looking statements, which speak only as of the date they
are made. The Company undertakes no obligation to publicly update
or revise any forward-looking statements.
About the Company
The Boston Beer Company, Inc. (NYSE: SAM) began in 1984 brewing
Samuel Adams beer and the Samuel Adams brand is currently
recognized as one of the largest and most respected craft beer
brands. Our portfolio of brands also includes Truly Hard Seltzer,
Twisted Tea, Angry Orchard Hard Cider, Dogfish Head Brewery, Hard
Mountain Dew, and Jim Beam Kentucky Coolers, as well as other craft
beer brands such as Angel City Brewery and Coney Island Brewing.
For more information, please visit our investor relations website
at www.bostonbeer.com, which includes links to all of our
respective brand websites.
Thursday, July 27, 2023
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
(in thousands,
except per share data)
|
|
|
|
(unaudited)
|
|
|
|
Thirteen weeks
ended
|
|
|
Twenty-six weeks
ended
|
|
|
|
July 1,
2023
|
|
|
June 25,
2022
|
|
|
July 1,
2023
|
|
|
June 25,
2022
|
|
Revenue
|
|
$
|
641,333
|
|
|
$
|
655,022
|
|
|
$
|
1,076,489
|
|
|
$
|
1,112,310
|
|
Less excise
taxes
|
|
|
38,029
|
|
|
|
38,779
|
|
|
|
63,185
|
|
|
|
65,954
|
|
Net revenue
|
|
|
603,304
|
|
|
|
616,243
|
|
|
|
1,013,304
|
|
|
|
1,046,356
|
|
Cost of goods
sold
|
|
|
329,141
|
|
|
|
350,468
|
|
|
|
583,479
|
|
|
|
607,629
|
|
Gross
profit
|
|
|
274,163
|
|
|
|
265,775
|
|
|
|
429,825
|
|
|
|
438,727
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising,
promotional, and selling expenses
|
|
|
149,362
|
|
|
|
154,883
|
|
|
|
274,790
|
|
|
|
285,498
|
|
General and
administrative expenses
|
|
|
44,899
|
|
|
|
38,849
|
|
|
|
88,593
|
|
|
|
78,547
|
|
Contract termination
costs and other
|
|
|
—
|
|
|
|
578
|
|
|
|
—
|
|
|
|
5,330
|
|
Impairment of brewery
assets
|
|
|
1,532
|
|
|
|
80
|
|
|
|
2,016
|
|
|
|
121
|
|
Total operating
expenses
|
|
|
195,793
|
|
|
|
194,390
|
|
|
|
365,399
|
|
|
|
369,496
|
|
Operating
income
|
|
|
78,370
|
|
|
|
71,385
|
|
|
|
64,426
|
|
|
|
69,231
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
1,855
|
|
|
|
83
|
|
|
|
3,499
|
|
|
|
50
|
|
Other
expense
|
|
|
(122)
|
|
|
|
(601)
|
|
|
|
(224)
|
|
|
|
(701)
|
|
Total other income
(expense)
|
|
|
1,733
|
|
|
|
(518)
|
|
|
|
3,275
|
|
|
|
(651)
|
|
Income before income
tax provision
|
|
|
80,103
|
|
|
|
70,867
|
|
|
|
67,701
|
|
|
|
68,580
|
|
Income tax
provision
|
|
|
22,068
|
|
|
|
17,518
|
|
|
|
18,622
|
|
|
|
17,186
|
|
Net income
|
|
$
|
58,035
|
|
|
$
|
53,349
|
|
|
$
|
49,079
|
|
|
$
|
51,394
|
|
Net income per common
share – basic
|
|
$
|
4.73
|
|
|
$
|
4.33
|
|
|
$
|
3.99
|
|
|
$
|
4.18
|
|
Net income per common
share – diluted
|
|
$
|
4.72
|
|
|
$
|
4.31
|
|
|
$
|
3.98
|
|
|
$
|
4.15
|
|
Weighted-average number
of common shares – basic
|
|
|
12,268
|
|
|
|
12,319
|
|
|
|
12,288
|
|
|
|
12,309
|
|
Weighted-average number
of common shares – diluted
|
|
|
12,276
|
|
|
|
12,341
|
|
|
|
12,304
|
|
|
|
12,341
|
|
Net income
|
|
$
|
58,035
|
|
|
$
|
53,349
|
|
|
$
|
49,079
|
|
|
$
|
51,394
|
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
126
|
|
|
|
(71)
|
|
|
|
144
|
|
|
|
(21)
|
|
Total other
comprehensive income (loss), net of tax
|
|
|
126
|
|
|
|
(71)
|
|
|
|
144
|
|
|
|
(21)
|
|
Comprehensive
income
|
|
$
|
58,161
|
|
|
$
|
53,278
|
|
|
$
|
49,223
|
|
|
$
|
51,373
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(in thousands, except
share data)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
July 1,
2023
|
|
|
December 31,
2022
|
|
Assets
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
207,755
|
|
|
$
|
180,560
|
|
Accounts
receivable
|
|
|
117,067
|
|
|
|
56,672
|
|
Inventories
|
|
|
155,702
|
|
|
|
148,450
|
|
Prepaid expenses and
other current assets
|
|
|
34,798
|
|
|
|
27,461
|
|
Income tax
receivable
|
|
|
1,748
|
|
|
|
10,126
|
|
Total current
assets
|
|
|
517,070
|
|
|
|
423,269
|
|
Property, plant, and
equipment, net
|
|
|
656,359
|
|
|
|
667,909
|
|
Operating right-of-use
assets
|
|
|
39,817
|
|
|
|
43,768
|
|
Goodwill
|
|
|
112,529
|
|
|
|
112,529
|
|
Intangible assets,
net
|
|
|
76,197
|
|
|
|
76,324
|
|
Third-party production
prepayments
|
|
|
46,827
|
|
|
|
61,339
|
|
Other assets
|
|
|
43,754
|
|
|
|
35,635
|
|
Total
assets
|
|
$
|
1,492,553
|
|
|
$
|
1,420,773
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
120,780
|
|
|
$
|
84,248
|
|
Accrued expenses and
other current liabilities
|
|
|
133,060
|
|
|
|
111,153
|
|
Current operating
lease liabilities
|
|
|
8,967
|
|
|
|
8,866
|
|
Total current
liabilities
|
|
|
262,807
|
|
|
|
204,267
|
|
Deferred income taxes,
net
|
|
|
95,415
|
|
|
|
96,592
|
|
Non-current operating
lease liabilities
|
|
|
40,755
|
|
|
|
45,274
|
|
Other
liabilities
|
|
|
6,386
|
|
|
|
6,091
|
|
Total
liabilities
|
|
|
405,363
|
|
|
|
352,224
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Class A Common Stock,
$0.01 par value; 22,700,000 shares authorized; 10,160,485
and 10,238,009 issued and outstanding as of July 1, 2023 and
December 31, 2022,
respectively
|
|
|
102
|
|
|
|
102
|
|
Class B Common Stock,
$0.01 par value; 4,200,000 shares authorized; 2,068,000
issued and outstanding as of July 1, 2023 and December 31,
2022
|
|
|
21
|
|
|
|
21
|
|
Additional paid-in
capital
|
|
|
646,086
|
|
|
|
629,515
|
|
Accumulated other
comprehensive loss
|
|
|
(66)
|
|
|
|
(210)
|
|
Retained
earnings
|
|
|
441,047
|
|
|
|
439,121
|
|
Total stockholders'
equity
|
|
|
1,087,190
|
|
|
|
1,068,549
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,492,553
|
|
|
$
|
1,420,773
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(in
thousands)
|
|
|
|
(unaudited)
|
|
|
|
Twenty-six weeks
ended
|
|
|
|
July 1,
2023
|
|
|
June 25,
2022
|
|
Cash flows provided
by operating activities:
|
|
|
|
|
|
|
Net income
|
|
$
|
49,079
|
|
|
$
|
51,394
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
43,602
|
|
|
|
39,909
|
|
Impairment of brewery
assets
|
|
|
2,016
|
|
|
|
121
|
|
Gain on disposal of
property, plant, and equipment
|
|
|
(195)
|
|
|
|
(39)
|
|
Change in right-of-use
assets
|
|
|
3,844
|
|
|
|
3,990
|
|
Stock-based
compensation expense
|
|
|
8,266
|
|
|
|
7,730
|
|
Deferred income
taxes
|
|
|
(1,177)
|
|
|
|
2,557
|
|
Other non-cash
(income) expense
|
|
|
(88)
|
|
|
|
54
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(60,307)
|
|
|
|
(64,469)
|
|
Inventories
|
|
|
(9,376)
|
|
|
|
(13,014)
|
|
Prepaid expenses,
income tax receivable, and other current assets
|
|
|
1,041
|
|
|
|
46,715
|
|
Third-party production
prepayments
|
|
|
14,512
|
|
|
|
14,067
|
|
Other
assets
|
|
|
(5,995)
|
|
|
|
295
|
|
Accounts
payable
|
|
|
38,872
|
|
|
|
48,337
|
|
Accrued expenses,
other current liabilities, and other liabilities
|
|
|
21,354
|
|
|
|
(13,275)
|
|
Operating lease
liabilities
|
|
|
(4,311)
|
|
|
|
(2,866)
|
|
Net cash provided by
operating activities
|
|
|
101,137
|
|
|
|
121,506
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
Purchases of property,
plant, and equipment
|
|
|
(34,809)
|
|
|
|
(50,804)
|
|
Proceeds from disposal
of property, plant, and equipment
|
|
|
195
|
|
|
|
506
|
|
Net cash used in
investing activities
|
|
|
(34,614)
|
|
|
|
(50,298)
|
|
Cash flows (used in)
provided by financing activities:
|
|
|
|
|
|
|
Repurchases of Class A
common stock
|
|
|
(45,887)
|
|
|
|
—
|
|
Proceeds from exercise
of stock options and sale of investment shares
|
|
|
9,466
|
|
|
|
4,610
|
|
Cash paid on finance
leases
|
|
|
(797)
|
|
|
|
(870)
|
|
Line of credit
borrowings
|
|
|
—
|
|
|
|
30,000
|
|
Line of credit
repayments
|
|
|
—
|
|
|
|
(30,000)
|
|
Payment of tax
withholding on stock-based payment awards and investment
shares
|
|
|
(2,110)
|
|
|
|
(3,468)
|
|
Net cash (used in)
provided by financing activities
|
|
|
(39,328)
|
|
|
|
272
|
|
Change in cash and cash
equivalents and restricted cash
|
|
|
27,195
|
|
|
|
71,480
|
|
Cash and cash
equivalents and restricted cash at beginning of year
|
|
|
180,560
|
|
|
|
66,321
|
|
Cash and cash
equivalents at end of period
|
|
$
|
207,755
|
|
|
$
|
137,801
|
|
|
|
|
|
|
|
|
Copies of The
Boston Beer Company's press releases, including quarterly financial
results,
|
|
are available on
the Internet at www.bostonbeer.com
|
|
View original
content:https://www.prnewswire.com/news-releases/boston-beer-reports-second-quarter-financial-results-301887698.html
SOURCE The Boston Beer Company, Inc.