• Revenue: Slight year-over-year increase, driven by shipments down 2% and two points of price realization.
• Gross Margin: Expanded by 200 basis points to 44.4%; excluding contractual prepayments and shortfall fees, it was 46.1%.
• Non-GAAP EPS: Increased 31% year-over-year to $9.43.
• Free Cash Flow: $173 million or $14.70 per share.
• Share Repurchases: $239 million in shares repurchased in 2024.
• Fourth Quarter Revenue: Increased 2.2% due to price increases and lower returns.
• Fourth Quarter Gross Margin: 39.9%, increased 230 basis points year-over-year.
• Advertising, Promotional, and Selling Expenses: Increased by 8.5% year-over-year in Q4.
• General and Administrative Expenses: Increased by 9.1% year-over-year in Q4.
• Contract Settlement Costs: $26 million or $1.70 per share in Q4.
• Non-GAAP Loss Per Diluted Share: $1.68 in Q4, excluding contract settlement costs.
• 2025 Guidance - Gross Margin: Expected between 45% and 47%.
• 2025 Guidance - Earnings Per Diluted Share: Targeting between $8.10 and $8.50.
• 2025 Capital Expenditures: Expected between $90 million and $110 million.
• Cash Balance: $212 million at the end of the quarter.
• Share Repurchase Authorization Remaining: Approximately $398 million as of February 21, 2025.

• Warning! GuruFocus has detected 4 Warning Signs with SAM.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Boston Beer Co Inc (NYSE:SAM) achieved a 31% growth in non-GAAP EPS, supported by a 200 basis point expansion in gross margin.
• The company generated $173 million in free cash flow, allowing for $239 million in share repurchases in 2024.
• Twisted Tea continues to grow its market share, holding an 84% share in the hard tea category and contributing significantly to the category's dollar growth.
• The national expansion of Sun Cruiser is underway, with positive performance in initial markets and plans to triple distribution points by mid-2025.
• Boston Beer Co Inc (NYSE:SAM) is investing in advertising and marketing to support brand growth, with a focus on innovation and expanding market share.

Negative Points

• The hard seltzer category is facing headwinds, with category dollars down 4% in the fourth quarter.
• Depletions in the fourth quarter were flat, and shipments decreased by 0.5% from the prior year.
• The company anticipates potential volatility in the volume environment due to dynamic consumer demand.
• Increased advertising investments are expected to dampen 2025 operating income growth.
• The company faces challenges from increased competition in the 'beyond beer' category and potential impacts from health and wellness trends.

Q & A Highlights

Q: Can you explain the changes in your compensation plan and what behaviors you aim to encourage? A: Michael Spillane, CEO, explained that the new incentive plans are designed to align with business objectives, encouraging equal effort across all brands to drive sales throughout the portfolio, which is seen as a more sustainable revenue stream.

Q: How has beer demand started this year, and why is there a disconnect between your depletion trends and scanner data? A: Diego Reynoso, CFO, noted that while the market has been bumpy, they are satisfied with starting from a flat depletion point. He explained that scanner data might not cover all business aspects, and they focus on overall depletions for a better forecast.

Q: What is the potential for Sun Cruiser compared to other brands like Surfside? A: Michael Spillane, CEO, expressed confidence in Sun Cruiser's performance, highlighting its success in New England and plans to triple its distribution points by mid-2025. He emphasized increased marketing investments and regional marketing plans to ensure its success.

Q: Have you seen any impact from cannabis beverages on your categories, particularly in states with developed Delta 9 THC markets? A: Michael Spillane, CEO, stated they haven't seen significant impact on their portfolio from cannabis beverages. They are prepared to enter the market if they see a profitable opportunity, but currently, they are monitoring the situation closely.

Q: What gives you confidence in Twisted Tea's growth potential despite scanner data showing negative volumes? A: C. James Koch, Chairman, highlighted Twisted Tea's historical double-digit growth and ongoing efforts to increase advertising and introduce new products like Twisted Tea Light and Twisted TXtreme to attract new drinkers and drive growth.

Q: Can you provide more details on the increased advertising spend and its expected impact on top-line growth? A: C. James Koch, Chairman, explained that they are cautious about top-line growth from advertising. They plan to evaluate the effectiveness of advertising in driving revenue and will adjust spending based on results. The focus is on improving advertising efficiency and regional activation.

Q: How do you view the long-term runway for Sun Cruiser, and what are the initial repeat rates? A: Michael Spillane, CEO, stated that they are carefully building Sun Cruiser with thoughtful market entry and marketing activations. While specific repeat rates weren't shared, they are confident in its long-term potential as part of their portfolio.

Q: What are your plans to reinvigorate the Samuel Adams brand, and what do you expect for spring resets? A: Michael Spillane, CEO, expressed excitement about Samuel Adams American Light, emphasizing its premium positioning and quality. They plan to highlight the brand's quality and premium attributes through new marketing efforts.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.