Boston Beer (SAM) Q3 Update

Oct 29, 2025

Disclosure: Long SAM

New Chief Supply Chain Officer: Philip Hodges (58) named COO. SAM Chief Supply Chain Officer since May 2023. Over 30 years in the industry: CSO Carlsberg, CSO SABMiller, CFO Kraft Foods International, GM Mondelez Southeast Asia. $800,000 salary. $9M three-year stock options plus $3M RSUs with 3-year vest.
Q3 volume of 1.936 million barrels down 13.7% compared to Q3-2024. TTM volume off 3%.
Revenue down 11.2% to $537.5 million; revenue per barrel $278, up 2.8% from a year ago
Bright spot was gross margin at 50.8%, the highest since 2018.
$250mm cash on hand and no financial debt
Repurchased $161 million in 2025 through Oct. 17, which puts diluted shares down 8% since FYE 2024.
Shares appear attractive at current levels (valuation discussion below).

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Weak macro factors and cost pressures hit just as the Truly hangover begins to subside. Still, it’s encouraging to see gross margin rebound to more favorable levels at over 50% and the highest GPM quarter since 2018.
SAM produced 90% of its domestic volume in its own facilities in Q3, compared to 66% a year ago.
I like the company’s thinking on third-party production: it’s not just about handling volume, it’s redundancy in the event of an issue with one of the company’s production facilities.
A few notes from the Q3 earnings call:
- SAM’s beyond beer cateogory is now 85% of their volume
- Twisted Tea is ~$1.2 billion in annual sales (about 60% of annual sales)
- Twisted Tea experienced unexpected weakness, down 5% YTD after being up double digits during the first few months of the year; some of the decline is due to cannibalization by Sun Cruiser
- Sam and Dogfish Head held market share
- Sun Cruiser and Angry Orchard grew
- Sun Cruiser expected to grow double and possibly triple digits in 2026 as the the company gets important spring shelf space
- Q4 profitability: 5 or 6 years ago, Q4 was profitable, even though it was the lowest in terms of volume; now that the company has shifted toward summer-oriented beverages (Twisted Tea, Truly, Sun Cruiser), Q4 will show a loss. Part of that is ramping up production to handle summer volumes, and part is marketing spend.
- GPM “windfall” reinvested into additional marketing spend

The balance sheet remains pristine with $250 million in cash and no financial debt (plus $41 million of operating lease liabilities).

Net PP&E was $580 million at the end of Q3, down $36 million since FYE 2024, as the company adapts to shrinking volumes.
Likewise, core working capital (A/R, Inventories, Prepaids, less A/P and Accruals) is down $9 million to negative $29 million at the end of Q3.
Major capital allocation moves for the first 9 months of 2025:
- Net income of $131 million
- $30 million shrinkage in PP&E (before $6.4 million impairment of brewery assets)
- Share repurchases of $152.4 million. Diluted shares are down 8% YTD.

With 10.8mm shares outstanding and a price of $225 (unchanged since the Q2 update), Boston Beer has a market value of $2.43 billion. Take off $210mm for net cash, and you’re at $2.22 billion.
The company employs tangible capital of $712 million, and with annual revenue at about $2 billion, it’s turning over its capital base 2.8x per year. Its pre-tax operating margin came in at 11.5% in Q3, which would put it below its 2013-20 average of 14.2%, meaning it’s very likely sustainable from here on out. Capital turnover of 2.8x and an 11.5% operating margin result in pre-tax returns on capital of 32.2% and about 24% after a 25% tax rate.
If we assume revenues stabilize at $2 billion and SAM can earn 15% normalized margins, it’ll earn $300 million pre-tax or $225 million after-tax. That’s about a 10% return on today’s market cap assuming no growth.