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Boston Beer (SAM) Q2 Earnings Miss Estimate, Shipments Dip 6.4%
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The Boston Beer Company, Inc. (SAM - Free Report) posted disappointing second-quarter 2024 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Both net sales and earnings also declined from the year-ago period. Results were impacted by soft volume trends due to soft Truly Hard Seltzer performance.
The craft brewer reported second-quarter earnings per share of $4.39 per share, which missed the Zacks Consensus Estimates of $4.99 per share and declined 7% year over year.
Net revenues of $579.1 million decreased 4% from the prior year quarter and missed the Zacks Consensus Estimate of $595 million. The decline can be mainly attributed to soft volume trends for both shipments and depletions, partly negated by pricing and lower returns. Excluding excise taxes, the top line decreased 4.2% year over year to $614.2 million.
Shares of this Zacks Rank #4 (Sell) company have lost 5.3% in the past three months compared with the industry’s decline of 4.3%.
Image Source: Zacks Investment Research
Quarter in Detail
The shipment volume deteriorated 6.4% from the year-ago period to 2.2 million barrels in the second quarter of 2024, whereas depletions volume fell 4% year over year. The decline mainly resulted from the weak performance of Truly Hard Seltzer, partially offset by growth in the Twisted Tea brand and its newly launched Sun Cruiser brand.
The company experienced lower-than-targeted distributor inventories as of Jun 29, 2024, which resulted in SAM failing to ship adequate amounts to meet the improving demand in the latter weeks of June. As of Jun 29, 2024, distributor inventory averaged three and one-half weeks compared with the targeted four to five weeks for our peak summer season. The company is focused on increasing shipments in July and August to restore wholesaler inventories to the target levels.
The gross profit declined 2.8% year over year to $266.5 million, whereas the gross margin expanded 60 basis points (bps) to 46% from 45.4% in the year-ago quarter. The gross margin primarily benefited from higher prices, procurement savings and lower returns, which outweighed the impact of elevated brewery processing costs per barrel due to lower volumes and increased inflationary costs. The company’s gross margin included $3 billion of shortfall fees and $6.2 million of non-cash expenses related to third-party production pre-payments, impacting the gross margin by 50 bps and 110 bps, respectively, in the second quarter.
Advertising, promotional and selling expenses declined 3.5% in the second quarter to $144.2 million due to lower freight to distributors of $2.8 million on reduced rates and lower volumes. In the quarter, the company revealed that brand and selling costs declined $2.3 million due to reduced spending on brand media.
General and administrative expenses increased 7% year over year to $48 million, mainly due to higher salaries and benefits costs.
The Boston Beer Company, Inc. Price, Consensus and EPS Surprise
As of Jun 29, 2024, Boston Beer had cash and cash equivalents of $219.3 million and total stockholders’ equity of $1.04 billion. The company currently has $150 million in its line of credit, which, along with its cash position, will be sufficient to meet cash requirements.
The company repurchased Class A common stocks worth $127 million year to date. As of Jul 19, 2024, the company had $140 million remaining under its current share repurchase authorization of $1.2 billion.
Outlook
Boston Beer reaffirmed its guidance for 2024. The company envisions GAAP earnings per share of $7.00-$11.00 for 2024. Depletions and shipments are expected between a low-single-digit decline and zero. The company estimates a price hike of 1-2% for 2024.
SAM anticipates a gross margin of 43-45% for 2024. The company's gross margin guidance includes the negative impacts of 50-75 bps from shortfall fees and 85-110 bps from non-cash expenses of third-party production pre-payments.
Advertising, promotional and selling expenses in 2024 are expected between ($5) million and $15 million. This does not include any change in freight costs for the shipment of products to distributors. The company anticipates an effective tax rate of 28.5% for 2024. Capital spending is expected to be $90-$110 million for 2024.
Consumer Staples Stocks Worth a Look
Here, we have highlighted three better-ranked stocks, namely, Vital Farms (VITL - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Post Holdings (POST - Free Report) .
Vital Farms offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 24.9% and 66.1%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 10.4%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings indicates a rise of around 8.1% and 12.4%, respectively, from the year-earlier levels.
Post Holdings is a consumer-packaged goods holding company involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. POST currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggests growth of 14.2% and 6.9%, respectively, from the year-ago period's reported figures. POST has a trailing four-quarter earnings surprise of 40.9%, on average.
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Boston Beer (SAM) Q2 Earnings Miss Estimate, Shipments Dip 6.4%
The Boston Beer Company, Inc. (SAM - Free Report) posted disappointing second-quarter 2024 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Both net sales and earnings also declined from the year-ago period. Results were impacted by soft volume trends due to soft Truly Hard Seltzer performance.
The craft brewer reported second-quarter earnings per share of $4.39 per share, which missed the Zacks Consensus Estimates of $4.99 per share and declined 7% year over year.
Net revenues of $579.1 million decreased 4% from the prior year quarter and missed the Zacks Consensus Estimate of $595 million. The decline can be mainly attributed to soft volume trends for both shipments and depletions, partly negated by pricing and lower returns. Excluding excise taxes, the top line decreased 4.2% year over year to $614.2 million.
Shares of this Zacks Rank #4 (Sell) company have lost 5.3% in the past three months compared with the industry’s decline of 4.3%.
Image Source: Zacks Investment Research
Quarter in Detail
The shipment volume deteriorated 6.4% from the year-ago period to 2.2 million barrels in the second quarter of 2024, whereas depletions volume fell 4% year over year. The decline mainly resulted from the weak performance of Truly Hard Seltzer, partially offset by growth in the Twisted Tea brand and its newly launched Sun Cruiser brand.
The company experienced lower-than-targeted distributor inventories as of Jun 29, 2024, which resulted in SAM failing to ship adequate amounts to meet the improving demand in the latter weeks of June. As of Jun 29, 2024, distributor inventory averaged three and one-half weeks compared with the targeted four to five weeks for our peak summer season. The company is focused on increasing shipments in July and August to restore wholesaler inventories to the target levels.
The gross profit declined 2.8% year over year to $266.5 million, whereas the gross margin expanded 60 basis points (bps) to 46% from 45.4% in the year-ago quarter. The gross margin primarily benefited from higher prices, procurement savings and lower returns, which outweighed the impact of elevated brewery processing costs per barrel due to lower volumes and increased inflationary costs. The company’s gross margin included $3 billion of shortfall fees and $6.2 million of non-cash expenses related to third-party production pre-payments, impacting the gross margin by 50 bps and 110 bps, respectively, in the second quarter.
Advertising, promotional and selling expenses declined 3.5% in the second quarter to $144.2 million due to lower freight to distributors of $2.8 million on reduced rates and lower volumes. In the quarter, the company revealed that brand and selling costs declined $2.3 million due to reduced spending on brand media.
General and administrative expenses increased 7% year over year to $48 million, mainly due to higher salaries and benefits costs.
The Boston Beer Company, Inc. Price, Consensus and EPS Surprise
The Boston Beer Company, Inc. price-consensus-eps-surprise-chart | The Boston Beer Company, Inc. Quote
Financials
As of Jun 29, 2024, Boston Beer had cash and cash equivalents of $219.3 million and total stockholders’ equity of $1.04 billion. The company currently has $150 million in its line of credit, which, along with its cash position, will be sufficient to meet cash requirements.
The company repurchased Class A common stocks worth $127 million year to date. As of Jul 19, 2024, the company had $140 million remaining under its current share repurchase authorization of $1.2 billion.
Outlook
Boston Beer reaffirmed its guidance for 2024. The company envisions GAAP earnings per share of $7.00-$11.00 for 2024. Depletions and shipments are expected between a low-single-digit decline and zero. The company estimates a price hike of 1-2% for 2024.
SAM anticipates a gross margin of 43-45% for 2024. The company's gross margin guidance includes the negative impacts of 50-75 bps from shortfall fees and 85-110 bps from non-cash expenses of third-party production pre-payments.
Advertising, promotional and selling expenses in 2024 are expected between ($5) million and $15 million. This does not include any change in freight costs for the shipment of products to distributors. The company anticipates an effective tax rate of 28.5% for 2024. Capital spending is expected to be $90-$110 million for 2024.
Consumer Staples Stocks Worth a Look
Here, we have highlighted three better-ranked stocks, namely, Vital Farms (VITL - Free Report) , Ollie's Bargain Outlet (OLLI - Free Report) and Post Holdings (POST - Free Report) .
Vital Farms offers a range of produced pasture-raised foods. It currently sports a Zacks Rank #1 (Strong Buy). VITL has a trailing four-quarter average earnings surprise of 102.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings suggests growth of 24.9% and 66.1%, respectively, from the year-ago reported numbers.
Ollie's Bargain, the extreme-value retailer of brand-name merchandise, currently carries a Zacks Rank #2 (Buy). OLLI has a trailing four-quarter earnings surprise of 10.4%, on average.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings indicates a rise of around 8.1% and 12.4%, respectively, from the year-earlier levels.
Post Holdings is a consumer-packaged goods holding company involved in the production of center-of-the-store, refrigerated, foodservice, food ingredient and convenient nutrition product categories. POST currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Post Holdings’ current financial-year sales and earnings suggests growth of 14.2% and 6.9%, respectively, from the year-ago period's reported figures. POST has a trailing four-quarter earnings surprise of 40.9%, on average.