Saturday, 27 July 2024
by BD Banks
Shares of Boston Beer (NYSE: SAM) were moving higher today after the parent of alcohol brands like Sam Adams and Truly hard seltzer posted better-than-expected results in its second-quarter earnings report, even though business continued to decline due to weakness in the hard seltzer category.
As of 12:17 p.m. ET, the stock was up 6.1% on the news.
Image source: Getty Images.
The quarterly report was far from stellar, but considering the company’s recent struggles, it was enough to please investors.
Depletions, or unit sales at the retail level, fell 4%, and shipments declined 6.4% in the quarter. Consequently, revenue before excise taxes fell 4% to $614.2 million, which beat estimates at $597.3 million.
Management said that demand improved during the quarter after a weak start in April, and the company also said gross margin increased 60 basis points to 46%. However, the bottom line still came up short, falling from $4.72 to $4.39, which was well below the consensus at $5.01.
Chairman Jim Koch noted an expanding gross margin and strong cash-flow generation, and said, “While the industry environment remains dynamic, we are seeing early signs of progress on innovation and will use our strong balance sheet to invest in our brands while returning cash to shareholders.”
Management also noted that growth in Twisted Tea and its newly launched Sun Cruiser brand offset continuing declines in Truly.
The company did lower its volume guidance to account for softer performance in the industry and the timing of product launches, though it maintained its earnings-per-share (EPS) guidance.
Management now sees volume between flat and down low single digits compared to an earlier range of down low single digits to up low single digits. It maintained EPS guidance at $7 to $11; the consensus is for $11.27.
While the business still needs work, investors seem pleased with the momentum toward growth, which was enough to bid the beaten-down stock higher.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boston Beer. The Motley Fool has a disclosure policy.