10-Q
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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2023

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission file number: 1-14092

 

THE BOSTON BEER COMPANY, INC.

(Exact name of registrant as specified in its charter)

 

 

MASSACHUSETTS

 

04-3284048

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer Identification No.)

One Design Center Place,
Suite 850
, Boston, Massachusetts

 

02210

(Address of principal executive offices)

 

(Zip Code)

 

(617) 368-5000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act.

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

 

 

 

 

 

Class A Common Stock $0.01 per value

 

SAM

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ____

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes No ☒

 

Number of shares outstanding of each of the issuer’s classes of common stock, as of October 20, 2023:

 

Class A Common Stock, $.01 par value

 

10,123,052

Class B Common Stock, $.01 par value

 

2,068,000

(Title of each class)

 

(Number of shares)

 

 


Table of Contents

 

THE BOSTON BEER COMPANY, INC.

FORM 10-Q

September 30, 2023

TABLE OF CONTENTS

 

PART I.

 

FINANCIAL INFORMATION

 

PAGE

 

 

 

 

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

 

3

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022

 

3

 

 

 

Condensed Consolidated Statements of Comprehensive Operations for the thirteen and thirty-nine weeks ended September 30, 2023 and September 24, 2022

 

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 30, 2023 and September 24, 2022

 

5

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the thirteen and thirty-nine weeks ended September 30, 2023 and September 24, 2022

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

20

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

26

 

 

Item 4.

Controls and Procedures

 

26

 

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

27

 

 

Item 1A.

Risk Factors

 

27

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

28

 

 

Item 3.

Defaults Upon Senior Securities

 

28

 

 

Item 4.

Mine Safety Disclosures

 

28

 

 

Item 5.

Other Information

 

28

 

 

Item 6.

Exhibits

 

29

 

 

 

 

 

 

SIGNATURES

 

30

 

EX-31.1 Section 302 CEO Certification

EX-31.2 Section 302 CFO Certification

EX-32.1 Section 906 CEO Certification

EX-32.2 Section 906 CFO Certification

 

2


Table of Contents

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

 

 

 

September 30,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

310,778

 

 

$

180,560

 

Accounts receivable

 

 

87,977

 

 

 

56,672

 

Inventories

 

 

148,402

 

 

 

148,450

 

Prepaid expenses and other current assets

 

 

32,242

 

 

 

27,461

 

Income tax receivable

 

 

-

 

 

 

10,126

 

Total current assets

 

 

579,399

 

 

 

423,269

 

Property, plant, and equipment, net

 

 

647,323

 

 

 

667,909

 

Operating right-of-use assets

 

 

37,456

 

 

 

43,768

 

Goodwill

 

 

112,529

 

 

 

112,529

 

Intangible assets, net

 

 

59,707

 

 

 

76,324

 

Third-party production prepayments

 

 

39,209

 

 

 

61,339

 

Other assets

 

 

41,265

 

 

 

35,635

 

Total assets

 

$

1,516,888

 

 

$

1,420,773

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

114,699

 

 

$

84,248

 

Accrued expenses and other current liabilities

 

 

141,025

 

 

 

111,153

 

Current operating lease liabilities

 

 

9,030

 

 

 

8,866

 

Total current liabilities

 

 

264,754

 

 

 

204,267

 

Deferred income taxes, net

 

 

86,243

 

 

 

96,592

 

Non-current operating lease liabilities

 

 

38,461

 

 

 

45,274

 

Other liabilities

 

 

6,653

 

 

 

6,091

 

Total liabilities

 

 

396,111

 

 

 

352,224

 

Commitments and Contingencies (See Note H)

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Class A Common Stock, $0.01 par value; 22,700,000 shares authorized; 10,116,181 and 10,238,009 issued and outstanding as of September 30, 2023 and December 31, 2022, respectively

 

 

101

 

 

 

102

 

Class B Common Stock, $0.01 par value; 4,200,000 shares authorized; 2,068,000
issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

21

 

 

 

21

 

Additional paid-in capital

 

 

650,874

 

 

 

629,515

 

Accumulated other comprehensive loss

 

 

(210

)

 

 

(210

)

Retained earnings

 

 

469,991

 

 

 

439,121

 

Total stockholders' equity

 

 

1,120,777

 

 

 

1,068,549

 

Total liabilities and stockholders' equity

 

$

1,516,888

 

 

$

1,420,773

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

3


Table of Contents

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS

(in thousands, except per share data)

(unaudited)

 

 

Thirteen weeks ended

 

 

Thirty-nine weeks ended

 

 

 

September 30,
2023

 

 

September 24,
2022

 

 

September 30,
2023

 

 

September 24,
2022

 

Revenue

 

$

639,394

 

 

$

634,332

 

 

$

1,715,883

 

 

$

1,746,642

 

Less excise taxes

 

 

37,795

 

 

 

37,879

 

 

 

100,980

 

 

 

103,833

 

Net revenue

 

 

601,599

 

 

 

596,453

 

 

 

1,614,903

 

 

 

1,642,809

 

Cost of goods sold

 

 

326,951

 

 

 

338,707

 

 

 

910,430

 

 

 

946,336

 

Gross profit

 

 

274,648

 

 

 

257,746

 

 

 

704,473

 

 

 

696,473

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising, promotional, and selling expenses

 

 

152,579

 

 

 

153,717

 

 

 

427,369

 

 

 

439,215

 

General and administrative expenses

 

 

42,241

 

 

 

37,382

 

 

 

130,834

 

 

 

115,929

 

Impairment of intangible assets

 

 

16,426

 

 

 

27,100

 

 

 

16,426

 

 

 

27,100

 

Impairment of brewery assets

 

 

1,900

 

 

 

1,181

 

 

 

3,916

 

 

 

1,302

 

Contract termination costs and other

 

 

 

 

 

 

 

 

 

 

 

5,330

 

Total operating expenses

 

 

213,146

 

 

 

219,380

 

 

 

578,545

 

 

 

588,876

 

Operating income

 

 

61,502

 

 

 

38,366

 

 

 

125,928

 

 

 

107,597

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

3,478

 

 

 

759

 

 

 

6,977

 

 

 

809

 

Other expense

 

 

(913

)

 

 

(891

)

 

 

(1,137

)

 

 

(1,592

)

Total other income (expense)

 

 

2,565

 

 

 

(132

)

 

 

5,840

 

 

 

(783

)

Income before income tax provision

 

 

64,067

 

 

 

38,234

 

 

 

131,768

 

 

 

106,814

 

Income tax provision

 

 

18,772

 

 

 

10,948

 

 

 

37,394

 

 

 

28,134

 

Net income

 

$

45,295

 

 

$

27,286

 

 

$

94,374

 

 

$

78,680

 

Net income per common share – basic

 

$

3.70

 

 

$

2.21

 

 

$

7.69

 

 

$

6.39

 

Net income per common share – diluted

 

$

3.70

 

 

$

2.21

 

 

$

7.67

 

 

$

6.36

 

Weighted-average number of common shares – basic

 

 

12,228

 

 

 

12,321

 

 

 

12,268

 

 

 

12,313

 

Weighted-average number of common shares – diluted

 

 

12,233

 

 

 

12,344

 

 

 

12,280

 

 

 

12,342

 

Net income

 

$

45,295

 

 

$

27,286

 

 

$

94,374

 

 

$

78,680

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(144

)

 

 

(242

)

 

 

 

 

 

(263

)

  Total other comprehensive loss, net of tax

 

 

(144

)

 

 

(242

)

 

 

 

 

 

(263

)

  Comprehensive income

 

$

45,151

 

 

$

27,044

 

 

$

94,374

 

 

$

78,417

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

4


Table of Contents

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

 

 

 

Thirty-nine weeks ended

 

 

 

September 30,
2023

 

 

September 24,
2022

 

Cash flows provided by operating activities:

 

 

 

 

 

 

Net income

 

$

94,374

 

 

$

78,680

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

66,603

 

 

 

60,765

 

Impairment of intangible assets

 

 

16,426

 

 

 

27,100

 

Impairment of brewery assets

 

 

3,916

 

 

 

1,302

 

Change in right-of-use assets

 

 

5,781

 

 

 

5,986

 

Stock-based compensation expense

 

 

12,313

 

 

 

10,328

 

Deferred income taxes

 

 

(10,349

)

 

 

2,199

 

Other non-cash expense

 

 

40

 

 

 

312

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(31,253

)

 

 

(37,745

)

Inventories

 

 

3,786

 

 

 

(45,185

)

Prepaid expenses, income tax receivable, and other current assets

 

 

3,986

 

 

 

52,680

 

Third-party production prepayments

 

 

22,130

 

 

 

20,845

 

Other assets

 

 

(9,368

)

 

 

(7,661

)

Accounts payable

 

 

31,341

 

 

 

67,620

 

Accrued expenses, other current liabilities, and other liabilities

 

 

29,217

 

 

 

(7,861

)

Operating lease liabilities

 

 

(6,542

)

 

 

(4,412

)

Net cash provided by operating activities

 

 

232,401

 

 

 

224,953

 

Cash flows used in investing activities:

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(48,777

)

 

 

(70,313

)

Proceeds from disposal of property, plant, and equipment

 

 

1,708

 

 

 

506

 

Net cash used in investing activities

 

 

(47,069

)

 

 

(69,807

)

Cash flows (used in) provided by financing activities:

 

 

 

 

 

 

Repurchases and retirement of Class A common stock

 

 

(62,477

)

 

 

 

Proceeds from exercise of stock options and sale of investment shares

 

 

10,660

 

 

 

5,327

 

Cash paid on finance leases

 

 

(1,184

)

 

 

(1,270

)

Line of credit borrowings

 

 

 

 

 

30,000

 

Line of credit repayments

 

 

 

 

 

(30,000

)

Payment of tax withholding on stock-based payment awards and investment shares

 

 

(2,113

)

 

 

(3,474

)

Net cash (used in) provided by financing activities

 

 

(55,114

)

 

 

583

 

Change in cash and cash equivalents and restricted cash

 

 

130,218

 

 

 

155,729

 

Cash and cash equivalents and restricted cash at beginning of year

 

 

180,560

 

 

 

66,321

 

Cash and cash equivalents at end of period

 

$

310,778

 

 

$

222,050

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income tax (payments) refunds, net

 

$

(13,776

)

 

$

37,860

 

Cash paid for amounts included in measurement of lease liabilities

 

 

 

 

 

 

Operating cash outflows from operating leases

 

$

7,865

 

 

$

5,839

 

Operating cash outflows from finance leases

 

$

100

 

 

$

58

 

Financing cash outflows from finance leases

 

$

1,183

 

 

$

1,195

 

Right-of-use-assets obtained in exchange for finance lease obligations

 

$

2,825

 

 

$

-

 

Decrease in accounts payable and accrued expenses for purchases of property, plant, and equipment

 

$

(1,843

)

 

$

(2,162

)

Non-cash financing activity – accrued excise taxes on share repurchases

 

$

629

 

 

$

-

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


Table of Contents

 

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the thirteen and thirty-nine weeks ended September 30, 2023 and September 24, 2022

(in thousands)

(unaudited)

 

 

 

 

 

 

Class A

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

Class A

 

 

Common

 

 

Class B

 

 

Class B

 

 

Additional

 

 

Other

 

 

 

 

 

Total

 

 

 

Common

 

 

Stock,

 

 

Common

 

 

Common

 

 

Paid-in

 

 

Comprehensive

 

 

Retained

 

 

Stockholders’

 

 

 

Shares

 

 

Par

 

 

Shares

 

 

Stock, Par

 

 

Capital

 

 

Loss

 

 

Earnings

 

 

Equity

 

Balance at December 31, 2022

 

 

10,238

 

 

$

102

 

 

 

2,068

 

 

$

21

 

 

$

629,515

 

 

$

(210

)

 

$

439,121

 

 

$

1,068,549

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,956

)

 

 

(8,956

)

Stock options exercised and restricted
   shares activities

 

 

20

 

 

 

1

 

 

 

 

 

 

 

 

 

(212

)

 

 

 

 

 

 

 

 

(211

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,073

 

 

 

 

 

 

 

 

 

4,073

 

Repurchase and retirement of Class A Common Stock

 

 

(65

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(22,115

)

 

 

(22,116

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Balance at April 1, 2023

 

 

10,193

 

 

$

102

 

 

 

2,068

 

 

$

21

 

 

$

633,376

 

 

$

(192

)

 

$

408,050

 

 

$

1,041,357

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

58,035

 

 

 

58,035

 

Stock options exercised and restricted
   shares activities

 

 

44

 

 

 

1

 

 

 

 

 

 

 

 

 

8,517

 

 

 

 

 

 

 

 

 

8,518

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,193

 

 

 

 

 

 

 

 

 

4,193

 

Repurchase and retirement of Class A Common Stock

 

 

(77

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,038

)

 

 

(25,039

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

126

 

 

 

 

 

 

126

 

Balance at July 1, 2023

 

 

10,160

 

 

$

102

 

 

 

2,068

 

 

$

21

 

 

$

646,086

 

 

$

(66

)

 

$

441,047

 

 

$

1,087,190

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45,295

 

 

 

45,295

 

Stock options exercised and restricted
   shares activities

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

741

 

 

 

 

 

 

 

 

 

741

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,047

 

 

 

 

 

 

 

 

 

4,047

 

Repurchase and retirement of Class A Common Stock

 

 

(48

)

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,351

)

 

 

(16,352

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(144

)

 

 

 

 

 

(144

)

Balance at September 30, 2023

 

 

10,116

 

 

$

101

 

 

 

2,068

 

 

$

21

 

 

$

650,874

 

 

$

(210

)

 

$

469,991