The Boston Beer Company Inc. (SAM, Financial) filed Quarterly Report for the period ended 2009-03-28.
The Boston Beer Company Inc. produces beer malt beverages and cider products at Company-owned breweries and under contract. Their beer products are primarily positioned in the `Better Beer` category of the beer industry which includes craft beers and most imports sold at premium prices. The Boston Beer Company Inc. has a market cap of $284.3 million; its shares were traded at around $28.01 with a P/E ratio of 17.6 and P/S ratio of 0.7. The Boston Beer Company Inc. had an annual average earning growth of 23.8% over the past 5 years.
Gross profit. Gross profit for core products was $100.25 per barrel for the three months ended March 28, 2009, as compared to $79.34 for the three months ended March 29, 2008. Gross margin for core products was 50% for the three months ended March 28, 2009, as compared to 42% for the three months ended March 29, 2008. Excluding the impact of costs associated with the voluntary product recall in 2008 of $22.81 per core barrel, gross profit for core products was $106.37 per barrel and gross margin was 55% for the first quarter of 2008. The decrease in gross profit per barrel of $6.12 and gross margin of 5% is due to an increase in cost of goods sold per barrel, partially offset by an increase in the Companys net selling price per barrel.
Advertising, promotional and selling. Advertising, promotional and selling expenses decreased by $5.6 million, or 18%, to $25.9 million for the three months ended March 28, 2009, as compared to $31.5 million for the three months ended March 29, 2008. The decrease is primarily a result of decreases in freight expenses for shipping beer to wholesalers driven by reduced fuel costs, as well as reduced advertising expense and more efficient purchasing of media in the first quarter of 2009. Advertising, promotional and selling expenses for core brands were 34% of net revenue, or $67.78 per barrel, for the three months ended March 28, 2009, as compared to 42% of net revenue, or $79.15 per barrel, for the three months ended March 29, 2008. The decreases in advertising, promotional and selling expenses per barrel and as a percentage of net revenue are due to the effect of the product recall on net revenue in 2008. The Company will invest in advertising and promotional campaigns that it believes are effective, but there is no guarantee that such investment will generate sales growth.
Cash flows provided by operating activities of $0.1 million for the three months ended March 28, 2009 primarily resulted from non-cash items of $5.5 million and net income of $1.4 million, partially offset by a net increase in operating assets and liabilities of $6.8 million. Cash flows provided by operating activities of $10.0 million for the three months ended March 29, 2008 primarily resulted from the sale of all of the Companys remaining trading securities of $16.2 million and non-cash items of $1.6 million, partially offset by a net loss of $3.7 million and a net increase in operating assets and liabilities of $4.0 million.
Comparing the three month periods ended March 28, 2009 and March 29, 2008, cash flows provided by operating activities decreased by $9.9 million. The decrease resulted from a decrease in sales of trading securities of $16.2 million and a net increase in operating assets and liabilities of $2.8 million, offset by a $5.1 million increase in net income and a $4.0 million increase in non-cash items. The net increase in operating assets and liabilities of $6.8 million in 2009, as compared to the $4.0 million net increase in 2008, is primarily attributable to a change in accrued expenses of $14.4 million, offset by changes in accounts receivable of $3.4 million, inventories of $2.1 million, prepaid expenses and other assets of $3.5 million and accounts payable of $2.7 million.
Cash provided by financing activities was $0.1 million during the three months ended March 28, 2009, as compared to $11.8 million of cash used in financing activities during the three months ended March 29, 2008. The $11.9 million change in cash used for financing activities is primarily due to $15.3 million in repurchases of Class A Common Stock in the prior year, partially offset by a reduction in proceeds from the exercise of stock options of $1.9 million and a reduction in excess tax benefits from stock-based compensation arrangements of $1.5 million.
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The Boston Beer Company Inc. produces beer malt beverages and cider products at Company-owned breweries and under contract. Their beer products are primarily positioned in the `Better Beer` category of the beer industry which includes craft beers and most imports sold at premium prices. The Boston Beer Company Inc. has a market cap of $284.3 million; its shares were traded at around $28.01 with a P/E ratio of 17.6 and P/S ratio of 0.7. The Boston Beer Company Inc. had an annual average earning growth of 23.8% over the past 5 years.
Highlight of Business Operations:
Net revenue. Net revenue increased by $5.0 million, or 7%, to $81.1 million for the three months ended March 28, 2009, as compared to $76.1 million for the three months ended March 29, 2008. Excluding the impact of $9.1 million associated with the voluntary product recall in 2008, net revenue for the first quarter of 2008 was $85.2 million. Not including the recall costs, net revenue for the three months ended March 28, 2009 decreased by $4.1 million versus the three months ended March 29, 2008 due to decreases in core shipment volume, partially offset by 2009 increases in net selling prices per core barrel and revenue related to the Diageo packaging services agreement.Gross profit. Gross profit for core products was $100.25 per barrel for the three months ended March 28, 2009, as compared to $79.34 for the three months ended March 29, 2008. Gross margin for core products was 50% for the three months ended March 28, 2009, as compared to 42% for the three months ended March 29, 2008. Excluding the impact of costs associated with the voluntary product recall in 2008 of $22.81 per core barrel, gross profit for core products was $106.37 per barrel and gross margin was 55% for the first quarter of 2008. The decrease in gross profit per barrel of $6.12 and gross margin of 5% is due to an increase in cost of goods sold per barrel, partially offset by an increase in the Companys net selling price per barrel.
Advertising, promotional and selling. Advertising, promotional and selling expenses decreased by $5.6 million, or 18%, to $25.9 million for the three months ended March 28, 2009, as compared to $31.5 million for the three months ended March 29, 2008. The decrease is primarily a result of decreases in freight expenses for shipping beer to wholesalers driven by reduced fuel costs, as well as reduced advertising expense and more efficient purchasing of media in the first quarter of 2009. Advertising, promotional and selling expenses for core brands were 34% of net revenue, or $67.78 per barrel, for the three months ended March 28, 2009, as compared to 42% of net revenue, or $79.15 per barrel, for the three months ended March 29, 2008. The decreases in advertising, promotional and selling expenses per barrel and as a percentage of net revenue are due to the effect of the product recall on net revenue in 2008. The Company will invest in advertising and promotional campaigns that it believes are effective, but there is no guarantee that such investment will generate sales growth.
Cash flows provided by operating activities of $0.1 million for the three months ended March 28, 2009 primarily resulted from non-cash items of $5.5 million and net income of $1.4 million, partially offset by a net increase in operating assets and liabilities of $6.8 million. Cash flows provided by operating activities of $10.0 million for the three months ended March 29, 2008 primarily resulted from the sale of all of the Companys remaining trading securities of $16.2 million and non-cash items of $1.6 million, partially offset by a net loss of $3.7 million and a net increase in operating assets and liabilities of $4.0 million.
Comparing the three month periods ended March 28, 2009 and March 29, 2008, cash flows provided by operating activities decreased by $9.9 million. The decrease resulted from a decrease in sales of trading securities of $16.2 million and a net increase in operating assets and liabilities of $2.8 million, offset by a $5.1 million increase in net income and a $4.0 million increase in non-cash items. The net increase in operating assets and liabilities of $6.8 million in 2009, as compared to the $4.0 million net increase in 2008, is primarily attributable to a change in accrued expenses of $14.4 million, offset by changes in accounts receivable of $3.4 million, inventories of $2.1 million, prepaid expenses and other assets of $3.5 million and accounts payable of $2.7 million.
Cash provided by financing activities was $0.1 million during the three months ended March 28, 2009, as compared to $11.8 million of cash used in financing activities during the three months ended March 29, 2008. The $11.9 million change in cash used for financing activities is primarily due to $15.3 million in repurchases of Class A Common Stock in the prior year, partially offset by a reduction in proceeds from the exercise of stock options of $1.9 million and a reduction in excess tax benefits from stock-based compensation arrangements of $1.5 million.
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