Boston Beer(US:SAM)2022-04-22 01:17Financial Data and Key Metrics Changes - The company reported a net loss of $2 million or $0.16 per diluted share in Q1 2022, compared to a net income of $65.6 million or $5.26 per diluted share in Q1 2021, primarily driven by lower net revenue and gross margins [31] - Operating expenses increased by 1.2% to $175.1 million in Q1 2022 [32] - Gross margin decreased to 40.2% in Q1 2022 from 45.8% in Q1 2021, mainly due to higher supply chain and materials costs [35] Business Line Data and Key Metrics Changes - Depletions for the quarter decreased by 7% from the prior year, reflecting declines in Truly Hard Seltzer, Angry Orchard, and Dogfish Head brands, partially offset by increases in Twisted Tea [32] - Shipment volume was approximately 1.7 million barrels, a 25.1% decrease from the prior year [33] - Twisted Tea grew double digits in measured off-premise channels, with 15% volume growth and 20% dollar growth [21] Market Data and Key Metrics Changes - The company gained dollar share in measured off-premise channels from 4.9% to 5.1% in Q1 2022, marking the second largest share gain among larger brewers [9] - Hard seltzers maintained a 29% household penetration over the last 52 weeks, equating to 9.3% of total beer dollars in Q1 2022 [15] - The on-premise share of total beer is currently around 13%, down from the pre-COVID level of 16% [58] Company Strategy and Development Direction - The company aims to achieve mid-single digit to double-digit depletions growth driven by broad-based growth across its entire portfolio, especially in Beyond Beer products [13] - New product innovations include Truly Margarita, Truly Poolside variety pack, and Truly Vodka Seltzer, which are expected to enhance market presence [20][19][18] - The company is focused on improving supply chain performance and reducing costs to enhance gross margins [28] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from supply chain issues and inflation affecting consumer purchases, but expressed confidence in recovery and growth for the full year [10][12] - The company expects depletions and shipment volumes to improve against less difficult prior year comparisons, with a full-year guidance of 4% to 10% growth [41][38] - Management remains cautious about external economic factors, including geopolitical issues and inflation, which may impact performance [102] Other Important Information - The company plans to invest between $140 million and $190 million in capital expenditures, primarily for brewery investments [45] - The fiscal year 2022 includes 53 weeks compared to 52 weeks in 2021, which may affect year-over-year comparisons [41] Q&A Session Summary Question: Can you provide insights on the higher supply chain costs faced in Q1? - Management explained that higher supply chain costs were due to lower absorption from high inventory levels, increased scrap, and temporary higher freight costs, but they expect improvements in supply chain performance [48][49] Question: How is the on-premise channel recovering? - Management noted that the on-premise channel showed strong growth in Q1, with sales per point for Truly Draft up 35%, indicating a positive trend [57][59] Question: What gives confidence that the company can meet its guidance? - Management highlighted upcoming innovations and improved execution as key factors for confidence in meeting guidance, despite acknowledging the challenges from the previous year's strong performance [90][93]