Boston Beer Co., Inc. Q1 FY2025 earnings call

• Jim Koch noted first quarter results were a solid start, depletions down 1% but shipments up 5%, margin enhancement initiatives showed progress, and priorities for 2025 include supporting category-leading brands, launching innovation, and expanding gross margins. • Michael Spillane discussed progress in execution, core brand performance (Twisted Tea, Hard seltzer, Samuel Adams, Dogfish Head, Angry Orchard), innovation efforts (SunCruiser, Hard Mountain Dew), and focus on improving market share and distribution. • Diego Reynoso provided financial details: revenue up 6.5%, gross margin 48.3% (up 460 basis points y/y), EPS $2.16 per diluted share, progress in productivity initiatives including procurement savings, brewery efficiencies, and inventory management.

Twisted Tea: Dollar sales grew 1% in measured channels in Q1 2025, gained market share of FMBs and maintained over 86% share in the hard tea category. Hard seltzer category: Dollar sales in measured off-premise channels declined 5% in Q1. Samuel Adams: National expansion of American Light is ongoing. Dogfish Head: Flat depletions in Q1 driven by launch of Grateful Dead Juicy Pale L. Angry Orchard: Number one cider brand with over 40% market share. SunCruiser: Solid contributor to year-to-date depletions, gross margin accretive, with expanded distribution and advertising investment. Hard Mountain Dew: Positive depletion trends for third consecutive quarter, with Texas launch and Code Red flavor debut.

• Full year 2025 earnings per diluted share expected to be between $8 and $10.50. • Tariffs expected to have unfavorable 2025 cost impact of approximately $20 million to $30 million or $1.25 to $1.90 earnings per diluted share. • Volume guidance: down low single digits to up low single digits. • Full year 2025 gross margins expected to be between 45-47% exclusive of tariff impacts. • Advertising, promotional, and selling expenses increases expected to range from $30 million to $50 million exclusive of tariff impact.

• Dynamic macroeconomic environment. • Tariff impact on costs, including aluminum cost and materials from China. • Consumer behavior changes such as moderation, health concerns, reduced sociability, etc., impacting the beer category.

Q: Please unpack how much of the gross margin performance in the quarter is a function of stronger shipments versus ongoing margin initiatives?

A: Diego Reynoso said there is a little bit of a benefit from shipments, but the main piece is the underlying gross margin initiative.

Q: What is driving the cost pressure from tariffs and are the numbers net of any mitigation effort?

A: Diego Reynoso said drivers include aluminum cost and materials from China; currently gross, and they are looking to deploy mitigation efforts but will share later.

Q: Can you break out how much Sun Cruiser and Truly Unruly contributed to shipment volume?

A: Diego Reynoso said they typically do not break out by product in terms of shipments, but Sun Cruiser is meeting expectations with expanded distribution.

Q: Comment on consumer demand changes and their impact on the beer industry?

A: Jim Koch said macroeconomic trends like consumer confidence and inflation, and longer term trends like moderation, health concerns, reduced sociability are impacting the industry.

Q: Color on the runway for Twisted Tea and the mix in Truly?

A: Diego Reynoso said Twisted Tea has opportunities with expansion of offerings like high ABV and light, and Truly has completed paring down flavor assortments with unruly showing progress but still facing category decline and distribution issues.

Q: Hedging on aluminum for tariffs?

A: Diego Reynoso said they do not hedge aluminum, with a pass through through can suppliers.

Q: Reconcile stepped up marketing spend in Q1 with depletions being down 1%?

A: Jim Koch said depletions are expected to flip positive in second half, and without increased brand support, depletions would have been down more.

Q: Distribution and performance of Twisted Tea core product?

A: Jim Koch said there are opportunities for distribution in brand extensions, category has competition with smaller brands, and macro headwinds are factors, but they continue to invest and innovate.