Disclosure: Long SAM
Highlights
Q2 depletions down 6%, shipments down 4.5%. Jim Koch noted in the earnings call that the beyond beer market is down 1% and traditional beer is down 4%.
2,047,000 barrels in Q2; TTM volume of 6,928,000, down 8.4% YoY
Revenue per barrel of $278, up 1.2%; TTM of $278/barrel up 2.5% yoY
Q2 showed declines in Twisted Tea, Truly, Sam Adam, Hard MTN Dew, Dogfish Head; offset by gains in Sun Cruiser and Angry Orchard. Twisted Tea and Sun Cruiser combined were slightly flat (Sun Cruiser is cannibalizing TT; but better in house than competitors).
SAM’s net revenue declined 3.3% to $568 million
On the positive side, gross margin improved 60bps YoY to 50.4%
Reported operating profit came in at $70.8 million, but it included a $19.4 million benefit from a litigation adjustment.
Adjusted operating profit was $51.6 million, a margin of 9.1%. Adjusted operating profit was 41% below Q2 2025.
$265.5 million cash on the books at quarter end with no long term debt
Repurchased $54 million in shares through the end of July
Some additional notes from the earnings call:
Twisted Tea is under pressure but still commands an 85% market share, with no single competitor over 5%.
In-house production was 84% vs 76% last year
On-premise is 12% of the company’s volume
Big Takeaways
Boston Beer is swimming against a modest industry headwind. Koch himself described a 1-2% chronic long-term pressure on per capita consumption, offset by premiumization. What does this mean for SAM? It probably means continued experimentation (the company’s strong suit) and a relatively flat top line, with pricing offsetting volume pressure.
SAM probably owns the most respected sales organization in the industry and has two heavyweights in its dominant Twisted Tea franchise and its #2 position in hard seltzer with Truly.
Management runs a pristine balance sheet with $265 million cash at last count and no debt (just $32 million of lease liabilities).
The company is highly cash-generative and is using that cash flow to repurchase shares. Repurchases are running at about $25 million per quarter, or about 5% of its current market cap per year.
The one black spot is its supplier lawsuit stemming from a pandemic-era supply contract that led it to underbuy cans between 2021 and 2026. After losing in court in April, SAM owes Ardagh Metal Packaging $191 million for the judgment and accrued interest and has a total of $192.6 million accrued as a liability as of Q2. The company says it will appeal the verdict, but I see this as nothing more than additional legal expense and distraction. After tax (say 25%), the company is looking at a ~$145 million hit. That’ll hurt, but it’s not a mortal wound.
Another item of concern is that the company’s CFO, Diego Reynoso, will be stepping down on September 14. Matt Murphy, the company’s chief accounting officer, will temporarily fill the open spot. This adds to some concern over governance with Koch in the CEO spot and no clear succession plan in place. (Speculation here: this could set up an eventual sale to one of the majors.)
