The Boston Beer Company, Inc. Q2 FY2025 earnings call

• Macroeconomic environment is challenging with economic uncertainty, household budget tightening, Hispanic consumer pressure, and poor weather in key selling weeks.
• Beyond Beer is over 85% of volume and outperforms legacy beer, wine, and spirits categories.
• Twisted Tea held share in the F&B category, gained shelf space in spring resets, and has strong brand equity.
• Sun Cruiser launched nationally, is gross margin accretive, and is growing volumes with increased distribution.
• Truly Hard Seltzer refreshed marketing, with Truly Unruly high ABV innovation growing in volume share.
• Samuel Adams and Dogfish Head gained shelf space, with Dogfish Head's Grateful Dead collaboration driving depletions.
• Angry Orchard returned to growth with new campaigns and sponsorships.
• Hard Mountain Dew had positive depletions, and cross-merchandising with TOSTITOS supports growth.
• Productivity initiatives, including brewery performance improvements, procurement savings, and waste/network optimization, are driving gross margin expansion.

Beyond Beer represents over 85% of volume. In financial performance: Twisted Tea had dollar sales decline 4% in measured channels last quarter, held share, and gained shelf space in spring resets. Sun Cruiser launched nationally in Jan 2025, is gross margin accretive, holds 4% share of RTD spirits, and is growing volumes. The overall hard seltzer category declined 7%, but Truly is a top 2 hard seltzer brand, and Truly Unruly high ABV innovation has 3% volume share of hard seltzer. Samuel Adams American Light launched, gaining shelf space. Dogfish Head's Grateful Dead Juicy Pale Ale launch drove depletions. Angry Orchard returned to growth. Hard Mountain Dew had positive depletions for the fourth quarter, with Code Red distributed in single-serve and cross-merchandising with TOSTITOS.

• Volume forecast lowered to down high single digits to down low single digits for the year due to softer depletion trends.
• Gross margin guidance raised to 46%-47.3%, including tariff impact of 70-100 basis points.
• EPS guidance: exclusive of tariffs, $8-$10.50; including tariffs, $6.72-$9.54.
• Capital expenditure guidance lowered to $70M-$90M, focusing on productivity programs.

• Macroeconomic uncertainty and household budget tightening negatively impact consumer demand.
• Poor weather in key selling weeks affected second quarter results.
• Pressure on Hispanic drinkers impacts volume performance.
• Tariff costs pose a headwind to gross margin.
• Intense competition in RTD and other beverage categories.

Q: Filippo Falorni asked about summer performance, Twisted Tea decline, and Sun Cruiser interaction.

A: Jim Koch and Michael Spillane discussed industry headwinds, weather, Hispanic pressure, Twisted Tea holding share, and Sun Cruiser being margin accretive.

Q: Peter Grom asked about updated guide and depletion trends.

A: Michael Spillane explained rebalancing of shipments and depletions due to softer Q2 depletions.

Q: Nadine Sarwat asked about tariff impact and Sun Cruiser's long-term growth.

A: Michael Spillane talked about Sun Cruiser's measured rollout, and Diego Reynoso discussed tariff mitigation.

Q: Eric Serotta asked about gross margins and Twisted Tea.

A: Michael Spillane discussed gross margin progress, tariff headwinds, and Twisted Tea's challenges.

Q: Bonnie Herzog asked about shipment and depletion guidance.

A: Diego Reynoso explained widened ranges due to uncertain market visibility, and Michael Spillane talked about maintaining market share.

Q: Rob Ottenstein asked about industry consolidation and D9 plans.

A: Jim Koch and Michael Spillane discussed M&A, D9 volatility, and retail slotting for D9 beverages.

Q: Bill Kirk asked about EPS and D9 plans.

A: Michael Spillane discussed EPS possibilities, D9 volatility, and retail slotting for D9 beverages.