Form 8-K BOSTON BEER CO INC For: Apr 21

 

 

			Exhibit 99
Investor Relations Contact:			Media Contact:
Jennifer Larson			Dave DeCecco
(617) 368-5152			(914) 261-6572
[email protected]			[email protected]

 

 

BOSTON BEER REPORTS

FIRST QUARTER FINANCIAL RESULTS

 

First Quarter (13-week) 2022 Financial Results

 

BOSTON (4/21/22) -- The Boston Beer Company, Inc. (NYSE: SAM), today reported financial results for the first quarter ended March 26, 2022. Key results were:

 

 

“Despite our depletions decline, we gained dollar share in measured off-premise channels in the first quarter – the second-largest share gain among brewers,” said Chairman and Founder Jim Koch. “The out-of-stock issues that affected our first quarter performance have improved during the quarter, setting us up for additional growth over the rest of the year. As we continue to innovate, today we are announcing the launch of Truly Vodka Seltzer, a new ready-to-drink hard seltzer with 110 calories and 5% ABV, which will begin rolling out later this summer. We believe it will help us compete effectively in the high-end of the hard seltzer category and continue to broaden the reach of the Truly brand.”

 

“While we met our internal targets for depletions, shipments and financials, our first quarter performance suffers by comparison to our exceptional performance in the first quarter of 2021,” said Dave Burwick, President and CEO. “We fully expect depletion and shipment volumes to improve, both in absolute terms and against less difficult prior year volume comparisons. We also expect margins to increase from the lower first quarter levels as our supply chain performance slowly improves during the remainder of the year. We continue to believe we have strategies in place to get back to company-wide mid single-digit to double-digit depletions growth driven by broad-based growth across our entire portfolio of brands – especially as consumers drink more ‘Beyond Beer’ products – and via our strong innovation pipeline.”

 

Details of the results were as follows:

 

 

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First Quarter 2022 (13 weeks ended March 26, 2022) Summary of Results

 

Depletions for the 2022 first quarter decreased 7% from the prior year, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, and Dogfish Head brands, partially offset by increases in its Twisted Tea brand. The Company’s Samuel Adams brand depletion volume was nearly equal in both periods.

 

Shipment volume for the quarter was approximately 1.7 million barrels, a 25.1% decrease from the prior year, reflecting decreases in the Company’s Truly Hard Seltzer, Twisted Tea, Angry Orchard, and Dogfish Head brands, partially offset by increases in its Samuel Adams brand.

 

The Company believes distributor inventory as of March 26, 2022 averaged approximately five weeks on hand and was at an appropriate level for each of its brands. The Company expects distributors will keep inventory levels below 2021 levels in terms of weeks on hand, as the need for peak season inventory prebuilds is greatly reduced due to our increased production capacity.

 

The first quarter 2022 gross margin of 40.2% decreased from the 45.8% margin realized in the first quarter of 2021, primarily due to higher supply chain costs and higher materials costs, partially offset by price increases.

 

Advertising, promotional and selling expenses for the first quarter of 2022 decreased $10.2 million or 7.3% from the first quarter of 2021, primarily due to a net decrease in brand investments of $9.4 million, mainly driven by lower media costs, partially offset by higher investments in local marketing and decreased freight to distributors of $0.8 million primarily due to lower volumes that were partially offset by higher rates.

 

General and administrative expenses increased by $7.8 million or 24.3% from the first quarter of 2021, primarily due to increased salaries and benefits costs and increases in services provided by third parties,

 

The Company recorded an expense of $4.8 million in contract termination costs in the first quarter of 2022, resulting from further negotiations with suppliers that eliminated future shortfall fees.

 

The Company’s effective tax rate for the first quarter was a tax benefit of 14.5% compared to a tax provision of 14.4% in the prior year. In the first quarters of 2022 and 2021, the Company recorded tax expense of $0.03 per diluted share and a tax benefit of $0.69 per diluted share, respectively, resulting from the Accounting Standard "Employee Share-Based Payment Accounting" ("ASU 2016-09").

 

The Company expects that its March 26, 2022 cash balance of $15.8 million, together with its future operating cash flows and the unused balance on its $135.0 million line of credit, will be sufficient to fund future cash requirements.

 

During the 13-week period ended March 26, 2022 and the period from March 27, 2022 through April 16, 2022, the Company did not repurchase any shares of its Class A Common Stock. As of April 16, 2022, the Company had approximately $90.3 million remaining on the $931.0 million share buyback expenditure limit set by the Board of Directors.

 

Depletion and shipments estimates

 

 

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Year-to-date depletions through the 16-week period ended April 16, 2022 are estimated by the Company to have decreased approximately 6% from the comparable period in 2021.

 

Year-to-date shipments through the 16-week period ended April 16, 2022 are estimated by the Company to have decreased approximately 23% from the comparable period in 2021.

 

Full-year 2022 Projections

 

The Company currently projects full-year 2022 Non-GAAP earnings per diluted share of between $11.00 and $16.00. This projection excludes the impact of ASU 2016-09 and is highly sensitive to changes in volume projections particularly related to the hard seltzer category and supply chain performance as well as inflationary impacts that have accelerated since we provided our last guidance. The Company’s actual 2022 earnings per share could vary significantly from the current projection. The 2022 fiscal year includes 53 weeks compared to the 2021 fiscal year which included only 52 weeks. Underlying the Company’s current 2022 projection are the following full-year estimates and targets:

 

 

Use of Non-GAAP Measures

 

Non-GAAP effective tax rate and earnings per diluted share, excluding the impact of ASU 2016-09, 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. Management uses these non-GAAP financial measures to make operating and strategic decisions and to evaluate the Company’s overall business performance. The Company is unable to reconcile the projection for its Non-GAAP effective tax rate and earnings per diluted share, excluding the impact of ASU 2016-09, because the Company is unable to predict the impact of 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. Management believes these forward-looking non-GAAP measures provide meaningful

 

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and useful information to investors and analysts regarding our outlook and facilitate period to period comparisons of our forecasted financial performance.

 

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 year ended December 25, 2021 and subsequent reports filed by the Company with the SEC on Forms 10-Q and 8-K. Copies of these documents are available from the SEC and may be found on the Company’s website, www.bostonbeer.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements.

 

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, Dogfish Head Brewery, and Bevy Long Drink as well as other craft beer brands such as Angel City Brewery and Coney Island Brewing. We also produce and sell Hard Mt Dew under a license agreement with PepsiCo, Inc. and Sauza Agave Cocktails under a license agreement with Jim Beam Brands Co. For more information, please visit our investor relations website at www.bostonbeer.com, which includes links to all of our respective brand websites.

 

Thursday, April 21, 2022

 

 

 

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited)
	March 26,				March 27
	2022				2021
Barrels sold		1,705				2,275
Revenue	$	457,288			581, 709
Less excise taxes		27,175				36,629
Net revenue		430,113				545,080
Cost of goods sold		257,161				295,450
Gross profit		172,952				249,630
Operating expenses:
Advertising, promotional and selling expenses		130,615				140,859
General and administrative expenses		39,698				31,946
Contract termination costs and other		4,752				—
Impairment of assets		41				227
Total operating expenses		175,106				173,032
Operating (loss) income		(2,154	)			76,598
Other expense:
Interest expense		(33	)			(29	)
Other expense		(100	)			(6	)
Total other expense		(133	)			(35	)
(Loss) income before income tax (benefit) provision		(2,287	)			76,563
Income tax (benefit) provision		(332	)			10,998
Net (loss) income	$	(1,955	)		$	65,565
Net (loss) income per common share - basic	$	(0.16	)		$	5.34
Net (loss) income per common share - diluted	$	(0.16	)		$	5.26
Weighted-average number of common shares -basic		12,300				12,271
Weighted-average number of common shares - diluted		12,300				12,457
Net (loss) income	$	(1,955	)		$	65,565
Other comprehensive (loss) income:
Foreign Currency translation adjustment		50				20
Total other comprehensive income (loss), net of tax:		50				20
Comprehensive (loss) income	$	(1,905	)		$	65,585

 

 

 

 

 

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
		(unaudited)
		March 26,				December 25,
		2022				2021
Assets
Current Assets:
Cash and cash equivalents		$	15,769			$	26,853
Restricted cash			—				39,468
Accounts receivable			101,884				55,022
Inventories			162,592				149,118
Prepaid expenses and other current assets			24,012				21,462
Income tax receivable			52,276				53,418
Total current assets			356,533				345,341
Property, plant and equipment, net			668,876				664,815
Operating right-of-use assets			50,780				52,774
Goodwill			112,529				112,529
Intangible assets			103,614				103,677
Third-party production prepayments			80,573				88,294
Other assets			17,092				19,354
Total assets		$	1,389,997			$	1,386,784
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable		$	112,711			$	85,920
Accrued expenses and other current liabilities			124,457				161,552
Current operating lease liabilities			8,366				7,634
Total current liabilities			245,534				255,106
Deferred income taxes, net			87,516				87,495
Line of credit			15,000				—
Non-current operating lease liabilities			51,689				53,849
Other liabilities			5,334				6,925
Total liabilities			405,073				403,375
Stockholders' Equity:
Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,214,612 and 10,183,801 issued and outstanding as of March 26, 2022 and    December 25, 2021, respectively			102				102
Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,068,000    and 2,068,000 issued and outstanding as of March 26, 2022 and    December 25, 2021, respectively			21				21
Additional paid-in capital			615,041				611,622
Accumulated other comprehensive loss			(143	)			(194	)
Retained earnings			369,903				371,858
Total stockholders' equity			984,924				983,409
Total liabilities and stockholders' equity		$	1,389,997			$	1,386,784

 

 

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THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
		March 26,				March 27
		2022				2021
Cash flows (used in) provided by operating activities:
Net (loss) income		$	(1,955	)		$	65,565
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			19,634				16,996
Impairment of assets			41				227
Loss (gain) on disposal of property, plant and equipment			21				(36	)
Change in right-of-use assets			1,994				1,965
Other non-cash expense (income)			45				(48	)
Stock-based compensation expense			2,922				4,957
Deferred income taxes			21				4,565
Changes in operating assets and liabilities:
Accounts receivable			(46,973	)			(26,723	)
Inventories			(11,205	)			(30,581	)
Prepaid expenses, income tax receivable, other current assets and other assets			(937	)			(14,369	)
Third-party production prepayments			7,721				(21,584	)
Accounts payable			26,799				36,912
Accrued expenses, other current liabilities and other liabilities			(37,706	)			(16,095	)
Change in operating lease liabilities			(1,428	)			(2,020	)
Net cash (used in) provided by operating activities			(41,006	)			19,807
Cash flows used in investing activities:
Purchases of property, plant and equipment			(23,767	)			(39,278	)
Proceeds from disposal of property, plant and equipment			66				320
Other investing activities			—				145
Net cash used in investing activities			(23,701	)			(38,813	)
Cash flows provided by financing activities:
Proceeds from exercise of stock options and sale of investment shares			2,010				6,768
Net cash paid on note payable and finance leases			(475	)			(435	)
Line of credit borrowings			30,000				—
Line of credit repayments			(15,000	)			—
Payment of tax withholding on stock-based payment awards and investment shares			(2,380	)			(5,951	)
Net cash provided by financing activities			14,155				382
Change in cash and cash equivalents and restricted cash			(50,552	)			(18,624	)
Cash and cash equivalents and restricted cash at beginning of year			66,321				163,282
Cash and cash equivalents end of period		$	15,769			$	144,658
Copies of The Boston Beer Company's press releases, including quarterly financial results,
are available on the Internet at www.bostonbeer.com

 

 

 

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