Boston Beer Reports Fourth Quarter Financial Results
- None.
- Depletions and shipments decreased in Q4 and full year 2023
- Net revenue declined in Q4 and full year 2023
- Impairment charges recorded for Dogfish Head brand
- Decrease in depletions estimated year-to-date
- Negative impact from contractual agreements on gross margins
Insights
The reported financial results for The Boston Beer Company, Inc. reflect a challenging fiscal year with a notable decrease in depletions and shipments. The decline in depletions by 6% and shipments by 6.2% on a 52-week comparable basis indicates a contraction in product volume reaching the end consumers and retailers, respectively. This contraction is a critical indicator of the company's performance and potentially its market share. The reported net revenue decrease of 3.9% year-over-year further underscores the need for strategic adjustments in the company's operations and marketing efforts.
However, there are positive elements to consider, such as the increase in gross margin, which suggests effective cost management and pricing strategies. The gross margin improvement by 120 basis points year-over-year could signal the company's ability to navigate inflationary pressures and optimize its production costs, despite the shortfall fees incurred due to underutilized third-party production capacity. The company's capital structure also appears strong, with a significant cash balance and no debt, along with an ongoing share repurchase program. This financial stability provides flexibility for future investments and shareholder returns.
From an investment perspective, the company's earnings per share (EPS) and the non-cash impairment charge related to the Dogfish Head brand are crucial. The non-GAAP diluted EPS of $7.17, which excludes this charge, offers a more normalized view of the company's earnings capacity. However, investors should closely monitor the company's forward-looking statements and projections, especially concerning depletions, shipments and gross margin expectations, as these will impact future financial health and stock performance.
The beverage industry, particularly the craft beer and hard seltzer segments, has been facing a dynamic and competitive environment. The Boston Beer Company's experience with Truly Hard Seltzer's decline is indicative of a broader trend in the market where the hard seltzer segment is becoming saturated and consumer preferences are shifting. The company's efforts to diversify its portfolio with non-alcoholic offerings and Dogfish Head Canned cocktails represent a strategic pivot to capture new growth areas.
It's also important to analyze the company's operational strategy, including its supply chain enhancements and marketing investments. These factors play a significant role in the company's ability to adapt to market changes and consumer demands. The increase in media investments and focus on local marketing initiatives could help in strengthening brand recognition and loyalty, which is vital in a market crowded with numerous craft beer options.
Additionally, the company's guidance for 2024, with a projection of depletions and shipments change ranging from a low single-digit decrease to a low single-digit increase, suggests cautious optimism. The anticipated gross margin of 43% to 45% indicates confidence in maintaining cost efficiencies. However, investors should be aware that the craft beer industry is subject to seasonal fluctuations and the company's performance in the lower volume quarters could significantly influence annual results.
From a legal and regulatory perspective, the international sales tax adjustment that impacted net revenue in the fourth quarter is a reminder of the complexities involved in global operations. Companies like The Boston Beer Company must navigate a myriad of tax laws and regulations, which can have sudden and significant financial implications.
The non-cash impairment charge related to the Dogfish Head brand also highlights the importance of accurate and timely financial reporting, as these charges reflect adjustments for changes in projected performance and market conditions. This is crucial for maintaining investor trust and ensuring compliance with financial reporting standards.
Investors should also be aware of the company's contractual commitments, such as those leading to shortfall fees. These legal obligations reflect the company's past decisions to secure production capacity, which now pose a financial burden due to shifts in market demand. Understanding the terms and potential impact of these contracts is essential for evaluating the company's long-term financial commitments and operational flexibility.
BOSTON, Feb. 27, 2024 (GLOBE NEWSWIRE) -- The Boston Beer Company, Inc. (NYSE: SAM), today reported financial results for its fourth quarter and full fiscal year 2023 that ended December 30, 2023. The 2023 fiscal fourth quarter included 13 weeks and is compared to the 2022 fiscal fourth quarter, which included 14 weeks. The 2023 full fiscal year included 52 weeks and is compared to the 2022 full fiscal year, which included 53 weeks.
Key results were:
Fourth Quarter 2023 Summary:
- Depletions decreased
9% . Depletions decreased1% on a 13-week comparable basis - Shipments decreased
12.2% . Shipments decreased3.5% on a 13-week comparable basis - Net revenue of
$393.7 million decreased12.0% . Net revenue decreased3.1% on a 13-week comparable basis - Gross margin of
37.6% , up 60 basis points year over year - Net loss of
$18.1 million - GAAP diluted loss per share of
$1.49
Full Year 2023 Summary:
- Depletions decreased
6% . Depletions decreased5% on a 52-week comparable basis - Shipments decreased
6.2% . Shipments decreased5.2% on a 52-week comparable basis - Net revenue of
$2.00 9 billion decreased3.9% . Net revenue decreased2.9% on a 52-week comparable basis - Gross margin of
42.4% , up 120 basis points year over year - Net income of
$76.3 million - GAAP diluted earnings per share of
$6.21 , which includes a non-cash impairment charge of$0.96 per share recorded in the third quarter of 2023 - Non-GAAP diluted earnings per share of
$7.17
Capital Structure
- Generated
$265 million in operating cash flow for the full 2023 fiscal year - Ended the fourth quarter with
$298.5 million in cash and no debt - Repurchased
$128.5 million in shares from January 2, 2023 to February 23, 2024
“We were pleased to deliver steady improvement in comparable weeks depletions, solid progress on gross margin expansion and strong cash flow generation for the full 2023 fiscal year,” said Chairman and Founder Jim Koch. “As we look forward into 2024, we believe we have the right strategies in place to steadily improve our revenue and margin performance while continuing to invest in our brands and industry leading salesforce.”
“The investments we made in our brands, marketing mix changes and supply chain enhancements drove improvement in operational and financial performance in 2023 and position us well to further fortify our business in 2024 and beyond,” said President and CEO Dave Burwick. “Moving forward, we’ll maintain our focus on driving volume and gross margin performance and winning in the marketplace with our advantaged Beyond Beer portfolio, new innovation and improved Supply Chain capabilities.”
Details of the results were as follows:
Fourth Quarter 2023 (13 weeks ended December 30, 2023) Summary of Results
The 2023 fiscal fourth quarter included 13 weeks and is compared to the 2022 fiscal fourth quarter, which included 14 weeks.
Net revenue of
Depletions in the fourth quarter declined
Shipment volume for the quarter was approximately 1.5 million barrels, a
The Company believes distributor inventory as of December 30, 2023 was at an appropriate level for each of its brands and averaged approximately four weeks on hand compared to five weeks on hand at the end of the third quarter.
As previously disclosed in the Company’s SEC Forms 10-K and 10-Q, before the decline in volumes related to hard seltzer in the second half of 2021, the Company entered into certain contractual agreements to access third party production capacity. These agreements continue to negatively impact the Company’s gross margins. The costs associated with these agreements include shortfall fees for not meeting contractual production minimums and third party production pre-payments that are being expensed over the estimated life of the related agreements.
Gross margin of
Advertising, promotional and selling expenses for the fourth quarter of 2023 decreased
General and administrative expenses increased by
The Company incurred impairment costs for brewery equipment of
The Company’s effective tax rate benefit for the fourth quarter was
Full year 2023 (52 weeks ended December 30, 2023) Summary of Results
The 2023 full fiscal year included 52 weeks and is compared to the 2022 full fiscal year, which included 53 weeks.
Net revenue of
Depletions for the full year declined
Shipment volume full year was approximately 7.7 million barrels, a
As previously disclosed in the Company’s SEC Forms 10-K and 10-Q, before the decline in volumes related to hard seltzer in the second half of 2021, the Company entered certain contractual agreements to access third party production capacity. These agreements continue to negatively impact the Company’s gross margins. The costs associated with these agreements include shortfall fees for not meeting contractual production minimums and third party production pre-payments which are being expensed over the estimated life of the related agreements.
Gross margin of
Advertising, promotional and selling expenses decreased
General and administrative expenses increased by
Impairment of intangible assets reflects a
The Company incurred impairment costs for brewery equipment of
In 2022, the Company recorded
The Company’s effective tax rate for the full year 2023 was
Net income of
The Company expects that its December 30, 2023 cash balance of
During the 52-week period ended December 30, 2023 and the period from January 2, 2024 through February 23, 2024, the Company repurchased shares of its outstanding Class A Common Stock in the amounts of
Depletions Estimate
Year-to-date depletions through the 8-week period ended February 24, 2024 are estimated by the Company to have decreased approximately
Full Year 2024 Projections
The Company’s actual 2024 results could vary significantly from the current projection and are highly sensitive to changes in volume and supply chain performance as well as inflationary impacts. The 2024 and 2023 fiscal years both include 52 weeks.
| Full Year 2024 | Guidance |
| Depletions and Shipments Percentage Change | Down low single digit to up low single digit |
| Price Increases | |
| Gross Margin | |
| Advertising, Promotion, and Selling Expense Year Over Year Change ($ million) | ( |
| Effective Tax Rate | |
| GAAP EPS | |
| Capital Spending ($ million) | |
Underlying the Company’s current 2024 projection are the following full-year estimates and targets:
- During full year 2024, the Company estimates shortfall fees will negatively impact gross margin by 50 to 75 basis points and non-cash expense of third-party production pre-payments will negatively impact gross margins by 125 to 150 basis points
- 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
- The Company’s business is seasonal, with the first quarter and fourth quarter being lower volume quarters and the fourth quarter typically the lowest absolute gross margin rate of the year
Use of Non-GAAP Measures
Non-GAAP EPS is not a defined term under U.S. generally accepted accounting principles (“GAAP”). Non-GAAP EPS, or Non-GAAP earnings per diluted share, excludes from projected GAAP EPS the impact of the non-cash asset impairment charge of
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 30, 2023 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 has since grown to become one of the largest and most respected craft brewers in the United States. We consistently offer the highest-quality products to our drinkers, and we apply what we’ve learned from making great-tasting craft beer to making great-tasting and innovative “beyond beer” products. Boston Beer Company has pioneered not only craft beer but also hard cider, hard seltzer and hard tea. Our core brands include household names like Angry Orchard Hard Cider, Dogfish Head, Truly Hard Seltzer, Twisted Tea Hard Iced Tea, and Samuel Adams. We have taprooms and hospitality locations in California, Delaware, Massachusetts, New York and Ohio. For more information, please visit our website at www.bostonbeer.com, which includes links to our respective brand websites.
Tuesday, February 27, 2024
| THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES | |||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| (unaudited) | |||||||||||||||
| December 30, | December 31, | December 30, | December 31, | ||||||||||||
| 2023 (13 weeks) | 2022 (14 weeks) | 2023 (52 weeks) | 2022 (53 weeks) | ||||||||||||
| Barrels sold | 1,503 | 1,712 | 7,678 | 8,183 | |||||||||||
| Revenue | $ | 417,409 | $ | 476,025 | $ | 2,133,292 | $ | 2,222,667 | |||||||
| Less excise taxes | 23,687 | 28,500 | 124,667 | 132,333 | |||||||||||
| Net revenue | 393,722 | 447,525 | 2,008,625 | 2,090,334 | |||||||||||
| Cost of goods sold | 245,826 | 282,012 | 1,156,256 | 1,228,348 | |||||||||||
| Gross profit | 147,896 | 165,513 | 852,369 | 861,986 | |||||||||||
| Operating expenses: | |||||||||||||||
| Advertising, promotional, and selling expenses | 128,629 | 139,185 | 555,998 | 578,400 | |||||||||||
| General and administrative expenses | 43,714 | 41,605 | 174,548 | 157,534 | |||||||||||
| Impairment of intangible asset | - | - | 16,426 | 27,100 | |||||||||||
| Impairment of brewery assets | 1,480 | 1,480 | 5,396 | 2,782 | |||||||||||
| Contract termination costs and other | - | 49 | — | 5,379 | |||||||||||
| Total operating expenses | 173,823 | 182,319 | 752,368 | 771,195 | |||||||||||
| Operating (loss) income | (25,927 | ) | (16,806 | ) | 100,001 | 90,791 | |||||||||
| Other income (expense), net: | |||||||||||||||
| Interest income (expense), net | 4,018 | 1,752 | 10,995 | 2,561 | |||||||||||
| Other expense, net | (271 | ) | (324 | ) | (1,408 | ) | (1,916 | ) | |||||||
| Total other income (expense), net | 3,747 | 1,428 | 9,587 | 645 | |||||||||||
| (Loss) income before income tax (benefit) provision | (22,180 | ) | (15,378 | ) | 109,588 | 91,436 | |||||||||
| Income tax (benefit) provision | (4,056 | ) | (3,961 | ) | 33,338 | 24,173 | |||||||||
| Net (loss) income | $ | (18,124 | ) | $ | (11,417 | ) | $ | 76,250 | $ | 67,263 | |||||
| Net (loss) income per common share - basic | $ | (1.49 | ) | $ | (0.93 | ) | $ | 6.23 | $ | 5.46 | |||||
| Net (loss) income per common share - diluted | $ | (1.49 | ) | $ | (0.93 | ) | $ | 6.21 | $ | 5.44 | |||||
| Weighted-average number of common shares - basic | 12,166 | 12,329 | 12,243 | 12,317 | |||||||||||
| Weighted-average number of common shares - diluted | 12,166 | 12,329 | 12,258 | 12,345 | |||||||||||
| Net (loss) income | $ | (18,124 | ) | $ | (11,417 | ) | $ | 76,250 | $ | 67,263 | |||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||
| Currency translation adjustment | 166 | 6 | 166 | (269 | ) | ||||||||||
| Defined benefit plans liability adjustment | (13 | ) | 90 | (13 | ) | 253 | |||||||||
| Total other comprehensive income (loss), net of tax: | 153 | 96 | 153 | (16 | ) | ||||||||||
| Comprehensive (loss) income | $ | (17,971 | ) | $ | (11,321 | ) | $ | 76,403 | $ | 67,247 | |||||
| THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except share data) | ||||||||
| (unaudited) | ||||||||
| December 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 298,491 | $ | 180,560 | ||||
| Accounts receivable | 66,997 | 56,672 | ||||||
| Inventories | 115,773 | 148,450 | ||||||
| Prepaid expenses and other current assets | 20,538 | 27,461 | ||||||
| Income tax receivable | 1,711 | 10,126 | ||||||
| Total current assets | 503,510 | 423,269 | ||||||
| Property, plant, and equipment, net | 642,509 | 667,909 | ||||||
| Operating right-of-use assets | 35,559 | 43,768 | ||||||
| Goodwill | 112,529 | 112,529 | ||||||
| Intangible assets | 59,644 | 76,324 | ||||||
| Third-party production prepayments | 33,581 | 61,339 | ||||||
| Other assets | 42,661 | 35,635 | ||||||
| Total assets | $ | 1,429,993 | $ | 1,420,773 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 87,245 | $ | 84,248 | ||||
| Accrued expenses and other current liabilities | 126,930 | 111,153 | ||||||
| Current operating lease liabilities | 9,113 | 8,866 | ||||||
| Total current liabilities | 223,288 | 204,267 | ||||||
| Deferred income taxes, net | 85,721 | 96,592 | ||||||
| Non-current operating lease liabilities | 36,161 | 45,274 | ||||||
| Other liabilities | 6,894 | 6,091 | ||||||
| Total liabilities | 352,064 | 352,224 | ||||||
| Stockholders' Equity: | ||||||||
| Class A Common Stock, | 100 | 102 | ||||||
| Class B Common Stock, | 21 | 21 | ||||||
| Additional paid-in capital | 656,297 | 629,515 | ||||||
| Accumulated other comprehensive loss | (57 | ) | (210 | ) | ||||
| Retained earnings | 421,568 | 439,121 | ||||||
| Total stockholders' equity | 1,077,929 | 1,068,549 | ||||||
| Total liabilities and stockholders' equity | $ | 1,429,993 | $ | 1,420,773 | ||||
| THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| December 30, | December 31, | |||||||
| 2023 (52 weeks) | 2022 (53 weeks) | |||||||
| Cash flows provided by operating activities: | ||||||||
| Net income | $ | 76,250 | $ | 67,263 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 88,141 | 81,356 | ||||||
| Impairment of intangible asset | 16,426 | 27,100 | ||||||
| Impairment of brewery assets | 5,396 | 2,782 | ||||||
| Change in right-of-use assets | 7,678 | 7,972 | ||||||
| Stock-based compensation expense | 16,971 | 13,988 | ||||||
| Deferred income taxes | (10,871 | ) | 9,097 | |||||
| Other non-cash expense | 224 | 89 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (10,340 | ) | (2,042 | ) | ||||
| Inventories | 31,500 | 131 | ||||||
| Prepaid expenses, income tax receivable, and other current assets | 13,979 | 38,652 | ||||||
| Third-party production prepayments | 27,758 | 26,955 | ||||||
| Other assets | (5,849 | ) | (14,031 | ) | ||||
| Accounts payable | 2,763 | (2,219 | ) | |||||
| Accrued expenses, other current liabilities, and other liabilities | 13,884 | (50,632 | ) | |||||
| Operating lease liabilities | (8,759 | ) | (6,516 | ) | ||||
| Net cash provided by operating activities | 265,151 | 199,945 | ||||||
| Cash flows used in investing activities: | ||||||||
| Purchases of property, plant, and equipment | (64,087 | ) | (90,582 | ) | ||||
| Proceeds from sale of property, plant, and equipment | 1,709 | 2,076 | ||||||
| Net cash used in investing activities | (62,378 | ) | (88,506 | ) | ||||
| Cash flows (used in) provided by financing activities: | ||||||||
| Repurchases and retirement of Class A common stock | (92,877 | ) | — | |||||
| Proceeds from exercise of stock options and sale of investment shares | 11,723 | 7,946 | ||||||
| Net cash paid on finance leases and notes payable | (1,575 | ) | (1,672 | ) | ||||
| Payment of tax withholding on stock-based payment awards and investment shares | (2,113 | ) | (3,474 | ) | ||||
| Line of credit borrowings | — | 30,000 | ||||||
| Line of credit repayments | — | (30,000 | ) | |||||
| Net cash (used in) provided by financing activities | (84,842 | ) | 2,800 | |||||
| Change in cash and cash equivalents | 117,931 | 114,239 | ||||||
| Cash and cash equivalents and restricted cash at beginning of period | 180,560 | 66,321 | ||||||
| Cash and cash equivalents and restricted cash at end of period | $ | 298,491 | $ | 180,560 | ||||
| Copies of The Boston Beer Company's press releases, including quarterly financial results, | ||||||||
| are available on the Internet at www.bostonbeer.com | ||||||||
| Investor Relations Contact: | Media Contact: |
| Jennifer Larson | Dave DeCecco |
| (617) 368-5152 | (914) 261-6572 |
| jennifer.larson@bostonbeer.com | dave.dececco@bostonbeer.com |
FAQ
How did Boston Beer Company's depletions and shipments perform in Q4 2023?
What was the net revenue for Boston Beer Company in full year 2023?
What was the gross margin percentage for Boston Beer Company in Q4 2023?
How much did Boston Beer Company repurchase in shares from January 2, 2023, to February 23, 2024?
What is Boston Beer Company's cash balance as of December 30, 2023?
