On July 25, 2024, Boston Beer Co Inc (SAM, Financial) released its 8-K filing detailing the financial results for the second quarter ended June 29, 2024. The company, a leading player in high-end malt beverages and adjacent categories in the U.S., reported a challenging quarter with declines in both revenue and net income.
Company Overview
Boston Beer Co Inc (SAM, Financial) is renowned for its strong positions in craft beer, flavored malt beverages, hard cider, and hard seltzer. The company's primary brands include Samuel Adams, Angry Orchard, Twisted Tea, and Truly. Boston Beer employs a hybrid production model, utilizing both in-house capacities and third-party breweries. The firm generates over 95% of its sales in the U.S. and leverages a network of distributors and 500 internal sales representatives to reach end markets.
Q2 2024 Financial Performance
For the second quarter of 2024, Boston Beer Co Inc (SAM, Financial) reported:
- Net revenue of $579.1 million, a 4.0% decrease year-over-year, missing the analyst estimate of $597.33 million.
- Net income of $52.3 million, down 9.8% from the previous year.
- Diluted earnings per share (EPS) of $4.39, falling short of the analyst estimate of $5.10.
- Gross margin improved to 46.0%, up 60 basis points year-over-year.
Year-to-Date 2024 Summary
For the first half of 2024, Boston Beer Co Inc (SAM, Financial) reported:
- Net revenue of $1.005 billion, a slight decrease of 0.8% year-over-year.
- Net income of $64.9 million, a significant increase of 32.3% year-over-year.
- Diluted EPS of $5.41, up from $3.98 in the same period last year.
- Gross margin improved to 45.0%, up 260 basis points year-over-year.
Key Financial Metrics
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Revenue | $579.1 million | $603.3 million |
| Net Income | $52.3 million | $58.0 million |
| Diluted EPS | $4.39 | $4.72 |
| Gross Margin | 46.0% | 45.4% |
Performance Analysis
The decrease in net revenue and net income can be attributed to a 4% decline in depletions and a 6.4% decrease in shipments, primarily driven by declines in Truly Hard Seltzer. However, the company saw growth in its Twisted Tea brand and the newly launched Sun Cruiser brand. The gross margin improvement was driven by price increases, procurement savings, and lower returns, which offset higher brewery processing costs and inflationary pressures.
"Our gross margin improvement initiatives continue to take hold, with gross margin expanding over 250 basis points year-to-date, and strong cash flow generation," said Chairman and Founder Jim Koch. "Depletions were soft in April, but improved as we moved through the quarter."
Challenges and Future Outlook
Boston Beer Co Inc (SAM, Financial) faces challenges in the form of decreased shipments and depletions, particularly in the hard seltzer category. The company is working to rebuild distributor inventory levels to meet improving demand. Despite these challenges, the company remains focused on innovation and optimizing execution to drive future growth.
"We are revising our volume guidance to reflect softer category performance in the second quarter and timing of product launches, while maintaining our EPS guidance supported by progress on our transformation efforts," said President and CEO Michael Spillane.
Boston Beer Co Inc (SAM, Financial) ended the quarter with $219.3 million in cash and no debt, and repurchased $127.0 million in shares year-to-date. The company remains committed to leveraging its strong balance sheet to invest in its brands and return cash to shareholders.
For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Boston Beer Co Inc for further details.
