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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

For the quarterly period ended September 25, 2021

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission file number: 1-14092

 

THE BOSTON BEER COMPANY, INC.

(Exact name of registrant as specified in its charter)

 

 

MASSACHUSETTS

 

04-3284048

(State or other jurisdiction of

incorporation or organization)

 

(State or other jurisdiction of

incorporation Identification No.)

One Design Center Place,
Suite 850
, Boston, Massachusetts

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

(617) 368-5000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act.

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

 

 

 

 

 

Class A Common Stock $0.01 per value

 

SAM

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ____

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes No ☒

 

Number of shares outstanding of each of the issuer’s classes of common stock, as of October 15, 2021:

 

Class A Common Stock, $.01 par value

 

10,203,620

Class B Common Stock, $.01 par value

 

2,078,000

(Title of each class)

 

(Number of shares)

 

 


Table of Contents

 

THE BOSTON BEER COMPANY, INC.

FORM 10-Q

September 25, 2021

TABLE OF CONTENTS

 

PART I.

 

FINANCIAL INFORMATION

 

PAGE

 

 

 

 

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

 

3

 

 

 

Condensed Consolidated Balance Sheets as of September 25, 2021 and December 26, 2020

 

3

 

 

 

Condensed Consolidated Statements of Comprehensive Operations for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020

 

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 25, 2021 and September 26, 2020

 

5

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8-19

 

 

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20-25

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

26

 

 

Item 4.

Controls and Procedures

 

26

 

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

27

 

 

Item 1A.

Risk Factors

 

27

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

 

 

Item 3.

Defaults Upon Senior Securities

 

28

 

 

Item 4.

Mine Safety Disclosures

 

28

 

 

Item 5.

Other Information

 

28

 

 

Item 6.

Exhibits

 

29

 

 

 

 

 

 

SIGNATURES

 

30

 

EX-31.1 Section 302 CEO Certification

EX-31.2 Section 302 CFO Certification

EX-32.1 Section 906 CEO Certification

EX-32.2 Section 906 CFO Certification

 

 

 

2


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

 

 

 

September 25,
2021

 

 

December 26,
2020

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

86,504

 

 

$

163,282

 

Accounts receivable

 

 

83,121

 

 

 

78,358

 

Inventories

 

 

196,455

 

 

 

130,910

 

Prepaid expenses and other current assets

 

 

24,127

 

 

 

30,230

 

Income tax receivable

 

 

40,919

 

 

 

10,393

 

Total current assets

 

 

431,126

 

 

 

413,173

 

Property, plant and equipment, net

 

 

665,374

 

 

 

623,083

 

Operating right-of-use assets

 

 

54,485

 

 

 

58,483

 

Goodwill

 

 

112,529

 

 

 

112,529

 

Intangible assets

 

 

103,740

 

 

 

103,930

 

Third-party production prepayments

 

 

74,392

 

 

 

56,843

 

Other assets

 

 

21,880

 

 

 

10,784

 

Total assets

 

$

1,463,526

 

 

$

1,378,825

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

136,462

 

 

$

121,647

 

Accrued expenses and other current liabilities

 

 

140,712

 

 

 

129,544

 

Current operating lease liabilities

 

 

8,313

 

 

 

8,232

 

Total current liabilities

 

 

285,487

 

 

 

259,423

 

Deferred income taxes, net

 

 

83,350

 

 

 

92,665

 

Non-current operating lease liabilities

 

 

54,950

 

 

 

59,171

 

Other liabilities

 

 

10,361

 

 

 

10,599

 

Total liabilities

 

 

434,148

 

 

 

421,858

 

Commitments and Contingencies (See Note K)

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,165,710
   and
10,004,681 issued and outstanding as of September 25, 2021 and
   December 26, 2020, respectively

 

 

102

 

 

 

100

 

Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,078,000
   and
2,177,983 issued and outstanding as of September 25, 2021 and
   December 26, 2020, respectively

 

 

21

 

 

 

22

 

Additional paid-in capital

 

 

605,853

 

 

 

599,737

 

Accumulated other comprehensive loss

 

 

(243

)

 

 

(252

)

Retained earnings

 

 

423,645

 

 

 

357,360

 

Total stockholders' equity

 

 

1,029,378

 

 

 

956,967

 

Total liabilities and stockholders' equity

 

$

1,463,526

 

 

$

1,378,825

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


Table of Contents

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

 

Thirteen weeks ended

 

 

Thirty-nine weeks ended

 

 

 

September 25,
2021

 

 

September 26,
2020

 

 

September 25,
2021

 

 

September 26,
2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

599,971

 

 

$

525,249

 

 

$

1,822,994

 

 

$

1,358,563

 

Less excise taxes

 

 

38,328

 

 

 

32,457

 

 

 

113,466

 

 

 

83,068

 

Net revenue

 

 

561,643

 

 

 

492,792

 

 

 

1,709,528

 

 

 

1,275,495

 

Cost of goods sold

 

 

388,947

 

 

 

252,207

 

 

 

1,011,513

 

 

 

677,313

 

Gross profit

 

 

172,696

 

 

 

240,585

 

 

 

698,015

 

 

 

598,182

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising, promotional and selling expenses

 

 

166,817

 

 

 

108,023

 

 

 

469,296

 

 

 

306,250

 

General and administrative expenses

 

 

32,066

 

 

 

30,340

 

 

 

96,973

 

 

 

87,054

 

Contract termination costs and other

 

 

35,428

 

 

 

 

 

 

35,428

 

 

 

 

Impairment of assets

 

 

14,158

 

 

 

441

 

 

 

15,389

 

 

 

2,796

 

Total operating expenses

 

 

248,469

 

 

 

138,804

 

 

 

617,086

 

 

 

396,100

 

Operating (loss) income

 

 

(75,773

)

 

 

101,781

 

 

 

80,929

 

 

 

202,082

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(26

)

 

 

(20

)

 

 

(84

)

 

 

(169

)

Other (expense) income, net

 

 

(657

)

 

 

190

 

 

 

(655

)

 

 

(222

)

Total other (expense) income, net

 

 

(683

)

 

 

170

 

 

 

(739

)

 

 

(391

)

(Loss) income before income tax (benefit) provision

 

 

(76,456

)

 

 

101,951

 

 

 

80,190

 

 

 

201,691

 

Income tax (benefit) provision

 

 

(18,035

)

 

 

21,183

 

 

 

13,852

 

 

 

42,548

 

Net (loss) income

 

$

(58,421

)

 

$

80,768

 

 

$

66,338

 

 

$

159,143

 

Net (loss) income per common share - basic

 

$

(4.76

)

 

$

6.61

 

 

$

5.40

 

 

$

13.05

 

Net (loss) income per common share - diluted

 

$

(4.76

)

 

$

6.51

 

 

$

5.33

 

 

$

12.90

 

Weighted-average number of common shares - basic

 

 

12,282

 

 

 

12,221

 

 

 

12,279

 

 

 

12,191

 

Weighted-average number of common shares - diluted

 

 

12,282

 

 

 

12,333

 

 

 

12,450

 

 

 

12,259

 

Net (loss) income

 

$

(58,421

)

 

$

80,768

 

 

$

66,338

 

 

$

159,143

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(26

)

 

 

61

 

 

 

9

 

 

 

(10

)

Defined benefit plans liability adjustment

 

 

 

 

 

1,117

 

 

 

 

 

 

1,117

 

Total other comprehensive (loss) income, net of tax

 

 

(26

)

 

 

1,178

 

 

 

9

 

 

 

1,107

 

Comprehensive (loss) income

 

$

(58,447

)

 

$

81,946

 

 

$

66,347

 

 

$

160,250

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


Table of Contents

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Thirty-nine weeks ended

 

 

 

September 25,
2021

 

 

September 26,
2020

 

Cash flows provided by operating activities:

 

 

 

 

 

 

Net income

 

$

66,338

 

 

$

159,143

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

52,953

 

 

 

48,937

 

Impairment of assets

 

 

15,389

 

 

 

2,796

 

Gain on disposal of property, plant and equipment

 

 

(202

)

 

 

(173

)

Change in right-of-use assets

 

 

5,959

 

 

 

5,465

 

Other non-cash (income) expense

 

 

(92

)

 

 

746

 

Stock-based compensation expense

 

 

14,002

 

 

 

10,735

 

Deferred income taxes

 

 

(9,370

)

 

 

14,160

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(5,184

)

 

 

(39,775

)

Inventories

 

 

(71,104

)

 

 

(23,072

)

Prepaid expenses, income tax receivable and other current assets

 

 

(39,239

)

 

 

43

 

Third-party production prepayments

 

 

(2,733

)

 

 

(21,397

)

Other assets

 

 

(5,682

)

 

 

(516

)

Accounts payable

 

 

17,781

 

 

 

33,020

 

Accrued expenses and other current liabilities

 

 

18,127

 

 

 

18,024

 

Change in operating lease liabilities

 

 

(6,102

)

 

 

(1,887

)

Other liabilities

 

 

124

 

 

 

2,671

 

Net cash provided by operating activities

 

 

50,965

 

 

 

208,920

 

Cash flows used in investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(120,887

)

 

 

(100,341

)

Proceeds from disposal of property, plant and equipment

 

 

1,142

 

 

 

72

 

Other investing activities

 

 

145

 

 

 

392

 

Net cash used in investing activities

 

 

(119,600

)

 

 

(99,877

)

Cash flows (used in) provided by financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options and sale of investment shares

 

 

8,571

 

 

 

14,015

 

Net cash paid on note payable and finance leases

 

 

(1,181

)

 

 

(906

)

Cash borrowed on line of credit

 

 

 

 

 

100,000

 

Cash paid on line of credit

 

 

 

 

 

(100,000

)

Payment of tax withholding on stock-based payment awards and investment shares

 

 

(15,533

)

 

 

(1,692

)

Net cash (used in) provided by financing activities

 

 

(8,143

)

 

 

11,417

 

Change in cash and cash equivalents

 

 

(76,778

)

 

 

120,460

 

Cash and cash equivalents at beginning of year

 

 

163,282

 

 

 

36,670

 

Cash and cash equivalents at end of period

 

$

86,504

 

 

$

157,130

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income taxes paid

 

$

53,712

 

 

$

17,309

 

Cash paid for amounts included in measurement of lease liabilities

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

7,823

 

 

$

6,949

 

Operating cash flows from finance leases

 

$

95

 

 

$

106

 

Financing cash flows from finance leases

 

$

1,110

 

 

$

838

 

Right-of-use-assets obtained in exchange for operating lease obligations

 

$

1,961

 

 

$

11,698

 

Right-of-use-assets obtained in exchange for finance lease obligations

 

$

472

 

 

$

2,689

 

Change in purchase of property, plant and equipment in accounts payable and
   accrued expenses

 

$

(10,489

)

 

$

(3,390

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


Table of Contents

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the thirteen and thirty-nine weeks ended September 25, 2021 and September 26, 2020

(in thousands)

(unaudited)

 

 

 

 

 

 

Class A

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Class A

 

 

Common

 

 

Class B

 

 

Class B

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common

 

 

Stock,

 

 

Common

 

 

Common

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

Stockholders’

 

 

 

Shares

 

 

Par

 

 

Shares

 

 

Stock, Par

 

 

Capital

 

 

Loss

 

 

Earnings

 

 

Equity

 

Balance at December 26, 2020

 

 

10,005

 

 

$

100

 

 

 

2,178

 

 

$

22

 

 

$

599,737

 

 

$

(252

)

 

$

357,360

 

 

$

956,967

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

65,565

 

 

 

65,565

 

Stock options exercised and restricted
   shares activities

 

 

48

 

 

 

1

 

 

 

 

 

 

 

 

 

1,268

 

 

 

 

 

 

 

 

 

1,269

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,957

 

 

 

 

 

 

 

 

 

4,957

 

Adoption of ASU 2019-12, Simplifying the
   accounting for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(54

)

 

 

(54

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

20

 

Balance at March 27, 2021

 

 

10,053

 

 

$

101

 

 

 

2,178

 

 

$

22

 

 

$

605,962

 

 

$

(232

)

 

$

422,871

 

 

$

1,028,724

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

59,195

 

 

 

59,195

 

Stock options exercised and restricted
   shares activities

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

(9,133

)

 

 

 

 

 

 

 

 

(9,133

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,334

 

 

 

 

 

 

 

 

 

5,334

 

Conversion from Class B to Class A

 

 

100

 

 

 

1

 

 

 

(100

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Balance at June 26, 2021

 

 

10,166

 

 

$

102

 

 

 

2,078

 

 

$

21

 

 

$

602,163

 

 

$

(217

)

 

$

482,066

 

 

$

1,084,135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(58,421

)

 

 

(58,421

)

Stock options exercised and restricted
   shares activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(21

)

 

 

 

 

 

 

 

 

(21

)

Stock-based compensation expense