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Boston Beer (SAM) Stock Declines on Q4 Loss, Revenue Miss
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The Boston Beer Company, Inc. (SAM - Free Report) reported dismal fourth-quarter 2023 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Additionally, the company reported a year-over-year decline in revenues, along with a widened loss per share. The decline mainly resulted from soft trends in the Truly brand, which caused lower shipments and depletions.
The company also noted that the fourth-quarter 2023 results included 13 weeks, while fourth-quarter 2022 had 14 weeks. This impacted its top and bottom-line performances.
The company’s loss per share of $1.49 in fourth-quarter 2023 was wider than the loss of 93 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of earnings of 22 cents. The decline mainly resulted from soft top-line trends, accompanied by higher operating costs.
The Boston Beer Company, Inc. Price, Consensus and EPS Surprise
Net revenues declined 12% year over year to $393.7 million and missed the Zacks Consensus Estimate of $416 million. The dip in the company’s fourth-quarter revenues included an impact of 8.9 percentage points from the 14th week in 2022. Additionally, the company’s fourth-quarter revenues reflected a $5.1-million impact of international sales tax adjustment. Its shipments and depletions declined year over year in the quarter. Excluding excise taxes, the top line dropped 12.3% year over year to $417.4 million.
On a 13-week comparable basis, net revenues declined 3.1% in the fourth quarter. Excluding the impacts of the international sales tax adjustments, net revenues fell 10.9% on a reported basis and 1.9% on a 13-week comparable basis.
Backed by the soft results, shares of Boston Beer declined 11.6% in the after-hours trading session on Feb 27, 2024. The Zacks Rank #3 (Hold) stock has lost 6.4% in the past three months against the industry’s 1.8% growth.
Image Source: Zacks Investment Research
Quarter in Detail
The shipment volume declined 12.2% from the year-ago period to 1.5 million barrels in the fourth quarter of 2023, whereas depletions fell 9%. On a 13-week comparable basis, shipments and depletion dipped 3.5% and 1%, respectively. Decreased shipment and depletion resulted from declines in Truly Hard seltzer, partly negated by growth in the Twisted Tea, Samuel Adams Non-Alcoholic styles and Dogfish Head Canned cocktails.
The gross profit declined 10.6% year over year to $147.9 million, whereas it expanded 60 basis points (bps) to 37.6% from 37% in the year-ago quarter. The gross margin primarily benefited from strong price realization, reduced inventory obsolescence and procurement savings. This was partly offset by higher inflationary costs, third-party production shortfall fees and brewery processing costs per barrel due to lower volumes.
Advertising, promotional and selling expenses declined 7.6% in the reported quarter to $128.6 million due to lower freight to distributors of $11.8 million on reduced rates and volumes. This was partly offset by higher brand investments and selling costs of $1.2 million mainly related to increased media investments.
General and administrative expenses rose 5% year over year to $43.7 million mainly due to higher salaries and benefits costs.
The company reported an operating loss of $25.9 million compared with a loss of $16.8 million in the year-ago quarter.
Financials
As of Dec 30, 2023, Boston Beer had cash and cash equivalents of $298.5 million, and total stockholders’ equity of $1,077.9 million. The company currently has $150 million in its line of credit, which, along with its cash position, will be sufficient to meet cash requirements.
The company repurchased Class A shares worth $92.9 million in 2023. From the start of 2024 through Feb 23, the company repurchased shares worth $35.6 million. This brought the total share repurchase since the beginning of 2023 to $128.5 million. As of Feb 23, 2024, the company had $230 million remaining under its existing share repurchase authorization worth $1.2 billion.
Outlook
Boston Beer envisions GAAP earnings per share of $7.00-$11.00 for 2024. Depletions and shipments are expected between a low-single-digit decline and a low-single-digit increase. The company estimates a price increase of 1-2% for 2024.
SAM anticipates a gross margin of 43-45% for 2024. The company's gross margin guidance includes the impacts of 50-75 bps from elevated shortfall fees and 125-150 bps from non-cash expenses of third-party production pre-payments.
Advertising, promotional and selling expenses in 2024 are expected between ($5) million and $15 million. This does not include any change in freight costs for the shipment of products to distributors. The company anticipates an effective tax rate of 27.5% for 2024. Capital spending is expected to be $90-$110 million for 2024.
Consumer Staple Stocks Worth a Look
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Molson Coors (TAP - Free Report) , Fomento Economico Mexicano (FMX - Free Report) and Lamb Weston (LW - Free Report) .
Molson Coors, a leading beverage company, currently flaunts a Zacks Rank #1 (Strong Buy). TAP has a trailing four-quarter earnings surprise of 37.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Molson Coors’ current fiscal-year sales and earnings suggests growth of 1.3% and 4.2%, respectively, from the year-ago reported numbers.
Fomento Economico Mexicano, alias FEMSA, participates in the beverage industry through Coca-Cola FEMSA, which is the world’s largest franchise bottler for Coca-Cola products. It currently sports a Zacks Rank #1. FMX has a trailing four-quarter earnings surprise of 46.3%, on average.
The Zacks Consensus Estimate for FEMSA’s current fiscal-year sales suggests growth of 11% from the year-ago reported figure. Meanwhile, the consensus mark for earnings suggests a year-over-year decline of 3.4%.
Lamb Weston, which offers frozen potato products, has a Zacks Rank #2 (Buy) at present. LW delivered an earnings surprise of 28.8% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 26.9%, respectively, from the year-ago reported numbers.
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Boston Beer (SAM) Stock Declines on Q4 Loss, Revenue Miss
The Boston Beer Company, Inc. (SAM - Free Report) reported dismal fourth-quarter 2023 results, wherein the top and bottom lines missed the Zacks Consensus Estimate. Additionally, the company reported a year-over-year decline in revenues, along with a widened loss per share. The decline mainly resulted from soft trends in the Truly brand, which caused lower shipments and depletions.
The company also noted that the fourth-quarter 2023 results included 13 weeks, while fourth-quarter 2022 had 14 weeks. This impacted its top and bottom-line performances.
The company’s loss per share of $1.49 in fourth-quarter 2023 was wider than the loss of 93 cents in the year-ago quarter. The bottom line missed the Zacks Consensus Estimate of earnings of 22 cents. The decline mainly resulted from soft top-line trends, accompanied by higher operating costs.
The Boston Beer Company, Inc. Price, Consensus and EPS Surprise
The Boston Beer Company, Inc. price-consensus-eps-surprise-chart | The Boston Beer Company, Inc. Quote
Net revenues declined 12% year over year to $393.7 million and missed the Zacks Consensus Estimate of $416 million. The dip in the company’s fourth-quarter revenues included an impact of 8.9 percentage points from the 14th week in 2022. Additionally, the company’s fourth-quarter revenues reflected a $5.1-million impact of international sales tax adjustment. Its shipments and depletions declined year over year in the quarter. Excluding excise taxes, the top line dropped 12.3% year over year to $417.4 million.
On a 13-week comparable basis, net revenues declined 3.1% in the fourth quarter. Excluding the impacts of the international sales tax adjustments, net revenues fell 10.9% on a reported basis and 1.9% on a 13-week comparable basis.
Backed by the soft results, shares of Boston Beer declined 11.6% in the after-hours trading session on Feb 27, 2024. The Zacks Rank #3 (Hold) stock has lost 6.4% in the past three months against the industry’s 1.8% growth.
Image Source: Zacks Investment Research
Quarter in Detail
The shipment volume declined 12.2% from the year-ago period to 1.5 million barrels in the fourth quarter of 2023, whereas depletions fell 9%. On a 13-week comparable basis, shipments and depletion dipped 3.5% and 1%, respectively. Decreased shipment and depletion resulted from declines in Truly Hard seltzer, partly negated by growth in the Twisted Tea, Samuel Adams Non-Alcoholic styles and Dogfish Head Canned cocktails.
The gross profit declined 10.6% year over year to $147.9 million, whereas it expanded 60 basis points (bps) to 37.6% from 37% in the year-ago quarter. The gross margin primarily benefited from strong price realization, reduced inventory obsolescence and procurement savings. This was partly offset by higher inflationary costs, third-party production shortfall fees and brewery processing costs per barrel due to lower volumes.
Advertising, promotional and selling expenses declined 7.6% in the reported quarter to $128.6 million due to lower freight to distributors of $11.8 million on reduced rates and volumes. This was partly offset by higher brand investments and selling costs of $1.2 million mainly related to increased media investments.
General and administrative expenses rose 5% year over year to $43.7 million mainly due to higher salaries and benefits costs.
The company reported an operating loss of $25.9 million compared with a loss of $16.8 million in the year-ago quarter.
Financials
As of Dec 30, 2023, Boston Beer had cash and cash equivalents of $298.5 million, and total stockholders’ equity of $1,077.9 million. The company currently has $150 million in its line of credit, which, along with its cash position, will be sufficient to meet cash requirements.
The company repurchased Class A shares worth $92.9 million in 2023. From the start of 2024 through Feb 23, the company repurchased shares worth $35.6 million. This brought the total share repurchase since the beginning of 2023 to $128.5 million. As of Feb 23, 2024, the company had $230 million remaining under its existing share repurchase authorization worth $1.2 billion.
Outlook
Boston Beer envisions GAAP earnings per share of $7.00-$11.00 for 2024. Depletions and shipments are expected between a low-single-digit decline and a low-single-digit increase. The company estimates a price increase of 1-2% for 2024.
SAM anticipates a gross margin of 43-45% for 2024. The company's gross margin guidance includes the impacts of 50-75 bps from elevated shortfall fees and 125-150 bps from non-cash expenses of third-party production pre-payments.
Advertising, promotional and selling expenses in 2024 are expected between ($5) million and $15 million. This does not include any change in freight costs for the shipment of products to distributors. The company anticipates an effective tax rate of 27.5% for 2024. Capital spending is expected to be $90-$110 million for 2024.
Consumer Staple Stocks Worth a Look
We have highlighted three better-ranked stocks from the Consumer Staple sector, namely Molson Coors (TAP - Free Report) , Fomento Economico Mexicano (FMX - Free Report) and Lamb Weston (LW - Free Report) .
Molson Coors, a leading beverage company, currently flaunts a Zacks Rank #1 (Strong Buy). TAP has a trailing four-quarter earnings surprise of 37.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Molson Coors’ current fiscal-year sales and earnings suggests growth of 1.3% and 4.2%, respectively, from the year-ago reported numbers.
Fomento Economico Mexicano, alias FEMSA, participates in the beverage industry through Coca-Cola FEMSA, which is the world’s largest franchise bottler for Coca-Cola products. It currently sports a Zacks Rank #1. FMX has a trailing four-quarter earnings surprise of 46.3%, on average.
The Zacks Consensus Estimate for FEMSA’s current fiscal-year sales suggests growth of 11% from the year-ago reported figure. Meanwhile, the consensus mark for earnings suggests a year-over-year decline of 3.4%.
Lamb Weston, which offers frozen potato products, has a Zacks Rank #2 (Buy) at present. LW delivered an earnings surprise of 28.8% in the last reported quarter.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 26.9%, respectively, from the year-ago reported numbers.