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    BOSTON BEER CO (SAM)

    SAM Q2 2024: Guides High-40s Gross Margins, Beyond Beer Volumes +3–5%

    Reported on Jun 8, 2025 (After Market Close)
    Pre-Earnings Price$270.52Last close (Jul 25, 2024)
    Post-Earnings Price$262.00Open (Jul 26, 2024)
    Price Change
    $-8.52(-3.15%)
    • Robust Innovation Pipeline: Executives emphasized a strong innovation engine with successful product launches—such as Sun Cruiser and new extensions in the Twisted Tea line—that are expected to drive both near-term momentum and longer-term growth.
    • Sequential Brand Recovery and Category Leadership: Q&A responses highlighted sequential improvements, with key brands like Twisted Tea and Sun Cruiser rebounding during the summer selling season, underscoring effective execution in the rapidly growing "beyond beer" category.
    • Focused Operational Efficiency and Margin Expansion: Management outlined efforts aimed at optimizing operations and boosting margins—targeting gross margins in the high 40s—through disciplined cost control and sales force reorientation, supporting a robust financial performance over time.
    • Weak volume performance and declining shipments: The Q&A highlighted that depletions decreased and volumes remain under pressure, contributing to softer shipment trends and lower EPS, which could challenge revenue growth.
    • Execution challenges in key brand transitions: Comments on the slower-than-expected rollout of HARD MTN DEW and mixed performance in categories like Truly Hard Seltzer raise concerns about the company’s ability to manage complex transitions and maintain momentum.
    • Inventory and supply chain issues: Discussions around lower-than-target distributor inventory levels and production shortfalls suggest operational inefficiencies that may impact the company’s ability to meet peak seasonal demand.
    1. Long-Term Growth
      Q: Long-term growth for core and beyond beer?
      A: Management anticipates sustained growth with beyond beer volumes growing 3%-5% and modest gains in traditional segments—reflecting disciplined innovation for robust long-term top‐line expansion.

    2. Margin Expansion
      Q: How will margins improve second half?
      A: They expect full‐year gross margins between 43%–45%, with initiatives pushing margins into the high 40s later despite a traditionally lower Q4, underscoring disciplined cost management.

    3. Twisted Tea Outlook
      Q: What is Twisted Tea’s midterm outlook?
      A: Management foresees consistent low double-digit growth driven by expanding household penetration and incremental offerings like Twisted Tea Light, reinforcing its leadership.

    4. SG&A Outlook
      Q: Will SG&A expenses rise this half-year?
      A: Although first‐half marketing spend was subdued, increased investment later is planned to fuel key launches while balancing cost savings with growth.

    5. Operating Improvements
      Q: How are operational improvements progressing?
      A: They are refocusing on internal cost discipline, reallocating sales efforts, and refining execution to boost overall efficiency and future growth.

    6. Beyond Beer Performance
      Q: Why is beyond beer performing strongly?
      A: Brands like Surfside and Sun Cruiser have resonated well with consumers, delivering strong market acceptance and even a two-to-one sales advantage in key areas.

    7. Beer Business Decline
      Q: How is the traditional beer segment faring?
      A: While beer volumes continue to decline, efforts such as the measured launch of American Light and renewed on-premise focus aim to recapture market share gradually.

    8. Acquisition Rumor
      Q: Is a sale of the company under consideration?
      A: Management reiterated its commitment to growing as an independent business, firmly dismissing any rumors of a sale.

    9. Innovation Pipeline
      Q: What’s next in product innovation?
      A: Their disciplined approach targets both successful line extensions and entirely new concepts to capture evolving consumer tastes without overextending resources.

    10. Demand Recovery Trends
      Q: How is overall demand recovering?
      A: Following an April trough, demand has shown improvement with brands like Twisted Tea bouncing back, supporting a gradual normalization in shipments.

    11. Sequential Improvement
      Q: Has sequential sales improvement been observed?
      A: Recent data, particularly through the 4th of July period, indicates a positive shift from earlier soft demand toward stronger seasonal performance.

    12. Inventory Increases
      Q: Why are inventories higher than expected?
      A: Lower-than-anticipated production late in the quarter led to higher inventories, though management expects a return to normal levels soon.

    13. Distributor Inventory
      Q: Will distributor inventory levels rebound?
      A: Wholesalers are committed to rebuilding inventory to target levels ahead of peak season, ensuring adequate market supply.

    14. HARD MTN DEW Transition
      Q: Why was the MTN DEW transition slow?
      A: The transition proved more complex than anticipated, with management working through regulatory and logistical challenges causing delays.

    15. HARD MTN DEW Update
      Q: What's the update on HARD MTN DEW rollout?
      A: Execution remains steady across territories, with the full impact expected in 2025 as additional approvals and expanded distribution come online.

    Research analysts covering BOSTON BEER CO.