The Boston Beer Company, Inc. Q4 FY2025 earnings call

• Strategy overview: Emphasized disciplined Fewer Things Better Innovation approach. Focused on Beyond Beer category which is 85% of total company volume and growing. - 2025 performance: Operational discipline enabled delivery on financial commitments despite 4% depletion decline. Sun Cruiser's national launch was successful. Efficiency improvements drove 410 basis points of gross margin expansion. Highly cash generative with $216 million free cash flow in 2025. - 2026 outlook: Expect industry volume headwinds to continue. Priorities include supporting brand portfolio through advertising and local in - market execution, developing margin - accretive innovation and driving margin improvement through productivity. Focus on Twisted Tea's performance with increased advertising investment, new partnerships, new pack sizes and flavor innovation. Sun Cruiser's growth potential with expanded distribution and strong advertising support. Angry Orchard's growth behind new positioning and creative. Truly's brand strategy including World Cup activation and new creative platform. Samuel Adams and Dogfish Head's efforts in their respective categories. - Supply chain and savings: Brewery efficiencies improved with increased internal production. Procurement savings had progress but impact expected to be moderate in 2026. Waste and network optimization led to record high customer service levels and reduced obsolete inventory. Beginning to add revenue management capabilities.

In 2025, depletions were down 4% in line with the industry. Sun Cruiser had a successful national launch, revenue and margin accretive. Beyond Beer category is 85% of total company volume, doubled in volume from 2019 - 2025, representing 9% of U.S. alcohol consumption. Twisted Tea was down 6% in dollar sales in measured off - premise channels in 2025 but remains the clear leader in malt - based hard tea with over 85% market share. Angry Orchard returned to growth. Samuel Adams and Dogfish Head combined to hold share in the craft beer category. 2025 revenue was down 2.4% year - over - year, driven by shipments down 4.7% and 2.3 percentage points of positive price and mix. Gross margin reached 48.5% in 2025, a high since 2019. Fourth quarter depletions decreased 6% and shipments decreased 7.5%, with gross margin of 43.5% increasing 360 basis points year - over - year.

• 2026 depletions and shipments are planned to be flat to down mid - single digits, impacted by consumer environment and brand investment initiatives. - Expect price increases of between 1% and 2% and some additional benefit from mix. - Full year 2026 reported gross margins are expected to be between 48% and 50%, covering commodities and non - tariff - related inflation with pricing, and lower shortfall fees and prepayment amortization offsetting increased tariff costs. - 2026 tariff cost estimate is $20 million to $30 million. - Estimate advertising, promotional and selling expenses to increase between $20 million and $40 million. - Target full year 2026 earnings per diluted share of between $8.50 and $11. - First quarter and first half shipments expected to be down towards lower end of volume guidance, but better later in the year. - Shortfall fees and noncash expenses of third - party production prepayments to negatively impact gross margins by 40 to 60 basis points in 2026. - Incremental advertising investment weighted to second and third quarters.

• Industry volume headwinds continue with consumers tightly managing budgets, pressure on Hispanic consumer, moderation trends and competition from hemp - derived beverages despite federal regulations restricting their availability after November 2026. - Greater competition in Beyond Beer category affecting volume performance. - Macroeconomic environment is a significant driver of weaker alcohol consumption trends and deceleration in Twisted Tea's performance. - Tariff costs could impact margins, with 2026 estimate based on tariffs in place prior to February 2026 Supreme Court ruling which may change.

• Q: One on the gross margin outlook, specifically impact of aluminum Midwest premium.

A: Do not hedge in aluminum, expecting a little bit of inflation but built into next year's margins. - Q: View on year - to - date performance and category growth.

A: Twisted Tea's trends improved at the start of 2026, category trends have gotten better in the last 2 months, up by about 300 basis points. - Q: Improvement at Twisted Tea and shelf space.

A: Addressed pricing issues in certain markets and packages, pushed Twisted Tea Extreme and Light, and worked with wholesalers. Shelf space for beer has some erosion to RTDs, but impact from hemp - derived beverages may diminish. - Q: Plans for year 2 on Sun Cruiser and flavor innovation.

A: Sun Cruiser to get stronger distribution support from big chains, continue high level of support including national and local sponsorships. Sinless vodka cocktail rolled out in 30 + states, with other flavor innovations in test markets. - Q: Tariffs and gross margin guidance.

A: Tariffs include aluminum, POS from China, ingredients from other countries, with impact phased throughout the year. Gross margin guidance building blocks include savings from operations, revenue management, and leveraging volume. - Q: Truly brand and higher ABV products.

A: Hope for Truly to be a strong #2 in the category with low single - digit growth, investing more in it. Higher ABV products have trade - offs but manageable, with growth in some higher ABV products not necessarily offsetting lower ABV declines in a one - for - one manner