Boston Beer Reports Increases in Second Quarter Volume, Revenue and Earnings
BOSTON, Jul 27, 2004 /PRNewswire-FirstCall via COMTEX/ -- The Boston Beer Company, Inc. (NYSE: SAM) today reports increases in second quarter 2004 volume, revenue and earnings compared to the second quarter 2003.
2nd Quarter Results
For the 13-week period ended June 26, 2004, The Boston Beer Company recorded net sales of $62.0 million, a 10.1% increase from the second quarter in 2003. Net revenue per barrel increased slightly during the quarter due to price increases of approximately 1.0%, offset by a shift in the package mix. As reflected on the following chart, reported sales volume for the period increased to 363,000 barrels.
(in barrels) Q2-2004 Q2-2003 %Chg
Total Boston Beer Brands 359,000 328,000 9.5%
3rd Party Contract Brewing 4,000 2,000 100%
Total Company 363,000 330,000 10.0%
The Company recorded net income of $5.4 million or $.37 per diluted share for the quarter versus net income of $3.1 million and $.20 per diluted share for the same period last year. Gross margin as a percentage of net sales was 60.5% as compared to 61.0% in the prior year second quarter. This decrease is due to an increase in packaging costs, partially offset by price increases. Operating expenses for the quarter were down 6.2% in comparison to the same period last year, driven by more effective purchasing of media in 2004, as well as a decrease in point-of-sale expenses related to the purchase of new tap handles in 2003.
Based on the information available to the Company, distributor sales of Boston Beer brands to retail (depletions) during the second quarter 2004 totaled 326,000 barrels, approximately a 2% increase from the same period in 2003. Shipments and orders in-hand suggest that shipments of Boston Beer brands for July and August 2004 will be essentially flat as compared to the same periods last year. Actual shipments for the current quarter may differ, however, and no inferences should be drawn with respect to shipments in future periods.
Year to Date Results
For the 26-week period ended June 26, 2004, Boston Beer Company recorded net sales of $106.7 million, a 5.0% increase from the same period in 2003. Net revenue per barrel increased by 0.6% during the six months due to price increases, offset by a package mix shift. As reflected on the following chart, reported sales volume for the period increased to 626,000 barrels.
(in barrels) 6 MOS-2004 6 MOS -2003 %Chg
Total Boston Beer Brands 620,000 596,000 4.0%
3rd Party Contract Brewing 6,000 4,000 50.0%
Total Company 626,000 600,000 4.3%
Based on the information available to the Company, distributor sales of Boston Beer brands to retail (depletions) totaled 577,000 barrels, approximately a 1% increase over 2003.
The Company recorded $6.6 million in net income or $.46 per diluted share for the six months versus net income of $3.0 million and $.19 per diluted share for the same period last year. Gross margins as a percent of net sales were 60.1% for the first six months of 2004 as compared to 59.9% in the same period 2003. Advertising, promotional and selling expenditures decreased by $2.6 million to $46.7 million for the period ended June 26, 2004. The decrease was primarily driven by more effective purchasing of television advertising in 2004 and lower point-of-sale expenditures in 2004 as compared to the same period in 2003.
The Company's effective tax rate was 37.8% for the six months ended June 26, 2004, down from 38.0% during the same period 2003. The rate recorded through the first six months 2004 is expected to approximate that for the full year 2004.
Jim Koch, Chairman of The Boston Beer Company, said, "We continue to be pleased with the Samuel Adams Boston Lager advertising campaign, as we have seen increases of approximately 5% in combined depletions for Lager and Seasonals in the first half of 2004. Sam Adams Light appears to have stabilized although we will continue to face tough volume comparison through the fourth quarter. We are currently finalizing the development of a new television advertising campaign for Sam Adams Light, and we anticipate rolling this campaign out in the second half of 2004 with additional investment on top of our existing campaign."
Martin Roper, Boston Beer President and CEO, said, "Continued health of Lager and Seasonals offset the declines in Light, and generated growth in both sales and depletions year to date. While shipments of core products exceeded depletions year to date by approximately 43,000 barrels, this inventory build at wholesaler appears reasonable for this time of year in support of the summer selling season."
Mr. Roper also reported on the Company's financial performance and outlook, "We are pleased with our overall financial performance in the second quarter of 2004. Our gross margins remain strong through June compared to 2003. During the second quarter, we experienced some cost pressures in packaging materials, utility costs and freight costs. Based on current market pricing conditions and the current cost environment, we expect gross margins for the full year 2004 to approximate 2003. Based on current information, for full year 2004, we expect double-digit earnings growth over 2003. This could be adversely affected if cost pressures or market conditions change."
The Boston Beer Company's balance sheet remains strong with $55.1 million in cash and short-term investments and no debt. The Company's cash flow also remains strong, delivering $12.0 million in operating cash flow during the first six months of 2004. The Company is continually evaluating options for utilizing its cash to increase shareholder value for the long term. The Company has $5.2 million remaining under an $80 million board authorized spending limit related to the Stock Repurchase Program. Through July 26, 2004 the Company has repurchased a total of 7.1 million shares of Class A Common Stock for an aggregate purchase price of $74.8 million.
The Boston Beer Company is America's leading brewer of world-class beer. Founded in 1984 by sixth-generation brewer Jim Koch, the Company has won more than 650 international awards for its better-tasting beers. Samuel Adams Boston Lager(R) is the Company's flagship brand, celebrated worldwide for its high-quality ingredients and traditional brewing techniques. The result is a beer renowned by drinkers for its full flavor, balance, complexity, and consistent quality. For more information, visit the web-site at http://www.samadams.com or visit http://www.bostonbeer.com for financial information.
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 27, 2003 and for December 28, 2002. Copies of these documents may be obtained by visiting the Company's website at http://www.bostonbeer.com or contacting the Company or the SEC.
Tuesday, July 27, 2004
THE BOSTON BEER COMPANY, INC.
Financial Results
(In thousands, except per share data)
Operating Results:
(unaudited) (unaudited)
Quarter Ended 6 Months Ended
June 26, June 28, June 26, June 28,
2004 2003 2004 2003
Barrels sold 363 330 626 600
Gross revenue $68,520 $62,161 $117,827 $112,284
Less excise taxes 6,503 5,842 11,155 10,645
Net revenue 62,017 56,319 106,672 101,639
Cost of goods sold 24,504 21,965 42,577 40,737
Gross profit 37,513 34,354 64,095 60,902
Advertising, promotional and
selling expenses 25,217 26,006 46,739 49,316
General and administrative
expenses 3,630 3,669 6,839 7,472
Total operating expenses 28,847 29,675 53,578 56,788
Operating income 8,666 4,679 10,517 4,114
Interest income, net 187 260 387 654
Other (expense) income, net (231) 4 (239) (4)
Income before taxes 8,622 4,943 10,665 4,764
Provision for income taxes 3,259 1,881 4,031 1,811
Net income $5,363 $3,062 $6,634 $2,953
Net income per share - basic $0.38 $0.20 $0.47 $0.19
Net income per share - diluted $0.37 $0.20 $0.46 $0.19
Weighted average number of common
shares - basic 14,126 15,087 14,073 15,411
Weighted average number of common
shares - diluted 14,465 15,306 14,406 15,649
Consolidated Balance Sheets:
(unaudited)
June 26, December 27,
2004 2003
Assets
Current Assets:
Cash and cash equivalents $52,068 $27,792
Short-term investments 3,001 15,098
Accounts receivable, net
of allowance for doubtful
accounts of $515 and $450 as of
June 26, 2004 and December 28, 2002,
respectively 15,273 10,432
Inventories 9,180 9,890
Prepaid expenses 1,044 1,126
Deferred income taxes 1,138 1,177
Other current assets 443 2,304
Total current assets 82,147 67,819
Property, plant and equipment, net 17,022 17,059
Other assets 1,148 1,099
Goodwill 1,377 1,377
Total assets $101,694 $87,354
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $8,176 $6,395
Accrued expenses 18,767 15,504
Total current
liabilities 26,943 21,899
Long-term deferred income taxes 2,190 2,191
Other long-term liabilities 693 740
Commitments and Contingencies
Stockholders' Equity
Class A Common Stock, $.01
par value; 22,700,000 shares
authorized; 17,152,835 and
16,945,418 issued
as of June 26, 2004
and December 27,
2003, respectively 172 169
Class B Common Stock, $.01
par value; 4,200,000 shares
authorized; 4,107,355 issued and
outstanding 41 41
Additional paid-in capital 65,481 62,517
Unearned compensation (337) (229)
Other comprehensive income (104) 45
Retained earnings 81,392 74,758
Treasury stock, at cost;
7,102,467 shares as
of June 26, 2004 and
December 27, 2003 (74,777) (74,777)
Total stockholders' equity 71,868 62,524
Total liabilities and
stockholders' equity $101,694 $87,354
Consolidated Statements of Cash Flows:
(unaudited)
Six Months Ended
June 26, June 28,
2004 2003
Cash flows from operating
activities:
Net income $6,634 $2,953
Adjustments to reconcile net
income to net cash from
operating activities:
Depreciation and
amortization 2,526 2,788
Loss on disposal of fixed assets - 47
Bad debt expense
(recovery) 65 (39)
Realized loss (gain) on
sale of short-term
investments 229 (28)
Stock option compensation expense 63 43
Changes in assets and
liabilities:
Accounts receivable (4,906) (5,086)
Inventories 82 (2,259)
Prepaid expenses 710 101
Other current assets 1,643 (943)
Deferred taxes 32 (796)
Other assets (121) -
Accounts payable 1,781 1,951
Accrued expenses 3,263 (1,339)
Other long-term
liabilities (46) (47)
Net cash from (used
in) operating
activities 11,955 (2,654)
Cash flows from investing
activities:
Purchases of property, plant
and equipment (2,051) (1,225)
Proceeds on disposal of fixed
assets - 14
Purchases of available-for-sale
securities (6,256) (3,560)
Purchases of held-to-maturity
securities (3,001) -
Proceeds from the sale of
available-for-sale securities 20,983 4,610
Net cash from (used
in) investing
activities 9,675 (161)
Cash flows from financing
activities:
Purchase of treasury stock - (17,359)
Proceeds from exercise of stock
options 2,534 510
Net proceeds from the sale of
Investment Shares 112 106
Net cash from (used
in) provided by
financing activities 2,646 (16,743)
Change in cash and cash equivalents 24,276 (19,558)
Cash and cash equivalents at
beginning of period 27,792 20,608
Cash and cash equivalents at end of
period $52,068 $1,050
Supplemental disclosure of cash flow
information:
Interest paid $- $-
Taxes paid $533 $4,356
SOURCE Boston Beer Company
Michelle Sullivan of Boston Beer, +1-617-368-5165
http://www.samadams.com