First Quarter (13-week) 2022 Financial Results
BOSTON, April 21, 2022 /PRNewswire/ -- The Boston
Beer Company, Inc. (NYSE: SAM), today reported financial results
for the first quarter ended March 26,
2022. Key results were:
- First quarter depletions decreased 7% and first quarter
shipments decreased 25.1% compared to the quarter ended
March 27, 2021
- First quarter net revenue of $430.1
million decreased 21.1% compared to the net revenue realized
in the first quarter of 2021
- First quarter gross margin of 40.2% was 5.6 percentage points
below the 2021 first quarter margin of 45.8%
- First quarter operating expenses of $175.1 million increased 1.2% compared to the
first quarter of 2021
- First quarter net loss of $2.0
million or $0.16 per diluted
share, decreased from net income of $65.6
million or $5.26 per diluted
share in the first quarter of 2021. This change between periods was
primarily driven by decreased net revenue and gross margins
- Full-year depletion and shipment growth continues to be
estimated at between 4% and 10%
"Despite our depletions decline, we gained dollar share in
measured off-premise channels in the first quarter – the
second-largest share gain among brewers," said Chairman and Founder
Jim Koch. "The out-of-stock issues
that affected our first quarter performance have improved
during the quarter, setting us up for additional growth over the
rest of the year. As we continue to innovate, today we are
announcing the launch of Truly Vodka Seltzer, a new ready-to-drink
hard seltzer with 110 calories and 5% ABV, which will begin rolling
out later this summer. We believe it will help us compete
effectively in the high-end of the hard seltzer category and
continue to broaden the reach of the Truly brand."
"While we met our internal targets for depletions, shipments and
financials, our first quarter performance suffers by comparison to
our exceptional performance in the first quarter of 2021," said
Dave Burwick, President and CEO. "We
fully expect depletion and shipment volumes to improve, both in
absolute terms and against less difficult prior year volume
comparisons. We also expect margins to increase from the lower
first quarter levels as our supply chain performance slowly
improves during the remainder of the year. We continue to believe
we have strategies in place to get back to company-wide mid
single-digit to double-digit depletions growth driven by
broad-based growth across our entire portfolio of brands –
especially as consumers drink more 'Beyond Beer' products – and via
our strong innovation pipeline."
Details of the results were as follows:
First Quarter 2022 (13 weeks ended March 26, 2022) Summary of Results
Depletions for the 2022 first quarter decreased 7% from the
prior year, reflecting decreases in the Company's Truly Hard
Seltzer, Angry Orchard, and Dogfish Head brands, partially offset
by increases in its Twisted Tea brand. The Company's Samuel Adams
brand depletion volume was nearly equal in both periods.
Shipment volume for the quarter was approximately 1.7 million
barrels, a 25.1% decrease from the prior year, reflecting decreases
in the Company's Truly Hard Seltzer, Twisted Tea, Angry Orchard,
and Dogfish Head brands, partially offset by increases in its
Samuel Adams brand.
The Company believes distributor inventory as of March 26, 2022 averaged approximately five weeks
on hand and was at an appropriate level for each of its brands. The
Company expects distributors will keep inventory levels below 2021
levels in terms of weeks on hand, as the need for peak season
inventory prebuilds is greatly reduced due to our increased
production capacity.
The first quarter 2022 gross margin of 40.2% decreased from the
45.8% margin realized in the first quarter of 2021, primarily due
to higher supply chain costs and higher materials costs, partially
offset by price increases.
Advertising, promotional and selling expenses for the first
quarter of 2022 decreased $10.2
million or 7.3% from the first quarter of 2021, primarily
due to a net decrease in brand investments of $9.4 million, mainly driven by lower media costs,
partially offset by higher investments in local marketing and
decreased freight to distributors of $0.8
million primarily due to lower volumes that were partially
offset by higher rates.
General and administrative expenses increased by $7.8 million or 24.3% from the first quarter of
2021, primarily due to increased salaries and benefits costs and
increases in services provided by third parties.
The Company recorded an expense of $4.8
million in contract termination costs in the first quarter
of 2022, resulting from further negotiations with suppliers that
eliminated future shortfall fees.
The Company's effective tax rate for the first quarter was a tax
benefit of 14.5% compared to a tax provision of 14.4% in the prior
year. In the first quarters of 2022 and 2021, the Company recorded
tax expense of $0.03 per diluted
share and a tax benefit of $0.69 per
diluted share, respectively, resulting from the Accounting Standard
"Employee Share-Based Payment Accounting" ("ASU 2016-09").
The Company expects that its March 26,
2022 cash balance of $15.8
million, together with its future operating cash flows and
the unused balance on its $135.0
million line of credit, will be sufficient to fund future
cash requirements.
During the 13-week period ended March 26,
2022 and the period from March 27,
2022 through April 16, 2022,
the Company did not repurchase any shares of its Class A Common
Stock. As of April 16, 2022, the
Company had approximately $90.3
million remaining on the $931.0
million share buyback expenditure limit set by the Board of
Directors.
Depletion and shipments estimates
Year-to-date depletions through the 16-week period ended
April 16, 2022 are estimated by the
Company to have decreased approximately 6% from the comparable
period in 2021.
Year-to-date shipments through the 16-week period ended
April 16, 2022 are estimated by the
Company to have decreased approximately 23% from the comparable
period in 2021.
Full-year 2022 Projections
The Company currently projects full-year 2022 Non-GAAP earnings
per diluted share of between $11.00
and $16.00. This projection excludes
the impact of ASU 2016-09 and is highly sensitive to changes in
volume projections particularly related to the hard seltzer
category and supply chain performance as well as inflationary
impacts that have accelerated since we provided our last guidance.
The Company's actual 2022 earnings per share could vary
significantly from the current projection. The 2022 fiscal year
includes 53 weeks compared to the 2021 fiscal year which included
only 52 weeks. Underlying the Company's current 2022 projection are
the following full-year estimates and targets:
- Depletions and shipments increase of between 4% and 10%. In the
first quarter of 2022 total depletions declined 7% compared to the
first quarter of 2021 and increased 38% compared to the first
quarter of 2020. In order for the Company to achieve the mid-point
of its full year depletions range, its depletions for the remainder
of the year must increase 10% compared to the last nine months of
2021 and increase 29% compared to the last nine months of
2020.
- National price increases of between 3% and 5%.
- Gross margin of between 45% and 48%.
- Increased investments in advertising, promotional and selling
expenses of between $0 and
$20 million. This does not include
any changes in freight costs for the shipment of products to the
Company's distributors.
- Non-GAAP effective tax rate of approximately 26%, excluding the
impact of ASU 2016-09. This effective tax rate also excludes any
potential future changes to current federal income tax rates and
regulations.
- Estimated capital spending of between $140 million and $190
million.
Use of Non-GAAP Measures
Non-GAAP effective tax rate and earnings per diluted share,
excluding the impact of ASU 2016-09, are not defined terms under
U.S. generally accepted accounting principles ("GAAP"). These
non-GAAP measures should not be considered in isolation or as a
substitute for diluted earnings per share and effective tax rate
data prepared in accordance with GAAP, and may not be comparable to
calculations of similarly titled measures by other companies.
Management uses these non-GAAP financial measures to make operating
and strategic decisions and to evaluate the Company's overall
business performance. The Company is unable to reconcile the
projection for its Non-GAAP effective tax rate and earnings per
diluted share, excluding the impact of ASU 2016-09, because the
Company is unable to predict the impact of future events outside
the Company's control, including the timing and value realized upon
exercise of stock options versus the fair value of those options
when granted. Therefore, because of the uncertainty and variability
of the impact of ASU 2016-09, the Company is unable to provide,
without unreasonable effort, a reconciliation of these non-GAAP
measures on a forward-looking basis. Management believes these
forward-looking non-GAAP measures provide meaningful and useful
information to investors and analysts regarding our outlook and
facilitate period to period comparisons of our forecasted financial
performance.
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 25, 2021 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, and Bevy Long Drink as well as other craft beer brands
such as Angel City Brewery and Coney Island Brewing. We also
produce and sell Hard Mt Dew under a license agreement with
PepsiCo, Inc. and Sauza Agave Cocktails under a license agreement
with Jim Beam Brands Co. For more information, please visit our
investor relations website at www.bostonbeer.com, which includes
links to all of our respective brand websites.
Thursday, April 21, 2022
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
|
(in thousands, except
per share data)
|
|
(unaudited)
|
|
|
March
26,
|
|
|
March
27
|
|
|
2022
|
|
|
2021
|
|
Barrels
sold
|
|
1,705
|
|
|
|
2,275
|
|
Revenue
|
$
|
457,288
|
|
|
581, 709
|
|
Less excise
taxes
|
|
27,175
|
|
|
|
36,629
|
|
Net
revenue
|
|
430,113
|
|
|
|
545,080
|
|
Cost of goods
sold
|
|
257,161
|
|
|
|
295,450
|
|
Gross
profit
|
|
172,952
|
|
|
|
249,630
|
|
Operating
expenses:
|
|
|
|
|
|
Advertising,
promotional and selling expenses
|
|
130,615
|
|
|
|
140,859
|
|
General and
administrative expenses
|
|
39,698
|
|
|
|
31,946
|
|
Contract termination
costs and other
|
|
4,752
|
|
|
|
—
|
|
Impairment of
assets
|
|
41
|
|
|
|
227
|
|
Total operating
expenses
|
|
175,106
|
|
|
|
173,032
|
|
Operating (loss)
income
|
|
(2,154)
|
|
|
|
76,598
|
|
Other
expense:
|
|
|
|
|
|
Interest
expense
|
|
(33)
|
|
|
|
(29)
|
|
Other
expense
|
|
(100)
|
|
|
|
(6)
|
|
Total other
expense
|
|
(133)
|
|
|
|
(35)
|
|
(Loss) income before
income tax (benefit) provision
|
|
(2,287)
|
|
|
|
76,563
|
|
Income tax (benefit)
provision
|
|
(332)
|
|
|
|
10,998
|
|
Net (loss)
income
|
$
|
(1,955)
|
|
|
$
|
65,565
|
|
|
|
|
|
|
|
Net (loss) income per
common share - basic
|
$
|
(0.16)
|
|
|
$
|
5.34
|
|
Net (loss) income per
common share - diluted
|
$
|
(0.16)
|
|
|
$
|
5.26
|
|
|
|
|
|
|
|
Weighted-average
number of common shares -basic
|
|
12,300
|
|
|
|
12,271
|
|
Weighted-average
number of common shares - diluted
|
|
12,300
|
|
|
|
12,457
|
|
|
|
|
|
|
|
Net (loss)
income
|
$
|
(1,955)
|
|
|
$
|
65,565
|
|
Other comprehensive
(loss) income:
|
|
|
|
|
|
Foreign Currency
translation adjustment
|
|
50
|
|
|
|
20
|
|
Total other
comprehensive income (loss), net of tax:
|
|
50
|
|
|
|
20
|
|
Comprehensive (loss)
income
|
$
|
(1,905)
|
|
|
$
|
65,585
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(in thousands, except
share data)
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
March
26,
|
|
|
December
25,
|
|
|
|
2022
|
|
|
2021
|
|
Assets
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
15,769
|
|
|
$
|
26,853
|
|
Restricted
cash
|
|
|
—
|
|
|
|
39,468
|
|
Accounts
receivable
|
|
|
101,884
|
|
|
|
55,022
|
|
Inventories
|
|
|
162,592
|
|
|
|
149,118
|
|
Prepaid expenses and
other current assets
|
|
|
24,012
|
|
|
|
21,462
|
|
Income tax
receivable
|
|
|
52,276
|
|
|
|
53,418
|
|
Total current
assets
|
|
|
356,533
|
|
|
|
345,341
|
|
Property, plant and
equipment, net
|
|
|
668,876
|
|
|
|
664,815
|
|
Operating
right-of-use assets
|
|
|
50,780
|
|
|
|
52,774
|
|
Goodwill
|
|
|
112,529
|
|
|
|
112,529
|
|
Intangible
assets
|
|
|
103,614
|
|
|
|
103,677
|
|
Third-party
production prepayments
|
|
|
80,573
|
|
|
|
88,294
|
|
Other
assets
|
|
|
17,092
|
|
|
|
19,354
|
|
Total
assets
|
|
$
|
1,389,997
|
|
|
$
|
1,386,784
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
112,711
|
|
|
$
|
85,920
|
|
Accrued expenses and
other current liabilities
|
|
|
124,457
|
|
|
|
161,552
|
|
Current operating
lease liabilities
|
|
|
8,366
|
|
|
|
7,634
|
|
Total current
liabilities
|
|
|
245,534
|
|
|
|
255,106
|
|
Deferred income
taxes, net
|
|
|
87,516
|
|
|
|
87,495
|
|
Line of
credit
|
|
|
15,000
|
|
|
|
—
|
|
Non-current operating
lease liabilities
|
|
|
51,689
|
|
|
|
53,849
|
|
Other
liabilities
|
|
|
5,334
|
|
|
|
6,925
|
|
Total
liabilities
|
|
|
405,073
|
|
|
|
403,375
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
Class A Common Stock,
$.01 par value; 22,700,000 shares authorized; 10,214,612
and 10,183,801 issued and outstanding as of March 26,
2022 and
December 25, 2021, respectively
|
|
|
102
|
|
|
|
102
|
|
Class B Common Stock,
$.01 par value; 4,200,000 shares authorized; 2,068,000
and 2,068,000 issued and outstanding as of March 26,
2022 and
December 25, 2021, respectively
|
|
|
21
|
|
|
|
21
|
|
Additional paid-in
capital
|
|
|
615,041
|
|
|
|
611,622
|
|
Accumulated other
comprehensive loss
|
|
|
(143)
|
|
|
|
(194)
|
|
Retained
earnings
|
|
|
369,903
|
|
|
|
371,858
|
|
Total stockholders'
equity
|
|
|
984,924
|
|
|
|
983,409
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,389,997
|
|
|
$
|
1,386,784
|
|
|
|
|
|
|
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(in
thousands)
|
|
(unaudited)
|
|
|
|
March
26,
|
|
|
March
27
|
|
|
|
2022
|
|
|
2021
|
|
Cash flows (used
in) provided by operating activities:
|
|
|
|
|
|
|
Net (loss)
income
|
|
$
|
(1,955)
|
|
|
$
|
65,565
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
19,634
|
|
|
|
16,996
|
|
Impairment of
assets
|
|
|
41
|
|
|
|
227
|
|
Loss (gain) on
disposal of property, plant and equipment
|
|
|
21
|
|
|
|
(36)
|
|
Change in right-of-use
assets
|
|
|
1,994
|
|
|
|
1,965
|
|
Other non-cash expense
(income)
|
|
|
45
|
|
|
|
(48)
|
|
Stock-based
compensation expense
|
|
|
2,922
|
|
|
|
4,957
|
|
Deferred income
taxes
|
|
|
21
|
|
|
|
4,565
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(46,973)
|
|
|
|
(26,723)
|
|
Inventories
|
|
|
(11,205)
|
|
|
|
(30,581)
|
|
Prepaid expenses,
income tax receivable, other current assets and other
assets
|
|
|
(937)
|
|
|
|
(14,369)
|
|
Third-party production
prepayments
|
|
|
7,721
|
|
|
|
(21,584)
|
|
Accounts
payable
|
|
|
26,799
|
|
|
|
36,912
|
|
Accrued expenses,
other current liabilities and other liabilities
|
|
|
(37,706)
|
|
|
|
(16,095)
|
|
Change in operating
lease liabilities
|
|
|
(1,428)
|
|
|
|
(2,020)
|
|
Net cash (used in)
provided by operating activities
|
|
|
(41,006)
|
|
|
|
19,807
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
|
(23,767)
|
|
|
|
(39,278)
|
|
Proceeds from disposal
of property, plant and equipment
|
|
|
66
|
|
|
|
320
|
|
Other investing
activities
|
|
|
—
|
|
|
|
145
|
|
Net cash used in
investing activities
|
|
|
(23,701)
|
|
|
|
(38,813)
|
|
Cash flows
provided by financing activities:
|
|
|
|
|
|
|
Proceeds from exercise
of stock options and sale of investment shares
|
|
|
2,010
|
|
|
|
6,768
|
|
Net cash paid on note
payable and finance leases
|
|
|
(475)
|
|
|
|
(435)
|
|
Line of credit
borrowings
|
|
|
30,000
|
|
|
|
—
|
|
Line of credit
repayments
|
|
|
(15,000)
|
|
|
|
—
|
|
Payment of tax
withholding on stock-based payment awards and investment
shares
|
|
|
(2,380)
|
|
|
|
(5,951)
|
|
Net cash provided by
financing activities
|
|
|
14,155
|
|
|
|
382
|
|
Change in cash and
cash equivalents and restricted cash
|
|
|
(50,552)
|
|
|
|
(18,624)
|
|
Cash and cash
equivalents and restricted cash at beginning of year
|
|
|
66,321
|
|
|
|
163,282
|
|
Cash and cash
equivalents end of period
|
|
$
|
15,769
|
|
|
$
|
144,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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-first-quarter-financial-results-301530576.html
SOURCE The Boston Beer Company, Inc.