BOSTON BEER UPDATES 2024 FINANCIAL GUIDANCE TO REFLECT SUPPLIER CONTRACT AMENDMENT
21 December 2024 - 8:15AM
As part of its ongoing initiatives to optimize its supply chain,
The Boston Beer Company, Inc. (NYSE: SAM), today announced an
amendment and restatement in its entirety of an existing production
agreement with a third-party supplier, Rauch North America Inc
(‘Rauch’). This amendment adjusts the existing production agreement
to better match the Company’s future capacity requirements and
results in increased production flexibility and more favorable
termination rights to the company in exchange for a $26 million
cash payment to Rauch on or before December 23, 2024.
As a result of the payment, the Company expects to record a
pre-tax contract settlement expense of $26 million or $1.70 after
tax per diluted share impact in the fourth quarter of 2024. The
full anticipated impact of the payment on the Company’s prior
guidance is set forth in the chart below under Updated Full-Year
2024 Projections.
Updated Future Third Party Production Obligations
For the full year 2024, the Company continues to estimate
shortfall fees will negatively impact gross margin by 65 to 75
basis points and the non-cash expense of third-party production
pre- payments will negatively impact gross margins by 95 to 105
basis points.
The Company continues to work to finalize its 2025 financial
plan. The company does not expect this agreement to materially
impact its previously provided estimate of $14 million in 2025
shortfall fees disclosed in its third quarter 10-Q filed on October
24, 2024. The Company will provide further guidance on shortfall
fees and the non-cash expense of third-party productionpre-payments
along with its full year 2025 financial guidance in its fourth
quarter earnings report in February 2025.
The Company has regular discussions with its third-party
production suppliers related to its future capacity needs and the
terms of its contracts. Changes to volume estimates, future
amendments or cancellations of existing contracts could accelerate
or change total shortfall fees expected to be incurred.
Updated Full-Year 2024 Projections
The Company has updated its full year guidance to reflect the
estimated contract settlement expense discussed above. The
Company’s actual 2024 results could vary from the current
projection and are highly sensitive to changes in volume
projections and supply chain performance.
Full Year 2024 |
Current Guidance |
Prior Guidance |
Depletions and Shipments Percentage Decrease |
Down low single digits |
Down low single digits |
Price Increases |
2% |
2% |
Gross Margin |
44% to 45% |
44% to 45% |
Advertising, Promotion, and Selling Expense Year Over Year
Change ($million) |
($5) to $15 |
($5) to $15 |
Effective Tax Rate |
34% |
30% |
GAAP EPS |
$3.80 to $5.80 |
$5.50 to $7.50 |
Non-GAAP EPS |
$8.00 to $10.00 |
$8.00 to $10.00 |
Capital Spending ($ million) |
$80 to $95 |
$80 to $95 |
The non-GAAP earnings per share (Non-GAAP EPS) projection
excludes the contract settlement of $26 million or $1.70 per
diluted share and the impact of non-cash brand impairments of $42.6
million or $2.49 per diluted share, recognized in the third quarter
of fiscal 2024 relating primarily to the Dogfish Head brand.
The increase in the estimated full year effective tax rate is
due to the impact of the contract settlement which decreased
estimated full year pre-tax income but did not significantly change
estimated full year non-deductible expenses.
Use of Non-GAAP Measures
Non-GAAP EPS is not a defined term under U.S. generally accepted
accounting principles (“GAAP”). Non-GAAP EPS, or Non-GAAP earnings
per diluted share, excludes from projected GAAP EPS the estimated
impact of the contract settlement of $26 million or $1.70 per
diluted share to be recognized in the fourth quarter of fiscal 2024
and the impact of the non-cash asset impairment charge of $42.6
million, or $2.49 per diluted share, recognized in the third
quarter of fiscal 2024 relating primarily to the Dogfish Head
brand. This non-GAAP measure should not be considered in isolation
or as a substitute for diluted earnings per share prepared in
accordance with GAAP, and may not be comparable to calculations of
similarly titled measures by other companies. Management uses this
non-GAAP financial measure to make operating and strategic
decisions and to evaluate the Company’s underlying business
performance. Management believes this forward-looking non-GAAP
measure provides meaningful and useful information to investors and
analysts regarding the Company’s outlook for its ongoing financial
and business performance or trends and facilitates period to period
comparisons of its forecasted financial performance.
Forward-Looking Statements
Statements made in this press release that state the Company’s
or management’s intentions, hopes, beliefs, expectations or
predictions of the future are forward-looking statements. It
isimportant to note that the Company’s actual results could differ
materially from those projected in such forward-looking statements.
Additional information concerning factors that could cause actual
results to differ materially from those in the forward-looking
statements is contained from time to time in the Company’s SEC
filings, including, but not limited to, the Company’s report on
Form 10-K for the year ended December 30, 2023 and subsequent
reports filed by the Company with the SEC on Forms 10-Q and 8-K.
Copies of these documents are available from the SEC and may be
found on the Company’s website, www.bostonbeer.com. You should not
place undue reliance on forward-looking statements, which speak
only as of the date they are made. The Company undertakes no
obligation to publicly update or revise any forward-looking
statements.
About the Company
The Boston Beer Company, Inc. (NYSE: SAM) began brewing Samuel
Adams beer in 1984 and has since grown to become one of the largest
and most respected craft brewers in the United States. We
consistently offer the highest-quality products to our drinkers,
and we apply whatwe’ve learned from making great-tasting craft beer
to making great-tasting and innovative“beyond beer” products.
Boston Beer Company has pioneered not only craft beer but also hard
cider, hard seltzer and hard tea. Our core brands include household
names like Angry Orchard Hard Cider, Dogfish Head, Sun Cruiser,
Truly Hard Seltzer, Twisted Tea Hard Iced Tea, and Samuel Adams. We
have taprooms and hospitality locations in California, Delaware,
Massachusetts, New York and Ohio. For more information, please
visit our website at www.bostonbeer.com, which includes links to
our respective brand websites.
Jennifer Larson
Boston Beer Company
(617) 368-5152
jennifer.larson@bostonbeer.com
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