USA, MA: Boston Beer shares plummet on earnings miss, weak guidance

Shares of The Boston Beer Company, Inc. plummeted 11.16% in aftermarket trading following the release of its fourth quarter financial results, which fell short of Wall Street expectations. The company reported an adjusted fourth-quarter loss per share of $1.49, significantly below analysts' projections of a $0.34 loss. Revenue also came in lower than anticipated at $393.72 million, missing the consensus estimate of $413.77 million, Investing.com reported on February 27.

The brewery's fourth-quarter performance was marred by a 12% year-over-year (YoY) decrease in net revenue, which the company partly attributed to a $5.1 million international sales tax adjustment. When adjusted for a comparable 13-week period, revenue declined by 3.1%. Depletions, a measure of distributor sales to retailers, dropped by 9%, or 1% on a 13-week comparable basis, primarily due to declines in the Truly Hard Seltzer brand, although this was partially offset by increases in Twisted Tea and growth in Samuel Adams Non-Alcoholic styles and Dogfish Head Canned cocktails.

Boston Beer's full-year results also reflected challenges, with net revenue for 2023 down 3.9% to $2.009 billion compared to the previous year. The company's gross margin for the quarter improved slightly by 60 basis points to 37.6%, benefiting from price increases and procurement savings, despite being negatively impacted by inflationary costs and higher third-party production shortfall fees.

Looking ahead, the company's guidance for fiscal year 2024 anticipates an adjusted earnings per share range of $7.00 to $10.00, which is below the analyst consensus of $11.39. The projected EPS reflects the company's expectations of continued challenges, including lower shipment volumes and impacts on gross margins due to third-party production agreements.

President and CEO Dave Burwick expressed optimism about the company's strategies to improve revenue and margin performance, citing investments in brands, marketing, and supply chain enhancements. "Moving forward, we’ll maintain our focus on driving volume and gross margin performance and winning in the marketplace with our advantaged Beyond Beer portfolio, new innovation and improved Supply Chain capabilities," said Burwick.

Investors reacted negatively to the earnings miss and cautious outlook, as reflected in the significant aftermarket stock price decline. Despite the setbacks, Boston Beer ended the fourth quarter with $298.5 million in cash and no debt, and repurchased $128.5 million in shares over the fiscal year, signaling confidence in its long-term strategy.

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