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Dec 28, 2019
Boston Beer Q4 2019 Earnings Report
Reported a decrease in net income due to increases in advertising, promotional and selling expenses and lower gross margins, which were partially offset by increased revenue.
Key Takeaways
The Boston Beer Company reported a 33.8% increase in fourth-quarter net revenue to $301.3 million, driven by a 31.7% increase in shipments. However, net income decreased to $13.8 million, or $1.12 per diluted share, due to higher advertising, promotional, and selling expenses, and lower gross margins.
Depletions increased 25% from the comparable 13-week period in 2018.
Excluding the addition of the Dogfish Head brands, depletions increased 19% from the comparable 13-week period in the prior year.
Shipment volume was approximately 1.26 million barrels, a 31.7% increase from the comparable 13-week period in 2018.
Gross margin at 47.4% represented a decrease from the 51.9% margin realized in the fourth quarter of 2018, primarily as a result of higher processing costs due to increased production at third-party breweries and higher temporary labor requirements at Company-owned breweries, partially offset by price increases and cost saving initiatives at Company-owned breweries.
Forward Guidance
The Company currently projects full year 2020 Non-GAAP earnings per diluted share of between $10.70 and $11.70.
Positive Outlook
- Depletions and shipments percentage increase of between 15% and 25%.
- National price increases of between 1% and 3%.
- Gross margin of between 49% and 51%.
- Increased investment in advertising, promotional and selling expenses of between $80 million and $90 million.
- Estimated capital spending of between $135 million and $155 million, which could be significantly higher, if deemed necessary to meet future growth.
Challenges Ahead
- Company’s actual 2020 earnings per share could vary significantly from the current projection.
- This does not include any changes in freight costs for the shipment of products to the Company’s distributors.
- Non-GAAP effective tax rate of approximately 27%, excluding the impact of ASU 2016-09.
Historical Earnings Impact
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Avg. Return Before/After Earnings
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