Boston Beer: Boston Beer Q1 Revenues & Earnings Beat, Tariff Fears Loom on Outlook

In This Article: The Boston Beer Company, Inc. SAM posted robust first-quarter 2025 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and improved year over year. Despite soft category trends, the company's business demonstrated resilience in the first quarter. SAM benefited from a diversified portfolio of iconic brands and a robust innovation pipeline. Amid ongoing macroeconomic challenges, the company remains committed to executing its well-defined operating plans for the pivotal summer season. This approach is fueling momentum across core brands and recent innovations, underpinned by strategic, targeted advertising investments. However, uncertainty surrounding the evolving tariff landscape continues to pose a potential headwind to performance in the quarters ahead. The leading craft brewer reported first-quarter earnings per share of $2.16, surpassing the Zacks Consensus Estimate of 78 cents per share and improving 108% year over year. (See the Zacks Earnings Calendar to stay ahead of market-making news.) Net revenues of $453.9 million gained 6.5% from the prior-year quarter and beat the Zacks Consensus Estimate of $432.3 million. The increase can be attributed to higher pricing and volume gains. Excluding excise taxes, the top line grew 6.4% year over year to $481.4 million. Shares of Boston Beer rallied 2.7% in the after-hours trading session on April 25 following the upbeat first-quarter 2025 earnings report. This Zacks Rank #3 (Hold) company's shares have lost 4.7% against the industry's 11.4% growth in the past three months. Zacks Investment Research Image Source: Zacks Investment Research Analyzing SAM's Quarterly Performance Boston Beer reported a 5.3% year-over-year increase in the shipment volume to 1.7 million barrels in the first quarter. The increase mainly resulted from higher shipments in Sun Cruiser, Hard Mountain Dew and Twisted Tea brands, partly negated by declines in Truly brand. Meanwhile, depletions fell 1% year over year. The Boston Beer Company, Inc. Price, Consensus and EPS Surprise The Boston Beer Company, Inc. Price, Consensus and EPS Surprise The Boston Beer Company, Inc. price-consensus-eps-surprise-chart | The Boston Beer Company, Inc. Quote Year-to-date depletions through the 16 weeks ended April 18, 2025, are estimated to have declined 1% year over year. As of March 29, 2025, distributor inventory averaged nearly five weeks on hand compared with four weeks on hand as of the end of fourth-quarter 2024 and about four and a half weeks on hand at the end of first-quarter 2024. This indicates that inventory is at appropriate levels for each of its brands. The gross profit improved 17.7% year over year to $219.3 million, whereas the gross margin expanded 460 basis points (bps) to 48.3% from 43.7% in the year-ago quarter. The gross margin improved mainly due to price increases, procurement savings and lower brewery processing costs per barrel, driven by higher volumes and enhanced brewery efficiencies, partially offset by inflationary pressures. The company's gross margin included $0.8 million of shortfall fees and $2.6 million of non-cash expenses related to third-party production pre-payments, impacting the gross margin negatively by 17 bps and 57 bps, respectively, in the first quarter. Advertising, promotional and selling expenses rose 14.4% in the first quarter to $137.5 million, owing to higher investments in media and local marketing. General and administrative expenses declined 4.8% year over year to $48 million due to CEO transition costs incurred in the prior-year quarter. Zacks Investment Research The Boston Beer Company, Inc. Price, Consensus and EPS Surprise SAM's Financial Snapshot As of March 29, 2025, Boston Beer had cash and cash equivalents of $152.5 million and total stockholders' equity of $897 million. The company currently has $150 million in its line of credit, which, along with its cash position, will be sufficient to meet cash requirements. The company repurchased Class A common stocks worth $49.2 million in first-quarter 2025 and $11.3 million from March 31, 2025, through April 18, 2025. This brings the company's total year-to-date share repurchases to $60.5 million. As of April 18, 2025, it had $367 million remaining under its current share repurchase authorization of $1.6 billion. Expectations From Boston Beer in 2025 SAM reiterated its guidance for 2025, which excludes any potential impacts of tariffs. However, based on the information so far and the announced tariff programs, the company estimates tariffs to attract unfavorable cost impacts of $20-$30 million in 2025, equating to a reduction of $1.25-$1.90 in earnings per share. This includes an estimated gross margin headwind of 50-100 basis points. Depletions and shipments are expected to be down in the low-single digits to up in the low-single digits for 2025. The company expects second-quarter shipments to outpace depletions, though year-over-year shipment growth will be lower than in the first quarter. In the second half of the year, particularly in the third quarter, this trend is expected to reverse, with depletions surpassing shipments. The company expects price increases of 1-2% for 2025. SAM anticipates a gross margin of 45-47% for 2025. The company's gross margin guidance includes the negative impacts of 60-80 bps from shortfall fees and 40-60 bps from non-cash expenses of third-party production pre-payments. Advertising, promotional and selling expenses are anticipated to increase $30-$50 million. The increases in advertising, promotional and selling expenses are mainly expected to occur in the first half of 2025. This projection does not include any change in freight expenses for the shipment of products to distributors. The company anticipates an effective tax rate of 29-30% for 2025. It envisions GAAP earnings per share of $8-$10.50 for 2025. Capital spending is expected to be $90-$110 million for 2025 related to the company's breweries to design capabilities and enhance efficiencies. Three Stocks Looking Good We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Fomento Economico Mexicano FMX, Primo Brands Corporation PRMB and Carlsberg CABGY. Fomento, which participates in the beverage industry through Coca-Cola FEMSA, currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here . The Zacks Consensus Estimate for Fomento's 2025 earnings suggests growth of 41.5% from the year-ago period's reported figure. FMX sales for 2025 indicate a year-over-year decline of 3.6%. Primo Brands is a branded beverage company focused on healthy hydration, delivering sustainably and domestically sourced diversified offerings. The company carries a Zacks Rank #2 at present. The Zacks Consensus Estimate for PRMB's 2025 earnings and sales indicates surges of 146.6% and 57.4%, respectively, from the previous year's reported figures. Primo Brands has a trailing four-quarter average earnings surprise of 7.2%. Carlsberg is a brewing company and has operations in Northern and Western Europe, Eastern Europe, and Asia. CABGY currently has a Zacks Rank #2. The Zacks Consensus Estimate for the company's 2025 sales and earnings implies growth of 23.4% and 3.8%, respectively, from the previous year's reported number. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report Carlsberg AS (CABGY) : Free Stock Analysis Report Primo Brands Corporation (PRMB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research