Boston Beer Q3 2020 Earnings Report
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%.
Boston Beer
Boston Beer
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.
- Increased usage of third-party breweries and an increasing percentage of variety packs in the Company’s overall product mix come at a higher incremental cost.
- COVID-19 and the related On-Premise closures have negatively impacted Samuel Adams, Angry Orchard and Dogfish Head brands.