The Boston Beer Company (SAM) Q2 2024 earnings summary

Executive summary

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

• Net income for Q2 2024 was $52.3 million, a decrease of 9.8% year-over-year; diluted EPS was $4.39, down $0.32 from the prior year.

• Year-to-date net revenue declined 0.8% to $1.01 billion, with net income rising 32.3% to $64.9 million, driven by improved gross margins.

• Gross margin improved to 46% in Q2 (up 60 bps), reflecting price increases, procurement savings, and lower returns.

• Cash balance at quarter-end was $219.3 million with no debt; $127 million in share repurchases year-to-date.

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.

• Q2 gross margin benefited from price increases, procurement savings, and lower returns, offset by higher brewery processing and inflationary costs.

• Advertising, promotional, and selling expenses in Q2 decreased 3.4% due to lower freight and media spend; G&A expenses increased 7% due to salary and benefit inflation.

• Cash and cash equivalents stood at $219.3 million as of June 29, 2024, with an unused $150 million credit line.

• Diluted EPS for Q2 2024 was $4.39, compared to $4.72 in Q2 2023.

Outlook and guidance

• Full-year 2024 depletions and shipments expected to be down low single digit to flat; price increases of 1%-2%.

• Gross margin guidance remains 43%-45%; GAAP EPS expected between $7.00 and $11.00, highly sensitive to volume, mix, supply chain, and inflation.

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

• 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.