Shares of Boston Beer Co. experienced a significant rally after the hours on Thursday following the release of their second-quarter financial report. The renowned alcoholic-beverage maker exceeded expectations, with the Fourth of July holiday and the high demand for Twisted Tea helping to offset the weaker demand for seltzer.
In the same quarter last year, the company, known for its beverages like Samuel Adams beer, Truly seltzer, and Twisted Tea, recorded a net income of $58 million, or $4.72 per share, compared to $53.3 million, or $4.31 per share. Although revenue saw a decline of 2.1% to $603.3 million, it stood strong against the prior-year quarter’s $616.2 million.
According to analysts polled by FactSet, Boston Beer was expected to earn $3.38 per share on revenue of $590 million. However, the company’s actual performance surpassed these estimates, resulting in a 9% surge in shares after hours on Thursday.
CEO Dave Burwick affirmed that the company’s second-quarter results were in line with expectations. While Twisted Tea witnessed robust growth, Boston Beer continued to face challenges in the hard-seltzer category. Nevertheless, management maintained its full-year profit outlook of $6 to $10 per share, while also anticipating a decrease in shipments and alcohol sales to retailers. Additionally, higher advertising and promotional expenses were expected.
Given the strong financial performance in the second quarter, Burwick indicated that the company intends to increase their investment in advertising for both Truly and Twisted Tea brands. They believe that their messaging has been effective and will yield positive results in the short- and long-term.
Ahead of the earnings announcement, TD Cowen analyst Vivien Azer pointed out the lackluster trends in the hard seltzer market. Over the years, seltzer demand has declined as numerous breweries launched brands that were overly similar to one another.
