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BOSTON BEER CO INC (SAM)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a broad beat: net revenue $453.9M (+6.5% YoY), GAAP diluted EPS $2.16 (up 108% YoY), and gross margin 48.3% (+460 bps YoY), driven by pricing, procurement savings, and higher internal production/efficiencies .
  • Versus S&P Global consensus, SAM beat on EPS ($2.16 vs $0.69*), revenue ($453.9M vs $435.3M*), and EBITDA ($56.6M vs $32.0M*) as shipments (+5.3% YoY) outpaced depletions (-1%) amid Sun Cruiser, Twisted Tea Extreme, Hard MTN DEW momentum . Values retrieved from S&P Global*.
  • FY25 guidance was reiterated (depletions/shipments down to up low-single-digit; GM 45–47%; EPS $8.00–$10.50; APS up $30–$50M; capex $90–$110M), with new tariff headwind detail ($20–$30M cost; $1.25–$1.90 EPS; 50–100 bps GM) expected to begin impacting early Q2 .
  • Narrative catalysts: margin expansion trajectory, disciplined innovation (Sun Cruiser margin-accretive), and increased advertising investment; category headwinds (beer -5%, FMB -2% in measured channels) temper depletions near term .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expansion to 48.3% (+460 bps YoY), with benefits from pricing, procurement savings, and brewery efficiencies; highest first-quarter GM since 2019 per management .
  • Shipments +5.3% YoY (≈1.7M barrels), supported by Sun Cruiser, Truly Unruly, and Hard MTN DEW; inventory at ~5 weeks viewed appropriate .
  • Sun Cruiser performing well and is margin-accretive; national rollout and tripling of points of distribution into summer; “well received by wholesalers, retailers, and drinkers” .

Selected quotes:

  • “Our first quarter performance reflects a solid start to the year as we increased our market share and significantly expanded gross margin.” — CEO Michael Spillane .
  • “Sun Cruiser is margin accretive to our portfolio…we expect to have 3x the points of distribution by the summer.” — CEO Michael Spillane .
  • “We are stepping up our advertising investment in 2025…to return to long-term volume growth.” — Chairman Jim Koch .

What Went Wrong

  • Depletions down 1% YoY in Q1; management cited a challenging macro and category weakness; measured channels decelerated more than anticipated .
  • Truly remains a drag; management is refreshing marketing, leaning into higher-ABV Unruly, and rebuilding distribution; FY25 planning assumes conservative trajectory .
  • Anticipated tariff headwinds ($20–$30M cost; 50–100 bps GM; $1.25–$1.90 EPS) with impacts beginning early Q2; no aluminum hedging; mitigation plans TBD .

Financial Results

Trend vs Prior Quarters (GAAP)

MetricQ3 2024Q4 2024Q1 2025
Net Revenue ($USD Millions)$605.5 $402.3 $453.9
Gross Margin (%)46.3% 39.9% 48.3%
GAAP Diluted EPS ($)$2.86 ($3.38) $2.16
Net Income ($USD Millions)$33.5 ($38.8) $24.4

Year-over-Year (Q1 2025 vs Q1 2024, GAAP)

MetricQ1 2024Q1 2025
Net Revenue ($USD Millions)$426.1 $453.9
Gross Margin (%)43.7% 48.3%
GAAP Diluted EPS ($)$1.04 $2.16
Net Income ($USD Millions)$12.6 $24.4

Operational KPIs

KPIQ3 2024Q4 2024Q1 2025
Depletions YoY-3% Flat -1%
Shipments (Barrels, Millions)~2.24 ~1.50 ~1.70
Distributor Inventory (Weeks)~5.5 ~4.0 ~5.0
Advertising, Promotional & Selling ($USD Millions)$148.0 $139.5 $137.5
Effective Tax Rate (%)31.7% 27.7% (benefit) 31.9%
Cash Balance ($USD Millions)$255.6 $211.8 $152.5

Estimates vs Actuals (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 ActualBeat/Miss
Revenue ($USD Millions)$435.3*$453.9 Beat
GAAP/Primary EPS ($)$0.69*$2.16 Beat
EBITDA ($USD Millions)$32.0*$56.6*Beat

Values retrieved from S&P Global*. Actual EBITDA shown for context from S&P Global; company does not disclose EBITDA in release.

Guidance Changes

MetricPeriodPrevious Guidance (Feb 25, 2025)Current Guidance (Apr 24, 2025)Change
Depletions & Shipments %FY 2025Down low single digit to up low single digit Down low single digit to up low single digit Maintained
Price IncreasesFY 20251% to 2% 1% to 2% Maintained
Gross Margin (reported)FY 202545% to 47% 45% to 47% (exclusive of tariff impact) Maintained (added tariff note)
APS YoY Increase ($)FY 2025$30 to $50 $30 to $50 Maintained
Effective Tax RateFY 202529% to 30% 29% to 30% Maintained
GAAP EPS ($)FY 2025$8.00 to $10.50 $8.00 to $10.50 Maintained
Capital Spending ($)FY 2025$90 to $110 $90 to $110 Maintained
Tariff Impact (cost/GM/EPS)FY 2025Not provided Cost $20–$30M; GM -50–100 bps; EPS -$1.25–$1.90 New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3/Q4 2024)Current Period (Q1 2025)Trend
Supply chain/productivityMulti-year plan across procurement, brewery performance, waste/network; increasing internal production; Kinaxis ordering system; contractual headwinds 100–140 bps GM in 2025 Continued progress; procurement savings, higher line efficiencies; internal production up to 85% (vs 83% LY) Positive execution
Advertising investmentStep-up planned for 2025; cautious Pay-for-performance; shift to digital/social; local activation APS up $17.3M in Q1; heavy weighting in H1; broader brand support (Barstool, podcasts) Increased spend
Twisted TeaLeader; expected deceleration to single-digit growth; underpenetrated Light; Extreme national expansion Measured channels slowed; expecting low single-digit growth via advertising, distribution, Extreme Decelerating, stabilizing
Truly & UnrulyPortfolio refocus; Unruly high-ABV strong; conservative 2025 planning Renewed marketing (U.S. Soccer, Barstool); Unruly at 2% share of seltzer; second variety pack launched Repositioning
Sun Cruiser (vodka tea/lemonade)National expansion in H1 2025; tripling points of distribution; margin-accretive Strong reception; national chain rollout; lemonade lineup launched Apr 17 Scaling
Tariffs/macroNo tariff guidance in Oct; added awareness by Feb New quantitative tariff headwind; impacts starting early Q2 Emerging headwind
Cannabis/Delta-9Watching hemp-derived THC beverages; prepared with TeaPot brand in Canada Management sees potential challenge, state-by-state variability; too early to quantify impact Monitor

Management Commentary

  • “Our margin enhancement initiatives continued to show strong progress…resulted in our highest first quarter gross margin since 2019.” — Chairman Jim Koch .
  • “We are highly focused on executing our summer marketing plans…Our 2025 innovation efforts remain focused on Sun Cruiser…Twisted Tea Extreme and Truly Unruly high ABV offerings.” — CEO Michael Spillane .
  • “We reported EPS of $2.16 per diluted share…driven by revenue growth and higher gross margin as well as a lower tax rate and the effect of our share repurchase.” — CFO Diego Reynoso .

Q&A Highlights

  • Gross margin drivers: uplift from shipments, but underlying drivers are margin initiatives (pricing, procurement, efficiencies); management kept full-year GM range unchanged despite strong Q1 .
  • Tariffs: cost pressure mainly from aluminum and POS/materials sourced from China; guide reflects gross impact with mitigation actions under evaluation; impacts expected early Q2 .
  • Sun Cruiser: margin-accretive; distribution to triple by summer; early volume mostly off tracked channels; national chains now rolling out .
  • Twisted Tea: confidence in low-single-digit 2025 growth; investments in advertising and distribution; Extreme and Light under-distributed and incremental; category competition being “clawed back” .
  • Depletions outlook: management expects depletions to flip positive “maybe in Q2, certainly in H2” with stepped-up brand support .

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS $2.16 vs $0.69* (beat), revenue $453.9M vs $435.3M* (beat), EBITDA $56.6M vs $32.0M* (beat). Values retrieved from S&P Global*. Actuals per company filings .
  • FY25 consensus EPS at $9.29* sits within reiterated GAAP guidance range ($8.00–$10.50). Given explicit tariff headwind ($1.25–$1.90 EPS; GM -50–100 bps), estimate dispersion may widen and models will need to incorporate timing of Q2 tariff onset . Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Margin trajectory is intact: Q1 GM 48.3% (+460 bps YoY) from structural savings and pricing; management reaffirmed FY25 GM 45–47% (ex tariffs), implying strong H1 leverage and seasonal Q4 mix effects .
  • Near-term volume optics: shipments ahead of depletions in H1 (inventory build for summer resets, innovation rollouts) to reverse in H2 as consumption catches up, reducing risk of channel stuffing .
  • Innovation-led mix and accretive growth: Sun Cruiser (national rollout, lemonade line) and Twisted Tea Extreme/Unruly drive higher-mix profitability while Truly core is repositioned; watch measured-channel visibility as distribution expands .
  • Advertising cadence: significant H1 brand investment ($17.3M increase in Q1; $30–$50M FY increase) is intended to stabilize share/consumption; expect operating leverage to skew to H2 if demand improves .
  • Tariff risk quantified: $20–$30M cost; EPS -$1.25–$1.90; GM -50–100 bps; impacts begin early Q2; mitigation options under review; aluminum not hedged .
  • Balance sheet optionality: $152.5M cash, no debt, $150M undrawn credit line; buybacks YTD $60.5M with $367M remaining authorization—provides flexibility for investment and capital return .
  • Tactical watch items: depletions turning positive into summer, Sun Cruiser tracked-channel scaling, Twisted Tea shelf space recovery vs smaller competitor exits, tariff policy developments, and FY25 GM delivery vs range .