Boston Beer(US:SAM)2021-04-23 04:00Financial Data and Key Metrics Changes - The company reported a net income of $65.6 million or $5.26 per diluted share, an increase of $3.77 per diluted share from the first quarter of last year [25] - Shipment volumes were approximately 2.3 million barrels, a 60.1% increase from the first quarter of 2020 [26] - The gross margin for the first quarter of 2021 was 45.8%, up from 44.8% in the same period last year [28] - The company adjusted its earnings per diluted share target for 2021 to between $22 and $26, up from the previous range of $20 to $24 [31] - The company is targeting increases in shipments and depletions of between 40% and 50% for 2021, an increase from the previously communicated range of 35% to 45% [32] Business Line Data and Key Metrics Changes - Depletions increased by 48% in the first quarter, driven by growth in the Truly Hard Seltzer and Twisted Tea brands, partially offset by declines in Sam Adams, Angry Orchard, and Dogfish Head brands [5][14] - The Truly brand outgrew the hard seltzer category by nearly 2x, resulting in a market share increase of 6.5 percentage points, reaching over 28% [15] - Twisted Tea's case growth was almost 3x higher than its closest competitor, positioning it to potentially become the number one flavored malt beverage by year-end [17] Market Data and Key Metrics Changes - The Truly Iced Tea Hard Seltzer achieved a 4.3 percentage point market share in measured off-premise channels, leading among new entrants in the beer category [15] - The company expects the launch of Truly Punch Hard Seltzer to continue the positive momentum in the hard seltzer category [16] - The company reported that year-to-date depletions increased approximately 49% from the comparable weeks in 2020 [23] Company Strategy and Development Direction - The company is focused on innovation and brand support to ensure long-term sustainable growth, particularly in the hard seltzer category [7][9] - A comprehensive program to transform the supply chain is underway, aiming for increased efficiency and flexibility over the next 2 to 3 years [20][21] - The company plans to invest heavily in the Truly brand and its new product launches to maintain its competitive edge [16][19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of the on-premise business as COVID-19 restrictions are lifted [7] - The company anticipates continued growth in its brand portfolio and is prepared to protect short-term earnings while investing for long-term growth [23] - Management noted that the hard seltzer category is expected to grow significantly, with a revised growth outlook of 60% to 90% [40] Other Important Information - The company plans to increase advertising, promotional, and selling expenses for the full year 2021 to between $130 million and $150 million [33] - Capital expenditures are estimated to be between $250 million and $350 million, a decrease from the previous range of $300 million to $400 million [35] - The effective tax rate for the full year 2021 is estimated to be approximately 26.5% [34] Q&A Session Summary Question: Update on full year growth for the hard seltzer category - Management revised the growth outlook for the hard seltzer category to 60% to 90%, citing increased household penetration and shelf space [40][41] Question: Impact of bars and restaurants reopening on hard seltzer - Management is optimistic about the demand for hard seltzers in on-premise settings, noting active efforts to drive distribution [47][50] Question: Visibility on market share amidst competition - Management believes they can outgrow the category growth rate, supported by strong performance from Truly and upcoming product launches [59][62] Question: Pricing environment and competition - The company raised its pricing guidance, indicating confidence in maintaining pricing power across its portfolio [67] Question: Future innovation pipeline - Management is confident in their innovation capabilities and has many ideas lined up for future product launches [68][70] Question: Growth drivers for Twisted Tea - Twisted Tea has seen significant growth due to increased penetration and distribution, particularly in urban areas [104][106]