BOSTON, March 9, 2005 /PRNewswire-FirstCall via COMTEX/ -- The Boston Beer Company, Inc. (NYSE: SAM) achieved full year earnings per diluted share of $0.86 in 2004, a 22.3% increase over the prior year. Net revenue increased in the fourth quarter and for the full year 2004 over the comparable periods of the prior year, and net income increased for the full year by $1.9 million over the prior year.
Net revenue increased 9.9% in the fourth quarter and 4.5% for the full year, while shipment volume increased 6.0% in the fourth quarter and 2.5% for the full year. Net income in the fourth quarter was $2.8 million, down 21.4% from last year primarily due to increased advertising, promotions and selling expense. Net income for the full year was $12.5 million, an 18.4% increase over 2003. The Company earned $0.19 per diluted share for the quarter, versus $0.25 for the same period last year, and $0.86 per diluted share for the twelve months ending December 25, 2004 versus $0.70 earned during 2003.
"We were delighted with 4.6% depletion growth in the fourth quarter as we increased our brand support spending" said Jim Koch Chairman and Founder. "While pleased with our revenue and earnings performance for the full year and our strong fourth quarter sales performance, we believe that we can do better. We will introduce new brand communications very soon that we think will capitalize on the roots and essence of Samuel Adams' success. We are excited by this new campaign."
The Company currently expects earnings per share for the full year 2005 to be between $0.94 to $1.00, based on current plans and market trends. The Company expects earnings per share growth to be driven by continued volume increases and price increases of approximately 2.0% planned for the first quarter, offset somewhat by increases in brand support in advertising, promotional and selling expenses.
Martin Roper, Boston Beer President and CEO said, "We believe the Samuel Adams brand is stronger, as demonstrated by the level of growth in the fourth quarter. However, on-premise trends were not as strong as off-premise in the second half of the year, and we are evaluating the cause and potential solutions. We are currently finalizing the strategy and communicating plans behind our new brand message. We are encouraged by the initial quantitative testing of the television commercials which indicates that this campaign is even stronger than our current work, and we will be evaluating its performance in market to determine appropriate investment levels. As a result, our full year projections of brand investment may change depending on campaign performance."
Bill Urich, Boston Beer CFO added, "During 2004, we have continued to achieve cost savings and efficiencies in our manufacturing and operating expenses, offsetting the increases in packaging and freight costs, which were primarily due to energy cost increases, that have placed pressure on our margins. We see these cost pressures continuing, but plan to offset them with planned price increases in the first quarter of 2005, coupled with continued initiatives against the efficiency of our spending. The $6.5 million Cincinnati brewery expansion project is an important part of these efforts with the goal of providing an attractive return both financially and strategically."
Shipments and orders in-hand suggest that shipments for the first quarter will be up approximately 5.0% over the first quarter 2004. Based on information available to Boston Beer as of March 8, 2005, depletions for January and February combined look like they could be down a couple percentage points. Actual shipments for the current quarter may differ and no inferences should be drawn with respect to shipments in future periods.
4th Quarter Results Details
For the three month period ended December 25, 2004, Boston Beer shipment volumes of Boston Beer Brands were up 5.9% and the net revenue of $55.8 million was up 9.9% or $5.0 million over the previous year. The following chart compares reported shipment volume for the current period to the prior year.
(in barrels) Q4-2004 Q4-2003 %Chg Total Boston Beer Brands 319,279 301,486 5.9 3rd Party Contract Brewing 1,428 1,153 23.9 Total Company 320,707 302,639 6.0
Total volume was up driven by growth in Samuel Adams Boston Lager(R), Samuel Adams(R) Seasonals, Samuel Adams(R) Brewmaster's Collection and Twisted Tea(R), with strength in off-premise trends. Distributor sales of Boston Beer brands to retail (depletions) during the 2004 fourth quarter totaled 351,000 barrels, approximately a 4.6% increase from the same period in 2003.
The Company earned $2.8 million in net income and $0.19 per diluted share for the quarter versus net income of $3.6 million and $0.25 per diluted share for the same period last year. The decrease in net income was primarily the result of increases in advertising, promotional and selling expenses of $4.5 million and increases in general and administrative expenses of $1.3 million.
Net revenue per barrel increased by 3.8% to $173.84. This increase was primarily due to product mix, including seasonal shipments of a specialty beer, a shift in the package mix towards bottles from kegs, and net price increases.
Gross margin as a percent of net revenue was 59.4% as compared to 56.6% in the prior year fourth quarter. Results for 2003 reflect the non-recurring $1.5 million charge relating to the securing of long-term production alternatives in the event of an unfavorable outcome in the arbitration proceedings with Miller Brewing Company. Advertising, promotional and selling expenses increased due primarily to an increase in television advertising, freight cost, and timing of point-of-sale merchandise purchased. General and administrative expenses for the quarter increased $1.3 million compared to the same period last year. This increase reflects increases in accounting and audit fees related to the implementation of section 404 of the Sarbanes-Oxley Act and the fact that fourth quarter 2003 expenses were reduced as a result of the award received in the arbitration proceedings with Miller Brewing Company.
Full Year Results Details
For the twelve month period ended December 25, 2004, Boston Beer recorded net revenue of $217.2 million, a 4.5% increase from the same period in 2003. The increase in net revenue is primarily due to volume increases, price increases and product mix. The following chart compares reported sales volume for the current twelve months to the same period last year.
(in barrels) YTD-2004 YTD-2003 %Chg Total Boston Beer Brands 1,258,206 1,229,217 2.4 3rd Party Contract Brewing 8,999 6,734 33.6 Total Company 1,267,205 1,235,951 2.5
For the full year 2004 Boston Beer Brand distributor sales to retail (depletions) totaled 1,257,000 barrels, a 1.6% increase over 2003.
The depletion increase for the full year was driven by growth in Samuel Adams Boston Lager(R), Samuel Adams(R) Seasonals, Samuel Adams(R) Brewmaster's Collection and Twisted Tea(R). The growth was somewhat offset by declines in Sam Adams Light(R).
The Company earned $12.5 million in net income or $0.86 per diluted share for the twelve months ending December 25, 2004 versus net income of $10.6 million and $0.70 per diluted share earned during 2003.
Net revenue per barrel for the full year increased by 1.9% to $171.43. This increase was primarily due to net price increases and product mix.
Gross margin as a percent of net revenue increased to 59.5% as compared to 58.8% in 2003. The increase in gross margin was driven primarily by net price increases and operating efficiencies, and also reflects the non-recurring $1.5 million charge taken in the fourth quarter 2003 relating to certain precautions taken to secure long-term production supply prior to learning the favorable outcome of the arbitration proceedings with Miller Brewing Company. Advertising, promotional and selling expenses increased by $3.1 million, or 3.3%, for the full year 2004 as compared to 2003, primarily due to increases in promotional activities, advertising costs and freight cost, offset by higher costs in 2003 for new tap handles and glassware.
The Company's effective tax rate was 37.8% for the twelve months ended December 25, 2004, the same rate as in the prior year.
The Company currently expects earnings per share for the full year 2005 to be between $0.94 to $1.00, based on current plans and market trends. This estimate is made prior to the effect of adoption of Statement of Financial Accounting Standards No. 123R (accounting for future effect of stock options on company earnings) which the Company currently estimates will reduce full year earnings per share by between $0.05 and $0.07 for 2005. This reduction is based on models still in development and current options issued, and the final charge could vary from this estimate. The Company expects earnings per share growth to be driven by continued volume increases and price increases of approximately 2.0% planned for the first quarter, offset somewhat by increases in brand support in advertising, promotional and selling expenses of between $4.0 million to $7.0 million and normal inflationary production and general and administrative expense increases. In 2005, total advertising, promotional and selling expenditures currently anticipated may be adjusted as deemed necessary for the benefit of the Company's long term volume growth.
The 200,000-barrel production expansion project at the Company's Cincinnati brewery will cost approximately $6.5 million and is expected to realize reduced production cost of approximately $300,000 to $400,000 in 2005 (which are included in the full year earnings projections) and $1.0 to $1.2 million thereafter as well as providing the ability to supply approximately two thirds of the Company's volume in its traditional small-batch brewery. Full year 2005 capital expenditures, including the Cincinnati brewery expansion, will approximate $9.0 million to $12.0 million. The Company continues to look for attractive projects that utilize its capital in support of its brand and brewing strategies, while providing a suitable return for investors.
During the three and twelve months ended December 25, 2004, the Company did not repurchase any of its Class A Common Stock. As of March 8, 2005, the Company had $5.2 million remaining on the authorized share buyback expenditure limit. Since the beginning of the share repurchase program, the Company has repurchased a total of approximately 7.1 million shares of its Class A Common Stock for an aggregate purchase price of $74.8 million through March 8, 2005. As of March 8, 2005, the Company has 10.2 million shares of Class A Common Stock outstanding and 4.1 million shares of Class B Common Stock outstanding.
The Boston Beer Company is America's leading brewer of hand-crafted, full- flavored beer. Founder and brewer, Jim Koch, brews Samuel Adams(R) beers using the time-honored, traditional four-vessel brewing process and the world's finest all-natural ingredients. Beer-lovers can enjoy many styles of Samuel Adams(R) beers that range from light-bodied to bold, traditional to extreme. In the last twenty years, the brewery has won more awards in international beer tasting competitions than any other brewery in the world. Samuel Adams Boston Lager(R), the Company's flagship brand, is brewed using the same recipe and techniques that Jim Koch's great-great grandfather used in the mid 1800s. The result is a beer renowned by drinkers for its full flavor, balance, complexity, and consistent quality. For more information about Samuel Adams(R) beers visit http://www.samueladams.com or visit http://www.bostonbeer.com for financial information.
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 27, 2003 and for December 28, 2002. Copies of these documents may be found on the Company's website, http://www.bostonbeer.com, or obtained by contacting the Company or the SEC.
Wednesday, March 9, 2005 Contact: Michelle Sullivan The Boston Beer Company, Inc. (617) 368-5165 THE BOSTON BEER COMPANY, INC. Financial Results (In thousands, except per share data) Consolidated Statements of Income: (unaudited) (unaudited) Quarter Ended 12 Months Ended Dec 25, Dec 27, Dec 25, Dec 27, 2004 2003 2004 2003 Barrels sold 321 303 1,267 1,236 Revenue $61,377 $56,235 $239,680 $230,103 Less excise taxes 5,574 5,474 22,472 22,158 Net revenue 55,803 50,761 217,208 207,945 Cost of goods sold 22,658 22,016 87,973 85,606 Gross profit 33,145 28,745 129,235 122,339 Advertising, promotional and selling expenses 24,784 20,286 94,913 91,841 General and administrative expenses 4,072 2,808 14,837 14,628 Total operating expenses 28,856 23,094 109,750 106,469 Operating income 4,289 5,651 19,485 15,870 Interest income, net 270 144 840 1,085 Other (expense) income, net (9) 20 (247) 19 Income before provision for income taxes 4,550 5,815 20,078 16,974 Provision for income taxes 1,706 2,198 7,576 6,416 Net income $2,844 $3,617 $12,502 $10,558 Net income per common share - basic $0.20 $0.26 $0.89 $0.72 Net income per common share - diluted $0.19 $0.25 $0.86 $0.70 Weighted average number of common shares - basic 14,192 13,890 14,126 14,723 Weighted average number of common shares - diluted 14,623 14,227 14,518 15,000
Copies of The Boston Beer Company's press releases, including quarterly financial results, are available on the Internet at http://www.bostonbeer.com.
Consolidated Balance Sheets: (unaudited) Dec 25, Dec 27, 2004 2003 Assets Current Assets: Cash and cash equivalents $35,794 $27,792 Short-term investments 24,000 15,098 Accounts receivable, net of allowance for doubtful accounts of $597 and $450 as of December 25, 2004 and December 27, 2003, respectively 12,826 10,432 Inventories 12,561 9,890 Prepaid expenses 883 1,126 Deferred income taxes 1,474 1,177 Other current assets 230 2,304 Total current assets 87,768 67,819 Property, plant and equipment, net 17,222 17,059 Other assets 1,095 1,099 Goodwill 1,377 1,377 Total assets $107,462 $87,354 Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $9,744 $6,395 Accrued expenses 16,494 15,504 Total current liabilities 26,238 21,899 Deferred income taxes 2,085 2,191 Other long-term liabilities 769 740 Commitments and Contingencies Stockholders' Equity Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,088,869 and 16,945,418 issued as of December 25, 2004 and December 27, 2003, respectively 101 169 Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 4,107,355 issued and outstanding 41 41 Additional paid-in capital 66,157 62,517 Unearned compensation (280) (229) Accumulated other comprehensive (loss) income (203) 45 Retained earnings 12,554 74,758 Treasury stock, at cost; 7,102,467 shares as of December 27, 2003 - (74,777) Total stockholders' equity 78,370 62,524 Total liabilities and stockholders' equity $107,462 $87,354 Consolidated Statements of Cash Flows: (unaudited) Twelve Months Ended Dec 25, Dec 27, 2004 2003 Cash flows from operating activities: Net income $12,502 $10,558 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 5,025 7,106 (Gain) Loss on disposal of fixed assets (4) 102 Bad debt expense (recovery) 147 (113) Realized loss (gain) on sale of short-term investments 229 (128) Stock compensation expense 121 85 Changes in assets and liabilities: Accounts receivable (2,541) 7,514 Inventories (2,671) (1,548) Prepaid expenses 243 158 Other current assets 1,588 (1,432) Deferred income taxes (449) 1,427 Other assets (139) (1,653) Accounts payable 3,349 (2,602) Accrued expenses 990 159 Other long-term liabilities (32) 8 Net cash from operating activities 18,358 19,641 Cash flows from investing activities: Purchases of property, plant and equipment (4,559) (1,729) Proceeds on disposal of property, plant and equipment 4 32 Purchases of available-for-sale securities (30,255) (3,778) Proceeds from the sale of available-for-sale securities 20,983 20,470 Net cash (used in) from investing activities (13,827) 14,995 Cash flows from financing activities: Purchase of treasury stock - (29,828) Proceeds from exercise of stock options 3,213 2,143 Net proceeds from the sale of investment shares 258 233 Net cash from (used in) financing activities 3,471 (27,452) Change in cash and cash equivalents 8,002 7,184 Cash and cash equivalents at beginning of year 27,792 20,608 Cash and cash equivalents at end of year $35,794 $27,792 Supplemental disclosure of cash flow information: Interest paid $53 $67 Taxes paid $5,202 $5,571
SOURCE The Boston Beer Company, Inc.
Michelle Sullivan of The Boston Beer Company, Inc.,