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Sep 26, 2020
Boston Beer Q3 2020 Earnings Report
Boston Beer's Q3 2020 results reflected a significant increase in net revenue and net income compared to the same period last year, driven by shipment growth and depletions, partially offset by lower gross margins and increased operating expenses.
Key Takeaways
Boston Beer reported a strong third quarter with a 30.2% increase in net revenue to $492.8 million and an 80.6% increase in net income to $80.8 million, driven by shipment growth of 30.5%. Earnings per diluted share increased by 78.4% to $6.51.
Depletions increased 36% due to the growth of Truly Hard Seltzer and Twisted Tea brands, offset by declines in Samuel Adams, Angry Orchard, and Dogfish Head brands.
Shipments increased 30.5% to approximately 2.1 million barrels.
Gross margin decreased to 48.8% due to higher processing costs from increased third-party brewery production.
The company estimates full-year 2020 shipments and depletions growth to be between 37% and 42%.
Forward Guidance
The Company is expecting all of their brands to grow in 2021 and are targeting overall volume growth rates to be between 35% and 45%.
Positive Outlook
- Depletions and shipments percentage increase between 35% and 45%.
- National price increases of between 1% and 2%.
- Gross margin of between 46% and 48%.
- Increased investments in advertising, promotional and selling expenses of between $130 million and $150 million.
- Non-GAAP effective tax rate of approximately 26%, excluding the impact of ASU 2016-09.
Challenges Ahead
- Estimated capital spending of between $300 million and $400 million, which could be significantly higher, if deemed necessary to meet future growth.
- Gross margins and gross margin expectations will be negatively impacted until the volume growth stabilizes.
- Higher processing costs due to increased production at third party breweries.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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