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The Boston Beer Company Inc. Reports Operating Results (10-Q)

November 01, 2012 | About:
10qk

10qk

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The Boston Beer Company Inc. (SAM) filed Quarterly Report for the period ended 2012-09-29.

Boston Beer Company, Inc. has a market cap of $1.37 billion; its shares were traded at around $108 with a P/E ratio of 25.7 and P/S ratio of 2.7. Boston Beer Company, Inc. had an annual average earning growth of 22.4% over the past 10 years. GuruFocus rated Boston Beer Company, Inc. the business predictability rank of 4-star.

Highlight of Business Operations:

Net revenue. Net revenue increased by $31.6 million, or 23.5%, to $166.4 million for the thirteen weeks ended September 29, 2012, as compared to $134.8 million for the thirteen weeks ended September 24, 2011, due primarily to increased shipments and pricing improvements.

Gross profit. Gross profit for core products was $120.63 per barrel for the thirteen weeks ended September 29, 2012, as compared to $115.46 per barrel for the thirteen weeks ended September 24, 2011. Gross margin for core products was 56.1% for the thirteen weeks ended September 29, 2012, as compared to 56.4% for the thirteen weeks ended September 24, 2011. The increase in gross profit per barrel of $5.17 is primarily due to an increase in net revenue per barrel, partially offset by an increase in cost of goods sold per barrel.

Advertising, promotional and selling. Advertising, promotional and selling expenses increased by $8.3 million, or 21.1%, to $47.6 million for the thirteen weeks ended September 29, 2012, as compared to $39.3 million for the thirteen weeks ended September 24, 2011. Such expenses for core brands were 28.7% of net revenue, or $61.71 per barrel, for the thirteen weeks ended September 29, 2012, as compared to 29.2% of net revenue, or $59.78 per barrel, for the thirteen weeks ended September 24, 2011. The increase is primarily a result of increased investments in local marketing, advertising and point of sale, costs for additional sales personnel, and freight to wholesalers due to higher volumes.

Advertising, promotional and selling. Advertising, promotional and selling expenses increased by $14.8 million, or 12.9%, to $130.2 million for the thirty-nine weeks ended September 29, 2012, as compared to $115.4 million for the thirty-nine weeks ended September 24, 2011. The increase is primarily a result of increased investments in local marketing, advertising and point of sale, costs for additional sales personnel, as well as increased costs of freight to wholesalers. Advertising, promotional and selling expenses for core brands were 30.5% of net revenue, or $65.17 per barrel, for the thirty-nine weeks ended September 29, 2012, as compared to 31.2% of net revenue, or $64.02 per barrel, for the comparable period in 2011.

The Companys projected full year 2012 earnings per diluted share are estimated to be between $3.80 and $4.20. The Companys actual 2012 earnings per diluted share could vary significantly from the current projection. The Company expects depletions growth of 8% to 12% for the fifty-two week period ending December 29, 2012 compared against the fifty-two week period ending December 31, 2011. The Company expects shipment growth of 7% to 10% for the fifty-two week period ending December 29, 2012 compared against the fifty-three week fiscal period ending December 31, 2011. The Company is targeting price increases per barrel of approximately 3%. The Company estimates aggregate inventory reduction at wholesalers participating in the Freshest Beer Program of between 100 thousand and 300 thousand case equivalents at year end compared to same time last year. Full-year 2012 gross margins are currently expected to be between 54% and 56%. The Company now estimates the full year 2012 increase in advertising, promotional and selling expense, not including any increase in freight costs for the shipment of products to the Companys wholesalers, to be between $14 million and $18 million from the previously communicated estimate of $11 million to $15 million. Approximately $10.5 million of this increase has been incurred in the nine months ending September 29, 2012. The Company estimates startup costs of $3 million to $5 million for new brands developed by Alchemy & Science of which $2 million to $3 million are included in our full-year estimated increases in advertising, promotional and selling expenses. The Company believes that its 2012 effective tax rate will be approximately 38%.

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