Boston Beer Q1 Update
A very attractive entry point amid current uncertainty.
Disclosure: Long SAM.
At $176/share, Boston Beer shares are down 33% from their 52-week highs. With 10.47 million shares outstanding, the current share price implies a market cap of $1.84 billion.
SAM has $129 million of net cash (no LTD + operating leases), but there’s a big asterisk next to it.
Ardagh Litigation
The big negative news of the quarter was a $216 million pre-tax charge ($162 million after-tax at 25%) related to a contract dispute with Ardagh Metal Packaging. A jury awarded Ardagh $175.5 million for SAM’s failure to meet contractual minimum purchases of aluminum cans during the height of the hard seltzer boom. The $216 million figure includes $36.5 million of pre-judgement interest expense and $4 million of legal fees (in G&A).
SAM says it will appeal the verdict. With absolutely no real knowledge of the legal merits of the case, I think it seems likely that SAM will have to pay. With no debt, cash on hand, and a $150 million line of credit, if/when SAM pays, it shouldn’t cause operational issues.
Operational Highlights
Volume/Pricing
The key driver for a beverage company is volume. You can’t generate revenue or profit if you don’t sell beer.
Q1 2026 volume of 1,561,000 barrels, a decline of 6.9% compared to the same quarter a year ago. Of note, this figure represents shipments. Depletions (distributor inventory) declined at a slower 4% rate.
The company produced 95% of its volume in-house during the quarter.
TTM volume was 7,025,000 barrels, a decline of 7.3% from a year ago.
On the plus side, pricing (rev/barrel) increased 2.7% Q/Q and 2.8% on a TTM basis.
At a recent industry conference, the company’s CFO noted that beer was around 18% of volume, putting SAM solidly in the beyond beer category. He also highlighted the company’s expertise in creating brands, putting it at an advantage over larger rivals who must pay premium multiples to acquire them.
The company’s Sun Cruiser brand, which was launched in-house, is a bright spot offsetting some weakness in Twisted Tea and Truly.
Revenue
Q1 2026: $433.9 million, down 4.7%
TTM: $1,945 million, also down 4.7%
Costs and Expenses
Gross margin came in at 49.3%, up 100 bps from a year ago.
SAM posted a $190 million operating loss due to the $216 million litigation expense. It also reported a $2 million impairment of brewery assets.
On the expense front, advertising, promotional, and selling expenses increased 200 bps to 32.3% as the company continues to invest in its brands ahead of summer.
SG&A increased 150bps to 12.1%; 100bps to 11.1% excluding $4 million legal fees.
Overall, the operating margin was negative due to the litigation expense. Ex. litigation, operating margin declined 240bps to 5.0%.
TTM operating margin was 7.2% ex. litigation expense, down from 8.3% a year ago.
Capital Allocation
As noted above, SAM has no LTD and only modest operating lease liabilities.
From December 28, 2025 to April 24, 2026, the company repurchased 137,912 shares of its Class A stock for $31.2 million ($23.3 million in the quarter itself through March 28), implying a price of $226/share.
