USA: Boston Beer Company reports drop in first-quarter net revenue

The Boston Beer Company, Inc. reported on April 30 its financial results for the first quarter ended March 28, 2026. Key results were:

First Quarter 2026 Summary:

• Depletions decreased 4% and shipments decreased 6.9%
• Net revenue of $433.9 million decreased 4.4%
• Gross margin of 49.3% up 100 basis points year over year
• GAAP diluted loss per share of $13.88, which includes non-recurring litigation expenses of $15.52 per share
• Non-GAAP diluted earnings per share of $1.64

Capital Structure

• Ended the first quarter with $164.1 million in cash and no debt
• Repurchased $31 million in shares from December 29, 2025 to April 24, 2026

“We were encouraged by early signs of improvement in the total beer category in the first quarter,” said Chairman, Founder and CEO Jim Koch. “While our depletions improved and it remains early in the year, our portfolio has not yet fully matched the improvement in category trends. The operating environment is dynamic, and we are executing with focus against our summer plans, including meaningful advertising support. Our strong balance sheet and highly cash generative business position us to invest in our brands and return cash to shareholders, with the previously announced potential legal payment well within our capacity.”

“Today we are modestly narrowing our guidance range to reflect our latest volume outlook and a more challenging cost environment,” said CFO Diego Reynoso. “We continue to deliver strong gross margin performance and expect our savings agenda to help mitigate tariff and commodity headwinds as we move through the year.”

Depletions for the first quarter decreased 4% compared to the first quarter of the prior year due to decreases in Twisted Tea, Truly, Samuel Adams and Hard Mountain Dew brands that were partially offset by increases in Sun Cruiser, Angry Orchard and Dogfish Head brands.

Consistent with the Company’s plans, shipments declined at a higher rate than depletions. Shipment volume for the quarter was approximately 1.6 million barrels, a 6.9% decrease compared to the first quarter of the prior year, primarily due to difficult comparisons as distributors built inventories for Sun Cruiser and Truly Unruly innovation in the first quarter of 2025 as well as modestly lower overall distributor inventory levels enabled by improvements in the responsiveness of the Company’s supply chain to meet demand.

The Company believes distributor inventory as of March 28, 2026 was at an appropriate level for each of its brands and averaged approximately four and a half weeks on hand compared to five weeks at the end of the first quarter of 2025.

Revenue for the quarter decreased 4.4% due to decreases in volume partially offset by pricing and favorable mix.

Gross margin of 49.3% increased from the 48.3% margin realized in the first quarter of 2025, or an increase of 100 basis points year over year. Gross margin primarily benefited from price increases, favorable product mix, procurement savings, and improved brewery efficiencies partially offset by inflationary, commodity and tariff costs.

The first quarter gross margin of 49.3% includes $1.6 million of shortfall fees and non-cash expense of third-party production pre-payments in total, which negatively impacted gross margin by approximately 37 basis points on an absolute basis.

Advertising, promotional and selling expenses for the first quarter of 2026 increased $2.5 million or 1.8% from the first quarter of 2025, resulting from higher freight costs of $2.5 million due to higher rates partially offset by lower volumes. The Company’s brand investments were flat compared to the first quarter of 2025.

General and administrative expenses increased by $4.4 million or 9.1% from the first quarter of 2025, primarily due to higher legal and consulting costs. Excluding legal costs related to the non-recurring litigation expense discussed below, general and administrative expenses increased by $0.4 million from the first quarter of 2025 primarily due to increased consulting costs.

In the first quarter, the Company recorded a previously announced non-recurring pre-tax litigation expense of $175.5 million and related pre-judgement interest expense of $36.5 million resulting from a verdict entered on April 6, 2026 awarding damages to a supplier. The pre-judgement interest has not yet been determined and potential outcomes range between zero and $36.5 million. In addition to the damages and interest, the Company has recorded legal fees of $4.0 million in general and administrative expenses for a total of $216.0 million pre-tax or $15.52 per diluted share. The Company denies that it breached the terms of the parties’ contract and intends to pursue all available post-trial motions and appellate remedies. The Company cannot estimate when or if damages or interest will ultimately be paid or when this matter will ultimately be resolved.

The Company’s effective tax rate for the first quarter was a benefit of 23.1%. Excluding the impact of the non-recurring litigation expense, the effective tax rate was a provision of 36.8% compared to a provision of 31.9% in the prior year. This increase in rate is due primarily to the increased negative impact of non-deductible stock compensation.

The Company expects that its March 28, 2026 cash balance of $164.1 million, together with its projected future operating cash flows and the unused balance on its $150.0 million line of credit, will be sufficient to fund future cash requirements, including the potential litigation-related payments.

During the 13-week period ended March 28, 2026 and the period from March 30, 2026 through April 24, 2026, the Company repurchased shares of its Class A Common Stock in the amounts of $23.8 million and $7.4 million, respectively, for a total of $31.2 million year to date. As of April 24, 2026, the Company had approximately $197 million remaining on the $1.6 billion share buyback expenditure limit set by the Board of Directors.

Year-to-date depletions through the 17-week period ended April 24, 2026 are estimated by the Company to have decreased approximately 4% from the comparable period in 2025.

The Company has updated its financial guidance for the full year 2026. The litigation related expenses of $15.52 per share detailed above is now included in GAAP earnings per share guidance.

The Company’s actual 2026 results could vary significantly from the current projection and are highly sensitive to changes in volume projections, supply chain performance, inflationary and commodity impacts and tariff policy. Tariff cost projections below are consistent with tariffs currently being charged by the Company’s suppliers and that the Company currently expects to continue for the remainder of 2026.

Underlying the Company's current 2026 projections are the following full-year estimates and targets:

The Company is monitoring recent increases in commodity costs driven by macroeconomic factors, particularly energy, which impacts freight expense as well as aluminum expense given the energy intensive nature of aluminum production. The Company’s current estimates of these cost increases are reflected in its guidance. The Company is continuing to execute savings initiatives to help offset these pressures, along with maintaining flexibility to reduce planned incremental advertising investment to the lower end of its guidance range as needed.

The Company’s business is seasonal, with the first quarter and fourth quarter being lower volume quarters and the fourth quarter typically the lowest absolute gross margin rate of the year.

The Company continues to expect first half shipments to decline toward the lower end of its full year volume guidance with better shipment performance later in the year. This is due to higher shipment comparisons in the first half of the year as the company shipped ahead of depletions in 2025 to support innovation and build distributor inventories, as well as 2026 innovation launches which are second half weighted. Additionally, improvements in the Company’s supply chain responsiveness that enable modestly lower distributor inventory levels are expected to have a more meaningful impact on the first half and begin to be lapped throughout the second half.

During full year 2026, the Company estimates shortfall fees and non-cash expense of third-party production pre-payments in total will negatively impact gross margins by 40 to 60 basis points.
The Company expects year over year gross margin rate improvement to be the most meaningful in the fourth quarter as shortfall fees are expected to be lower in 2026 versus 2025 and the Company typically expenses the majority of its shortfall fees in the fourth quarter.

The advertising, selling and promotional expense projection does not include any changes in freight costs for the shipment of products to the Company’s distributors. Incremental advertising investment is expected to be weighted to the second and third quarters to support the key summer selling season.

01 May, 2026