8-K
0000949870false00009498702022-04-212022-04-21

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 21, 2022

 

The Boston Beer Company, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

Massachusetts

001-14092

04-3284048

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

 

 

 

One Design Center Place, Suite 850,

Boston, MA

 

02210

(Address of Principal Executive Offices)

 

(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 368-5000

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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

 

SAM

 

NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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. ☐

 

 

 


 

 

Item 2.02 Results of Operations and Financial Condition

On April 21, 2022, The Boston Beer Company, Inc. disclosed financial information for the first quarter of 2022 in an earnings release, a copy of which is set forth in the attached Exhibit 99.

The information in this Form 8-K and the Exhibit 99 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits

 

 Exhibit 99

 

Earnings Release of The Boston Beer Company, Inc. dated April 21, 2022.

 

 

 

 104

 

Cover Page Interactive Data File (embedded within Inline XBRL document).

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

The Boston Beer Company, Inc.

 

 

(Registrant)

 

 

 

Date: April 21, 2022

 

/s/ Frank H. Smalla

 

 

Frank H. Smalla

 

 

Chief Financial Officer

 

 


EX-99

 

 

 

 

 

Exhibit 99

Investor Relations Contact:

 

 

Media Contact:

Jennifer Larson

 

 

Dave DeCecco

(617) 368-5152

 

 

(914) 261-6572

jennifer.larson@bostonbeer.com

 

 

dave.dececco@bostonbeer.com

 

 

BOSTON BEER REPORTS

FIRST QUARTER FINANCIAL RESULTS

 

First Quarter (13-week) 2022 Financial Results

 

BOSTON (4/21/22) -- The Boston Beer Company, Inc. (NYSE: SAM), today reported financial results for the first quarter ended March 26, 2022. Key results were:

 

First quarter depletions decreased 7% and first quarter shipments decreased 25.1% compared to the quarter ended March 27, 2021
First quarter net revenue of $430.1 million decreased 21.1% compared to the net revenue realized in the first quarter of 2021
First quarter gross margin of 40.2% was 5.6 percentage points below the 2021 first quarter margin of 45.8%
First quarter operating expenses of $175.1 million increased 1.2% compared to the first quarter of 2021
First quarter net loss of $2.0 million or $0.16 per diluted share, decreased from net income of $65.6 million or $5.26 per diluted share in the first quarter of 2021. This change between periods was primarily driven by decreased net revenue and gross margins
Full-year depletion and shipment growth continues to be estimated at between 4% and 10%

 

“Despite our depletions decline, we gained dollar share in measured off-premise channels in the first quarter – the second-largest share gain among brewers,” said Chairman and Founder Jim Koch. “The out-of-stock issues that affected our first quarter performance have improved during the quarter, setting us up for additional growth over the rest of the year. As we continue to innovate, today we are announcing the launch of Truly Vodka Seltzer, a new ready-to-drink hard seltzer with 110 calories and 5% ABV, which will begin rolling out later this summer. We believe it will help us compete effectively in the high-end of the hard seltzer category and continue to broaden the reach of the Truly brand.”

 

“While we met our internal targets for depletions, shipments and financials, our first quarter performance suffers by comparison to our exceptional performance in the first quarter of 2021,” said Dave Burwick, President and CEO. “We fully expect depletion and shipment volumes to improve, both in absolute terms and against less difficult prior year volume comparisons. We also expect margins to increase from the lower first quarter levels as our supply chain performance slowly improves during the remainder of the year. We continue to believe we have strategies in place to get back to company-wide mid single-digit to double-digit depletions growth driven by broad-based growth across our entire portfolio of brands – especially as consumers drink more ‘Beyond Beer’ products – and via our strong innovation pipeline.”

 

Details of the results were as follows:

 

 


 

First Quarter 2022 (13 weeks ended March 26, 2022) Summary of Results

 

Depletions for the 2022 first quarter decreased 7% from the prior year, reflecting decreases in the Company’s Truly Hard Seltzer, Angry Orchard, and Dogfish Head brands, partially offset by increases in its Twisted Tea brand. The Company’s Samuel Adams brand depletion volume was nearly equal in both periods.

 

Shipment volume for the quarter was approximately 1.7 million barrels, a 25.1% decrease from the prior year, reflecting decreases in the Company’s Truly Hard Seltzer, Twisted Tea, Angry Orchard, and Dogfish Head brands, partially offset by increases in its Samuel Adams brand.

 

The Company believes distributor inventory as of March 26, 2022 averaged approximately five weeks on hand and was at an appropriate level for each of its brands. The Company expects distributors will keep inventory levels below 2021 levels in terms of weeks on hand, as the need for peak season inventory prebuilds is greatly reduced due to our increased production capacity.

 

The first quarter 2022 gross margin of 40.2% decreased from the 45.8% margin realized in the first quarter of 2021, primarily due to higher supply chain costs and higher materials costs, partially offset by price increases.

 

Advertising, promotional and selling expenses for the first quarter of 2022 decreased $10.2 million or 7.3% from the first quarter of 2021, primarily due to a net decrease in brand investments of $9.4 million, mainly driven by lower media costs, partially offset by higher investments in local marketing and decreased freight to distributors of $0.8 million primarily due to lower volumes that were partially offset by higher rates.

 

General and administrative expenses increased by $7.8 million or 24.3% from the first quarter of 2021, primarily due to increased salaries and benefits costs and increases in services provided by third parties,

 

The Company recorded an expense of $4.8 million in contract termination costs in the first quarter of 2022, resulting from further negotiations with suppliers that eliminated future shortfall fees.

 

The Company’s effective tax rate for the first quarter was a tax benefit of 14.5% compared to a tax provision of 14.4% in the prior year. In the first quarters of 2022 and 2021, the Company recorded tax expense of $0.03 per diluted share and a tax benefit of $0.69 per diluted share, respectively, resulting from the Accounting Standard "Employee Share-Based Payment Accounting" ("ASU 2016-09").

 

The Company expects that its March 26, 2022 cash balance of $15.8 million, together with its future operating cash flows and the unused balance on its $135.0 million line of credit, will be sufficient to fund future cash requirements.

 

During the 13-week period ended March 26, 2022 and the period from March 27, 2022 through April 16, 2022, the Company did not repurchase any shares of its Class A Common Stock. As of April 16, 2022, the Company had approximately $90.3 million remaining on the $931.0 million share buyback expenditure limit set by the Board of Directors.

 

Depletion and shipments estimates

 

 


 

Year-to-date depletions through the 16-week period ended April 16, 2022 are estimated by the Company to have decreased approximately 6% from the comparable period in 2021.

 

Year-to-date shipments through the 16-week period ended April 16, 2022 are estimated by the Company to have decreased approximately 23% from the comparable period in 2021.

 

Full-year 2022 Projections

 

The Company currently projects full-year 2022 Non-GAAP earnings per diluted share of between $11.00 and $16.00. This projection excludes the impact of ASU 2016-09 and is highly sensitive to changes in volume projections particularly related to the hard seltzer category and supply chain performance as well as inflationary impacts that have accelerated since we provided our last guidance. The Company’s actual 2022 earnings per share could vary significantly from the current projection. The 2022 fiscal year includes 53 weeks compared to the 2021 fiscal year which included only 52 weeks. Underlying the Company’s current 2022 projection are the following full-year estimates and targets:

 

Depletions and shipments increase of between 4% and 10%. In the first quarter of 2022 total depletions declined 7% compared to the first quarter of 2021 and increased 38% compared to the first quarter of 2020. In order for the Company to achieve the mid-point of its full year depletions range, its depletions for the remainder of the year must increase 10% compared to the last nine months of 2021 and increase 29% compared to the last nine months of 2020.
National price increases of between 3% and 5%.
Gross margin of between 45% and 48%.
Increased investments in advertising, promotional and selling expenses of between $0 and $20 million. 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 26%, excluding the impact of ASU 2016-09. This effective tax rate also excludes any potential future changes to current federal income tax rates and regulations.
Estimated capital spending of between $140 million and $190 million.

 

Use of Non-GAAP Measures

 

Non-GAAP effective tax rate and earnings per diluted share, excluding the impact of ASU 2016-09, are not defined terms under U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures should not be considered in isolation or as a substitute for diluted earnings per share and effective tax rate data prepared in accordance with GAAP, and may not be comparable to calculations of similarly titled measures by other companies. Management uses these non-GAAP financial measures to make operating and strategic decisions and to evaluate the Company’s overall business performance. The Company is unable to reconcile the projection for its Non-GAAP effective tax rate and earnings per diluted share, excluding the impact of ASU 2016-09, because the Company is unable to predict the impact of future events outside the Company’s control, including the timing and value realized upon exercise of stock options versus the fair value of those options when granted. Therefore, because of the uncertainty and variability of the impact of ASU 2016-09, the Company is unable to provide, without unreasonable effort, a reconciliation of these non-GAAP measures on a forward-looking basis. Management believes these forward-looking non-GAAP measures provide meaningful

 


 

and useful information to investors and analysts regarding our outlook and facilitate period to period comparisons of our forecasted financial performance.

 

Forward-Looking Statements

 

Statements made in this press release that state the Company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements. It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in the Company’s SEC filings, including, but not limited to, the Company’s report on Form 10-K for the year ended December 25, 2021 and subsequent reports filed by the Company with the SEC on Forms 10-Q and 8-K. Copies of these documents are available from the SEC and may be found on the Company’s website, www.bostonbeer.com. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements.

 

About the Company

 

The Boston Beer Company, Inc. (NYSE: SAM) began in 1984 brewing Samuel Adams beer and the Samuel Adams brand is currently recognized as one of the largest and most respected craft beer brands. Our portfolio of brands also includes Truly Hard Seltzer, Twisted Tea, Angry Orchard Hard Cider, Dogfish Head Brewery, and Bevy Long Drink as well as other craft beer brands such as Angel City Brewery and Coney Island Brewing. We also produce and sell Hard Mt Dew under a license agreement with PepsiCo, Inc. and Sauza Agave Cocktails under a license agreement with Jim Beam Brands Co. For more information, please visit our investor relations website at www.bostonbeer.com, which includes links to all of our respective brand websites.

 

Thursday, April 21, 2022

 

 

 


 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

(in thousands, except per share data)

 

(unaudited)

 

 

March 26,

 

 

March 27

 

 

2022

 

 

2021

 

Barrels sold

 

1,705

 

 

 

2,275

 

Revenue

$

457,288

 

 

581, 709

 

Less excise taxes

 

27,175

 

 

 

36,629

 

Net revenue

 

430,113

 

 

 

545,080

 

Cost of goods sold

 

257,161

 

 

 

295,450

 

Gross profit

 

172,952

 

 

 

249,630

 

Operating expenses:

 

 

 

 

 

Advertising, promotional and selling expenses

 

130,615

 

 

 

140,859

 

General and administrative expenses

 

39,698

 

 

 

31,946

 

Contract termination costs and other

 

4,752

 

 

 

 

Impairment of assets

 

41

 

 

 

227

 

Total operating expenses

 

175,106

 

 

 

173,032

 

Operating (loss) income

 

(2,154

)

 

 

76,598

 

Other expense:

 

 

 

 

 

Interest expense

 

(33

)

 

 

(29

)

Other expense

 

(100

)

 

 

(6

)

Total other expense

 

(133

)

 

 

(35

)

(Loss) income before income tax (benefit) provision

 

(2,287

)

 

 

76,563

 

Income tax (benefit) provision

 

(332

)

 

 

10,998

 

Net (loss) income

$

(1,955

)

 

$

65,565

 

 

 

 

 

 

 

Net (loss) income per common share - basic

$

(0.16

)

 

$

5.34

 

Net (loss) income per common share - diluted

$

(0.16

)

 

$

5.26

 

 

 

 

 

 

 

Weighted-average number of common shares -basic

 

12,300

 

 

 

12,271

 

Weighted-average number of common shares - diluted

 

12,300

 

 

 

12,457

 

 

 

 

 

 

 

Net (loss) income

$

(1,955

)

 

$

65,565

 

Other comprehensive (loss) income:

 

 

 

 

 

Foreign Currency translation adjustment

 

50

 

 

 

20

 

Total other comprehensive income (loss), net of tax:

 

50

 

 

 

20

 

Comprehensive (loss) income

$

(1,905

)

 

$

65,585

 

 

 

 

 

 


 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands, except share data)

 

 

 

(unaudited)

 

 

 

 

 

 

March 26,

 

 

December 25,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

15,769

 

 

$

26,853

 

Restricted cash

 

 

 

 

 

39,468

 

Accounts receivable

 

 

101,884

 

 

 

55,022

 

Inventories

 

 

162,592

 

 

 

149,118

 

Prepaid expenses and other current assets

 

 

24,012

 

 

 

21,462

 

Income tax receivable

 

 

52,276

 

 

 

53,418

 

Total current assets

 

 

356,533

 

 

 

345,341

 

Property, plant and equipment, net

 

 

668,876

 

 

 

664,815

 

Operating right-of-use assets

 

 

50,780

 

 

 

52,774

 

Goodwill

 

 

112,529

 

 

 

112,529

 

Intangible assets

 

 

103,614

 

 

 

103,677

 

Third-party production prepayments

 

 

80,573

 

 

 

88,294

 

Other assets

 

 

17,092

 

 

 

19,354

 

Total assets

 

$

1,389,997

 

 

$

1,386,784

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

112,711

 

 

$

85,920

 

Accrued expenses and other current liabilities

 

 

124,457

 

 

 

161,552

 

Current operating lease liabilities

 

 

8,366

 

 

 

7,634

 

Total current liabilities

 

 

245,534

 

 

 

255,106

 

Deferred income taxes, net

 

 

87,516

 

 

 

87,495

 

Line of credit

 

 

15,000

 

 

 

 

Non-current operating lease liabilities

 

 

51,689

 

 

 

53,849

 

Other liabilities

 

 

5,334

 

 

 

6,925

 

Total liabilities

 

 

405,073

 

 

 

403,375

 

Stockholders' Equity:

 

 

 

 

 

 

Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,214,612 and 10,183,801 issued and outstanding as of March 26, 2022 and
   December 25, 2021, respectively

 

 

102

 

 

 

102

 

Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,068,000
   and 2,068,000 issued and outstanding as of March 26, 2022 and
   December 25, 2021, respectively

 

 

21

 

 

 

21

 

Additional paid-in capital

 

 

615,041

 

 

 

611,622

 

Accumulated other comprehensive loss

 

 

(143

)

 

 

(194

)

Retained earnings

 

 

369,903

 

 

 

371,858

 

Total stockholders' equity

 

 

984,924

 

 

 

983,409

 

Total liabilities and stockholders' equity

 

$

1,389,997

 

 

$

1,386,784

 

 

 

 

 

 

 

 

 

 


 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

(unaudited)

 

 

 

March 26,

 

 

March 27

 

 

 

2022

 

 

2021

 

Cash flows (used in) provided by operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(1,955

)

 

$

65,565

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

19,634

 

 

 

16,996

 

Impairment of assets

 

 

41

 

 

 

227

 

Loss (gain) on disposal of property, plant and equipment

 

 

21

 

 

 

(36

)

Change in right-of-use assets

 

 

1,994

 

 

 

1,965

 

Other non-cash expense (income)

 

 

45

 

 

 

(48

)

Stock-based compensation expense

 

 

2,922

 

 

 

4,957

 

Deferred income taxes

 

 

21

 

 

 

4,565

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(46,973

)

 

 

(26,723

)

Inventories

 

 

(11,205

)

 

 

(30,581

)

Prepaid expenses, income tax receivable, other current assets and other assets

 

 

(937

)

 

 

(14,369

)

Third-party production prepayments

 

 

7,721

 

 

 

(21,584

)

Accounts payable

 

 

26,799

 

 

 

36,912

 

Accrued expenses, other current liabilities and other liabilities

 

 

(37,706

)

 

 

(16,095

)

Change in operating lease liabilities

 

 

(1,428

)

 

 

(2,020

)

Net cash (used in) provided by operating activities

 

 

(41,006

)

 

 

19,807

 

Cash flows used in investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(23,767

)

 

 

(39,278

)

Proceeds from disposal of property, plant and equipment

 

 

66

 

 

 

320

 

Other investing activities

 

 

 

 

 

145

 

Net cash used in investing activities

 

 

(23,701

)

 

 

(38,813

)

Cash flows provided by financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options and sale of investment shares

 

 

2,010

 

 

 

6,768

 

Net cash paid on note payable and finance leases

 

 

(475

)

 

 

(435

)

Line of credit borrowings

 

 

30,000

 

 

 

 

Line of credit repayments

 

 

(15,000

)

 

 

 

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

 

 

(2,380

)

 

 

(5,951

)

Net cash provided by financing activities

 

 

14,155

 

 

 

382

 

Change in cash and cash equivalents and restricted cash

 

 

(50,552

)

 

 

(18,624

)

Cash and cash equivalents and restricted cash at beginning of year

 

 

66,321

 

 

 

163,282

 

Cash and cash equivalents end of period

 

$

15,769

 

 

$

144,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Copies of The Boston Beer Company's press releases, including quarterly financial results,

 

are available on the Internet at www.bostonbeer.com