Boston Beer (NYSE: SAM), the manufacturer of Sam Adams beer, surprised investors yesterday night with a quarterly profit announcement that fell significantly short of expectations. As a result, the stock has been hammered this morning, with shares down more than 24% as of Friday afternoon.
For the second quarter of 2021, Boston Beer posted earnings per share of $4.75, significantly below the analyst average of $6.69. In addition, revenue fell short of projections. Weaker sales of its famous Truly hard seltzer product, as well as general weakness in the beer sector, were cited by the company.
Headwinds for the hard seltzer category, according to Boston Beer chairman and founder Jim Koch, include market maturation, a “gradual transfer” of the product from household sales to on-premise consumption, and more competing offers.
Despite this, Boston Beer recorded a 33 percent increase in revenue for the quarter compared to the previous year. Investors, on the other hand, were depending on the fast-growing hard seltzer sector to continue to contribute significantly. Analysts are downgrading and shareholders are selling today due to the fact that it was considerably softer than even the business predicted.
About Boston Beer
Samuel Adams beer was first produced by the Boston Beer Company in 1984, and it is now one of the most well-known and recognized craft beer brands in the world.
Quarter 2 earnings
- Over the prior year’s 13- and 26-week similar periods, depletions increased by 24% and 33%, respectively.
- Net sales increased to $602.8 million, they fell short of Wall Street’s forecasts.
- Over the previous year’s 13- and 26-week comparable periods, shipments increased by 27.4 percent and 41.3 percent, respectively.
- The rise in depletion and shipment for the full year is now projected to be between 25% and 40%, down from the previously disclosed prediction of between 40% and 50%.
- The gross margin in the second quarter was 45.7 percent, down from 46.4 percent in the same 13-week period in 2020, and 45.8 percent in the 26-week period ending June 26, 2021, up from 45.7 percent in the same 26-week period in 2020. SAM’s full-year gross margin target is still between 45 and 47 percent.
- Advertising, promotional, and selling costs increased by $61.3 million, or 61.1 percent, in the second quarter of 2020 compared to the same period in 2020, and by $104.3 million, or 52.6 percent, over the same 26-week period in 2020.
- Non-GAAP earnings per diluted share1 this year, excluding the impact of ASU 2016-09, are now projected to range from $18.00 to $22.00, down from a previously announced range of $22.00 to $26.00.
As the COVID-19 pandemic diminishes, SAM’s first goal remains responsibly managing its breweries and company while simultaneously working hard to meet the requirements of customers. Throughout the epidemic, SAM is immensely proud of its workers’ dedication, ingenuity, and commitment to the community. SAM began to see the impacts of the COVID-19 pandemic on its activities in early March 2020. The pandemic had a direct financial impact on the Company’s brewers, resulting in reduced keg demand through the On-Premise channel and higher labour and safety-related costs.
Boston Beer shares have suffered after hitting record highs during its previous earnings release, losing 24 percent in the last three months while the S&P 500 index SPX, 0.97 percent has gained 5.4 percent. However, the stock is still risen 42.7 percent in the last year.
Molson Coors Beverage Co. TAP, -1.07 percent, Anheuser Busch InBev SA BUD, 0.15 percent, and Constellation Brands Inc. STZ, 0.44 percent all fell more than 1% in the extended session Thursday following Boston Beer’s announcement.