The Boston Beer Company (SAM, Financial) reported earnings on Tuesday after a rough market close, and continued the trend: As of writing, it is down roughly 8% after hours, and close to 10% on the day. This felt like déjà vu in a lot of ways, considering that the stock took a near identical hit after Q1 earnings were released. Here are some of the key highlights from the 10-Q and the conference call:
The balance sheet continues to look good, with more than $66 million in cash/equivalents and current assets outnumbering total liabilities by nearly $40 million dollars; book value has increased roughly 10% since the end of last year.
Net revenue increased by $4.4 million, or 3.4%, to $134.0 million; depletions, or sales by wholesalers to retailers, of the company's core products for the second quarter of 2011 increased by approximately 6.8% compared to Q2 2010.
The net selling price per core product barrel increased by 0.5% to $206.90 per barrel for the three months ended June 25, 2011, as compared to $205.97 per barrel for the same period last year. This doesn’t look too bad in comparison to COGS, which was $1.78 lower per core product barrel compared to Q2 of last year. However, that doesn’t reflect the increasing cost of freight charges, which the company accounts for under advertising, promotional and selling expenses; this account increased by $5.4 million, or 15.4%, for the quarter, and jumped to 30.3% of net revenues (from 27.2% in Q2 2010).
After backing out $20.5 million in settlement proceeds from litigation with a former glass bottle supplier, operating income came in about $2.5 million lower than last year. With a mid-20’s forward multiple, those numbers aren’t going to cut it (not to suggest that management is to blame for an extremely tough pricing and consumer environment).
SAM reduced its full year 2011 earnings per diluted share projection to between $3.20 and $3.60 from the previous range of $3.45 and $3.95, including the estimated negative earnings per share impact of between $0.10 and $0.20 due to reduced shipments related to the implementation of the Freshest Beer Program. The remainder is accounted for by higher freight and an expected reduction in depletions from earlier estimates; this is in addition to potential issues in the back half, especially the concern of inability to take pricing despite rising barely costs.
As management touched on during the call, the industry is becoming increasingly competitive; as small brewers continue to fight for shelf space and the big boys are looking to grab onto a category that can bring some double digit growth, craft/premium continues to face both pricing and (like almost every CPG company out there) input cost pressure. Regardless, it is reassuring to hear that management is continuing their brand investments; time will tell whether it pays off in the continued fight for market share in the craft beer segment.
The balance sheet continues to look good, with more than $66 million in cash/equivalents and current assets outnumbering total liabilities by nearly $40 million dollars; book value has increased roughly 10% since the end of last year.
Net revenue increased by $4.4 million, or 3.4%, to $134.0 million; depletions, or sales by wholesalers to retailers, of the company's core products for the second quarter of 2011 increased by approximately 6.8% compared to Q2 2010.
The net selling price per core product barrel increased by 0.5% to $206.90 per barrel for the three months ended June 25, 2011, as compared to $205.97 per barrel for the same period last year. This doesn’t look too bad in comparison to COGS, which was $1.78 lower per core product barrel compared to Q2 of last year. However, that doesn’t reflect the increasing cost of freight charges, which the company accounts for under advertising, promotional and selling expenses; this account increased by $5.4 million, or 15.4%, for the quarter, and jumped to 30.3% of net revenues (from 27.2% in Q2 2010).
After backing out $20.5 million in settlement proceeds from litigation with a former glass bottle supplier, operating income came in about $2.5 million lower than last year. With a mid-20’s forward multiple, those numbers aren’t going to cut it (not to suggest that management is to blame for an extremely tough pricing and consumer environment).
SAM reduced its full year 2011 earnings per diluted share projection to between $3.20 and $3.60 from the previous range of $3.45 and $3.95, including the estimated negative earnings per share impact of between $0.10 and $0.20 due to reduced shipments related to the implementation of the Freshest Beer Program. The remainder is accounted for by higher freight and an expected reduction in depletions from earlier estimates; this is in addition to potential issues in the back half, especially the concern of inability to take pricing despite rising barely costs.
As management touched on during the call, the industry is becoming increasingly competitive; as small brewers continue to fight for shelf space and the big boys are looking to grab onto a category that can bring some double digit growth, craft/premium continues to face both pricing and (like almost every CPG company out there) input cost pressure. Regardless, it is reassuring to hear that management is continuing their brand investments; time will tell whether it pays off in the continued fight for market share in the craft beer segment.
