Massachusetts | 001-14092 | 04-3284048 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
One Design Center Place, Suite 850, Boston, MA |
02210 |
|
(Address of principal executive offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
The Boston Beer Company, Inc. (Registrant) |
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/s/ William F. Urich | Date: August 2, 2011 | William F. Urich | ||
Chief Financial Officer | ||||
Investor Relations Contact: | Media Contact: | |
Seana Phillips | Michelle Sullivan | |
(617) 368-5074 | (617) 368-5165 |
| Depletions growth of 7% for the second quarter and 7% year to date. |
| Gross margin of 57% for the second quarter and 54% year to date; and full year gross margin target of between 54% and 56%. |
| Advertising, promotional and selling expense increase of $5.4 million, or 15%, for the second quarter and $11.8 million, or 18%, year to date primarily due to planned increased investments behind the Companys brands. |
| Reduced inventory at participating wholesalers as a result of the Freshest Beer Program of an estimated 190,000 cases as of the end of the second quarter, reducing reported earnings per diluted share by approximately $0.05 for the second quarter and $0.07 year to date. |
| Earnings per diluted share of $2.01 for the quarter and $2.29 year to date. |
| Estimated full year depletions growth of between 7% and 8%, reduced from previously communicated target of 9%. |
| Excluding the impact of the recall settlement of $0.92 per diluted share, and as a result of the reduction in expectations for full year depletions and increased energy costs, the Company is reducing its full year 2011 earnings per diluted share projection to between $3.20 and $3.60 from the previous range of $3.45 and $3.95. |
| The full year 2011 earnings per diluted share projection of between $3.20 and $3.60 includes the estimated negative earnings per share impact of between $0.10 and $0.20 due to reduced shipments related to the implementation of the Freshest Beer Program. |
| On July 26, 2011, the Board of Directors approved an increase of $25.0 million to the previously approved $225.0 million share buyback expenditure limit, for a new limit of $250.0 million. |
| Based on information in-hand, year-to-date depletions through July 2011 are estimated by the Company to be up approximately 6% from the same period in 2010. |
| Year-to-date shipments through July 2011 are up approximately 6% compared to the same period in 2010. The Company no longer provides information on orders in-hand due to changes to the ordering process for Freshest Beer Program wholesalers. |
| The Company believes that inventory levels at the end of the second quarter at those wholesalers who are not participating in the Freshest Beer Program were similar to the levels in previous years. |
| Depletions growth of 7% to 8% and shipment growth of 6% to 7%, reflecting an estimated aggregate inventory reduction at wholesalers participating in the Freshest Beer Program of between 300 thousand and 500 thousand case equivalents. |
| The Company is exploring opportunities for price increases in the second half of 2011 or early 2012 as it expects significant barley cost pressures from the 2011 crop. Revenue per barrel for the full year is currently expected to increase approximately 1% excluding any benefit of further 2011 price movements. |
| Full-year 2011 gross margins of between 54% and 56%, which could be negatively impacted by further increases in energy costs. |
| Increased investment in brand support of between $12 million and $18 million for the full year 2011, not including any increases in freight costs for the shipment of beer products to the Companys wholesalers. Approximately $10 million of this increase has been incurred in the six months ending June 25, 2011. |
| Full-year 2011 effective tax rate of approximately 39%. |
| Full-year capital expenditures of between $15 million and $25 million, most of which relate to continued investments in the Companys breweries and additional keg purchases. |
(unaudited) | (unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 25, | June 26, | June 25, | June 26, | |||||||||||||
(in thousands, except per share data) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Barrels sold |
651 | 632 | 1,153 | 1,089 | ||||||||||||
Revenue |
$ | 146,014 | $ | 141,158 | $ | 257,423 | $ | 243,628 | ||||||||
Less excise taxes |
12,057 | 11,595 | 21,290 | 20,035 | ||||||||||||
Net revenue |
133,957 | 129,563 | 236,133 | 223,593 | ||||||||||||
Cost of goods sold |
57,884 | 57,291 | 107,686 | 103,427 | ||||||||||||
Gross profit |
76,073 | 72,272 | 128,447 | 120,166 | ||||||||||||
Operating expenses: |
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Advertising, promotional and selling expenses |
40,518 | 35,091 | 76,030 | 64,228 | ||||||||||||
General and administrative expenses |
11,132 | 10,547 | 21,405 | 19,000 | ||||||||||||
Settlement proceeds |
(20,500 | ) | | (20,500 | ) | | ||||||||||
Total operating expenses |
31,150 | 45,638 | 76,935 | 83,228 | ||||||||||||
Operating income |
44,923 | 26,634 | 51,512 | 36,938 | ||||||||||||
Other income, net: |
||||||||||||||||
Interest
income |
2 | 6 | 3 | 8 | ||||||||||||
Other income,
net |
21 | 4 | 29 | 3 | ||||||||||||
Total other income, net |
23 | 10 | 32 | 11 | ||||||||||||
Income
before income tax provision |
44,946 | 26,644 | 51,544 | 36,949 | ||||||||||||
Income tax provision |
16,927 | 10,374 | 19,566 | 14,419 | ||||||||||||
Net income |
$ | 28,019 | $ | 16,270 | $ | 31,978 | $ | 22,530 | ||||||||
Net income per common share basic |
$ | 2.12 | $ | 1.18 | $ | 2.41 | $ | 1.62 | ||||||||
Net income per common share diluted |
$ | 2.01 | $ | 1.13 | $ | 2.29 | $ | 1.57 | ||||||||
Weighted-average number of common shares basic |
13,223 | 13,838 | 13,249 | 13,899 | ||||||||||||
Weighted-average number of common shares diluted |
13,947 | 14,390 | 13,977 | 14,381 | ||||||||||||
(unaudited) | ||||||||
June 25, | December 25, | |||||||
(in thousands, except share data) | 2011 | 2010 | ||||||
Assets |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ | 66,315 | $ | 48,969 | ||||
Accounts receivable, net of allowance for doubtful accounts of $61 and
$121 as of June 25, 2011 and December 25, 2010, respectively |
26,503 | 20,017 | ||||||
Inventories |
31,828 | 26,614 | ||||||
Prepaid expenses and other assets |
13,906 | 12,756 | ||||||
Deferred income taxes |
3,648 | 3,648 | ||||||
Total current assets |
142,200 | 112,004 | ||||||
Property, plant and equipment, net |
139,844 | 142,889 | ||||||
Other assets |
1,836 | 2,260 | ||||||
Goodwill |
1,377 | 1,377 | ||||||
Total assets |
$ | 285,257 | $ | 258,530 | ||||
Liabilities and Stockholders Equity |
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Current Liabilities: |
||||||||
Accounts payable |
$ | 24,960 | $ | 19,423 | ||||
Accrued expenses and other current liabilities |
57,621 | 52,776 | ||||||
Total current liabilities |
82,581 | 72,199 | ||||||
Deferred income taxes |
17,387 | 17,087 | ||||||
Other liabilities |
3,296 | 3,656 | ||||||
Total liabilities |
103,264 | 92,942 | ||||||
Commitments and Contingencies |
||||||||
Stockholders Equity: |
||||||||
Class A Common Stock, $.01 par value; 22,700,000 shares authorized;
9,089,779 and 9,288,015 issued and outstanding as of June 25, 2011
and December 25, 2010, respectively |
91 | 93 | ||||||
Class B Common Stock, $.01 par value; 4,200,000 shares authorized;
4,107,355 issued and outstanding |
41 | 41 | ||||||
Additional paid-in capital |
129,069 | 122,016 | ||||||
Accumulated other comprehensive loss, net of tax |
(438 | ) | (438 | ) | ||||
Retained earnings |
53,230 | 43,876 | ||||||
Total stockholders equity |
181,993 | 165,588 | ||||||
Total liabilities and stockholders equity |
$ | 285,257 | $ | 258,530 | ||||
(unaudited) | ||||||||
Six Months Ended | ||||||||
June 25, | June 26, | |||||||
(in thousands) | 2011 | 2010 | ||||||
Cash flows provided by operating activities: |
||||||||
Net income |
$ | 31,978 | $ | 22,530 | ||||
Adjustments to reconcile net income to net cash provided by
operating activities: |
||||||||
Depreciation and amortization |
8,965 | 8,459 | ||||||
Impairment of long-lived assets |
22 | | ||||||
Loss (gain) on disposal of property, plant and equipment |
117 | (5 | ) | |||||
Bad debt (recovery) expense |
(60 | ) | 20 | |||||
Stock-based compensation expense |
3,522 | 1,635 | ||||||
Excess tax benefit from stock-based compensation arrangements |
(2,167 | ) | (2,112 | ) | ||||
Deferred income taxes |
300 | | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(6,426 | ) | (8,965 | ) | ||||
Inventories |
(5,214 | ) | 221 | |||||
Prepaid expenses and other assets |
(833 | ) | (537 | ) | ||||
Accounts payable |
5,537 | (2,717 | ) | |||||
Accrued expenses and other current liabilities |
7,053 | 7,482 | ||||||
Other liabilities |
(360 | ) | 1,149 | |||||
Net cash provided by operating activities |
42,434 | 27,160 | ||||||
Cash flows used in investing activities: |
||||||||
Purchases of property, plant and equipment |
(6,022 | ) | (4,214 | ) | ||||
Proceeds from disposal of property, plant and equipment |
| 20 | ||||||
Net cash used in investing activities |
(6,022 | ) | (4,194 | ) | ||||
Cash flows used in financing activities: |
||||||||
Repurchase
of Class A Common Stock |
(22,627 | ) | (30,219 | ) | ||||
Proceeds from exercise of stock options |
1,036 | 2,770 | ||||||
Excess tax benefit from stock-based compensation arrangements |
2,167 | 2,112 | ||||||
Net proceeds from sale of investment shares |
358 | 569 | ||||||
Net cash used in financing activities |
(19,066 | ) | (24,768 | ) | ||||
Change in cash and cash equivalents |
17,346 | (1,802 | ) | |||||
Cash and cash equivalents at beginning of period |
48,969 | 55,481 | ||||||
Cash and cash equivalents at end of period |
$ | 66,315 | $ | 53,679 | ||||
Supplemental disclosure of cash flow information: |
||||||||
Income taxes paid |
$ | 10,344 | $ | 7,805 | ||||