8-K
false000094987000009498702023-07-272023-07-27

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2023

The Boston Beer Company, Inc.

(Exact name of Registrant as Specified in Its Charter)

Massachusetts

001-14092

04-3284048

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

One Design Center Place, Suite 850,

Boston, MA

02210

(Address of Principal Executive Offices)

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 368-5000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock

 

SAM

 

NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 


 

 

Item 2.02 Results of Operations and Financial Condition

On July 27, 2023, The Boston Beer Company, Inc. disclosed financial information for the second quarter of 2023 in an earnings release, a copy of which is set forth in the attached Exhibit 99.

The information in this Form 8-K and the Exhibit 99 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

 

 Exhibit 99

Earnings Release of The Boston Beer Company, Inc. dated July 27, 2023.

 

 

 

 104

Cover Page Interactive Data File (embedded within Inline XBRL document).

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

The Boston Beer Company, Inc.

 

 

(Registrant)

 

 

 

Date: July 27, 2023

 

/s/ Matthew D. Murphy

 

 

Matthew D. Murphy

 

 

Chief Accounting Officer and Interim Chief Financial Officer

 

 


EX-99

 

 

 

 

 

Exhibit 99

Investor Relations Contact:

 

 

Media Contact:

Jennifer Larson

 

 

Dave DeCecco

(617) 368-5152

 

 

(914) 261-6572

jennifer.larson@bostonbeer.com

 

 

dave.dececco@bostonbeer.com

 

 

BOSTON BEER REPORTS

SECOND QUARTER FINANCIAL RESULTS

 

BOSTON (July 27, 2023) -- The Boston Beer Company, Inc. (NYSE: SAM), today reported financial results for its second quarter that ended July 1, 2023. Key results were:

 

Second Quarter 2023 Summary:

 

Depletions decreased 3%
Shipments decreased 4.5%
Net revenue decreased 2.1% to $603.3 million
Gross margin increased 230 basis points to 45.4%
Net income increased 8.8% to $58.0 million
Diluted income per share increased 9.5% to $4.72

 

Capital Structure

 

Generated $119.0 million in operating cash flow in the second quarter
Ended the second quarter with $207.8 million in cash and no debt
Repurchased $52.5 million in shares from January 3, 2023 to July 21, 2023

 

“We saw improvement in our financial performance and our volume benefited from the timing of the July 4th holiday in the second quarter, as we continue to execute our operational plans. We are proud to have just been named the number one beer industry supplier in the Tamarron Survey, the annual poll of beer distributors conducted by Tamarron Consulting, for the sixth year in a row,” said Chairman and Founder Jim Koch. “Our highly cash-generative business and strong balance sheet will not only fuel our 2023 brand investments, but have also enabled us to repurchase over $50 million in shares year-to-date.”

“As we expected, our second quarter performance reflected strong growth in Twisted Tea, offset by continuing challenges in the hard seltzer category, and we are reiterating our 2023 depletion and shipment expectations as well as our earnings guidance,” said President and CEO Dave Burwick. "Based on our second quarter financial performance, we plan to increase our balance of year spend behind both the Truly and Twisted Tea brands as we believe our messaging is effective and the business will respond over the short-and longer-term to these investments. We are focused on enhancing our productivity to continue to improve our gross margin and in turn incrementally invest to further strengthen our brands.”

Details of the results were as follows:

 

 


 

Second Quarter 2023 (13 weeks ended July 1, 2023) Summary of Results

 

Net revenue of $603.3 million decreased 2.1% compared to the prior year.

 

Depletions in the second quarter decreased 3% from the prior year, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, Hard Mountain Dew and Samuel Adams brands, partially offset by increases in its Twisted Tea and Dogfish Head brands.

Shipment volume for the quarter was approximately 2.3 million barrels, a 4.5% decrease from the prior year, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, Samuel Adams, Hard Mountain Dew and Dogfish Head brands, partially offset by increases in its Twisted Tea brand.

 

The timing of the July 4th holiday relative to the Company’s 2023 and 2022 fiscal calendars resulted in a depletion and shipment volume benefit in the second quarter of 2023. This volume benefit was the most significant factor in the difference between depletions and shipments on a fiscal calendar basis compared to a comparable weeks basis. On a comparable weeks basis, depletions declined approximately 7% and shipments declined 4.8%.

The Company believes distributor inventory as of July 1, 2023 averaged approximately three weeks on hand and was at an appropriate level for each of its brands, except for certain Twisted Tea brand packages that were below targeted levels due to higher than forecasted consumer demand.

Gross margin of 45.4% increased 230 basis points from the 43.1% margin realized in the prior year. Gross margin primarily benefited from strong price realization and procurement savings, which more than offset increased inflationary costs.

Advertising, promotional and selling expenses for the second quarter of 2023 decreased $5.5 million or 3.6% from the second quarter of 2022, due to decreased freight to distributors of $15.7 million from lower rates and volumes, partially offset by an increase in brand and selling costs of $10.2 million, mainly driven by higher salaries and benefits costs, increased consulting costs and increased media investments.

General and administrative expenses increased by $6.1 million or 15.6% from the second quarter of 2022, primarily due to increased consulting and legal costs and higher salaries and benefits costs.

The Company incurred impairment costs for brewery equipment of $1.5 million in the second quarter of 2023.

The Company’s effective tax rate for the second quarter was 27.5% compared to 24.7% in the prior year. In the second quarters of 2023 and 2022, the Company recorded a tax benefit of $0.03 and $0.08 per diluted share, respectively, resulting from the Accounting Standard "Employee Share-Based Payment Accounting" ("ASU 2016-09").

 

Year-to-date 2023 (26 weeks ended July 1, 2023) Summary of Results

 

Net revenue year-to-date of $1.013 billion decreased 3.2% compared to year-to-date 2022.

 

 


 

Depletions year-to-date decreased 4% from year-to-date 2022, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, Dogfish Head, and Samuel Adams brands, partially offset by increases in its Twisted Tea and Hard Mountain Dew brands. Comparable weeks depletions year-to-date decreased 7%.

Shipment volume year-to-date was approximately 3.9 million barrels, a 5.8% decrease from year-to-date 2022, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, Dogfish Head, and Samuel Adams brands, partially offset by increases in its Twisted Tea and Hard Mountain Dew brands. Comparable weeks shipments year-to-date decreased 7.6%.

Gross margin year-to-date of 42.4% increased from the 41.9% gross margin realized in year-to-date 2022, primarily due to price increases partially offset by higher inventory obsolescence costs, primarily related to rebranding Truly Vodka Seltzer to Truly Vodka Soda, and a non-recurring payment to a third-party contract brewery. Increased inflationary costs were offset by procurement savings.

Advertising, promotional and selling expenses year-to-date decreased $10.7 million or 3.8% from year-to-date 2022, primarily due to decreased freight to distributors of $28.3 million from lower rates and volumes, partially offset by an increase in brand investments of $17.6 million, mainly driven by increased salaries and benefits costs and higher investments in local marketing.

General and administrative expenses year-to-date increased by $10.0 million or 12.8% from year-to-date 2022, primarily due to increased consulting and legal costs.

In 2022, the Company recorded $5.3 million in contract termination costs, most of which was recorded in the first quarter, as a result of further negotiations with suppliers that eliminated certain future shortfall fees.

The Company’s effective tax rate year-to-date was 27.5% compared to 25.1% year-to-date 2022. Year-to-date 2023 and 2022, the Company recorded tax benefit of $0.01 per diluted share and a tax benefit of $0.05 per diluted share, respectively, resulting from ASU 2016-09.

 

Net income year-to-date of $49.1 million or $3.98 per share, represented a decrease of $2.3 million or $0.17 per diluted share compared to year-to-date 2022. This decrease between periods was primarily driven by lower revenue, partially offset by higher gross margins and lower operating expenses.

 

The Company expects that its July 1, 2023 cash balance of $207.8 million, together with its projected future operating cash flows and the unused balance on its $150.0 million line of credit, will be sufficient to fund future cash requirements.

 

During the 26-week period ended July 1, 2023 and the period from July 2, 2023 through July 21, 2023, the Company repurchased its Class A Common Stock in the amounts of $46.7 million and $5.8 million, respectively, for a total of $52.5 million year to date. As of July 21, 2023, the Company had approximately $307.0 million remaining on the $1.2 billion share buyback expenditure limit set by the Board of Directors.

 

Depletions Estimate

 

Year-to-date depletions through the 29-week period ended July 22, 2023 are estimated by the Company to have decreased approximately 6% from the prior year fiscal period.

 


 

 

Full-Year 2023 Projections

 

The Company is maintaining the full year volume and earnings guidance previously communicated in its April 25, 2023 Earnings Release and increasing its Advertising, Promotion and Selling Expense guidance. The Company experienced lower than expected freight costs year to date, which in addition to gross margin performance allows it to further support its brands. The Company’s actual 2023 results could vary significantly from the current projection and are highly sensitive to changes in volume projections particularly related to the hard seltzer category and supply chain performance as well as inflationary impacts. The 2023 fiscal year includes 52 weeks compared to the 2022 fiscal year which included 53 weeks.

 

Full Year 2023

Current Guidance

Prior Guidance

Depletions Decreases

(2%) to (8%)

(2%) to (8%)

Shipments Decreases

(2%) to (8%)

(2%) to (8%)

Price Increases

1% to 3%

1% to 3%

Gross Margin

41% to 43%

41% to 43%

Advertising, Promotion, and Selling Expense YoY Change ($ million)

$20 to $40

($5) to $15

Effective Tax Rate

28%

28%

EPS

$6.00 to $10.00

$6.00 to $10.00

Capital Spending ($ million)

$100 to $140

$100 to $140

 

Underlying the Company's current 2023 projections are the following full-year estimates and targets:

 

The Company’s guidance on depletions and shipments includes the estimated negative impact of approximately 1.0 percentage point due to the fact that fiscal 2022 had 53 weeks and fiscal 2023 will have 52 weeks. On a 52-week comparable basis the Company expects depletions and shipments to decrease 1% to 7%.
As anticipated, the Company finished the first half at the lower end of shipment guidance range on a comparable weeks basis. The Company estimates that second half shipments will benefit from the expected continued growth of Twisted Tea which is its largest brand, the lapping of last year’s Truly Margarita launch and additional investments in advertising spend in the second half of the year.
The Company’s guidance incorporates an expectation of shortfall fees, which primarily impact the fourth quarter. Therefore, the Company expects year-over-year gross margin improvement to be lower in the fourth quarter relative to earlier quarters.
The advertising, selling and promotional expense projection does not include any changes in freight costs for the shipment of products to the Company’s distributors.

 

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 31, 2022 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, Hard Mountain Dew, and Jim Beam Kentucky Coolers, 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.

 

Thursday, July 27, 2023

 

 

 

 

 

 

 

 


 

 

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(in thousands, except per share data)

 

 

 

(unaudited)

 

 

 

Thirteen weeks ended

 

 

Twenty-six weeks ended

 

 

 

July 1,
2023

 

 

June 25,
2022

 

 

July 1,
2023

 

 

June 25,
2022

 

Revenue

 

$

641,333

 

 

$

655,022

 

 

$

1,076,489

 

 

$

1,112,310

 

Less excise taxes

 

 

38,029

 

 

 

38,779

 

 

 

63,185

 

 

 

65,954

 

Net revenue

 

 

603,304

 

 

 

616,243

 

 

 

1,013,304

 

 

 

1,046,356

 

Cost of goods sold

 

 

329,141

 

 

 

350,468

 

 

 

583,479

 

 

 

607,629

 

Gross profit

 

 

274,163

 

 

 

265,775

 

 

 

429,825

 

 

 

438,727

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising, promotional, and selling expenses

 

 

149,362

 

 

 

154,883

 

 

 

274,790

 

 

 

285,498

 

General and administrative expenses

 

 

44,899

 

 

 

38,849

 

 

 

88,593

 

 

 

78,547

 

Contract termination costs and other

 

 

 

 

 

578

 

 

 

 

 

 

5,330

 

Impairment of brewery assets

 

 

1,532

 

 

 

80

 

 

 

2,016

 

 

 

121

 

Total operating expenses

 

 

195,793

 

 

 

194,390

 

 

 

365,399

 

 

 

369,496

 

Operating income

 

 

78,370

 

 

 

71,385

 

 

 

64,426

 

 

 

69,231

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

1,855

 

 

 

83

 

 

 

3,499

 

 

 

50

 

Other expense

 

 

(122

)

 

 

(601

)

 

 

(224

)

 

 

(701

)

Total other income (expense)

 

 

1,733

 

 

 

(518

)

 

 

3,275

 

 

 

(651

)

Income before income tax provision

 

 

80,103

 

 

 

70,867

 

 

 

67,701

 

 

 

68,580

 

Income tax provision

 

 

22,068

 

 

 

17,518

 

 

 

18,622

 

 

 

17,186

 

Net income

 

$

58,035

 

 

$

53,349

 

 

$

49,079

 

 

$

51,394

 

Net income per common share – basic

 

$

4.73

 

 

$

4.33

 

 

$

3.99

 

 

$

4.18

 

Net income per common share – diluted

 

$

4.72

 

 

$

4.31

 

 

$

3.98

 

 

$

4.15

 

Weighted-average number of common shares – basic

 

 

12,268

 

 

 

12,319

 

 

 

12,288

 

 

 

12,309

 

Weighted-average number of common shares – diluted

 

 

12,276

 

 

 

12,341

 

 

 

12,304

 

 

 

12,341

 

Net income

 

$

58,035

 

 

$

53,349

 

 

$

49,079

 

 

$

51,394

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

126

 

 

 

(71

)

 

 

144

 

 

 

(21

)

  Total other comprehensive income (loss), net of tax

 

 

126

 

 

 

(71

)

 

 

144

 

 

 

(21

)

  Comprehensive income

 

$

58,161

 

 

$

53,278

 

 

$

49,223

 

 

$

51,373

 

 

 


 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share data)

 

 

 

(unaudited)

 

 

 

 

 

 

July 1,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

207,755

 

 

$

180,560

 

Accounts receivable

 

 

117,067

 

 

 

56,672

 

Inventories

 

 

155,702

 

 

 

148,450

 

Prepaid expenses and other current assets

 

 

34,798

 

 

 

27,461

 

Income tax receivable

 

 

1,748

 

 

 

10,126

 

Total current assets

 

 

517,070

 

 

 

423,269

 

Property, plant, and equipment, net

 

 

656,359

 

 

 

667,909

 

Operating right-of-use assets

 

 

39,817

 

 

 

43,768

 

Goodwill

 

 

112,529

 

 

 

112,529

 

Intangible assets, net

 

 

76,197

 

 

 

76,324

 

Third-party production prepayments

 

 

46,827

 

 

 

61,339

 

Other assets

 

 

43,754

 

 

 

35,635

 

Total assets

 

$

1,492,553

 

 

$

1,420,773

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

120,780

 

 

$

84,248

 

Accrued expenses and other current liabilities

 

 

133,060

 

 

 

111,153

 

Current operating lease liabilities

 

 

8,967

 

 

 

8,866

 

Total current liabilities

 

 

262,807

 

 

 

204,267

 

Deferred income taxes, net

 

 

95,415

 

 

 

96,592

 

Non-current operating lease liabilities

 

 

40,755

 

 

 

45,274

 

Other liabilities

 

 

6,386

 

 

 

6,091

 

Total liabilities

 

 

405,363

 

 

 

352,224

 

Stockholders' Equity:

 

 

 

 

 

 

Class A Common Stock, $0.01 par value; 22,700,000 shares authorized; 10,160,485 and 10,238,009 issued and outstanding as of July 1, 2023 and December 31, 2022, respectively

 

 

102

 

 

 

102

 

Class B Common Stock, $0.01 par value; 4,200,000 shares authorized; 2,068,000
issued and outstanding as of July 1, 2023 and December 31, 2022

 

 

21

 

 

 

21

 

Additional paid-in capital

 

 

646,086

 

 

 

629,515

 

Accumulated other comprehensive loss

 

 

(66

)

 

 

(210

)

Retained earnings

 

 

441,047

 

 

 

439,121

 

Total stockholders' equity

 

 

1,087,190

 

 

 

1,068,549

 

Total liabilities and stockholders' equity

 

$

1,492,553

 

 

$

1,420,773

 

 

 


 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

 

 

(unaudited)

 

 

 

Twenty-six weeks ended

 

 

 

July 1,
2023

 

 

June 25,
2022

 

Cash flows provided by operating activities:

 

 

 

 

 

 

Net income

 

$

49,079

 

 

$

51,394

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

43,602

 

 

 

39,909

 

Impairment of brewery assets

 

 

2,016

 

 

 

121

 

Gain on disposal of property, plant, and equipment

 

 

(195

)

 

 

(39

)

Change in right-of-use assets

 

 

3,844

 

 

 

3,990

 

Stock-based compensation expense

 

 

8,266

 

 

 

7,730

 

Deferred income taxes

 

 

(1,177

)

 

 

2,557

 

Other non-cash (income) expense

 

 

(88

)

 

 

54

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(60,307

)

 

 

(64,469

)

Inventories

 

 

(9,376

)

 

 

(13,014

)

Prepaid expenses, income tax receivable, and other current assets

 

 

1,041

 

 

 

46,715

 

Third-party production prepayments

 

 

14,512

 

 

 

14,067

 

Other assets

 

 

(5,995

)

 

 

295

 

Accounts payable

 

 

38,872

 

 

 

48,337

 

Accrued expenses, other current liabilities, and other liabilities

 

 

21,354

 

 

 

(13,275

)

Operating lease liabilities

 

 

(4,311

)

 

 

(2,866

)

Net cash provided by operating activities

 

 

101,137

 

 

 

121,506

 

Cash flows used in investing activities:

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(34,809

)

 

 

(50,804

)

Proceeds from disposal of property, plant, and equipment

 

 

195

 

 

 

506

 

Net cash used in investing activities

 

 

(34,614

)

 

 

(50,298

)

Cash flows (used in) provided by financing activities:

 

 

 

 

 

 

Repurchases of Class A common stock

 

 

(45,887

)

 

 

 

Proceeds from exercise of stock options and sale of investment shares

 

 

9,466

 

 

 

4,610

 

Cash paid on finance leases

 

 

(797

)

 

 

(870

)

Line of credit borrowings

 

 

 

 

 

30,000

 

Line of credit repayments

 

 

 

 

 

(30,000

)

Payment of tax withholding on stock-based payment awards and investment shares

 

 

(2,110

)

 

 

(3,468

)

Net cash (used in) provided by financing activities

 

 

(39,328

)

 

 

272

 

Change in cash and cash equivalents and restricted cash

 

 

27,195

 

 

 

71,480

 

Cash and cash equivalents and restricted cash at beginning of year

 

 

180,560

 

 

 

66,321

 

Cash and cash equivalents at end of period

 

$

207,755

 

 

$

137,801

 

 

 

 

 

 

 

 

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

 

are available on the Internet at www.bostonbeer.com