BOSTON, April 22, 2021 /PRNewswire/ -- The Boston Beer
Company, Inc. (NYSE: SAM) reported first quarter 2021 net revenue
of $545.1 million, an increase of
$214.5 million or 64.9% from the same
period last year, mainly due to an increase in shipments of 60.1%.
Net income for the first quarter was $65.6
million, an increase of $47.3
million or 259.6% from the same period last year. Earnings
per diluted share were $5.26, an
increase of $3.77 per diluted share,
or 253.0% from the first quarter of 2020. This increase was
primarily due to increased net revenue, partially offset by
increases in operating expenses. In the first quarter of 2020, the
Company recorded pre-tax COVID-19 related reductions in net revenue
and increases in costs that totaled $10.0
million or $0.60 per diluted
share.
In the first quarter of 2021 and the first quarter of 2020, the
Company recorded a tax benefit of $0.69 per diluted share and $0.17 per diluted share, respectively, resulting
from the Accounting Standard "Employee Share-Based Payment
Accounting" ("ASU 2016-09").
Highlights of this release include:
- Depletions increased 48% from the 13-week comparable period in
the prior year.
- Full-year depletion and shipment growth is now estimated at
between 40% and 50%, an increase from the previously communicated
range of between 35% and 45%.
- First quarter gross margin of 45.8% was 1.0 percentage point
above the 2020 first quarter margin of 44.8%. Excluding the 2020
impact of COVID-19 returns and other related direct costs, first
quarter 2021 gross margin of 45.8% was 1.0 percentage point below
the COVID adjusted 2020 first quarter margin of 46.8%.
- Advertising, promotional and selling expenses in the first
quarter increased $43.0 million or
43.9%.
- Based on current spending and investment plans, full-year 2021
Non-GAAP earnings per diluted share1, which excludes the
impact of ASU 2016-09, is now estimated at between $22.00 and $26.00,
an increase from the previously communicated range of between
$20.00 and $24.00.
Jim Koch, Chairman and Founder of
the Company, commented, "As the world slowly reopens and the
COVID-19 pandemic winds down, our primary focus continues to be on
operating our breweries and our business safely and working hard to
continue to innovate and meet customer demand. Before I turn
to our key first quarter operational achievements, I want to note
that, working with the Greg Hill Foundation, our Samuel Adams
Restaurant Strong Fund has raised $7.5
million thus far to support bar and restaurant workers who
are experiencing hardships in the wake of COVID-19 and is committed
to distributing 100% of its proceeds through grants to bar and
restaurant workers across the country. We are thankful to our
outstanding coworkers, distributors and retailers for their
continued focus and diligence to continue to operate and help grow
our business. The Company's depletions increased 48 percent
in the first quarter and we achieved double digit volume growth for
the twelfth consecutive quarter. Early in 2021, we launched
Truly Iced Tea Hard Seltzer and during the second quarter we plan
to launch Truly Punch Hard Seltzer. Both combine refreshing
hard seltzer with bold flavors and we believe these new launches
continue to demonstrate our innovation leadership within the Hard
Seltzer category. We are making steady progress in improving
our brand support and messaging for our beer and cider brands to
position them for long-term sustainable growth in the face of the
difficult on-premise environment. We are optimistic that our
on-premise business will significantly improve in 2021 as
restrictions are slowly lifted. We are excited about the
response to the introduction in early 2021 of several new Samuel
Adams beers, including Samuel Adams Wicked Hazy, Samuel Adams
Wicked Easy and Samuel Adams Just
the Haze, our first non-alcoholic beer, as well as the positive
reaction to our Samuel Adams 'Your Cousin from Boston' advertising campaign. We are
confident in our ability to innovate and build strong brands that
complement our current portfolio and help support our mission of
long-term profitable growth."
Dave Burwick, the Company's
President and CEO stated, "We are happy with our strong start to
the year and our record first quarter shipment and depletion
volumes. First quarter shipments growth was significantly
higher than depletions growth as we took active steps to ensure
that our distributor inventory levels are adequate to support
drinker demand during the peak summer months. Our depletions
growth in the first quarter was the result of increases in our
Truly Hard Seltzer and Twisted Tea brands, partly offset by
decreases in our Samuel Adams, Angry Orchard and Dogfish Head
brands. The recently launched Truly Iced Tea Hard Seltzer has
accelerated Truly brand growth, which has more than doubled since
last year. In the first quarter in measured off-premise
channels, the Truly brand outgrew the hard seltzer category by
nearly 2X or 50 percentage points, resulting in a share increase of
6.5 percentage points. The Truly brand has now reached a market
share of over 28 percent, accounting for approximately 40 percent
of all growth cases in the hard seltzer category, which is two
times greater than the next largest growth brand. Truly Iced
Tea Hard Seltzer has achieved a 4.3 percentage point market share
in measured off-premise channels, well ahead of all other new
entrants to the entire beer category. We expect the launch of
Truly Punch Hard Seltzer during the second quarter to continue this
positive momentum. We will invest heavily in the launch of
Truly Punch Hard Seltzer and the Truly brand, evolve our brand
communications, and further improve our position in the hard
seltzer category as more competitors enter. Twisted Tea
continues to generate double-digit volume growth rates that are
significantly above full year 2020 trends. In the first
quarter in measured off-premise channels, case growth in Twisted
Tea brand products was almost three times higher than its closest
competitor and we believe Twisted Tea is on its way to becoming the
number one flavored malt beverage (FMB) by year's end. We see
significant distribution and volume growth opportunities for our
Truly and Twisted Tea brands and are looking to continue to expand
distribution of our Dogfish Head brand. Pursuing these
opportunities in 2021 remains a top priority. Our Samuel Adams,
Angry Orchard and Dogfish Head brands were hit the most by COVID-19
and the related on-premise closures. We continue to work hard
on returning these brands to growth and are optimistic that they
will return to growth in 2021. Overall, given the trends for the
first three months and our current view of the remainder of the
year, we've adjusted our expectations for higher 2021 full-year
volume and earnings growth, which is primarily driven by the strong
performance of our Truly and Twisted Tea brands."
Mr. Burwick went on to say, "During the quarter, we have taken
various steps to ensure we have capacity to support this
accelerating growth. We continue to work hard on our comprehensive
program to transform our supply chain with the goal of making our
integrated supply chain more efficient, reduce costs, increase our
flexibility to better react to mix changes, and allow us to scale
up more efficiently. We expect to complete this transformation over
the next two to three years. We will continue to invest in capacity
to take advantage of the fast-growing hard seltzer category and
deliver against the increased demand through a combination of
internal capacity increases and higher usage of third-party
breweries, although meeting these higher volumes through increased
usage of third-party breweries has a negative impact on our gross
margins. While we anticipate delivering margin improvements
in 2021, our gross margins and gross margin expectations will
continue to be impacted negatively until our volume growth
stabilizes. While we are in a very competitive business, we are
optimistic for continued growth of our current brand portfolio and
innovations and we remain prepared to forsake short-term earnings
as we invest to sustain long-term profitable growth, in line with
the opportunities that we see."
COVID-19
The Company began seeing the impact of the COVID-19 pandemic on
its business in early March 2020. The direct financial impact
of the pandemic primarily included significantly reduced keg demand
from the on-premise channel and higher labor and safety-related
costs at the Company's breweries. In addition to these direct
financial impacts, COVID-19 related safety measures resulted
in a reduction of brewery productivity, which has shifted more
volume to third-party breweries, and negatively impacted gross
margins. In the 13-week period ended March 28, 2020, the Company recorded COVID-19
pre-tax related reductions in net revenue and increases in other
costs of $10.0 million. This
amount consists of a $5.8 million
reduction in net revenue for estimated keg returns from
distributors and retailers and $4.2
million of other COVID-19 related direct costs, of which
$3.6 million are recorded in cost of
goods sold and $0.6 million are
recorded in operating expenses. In 2021 and going forward, the
Company has chosen not to report COVID-19 related direct costs
separately as they are viewed to be a normal part of
operations. The Company will continue to assess and manage
this situation and will provide a further update in each quarterly
earnings release, to the extent that the effects of the COVID-19
pandemic are then known more clearly.
1st Quarter 2021 Summary of Results
Depletions increased 48% from the comparable 13-week period in
the prior year. Shipment volume was approximately 2.3 million
barrels, a 60.1% increase from the comparable 13-week period in the
prior year.
Shipment volume for the quarter was significantly higher than
depletions volume and resulted in significantly higher distributor
inventory as of March 27, 2021 when
compared to March 28, 2020. The
Company believes distributor inventory as of March 27, 2021 averaged approximately 7 weeks on
hand and was at an appropriate level based on the supply chain
capacity constraints and inventory requirements to support the
forecasted growth of Truly and Twisted Tea brands over the
summer.
Gross margin at 45.8% increased from the 44.8% margin realized
in the first quarter of 2020, primarily as a result of price
increases, the absence of the COVID-19 related direct costs
incurred in 2020 and cost saving initiatives at Company-owned
breweries partially offset by higher processing costs due to
increased production at third party breweries.
Advertising, promotional and selling expenses increased
$43.0 million compared to the first
quarter of 2020, primarily due to increased brand investments of
$21.0 million, primarily driven by
higher media and production costs, higher salaries and benefits
costs and increased freight to distributors of $21.9 million that was primarily due to higher
volumes and rates.
General and administrative expenses increased by $4.9 million from the first quarter of 2020,
primarily due to increases in salaries and benefits costs.
The Company's effective tax rate for the first quarter increased
to 14.4% from 14.1% in the first quarter of 2020. The Company's
effective tax rate for the first quarter, excluding the impact of
ASU 2016-09, increased to 25.6% from 23.6% in the first quarter of
2020 primarily due to one-time state tax benefits related to
capital investments in 2020.
The Company expects that its March 27,
2021 cash balance of $144.7
million, together with its future operating cash flows and
the $150.0 million available under
its line of credit, will be sufficient to fund future cash
requirements.
Depletion estimates
Year-to-date depletions through the fifteen weeks ended
April 10, 2021 are estimated by the
Company to have increased approximately 49% from the comparable
period in 2020.
2021 Outlook
The Company currently projects full year 2021 Non-GAAP earnings
per diluted share of between $22.00
and $26.00. This Non-GAAP
projection excludes the impact of ASU 2016-09. The Company's
actual 2021 earnings per share could vary significantly from the
current projection. Underlying the Company's current 2021
projection are the following full-year estimates and targets:
- Depletions and shipments percentage increase between 40% and
50%.
- National price increases of between 1% and 3%, an increase from
the previously communicated range of between 1% and 2%.
- Gross margin of between 45% and 47%.
- Increased investments in advertising, promotional and selling
expenses of between $130 million and
$150 million, an increase from the
previously communicated range of between $120 million and $140
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 26.5%, 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 $250 million and $350
million, a decrease from the previously communicated range
of between $300 million and
$400 million.
Non-GAAP effective tax rate and Non-GAAP earnings per diluted
share 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. The Company's projection for its
Non-GAAP effective tax rate and Non-GAAP earnings per diluted share
exclude the impact of ASU 2016-09, which could be significant and
will depend largely upon unpredictable 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.
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 and Dogfish Head
Brewery 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.
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, 2020 and December 28, 2019. Copies of these
documents may be found on the Company's website,
www.bostonbeer.com, or obtained by contacting the Company or
the SEC.
Thursday, April 22, 2021
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
|
(in thousands, except
per share data)
|
|
|
(unaudited)
|
|
|
March
27,
|
|
|
March
28,
|
|
|
2021
|
|
|
2020
|
|
Barrels
sold
|
|
2,278
|
|
|
|
1,423
|
|
Revenue
|
$
|
581,709
|
|
|
$
|
352,225
|
|
Less excise
taxes
|
|
36,629
|
|
|
|
21,660
|
|
Net
revenue
|
|
545,080
|
|
|
|
330,565
|
|
Cost of goods
sold
|
|
295,450
|
|
|
|
182,592
|
|
Gross
profit
|
|
249,630
|
|
|
|
147,973
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Advertising,
promotional and selling expenses
|
|
140,859
|
|
|
|
97,891
|
|
General and
administrative expenses
|
|
31,946
|
|
|
|
27,029
|
|
Impairment of
assets
|
|
227
|
|
|
|
1,521
|
|
Total operating
expenses
|
|
173,032
|
|
|
|
126,441
|
|
Operating
income
|
|
76,598
|
|
|
|
21,532
|
|
Other (expense)
income, net:
|
|
|
|
|
|
|
|
Interest (expense)
income, net
|
|
(29)
|
|
|
|
63
|
|
Other (expense)
income, net
|
|
(6)
|
|
|
|
(360)
|
|
Total other (expense)
income, net
|
|
(35)
|
|
|
|
(297)
|
|
Income before income
tax provision
|
|
76,563
|
|
|
|
21,235
|
|
Income tax
provision
|
|
10,998
|
|
|
|
3,001
|
|
Net income
|
$
|
65,565
|
|
|
$
|
18,234
|
|
|
|
|
|
|
|
|
|
Net income per common
share - basic
|
$
|
5.34
|
|
|
$
|
1.50
|
|
Net income per common
share - diluted
|
$
|
5.26
|
|
|
$
|
1.49
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares - basic
|
|
12,271
|
|
|
|
12,157
|
|
Weighted-average
number of common shares - diluted
|
|
12,457
|
|
|
|
12,186
|
|
|
|
|
|
|
|
|
|
Net Income
|
$
|
65,565
|
|
|
$
|
18,234
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
20
|
|
|
|
(58)
|
|
Comprehensive
income
|
$
|
65,585
|
|
|
$
|
18,176
|
|
|
|
|
|
|
|
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(in thousands, except
share data)
|
|
|
(unaudited)
|
|
|
March
27,
|
|
|
December
26,
|
|
|
2021
|
|
|
2020
|
|
Assets
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
144,658
|
|
|
$
|
163,282
|
|
Accounts
receivable
|
|
105,042
|
|
|
|
78,358
|
|
Inventories
|
|
160,671
|
|
|
|
130,910
|
|
Prepaid expenses and
other current assets
|
|
36,061
|
|
|
|
30,230
|
|
Income tax
receivable
|
|
4,115
|
|
|
|
10,393
|
|
Total current
assets
|
|
450,547
|
|
|
|
413,173
|
|
Property, plant and
equipment, net
|
|
636,007
|
|
|
|
623,083
|
|
Operating
right-of-use assets
|
|
56,518
|
|
|
|
58,483
|
|
Goodwill
|
|
112,529
|
|
|
|
112,529
|
|
Intangible
assets
|
|
103,867
|
|
|
|
103,930
|
|
Third-party
production prepayments
|
|
93,243
|
|
|
|
56,843
|
|
Other
assets
|
|
11,459
|
|
|
|
10,784
|
|
Total
assets
|
$
|
1,464,170
|
|
|
$
|
1,378,825
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
$
|
157,085
|
|
|
$
|
121,647
|
|
Accrued expenses and
other current liabilities
|
|
106,361
|
|
|
|
129,544
|
|
Current operating
lease liabilities
|
|
8,183
|
|
|
|
8,232
|
|
Total current
liabilities
|
|
271,629
|
|
|
|
259,423
|
|
Deferred income
taxes, net
|
|
97,284
|
|
|
|
92,665
|
|
Non-current operating
lease liabilities
|
|
57,200
|
|
|
|
59,171
|
|
Other
liabilities
|
|
9,333
|
|
|
|
10,599
|
|
Total
liabilities
|
$
|
435,446
|
|
|
$
|
421,858
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Class A Common Stock,
$.01 par value; 22,700,000 shares authorized; 10,052,711
and 10,004,681 issued and outstanding as
of March 27, 2021 and December 26,
2020, respectively
|
|
101
|
|
|
|
100
|
|
Class B Common Stock,
$.01 par value; 4,200,000 shares authorized; 2,177,983
and 2,177,983 issued and outstanding as
of March 27, 2021 and December 26,
2020, respectively
|
|
22
|
|
|
|
22
|
|
Additional paid-in
capital
|
|
605,962
|
|
|
|
599,737
|
|
Accumulated other
comprehensive loss, net of tax
|
|
(232)
|
|
|
|
(252)
|
|
Retained
earnings
|
|
422,871
|
|
|
|
357,360
|
|
Total stockholders'
equity
|
$
|
1,028,724
|
|
|
$
|
956,967
|
|
Total liabilities and
stockholders' equity
|
$
|
1,464,170
|
|
|
$
|
1,378,825
|
|
|
|
|
|
|
|
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(in
thousands)
|
|
|
(unaudited)
|
|
|
Thirteen weeks
ended
|
|
|
March
27, 2021
|
|
|
March
28, 2020
|
|
Cash flows
provided by operating activities:
|
|
|
|
|
|
|
|
Net income
|
$
|
65,565
|
|
|
$
|
18,234
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
16,996
|
|
|
|
15,945
|
|
Impairment of
assets
|
|
227
|
|
|
|
1,521
|
|
Gain on disposal of
property, plant and equipment
|
|
(36)
|
|
|
|
—
|
|
Change in right-of-use
assets
|
|
1,965
|
|
|
|
1,807
|
|
Credit loss (recovery)
expense
|
|
(48)
|
|
|
|
552
|
|
Stock-based
compensation expense
|
|
4,957
|
|
|
|
2,566
|
|
Deferred income
taxes
|
|
4,565
|
|
|
|
2,379
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
(26,723)
|
|
|
|
(4,436)
|
|
Inventories
|
|
(30,581)
|
|
|
|
(23,856)
|
|
Prepaid expenses,
income tax receivable and other current assets
|
|
(14,369)
|
|
|
|
(2,077)
|
|
Third-party production
prepayments
|
|
(21,584)
|
|
|
|
1,234
|
|
Other
assets
|
|
—
|
|
|
|
(41)
|
|
Accounts
payable
|
|
36,912
|
|
|
|
14,264
|
|
Accrued expenses and
other current liabilities
|
|
(16,095)
|
|
|
|
(7,579)
|
|
Change in operating
lease liabilities
|
|
(2,020)
|
|
|
|
(1,489)
|
|
Other
liabilities
|
|
76
|
|
|
|
(100)
|
|
Net cash provided by
operating activities
|
|
19,807
|
|
|
|
18,924
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Purchases of property,
plant and equipment
|
|
(39,278)
|
|
|
|
(27,394)
|
|
Proceeds from sale of
property, plant and equipment
|
|
320
|
|
|
|
35
|
|
Other investing
activities
|
|
145
|
|
|
|
96
|
|
Net cash used in
investing activities
|
|
(38,813)
|
|
|
|
(27,263)
|
|
Cash flows
provided by financing activities:
|
|
|
|
|
|
|
|
Proceeds from exercise
of stock options and sale of investment shares
|
|
6,768
|
|
|
|
2,941
|
|
Net cash paid on note
payable and finance leases
|
|
(435)
|
|
|
|
(209)
|
|
Cash borrowed on line
of credit
|
|
—
|
|
|
|
100,000
|
|
Payment of tax
withholdings on stock-based payment awards and investment
shares
|
|
(5,951)
|
|
|
|
(1,559)
|
|
Net cash provided by
financing activities
|
|
382
|
|
|
|
101,173
|
|
Change in cash and
cash equivalents
|
|
(18,624)
|
|
|
|
92,834
|
|
Cash and cash
equivalents at beginning of year
|
|
163,282
|
|
|
|
36,670
|
|
Cash and cash
equivalents at end of period
|
$
|
144,658
|
|
|
$
|
129,504
|
|
|
|
|
|
|
|
|
|
1 See "Outlook" below for additional information
regarding non-GAAP forward-looking measures used in this press
release.
View original
content:http://www.prnewswire.com/news-releases/boston-beer-reports-first-quarter-2021-results-301275392.html
SOURCE The Boston Beer Company, Inc.