Earnings call transcript: Boston Beer Q2 2025 beats EPS estimates

Boston Beer Company (SAM) reported its second-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $5.45, significantly outpacing the forecast of $3.92. Despite a slight revenue miss, the company’s shares fell by 2.89% in after-hours trading, reflecting a complex market reaction to the overall financial performance and future outlook. According to InvestingPro analysis, the stock appears undervalued at current levels, with the company maintaining a "GREAT" financial health score of 3.07 out of 5.

Key Takeaways

• Boston Beer delivered an EPS of $5.45, a 39.03% surprise over the forecast.
• Revenue slightly missed expectations at $587.95 million compared to the $588.75 million forecast.
• Stock declined by 2.89% in after-hours trading, closing at $207, down from $207.82.
• Gross margin improved to 49.8%, up 380 basis points year-over-year.
• The company anticipates a challenging year with potential volume declines and tariff impacts.

Company Performance

Boston Beer Company showcased resilience in the second quarter of 2025, achieving a 1.5% increase in revenue driven by strategic pricing and product mix enhancements. The company faced a 5% decline in depletions and a 0.8% decrease in shipments, reflecting broader industry challenges. Notable strengths include holding more cash than debt on its balance sheet and maintaining strong liquidity, with current assets exceeding short-term obligations at a ratio of 1.72. Despite these hurdles, Boston Beer managed to gain market share, benefiting from its diverse brand portfolio and innovative product launches. InvestingPro subscribers can access 8 additional key insights about SAM’s financial position and market performance.

Financial Highlights

• Revenue: $587.95 million, up 1.5% year-over-year
• Earnings per share: $5.45, a 24.1% increase from the previous year
• Gross margin: 49.8%, up 380 basis points
• Operating cash flow: $125 million in the first half of 2025

Earnings vs. Forecast

Boston Beer exceeded EPS expectations with a $5.45 result against a $3.92 forecast, marking a 39.03% surprise. This performance stands out in comparison to previous quarters, highlighting the company’s effective cost management and strategic pricing. However, the slight revenue miss of $0.8 million (-0.14% surprise) indicates lingering challenges in the market.

Market Reaction

Despite the robust EPS performance, Boston Beer’s stock fell by 2.89% in after-hours trading, closing at $207. This decline might reflect investor concerns over the modest revenue miss and future guidance uncertainties. The stock remains within its 52-week range, with a high of $329.55 and a low of $185.34, suggesting room for recovery amid broader market trends.

Outlook & Guidance

Looking ahead, Boston Beer forecasts volume declines in the high single to low single digits for 2025, with price increases between 1-2%. The company has raised its gross margin guidance to 46-47.3% and expects full-year EPS between $8 and $10.50, excluding tariff impacts. Tariffs are projected to affect EPS by $0.96 to $1.28, adding complexity to the financial outlook. InvestingPro data shows management’s commitment to shareholder value through aggressive share buybacks, though 3 analysts have recently revised their earnings expectations downward. For comprehensive analysis of SAM and 1,400+ other stocks, explore InvestingPro’s detailed research reports.

Executive Commentary

Jim Cook, Founder and Chairman, emphasized the company’s commitment to brand investment and innovation, stating, "We’re continuing to invest in our brands. We’re building a strong innovation pipeline, and we’re making progress on our multiyear productivity initiatives." CEO Michael Spillane highlighted the potential of new products, noting, "Sun Cruiser will be the next iconic brand for the company and an important growth contributor for the beyond beer category."

Risks and Challenges

• Economic uncertainty and reduced retail traffic could impact sales.
• The hard seltzer category’s decline by 7% poses challenges.
• Tariff implications may pressure profitability.
• Adverse weather conditions affecting summer sales.
• Competitive pressures in the evolving beverage market.

Q&A

During the earnings call, analysts raised questions about the performance of Twisted Tea and potential opportunities in cannabis and adjacent categories. Executives addressed concerns regarding the widened guidance range and potential negative earnings in the second half of the year, reflecting market volatility and strategic adjustments.

Full transcript - Boston Beer Comp Inc (SAM) Q2 2025:

Conference Operator: Greetings, and welcome to the Boston Beer Company second quarter twenty twenty five earnings call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. Is now my pleasure to introduce your host, Mike Andrews, Associate General Counsel and Corporate Secretary.

Thank you. You may begin.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company: Thank you. Good afternoon, and welcome. This is Mike Andrews, Associate General Counsel and Corporate Secretary of the Boston Beer Company. I’m pleased to kick off our twenty twenty five second quarter earnings call. Joining the call from Boston Beer are Jim Cook, Founder and Chairman Michael Spillane, our CEO and Diego Reynoso, our CFO.

Before we discuss our business, I’ll start with our disclaimer. As we state in our earnings release, some of the information we discuss and that may come up on this call reflects the company’s or management’s expectations or predictions of the future. Such predictions are forward looking statements. It’s important to note that the company’s actual results could differ materially from those projected in these forward looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward looking statements is contained in the company’s most recent 10 Q and 10 ks.

The company does not undertake to publicly update forward looking statements whether as a result of new information, future events or otherwise. I will now pass it over to Jim for some introductory comments.

Jim Cook, Founder and Chairman, Boston Beer Company: Thanks, Mike. I’ll begin my remarks this afternoon with a few introductory comments and then hand over to Michael, who will provide an overview of our operating results. Michael will then turn the call over to Diego, who will focus on the financial details of our second quarter results as well as our updated financial outlook for 2025. Immediately following Diego’s comments, we will open the line for questions. As I mentioned on our last call, we are operating in a challenging and unpredictable macroeconomic environment.

There are near term factors such as economic uncertainty and household budget tightening, along with pressure on Hispanic drinkers that are negatively impacting consumer demand across the overall beer industry. Additionally, the second quarter had especially poor weather in key selling weeks. Despite these industry headwinds, we see long term growth opportunities in Beyond Beer, which we often call the fourth category. Beyond Beer represents more than 85% of our volume and is outperforming the legacy three categories of beer, wine, and spirits. We have strong brands, and over the last year, one in three beer drinking households in The US have purchased at least one Boston beer product from our diverse portfolio.

We’ve built a culture of innovation for over forty years, which allows us to quickly move to where consumer demand is going. The latest example is Sun Cruiser, which one is one of the top volume gainers in RTD spirits so far this year. With that as context, let’s move on to our results and our updated 2025 outlook. In the first half, our depletions were down 3%, and we gained share compared to an overall beer industry that we estimate to be down over 4%. In the second quarter, our depletions were down 5%, And as expected, shipments were significantly ahead of depletions at down only 1%.

This was mostly driven by the timing of wholesaler demand for our Sun Cruiser and Truly Unruly innovations along with lower than target wholesaler inventory levels last June. Despite a weaker than expected volume environment, we delivered strong margin expansion and EPS growth in the quarter. This was driven by continued progress on our productivity initiatives, which Diego will discuss in his remarks. These efforts have allowed us to raise our gross margin guidance for the year while also absorbing tariff costs. Our business generated over a $125,000,000 in operating cash flow in the first half, which enables investments in our brands as well as a $111,000,000 in cash returns to shareholders year to date.

We believe increased brand investments are needed to support the national launch of Sun Cruiser and to ensure our full portfolio is well positioned when the industry improves. As always, we’ll be disciplined in our approach, and we’ll only invest where we see clear opportunities. We’re encouraged by the strong consumer reception for Sun Cruiser as well as growth in our smaller brands such as Angry Orchard and Dogfish Head. However, as Michael will discuss, industry headwinds are impacting our larger brands in the near term. As a result, we do expect shipment declines in the second half of the year as shipments rebalance in line with depletion trends.

In summary, I’m confident we have the right strategies and team in place. We’re continuing to invest in our brands. We’re building a strong innovation pipeline, and we’re making progress on our multiyear productivity initiatives. Importantly, we’re focused on controlling what we can control. We’re executing in the marketplace to improve share trends and expand our margins.

I’d like to thank our Boston Beer team, distributors, and retailers for their continued support. I will now pass the call over to Michael.

Michael Spillane, CEO, Boston Beer Company: Thanks, Jim, and good afternoon, everyone. Our strategy to nurture all our core brands, pursue a fewer things better approach to innovation and transform our supply chain is gaining traction. While we still have work to do, this strategy helped us deliver significant margin expansion and earnings per share growth in the second quarter while growing depletions on four of our seven brands. We also hit a record high in customer service levels and reached nearly 50% in gross margin. As Jim noted, the macroeconomic environment is dynamic and as such our depletions have softened since the last earnings call.

Beginning in May and accelerating to June, we saw higher than expected industry declines in the FMB category, which in measured off premise channels was down 3% in dollar sales year to date after growing 7% for the full year in 2024. Our current assessment is that economic uncertainty is driving lower traffic at retail as well as fewer social occasions. Also, while we remain underpenetrated with Hispanic consumers, they are a sizable portion of the consumer base for alcoholic beverages and do have some impact on our volume performance. We’ve maintained healthy points of distribution for our portfolio and gained shelf space in the spring resets for Twisted Tea, Sun Cruiser, Samuel Adams, Angry Orchard, and Howard Mountain Dew. However, traffic levels are down across retail channels and consumers have become somewhat more focused on absolute dollar spent.

This has slowed velocities on our larger brands Twisted Tea and Truly, which are more exposed to overall economic trends and generate a higher percentage of their sales mix from larger pack sizes. Given these trends, we’ve lowered our volume forecast for the year as Diego will further discuss in his remarks. Now I’ll provide an update on our brand performance and plans. Twisted Tea held share of the overall FMB category with dollar sales declining 4% in measured channels last quarter. As as we expected, Twisted Tea shelf space increased mid single digits in the spring resets as retailers began trimming their assortments.

Twisted Tea brand equities remain strong with a very large organic social following and some of the highest engagements among the top 10 beer brands. The Twisted Tea portfolio continues to grow households and has improved its penetration with Hispanic consumers. While that has not provided the growth we initially expected in 2025, it should benefit the brand in the long term. Twisted Tea Light and Twisted Tea Extreme are growing shelf space and velocities. Our packaging redesign has improved sales per point of Twisted Tea Light.

Twisted Tea Extreme Lemon and Twisted Tea Blue Razz are still the top two growth SKUs in the convenience channel among all FMBs. Twisted Tea Light and Twisted Tea Extreme will be growth drivers for the brand for the remainder of ’25 and beyond. We have strong advertising plans for the rest of summer to position us well when the overall category improves. Campaigns include a high performing tea drop ads and our annual America parties with tea program. We will also come back in the fall for the fourth year of our college football program.

This program now includes in game advertising, sponsorships with ESPN, and expanded retailer programs with team specific packages in key markets. In summary, Twisted Tea is our largest brand. We’re continuing to fully support it with advertising invest and innovation. We continue to believe that despite near term challenges, these actions coupled with an improvement in the macro environment will return the brand to growth for the long term. Moving to Sun Cruiser, which launched last summer and went national in January, Sun Cruiser is a gross margin accretive and has been very well received by wholesalers, retailers, and drinkers.

Sun Cruiser has quickly grown to a four share of the RTD spirits category and continues to grow volumes week over week as distribution expands. While Sun Cruiser mainly sources from other RTD spirits, it does have some interaction with Twisted Tea. After initial after an initial regional watch focused on independent and on premise accounts, SunCruiser is now on shelf in larger national chain retailers. This has helped us triple our points of distribution this summer compared to earlier in the year. As these placements drive volume, we expect a greater presence for Suncruiser in measured off premise channel data.

It’s worth noting that through the first half, only a small portion of Sun Cruiser’s total volume was captured and measured off premise channel data. We believe Sun Cruiser will be the next iconic brand for the company and an important growth contributor for the beyond beer category. Many consumers discovered it in the on premise channel, which is a great place to build brands. It’s putting up great trial and repeat numbers. It’s also showing up on paid social and digital advertising as well as big sports moment television advertising and music and sports venues, sponsorships like a v h e g concert series and Madison Square Garden.

Additionally, SunCruise’s presence in the AVP beach volleyball and the World Surf League further reinforce its positioning as the brand for sun, sand, and fun. Turning to hard seltzer, the overall hard seltzer category declined 7% in dollars and measured off premise channels in the second quarter as consumer preferences shift towards more premium RTD spirits based beverages. While Truly continues to be a top two hard seltzer brand and a top four beyond beer brand, we’re not satisfied with its performance. We’re refreshing our marketing strategy and continuing to support the Truly unruly high ABV innovation and as we work to stabilize the brand. We will be launching a new creative platform with a significant investment in regional media in key markets later in the third quarter.

Will continue to sponsor US soccer as we begin the year long lead up to the twenty twenty six World Cup, which will take place in North America for the first time in more than three decades. Truly also will continue to sponsor Barstool Sports podcast, Pardon My Take and Chicks in the Office and activate strong retail campaigns. High ABV offerings continue to be a bright spot in hard seltzer. Truly Unruly has grown to a 3% volume share of hard seltzer, and the Truly Unruly variety pack is the number $1 12 pack share gainer in Beyond Beer in the last twelve months. Our second variety pack, Truly Unruly Lemonade, launched in April and is helping Truly Unruly build momentum and gain shelf space.

Our beer brands Samuel Adams and Dogfish Head continue to be important parts of our portfolio. Samuel Adams American Light launched in glass bottles to support its positioning as the most premium light beer in America. American Light is also featured in our summer patriotic program along with Sam Adams Summer Ale. These initiatives have helped the Samuel Adams brand family gain shelf space even while overall craft beer shelf space declines. Dogfish Head grew depletions in the second quarter for the first time in many years behind the successful launch of Grateful Dead juicy pale ale.

This is the largest launch in Dogfish Head’s thirty year history and continues to build volume and distribution, especially in music venues and other key on premise accounts. Partnering with the Grateful Dead has allowed our team to gain distribution not only in our core Dogfish markets but beyond, including the Sphere in Las Vegas for the Dead and Company concerts. We also developed a limited edition Grateful Dead sixtieth anniversary single serve package that will be sold at the Dead and Company concert series in San Francisco next month. In cider, Angry Orchard has also returned to growth behind the consumer trend back to more flavorful options. Depletions grew in the second quarter driven by a higher level of focus for the organization, including increased investment and new sponsorships.

The new campaign, Don’t Get Angry, Get Orchard, and our sponsorships of WWE Wrestling positively impacted the results and helped the brand gain shelf space. Later this summer, we’ll launch an exciting program featuring Friday the thirteenth movie themed advertising, promotions, packaging, and displays for Halloween and the peak fall cider season. With respect to Hard Mountain Dew, we’re encouraged to see positive depletions for four straight quarter. Hard Mountain Dew Code Red, which was released earlier this year is now distributed in single serve. Earlier this month, we launched a cross merchandising partnership with Tostitos that is being utilized to help support further growth.

We continue to expect growth for Hard Mountain Dew this year, but it will be a multiyear effort for this product to become a meaningful part of our volume mix. In closing, we continue to make progress as an organization. We’re executing our commercial plans to take advantage of the rest of the summer selling season, and we’re continuing our longer term innovation and productivity initiatives. While current industry trends are challenging, we continue to believe we will create long term value for shareholders through innovation, focused execution and margin improvement. I’d like to thank our team for all their hard work executing the summer season and for remaining agile in a dynamic operating environment.

I’ll now pass the call over to Diego to review our second quarter financial results and 2025 guidance.

Diego Reynoso, CFO, Boston Beer Company: Thank you, Michael. Good afternoon, everyone. Depletions in the second quarter decreased 5% and shipments decreased 0.8% compared to the second quarter of last year, primarily driven by declines in the Truly Hard, Seltzer and Sam Adams brands that were only partially offset by growth in the company’s Sun Cruiser and Dogfish Head brands. As Jim noted earlier, shipments were higher than depletions in the quarter due to the timing of wholesaler demand for our Sun Cruiser and Truly Unruly Innovations, as well as lower than target wholesaler inventory levels last June. We believe distributor inventory of four and one half weeks on hand as of June 28 is an appropriate level for each of our brands.

Revenue for the quarter increased 1.5% due to increased pricing and favorable product mix, partially offset by lower volumes. Our second quarter gross margin of 49.8% increased 380 basis points year over year. Gross margin primarily benefited from improved brewery efficiencies, procurement savings, price increases, and product mix, which were partially offset by increased inflationary and tariff costs. Late in the second quarter, we did experience some tariff costs, which negatively impacted gross margin. Advertising, promotional, and selling expenses for the 2025 increased $15,500,000 or 10.7% year over year, primarily due to increased brand investment in media.

General and administrative expenses for the second quarter decreased $2,300,000 or 4.7% year over year, primarily due to a decrease in salaries and benefits cost from lower incentive compensation. We reported EPS of $5.45 per diluted share, an increase of 24.1% compared to the prior year. Our strong EPS performance was driven by higher gross margins and lower share count, partially offset by lower volumes and increased investments in our brands. For the first half of the year, we grew revenue 3.6%, delivered a 49.1% gross margin, and generated $7.58 of EPS. These results reflect shipment growth that was ahead of our depletions.

As we discussed in our last call, we expect shipment trends to rebalance with depletions in the second half of the year. Post our last earnings calls, depletion trends have softened, and we have updated our volume guidance to reflect a more dynamic industry environment. Our depletion trends for the first twenty nine weeks of 2025 have decreased 3% from 2024. We now expect our volume to be down high single digits to down low single digits for the year. We’re providing a wide volume range as there are still many weeks of the summer selling season ahead of us, and the timing of any improvements in the overall beer industry remain uncertain.

We continue to expect price increases of between 12%. Our strong gross margin performance year to date has enabled us to raise our gross margin guidance for the year to 46% to 47.3%, up from 45% to 47% previously. Our updated guidance now includes the impact of tariff, which we estimate to be a headwind of 70 to a 100 basis points. Significant progress on our ongoing productivity initiatives have been key to raising our gross margin guidance even as we absorb the impact of tariffs. Now I’ll provide an update on our initiatives across our three buckets of multiyear saving projects, which are positioning us to better respond to potential changes in the volume environment, product mix, and tariff.

We continue to expect contributions from all three buckets as I discussed on our last call. In brewery performance, second quarter performance was better than we expected, driven by benefits from higher line efficiencies. Our brewery performance targets for the full year of 2025 include continuing continued improvements in OEE, driven by process improvements at our breweries and continue to increase our internal production. In the second quarter, we increased our domestic internal production to 76% of our volume compared to 69% in the second quarter of last year. In our procurement savings bucket, we continue to see opportunities on packaging and ingredients, primarily due to price negotiations and recipe optimization.

Our second quarter results benefited from lower negotiated pricings on certain packaging and ingredients, which we expect will continue throughout 2025. In waste and network optimization, we’re continuing our efforts to improve our processes and systems. The automated customer ordering and inventory management system that we implemented last year continues to help us further reduce waste and optimize our network. Turning to our advertising spend and EPS guidance. We continue to expect increases in advertising, promotional, and selling expenses to range from $30,000,000 to $50,000,000.

Most of the increase occurred in the first half of the year. This does not include any change in freight costs for shipments of our products to our distributors. Exclusive of our estimated impacts of tariffs, we are reiterating our full year 2025 earnings per diluted share of between $8 and $10.50. Including tariffs, full year 2025 earnings per diluted share is expected to be between $6.72 and $9.54. Based on the information currently available and based on tariff programs announced year to date, we estimate that tariffs will have an unfavorable 2025 cost impact of approximately 15,000,000 to $20,000,000 or $0.96 to $1.28 earnings per diluted share.

These estimates include an unfavorable gross margin impact of between 70 to 100 basis points for the full year, giving expected buying patterns and inventory currently on hand. We expect most of the negative impacts from tariffs in the second half of the year. We’ll continue to closely monitor the tariff environment and are looking across our operations for opportunities to mitigate some of the tariff headwinds. As you model out the year, please keep in mind the following factors. Our business is impacted by seasonal volume changes, with the fourth quarter typically our lowest absolute gross margin rate of the year.

Shipments were ahead of depletion trends for the first half, which we expect to reverse in the second half. The third quarter is a much larger volume quarter than the fourth quarter given the seasonality of our business. As you may recall, in the prior year, we were not able to fully ship to meet demand in the second quarter and caught up in the third quarter. As a result of seasonality and the comparisons pre prior year, we expect most of the 2025 shipment reversal to occur in the third quarter, with shipments decline expected to be in the low to mid teens. As I mentioned earlier, the increase in brand investment has occurred mostly in the first half of the year.

Our reinvestment in brand spend began in the fourth quarter of twenty twenty four. So as a reminder, the 2025 will be lapping a high base of prior year brand investments. Turning to capital allocation. We ended the quarter with a cash balance of $212,400,000 and an unused credit line of a $150,000,000, which provide provides us with the flexibility to continue to invest in our base business, fund future growth initiatives, and return cash to our shareholders through our share buyback program. For the full year of 2025, we’re lowering our capital expenditure guidance range by $20,000,000 to between 70,000,000 and $90,000,000 and are focusing our spend on supporting our productivity programs.

During the thirteen week period ended 06/28/2025 and the period from 06/29/2025 through July 2025, we repurchased shares in the amount of $50,000,000 and $11,300,000. As of 07/18/2025, we had approximately $317,000,000 remaining on the $1,600,000,000 share repurchase authorization. This concludes our prepared remarks, and now we’ll open the line for questions.

Conference Operator: Thank you. At we will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove yourself from the queue.

For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, while we poll for questions. Our first question comes from the line of Filippo Folomi with Citi. Please proceed with your question.

Filippo Folomi, Analyst, Citi: Hey. Good afternoon, everyone. So obviously, this summer was off to a pretty soft start in the in the beer category. And it does seem like that the July the early July data continues to be soft. So maybe can you give us an update on kind of the actual rate of your business?

What are your thoughts as you enter to your point into, the key q three, quarter from a depletion standpoint? And then from a brand standpoint, obviously, the biggest slowdown we’ve seen is in Twisted Tea net of the the contribution from Sun Cruiser. So can you help us understand how you see the evolution of the two, like, in terms of the decline of Twisted net of some of the distribution gain and contribution from SunCruiser, going forward? Thank you.

Jim Cook, Founder and Chairman, Boston Beer Company: Yeah. Let me answer that one. Your your instincts are right that the start of the summer was quite slow through the whole industry. It looks like the industry is off four or 5% us a little bit less. So we have gained volume and and dollar share this year.

My take on it is we started this year thinking it was gonna be down 2%, and, you know, there were some drivers behind that, moderation, health concerns, sociability, a little less cannabis through d nine and just the overall macroeconomic uncertainty. I think, things got a little worse in the second quarter because on top of those, factors, the weather was just bad. The in the Northeast, there were 13 consecutive weekends where they had some rain. And then there was also added pressure on the Hispanic community and people going out less. And both of those increased the pressures on the beer business.

So, the second quarter was worse for us than the first. As you can see from our twenty nine week results versus the twenty six, we’re still down the same 3%. So, you can do the arithmetic on that, but the added three weeks did not push down our year to date number. And so that’s how I would look at the the industry. You asked about Twisted Tea and and Sun Cruiser and the interaction there.

Broadly speaking, we’re about flat for the hard tea category. Twisted Tea tends to respond as as the rest of the FNB category does to consumers. Sun Cruiser is a premiumization of the tea category. So to the extent we’re swapping some Twisted Tea drinkers for Sun Cruiser drinkers, it’s margin and revenue accretive. We we would hope that the that that as the year goes on, the momentum that we have behind Sun Cruiser will more than make up for what’s going on with Twisted Tea.

And there isn’t that much interaction between the two. When we run numerator data, it looks like your Twisted Tea is about 20% of the the drop in Twisted Tea is attributable to the vodka tea category, which is not just Sun Cruiser, but also some High Noon, Surfside, some smaller, you know, happy dad kind of things, a good boy, smaller entrance. So, you know, our efforts are really trying to evaluate what’s going on with Twisted Tea. It’s a brand that’s grown for several decades, and we think some of the the decline is fixable through there are places where, you know, the gap between Twisted Tea and mass domestics has gotten significantly bigger over the last four years. So we may have, you know, pushed the price up during COVID and the preceding couple of years, higher than sustainable.

So we may have to make some adjustments there. And the Hispanic component of Twisted Tea is the highest of anything in our portfolio. You know, our data suggests about 20%. So we think, you know, some of that loss is not permanent and as things normalize, some of that will come back.

Michael Spillane, CEO, Boston Beer Company: We’ve also seen increases in Twisted Tea Light and Twisted Tea Extreme has been successful. And as we stated on the last call, we expected to pick up additional points of distribution in shelf space as last year was a big year for smaller competitors to come in. The good news is we held them off and we are getting that space back. And again, net net, we we basically held market share, so despite the decline. So there’s, you know, as as we spoke to, we will continue to invest heavily in Twisted Tea, and make adjustments and continue to drive innovation through the the family.

Filippo Folomi, Analyst, Citi: Great. Thank you. Very comprehensive, guys. I’ll pass it on.

Conference Operator: Thank you. Our next question comes from the line of Peter Grom with UBS. Please proceed with your question.

Peter Grom, Analyst, UBS: Thanks, operator. Good evening, guys. I kind of wanted to just follow-up on Filipa’s question. And I guess, recognizing that summer has not been off to the best start from a category standpoint, but alluded to in the release, year to date depletions are 3%. So I the up what I’m trying to understand is the updated guide seems to imply trends get a lot worse sequentially.

So can you maybe just help us understand you know, why that may be the underlying assumptions embedded in that? Is that simply being conservative, or is there a reason that you would expect depletion to decelerate further from here?

Diego Reynoso, CFO, Boston Beer Company: Well, so the reality is we we we started from the beginning of the year and saying, look. We wanna be ready to support our brands in the summer. This is even before the slowdown in depletions. And from that, we we accelerated our production versus last year. We shipped a little bit ahead of last year, we said, look.

Eventually, the the shipment and depletions will come back in balance in the back end of the year. Now what has changed from the last conversation to now is as as we just discussed, the depletion started a lot, softer for the industry in the second quarter that we expected. And therefore, that rebalance is gonna be a little bit harder than we saw at the same depletion forecast. So it’s not necessarily that the depletion forecast changes per se, but because we have a softer q two, then that means it’s gonna be the rebalancing is gonna be a little bigger as you went to q three and q four. So that’s that’s the biggest driver of the piece.

It’s it’s the knock on effect of the q two depletions more than anything else.

Peter Grom, Analyst, UBS: Okay. And then, Jim, I was maybe hoping to get to go back to your response on just in terms of how category growth has evolved, that you pointed to kind of the structural headwinds that led to your view that the category would be down one to 2% this year. And you kind of touched on the weakening trends year to date. I think you mostly alluded to unfavorable weather, what’s been going on with the Hispanic consumer.

Eric Sarota, Analyst, Morgan Stanley: And this may be hard

Peter Grom, Analyst, UBS: to parse out, but when you look at what’s happening from a category perspective, you know, are the impacts related to to moderation or or the structural headwinds? Are those playing out as as you would have anticipated, or are they actually maybe, you know, worse or having a bigger impact on the category than what you thought, you know, entering this year?

Jim Cook, Founder and Chairman, Boston Beer Company: I would say playing out about as I expected. Maybe d nine, the, you know, the THC has become a bigger thing. But, you know, the GLP scare that we all had, I think, has has mitigated. It turns out that, you know, seventy percent, eighty percent of the people who take it regain all the weight back in the twelve months after they stop. But basic answer is the those sort of long term structural headwinds have been about what I thought, and the the greater decline has come from, it I think from the weather and the pressure on the Hispanic community.

And we’ve had better weather for the last three or four weeks. So, I think that’s actually improved things by a point or two.

Peter Grom, Analyst, UBS: Got it. Well, thank you so much. I’ll pass it on.

Conference Operator: Thank you. Our next question comes from the line of Medine Sorwat with Bernstein. Please proceed with your question.

Medine Sorwat, Analyst, Bernstein: Hi. Evening, everybody. Two for me. One straightforward. I know you called out lowering the estimate for the dollar impact of tariffs.

Could you just give us the moving parts on that? And then maybe a second bigger picture question on SunCruiser. You know, you called out the belief that it will be the next big growth driver for the business. The RTD space is already quite crowded, though still growing strongly, and we’ve seen boom and bust cycles in the past and beyond beer in the fourth category space. So, you know, all this to say, it’s really great to see the strong performance of Sun Cruiser and another brand, offering up some real growth for the group.

But how do you think of the brand’s long term room for growth given those considerations and what we can learn from history in these categories?

Michael Spillane, CEO, Boston Beer Company: Let me let me take the the second part of that, and then I’ll pass it back to Diego. So I think one of the things as a company, Jim talked about Twisted Tea, and that was kind of a twenty year overnight sensation where it it was a long steady healthy growth trajectory. And and it’s got a solid foundation. Because we make Truly and we experience the Truly spike, and and that was built very differently because that was built with a lot of brand extensions. It it came down and it’s still sort of we’re we’re still trying to find balance in that portfolio.

So we’ve taken those lessons with SunCruiser. And the most important thing we did here was we built this on premise to start. As Jim Jim noted that there’s a lot of great great exposure to consumers and they therefore go out and and and purchase it off premise as as they they enjoy the product. So we started really strong there and we’ve rolled it responsibly across the country. It hasn’t been a spike.

It is we’re just getting into measured channels now, and it is the fastest ramping product we’ve ever done. But we’re doing it in a very measured controlled way. So we’re we’ve we’ve learned a lot of lessons here. We’ve done a lot of things right. We’ve certainly made all the mistakes in the world as well.

But we’re building this on a strong foundation. And I think for the people that taste the product, you know, it comes back as as best in class. And so typically, that is what has always worked for Boston Beer is that we make the best product and, tell great stories around it and the consumer finds it. So we’re confident. We know it’s a long run.

We will continue to invest heavily, and and you heard some of that, but we’re we’re we’re gonna stay on premise as well as in arenas and around music and sports. So this will be a long term play for us and we like what we see so far. So I’ll pass it to Diego.

Diego Reynoso, CFO, Boston Beer Company: Excellent. Thank you, Michael. On a tariff point of view, as you know, the tariffs have multiple elements. So it’s the tariff as it’s currently announced. It’s also the timing of when the products are coming in.

And the the third piece is some of the mitigating actions. So if you look at where we were a quarter ago to now, a few things have changed. Aluminum actually went the other way. But for example, our POS material estimates on tariffs went down significant with some of the changes in the tariffs in the last few months. So it’s it’s a constant up and down depending on the different countries and different pieces.

The third piece is we’ve actually worked with some of our suppliers, especially around POS to mitigate some of the POS impact for this year. So that’s the third reason why we made the adjustment. So it’s a combination of up, downs, and timings of the announcements.

Medine Sorwat, Analyst, Bernstein: Understood. And just to confirm, you said that tariff impact is net of mitigation?

Diego Reynoso, CFO, Boston Beer Company: Yes. That is net of mitigation.

Rob Ottenstein, Analyst, Evercore ISI: Perfect. Thank you very much. I’ll pass it on. Oh.

Diego Reynoso, CFO, Boston Beer Company: Let me be very specific. It’s it’s net of mitigation within our suppliers. Now there’s a lot of things we’re doing in our gross margin and other things that are going to provide savings, and that’s why we’re taking our gross margin guidance up. But direct mitigation, it’s net of mitigation.

Medine Sorwat, Analyst, Bernstein: Understood. That’s very helpful and clear. Thank you. I will pass it on. Thank

Conference Operator: you. Our next question comes from the line of Eric Sarota with Morgan Stanley. Please proceed with your question.

Eric Sarota, Analyst, Morgan Stanley: Great. Thanks so much for taking the question. Want to come back to gross margins a bit. It it’s been a long time coming that you guys have been driving to get back to the high forties, low fifties, and you’re you know, you you you did it one quarter. Doesn’t you know, not nobody’s declaring victory after one quarter, but I have to give you credit.

So the question then becomes, you know, where to from here? How are you thinking about the the, you know, next year midterm, gross margin potential with the, productivity improvements that you’ve made to date? And then, you know, so just wanted to clarify, are current margins benefiting at all from any hedges in aluminum or Midwest premium?

Filippo Folomi, Analyst, Citi: You know, if we sort

Eric Sarota, Analyst, Morgan Stanley: of mark to market with where input costs are today, would there be more pressure? Thanks.

Diego Reynoso, CFO, Boston Beer Company: No no problem. Yes. We’re I’ll I’ll start by saying, I I I think our operations team, finance team, our procurement team has done a great job in gross margin. So so we appreciate your comments. I I think the the challenge that we’re seeing is as as well as solve the the initiatives that we’re doing or going, we’re also having headwinds with tariffs.

We’re having headwinds with some of the volume reductions we’ve taken. So I I think overall, we’re still very happy with the guidance that we’re giving that will take us to that kinda high forties number. Now if that changes in the future and we have to see a reduction in tariffs, we can we see some of the incremental volumes that we think we’ll get in the future, then we’ll revise our our kind of midterm target. But right now, I think we’re very happy with the performance. Not only that, but that’s allowed us to offset some of the the tariffs that we’ve seen so far.

And I think the the third piece that I’d add through that process is, we’re also getting a little bit of benefit for mix from Sun Cruiser, which is something that that we really like. So, again, I think as we go into 2026, those are the three things that we’re gonna be looking at when we come back at the end of the year and give us and give you guys the guidance for 2026 is how all those things come together for our gross margin target for next year.

Eric Sarota, Analyst, Morgan Stanley: Great. And then, question on Twisted. You seem, you know, a bit more tentative than I can remember in terms of Twisted potential and figuring out, you know, sort of exactly what’s going on. Know, I I I know this year has been clearly disappointing, but, you know, sort of as you, you know, as you diagnose the the issue, you know, how are you sort of handicapping the prospects of getting back to the historical low double digit rates? It, you know, reading between the lines, you sound pretty confident earlier this year.

But, you know, on this call, you’ve you’ve recognized more interaction with with SunCruiser, and and overall seemed a bit more tentative.

Michael Spillane, CEO, Boston Beer Company: Yeah. So I’ll I’ll start here, and then I think I’ll I’ll pass it to Jim. But I I think one of the things that we we’ve said here as a company all along is, regardless of what happens in the macro environment, we we see ourselves holding or gaining market share. So that regardless of what happens, we feel like we’re gonna compete. The bigger the business is for us, the more likely we are to track to the the overall macular growth situation.

And traffic is down, across most of the the channels we we sell in. So, we there are bright spots in there as we said, both light and extreme, are are performing better than the balance of the portfolio. So Jim constantly reminds us is that we’re controlling what we can control. Twisted t, so our investments will remain strong. We are leaning into it.

We think it’s really important to convert the consumers that are shopping and give them a great proposition when they are in the store. So we’re we’re staying strong and aggressive there. The macro environment is, you know, something that we can’t control.

Jim Cook, Founder and Chairman, Boston Beer Company: Yeah. I I would sort of break the problem down. I’d I’d start with the brand looks healthy. The and I say that because our our our singles, which is a big part of the volume, is flat to slightly up. And the issue is in 12 packs, and that is a bunch of things going on there that I I did allude to one of them.

Maybe a third of that volume, we pushed the price up close to the price of Sam Adams. So it was and historically, it’s been kind of in between, you know, a regular domestic beer where it has a lot of interaction and craft beer, and we pushed it up closer to craft. So we may have been overly aggressive in a piece of that volume. So I’m and we’re also we don’t have a really good handle on it yet, but we lost a lot of display space in the last few months, between Memorial Day and today, because we got pushed off the floors. I was really surprised when I’ve been out in the market to see how the retailers have swung towards RTD displays, you know, which would be things like, you know, big displays of Sun Cruiser, but also of things like, well, Gallo, who we never really thought we were competing for beer display space with.

Gallo had big high noon displays and big displays for their new vodka lemonade, Lucky One. So displays that last year went to Twisted Tea didn’t go there, and that may correct itself going forward. So that, you that gives me some optimism. We’ve got a healthy brand, and we will continue to support it at very high levels and continue you know? And and we got an increase in our distribution this year.

So those retailers still have confidence in it. It’s a big brand for our wholesalers, so we’re continuing to get support from them. So I I feel, more comfortable about the long term than the last few months.

Eric Sarota, Analyst, Morgan Stanley: Very helpful. Thanks, Jim. Thanks, Michael.

Conference Operator: Thank you. Our next question comes from the line of Bonnie Herzog with Goldman Sachs. Please proceed with your question.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company0: Alright. Thank you. Hi, everyone. I wanted to circle back with a few questions just on your shipment and depletion guidance. I guess, first, I’d be curious, you know, to hear why you widened the ranges so much, especially considering only five months left in the year.

You know, I understand everything you talked about and the pressures that are out there, but what has changed with your visibility? And then trying to understand your shipment guidance, which does imply shipments will be down, you know, low double digits at the midpoint in, you know, the second half. So why so negative, especially when you suggest wholesaler inventories are in a a pretty good place? And then finally, might have missed this, but I assume you no longer expect Twisted to grow low single digits this year. And should we expect, you know, a decline of low single digits for Twisted?

Is is that what’s implied in your guidance? Thanks.

Diego Reynoso, CFO, Boston Beer Company: Okay. So perfect. So thank thank you for your question. So I’ll take the first one, and then I’ll I’ll I’ll I’ll pass it on if anybody wants to add something. So, the first piece is I think we’ve talked a lot on the on the questions and on the call of how drastically depletions changed over the last eight, nine weeks.

And therefore, I think right now, nobody in the industry can accurately tell you what the market’s gonna do. And I think for that reason, I think we’ve widened our range, of the depletion targets because we know what we can control, but we’re still again, there’s the weather. There’s a bunch of other things that have been happening that are outside our control. So I think it’s the prudent thing to do is to expand our range in a more volatile environment. The the shipments is a direct consequence of of the depletion range because at the end of the day, we wanna make sure that we maintain the right level of inventories.

So if our depletions improve in the second half of the year, our shipments will improve in the second half of the year. But but what we don’t wanna do is set a shipment target that will increase our year end inventories if the depletions don’t actually improve. So again, for me, the prudent thing is we’re doing everything we can to be on the higher end of our range. And I think the actions we’re taking from a brand investment point of view, from a from a execution point of view are great. What I what we do not have is a key visibility of how the market’s gonna behave in the next twelve weeks.

And although you’re right, we’re in the middle of the year, the highest piece of our selling season, July and August, are still to come. So we’ll know more in the next few weeks when we see the July results and see what August comes in. But right now, I think the prudent thing is to expand that range. Oh, do wanna well and and I’m sorry. I’ll I’ll say we don’t usually give guidance by brand, but I’ll look to Michael and Jim to see if he want they wanna add something on

Michael Spillane, CEO, Boston Beer Company: Twisted Tea. Yeah. I would just anticipate that we continue to maintain our market share and and grow where where the opportunity presents itself. But, given the macro headwinds, it’s really hard to predict.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company0: Okay. Thank you. I’ll pass it on.

Conference Operator: Thank you. Our next question comes from the line of Rob Ottenstein with Evercore ISI. Please proceed with your question.

Rob Ottenstein, Analyst, Evercore ISI: Great. Thank you very much. I had a two part question. Yeah. I mean, your your depletions have been weak for a while.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company1: I’m having a

Michael Spillane, CEO, Boston Beer Company: little little trouble hearing you, Rob. You’re breaking up.

Diego Reynoso, CFO, Boston Beer Company: You you sound a little robotic. Is this a little better? A lot better, thank you. Appreciate that.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company1: Great, great. So beer depletions have been weak for a number of years now. They seem to be getting worse. And we can throw out the weather, the Hispanic consumer, I mean it’s a long litany. So the question is number one, in terms of the industry, how much longer can this go without more strategic actions, consolidation, given the high fixed costs of large parts of the industry?

And then tied to that, Jim, are you thinking any differently now about more strategic moves like whether to get into energy drinks or do anything fundamentally different than you have been doing given, you know, these headwinds, these structural headwinds that that seem to keep getting greater and greater?

Jim Cook, Founder and Chairman, Boston Beer Company: Let me take that one. You know, we are always looking for opportunities. And, to be honest, yes, you know, three years ago, we probably didn’t look at anything outside of alcohol. You know, now our innovation team is is starting to poke at opportunities there. We certainly haven’t found anything that we think is attractive and that we’re good at, and we recognize that in the non alk space are some of the best marketing best marketing companies in the world and the best innovators.

Lord knows how many energy drinks come out every year. It’s beyond dozens. So it’s it’s super competitive. So we’re just looking at it, not knowing whether it’s the right place for us, but we are always looking at innovations. And in terms of, you know, m and a, that’s kind of above my pay grade.

There’s lots of, investment bankers thinking very diligently about who should buy whom, and that’s really not in the cards for us.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company1: But do do you do you think you we will see some of that? Not naming names, but do do you think the industry will see some sort of consolidation either on the on the the the beer side, beverage alcohol, or or or beverages in general?

Jim Cook, Founder and Chairman, Boston Beer Company: You know, I’d have to say my opinion is uninformed, and, and nonchalant. Mean, I don’t know if, you know, what Miller’s gonna buy or if somebody’s Gallo or Coca Cola or Keurig. There’s the people on this call are much smarter than I am about that, so I I wouldn’t even venture an opinion.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company1: Much too humble, but thank you.

Conference Operator: Thank you. Our next question comes from the line of Bill Kirk with Roth Capital Partners. Please proceed with your question.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company2: Hey. Thank you. Good afternoon. I want to round out that guidance range conversation just because year to date EPS is already above the low end of the full year range. So is is negative earnings is that really a possibility for the back half of the year?

Diego Reynoso, CFO, Boston Beer Company: So look. Fourth quarter is always our lowest quarter, and that’s definitely a possibility. I I I think in q three, it really is gonna depend on the depletions of of, July and August. So if if the market continues to be down 10% for the summer, yeah, the math would say that is a possibility. Now we’ve seen some changes in the trends in July.

We haven’t seen the final July numbers, but I’m hopeful that that’s a low probability. But it’s still a chance if if we don’t see a change in the industry trends.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company2: Okay. And then and then, Jim, you you mentioned d nine maybe being bigger than you initially expected, and you obviously have a history of being very quick with innovation as these adjacent segments kinda, materialize. So do you have any d nine plans for The US market? And separately, given given your comment on displays at retail, are you seeing the d nine folks buy and, like, slot for shelf space at retailer and pay the retailers, which obviously alcohol can’t do? Are you seeing any of that?

Jim Cook, Founder and Chairman, Boston Beer Company: Let’s see. I’m I’m breaking it in half. You we do have a, you know, a a cannabis business in Canada, so it’s something that we dipped our toe in with the idea of being ready if something developed in The United States. And, you know, until hemp based t THC, we didn’t really see a lot of opportunity in The US, and and nobody’s really making a lot of money in that business. Consumers don’t go to dispensaries.

So now the hemp based THC currently in a in a handful of states is a different proposition. It’s basically selling in the beer cooler. So you don’t have to go to a dispensary to get it. It’s right there in front of you as an alternative to beer, and it’s getting real traction in a very small percentage of the country. You’re talking about Minnesota, you know, recently Tennessee, in the last twelve months, Louisiana, places where there is some kind of regulatory framework around it.

My overall assessment of the opportunity is that, you know, it’s a it’s it was created by the farm bill. And the politics of it are a mess, completely volatile, change from day to day if anybody’s following, like, what’s going on in Texas. So we don’t even know if that’s gonna be a business in six months. You know, there’s people handicapping, and one of my distributors said their information was $50.50 that it’ll get killed. That McConnell and like minded people who’d never intended to create this this loophole will shut it down completely.

So given how subject all of this is to a political process that is extremely volatile and is is sorting itself out and takes place at a state level, at a federal level. If you poke at it, the FDA could shut it down. They have regulatory authority over the ingredients in beverages, so you don’t just have the farm bill as a threat. So it’s it’s too volatile right now for us. But to your point, you know, we have been pretty quick to capitalize on on, you know, opportunities.

So, yeah, we and we have experience in it and and capabilities that we could apply to it. But right now, you know, I wouldn’t put us down for any volume this year. And that could change tomorrow.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company2: Thank you. And and are they are they paying slotting fees at retail? Like, are those beverages buying cooler space, the d nine guys?

Jim Cook, Founder and Chairman, Boston Beer Company: I you know, that’s a really good point, and and the current regulatory suggested regulatory practices from our our our friends at our trade organizations, the BA, the BI, even the general MBWA position, have not really focused on on trade practices as a regulatory requirement. I think they ought to be. It would be really a bad thing if if they were allowed to buy all the shelf space they want and bring in refrigerators and coolers and buy doors and so forth. I have not seen that. The the players that you find out is there, it’s very fragmented, very fragmented, and nobody’s making a lot of money to go out and, you know, spend away a Red Bull or a monster would in, you know, sucking up all that shelf space.

Mike Andrews, Associate General Counsel and Corporate Secretary, Boston Beer Company2: Thank you.

Conference Operator: Thank you. We have reached the end of the question and answer session. I would like to turn the floor back to Jim Cook for closing remarks.

Jim Cook, Founder and Chairman, Boston Beer Company: Well, thank you all, and I hope you enjoy and drink a lot of beer in the remaining months of summer. And we’ll talk to you after the third quarter closes.

Conference Operator: Thank you. And this concludes today’s conference, and you may disconnect your lines at this time. We thank you for your participation.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.