USA: Boston Beer reports 25.5% increase in net revenue for 2019

The Boston Beer Company, Inc. reported fourth quarter 2019 net revenue of $301.3 million, an increase of $76.1 million or 33.8% from the fourth quarter of 2018, mainly due to an increase in shipments of 31.7%.

Net income for the fourth quarter was $13.8 million, or $1.12 per diluted share, a decrease of $8.0 million or $0.74 per diluted share from the fourth quarter of 2018. This decrease was primarily due to increases in advertising, promotional and selling expenses and lower gross margins that were only partially offset by the increased revenue.

Earnings per diluted share for the 52-week period ended December 28, 2019 were $9.16, an increase of $1.34, or 17.1%, from the comparable 52-week period in 2018. Net revenue for the 52-week period ended December 28, 2019 was $1.25 billion, an increase of $254.2 million, or 25.5%, from the comparable 52-week period in 2018.

The company completed the previously reported Dogfish Head Brewery transaction and began consolidating the Dogfish Head financial results on July 3, 2019. In the fourth quarter ended December 28, 2019, the company incurred non-recurring Dogfish Head transaction-related expenses of $2.1 million. In the 52-week period ended December 28, 2019, non-recurring Dogfish Head transaction-related expenses of $10.0 million were partially offset by Dogfish Head operating income of $6.9 million. Excluding this $3.1 million net unfavorable impact, the company's operating income for the 52-week period ended December 28, 2019 was $148.0 million, an increase of $32.1 million or 27.7% from the comparable 52-week period in 2018.

In the fourth quarter and the 52-week period ended December 28, 2019, the earnings per diluted share impact from Dogfish Head's operating results net of the dilutive impact of the transaction-related share issuance was more than offset by the non-recurring transaction-related expenses, resulting in a combined unfavorable impact of $0.18 per diluted share and $0.40 per diluted share, respectively. Going forward for 2020, the company will report Dogfish Head's impact on 2020 shipments and depletion volume growth rates but does not plan to report the earnings per diluted share impact of Dogfish Head as it has been fully integrated into the company's operations beginning in early 2020.

In the fourth quarter and the 52-week period ended December 28, 2019, the company recorded a tax benefit of $0.06 per diluted share and $0.39 per diluted share, respectively, resulting from the Accounting Standard "Employee Share-Based Payment Accounting" ("ASU 2016-09"), which was effective for the Company on January 1, 2017.

Jim Koch, Chairman and Founder of the Company, commented, "We are happy to report 25% fourth quarter depletions growth, of which 19% is from Boston Beer legacy brands and 6% is from the addition of Dogfish Head brands. We are making good progress on the Dogfish Head integration and have merged our sales forces and our business processes and systems. We have learned a lot from each other, as we have merged our teams, culture, values and innovation capability. Collectively, we are thankful to our outstanding coworkers for their focus and diligence and our distributors, retailers and drinkers, all of whom helped the Company to achieve double digit volume growth for the seventh consecutive quarter. We believe that our depletions growth is attributable to our key innovations, the quality of our products and our strong brands, as well as sales execution and support from our distributors. We see significant distribution and volume growth opportunities in 2020 for our Dogfish Head brands as our Truly, Twisted Tea and Dogfish Head brands remain our top priorities for 2020. At the same time, we are working hard to further develop our brand support and messaging for our Samuel Adams brand to position it for long-term sustainable growth, in the face of a difficult competitive environment. We are excited about the response to the reformulation of our Samuel Adams Cold Snap seasonal, our new Samuel Adams 'Toast Someone' campaign, and the Samuel Adams Tap Room that opened in downtown Boston in January. We are confident in our ability to innovate and build strong brands that complement our current portfolio and help support our mission of long-term profitable growth."

21 February, 2020