The Boston Beer Company (SAM) Q2 2024 earnings summary

Executive summary

• Q2 2024 net revenue declined 4.0% to $579.1 million, with depletions down 4% and shipments down 6.4%, mainly due to declines in Truly Hard Seltzer, partially offset by growth in Twisted Tea and Sun Cruiser.

• Net income for Q2 was $52.3 million, a decrease of 9.8% year-over-year; diluted EPS was $4.39.

• Gross margin expanded to 46% (up 60 bps), driven by pricing, procurement savings, and lower returns despite lower volumes.

• Operating cash flow exceeded $90 million year-to-date, with $125 million in share repurchases and a cash balance of $219.3 million at quarter-end.

• Year-to-date net income rose 32.3% to $64.9 million, supported by improved gross margins.

Financial highlights

• Q2 shipment volume was 2.2 million barrels, down 6.4% year-over-year, mainly due to declines in Truly Hard Seltzer, partially offset by Twisted Tea and Sun Cruiser growth.

• EPS was $4.39 per diluted share, down $0.32 from Q2 2023, driven by lower volumes but partially offset by higher gross margins.

• Advertising, promotional, and selling expenses fell 3.4% year-over-year, while G&A expenses rose 7% due to inflation in salaries and benefits.

• Cash and cash equivalents stood at $219.3 million as of June 29, 2024, with no debt and an unused $150 million credit line.

• Net revenue per barrel increased 2.6% year-over-year in Q2 2024 to $267.85.

Outlook and guidance

• 2024 depletions and shipments now expected to range from a low single-digit decrease to flat, with price increases of 1%-2%.

• Gross margin guidance for 2024 remains 43%-45%; GAAP EPS expected between $7.00 and $11.00.

• Capital expenditures for 2024 expected between $90 million and $110 million, focused on brewery capabilities and efficiencies.

• Management expects cash, projected operating cash flow, and a $150 million unused credit facility to be sufficient for future requirements.

• Shortfall fees and third-party production pre-payments expected to negatively impact full-year gross margin by up to 185 bps.