Boston Beer Shares Trade 20% Higher on Strong Q2 Financial Results and Positive FY Outlook
Source: Streetwise Reports
July 27, 2020 (Investorideas.com Newswire) Shares of Boston Beer Company reached a new 52-week high after the company reported Q2/20 financial results that included a 42% y-o-y increase in net revenue.
The firm reported that in Q2/20, it posted net revenue of $452.1 million, an increase of $133.7 million or 42.0%, compared to Q2/19. In the same period, net income increased 116% to $60.1 million compared to $32.3 million in Q2/19. The firm stated that earnings per diluted share in Q2/20 were $4.88, compared to $2.36 in Q2/19. The company claimed that the earnings gain was mostly due to increased revenue driven by shipment growth of 39.8%, but was partially offset by lower gross margins and increased operating expenses.
The firm additionally noted that net revenue for H1/20 increased 37.3% to $782.7 million, versus $570.1 million in H1/19 and that earnings per diluted share for the 26-week period ended June 27, 2020 increased 45.4% to $6.37, compared to $4.38 in the same corresponding period last year.
The company said that it started seeing the first impact of the COVID-19 pandemic on its business in early March and that it significantly reduced keg demand from the on-premise channel and that it had experienced higher labor and safety related costs at its breweries.
The company's Chairman and Founder Jim Koch remarked, "As the world continues to grapple with the COVID-19 pandemic, our primary focus continues to be on operating our breweries and our business safely and supporting our partners in the beer industry. Supporting the communities in which we work and live is one of our core values and we are very happy that our Samuel Adams Restaurant Strong Fund has raised $5.4 million thus far to support bar and restaurant workers who are experiencing hardships in the wake of COVID-19...We achieved depletions growth of 46% in the second quarter, of which 42% is from Boston Beer legacy brands and 4% is from the addition of Dogfish Head brands..We remain positive about the future growth of our brands and are happy that our diversified brand portfolio continues to fuel double-digit growth."
The firm's President and CEO Dave Burwick commented, "Our depletions growth in the second quarter was a result of increases in our Truly Hard Seltzer and Twisted Tea brands and the addition of the Dogfish Head brands that were only partially offset by decreases in our Samuel Adams and Angry Orchard brands. The growth of the Truly brand, led by Truly Hard Lemonade, has accelerated and continues to grow beyond our expectations...Twisted Tea continues to generate double-digit volume growth rates that are well above full-year 2019 trends. We expect to increase our brand investments in the second half compared to the first half and see significant distribution and volume growth opportunities for our Truly, Twisted Tea and Dogfish Head brands."
"Samuel Adams and Angry Orchard's volumes continue to decline, as they are more deeply impacted by the effect of COVID-19 on on-premise retailers. We are encouraged that Samuel Adams Boston Lager and Angry Orchard Crisp Apple both have experienced double-digit growth in the measured off-premise channels during the quarter...Given our trends for the first half and our current view of the remainder of the year, we've adjusted our expectations for higher 2020 full-year earnings, depletions and shipment growth, which is primarily driven by the strong performance of our Truly and Twisted Tea brands," CEO Burwick added.
The company advised that it projects FY/20 earnings per diluted share to be between $11.70 and $12.70 excluding the impact of ASU 2016-09. The firm stated that the projections are based on expectations that depletions and shipments percentage increases 27-35% of which 1-2% of this growth is due to the addition of the Dogfish Head brands, price increases nationwide of 1-2% and a gross margin of 46-48%.
Boston Beer Company is an alcoholic beverage company that began in 1984 brewing Samuel Adams beer and has since expanded by adding several other craft beer brands and other hard cider and seltzer beverages. The firm's brand portfolio includes Angry Orchard Hard Cider, Truly Hard Seltzer, Twisted Tea and craft beer brands Angel City Brewery, Coney Island Brewing, Concrete Beach Brewery and Dogfish Head Brewery.
Boston Beer began the day with a market capitalization of around $8.0 billion with approximately 12.18 million shares outstanding and a short interest of about 9.3%. SAM shares opened almost 8% higher today at $711.20 (+$51.97, +7.88%) over yesterday's $659.23 closing price and reached a new 52-week high price this morning of $813.04. The stock has traded today between $703.99 and $813.04 per share and is currently trading at $792.97 (+$133.99, +20.88%).
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