Core Insights - Boston Beer Company, Inc. (SAM) reported third-quarter 2025 results with earnings per share of $4.25, exceeding the Zacks Consensus Estimate of $3.78 and reflecting a year-over-year increase of 48.6. However, net revenues fell 11% year over year [1][9]. Financial Performance - Net revenues for the third quarter were $571.5 million, down 11% from the prior-year quarter, with revenues excluding excise taxes declining 11.2% to $537.5 million. This decline was attributed to lower shipment volumes, partially offset by higher pricing and a favorable product mix [2]. - Shipment volume decreased by 13.7% year over year to 1.9 million barrels, primarily due to lower volumes of Truly Hard Seltzer, Twisted Tea, and Samuel Adams, although brands like Sun Cruiser and Angry Orchard showed growth [3]. - Gross profit fell 2.5% year over year to $273.1 million, but gross margin improved by 450 basis points to 50.8%, driven by brewery efficiencies, procurement savings, and a favorable product mix [5][9]. Expenses and Costs - Advertising, promotional, and selling expenses rose 11.3% to $164.7 million due to increased investments in brand media and marketing, while general and administrative expenses increased by 2.5% to $44.9 million [6]. - The company anticipates advertising expenses to increase by $50-$60 million, up from a previous estimate of $30-$50 million [13]. Financial Position - As of September 27, 2025, Boston Beer had cash and cash equivalents of $250.5 million and total stockholders' equity of $911 million, with $150 million available in its line of credit [7]. - The company repurchased shares worth $161.3 million year to date, with approximately $266 million remaining on its $1.6 billion share buyback expenditure limit [8]. Future Guidance - Boston Beer updated its 2025 financial guidance, expecting mid-single-digit declines in depletions and shipments, with price increases remaining at 1-2% [10][11]. - The gross margin forecast for 2025 is now 47-48%, reflecting a change due to lower-than-expected tariff impacts [12]. - Capital spending is now projected at $50-$70 million, down from the previous range of $70-$90 million [14].

Financial Data and Key Metrics Changes - In Q3 2025, depletions decreased by 3%, while shipments decreased by 14% compared to the previous year, primarily driven by declines in Twisted Tea, Truly Hard Seltzer, and Samuel Adams brands [8][24] - Revenue for the quarter decreased by 11.2% due to lower volumes, partially offset by increased pricing and favorable product mix [24] - The gross margin for Q3 was 50.8%, an increase of 450 basis points year-over-year, marking the highest level since 2018 [24][25] - Year-to-date, the company generated $11.82 in EPS, with gross margin at 49.7% [25] Business Line Data and Key Metrics Changes - Twisted Tea experienced a decline of 5% in dollar sales year-to-date in measured off-premise channels, losing share in a category that is down 3% [11][12] - Sun Cruiser has become the leading RTD spirits, tea, and lemonade brand in on-premise bars and restaurants, with significant growth in distribution and velocity [17][18] - Angry Orchard returned to growth, driven by increased investment and new sponsorships, with depletions growing in Q3 [22] Market Data and Key Metrics Changes - The overall beer industry is estimated to be down over 4% in volume, while the company’s depletions were down 3% [8][9] - The hard seltzer category declined by 4% in dollars in measured off-premise channels, as consumer preferences shift towards premium RTD spirits-based beverages [20] Company Strategy and Development Direction - The company is focused on innovation, advertising investment, and margin improvement, with a strong emphasis on the beyond beer category, which represents over 85% of its volume [6][7] - Plans include expanding Sun Cruiser and launching additional innovation brands, alongside local market activation programs [8][19] - The company aims to maintain share within its brand families and is investing in marketing to support Twisted Tea and Truly [55][56] Management's Comments on Operating Environment and Future Outlook - The management noted ongoing challenges in the macroeconomic environment, impacting consumer demand, particularly among Hispanic consumers [6][12] - Despite current headwinds, the company sees long-term growth opportunities in the beyond beer category and plans to continue investing in its brands [7][19] - Management expressed confidence in the strategies and team in place to improve share trends and expand margins [23] Other Important Information - The company generated over $230 million in operating cash flow in the first nine months, allowing for significant share repurchases [10][30] - The company has narrowed its volume guidance range and raised its gross margin and EPS guidance for the full year [27][29] Q&A Session Summary Question: Clarification on promotional spend and pack sizes - Management confirmed that promotional spending will continue to support brands, particularly Twisted Tea, and mentioned the introduction of a four-pack of 16-ounce cans priced under $10 to attract consumers [34][38] Question: Gross margin performance and future targets - Management highlighted that strong gross margin performance was driven by procurement savings and brewery efficiencies, with a target of maintaining high 40s gross margin [44][46] Question: Top-line growth outlook and brand support - Management expressed optimism about Sun Cruiser's growth potential and emphasized the importance of maintaining share for Twisted Tea and Truly through increased brand support [52][55] Question: Impact of hemp beverages and Hispanic consumers - Management estimated that about 20% of Twisted Tea drinkers are Hispanic and noted that macroeconomic conditions and health concerns are significant factors affecting demand [72][73] Question: Fourth quarter earnings outlook - Management reiterated that the fourth quarter is typically the lowest revenue quarter, with expectations of continued volume challenges [78][79]

Financial Data and Key Metrics Changes - In Q3 2025, depletions decreased by 3%, while shipments decreased by 14% compared to the previous year, primarily due to declines in Twisted Tea, Truly Hard Seltzer, and Samuel Adams brands [8][24] - Revenue for the quarter decreased by 11.2% due to lower volumes, partially offset by increased pricing and favorable product mix [24] - The gross margin for Q3 was 50.8%, an increase of 450 basis points year-over-year, marking the highest level since 2018 [24][25] Business Line Data and Key Metrics Changes - Twisted Tea experienced a decline of 5% in dollar sales year-to-date in measured off-premise channels, losing share in a category that is down 3% [11][12] - Sun Cruiser has become the leading RTD spirits brand in on-premise channels and is now the fourth largest brand in the RTD spirits category, with significant growth in distribution [17][18] - Angry Orchard returned to growth in Q3, driven by increased investment and new sponsorships [22] Market Data and Key Metrics Changes - The overall beer industry is estimated to be down over 4% in volume, while the beyond beer category, which represents over 85% of the company's volume, is expected to grow as it attracts a younger and more diverse consumer base [6][7] - The hard seltzer category declined by 4% in dollars in measured off-premise channels, as consumer preferences shift towards premium RTD spirits-based beverages [20] Company Strategy and Development Direction - The company is focused on innovation, supporting its brand portfolio with advertising investments, and driving margin improvement [4][5] - Plans include expanding the Sun Cruiser brand and launching additional innovation brands in 2026 [8][19] - The company aims to maintain share within its brand families and is investing in marketing to support Twisted Tea and Truly [56] Management's Comments on Operating Environment and Future Outlook - The management noted ongoing challenges in the macroeconomic environment, impacting consumer demand, particularly among Hispanic consumers [6][12] - Despite current headwinds, the company sees long-term growth opportunities in the beyond beer category and plans to continue investing in its brands [7][19] - Management expressed confidence in the strategies and team in place to improve share trends and expand margins [23] Other Important Information - The company generated over $230 million in operating cash flow in the first nine months of the year, allowing for brand investments and share repurchases [10] - The company has narrowed its volume guidance range and raised its gross margin and EPS guidance for the full year [27][29] Q&A Session Summary Question: Clarification on promotional spend and pack sizes - Management indicated that promotional spending will support Twisted Tea, including a new four-pack of 16-ounce cans priced under $10, and they are exploring smaller pack sizes [34][39] Question: Gross margin performance and future targets - Management highlighted that strong gross margin performance was driven by procurement savings and brewery efficiencies, with a target to maintain high 40s gross margin [44][46] Question: Top-line growth outlook - Management expressed optimism about Sun Cruiser's growth potential and plans to maintain share for other brands, despite challenges faced by Twisted Tea and Truly [53][56] Question: Impact of hemp beverages and Hispanic consumers - Management estimated that about 20% of Twisted Tea drinkers are Hispanic, and the overall macroeconomic situation and health concerns are significant factors affecting demand [72][73]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 decreased by 11.2% due to lower volumes, partially offset by increased pricing and favorable product mix [26] - Gross margin for Q3 2025 was 50.8%, an increase of 450 basis points year over year, marking the highest level since 2018 [26][27] - Year-to-date EPS reached $11.82, with guidance for full-year EPS revised to $7.80 to $9.80, up from $6.72 to $9.54 [28][32] Business Line Data and Key Metrics Changes - Depletions decreased by 3% in Q3 2025, with shipments down 13.7%, primarily driven by declines in Twisted Tea, Truly Hard Seltzer, and Samuel Adams [26][10] - Twisted Tea saw a year-to-date decline of 5% in dollar sales, while Angry Orchard returned to growth with increased depletions [12][24] - Sun Cruiser became the leading RTD spirits brand in on-premise channels, with significant growth in distribution and velocity [18][19] Market Data and Key Metrics Changes - The overall beer industry is estimated to be down over 4% in volume, while the beyond beer category, which represents over 85% of the company's volume, is expected to grow [6][10] - The hard seltzer category declined 4% in dollars in measured off-premise channels, as consumer preferences shift towards premium RTD spirits [21] - Hispanic consumer buying rates remain challenged, impacting brands like Twisted Tea, which has a significant portion of its drinker base from this demographic [12][13] Company Strategy and Development Direction - The company is focused on innovation, advertising investment, and margin improvement, with a strong emphasis on the beyond beer category [4][6] - Plans to expand Sun Cruiser and launch additional innovation brands in 2026 are underway, alongside increased advertising support [19][20] - The company aims to maintain share within its brand families and is investing in local market activation programs to support brand growth [8][17] Management's Comments on Operating Environment and Future Outlook - The management acknowledged a challenging macroeconomic environment affecting consumer demand, particularly among low to middle-income consumers [6][12] - Despite current headwinds, the company sees long-term growth opportunities in the beyond beer category and is committed to investing in its brands [7][10] - Management expressed confidence in the strategies and team in place to navigate the current environment and improve share trends [25] Other Important Information - The company generated over $230 million in operating cash flow in the first nine months of the year, allowing for brand investments and share repurchases [11] - The company has narrowed its volume guidance range for the year and raised its gross margin and EPS guidance, reflecting strong performance year-to-date [30][32] - The company ended the quarter with a cash balance of $250.5 million and an unused credit line of $150 million, providing flexibility for future investments [33] Q&A Session Summary Question: Clarification on promotional spend and timing - Management indicated that promotional spending will support Twisted Tea and that local marketing efforts will continue into next year [36][40] Question: Thoughts on smaller pack sizes - Management is exploring smaller pack sizes but believes that traditional sizes offer better value and margin [37][42] Question: Gross margin performance and future targets - Management expressed confidence in maintaining high gross margins and achieving targets through ongoing savings projects [46][50] Question: Top-line growth outlook - Management is optimistic about Sun Cruiser's growth potential and aims to maintain share across its brand portfolio [54][58] Question: Impact of hemp beverages and Hispanic consumers - Management noted that economic conditions and health concerns are significant factors affecting demand, with limited impact from hemp beverages [72][74]

Financial Data and Key Metrics Changes - Revenue for Q3 decreased by 11.2% due to lower volumes, partially offset by increased pricing and favorable product mix [32] - Gross margin for Q3 was 50.8%, an increase of 450 basis points year-over-year, marking the highest level since 2018 [33] - Year-to-date EPS reached $11.82, with guidance for full-year EPS revised to $7.80 to $9.80, up from $6.72 to $9.54 [38] Business Line Data and Key Metrics Changes - Depletions decreased by 3% in Q3, with shipments down 13.7%, primarily driven by declines in Twisted Tea, Truly Hard Seltzer, and Samuel Adams [32] - Sun Cruiser and Angry Orchard brands showed growth, with Sun Cruiser becoming the leading RTD spirits brand in on-premise channels [22][32] - Twisted Tea experienced a decline of 5% in dollar sales year-to-date, attributed to macroeconomic factors and competition from RTD spirits [15][16] Market Data and Key Metrics Changes - The overall beer industry is estimated to be down over 4% in volume, while the company's depletions were down 3% [12][32] - The hard seltzer category declined by 4% in dollars, with Truly remaining a top brand but underperforming [25] - The Hispanic consumer segment continues to face challenges, impacting demand across the industry [16][97] Company Strategy and Development Direction - The company is focused on innovation, brand support through advertising, and margin improvement initiatives [7][11] - Plans to expand Sun Cruiser and introduce new innovation brands in 2026, while continuing to support Twisted Tea with advertising and promotional efforts [20][25] - The company aims to maintain share in its brand families and capitalize on growth opportunities in the beyond beer category [71][80] Management's Comments on Operating Environment and Future Outlook - The current macroeconomic environment remains challenging, with consumers managing budgets tightly and moderation trends impacting demand [8][9] - Management remains optimistic about long-term growth opportunities in the beyond beer category, which represents over 85% of the company's volume [9][10] - The company expects to see improvements in the macroeconomic environment and brand performance in the long term [21][72] Other Important Information - The company generated over $230 million in operating cash flow in the first nine months, allowing for brand investments and share repurchases [14] - The company has narrowed its volume guidance range and raised gross margin and EPS guidance for the full year [36][38] - The company ended the quarter with a cash balance of $250.5 million and an unused credit line of $150 million [40] Q&A Session Summary Question: Clarification on promotional spend and local marketing - Management indicated that promotional spending will support Twisted Tea and that local marketing efforts will continue into next year [44][46] Question: Gross margin performance and future targets - Management expressed confidence in maintaining high gross margins due to ongoing savings projects and operational efficiencies [56][59] Question: Top line growth outlook and brand contributions - Management remains optimistic about Sun Cruiser's growth potential and aims to maintain share for Twisted Tea and Truly [70][76] Question: Impact of hemp beverages and Hispanic consumers - Management noted that the Hispanic consumer segment represents about 20% of Twisted Tea drinkers and highlighted macroeconomic factors as significant drivers of industry declines [97][98] Question: Fourth quarter earnings outlook - Management reiterated that Q4 is typically the lowest revenue quarter and explained the changes in production and marketing spend that contribute to this trend [104][108]

Core Insights - Boston Beer Company is navigating a challenging operating environment characterized by macroeconomic uncertainty, pressured consumer spending, and weak category demand, yet it has achieved strong margin gains and earnings growth [1][4] - The company's innovation strategy, particularly with products like Sun Cruiser and Twisted Tea Light, is driving consumer engagement and brand relevance, helping to offset declines in more mature categories [2][7] - Boston Beer is focusing on long-term brand building, reinforcing core brands like Twisted Tea and Samuel Adams while expanding newer offerings, which illustrates a disciplined strategy in a competitive beverage landscape [3][4] Financial Performance - Despite weak demand and soft retail traffic, Boston Beer posted margin gains and earnings growth, indicating resilience in its financial performance [7] - The company's shares have gained 18% over the past three months, outperforming the industry and broader Consumer Staples sector, which declined by 6.6% and 1.8%, respectively [5] Valuation Metrics - Boston Beer currently trades at a forward 12-month P/E ratio of 20.43X, which is higher than the industry average of 13.82X and the sector average of 25.51X, suggesting that investors may be pricing in stronger growth prospects [9]

Core Insights - Sin stocks, representing companies in industries like alcohol, tobacco, cannabis, and gambling, are often viewed as unethical but have a history of delivering strong returns due to consistent demand [2][3][4] - These stocks are characterized by their defensive nature, maintaining stable demand even during economic downturns, which allows for strong pricing power and consistent cash flows [3][4] - Despite their potential for robust returns, sin stocks face challenges such as heavy regulation, negative public perception, and ethical concerns that may deter some investors [5][10] Industry Overview - Sin stocks have shown resilience during both economic expansions and contractions, making them appealing for investors willing to overlook ethical concerns [4] - The alcohol sector is experiencing a shift towards premium and craft offerings, while tobacco companies are adapting to declining cigarette use by investing in vaping products [8] - The cannabis industry is rapidly expanding in regions where legalization is increasing, presenting both growth opportunities and volatility [8][9] Company Analysis - **Diageo Plc (DEO)**: Focuses on market share growth through innovation and premiumization in the alcohol sector [6] - **Las Vegas Sands (LVS)**: Concentrates on property upgrades and strategic investments to drive growth in the gambling sector [6][18] - **Turning Point Brands (TPB)**: Building a growth story around established brands and next-generation products, with a focus on smoke-free alternatives [12][13][14] - **Boston Beer Company (SAM)**: Maintains a strong position in the U.S. craft beverage market, emphasizing innovation and operational efficiency to adapt to consumer preferences [15][16][17] - **MGM Resorts International (MGM)**: Holds a leading position in global gaming, enhancing its competitive edge through capital investments and expansion in digital gaming [18][19][20]

Financial Data and Key Metrics Changes - Depletions in the second quarter decreased by 5%, while shipments decreased by only 0.8% compared to the previous year, primarily driven by declines in the Truly Hard Seltzer and Sam Adams brands [30] - Revenue for the quarter increased by 1.5% due to increased pricing and favorable product mix, partially offset by lower volumes [31] - Gross margin for the second quarter was 49.8%, an increase of 380 basis points year over year, benefiting from improved brewery efficiencies and price increases [31] - Earnings per share (EPS) was reported at $5.45, a 24.1% increase compared to the prior year [32] Business Line Data and Key Metrics Changes - Twisted Tea held share in the overall FMB category, with dollar sales declining by 4% in measured channels last quarter [15] - Sun Cruiser has quickly grown to a 4% share of the RTD spirits category and continues to grow volumes week over week as distribution expands [20] - Dogfish Head grew depletions in the second quarter for the first time in many years, driven by the successful launch of Grateful Dead juicy pale ale [25] - Angry Orchard returned to growth in depletions, driven by increased investment and new sponsorships [26] Market Data and Key Metrics Changes - The overall beer industry is estimated to be down over 4%, while the company gained share [8] - The hard seltzer category declined by 7% in dollars in the second quarter as consumer preferences shift towards more premium RTD spirits [22] - The Hispanic consumer segment has been under pressure, impacting overall volume performance [14] Company Strategy and Development Direction - The company is focusing on long-term growth opportunities in the Beyond Beer category, which represents over 85% of its volume [7] - Continued investment in brand support and innovation is emphasized, particularly for Sun Cruiser and Twisted Tea [10][19] - The company is committed to a disciplined approach to investments, only pursuing clear opportunities [10] Management's Comments on Operating Environment and Future Outlook - The management acknowledges a challenging macroeconomic environment, with factors such as economic uncertainty and poor weather negatively impacting consumer demand [6][7] - Despite near-term challenges, the management remains confident in the company's strategies and innovation pipeline to create long-term value for shareholders [11][28] - The company has updated its volume guidance to reflect a more dynamic industry environment, expecting volume to be down in the high single digits to low single digits for the year [33] Other Important Information - The company generated over $125 million in operating cash flow in the first half, enabling investments in brands and cash returns to shareholders [9] - The company ended the quarter with a cash balance of $212.4 million and an unused credit line of $150 million, providing flexibility for future investments [40] Q&A Session Summary Question: Update on business performance and Twisted Tea's decline - Management acknowledged a slow start to summer and noted that the industry is down 4-5%, but the company has gained volume and dollar share [46] - The decline in Twisted Tea is partially attributed to competition from the vodka tea category, but management believes the brand can recover as the market normalizes [49][51] Question: Clarification on updated guidance and depletion trends - Management explained that the updated guidance reflects softer depletion trends in Q2, leading to a wider range for future expectations [56][58] Question: Long-term growth potential for Sun Cruiser - Management expressed confidence in Sun Cruiser's growth potential, emphasizing a measured approach to its rollout and strong consumer reception [66][70] Question: Impact of tariffs on financial outlook - Management discussed the complexities of tariff impacts, noting adjustments based on supplier negotiations and changes in aluminum pricing [72][76] Question: Future gross margin potential - Management indicated that while current margins are strong, future performance will depend on tariff impacts and volume recovery [82][83] Question: Strategic actions in response to industry challenges - Management acknowledged the need for potential strategic actions in the industry due to ongoing structural headwinds [104]

Financial Data and Key Metrics Changes - Depletions decreased by 1% compared to the first quarter of the previous year, while shipments increased by 5.3% [33][34] - Revenue for the quarter increased by 6.5% due to volume and price increases [34] - Gross margin for the first quarter was 48.3%, an increase of 460 basis points year over year, attributed to lower brewery processing costs and pricing savings [35][37] Business Line Data and Key Metrics Changes - Twisted Tea grew dollar sales by 1% in measured channels, maintaining over 86% market share in the hard tea category [17] - Hard seltzer category sales declined by 5% in the first quarter, with Truly experiencing performance challenges [21][22] - Samuel Adams and Dogfish Head brands showed flat depletions, with Dogfish Head's new product launch achieving significant media impressions [24][25] Market Data and Key Metrics Changes - The broader beer category is expected to remain relevant, with growth opportunities in the "beyond beer" segment [10] - The hard seltzer category continues to decline, impacting Truly's performance [21] - The company noted a pullback in consumer spending, particularly among Hispanic consumers, affecting overall market dynamics [81] Company Strategy and Development Direction - The company is focusing on increasing advertising investments in 2025 to improve market share and support new product launches [12][10] - There is a commitment to innovation, particularly with the vodka-based hard tea SunCruiser and the expansion of Twisted Tea [15][27] - The company aims to enhance gross margins through procurement savings and improved brewery efficiencies [39][41] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging macroeconomic environment, with inflation and economic uncertainty impacting consumer behavior [11][82] - The company expects to see positive depletions in the second half of the year, driven by increased brand support and marketing efforts [108] - Future guidance remains cautious, with anticipated tariff impacts and a dynamic market environment [44][46] Other Important Information - The company repurchased $61 million in shares year to date, with a remaining authorization of approximately $367 million [51][52] - Capital expenditures for 2025 are expected to be between $90 million and $110 million [51] Q&A Session Summary Question: Can you unpack the gross margin performance in the quarter? - Management indicated that stronger shipments contributed to the gross margin uplift, but the main driver was ongoing gross margin initiatives [55][57] Question: What is driving the cost pressure from tariffs? - Key components include the cost of aluminum and point of sale materials from countries with higher tariffs, particularly China [60][61] Question: How much did Sun Cruiser and Truly Unruly contribute to shipment volume? - Management did not provide specific breakout figures but confirmed that Sun Cruiser is meeting expectations and is margin accretive [66][67] Question: What are the main drivers of the slowdown in Twisted Tea? - The slowdown is attributed to increased competition and macroeconomic challenges, but management is confident in recovery through marketing investments [68][70] Question: Are you making any assumptions about changes in consumer demand due to tariffs? - Current guidance does not include changes in demand, as it is too early to assess the impact [76] Question: What is the outlook for Twisted Tea's growth? - Management is optimistic about reaccelerating growth through innovation and marketing, despite recent performance challenges [88][90] Question: Will you absorb the incremental tariff costs or take pricing action? - The company is assessing the situation and is prepared to implement solutions as needed, including potential pricing adjustments [96][97] Question: What is the distribution status of Sun Cruiser? - Most current volume is in untracked channels, with expectations to triple points of distribution in measured channels by mid-summer [99][100]

Financial Data and Key Metrics Changes - Depletions decreased by 1% compared to the first quarter of the previous year, while shipments increased by 5.3% [22][7] - Revenue for the quarter increased by 6.5% due to volume and price increases [23] - Gross margin for the first quarter was 48.3%, an increase of 460 basis points year over year [24] - Earnings per diluted share (EPS) was $2.16, more than double compared to the prior year [25] Business Line Data and Key Metrics Changes - Twisted Tea grew dollar sales by 1% in measured channels and maintained an over 86% share in the hard tea category [12] - Hard seltzer category sales declined by 5% in the first quarter, impacting Truly's performance [14] - Samuel Adams and Dogfish Head brands achieved flat depletions, with Dogfish Head's Grateful Dead Juicy Pale Ale launch being particularly successful [17] Market Data and Key Metrics Changes - The broader beer category is expected to remain relevant, but inflation and economic uncertainty are significant drivers of recent weakness [8] - The hard seltzer category continues to decline, with Truly facing challenges in maintaining market share [14][15] Company Strategy and Development Direction - The company is focusing on supporting category-leading brands, launching strong innovations, and expanding gross margins [8] - Increased advertising investment in 2025 aims to improve market share trends and ensure successful product launches [9] - The strategy includes nurturing core brands and pursuing a "fewer things better" approach to innovation [10] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment is challenging, with inflation and consumer confidence impacting performance [8][62] - Management remains confident in the strategies and team in place to deliver on 2025 plans and generate long-term sustainable growth [9] - The company expects to see improvements in depletions in the second half of the year, driven by increased brand support [84] Other Important Information - The company has repurchased $61 million in shares year to date [7] - Tariffs are expected to have an unfavorable cost impact of approximately $20 million to $30 million in 2025 [29] - The company ended the quarter with a cash balance of $152.5 million and an unused credit line of $150 million [34] Q&A Session Summary Question: Can you unpack the gross margin performance in the quarter? - Management indicated that stronger shipments contributed to the gross margin uplift, but the main driver was ongoing gross margin initiatives [38][39] Question: What is driving the cost pressure from tariffs? - Key drivers include the cost of aluminum and point of sale materials from countries with higher tariffs, particularly China [41][42] Question: Can you break out the contribution of Sun Cruiser and Truly Unruly to shipment volume? - Management typically does not break out shipments by product but confirmed that Sun Cruiser is meeting expectations and is margin accretive [48][49] Question: What gives confidence in Twisted Tea's growth after a slowdown? - Management noted the presence of smaller competitors and emphasized ongoing investments in advertising and innovation to regain market share [52][53] Question: How is the company addressing changes in consumer demand? - Management acknowledged the impact of macroeconomic trends and consumer behavior changes, including reduced sociability and health concerns [62] Question: Will depletions flip positive in the second half of the year? - Management expects depletions to improve, potentially flipping positive in the second quarter or second half of the year [84]