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Earnings Results: Maker of Sam Adams beer heads toward record stock high as hard-seltzer sales boost earnings

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Boston Beer Co. shares headed toward fresh record highs Thursday afternoon, following an earnings report that showed buzzy hard seltzers are lifting the company’s spirits.

Boston Beer
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known for its Sam Adams-branded beers, reported profit of $65.6 million, or $5.26 a share, more than triple its total of $18.2 million in the same quarter a year ago. The company’s net revenue, which removes excise taxes, jumped to $545.1 million from $330.6 million a year ago.

Analysts on average expected earnings of $2.61 a share on sales of $477.3 million. Shares jumped more than 8% in after-hours trading immediately following the release of the results, gains that would push Boston Beer stock to record highs if they hold into Friday’s trading session. Shares hit a record intraday high of $1.319.34 in Thursday’s regular session, but fell back to close with a 0.7% decline at $1.246; the stock reached a record closing high of $1.294.93 on April 16.

While known for its Sam Adams brands, as well as Dogfish Head and other beers, Boston Beer executives credited a newer drink category for its gains: hard seltzer. The company has jumped into a category that became popular in recent years with the introduction of White Claw and other fizzy, fruity alcoholic beverages.

“The recently launched Truly Iced Tea Hard Seltzer has accelerated Truly brand growth, which has more than doubled since last year,” Chief Executive Dave Burwick said in Thursday’s release. “In the first quarter in measured off-premise channels, the Truly brand outgrew the hard-seltzer category by nearly 2X, or 50 percentage points, resulting in a share increase of 6.5 percentage points. The Truly brand has now reached a market share of over 28%, accounting for approximately 40% of all growth cases in the hard-seltzer category, which is two times greater than the next largest growth brand.”

Boston Beer expects to launch another Truly-branded fruity drink in the second quarter, Truly Punch Hard Seltzer, while continuing to also push its Twisted Tea brand.

“Twisted Tea continues to generate double-digit volume growth rates that are significantly above full-year 2020 trends,” Burwick said in Thursday’s statement. “In the first quarter in measured off-premise channels, case growth in Twisted Tea brand products was almost three times higher than its closest competitor and we believe Twisted Tea is on its way to becoming the number one flavored malt beverage (FMB) by year’s end.”

Executives also added $2 to their adjusted earnings-per-share forecast for the full year, now predicting $22 to $26 a share after earlier stating $20 to $24 a share.

One concern for the executives is producing enough hard seltzer to meet supply, and how that could affect their margins. Burwick said that Boston Beer will have to contract with third-party breweries to help make their products, which could cut into profit.

“While we anticipate delivering margin improvements in 2021, our gross margins and gross margin expectations will continue to be impacted negatively until our volume growth stabilizes,” Burwick said.

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