E-Malt.com News article: USA: The Boston Beer Company announces 28% net revenue growth for Q2 2014

In its second quarter earnings report, the Boston Beer Company on July 30 announced net revenue growth of 28 percent, an increase of $50.3 million over the same period last year.

Second quarter core shipment volume of approximately 1.1 million barrels represents growth of 25 percent over the same period last year. 13 week-depletions grew 23 percent while full-year depletions grew a record 28 percent versus 2013.

“We achieved depletions growth of 23 percent and record total depletions in the second quarter,” company founder and chairman Jim Koch said in a statement. “I am tremendously proud of the efforts of our employees in achieving this record, while maintaining a focus on brewing quality and innovation. We believe that our depletions growth is attributable to strong sales execution and support from our distributors and retailers as well as our quality beers and strong brands.”

As a result of product mix increases and the addition of new packages, Boston Beer’s gross margins decreased slightly to 53.1 percent (from the 53.6 percent it achieved in the second quarter of 2013).

Boston Beer estimates that, through July 19, year-to-date depletions are up 27 percent from the comparable period in 2013.

Despite the impressive depletions growth, however, The Samuel Adams maker said its supply chain performance is “below expectations.”

“The high demand levels and the large number of expansion and efficiency projects ongoing during the quarter caused us to experience higher operational costs than we had originally expected.,” CEO Martin Roper said in a release. “We are also seeing pressure from our transportation suppliers and experiencing increased freight costs to secure the performance and capacity that we need. Despite our best efforts, we had some continued product shortages and service issues during the quarter.

Roper added that, looking forward, the company “expects a continued high level of brand and capital investments,” as its “pursues growth and innovation.”

The company has left unchanged its projected 2014 earnings per diluted share of between $6.00 and $6.40. Its actual 2014 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 20% and 24%.

National price increases of approximately 2%.

Gross margins of between 51% and 53%.

Increased investment in advertising, promotional and selling expenses of between $37 million and $45 million, an increase of the range from the previously communicated estimate of $34 million to $42 million. This does not include any increases in freight costs for the shipment of products to the company’s distributors.

Effective tax rate of approximately 38%.

Capital spending of between $160 million and $185 million, which could be significantly higher, dependent on capital required to meet future growth.

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. Inspired and unafraid to challenge conventional thinking about beer, Jim brought the recipe to life in his kitchen. Pleased with the results of his work, Jim decided to sample his beer with bars in Boston in the hopes that drinkers would appreciate the complex, full-flavored beer he brewed fresh in America. That beer was aptly named Samuel Adams Boston Lager®, in recognition of one of our nation’s great founding fathers, a man of independent mind and spirit. Little did Jim know at the time, Samuel Adams Boston Lager would soon become a catalyst of the American craft beer revolution.

Today, The Boston Beer Company brews more than 50 styles of beer. Although Samuel Adams® beer is America’s largest-selling craft beer, it accounts for only one percent of the U.S. beer market.


01 August, 2014