Welcome!

News Feed Item

Boston Beer Reports Second Quarter 2014 Results

BOSTON, July 30, 2014 /PRNewswire/ -- The Boston Beer Company, Inc. (NYSE: SAM) reported second quarter 2014 net revenue of $231.6 million, an increase of $50.3 million or 28%, over the same period last year, mainly due to core shipment growth of 25%. Net income for the second quarter was $25.4 million, or $1.88 per diluted share, an increase of $5.7 million or $0.43 per diluted share from the second quarter of 2013.  This increase was primarily due to shipment increases, partially offset by increased investments in advertising, promotional and selling expenses.

Earnings per diluted share for the 26-week period ended June 28, 2014 were $2.49, an increase of $0.53 from the comparable 26-week period in 2013.  Net revenue for the 26-week period ended June 28, 2014 was $415.5 million, an increase of $98.2 million, or 31%, from the comparable 26-week period in 2013.

Highlights of this release include:

  • Depletions grew 23% and 28% from the comparable 13 and 26 week periods in the prior year.
  • Gross margin of 53.1% for the second quarter and 51.4% for first half, with the Company maintaining its full year gross margin target of between 51% and 53%.
  • Advertising, promotional and selling expense increased by $15.7 million or 31% in the quarter, primarily due to planned increased investments behind the Company's brands.
  • Full year 2014 depletions growth is now estimated to be between 20% and 24%, an increase from the previously communicated estimate of 16% to 20%.
  • Full year 2014 estimated earnings per diluted share remain unchanged at $6.00 to $6.40.
  • Full year 2014 capital spending is now estimated to be between $160 million to $185 million, a narrowing of the range from the previously communicated estimate of $160 million to $220 million.

Jim Koch, Chairman and Founder of the Company, commented, "We achieved depletions growth of 23% and record total depletions in the second quarter.   I am tremendously proud of the efforts of our employees in achieving this record, while maintaining a focus on brewing quality and innovation.  We believe that our depletions growth is attributable to strong sales execution and support from our distributors and retailers as well as our quality beers and strong brands.  We were also delighted to learn that, for the sixth year in a row, our distributors ranked us the number one beer supplier in the industry, in the annual poll of beer distributors conducted by Tamarron Consulting, a consulting firm specializing in the alcohol beverage distribution industry.  This is a testament to the efforts of all Boston Beer employees to service and support our distributors' business and to the relationships we have built with them.  Overall, our brand portfolio is healthy and we remain positive about the future of craft beer."

Martin Roper, the Company's President and CEO stated, "In the second quarter, our depletions growth benefited from the strength of our Samuel Adams, Angry Orchard and Twisted Tea brands.  We believe that the growth we see in our main brands reflects a response to our increased investments in media, local marketing and point of sale and the efforts of our increased sales force, even as we face a more competitive environment. Accordingly, we have increased our expectations for full year depletions growth to between 20% and 24% to reflect the most recent trends.  We are planning continued increases in investments in advertising, promotional and selling expenses behind existing brands in an attempt to maintain the momentum, as well as in innovation, commensurate with the opportunities and the increased competition that we see."

Mr. Roper went on to say, "Our supply chain performance still remains below our expectations but is improving. The high demand levels and the large number of expansion and efficiency projects ongoing during the quarter caused us to experience higher operational costs than we had originally expected.  We are also seeing pressure from our transportation suppliers and experiencing increased freight costs to secure the performance and capacity that we need.  Despite our best efforts, we had some continued product shortages and service issues during the quarter.  Many of our major capital projects were completed during the last 45 days, allowing us to focus more on training, process improvement and predictable operations. We are appreciative of the tremendous effort of our Brewery and Engineering teams to complete these projects successfully while we operate at peak levels.  Looking forward, we expect a continued high level of brand and capital investments, as we pursue growth and innovation.  We are prepared to forsake the earnings that may be lost as a result of these investments in the short term, as we pursue long term profitable growth."

2nd Quarter 2014 Summary of Results

Depletions grew 23% from the comparable 13-week period in the prior year primarily due to increases in the Company's Angry Orchard®, Samuel Adams® and Twisted Tea® brand products.

Core shipment volume was approximately 1.1 million barrels, a 25% increase compared to the second quarter of 2013.

The Company believes distributor inventory levels at June 28, 2014 were at appropriate levels. Inventory at distributors participating in the Freshest Beer Program at June 28, 2014 increased slightly in terms of days of inventory on hand when compared to June 29, 2013. The Company has over 65% of its volume on the Freshest Beer Program and it believes participation in the Program could reach up to 70% of its volume by the end of 2014.

Gross margin decreased to 53.1% from the 53.6% achieved in the second quarter of 2013.  The margin decrease was a result of product mix effects and increases in packaging and ingredient costs that were only partially offset by price increases.

Advertising, promotional and selling expenses were $15.7 million higher than costs incurred in the second quarter of 2013. The increase was primarily a result of increased investments in media advertising, increased costs for additional sales personnel and commissions, point of sale and local marketing, and increased freight to distributors due to higher volumes.

General and administrative expenses increased $1.8 million compared to the second quarter of 2013, primarily due to increases in salary and benefit costs.

Year to Date 2014 Summary of Results

Depletions grew by 28% from the comparable 26-week period in 2013, primarily due to increases in Angry Orchard, Samuel Adams, and Twisted Tea brand products.

Core shipment volume was approximately 1.9 million barrels, a 28% increase from the comparable 26-week period in 2013.

Advertising, promotional and selling expenses were $33.6 million higher than costs incurred in the comparable 26-week period in 2013. The increase was primarily a result of increased investments in media advertising, point of sale and local marketing, increased costs for additional sales personnel and commissions, and increased freight to distributors due to higher volumes.

General and administrative expenses increased by $3.0 million from the comparable 26-week period in 2013, due to increases in salary and benefit costs and consulting costs.

The Company's effective tax rate increased to 37% from 36% in the comparable 26-week period in 2013.  The lower 2013 rate was primarily a result of the favorable impact of a federal income tax settlement of $0.07 per diluted share in 2013.

The Company expects that its June 28, 2014 cash balance of $31.3 million, together with its future operating cash flows and its $150.0 million line of credit, will be sufficient to fund future cash requirements.

Depletion estimates

Year-to-date depletions through the 29 weeks ended July 19, 2014 are estimated by the Company to be up approximately 27% from the comparable period in 2013.

Outlook

The Company has left unchanged its projected 2014 earnings per diluted share of between $6.00 and $6.40.  The Company's actual 2014 earnings per share could vary significantly from the current projection.  Underlying the Company's current projection are the following estimates and targets:

  • Depletions and shipments growth of between 20% and 24%.
  • National price increases of approximately 2%.
  • Gross margins of between 51% and 53%.
  • Increased investment in advertising, promotional and selling expenses of between $37 million and $45 million, an increase of the range from the previously communicated estimate of $34 million to $42 million.  This does not include any increases in freight costs for the shipment of products to the Company's distributors.
  • Increased expenditures of between $3 million and $5 million for continued brand investments in existing Alchemy & Science brands, which are included in our full year estimated increases in advertising, promotional and selling expenses.  These estimates could change significantly and 2014 volume from these brands is unlikely to cover these and other expenditures related to these projects that could be incurred.
  • Effective tax rate of approximately 38%.
  • Capital spending of between $160 million and $185 million, which could be significantly higher, dependent on capital required to meet future growth. These estimates include capital investments for existing Alchemy & Science projects of between $7 million and $9 million.

About the Company

The Boston Beer Company began in 1984 with a generations-old family recipe that Founder and Brewer Jim Koch uncovered in his father's attic. Inspired and unafraid to challenge conventional thinking about beer, Jim brought the recipe to life in his kitchen.  Pleased with the results of his work, Jim decided to sample his beer with bars in Boston in the hopes that drinkers would appreciate the complex, full-flavored beer he brewed fresh in America.  That beer was aptly named Samuel Adams Boston Lager®, in recognition of one of our nation's great founding fathers, a man of independent mind and spirit.  Little did Jim know at the time, Samuel Adams Boston Lager would soon become a catalyst of the American craft beer revolution.

Today, The Boston Beer Company brews more than 50 styles of beer.  It relentlessly pursues the development of new styles and the perfection of classic beers by searching the world for the finest ingredients.  Using the traditional four vessel brewing process, the Company often takes extra steps like dry-hopping, barrel-aging and a secondary fermentation known as krausening.  The Company has also pioneered another revolution, the 'extreme beer' movement, where it seeks to challenge drinker's perceptions of what beer can be. The Boston Beer Company has been committed to elevating the image of American craft beer by entering festivals and competitions around the globe, and is one of world's most awarded breweries at international beer competitions. As an independent company, brewing quality beer remains its single focus. Although Samuel Adams® beer is America's largest-selling craft beer, it accounts for only one percent of the U.S. beer market.  The Boston Beer Company will continue its independently-minded quest to brew great beer and to advocate for the growth of craft beer across America. In addition to Samuel Adams beers and the other craft brands brewed by Alchemy & Science, its craft brew incubator, the Company's brands include Twisted Tea® and Angry Orchard® hard cider. For more information, please visit www.samueladams.com, www.twistedtea.com, www.angryorchard.com.

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 28, 2013 and December 29, 2012.  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.

Financial Results












Consolidated Statements of Income and Comprehensive Income:









(unaudited in thousands, except per share data)








June 28,


June 29,


June 28,


June 29,





2014


2013


2014


2013





(13 weeks)


(13 weeks)


(26 weeks)


(26 weeks)













Barrels sold



1,054


842


1,892


1,478













Revenue

$   247,365


$   194,939


$   444,735


$   341,351


Less excise taxes

15,754


13,607


29,279


24,087


      Net revenue

231,611


181,332


415,456


317,264


Cost of goods sold

108,515


84,200


201,841


152,349


      Gross profit

123,096


97,132


213,615


164,915


Operating expenses:









   Advertising, promotional and selling expenses

65,922


50,178


127,179


93,627


   General and administrative expenses

16,681


14,906


32,552


29,554


      Total operating expenses

82,603


65,084


159,731


123,181


Operating income

40,493


32,048


53,884


41,734


Other income (expense), net:









Interest expense

(5)


(6)


(9)


(8)


Other income (expense), net

201


(220)


65


(342)


      Total other income (expense), net

196


(226)


56


(350)


Income before income tax provision

40,689


31,822


53,940


41,384


Provision for income taxes

15,261


12,107


20,197


14,757


      Net income


$     25,428


$     19,715


$    33,743


$    26,627













Net income per common share - basic

$         1.95


$         1.53


$        2.59


$        2.07


Net income per common share - diluted

$         1.88


$         1.45


$        2.49


$        1.96













Weighted-average number of common shares -Class A basic

9,196


8,765


9,097


8,737


Weighted-average number of common shares - Class B basic

3,770


4,007


3,837


4,055


Weighted-average number of common shares - diluted

13,486


13,462


13,461


13,484













Other comprehensive income, net of tax:









Defined benefit plans liability adjustment

-


-


-


-


      Comprehensive income

$     25,428


$     19,715


$     33,743


$     26,627












 

THE BOSTON BEER COMPANY, INC.

Financial Results









Consolidated Balance Sheets:








(unaudited in thousands, except share data)













June 28,


Dec. 28,






2014


2013









Assets




     Current Assets:








          Cash and cash equivalents





$    31,282


$   49,524

          Accounts receivable, net of allowance for doubtful accounts of $280 and

               $160 as of June 28, 2014 and December 28, 2013, respectively




57,762


42,001

          Inventories





64,332


56,397

          Prepaid expenses and other assets





15,334


10,644

          Deferred income taxes





5,712


5,712

               Total current assets





174,422


164,278









     Property, plant and equipment, net





347,624


266,558

     Other assets





8,141


9,556

     Goodwill





3,683


3,683

               Total assets





$  533,870


$ 444,075









Liabilities and Stockholders' Equity




     Current Liabilities:








          Accounts payable





$    45,098


$   34,424

          Current portion of debt





55


53

          Accrued expenses and other current liabilities


79,670


69,900

               Total current liabilities





124,823


104,377









     Deferred income taxes





32,293


32,394

     Debt, less current portion





528


584

     Other liabilities





4,496


4,635

               Total liabilities





162,140


141,990









     Commitments and Contingencies
















     Stockholders' Equity:








          Class A Common Stock, $.01 par value; 22,700,000 shares authorized;




               9,239,212 and 8,785,343 issued and outstanding as of June 28, 2014




               and December 28, 2013, respectively


92


88

          Class B Common Stock, $.01 par value; 4,200,000 shares authorized;




               3,727,355 and 3,962,355 issued and outstanding as of June 28, 2014

37


40

               and December 28, 2013, respectively






          Additional paid-in capital





208,926


173,025

          Accumulated other comprehensive loss, net of tax


(417)


(417)

          Retained earnings





163,092


129,349

               Total stockholders' equity





371,730


302,085

               Total liabilities and stockholders' equity


$  533,870


$ 444,075









 

THE BOSTON BEER COMPANY, INC.

Financial Results










Consolidated Statements of Cash Flows:







(unaudited in thousands)












June 28,


June 29,







2014


2013







(26 weeks)


(26 weeks)











Cash flows provided by operating activities:







     Net income





$   33,743


$  26,627


     Adjustments to reconcile net income to net cash provided by operating activities:





          Depreciation and amortization





15,391


11,463


          Loss on disposal of property, plant and equipment


71


190


          Bad debt expense 





120


28


          Stock-based compensation expense





3,937


3,782


          Excess tax benefit from stock-based compensation arrangements

(8,131)


(4,825)


   Deferred income taxes





(101)


(208)


     Changes in operating assets and liabilities:









          Accounts receivable





(15,881)


(12,029)


          Inventories





(7,935)


(7,073)


          Prepaid expenses and other assets





(3,500)


(7,910)


          Accounts payable





2,724


3,583


          Accrued expenses and other current liabilities





17,766


4,487


          Other liabilities





116


(127)


               Net cash provided by operating activities





38,320


17,988











Cash flows used in investing activities:









     Purchases of property, plant and equipment





(88,451)


(45,563)


     Decrease in restricted cash





55


62


               Net cash used in investing activities





(88,396)


(45,501)











Cash flows provided by (used in) financing activities:






     Repurchase of Class A Common Stock





-


(29,586)


     Proceeds from exercise of stock options





23,126


2,216


     Cash paid on notes payable





(53)


(62)


     Excess tax benefit from stock-based compensation arrangements


8,131


4,825


     Net proceeds from sale of investment shares





630


531


               Net cash provided by (used in) financing activities


31,834


(22,076)











Change in cash and cash equivalents





(18,242)


(49,589)











Cash and cash equivalents at beginning of year





49,524


74,463











Cash and cash equivalents at end of period





$  31,282


$  24,874











Supplemental disclosure of cash flow information:







Income taxes paid





$    7,605


$ 10,602











Acquisition of property and equipment under capital lease




$           -


$      252











Increase in accounts payable for purchase of property, plant and equipment

$    7,950


$           -










Copies of The Boston Beer Company's press releases, including quarterly financial results,

are available on the Internet at www.bostonbeer.com










SOURCE The Boston Beer Company, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
"We focus on SAP workloads because they are among the most powerful but somewhat challenging workloads out there to take into public cloud," explained Swen Conrad, CEO of Ocean9, Inc., in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"Outscale was founded in 2010, is based in France, is a strategic partner to Dassault Systémes and has done quite a bit of work with divisions of Dassault," explained Jackie Funk, Digital Marketing exec at Outscale, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are still a relatively small software house and we are focusing on certain industries like FinTech, med tech, energy and utilities. We help our customers with their digital transformation," noted Piotr Stawinski, Founder and CEO of EARP Integration, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"I think DevOps is now a rambunctious teenager – it’s starting to get a mind of its own, wanting to get its own things but it still needs some adult supervision," explained Thomas Hooker, VP of marketing at CollabNet, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We've been engaging with a lot of customers including Panasonic, we've been involved with Cisco and now we're working with the U.S. government - the Department of Homeland Security," explained Peter Jung, Chief Product Officer at Pulzze Systems, in this SYS-CON.tv interview at @ThingsExpo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We're here to tell the world about our cloud-scale infrastructure that we have at Juniper combined with the world-class security that we put into the cloud," explained Lisa Guess, VP of Systems Engineering at Juniper Networks, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
There is a huge demand for responsive, real-time mobile and web experiences, but current architectural patterns do not easily accommodate applications that respond to events in real time. Common solutions using message queues or HTTP long-polling quickly lead to resiliency, scalability and development velocity challenges. In his session at 21st Cloud Expo, Ryland Degnan, a Senior Software Engineer on the Netflix Edge Platform team, will discuss how by leveraging a reactive stream-based protocol,...
"With Digital Experience Monitoring what used to be a simple visit to a web page has exploded into app on phones, data from social media feeds, competitive benchmarking - these are all components that are only available because of some type of digital asset," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at DevOps Summit at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
Your homes and cars can be automated and self-serviced. Why can't your storage? From simply asking questions to analyze and troubleshoot your infrastructure, to provisioning storage with snapshots, recovery and replication, your wildest sci-fi dream has come true. In his session at @DevOpsSummit at 20th Cloud Expo, Dan Florea, Director of Product Management at Tintri, provided a ChatOps demo where you can talk to your storage and manage it from anywhere, through Slack and similar services with...
"I'm here to leverage my secret sauce, which is using outsourced development and the company that I utilize is delaPlex Software and they've basically allowed me to win Fortune 500 companies," noted Justin Witz, CTO of FRA and PlanTools, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We want to show that our solution is far less expensive with a much better total cost of ownership so we announced several key features. One is called geo-distributed erasure coding, another is support for KVM and we introduced a new capability called Multi-Part," explained Tim Desai, Senior Product Marketing Manager at Hitachi Data Systems, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We provide IoT solutions. We provide the most compatible solutions for many applications. Our solutions are industry agnostic and also protocol agnostic," explained Richard Han, Head of Sales and Marketing and Engineering at Systena America, in this SYS-CON.tv interview at @ThingsExpo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"As we've gone out into the public cloud we've seen that over time we may have lost a few things - we've lost control, we've given up cost to a certain extent, and then security, flexibility," explained Steve Conner, VP of Sales at Cloudistics,in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
"We are an IT services solution provider and we sell software to support those solutions. Our focus and key areas are around security, enterprise monitoring, and continuous delivery optimization," noted John Balsavage, President of A&I Solutions, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.
SYS-CON Events announced today that Calligo, an innovative cloud service provider offering mid-sized companies the highest levels of data privacy and security, has been named "Bronze Sponsor" of SYS-CON's 21st International Cloud Expo ®, which will take place on Oct 31 - Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Calligo offers unparalleled application performance guarantees, commercial flexibility and a personalised support service from its globally located cloud plat...