Boston Beer Company (NYSE: SAM) earnings report for the 1st quarter of their 2020 fiscal year
About Boston Beer Company
The Boston Beer Company, Inc. (NYSE: SAM) began in 1984 brewing Samuel Adams beer and the Samuel Adams brand is currently recognized as one of the largest and most respected craft beer brands. Our portfolio of brands also includes Angry Orchard Hard Cider, Twisted Tea, Truly Hard Seltzer, Wild Leaf Hard Tea and Tura Alcoholic Kombucha as well as other craft beer brands such as Angel City Brewery, Coney Island Brewing, and Concrete Beach Brewery. On July 3, 2019, the Company completed its previously reported Dogfish Head Brewery transaction. Dogfish Head has a proud history as a craft beer pioneer with a brand that is beloved by American consumers and highly respected by the industry.
Overview of Boston Beer Company 1st quarter 2020 earnings report
The data below refers to the latest quarter's data (unless specified otherwise)
- Revenues: $352.255 million (up from $267.599 million for the same quarter of the previous year)
- Revenues increased by 31.6% over the last 12 months
- Cost of goods sold: $182.592 million (up from $127.111 million for the same quarter of the previous year)
- Cost of goods increased by 43.6% over the last 12 months
- Some margin squeeze on Boston Beer Company is revenues grew at a rate a lot slower than their cost of goods sold.
- Net income: $18.234 million (down from $23.694 million for the same quarter of the previous year)
- Diluted earnings per share: $1.49 (down from $2.02 for the same quarter of the previous year)
- PE ratio of Boston Beer Company: 71.5
- Number of shares in issue: 12.186 million (up from 11.636 million for the same period of the previous year)
- Cash and cash equivalents: $129.504 million
- Cash and cash equivalents per share: $10.63
- Cash and cash equivalents makes up 2.49% of Boston Beer Company's market capital
- Cash and cash equivalents makes up 10.85% of Boston Beer Company's total assets
- Inventories: $124.529 million
- Inventories makes up 10.43% of Boston Beer Company's total assets
- Goodwill in Boston Beer Company: $112.529 million
- Goodwill per share: $9.23
- Goodwill makes up 10.67% of Boston Beer Company's total assets
- Total stockholders equity in Boston Beer Company: $758.236 million
- Stockholders equity per share in Boston Beer Company: $62.22
- Boston Beer Company is trading at 6.85 times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at
- For perspective the S&P 500 has an average price to book of 3.34. Read more about the S&P 500 here.
Boston Beer Company (NYSE: SAM) management commentary on 1st quarter 2020 earnings
BOSTON, April 22, 2020 /PRNewswire/ -- The Boston Beer Company, Inc. (NYSE: SAM) reported first quarter 2020 net revenue of $330.6 million, an increase of $78.9 million or 31.4% from the same period last year, mainly due to an increase in shipments of 32.2%.
The Company began seeing the impact of the COVID-19 pandemic on its business in early March. Prior to then, the Company was on track to maintain its financial guidance for full-year fiscal 2020. Depletions through the 9-week period ended February 29, 2020 are estimated by the Company to have increased approximately 32% from the comparable period in 2019. Excluding the Dogfish Head impact, depletions increased 26%
The Company began seeing the impact of the COVID-19 pandemic on its business in early March. Prior to then, the Company was on track to maintain its financial guidance for full-year fiscal 2020. Depletions through the 9-week period ended February 29, 2020 are estimated by the Company to have increased approximately 32% from the comparable period in 2019. Excluding the Dogfish Head impact, depletions increased 26%
Jim Koch, Chairman and Founder of the Company, commented, "As the world is grappling with the COVID-19 pandemic, our primary focus is on operating our breweries and our business safely and supporting our partners in the beer industry. We have a strong cash position and balance sheet and feel very fortunate to be in a position where we can help. Supporting the communities in which we work and live is one of our core values. Our business got its start in bars and restaurants and we recognize the role we can play right now in giving back. We're proud to share some of the initiatives we've gotten off the ground in a short period of time that we hope will help make a difference. We have established the Samuel Adams Restaurant Strong Fund and donated over $2.1 million to support bar and restaurant workers that have been impacted by pandemic-related closures in 20 states. In addition, we are a founding partner of Restaurant Relief America which is committed to helping restaurant industry workers experiencing hardship in the wake of COVID-19. Both funds will distribute 100% of the proceeds through grants to bar and restaurant workers. Also, to support our internal needs as well as local hospitals, we have begun production of hand sanitizer at our Dogfish Head distillery in Milton, Delaware. We are thankful to our outstanding coworkers, distributors and retailers for their focus during COVID-19 and diligence to continue to operate and help grow our business. The Company's depletions increased 36% in the first quarter of which 30% is from Boston Beer legacy brands and 6% is from the addition of Dogfish Head brands. Our business in the first quarter was strong but there remains significant uncertainty due to COVID-19. These uncertainties include our continued ability to operate our breweries at a level of safety that meets our standards, the continued ability to distribute to the off-premise retail locations, the duration of the current on-premise shutdown, and how long consumer pantry loading will continue in the weeks ahead. We will continue to work hard throughout the COVID-19 pandemic and prioritize safety above all else. I am very proud of the passion, creativity and commitment to community that our company has demonstrated during this pandemic."
Dave Burwick, the Company's President and CEO stated, "Consistent with the first quarter of last year, our first quarter shipments volume was significantly higher than depletions volume as we took active steps to ensure that our distributor inventory levels are adequate to support drinker demand. Our depletions growth in the first quarter was the result of increases in our Truly Hard Seltzer and Twisted Tea brands and the addition of the Dogfish Head brands that were only partially offset by decreases in our Angry Orchard and Samuel Adams brands. The growth of the Truly brand and the recently launched Truly Hard Lemonade have accelerated and continue to grow beyond our expectations. Since early January, Truly has continued to grow its velocity and has maintained its market share while other national hard seltzer brands have ceded share. We will continue to invest heavily in the Truly brand and evolve our brand communications and work to improve our position in the hard seltzer category, even as more competitors enter. We are ready to launch an exciting new Truly advertising campaign, but have postponed the launch due to the uncertainties surrounding COVID-19. Twisted Tea continues to generate double-digit volume growth rates that are above full year 2019 trends. We see significant distribution and volume growth opportunities for our Truly and Twisted Tea brands and are looking to continue to expand distribution of our Dogfish Head brand. Pursuing these opportunities in 2020 remains a top priority. Samuel Adams and Angry Orchard's volumes continue to decline, as they are more deeply impacted by the on-premise shutdown. We continue to work hard on returning these brands to growth, but do not expect them to grow during 2020."
Mr. Burwick went on to say, "We have reacted quickly to COVID-19 and continue to work to control what we can control, with our primary focus being the safety of our coworkers, distributors, retailers and drinkers. We have worked aggressively to put in place many protocols at our breweries, including entrance screening and temperature checks, face mask requirements, reorganizing work to increase social distancing between and among shifts, and adding cleaning time to each shift. Additionally, we closed all of our hospitality locations beginning on March 13, 2020. We are working hard to rebalance our supply chain to address additional demand in can and bottle packages at off-premise retailers against very low demand for kegs given the shutdown of on-premise venues. This shift in volume mix is likely to come at a higher incremental cost due to the increased usage of third-party breweries, which negatively impacts our gross margin. We have deferred some of our new marketing campaigns, as we closely assess and manage this situation. Drinker demand for our brands continues to be very strong, particularly our Truly and Twisted Tea brands. Our depletions growth through the 9-week period ended February 29, 2020 was approximately 32% from the comparable period in 2019 and we saw a further acceleration in demand for our brands beginning in the second half of March. It is not possible for us to estimate the amount of the new demand that is a temporary reaction to COVID-19. We're in a very competitive business and we are optimistic for continued growth of our current brand portfolio and we remain prepared to forsake short-term earnings as we invest to sustain long-term profitable growth, in line with the opportunities that we see."
Dave Burwick, the Company's President and CEO stated, "Consistent with the first quarter of last year, our first quarter shipments volume was significantly higher than depletions volume as we took active steps to ensure that our distributor inventory levels are adequate to support drinker demand. Our depletions growth in the first quarter was the result of increases in our Truly Hard Seltzer and Twisted Tea brands and the addition of the Dogfish Head brands that were only partially offset by decreases in our Angry Orchard and Samuel Adams brands. The growth of the Truly brand and the recently launched Truly Hard Lemonade have accelerated and continue to grow beyond our expectations. Since early January, Truly has continued to grow its velocity and has maintained its market share while other national hard seltzer brands have ceded share. We will continue to invest heavily in the Truly brand and evolve our brand communications and work to improve our position in the hard seltzer category, even as more competitors enter. We are ready to launch an exciting new Truly advertising campaign, but have postponed the launch due to the uncertainties surrounding COVID-19. Twisted Tea continues to generate double-digit volume growth rates that are above full year 2019 trends. We see significant distribution and volume growth opportunities for our Truly and Twisted Tea brands and are looking to continue to expand distribution of our Dogfish Head brand. Pursuing these opportunities in 2020 remains a top priority. Samuel Adams and Angry Orchard's volumes continue to decline, as they are more deeply impacted by the on-premise shutdown. We continue to work hard on returning these brands to growth, but do not expect them to grow during 2020."
Mr. Burwick went on to say, "We have reacted quickly to COVID-19 and continue to work to control what we can control, with our primary focus being the safety of our coworkers, distributors, retailers and drinkers. We have worked aggressively to put in place many protocols at our breweries, including entrance screening and temperature checks, face mask requirements, reorganizing work to increase social distancing between and among shifts, and adding cleaning time to each shift. Additionally, we closed all of our hospitality locations beginning on March 13, 2020. We are working hard to rebalance our supply chain to address additional demand in can and bottle packages at off-premise retailers against very low demand for kegs given the shutdown of on-premise venues. This shift in volume mix is likely to come at a higher incremental cost due to the increased usage of third-party breweries, which negatively impacts our gross margin. We have deferred some of our new marketing campaigns, as we closely assess and manage this situation. Drinker demand for our brands continues to be very strong, particularly our Truly and Twisted Tea brands. Our depletions growth through the 9-week period ended February 29, 2020 was approximately 32% from the comparable period in 2019 and we saw a further acceleration in demand for our brands beginning in the second half of March. It is not possible for us to estimate the amount of the new demand that is a temporary reaction to COVID-19. We're in a very competitive business and we are optimistic for continued growth of our current brand portfolio and we remain prepared to forsake short-term earnings as we invest to sustain long-term profitable growth, in line with the opportunities that we see."
Boston Beer Company (NYSE: SAM) stock price history
The image below obtained from Google, shows the stock price history of Boston Beer Company over the last 5 years. And its been a very volatile but pretty good time for Boston Beer Company. 5 years ago the stock of Boston Beer Company was trading at around $265 a stock and its currently trading at $426.33 a stock. That's a decent return of 60.9% provided to Boston Beer Company stockholders over the last 5 years.
The stock of Boston Beer Company is trading at a lot closer to its 52 week high of $444.64 than it is to its 52 week low of $270.31 a stock, which to us is a clear indication that the short term sentiment and momentum of Boston Beer Company stock is positive at this point in time,
The stock of Boston Beer Company is trading at a lot closer to its 52 week high of $444.64 than it is to its 52 week low of $270.31 a stock, which to us is a clear indication that the short term sentiment and momentum of Boston Beer Company stock is positive at this point in time,
Recent coverage of Boston Beer Company
The extract below discusses the latest regarding Boston Beer Company (NYSE: CTB) as obtained from Marketwatch.com
Boston Beer Co. shares SAM, +3.84% fell 8.5% in the extended session Wednesday after the company missed consensus estimates and recorded a revenue reduction related to the coronavirus pandemic. The company reported first-quarter net income of $18.2 million, or $1.49 a share, compared with net income of $23.7 million, which amounts to $2.02 a share, in the year-ago period. Revenue net of excise taxes rose to $330.6 million from $251.7 million in the year-ago period. Analysts surveyed by FactSet had estimated earnings of $1.92 a share on revenue of $347.7 million. Boston Beer withdrew its full-year 2020 guidance due to the COVID-19 pandemic. The maker of Samuel Adams Boston Lager and other beers said that thus far it has seen reduced keg demand and higher labor and safety costs. In the first quarter, Boston Beer recorded a coronavirus-related reduction in revenue of $10 million due to $5.8 million worth of keg returns, and $4.2 million in direct costs. The company also said it had shifted more volume to third-party breweries, which has increased production costs and impacted margins. Boston Beer stock has gained 57% in the past year, with the S&P 500 index SPX, +2.29% falling 5.9%.
Read the full article here
Boston Beer Co. shares SAM, +3.84% fell 8.5% in the extended session Wednesday after the company missed consensus estimates and recorded a revenue reduction related to the coronavirus pandemic. The company reported first-quarter net income of $18.2 million, or $1.49 a share, compared with net income of $23.7 million, which amounts to $2.02 a share, in the year-ago period. Revenue net of excise taxes rose to $330.6 million from $251.7 million in the year-ago period. Analysts surveyed by FactSet had estimated earnings of $1.92 a share on revenue of $347.7 million. Boston Beer withdrew its full-year 2020 guidance due to the COVID-19 pandemic. The maker of Samuel Adams Boston Lager and other beers said that thus far it has seen reduced keg demand and higher labor and safety costs. In the first quarter, Boston Beer recorded a coronavirus-related reduction in revenue of $10 million due to $5.8 million worth of keg returns, and $4.2 million in direct costs. The company also said it had shifted more volume to third-party breweries, which has increased production costs and impacted margins. Boston Beer stock has gained 57% in the past year, with the S&P 500 index SPX, +2.29% falling 5.9%.
Read the full article here
Boston Beer Company (NYSE: SAM) stock valuation
So what do we value Boston Beer Company stock at after the release of their 1st quarter 2020 earnings? Based on Boston Beer Company earnings report our valuation models provides a target (full value) price for Boston Beer Company at $327.90 a stock . We therefore believe that the stock of Boston Beer Company is overvalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $327.90. Therefore we believe a good entry point into Boston Beer Company stock is at $295.10 or below. We expect the stock of Boston Beer Company to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Boston Beer Company stock as a sell
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $327.90. Therefore we believe a good entry point into Boston Beer Company stock is at $295.10 or below. We expect the stock of Boston Beer Company to pull back from current levels to levels closer to our target price (full value price) in coming weeks and moths as we believe it is significantly overvalued at this point in time.
We therefore rate Boston Beer Company stock as a sell
Next earnings release of Boston Beer Company
It is expected that Boston Beer Company will publish their 2nd quarter 2020 earnings report in late July 2020