10-Q 1 sam-20220924.htm 10-Q 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 24, 2022

 

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)

 

(State or other jurisdiction of

incorporation 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 15, 2022:

 

Class A Common Stock, $.01 par value

 

10,227,137

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 24, 2022

TABLE OF CONTENTS

 

PART I.

 

FINANCIAL INFORMATION

 

PAGE

 

 

 

 

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

 

3

 

 

 

Condensed Consolidated Balance Sheets as of September 24, 2022 and December 25, 2021

 

3

 

 

 

Condensed Consolidated Statements of Comprehensive Operations for the thirteen and thirty-nine weeks ended September 24, 2022 and September 25, 2021

 

4

 

 

 

Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks ended September 24, 2022 and September 25, 2021

 

5

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the thirteen and thirty-nine weeks ended September 24, 2022 and September 25, 2021

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

8

 

 

 

 

 

 

 

 

Item 2.

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

 

18

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

25

 

 

Item 4.

Controls and Procedures

 

25

 

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

26

 

 

Item 1A.

Risk Factors

 

26

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

27

 

 

Item 3.

Defaults Upon Senior Securities

 

27

 

 

Item 4.

Mine Safety Disclosures

 

27

 

 

Item 5.

Other Information

 

27

 

 

Item 6.

Exhibits

 

28

 

 

 

 

 

 

SIGNATURES

 

29

 

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 24,
2022

 

 

December 25,
2021

 

Assets

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

222,050

 

 

$

26,853

 

 Restricted cash

 

 

 

 

 

39,468

 

Accounts receivable

 

 

92,349

 

 

 

55,022

 

Inventories

 

 

192,172

 

 

 

149,118

 

Prepaid expenses and other current assets

 

 

17,948

 

 

 

21,462

 

Income tax receivable

 

 

4,252

 

 

 

53,418

 

Total current assets

 

 

528,771

 

 

 

345,341

 

Property, plant and equipment, net

 

 

670,689

 

 

 

664,815

 

Operating right-of-use assets

 

 

45,727

 

 

 

52,774

 

Goodwill

 

 

112,529

 

 

 

112,529

 

Intangible assets, net

 

 

76,387

 

 

 

103,677

 

Third-party production prepayments

 

 

67,449

 

 

 

88,294

 

Other assets

 

 

29,146

 

 

 

19,354

 

Total assets

 

$

1,530,698

 

 

$

1,386,784

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

Accounts payable

 

$

151,443

 

 

$

85,920

 

Accrued expenses and other current liabilities

 

 

153,543

 

 

 

161,552

 

Current operating lease liabilities

 

 

8,611

 

 

 

7,634

 

Total current liabilities

 

 

313,597

 

 

 

255,106

 

Deferred income taxes, net

 

 

89,694

 

 

 

87,495

 

Non-current operating lease liabilities

 

 

47,399

 

 

 

53,849

 

Other liabilities

 

 

6,022

 

 

 

6,925

 

Total liabilities

 

 

456,712

 

 

 

403,375

 

Commitments and Contingencies (See Note I)

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

Class A Common Stock, $0.01 par value; 22,700,000 shares authorized; 10,226,712 and 10,183,801 issued and outstanding as of September 24, 2022 and
   December 25, 2021, respectively

 

 

102

 

 

 

102

 

Class B Common Stock, $0.01 par value; 4,200,000 shares authorized; 2,068,000
   issued and outstanding as of September 24, 2022 and December 25, 2021

 

 

21

 

 

 

21

 

Additional paid-in capital

 

 

623,782

 

 

 

611,622

 

Accumulated other comprehensive loss

 

 

(457

)

 

 

(194

)

Retained earnings

 

 

450,538

 

 

 

371,858

 

Total stockholders' equity

 

 

1,073,986

 

 

 

983,409

 

Total liabilities and stockholders' equity

 

$

1,530,698

 

 

$

1,386,784

 

 

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 24,
2022

 

 

September 25,
2021

 

 

September 24,
2022

 

 

September 25,
2021

 

Revenue

 

$

634,332

 

 

$

599,971

 

 

$

1,746,642

 

 

$

1,822,994

 

Less excise taxes

 

 

37,879

 

 

 

38,328

 

 

 

103,833

 

 

 

113,466

 

Net revenue

 

 

596,453

 

 

 

561,643

 

 

 

1,642,809

 

 

 

1,709,528

 

Cost of goods sold

 

 

338,707

 

 

 

388,947

 

 

 

946,336

 

 

 

1,011,513

 

Gross profit

 

 

257,746

 

 

 

172,696

 

 

 

696,473

 

 

 

698,015

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Advertising, promotional and selling expenses

 

 

153,717

 

 

 

166,817

 

 

 

439,215

 

 

 

469,296

 

General and administrative expenses

 

 

37,382

 

 

 

32,066

 

 

 

115,929

 

 

 

96,973

 

Contract termination costs and other

 

 

 

 

 

35,428

 

 

 

5,330

 

 

 

35,428

 

Impairment of intangible assets

 

 

27,100

 

 

 

 

 

 

27,100

 

 

 

 

Impairment of brewery assets

 

 

1,181

 

 

 

14,158

 

 

 

1,302

 

 

 

15,389

 

Total operating expenses

 

 

219,380

 

 

 

248,469

 

 

 

588,876

 

 

 

617,086

 

Operating income (loss)

 

 

38,366

 

 

 

(75,773

)

 

 

107,597

 

 

 

80,929

 

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense)

 

 

759

 

 

 

(26

)

 

 

809

 

 

 

(84

)

Other expense

 

 

(891

)

 

 

(657

)

 

 

(1,592

)

 

 

(655

)

Total other expense

 

 

(132

)

 

 

(683

)

 

 

(783

)

 

 

(739

)

Income (loss) before income tax provision (benefit)

 

 

38,234

 

 

 

(76,456

)

 

 

106,814

 

 

 

80,190

 

Income tax provision (benefit)

 

 

10,948

 

 

 

(18,035

)

 

 

28,134

 

 

 

13,852

 

Net income (loss)

 

$

27,286

 

 

$

(58,421

)

 

$

78,680

 

 

$

66,338

 

Net income (loss) per common share – basic

 

$

2.21

 

 

$

(4.76

)

 

$

6.39

 

 

$

5.40

 

Net income (loss) per common share – diluted

 

$

2.21

 

 

$

(4.76

)

 

$

6.36

 

 

$

5.33

 

Weighted-average number of common shares – basic

 

 

12,321

 

 

 

12,282

 

 

 

12,313

 

 

 

12,279

 

Weighted-average number of common shares – diluted

 

 

12,344

 

 

 

12,282

 

 

 

12,342

 

 

 

12,450

 

Net income (loss)

 

$

27,286

 

 

$

(58,421

)

 

$

78,680

 

 

$

66,338

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(242

)

 

 

(26

)

 

 

(263

)

 

 

9

 

  Total other comprehensive (loss) income, net of tax

 

 

(242

)

 

 

(26

)

 

 

(263

)

 

 

9

 

  Comprehensive income (loss)

 

$

27,044

 

 

$

(58,447

)

 

$

78,417

 

 

$

66,347

 

 

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 24,
2022

 

 

September 25,
2021

 

Cash flows provided by operating activities:

 

 

 

 

 

 

Net income

 

$

78,680

 

 

$

66,338

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

60,765

 

 

 

52,953

 

Impairment of intangible assets

 

 

27,100

 

 

 

 

Impairment of brewery assets

 

 

1,302

 

 

 

15,389

 

Change in right-of-use assets

 

 

5,986

 

 

 

5,959

 

Stock-based compensation expense

 

 

10,328

 

 

 

14,002

 

Deferred income taxes

 

 

2,199

 

 

 

(9,370

)

Other non-cash expense (income)

 

 

312

 

 

 

(294

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(37,745

)

 

 

(5,184

)

Inventories

 

 

(45,185

)

 

 

(71,104

)

Prepaid expenses, income tax receivable, and other current assets

 

 

52,680

 

 

 

(39,239

)

Third-party production prepayments

 

 

20,845

 

 

 

(2,733

)

Other Assets

 

 

(7,661

)

 

 

(5,682

)

Accounts payable

 

 

67,620

 

 

 

17,781

 

Accrued expenses, other current liabilities and other liabilities

 

 

(7,861

)

 

 

18,251

 

Change in operating lease liabilities

 

 

(4,412

)

 

 

(6,102

)

Net cash provided by operating activities

 

 

224,953

 

 

 

50,965

 

Cash flows used in investing activities:

 

 

 

 

 

 

Purchases of property, plant and equipment

 

 

(70,313

)

 

 

(120,887

)

Proceeds from disposal of property, plant and equipment

 

 

506

 

 

 

1,142

 

Other investing activities

 

 

 

 

 

145

 

Net cash used in investing activities

 

 

(69,807

)

 

 

(119,600

)

Cash flows provided by (used in) financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options and sale of investment shares

 

 

5,327

 

 

 

8,571

 

Cash paid on note payable and finance leases

 

 

(1,270

)

 

 

(1,181

)

Line of credit borrowings

 

 

30,000

 

 

 

 

Line of credit repayments

 

 

(30,000

)

 

 

 

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

 

 

(3,474

)

 

 

(15,533

)

Net cash provided by (used in) financing activities

 

 

583

 

 

 

(8,143

)

Change in cash and cash equivalents and restricted cash

 

 

155,729

 

 

 

(76,778

)

Cash and cash equivalents and restricted cash at beginning of year

 

 

66,321

 

 

 

163,282

 

Cash and cash equivalents at end of period

 

$

222,050

 

 

$

86,504

 

Supplemental disclosure of cash flow information:

 

 

 

 

 

 

Income taxes (refunded) paid, net

 

$

(37,860

)

 

$

53,712

 

Cash paid for amounts included in measurement of lease liabilities

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

5,839

 

 

$

7,823

 

Operating cash flows from finance leases

 

$

58

 

 

$

95

 

Financing cash flows from finance leases

 

$

1,195

 

 

$

1,110

 

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

 

$

-

 

 

$

1,961

 

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

 

$

-

 

 

$

472

 

Change in purchase of property, plant and equipment in accounts payable and
   accrued expenses

 

$

2,162

 

 

$

(10,489

)

 

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 24, 2022 and September 25, 2021

(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 25, 2021

 

 

10,184

 

 

$

102

 

 

 

2,068

 

 

$

21

 

 

$

611,622

 

 

$

(194

)

 

$

371,858

 

 

$

983,409

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,955

)

 

 

(1,955

)

Stock options exercised and restricted
   shares activities

 

 

31

 

 

 

 

 

 

 

 

 

 

 

 

498

 

 

 

 

 

 

 

 

 

498

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,922

 

 

 

 

 

 

 

 

 

2,922

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50

 

 

 

 

 

 

50

 

Balance at March 26, 2022

 

 

10,215

 

 

$

102

 

 

 

2,068

 

 

$

21

 

 

$

615,042

 

 

$

(144

)

 

$

369,903

 

 

$

984,924

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53,349

 

 

 

53,349

 

Stock options exercised and restricted
   shares activities

 

 

10