BOSTON, April 29, 2015
/PRNewswire/ -- The Boston Beer Company, Inc. (NYSE: SAM) reported
first quarter 2015 net revenue of $199.5
million, an increase of $15.7
million, or 8.5%, over the same period last year, mainly due
to core shipment growth of 6%. Net income for the first quarter was
$13.7 million, or $1.00 per diluted share, an increase of
$5.4 million, or $0.38 per diluted share, from the first quarter
of 2014. This increase was primarily due to shipment
increases and slightly improved gross margins.
Highlights of this release include:
- Depletions for the 13 week period ending March 28, 2015 grew by 8% from the comparable 13
week period ending March 29, 2014 and
full year estimated depletion growth remains unchanged at between
8% and 12%.
- The Company achieved price increases of approximately 2% during
the quarter.
- First quarter gross margin was 50%, the Company maintains its
full year gross margin target of between 51% and 53%.
- Advertising, promotional and selling expense decreased by
$1.0 million or 2% in the quarter
primarily due to the timing of spend related to new product
launches during the first quarter of 2014.
- Estimated full year 2015 earnings per diluted share at
$7.10 to $7.50 remain unchanged.
- Estimated full year 2015 capital spending remains unchanged at
between $80 million to $110
million.
Jim Koch, Chairman and Founder of
the Company, commented, "I am proud that we continue to lead the
craft industry in both innovation and variety. In the first
quarter, our spring seasonal, Samuel Adams Cold Snap, a unique and
approachable white ale brewed with a blend of exotic spices was
well received by drinkers, retailers and distributors. Late in the
first quarter, we had a smooth transition from Cold Snap to our
Summer Seasonal, Samuel Adams Summer
Ale, which is now in its twentieth year and still the
leading Summer Seasonal beer in the craft industry. During
the quarter, we rolled out our new session IPA, Samuel Adams Rebel
Rider IPA, and our new double IPA, Samuel Adams Rebel Rouser IPA
which complement our Samuel Adams Rebel IPA, a West Coast style IPA
brewed with hops from the Pacific Northwest. Rebel continues
to receive great support from distributors and on and off-premise
retailers. We are pleased with the health of our brand
portfolio and remain positive about the future of craft beer."
Martin Roper, the Company's
President and CEO, stated, "We are pleased with the start of the
year and the continued growth of our business. In the first
quarter, our depletions growth of 8% benefited from strength in our
Angry Orchard, Twisted Tea and Traveler brands that offset slight
declines in some of our Samuel Adams styles, as the comparables
were tough due to our 30th Anniversary celebration, the
rollout of Samuel Adams Rebel IPA, and the launch of Samuel Adams
Cold Snap all in the first quarter last year. We continue to
invest in our brands and in new opportunities such as Traveler, and
we will increase investments in advertising, promotional and
selling expenses commensurate with the opportunities and the
increased competition that we see. Our national rollout of
our Traveler brand is currently in progress and supported by
national media. Thus far, the rollout is being well supported by
distributors, retailers and drinkers, but it is too early to tell
how successful the rollout may be. We will continue to look
for complementary opportunities to leverage our capabilities,
provided that they do not distract us from our primary focus on our
Samuel Adams brand."
Mr. Roper went on to say, "Our supply chain focus for the year
continues to be taking greater advantage of our increased capacity
through improved training, stable scheduling, and operating
efficiency and reliability improvements. We will continue to make
supply chain improvements intended to improve the freshness of our
beers and enhance our customer service. Our sales focus for
2015 is to ensure successful second year growth of our 2014
launches and to support the national launch of our Traveler brand.
Looking forward, we expect to maintain a high level of brand
investment, as we pursue sustainable growth and innovation. We
remain 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."
1st Quarter 2015 Summary of Results
Depletions grew 8% from the comparable 13-week period in 2014,
primarily due to depletion increases across our Angry
Orchard®, Twisted Tea® and
Traveler® brands, partially offset by slight declines in
our Samuel Adams® brand.
Core shipment volume was approximately 885,000 barrels, a 6%
increase compared to the first quarter of 2014.
The Company believes distributor inventory at March 28, 2015 was at an appropriate level.
Inventory at distributors participating in the Freshest Beer
Program at March 28, 2015 decreased
slightly in terms of days of inventory on hand when compared to
March 29, 2014. The Company has over
68% of its volume on the Freshest Beer Program and it believes
participation in the Program could reach between 72% and 78% of its
volume by the end of 2015.
Gross margin increased to 50% compared to 49% in the first
quarter of 2014. The margin increase was a result of price
increases partially offset by product mix effects.
Advertising, promotional and selling expenses decreased
$1.0 million compared to the first
quarter of 2014. The decrease resulted primarily from decreases in
point of sale and local marketing due to the timing of new product
launches that were only partially offset by increased investments
in media advertising and higher costs of freight to distributors
attributable to higher volumes.
General and administrative expenses increased by $1.3 million over the first quarter of 2014,
primarily due to increases in salary costs.
The Company expects that its March 28,
2015 cash balance of $122.2
million, together with its future operating cash flows and
its available $150.0 million line of
credit, will be sufficient to fund future cash requirements.
During the first quarter and the period from March 29, 2015 through April 24, 2015, the Company repurchased
approximately 53,000 shares of its Class A Common Stock for an
aggregate purchase price of approximately $14.3 million. As of April 24, 2015 the Company had approximately
$28.3 million remaining on the
$350.0 million share buyback
expenditure limit set by the Board of Directors.
Depletion estimates
Year-to-date depletions through the 16 weeks ended April 18, 2015 are estimated by the Company to be
up approximately 8% from the comparable period in 2014.
Fiscal 2015 Outlook
The Company has left unchanged its projected 2015 earnings per
diluted share of between $7.10 and
$7.50. The Company's actual 2015 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 percentage growth of between 8% and
12%.
- National price increases of between 1% and 2%.
- Gross margin of between 51% and 53%.
- Increased investment in advertising, promotional and selling
expenses of between $25 million and $35
million. This does not include any increases in
freight costs for the shipment of products to the Company's
distributors.
- Increased expenditures of between $10
million to $15 million for continued investment in Traveler
and other existing brands developed by Alchemy & Science
brands, which are included in the full-year estimated increases in
advertising, promotional and selling expenses. These
estimates could change significantly and 2015 volume from these
brands is unlikely to cover these and other potential Alchemy &
Science brand investments.
- Effective tax rate of approximately 38% based upon current tax
laws and underlying regulations.
- Estimated capital spending of between $80 million and $110 million, which could be
higher, depending on capital required to meet future growth. These
estimates include capital investments for existing Alchemy &
Science projects of between $3 million and
$5 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 60 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 Boston Beer Company is America's largest-selling craft
brewer, its Samuel Adams beers account for only a little over 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, and
www.alchemyandscience.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 27, 2014 and December 28, 2013. 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. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Thirteen weeks
ended
|
|
|
|
|
|
March
28,
|
|
March
29,
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Barrels
sold
|
|
|
889
|
|
838
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
212,834
|
|
$
197,370
|
|
|
Less excise
taxes
|
|
|
13,331
|
|
13,525
|
|
|
Net revenue
|
|
|
199,503
|
|
183,845
|
|
|
Cost of goods
sold
|
|
|
99,888
|
|
93,326
|
|
|
Gross
profit
|
|
|
99,615
|
|
90,519
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Advertising, promotional and selling expenses
|
|
|
60,247
|
|
61,257
|
|
|
General
and administrative expenses
|
|
|
17,230
|
|
15,871
|
|
|
Total operating
expenses
|
|
|
77,477
|
|
77,128
|
|
|
Operating
income
|
|
|
22,138
|
|
13,391
|
|
|
Other expense,
net:
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(3)
|
|
(4)
|
|
|
Other expense,
net
|
|
|
(325)
|
|
(136)
|
|
|
Total other expense,
net
|
|
|
(328)
|
|
(140)
|
|
|
Income before income
tax provision
|
|
|
21,810
|
|
13,251
|
|
|
Provision for income
taxes
|
|
|
8,067
|
|
4,936
|
|
|
Net income
|
|
|
$
13,743
|
|
$
8,315
|
|
|
|
|
|
|
|
|
|
|
Net income per common
share - basic
|
|
|
$
1.04
|
|
$
0.64
|
|
|
Net income per common
share - diluted
|
|
|
$
1.00
|
|
$
0.62
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
number of common shares - Class A basic
|
|
|
9,598
|
|
8,999
|
|
|
Weighted-average
number of common shares - Class B basic
|
|
|
3,617
|
|
3,905
|
|
|
Weighted-average
number of common shares - diluted
|
|
|
13,633
|
|
13,435
|
|
|
Other comprehensive
income, net of tax:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
|
6
|
|
-
|
|
|
Comprehensive
income
|
|
|
$
13,749
|
|
$
8,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
(in thousands, except
share data)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
March
28,
|
|
December
27,
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
122,156
|
|
$
76,402
|
|
|
Accounts receivable, net of allowance for doubtful accounts
of $102 and
|
|
|
|
|
|
$144 as of March 28, 2015 and December 27, 2014,
respectively
|
|
44,346
|
|
36,860
|
|
|
Inventories
|
|
|
55,796
|
|
51,307
|
|
|
Prepaid expenses and other current assets
|
|
|
10,428
|
|
12,887
|
|
|
Income tax receivable
|
|
|
8,996
|
|
21,321
|
|
|
Deferred income taxes
|
|
|
8,685
|
|
8,685
|
|
|
Total current assets
|
|
|
250,407
|
|
207,462
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
|
391,366
|
|
381,569
|
|
|
Other assets
|
|
|
10,168
|
|
12,447
|
|
|
Goodwill
|
|
|
3,683
|
|
3,683
|
|
|
Total assets
|
|
|
$
655,624
|
|
$
605,161
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
39,361
|
|
$
35,576
|
|
|
Current portion of debt and capital lease obligations
|
|
|
58
|
|
55
|
|
|
Accrued expenses and other current liabilities
|
|
|
62,638
|
|
74,539
|
|
|
Total current liabilities
|
|
|
102,057
|
|
110,170
|
|
|
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
|
50,712
|
|
50,717
|
|
|
Debt and capital lease
obligations, less current portion
|
|
|
471
|
|
528
|
|
|
Other liabilities
|
|
|
7,265
|
|
7,606
|
|
|
Total liabilities
|
|
|
160,505
|
|
169,021
|
|
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
|
|
|
Class A Common Stock, $.01 par value; 22,700,000 shares
authorized;
|
|
|
|
|
|
|
9,677,950 and 9,452,375 issued and outstanding as of March 28,
2015
|
|
|
|
|
|
|
and December 27, 2014, respectively
|
|
|
97
|
|
95
|
|
|
Class B Common Stock, $.01 par value; 4,200,000 shares
authorized;
|
|
|
|
|
|
|
3,617,355 issued and outstanding as of March 28, 2015
and
|
|
|
36
|
|
36
|
|
|
December 27, 2014
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
279,627
|
|
224,909
|
|
|
Accumulated other comprehensive loss, net of tax
|
|
|
(1,127)
|
|
(1,133)
|
|
|
Retained earnings
|
|
|
216,486
|
|
212,233
|
|
|
Total stockholders' equity
|
|
|
495,119
|
|
436,140
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
655,624
|
|
$
605,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THE BOSTON BEER
COMPANY, INC. AND SUBSIDIARIES
|
|
|
CONSOLIDATED
STATEMENTS OF CASHFLOWS
|
|
(in
thousands)
|
|
|
(unaudited)
|
|
|
|
|
|
Thirteen weeks
ended
|
|
|
|
|
|
March
28,
|
|
March
29,
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Cash flows
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
Net income
|
|
|
$
13,743
|
|
$
8,315
|
|
|
Adjustments to reconcile net
income to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
Depreciation and amortization
|
|
|
10,312
|
|
7,195
|
|
|
Loss on disposal of property, plant and equipment
|
|
|
335
|
|
-
|
|
|
Bad debt (recovery) expense
|
|
|
(42)
|
|
175
|
|
|
Stock-based compensation expense
|
|
|
1,621
|
|
1,936
|
|
|
Excess tax benefit from stock-based compensation
arrangements
|
|
|
(12,538)
|
|
(8,060)
|
|
|
Deferred income taxes
|
|
|
(5)
|
|
(97)
|
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(7,444)
|
|
(4,141)
|
|
|
Inventories
|
|
|
(4,489)
|
|
(4,610)
|
|
|
Prepaid expenses, income tax receivable and other assets
|
|
|
29,535
|
|
(5,869)
|
|
|
Accounts payable
|
|
|
2,138
|
|
(1,011)
|
|
|
Accrued expenses and other current liabilities
|
|
|
(12,108)
|
|
(2,740)
|
|
|
Other liabilities
|
|
|
167
|
|
97
|
|
|
Net cash provided by (used in) operating activities
|
|
|
21,225
|
|
(8,810)
|
|
|
|
|
|
|
|
|
|
|
Cash flows used in
investing activities:
|
|
|
|
|
|
|
|
Purchases of property, plant
and equipment
|
|
|
(18,688)
|
|
(44,170)
|
|
|
Cash paid for other
intangible assets
|
|
|
(100)
|
|
-
|
|
|
Decrease in restricted
cash
|
|
|
57
|
|
55
|
|
|
Net cash used in investing activities
|
|
|
(18,731)
|
|
(44,115)
|
|
|
|
|
|
|
|
|
|
|
Cash flows
provided by financing activities:
|
|
|
|
|
|
|
|
Repurchase of Class A Common
Stock
|
|
|
(9,490)
|
|
-
|
|
|
Proceeds from exercise of
stock options
|
|
|
39,745
|
|
22,996
|
|
|
Cash paid on note
payable
|
|
|
(54)
|
|
(53)
|
|
|
Excess tax benefit from
stock-based compensation arrangements
|
|
|
12,538
|
|
8,060
|
|
|
Net proceeds from sale of
investment shares
|
|
|
521
|
|
374
|
|
|
Net cash provided by financing activities
|
|
|
43,260
|
|
31,377
|
|
|
|
|
|
|
|
|
|
|
Change in cash and
cash equivalents
|
|
|
45,754
|
|
(21,548)
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at beginning of year
|
|
|
76,402
|
|
49,524
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
|
$
122,156
|
|
$
27,976
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
|
Income taxes
paid
|
|
|
$
417
|
|
$
1,951
|
|
|
Increase in accounts
payable for purchase of property, plant and equipment
|
|
$
1,647
|
|
$
5,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Copies of The
Boston Beer Company's press releases, including quarterly financial
results,
|
|
|
are available
on the Internet at www.bostonbeer.com
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/boston-beer-reports-first-quarter-2015-results-300074545.html
SOURCE The Boston Beer Company, Inc.