E-Malt.com News article: US: Boston Beer Company reports successful Q1 2011

The Boston Beer Company, Inc. reported on May, 4 first quarter 2011 net revenue of $102.2 million, an increase of $8.1 million, over the same period last year, mainly due to shipment volume gains. Net income for the first quarter was $4.0 million, or $0.28 per diluted share, a decrease of $2.3 million, or $0.16 per diluted share, from the first quarter of 2010. This decrease was primarily due to increased investments in advertising, promotional and selling expenses.

First quarter depletions grew by 7% and core shipments increased by 10%, the company said.

Core shipment volume was approximately 498,000 barrels, a 10% increase over the same period in 2010. The increase in shipments for the quarter is due primarily to increases in Twisted TeaŪ, Samuel Adams Boston LagerŪ, Samuel AdamsŪ Brewmaster's Collection and Samuel AdamsŪ Seasonals, partially offset by declines in Sam Adams LightŪ.

First quarter gross margin was 51%; the company maintains its full year gross margin target of between 54% and 56%.

Advertising, promotional and selling expense increased by $6.4 million or 22% for the quarter, primarily due to planned increased investments behind the company's brands.

Net income for the first quarter was $4.0 million, or $0.28 per diluted share, a decrease of $2.3 million, or $0.16 per diluted share, from the first quarter of 2010 primarily due to the increased advertising, promotional and selling expenses.

The company's full year 2011 earnings per diluted share projection of between $3.45 and $3.95 remains unchanged.

Jim Koch, Chairman and Founder of the Company, commented, "We achieved record total depletions in the first quarter. We believe that our depletions growth is attributable to our strong sales execution and support from our wholesalers and retailers, and is an excellent result when measured against our very strong first quarter of 2010. We are still seeing expanded distribution of domestic specialty brands and craft brands, but even so, we grew both our flagship Samuel Adams Boston LagerŪ and our Samuel AdamsŪ Seasonals during the quarter. We are also proud to have developed several exciting new beer styles and packages, such as Samuel AdamsŪ Latitude 48 Deconstructed, Samuel AdamsŪ Rustic Saison and Samuel AdamsŪ East-West Kolsch which are being well received. We are happy with the health of our brand portfolio and remain positive about the future of craft beer."

Year-to-date depletions through April 2011 are estimated by the company to be up approximately 5% from the same period in 2010.

Shipments and orders in-hand suggest that core shipments year-to-date through May 2011 will be up approximately 8% compared to the same period in 2010.


Fiscal 2011 Outlook

The company has left unchanged its projection of 2011 earnings per diluted share of between $3.45 and $3.95. While Boston Beer is currently concerned about significant cost pressure from fuel price increases and their impact on freight costs, package material and brewery operating costs, it believes that it is too early in the year to assess the extent to which the increased fuel costs may be offset by operating efficiencies, pricing or volume growth, or the possibility that these pressures may subside. At the current fuel prices the company believes that freight costs could negatively impact 2011 earnings per diluted share by approximately $0.20, but this could be offset by a slightly lower negative impact of the Freshest Beer Program and other company initiatives. Accordingly, the company's actual 2011 earnings per diluted share could vary significantly from the current projection.

Underlying the company's current projection are the following estimates and targets:

Depletions growth of 9% and shipment growth of 7% to 8%, reflecting an estimated aggregate inventory reduction at Freshest Beer Program participating wholesalers of between 300 thousand and 500 thousand case equivalents.

Revenue per barrel increases of approximately 1%.

Full-year 2011 gross margins of between 54% and 56%, which could be negatively impacted by further increases in energy cost.

Increased investment in brand support of between $12.0 million and $18.0 million for the full year 2011, not including any increases in freight costs for the shipment of beer products to the company's wholesalers.

Full year 2011 effective tax rate of approximately 39%.

Full year capital expenditures of between $15.0 million and $25.0 million, most of which relate to continued investments in the company's breweries and additional keg purchases.

The Boston Beer Company began in 1984 with a generations-old family recipe that Founder and Brewer Jim Koch uncovered in his father's attic. After bringing the recipe to life in his kitchen, Jim brought it to bars in Boston with the belief that drinkers would appreciate a complex, full-flavored beer, brewed fresh in America. That beer was Samuel Adams Boston LagerŪ, and it helped catalyze what became known as the American craft beer revolution.

Today, the company brews over 25 styles of beer. While the company is the country's largest-selling craft beer, it accounts for only approximately one percent of the U.S. beer market.


11 May, 2011