BOSTON, April 21, 2016 /PRNewswire/ -- The Boston
Beer Company, Inc. (NYSE: SAM) reported first quarter 2016 net
revenue of $188.8 million, a decrease
of $10.7 million or 5% from the same
period last year, mainly due to a decline in core shipments of 6%,
partially offset by price increases. Net income for the first
quarter was $7.0 million, or
$0.53 per diluted share, a decrease
of $6.7 million or $0.47 per diluted share from the first quarter of
2015. This decrease was primarily due to decreases in net
revenue, a decrease in gross margin and increased general and
administrative expenses.
Highlights of this release include:
- Depletions decreased 5% from the comparable 13-week period in
2015.
- First quarter gross margin was 48.5% compared to 50.0% in the
first quarter of 2015 and the Company now estimates a full year
gross margin target of between 51% and 53%, a decrease in the range
from the previously communicated estimate of between 52% and
54%.
- The 2016 fiscal year includes 53 weeks compared to the 2015
fiscal year which included only 52 weeks.
- Full-year 2016 depletion and shipment change is now estimated
at between minus 4% and plus 2%, a decrease in the range from the
previously communicated estimate of growth of mid-single
digits.
- Full-year 2016 earnings per diluted share are now estimated at
$6.50 to $7.30, a decrease in the
range from the previously communicated estimate of $7.60 to $8.00.
- Full-year 2016 capital spending is now estimated to be between
$50 million and $70 million, a
decrease in the range from the previously communicated estimate of
$60 million to $80 million.
Jim Koch, Chairman and Founder of
the Company, commented, "Our total company depletion trends
declined in the first quarter, even as the better beer and craft
categories appear healthy. We believe Samuel Adams has lost share
due to the increased competition and continued growth of drinker
interest in variety and innovation. During the quarter, we
rolled out new beers, including Samuel
Adams Nitro White Ale, Samuel Adams Nitro IPA, Samuel Adams Nitro Coffee Stout and Samuel Adams
Rebel Grapefruit IPA. These beers have started slowly, but
their momentum continues to build. We believe that we are
well positioned to meet the longer term challenges of this
competitive environment, through the quality of our beers, our
innovation capability and our sales execution strength, coupled
with our strong financial position that enables us to invest in
growing our brands."
Martin Roper, the Company's
President and CEO stated, "In the first quarter, our depletions
volume was significantly below our expectations, as the declines in
our existing styles of our Samuel Adams and Angry Orchard brands
were not offset by our new styles or the growth of the rest of our
brand portfolio. The lower volume combined with the higher planned
spending and excess brewery capacity significantly impacted our
financial results for the quarter. We are focused on
adjusting our cost structure, based on our lower volume
expectations, and on driving efficiencies throughout the
organization, so that we direct funds to the highest growth
initiatives. While we are prioritizing these efforts, some of
the adjustments will benefit this year and others may take more
than a year to fully implement. As we pursue and achieve cost
savings through improved efficiencies and more effective processes,
we plan to invest part of these savings into strengthening our
brands and our sales force and in new beer and cider development
capabilities, so that we can react quickly to any opportunities
that emerge. We remain prepared to forsake short term
earnings, as we strive to return to long term profitable
growth."
Mr. Roper went on to say, "Our depletions decline in the first
quarter was primarily due to decreases in our Samuel Adams and
Angry Orchard brands that were only partially offset by increases
in our Twisted Tea and Coney Island brands. The Angry Orchard
decline appears largely due to softness across the cider category,
as casual cider drinkers are testing hard sodas and other new
alternative beverage options. We are working hard to improve the
Samuel Adams brand trends through continued innovation, executional
focus on our core styles and a full review of our brand messaging
and packaging, which we hope to complete during the second half of
the year. We are also developing programs to reverse the cider
category decline that began in late 2015 after several years of
high growth. We believe the recent declines are not indicative of
long term cider category potential and are happy that Angry Orchard
has maintained a very high share level. The trends for larger craft
beer brands and the cider category are very difficult to predict
and we have therefore broadened our guidance on full year depletion
volumes and earnings while reducing our target commensurate with
current trends."
1st Quarter 2016 Summary of Results
Depletions declined 5% from the comparable 13-week period in the
prior year, reflecting decreases in the Company's Samuel Adams and
Angry Orchard brands, partially offset by increases in its Twisted
Tea and Coney Island brands.
Core shipment volume was approximately 830,000 barrels, a 6%
decrease from the first quarter of 2015.
The Company believes distributor inventory at March 26, 2016 was at an appropriate level.
Inventory at March 26, 2016 at
distributors participating in the Freshest Beer Program decreased
slightly in terms of days of inventory on hand when compared to
March 28, 2015. The Company has
approximately 73% of its volume on the Freshest Beer Program.
Gross margin at 48.5% decreased from the 50.0% margin realized
in the first quarter of 2015, primarily due to increased brewery
processing costs per barrel and product mix effects, partially
offset by price increases.
Advertising, promotional and selling expenses decreased
$1.0 million compared to the first
quarter of 2015, primarily due to decreases in freight to
distributors due to lower volume and lower freight rates, partially
offset by increases in point of sale and salaries and benefits.
General and administrative expenses increased by $3.8 million from the first quarter of 2015,
primarily due to increases in stock compensation, salaries and
benefits and facilities costs.
The Company expects that its March 26,
2016 cash balance of $51.1
million, together with its future operating cash flows and
its available $150.0 million line of
credit, will be sufficient to fund future cash requirements.
During the first quarter and the period from March 26, 2016 through April 15, 2016, the Company repurchased
approximately 415,000 shares of its Class A Common Stock for an
aggregate purchase price of approximately $75.7 million. As of April
15, 2016 the Company had approximately $53.2 million remaining on the $575.0 million share buyback expenditure limit
set by the Board of Directors.
Depletion estimates
Year-to-date depletions through the fifteen weeks ended
April 9, 2016 are estimated by the
Company to have decreased approximately 5% from the comparable
period in 2015.
Fiscal 2016 Outlook
The Company currently projects full year 2016 earnings per
diluted share to be between $6.50 and
$7.30. The Company's actual 2016 earnings per share
could vary significantly from the current projection. The
2016 fiscal year includes 53 weeks compared to the 2015 fiscal year
which included only 52 weeks. Underlying the Company's
current 2016 projection are the following 53-week full-year
estimates and targets:
- Depletions and shipments percentage change at between minus 4%
and plus 2%.
- Price increases of between 1% and 2%.
- Gross margin of between 51% and 53%.
- Increased investment in advertising, promotional and selling
expenses of between zero and $10
million, a decrease from the previously communicated
estimate of between $10 million and $20
million. This estimate does not include any increases
or decreases in freight costs for the shipment of products to the
Company's distributors.
- Effective tax rate of approximately 37%.
- Estimated capital spending of between $50 million and $70 million, which will be mostly
spent in our breweries to support future growth and product
innovation and to drive efficiencies and cost reductions.
About the Company
The Boston Beer Company, Inc. (NYSE: SAM) began in 1984 and
today brews more than 60 styles of Samuel Adams beer. Our
portfolio of brands also includes Angry Orchard Hard Cider and
Twisted Tea, as well as several other craft beer brands brewed by
Alchemy & Science, our craft beer incubator. For more
information, please visit our investor relations website at
www.bostonbeer.com, which includes links to all of our respective
brand websites.
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 years ended December 26, 2015 and December 27, 2014. Copies of these
documents may be found on the Company's website,
www.bostonbeer.com, or obtained by contacting the Company or
the SEC.
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Thirteen weeks
ended
|
|
|
|
March
26,
|
|
March
28,
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Barrels
sold
|
|
|
834
|
|
889
|
|
|
|
|
|
|
Revenue
|
|
|
$
202,009
|
|
$
212,834
|
Less excise
taxes
|
|
|
13,182
|
|
13,331
|
Net revenue
|
|
|
188,827
|
|
199,503
|
Cost of goods
sold
|
|
|
97,296
|
|
99,888
|
Gross
profit
|
|
|
91,531
|
|
99,615
|
Operating
expenses:
|
|
|
|
|
|
Advertising, promotional and selling expenses
|
|
|
59,249
|
|
60,247
|
General
and administrative expenses
|
|
|
21,045
|
|
17,230
|
Total operating
expenses
|
|
|
80,294
|
|
77,477
|
Operating
income
|
|
|
11,237
|
|
22,138
|
Other income
(expense), net:
|
|
|
|
|
|
Interest income
(expense), net
|
|
|
23
|
|
(3)
|
Other income
(expense), net
|
|
|
(219)
|
|
(325)
|
Total other income
(expense), net
|
|
|
(196)
|
|
(328)
|
Income before income
tax provision
|
|
|
11,041
|
|
21,810
|
Provision for income
taxes
|
|
|
4,009
|
|
8,067
|
Net income
|
|
|
$
7,032
|
|
$
13,743
|
|
|
|
|
|
|
Net income per common
share - basic
|
|
|
$
0.55
|
|
$
1.04
|
Net income per common
share - diluted
|
|
|
$
0.53
|
|
$
1.00
|
|
|
|
|
|
|
Weighted-average
number of common shares - Class A basic
|
|
|
9,375
|
|
9,598
|
Weighted-average
number of common shares - Class B basic
|
|
|
3,367
|
|
3,617
|
Weighted-average
number of common shares - diluted
|
|
|
13,088
|
|
13,633
|
|
|
|
|
|
|
Net income
|
|
|
$
7,032
|
|
$
13,743
|
Other comprehensive
income, net of tax:
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
(4)
|
|
6
|
Comprehensive
income
|
|
|
$
7,028
|
|
$
13,749
|
|
|
|
|
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
CONSOLIDATED
BALANCE SHEETS
|
(in thousands, except
share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
March
26,
|
|
December
26,
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Assets
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
51,128
|
|
$
94,193
|
Accounts receivable, net of allowance for doubtful accounts of $211
and
|
|
|
|
|
|
$244 as of March 26, 2016 and December 26, 2015,
respectively
|
|
|
45,183
|
|
38,984
|
Inventories
|
|
|
61,737
|
|
56,462
|
Prepaid expenses and other current assets
|
|
|
12,499
|
|
12,053
|
Income tax receivable
|
|
|
5,029
|
|
14,928
|
Deferred income taxes
|
|
|
6,919
|
|
6,983
|
Total current assets
|
|
|
182,495
|
|
223,603
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
412,301
|
|
409,926
|
Other assets
|
|
|
9,352
|
|
8,188
|
Goodwill
|
|
|
3,683
|
|
3,683
|
Total assets
|
|
|
$
607,831
|
|
$
645,400
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
Accounts payable
|
|
|
$
45,171
|
|
$
42,718
|
Current portion of debt and capital lease obligations
|
|
|
60
|
|
58
|
Accrued expenses and other current liabilities
|
|
|
56,290
|
|
68,384
|
Total current liabilities
|
|
|
101,521
|
|
111,160
|
|
|
|
|
|
|
Deferred income
taxes
|
|
|
56,288
|
|
56,001
|
Debt and capital lease
obligations, less current portion
|
|
|
411
|
|
471
|
Other liabilities
|
|
|
14,264
|
|
16,547
|
Total liabilities
|
|
|
172,484
|
|
184,179
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
Class A Common Stock, $.01 par value; 22,700,000 shares
authorized;
|
|
|
|
|
|
9,293,632 and 9,389,005 issued and outstanding as of March 26,
2016
|
|
|
|
|
|
and December 26, 2015, respectively
|
|
|
93
|
|
94
|
Class B Common Stock, $.01 par value; 4,200,000 shares
authorized;
|
|
|
|
|
|
3,367,355 and 3,367,355 issued and outstanding as of March 26,
2016
|
|
|
34
|
|
34
|
and December 26, 2015, respectively
|
|
|
|
|
|
Additional paid-in capital
|
|
|
317,967
|
|
290,096
|
Accumulated other comprehensive loss, net of tax
|
|
|
(955)
|
|
(951)
|
Retained earnings
|
|
|
118,208
|
|
171,948
|
Total stockholders' equity
|
|
|
435,347
|
|
461,221
|
Total liabilities and stockholders' equity
|
|
|
$
607,831
|
|
$
645,400
|
|
|
|
|
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASHFLOWS
|
(in
thousands)
|
(unaudited)
|
|
|
|
Thirteen weeks
ended
|
|
|
|
March
26,
|
|
March
28,
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Cash flows
provided by operating activities:
|
|
|
|
|
|
Net income
|
|
|
$
7,032
|
|
$
13,743
|
Adjustments to reconcile net
income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
|
|
12,029
|
|
10,312
|
Loss on disposal of property, plant and equipment
|
|
|
303
|
|
335
|
Bad debt recovery
|
|
|
(33)
|
|
(42)
|
Stock-based compensation expense
|
|
|
2,686
|
|
1,621
|
Excess tax benefit from stock-based compensation
arrangements
|
|
|
(3,839)
|
|
(12,538)
|
Deferred income taxes
|
|
|
351
|
|
(5)
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
Accounts receivable
|
|
|
(6,166)
|
|
(7,444)
|
Inventories
|
|
|
(5,275)
|
|
(4,489)
|
Prepaid expenses, income tax receivable and other assets
|
|
|
8,165
|
|
29,535
|
Accounts payable
|
|
|
825
|
|
2,138
|
Accrued expenses and other current liabilities
|
|
|
(8,282)
|
|
(12,108)
|
Other liabilities
|
|
|
(1,529)
|
|
167
|
Net cash provided by operating activities
|
|
|
6,267
|
|
21,225
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
Purchases of property, plant
and equipment
|
|
|
(13,011)
|
|
(18,688)
|
Cash paid for acquisition of
intangible assets
|
|
|
-
|
|
(100)
|
Decrease in restricted
cash
|
|
|
56
|
|
57
|
Net cash used in investing activities
|
|
|
(12,955)
|
|
(18,731)
|
|
|
|
|
|
|
Cash flows (used
in) provided by financing activities:
|
|
|
|
|
|
Repurchase of Class A Common
Stock
|
|
|
(60,775)
|
|
(9,490)
|
Proceeds from exercise of
stock options
|
|
|
20,347
|
|
39,745
|
Cash paid on note
payable
|
|
|
(58)
|
|
(54)
|
Excess tax benefit from
stock-based compensation arrangements
|
|
|
3,839
|
|
12,538
|
Net proceeds from sale of
investment shares
|
|
|
270
|
|
521
|
Net cash (used in) provided by financing activities
|
|
|
(36,377)
|
|
43,260
|
|
|
|
|
|
|
Change in cash and
cash equivalents
|
|
|
(43,065)
|
|
45,754
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of year
|
|
|
94,193
|
|
76,402
|
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
|
$
51,128
|
|
$
122,156
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
Income taxes
paid
|
|
|
$
1,963
|
|
$
417
|
Income taxes
refunded
|
|
|
$
12,000
|
|
$
17,252
|
Increase in accounts
payable for purchase of property, plant and equipment
|
|
|
$
1,628
|
|
$
1,647
|
|
|
|
|
|
|
|
|
|
|
|
|
Copies of The
Boston Beer Company's press releases, including quarterly financial
results,
|
are available
on the Internet at www.bostonbeer.com
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/boston-beer-reports-first-quarter-2016-results-300255560.html
SOURCE The Boston Beer Company, Inc.