Boston Beer Co Inc (SAM) Q3 Earnings: Revenue Growth Amid Depletions and Shipments Decrease
Depletions decreased by 6% on a fiscal calendar basis and approximately 3% on a comparable week basis
Shipments decreased by 2.5% on a fiscal calendar basis and 1.8% on a comparable week basis
Net revenue increased by 0.9% to $601.6 million
Gross margin increased by 250 basis points to 45.7%
Released on October 26, 2023, Boston Beer Co Inc (NYSE:SAM)'s third-quarter earnings report showed a slight increase in net revenue despite a decrease in depletions and shipments. The company's net revenue increased by 0.9% to $601.6 million, while depletions decreased by 6% on a fiscal calendar basis and approximately 3% on a comparable week basis. Shipments also decreased by 2.5% on a fiscal calendar basis and 1.8% on a comparable week basis.
Financial Highlights
The company's gross margin increased by 250 basis points to 45.7%. Net income was reported at $45.3 million, which includes non-cash brand impairment charges of $16.4 million and the related tax benefit. Diluted earnings per share were $3.70, including non-cash brand impairment charges of $0.96 per share.
On the capital structure front, Boston Beer Co Inc (NYSE:SAM) generated $131.3 million in operating cash flow in the third quarter and ended the period with $310.8 million in cash and no debt. The company repurchased $69.4 million in shares from January 3, 2023, to October 20, 2023.
Company's Commentary
On a comparable weeks basis, which adjusts for the timing impact of the July 4th holiday, our depletions trends improved from a decrease of 7% in the second quarter to a decrease of 3% in the third quarter. We continue to execute our operational plans and grew revenue, gross margin and operating cash flow in the quarter which enabled us to repurchase over $69 million in shares year-to-date, said Chairman and Founder Jim Koch.
We are pleased with our performance in the third quarter as momentum on Twisted Tea remained strong and we continued to show progress on our margin enhancement plans while increasing brand investment. Based on our results year-to-date and our expectations for the fourth quarter, we are narrowing our revenue and EPS guidance ranges, said President and CEO Dave Burwick.
Looking Forward
For the full year 2023, the company updated its volume and earnings guidance. Depletions and shipments are expected to decrease by 5% to 7%, while price increases are projected to be between 2% and 3%. The gross margin is expected to be between 42% and 43%, and the effective tax rate is projected to be 28%. The GAAP EPS is expected to be between $6.04 and $8.04.
The company's strong balance sheet and cash-generative business model allow it to invest in its brands as it works to return to long-term sustainable growth. The company plans to continue investing behind the Twisted Tea and Truly brands while also nurturing innovation across Beyond Beer categories to drive long-term growth.
Explore the complete 8-K earnings release (here) from Boston Beer Co Inc for further details.
This article first appeared on GuruFocus.
