Boston Beer reports a surprise profit as Twisted Tea shipments keep growing

By Tomi Kilgore

Stock soars, as depletions trend flat and as price increases boost gross margins

Shares of Boston Beer Co. saw a nice pop Friday, after the beer brewer reported a surprise first-quarter profit and revenue that rose well above forecasts, fueled by volume increases, pricing and lower returns.

The company, with brands including Samuel Adams, Twisted Tea Hard Iced Tea, Truly Hard Seltzer and Dogfish Head, also reiterated its full-year guidance for profit and volume growth.

Boston Beer stock (SAM) shot up about 9.7% in premarket trading. Thursday's closing price of $287.27 was 4.5% above the April 16 five-year closing low of $274.92.

The stock was headed for the biggest one-day gain since it rallied 16.8% on July 28, 2023.

The company said late Thursday that it swung to net income of $12.6 million, or $1.04 a share, from a loss of $9 million, or 73 cents a share, in the same period a year ago. That beat the FactSet consensus for a per-share loss of 3 cents.

Revenue grew 3.9% to $452.2 million, well above the FactSet consensus of $412.5 million. Depletions, or what is sold to retailers by distributors, were flat, while shipment volume was up 0.9% to about 1.6 million barrels, as growth in Twisted Tea offset by declines in Truly Hard Seltzer and other brands.

Twisted Tea dollar sales rose 21% in the first quarter, while market share increased by 1.4 percentage points.

"We continue to increase distribution while maintaining strong sales per point and achieved additional space in the spring-shelf resets," said new Chief Executive Michael Spillane, according to an AlphaSense transcript of the post-earnings call with analysts.

Regarding Truly, Spillane said he remains focused on stabilizing the brand, and has seen improvement from the previous quarter in the lighter flavor variety bags in single serve packages. That said, "the hard seltzer category remains under pressure in 2024," and with volume expected to decline in the low-teens percentage range.

Depletions had decreased in each quarter of 2023, and were down 6% for the full year. Meanwhile, Twisted Tea showed strong growth in each quarter of 2023, while Truly saw declines each quarter.

Gross margin improved by 5.7 percentage points to 43.7%, fueled by price increases.

For 2024, the company affirmed its outlook for earnings per share of $7 to $11, and for depletions and shipments percentage change in a range between a low-single-digits decline and a low-single-digits gain. The company also reiterated its guidance ranges for price increases of 1% to 2% and for gross margin of 43% to 45%.

The stock has dropped 16.9% year to date through Thursday, while the S&P 500 has gained 5.8%.

-Tomi Kilgore

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04-26-24 0820ET

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