Boston Beer Net Income drops 9.8% in Q2

Core Viewpoint - Boston Beer reported disappointing Q2 2024 earnings, with significant declines in shipment volumes and net income, prompting a downward revision of volume guidance for the full year [2][3][8]. Financial Performance - Net revenue decreased by 4% year over year to $579.1 million, down from $603.3 million in Q2 2023 [8][9]. - Net income fell by 9.8% to $52.3 million, compared to $58.0 million in the same quarter last year [8][9]. - Gross margin improved slightly to 46.0%, up from 45.4% in Q2 2023, attributed to price increases and procurement savings, despite higher processing costs and inflation [5][8][12]. Shipment Volumes - Shipment volume for the quarter was approximately 2.2 million barrels, reflecting a 6.4% decline from 2.3 million barrels in Q2 2023 [9][11]. - The decline in shipment volumes was primarily driven by underperformance in the Truly Hard Seltzer brand, while Twisted Tea and the newly launched Sun Cruiser brand showed growth [11][12]. Inventory and Operational Challenges - The company faced low inventory levels, averaging about three and a half weeks on hand, below the target of four to five weeks, indicating distribution inefficiencies [13]. - Rising production costs and inflationary pressures continued to impact profitability, despite some operational improvements [12]. Strategic Focus - Management maintained its full-year GAAP EPS guidance of $7.00 to $11.00, indicating confidence in long-term growth despite current challenges [14]. - Volume guidance was revised downward to reflect a flat or low single-digit decline in depletions and shipments [14].