E-Malt.com News article: USA: Boston Beer enjoys 30% increase in Q3 net revenue

The Boston Beer Company, Inc., America’s largest craft brewery, on October 30 reported third quarter 2013 net revenue of $216.4 million, an increase of $50.0 million or 30% over the same period last year, mainly due to core shipment growth of 29%.

Net income for the third quarter was $25.7 million, or $1.89 per diluted share, an increase of $4.9 million or $0.36 per diluted share from the third quarter of 2012. This increase was primarily due to shipment increases, partially offset by increased investments in advertising, promotional and selling expenses and a write-down of land of $0.10 per diluted share.

Net revenue for the 39-week period ended September 28, 2013 was $533.7 million, an increase of $106.5 million, or 25%, from the comparable 39-week period in 2012.

3rd Quarter 2013 Summary of Results

Depletions grew 26% from the comparable 13-week period in the prior year, primarily due to increases in the Angry Orchard®, Samuel Adams® and Twisted Tea® brands.

Core shipment volume was approximately 993,000 barrels, a 29% increase over the third quarter of 2012.

Gross margin at 53% was lower than the 56% realized in the third quarter of 2012. Increased brewery processing costs, increased ingredient costs and product mix effects, and the $3.3 million of customer program and incentive costs that are now recorded as reductions in revenue, were partially offset by pricing increases. In the third quarter of 2012, customer programs and incentive costs were recorded as advertising, promotional and selling expenses.

Year to Date 2013 Summary of Results

Depletions grew by 23% from the comparable 39-week period in 2012, primarily due to increases in the Angry Orchard, Samuel Adams, and Twisted Tea brands.

Core shipment volume was approximately 2.5 million barrels, a 23% increase from the comparable 39-week period in 2012.

2013 Outlook

The company estimates 2013 earnings per diluted share of between $5.05 and $5.35. The company's actual 2013 earnings per share could vary significantly from the current projection.

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

- Depletions and shipments growth of between 21% and 24%.

- Price increases of approximately 1% to partially offset ingredients, packaging, freight and processing cost pressures.

- Full-year 2013 gross margins of between 52% and 54%.

- Increased advertising, promotional and selling expenses for the full year 2013, excluding any increases in freight costs for the shipment of products to the company's wholesalers, of between $26 million and $32 million, primarily due to an increase in investments behind the company's brands.

- Full-year effective tax rate of approximately 38%.

- Full-year 2013 spending on capital investments is now estimated to be between $100 million and $120 million, consisting mostly of continued investments in the company's breweries and additional keg purchases in support of growth.

2014 Outlook

The company is completing its 2014 planning process and will provide further detailed guidance when the company presents its full-year 2013 results. The company is currently using the following preliminary assumptions and targets for 2014:

- Depletions and shipments percentage growth in the mid-teens.

- National price increases of between 2% and 3% to offset anticipated upward pressures on ingredients, packaging and freight costs, as well as increased investments behind the company's brands.

- Full-year 2014 gross margins of between 52% and 54%.

- Increased investment in advertising, promotional and selling expenses of between $34 million and $42 million for the full year 2014. This does not include any increases in freight costs for the shipment of products to the company's wholesalers.

- Increased expenditures of between $3 million to $5 million for continued investment in Alchemy & Science brands, which are included in Boston Beer’s full-year estimated increases in advertising, promotional and selling expenses. Brand investments in the Alchemy & Science brands could vary significantly from current estimates.

- Full-year effective tax rate of approximately 38%.

- Estimated full-year 2014 capital spending of between $140 million and $180 million.

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 Lager®, and it helped catalyze what became known as the American craft beer revolution.

Today, the company brews over 50 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. In addition to Samuel Adams beers and some other craft brands brewed by Alchemy & Science, its craft brew incubator, the company also brews Twisted Tea (a flavored malt beverage) and Angry Orchard (a hard cider).


01 November, 2013