The Boston Beer Company, Inc. (SAM Quick QuoteSAM - Free Report) reported lower-than-expected revenues and earnings in first-quarter 2026. Both top and bottom lines also fell year over year. It posted first-quarter adjusted earnings per share (EPS) of $1.64, missing the Zacks Consensus Estimate of $1.85 by 11.4%. Also, the reported number decreased from $2.16 seen in the year-earlier quarter.

Net revenues declined 4.4% year over year to $433.9 million and came below the consensus estimate of $437 million by 0.7%. The year-over-year decline was owing to soft volumes that were partly offset by pricing and a favorable mix.

Apparently, shares lost more than 1% in the after-hours trading yesterday. This Zacks Rank #3 (Hold) company’s shares have risen 11.1% in the past three months, outperforming the industry’s 3.8% decline.

SAM Sees Demand Softness & Lower Shipments

Depletions dipped 4% in the quarter, reflecting continued pressure across a few core brands. Decreases in Twisted Tea, Truly, Samuel Adams and Hard Mountain Dew brands were partly offset by growth in Sun Cruiser, Angry Orchard and Dogfish Head brands. 

Year-to-date depletions through the 17-week period ended April 24, 2026, decreased roughly 4% from the comparable period in 2025.

Meanwhile, shipments declined at a higher rate than depletions, reporting a 6.9% decrease versus the year-earlier quarter. Shipment volume for the quarter was about 1.6 million barrels, mainly owing to tough prior-year comparisons as distributors built inventories for Sun Cruiser and Truly Unruly innovation in the first quarter of 2025 and a slightly lower distributor inventory levels led by improvements in the responsiveness of its supply chain to resonate well with demand.

Management believes distributor inventory as of March 28, 2026, was at an appropriate level for each of its brands and averaged nearly four and a half weeks on hand versus the five weeks at the end of the year-earlier quarter.

Analysis of Boston Beer’s Margins & Expenses

SAM reported gross margin of 49.3%, up 100 basis points (bps) from the first quarter of 2025, benefiting from price increases, favorable product mix, procurement savings and enhanced brewery efficiencies. The gain was partly offset by inflationary, commodity and tariff costs. Gross margin also included $1.6 million of shortfall fees and non-cash expense of third-party production pre-payments in total, which hurt the metric by nearly 37 bps on an absolute basis.

Advertising, promotional and selling expenses inched up 1.8% on increased freight costs of $2.5 million stemming from higher rates offset by lower volumes. Boston Beer’s brand investments were flat year over year.

General and administrative expenses jumped 9.1% from the first quarter of 2025, mainly owing to increased legal and consulting costs. Excluding legal costs with respect to the non-recurring litigation expenses, the metric rose $0.4 million on higher consulting costs.

SAM Maintains Liquidity and Returns Cash to Holders

SAM ended the quarter with $164.1 million in cash and no debt and indicated that its cash balance, anticipated operating cash flows and unused $150 million line of credit should be enough to fund future needs, with potential litigation-related payments.

The company repurchased $23.8 million of Class A shares during the quarter and another $7.4 million from March 30, 2026, through April 24, 2026, bringing year-to-date repurchases to $31.2 million. As of April 24, 2026, about $197 million remained under the board-authorized $1.6 billion repurchase limit.

SAM Updates 2026 Guidance

Management revised financial guidance for 2026. The litigation-related expenses of $15.52 per share will be included in the GAAP earnings per share view. Boston Beer further notified that the actual 2026 results may vary significantly from the current expectations and are highly sensitive to changes in volume expectations, supply-chain performance, inflationary and commodity impacts, and tariffs. Its tariff cost projections assume that the current tariffs being charged by suppliers will remain in place through the rest of the year.

Depletions and shipments percentage are now expected to decline in low-single digits to mid-single digits versus the earlier projection of remaining flat to down mid-single digits for 2026. Price increases are still predicted at 1-2%. Boston Beer’s business is seasonal, with the first and fourth quarters being the lower volume quarters, and the fourth quarter generally being the lowest absolute gross margin rate of the year.

Management still anticipates first-half shipments to decrease toward the lower end of its full-year volume outlook, with improved shipment performance later in the year. This is owing to increased shipment comparisons in the first half of the year, as SAM shipped ahead of depletions in the last year to aid innovation and build distributor inventories, and innovation launches that are weighted in the second half. Additionally, improvements in the supply-chain responsiveness enable modestly lower distributor inventory levels, which are likely to have a significant impact on the first half and start lapping throughout the second half.

For 2026, SAM continues to project gross margin (including tariffs) of 48-50% and tariff costs of $20-$30 million. The company expects advertising, promotion and selling expenses to rise $20-$40 million year over year and forecasts adjusted EPS of $8.50-$10.50. It projects GAAP loss in a range of $7.02-$5.02 versus GAAP EPS of $8.50-$11.00 predicted earlier. Management expects the adjusted tax rate to be 29-30%. Capital spending is likely to be $70-$90 million for the year.

Boston Beer is monitoring increases in commodity costs, thanks to macroeconomic factors, particularly energy, which affects freight expense and aluminum expense, given the energy-intensive nature of aluminum production. Such cost increases are reflected in the guidance. It has been executing savings to help offset these pressures, alongside maintaining flexibility to lower planned incremental advertising investment to the lower end of its guidance range as required.

During 2026, the company expects shortfall fees and non-cash expense of third-party production pre-payments in total to hurt gross margins by 40-60 bps. SAM expects year-over-year gross margin rate improvement to be significant in the fourth quarter as shortfall fees are likely to be lower in 2026 than in 2025. The majority of shortfall fees are likely to be in the fourth quarter. 

Advertising, selling and promotional expenses view does not include any changes in freight expenses for the shipment of products to the company’s distributors. Incremental advertising investment is forecast to be weighted to the second and third quarters to aid the key summer selling season.

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