Boston Beer Co. reports first quarter 2019 net revenue of $251.7 million, an increase of $61.2 million or 32.1% from the same period last year, mainly due to an increase in shipments of 32.5%.
Net income rose 83.1% to $23.7 million, or $2.02 a share. The significant increase in net revenue, compared to the first quarter of 2018, was driven by the planned acceleration in the timing of shipments during the year to support current and anticipated growth in demand. The increase in net income reflects the higher net revenue, partially offset by increases in operating expenses and lower gross margins.
In the first quarter of 2019 and the first quarter of 2018, the Company recorded a tax benefit of $0.15 per diluted share and $0.23 per diluted share, respectively, resulting from the Accounting Standard “Employee Share-Based Payment Accounting” (“ASU 2016-09”), which was effective for the Company on January 1, 2017.
Depletions rose 11% from the like year-earlier period. “We believe this is attributable to our key innovations, the quality of our products and our strong brands, as well as successful sales execution and support from our distributors,” said Jim Koch, founder/chairman.
“We are still seeing challenges across the industry,” he said, “including a general softening of the craft beer category and retail shelves that offer an overwhelming number of options to drinkers. We remain positive about the future of craft beer and are happy that our diversified brand portfolio continues to fuel double-digit growth. “We are disappointed with our Samuel Adams brand trends and continue to work hard on our brand messaging, focusing on the quality and care that goes into brewing our Samuel Adams Boston Lager, along with a significant package re-design that is now hitting shelves and the recent release of our new “lighter and brighter” recipe for Samuel Adams Summer Ale,” Koch said, adding:
“We plan to continue to invest in the coming months to improve trends and remain focused on the longer-term goal of returning Samuel Adams to growth. While it’s too early to draw long-term conclusions, we’ve received very positive reactions from distributors, retailers and drinkers on our new Sam Adams packaging design and the new taste profile of Sam Summer Ale. We are confident in our ability to innovate and build strong brands and help support our mission of long-term profitable growth.”
Dave Burwick, the Company’s President and CEO said:
“First quarter shipments growth was significantly higher than depletions as we took active steps to ensure that our distributor inventory levels are adequate to support drinker demand during the peak summer months. Our depletions growth in the first quarter was the result of increases in our Truly Hard Seltzer and Twisted Tea brands that were only partially offset by decreases in our Samuel Adams and Angry Orchard brands.
“Truly continues to grow beyond our expectations. We are expanding distribution across all channels and improving our position as a leader in hard seltzer as more competitors enter the category. Twisted Tea continues to generate double-digit volume growth consistent with 2018 full year growth trends. Angry Orchard’s volume declined against the first quarter 2018 national roll out of Angry Orchard Rosé. We expect Angry Orchard to improve for the remainder of the year and are excited about our brand investment plans and the national rollout later in the year of Angry Orchard Crisp Unfiltered, a homage to traditional American Cider with a less sweet, fresh apple taste.
“Our new brands in 2019 address important health and wellness and active lifestyle opportunities in our categories and include 26.2 Brew from our wholly-owned affiliate Marathon Brewing Co., a refreshing Gose beer brewed with sea salt to fit runners’ active lifestyle and flavor preferences. We recently sponsored the Boston Marathon and to date, the response from our distributors, retailers and drinkers on 26.2 Brew has been very positive, but it’s too early to draw conclusions on the longer-term impact.”