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01/10 03:21
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary shows mixed sentiments: strong EPS growth and margin improvements are positive, but the Q&A reveals industry challenges and cautious guidance. The company faces headwinds in the beer market, with slow summer sales and macroeconomic pressures. While new product launches and margin enhancements are promising, the widened guidance range and lack of clear growth catalysts suggest uncertainty. Given the market cap, the stock is likely to see minimal movement, leading to a neutral sentiment rating.
Depletions Decreased 5% in Q2 2025 compared to the same quarter last year. This was primarily driven by declines in the Truly Hard Seltzer and Sam Adams brands, partially offset by growth in Sun Cruiser and Dogfish Head brands.
Shipments Decreased 0.8% in Q2 2025 compared to the same quarter last year. Shipments were higher than depletions due to the timing of wholesaler demand for Sun Cruiser and Truly Unruly innovations, as well as lower-than-target wholesaler inventory levels last June.
Revenue Increased 1.5% in Q2 2025 compared to the same quarter last year. This was due to increased pricing and favorable product mix, partially offset by lower volumes.
Gross Margin 49.8% in Q2 2025, an increase of 380 basis points year-over-year. This was driven by improved brewery efficiencies, procurement savings, price increases, and product mix, partially offset by increased inflationary and tariff costs.
Operating Cash Flow Generated over $125 million in the first half of 2025. This enabled investments in brands and $111 million in cash returns to shareholders year-to-date.
Advertising, Promotional, and Selling Expenses Increased $15.5 million or 10.7% year-over-year in Q2 2025, primarily due to increased brand investment in media.
General and Administrative Expenses Decreased $2.3 million or 4.7% year-over-year in Q2 2025, primarily due to a decrease in salaries and benefits costs from lower incentive compensation.
Earnings Per Share (EPS) $5.45 per diluted share in Q2 2025, an increase of 24.1% compared to the prior year. This was driven by higher gross margins and lower share count, partially offset by lower volumes and increased investments in brands.
Sun Cruiser: Launched last summer and went national in January 2025. It has grown to a 4% share of the RTD spirits category and is expected to be a significant growth contributor for the Beyond Beer category. It has been well received by wholesalers, retailers, and drinkers, with strong trial and repeat numbers.
Twisted Tea: Twisted Tea Light and Twisted Tea Extreme are growing shelf space and velocities. The brand is supported by advertising campaigns and sponsorships, including ESPN and college football programs. Twisted Tea Extreme Lemon and Blue Razz are top growth SKUs in the convenience channel.
Truly Unruly: High ABV offerings are a bright spot in the Hard Seltzer category. Truly Unruly has grown to a 3% volume share of Hard Seltzer, with its variety pack being the #1 dollar 12-pack share gainer in Beyond Beer in the last 12 months.
Dogfish Head: Grew depletions in Q2 2025 for the first time in many years, driven by the launch of Grateful Dead Juicy Pale Ale, the largest launch in its history.
Angry Orchard: Returned to growth in Q2 2025, driven by increased investment, new sponsorships, and a campaign called 'Don't get Angry, Get Orchard.'
Shelf Space Gains: Gained shelf space for Twisted Tea, Sun Cruiser, Samuel Adams, Angry Orchard, and Hard Mountain Dew in spring resets.
Hispanic Consumer Penetration: Twisted Tea has improved penetration with Hispanic consumers, which is expected to benefit the brand in the long term.
Gross Margin Expansion: Achieved a gross margin of 49.8% in Q2 2025, up 380 basis points year-over-year, driven by improved brewery efficiencies, procurement savings, and price increases.
Productivity Initiatives: Ongoing initiatives in brewery performance, procurement savings, and waste optimization contributed to improved operational efficiencies.
Focus on Beyond Beer: Beyond Beer represents more than 85% of the company's volume and is outperforming traditional beer, wine, and spirits categories.
Innovation Pipeline: Continued investment in innovation, including new product launches like Sun Cruiser and Truly Unruly, to align with consumer demand.
Macroeconomic Environment: The company is operating in a challenging and unpredictable macroeconomic environment, with economic uncertainty and household budget tightening negatively impacting consumer demand across the beer industry.
Consumer Behavior: There is a decline in retail traffic and fewer social occasions, with consumers becoming more focused on absolute dollar spend, which has slowed the velocity of larger brands like Twisted Tea and Truly.
Hispanic Consumer Base: The company remains underpenetrated with Hispanic consumers, a sizable portion of the alcoholic beverage market, which is impacting volume performance.
Industry Trends: The FMB category has seen higher-than-expected declines, with measured off-premise channels down 3% in dollar sales year-to-date, and the hard seltzer category declining 7% in dollars in the second quarter.
Tariff Costs: Late in the second quarter, the company experienced tariff costs, which negatively impacted gross margins and are expected to be a headwind of 70 to 100 basis points for the full year.
Shipment and Depletion Trends: Shipments were ahead of depletions in the first half, but the company expects shipment declines in the second half of the year as shipments rebalance in line with depletion trends.
Volume Forecast: The company has lowered its volume forecast for the year, expecting volumes to be down high single digits to low single digits, reflecting a more dynamic industry environment.
Category Shift: Consumer preferences are shifting towards more premium RTD spirits-based beverages, negatively impacting the hard seltzer category, including the Truly brand.
Volume Guidance: The company expects its volume to be down high single digits to low single digits for the year, reflecting a more dynamic industry environment. Depletion trends for the first 29 weeks of 2025 have decreased 3% from 2024.
Gross Margin Guidance: The company has raised its gross margin guidance for the year to 46% to 47.3%, up from 45% to 47% previously. This includes the impact of tariffs, which are estimated to be a headwind of 70 to 100 basis points.
Earnings Per Share (EPS) Guidance: Excluding tariffs, full-year 2025 EPS is expected to be between $8 and $10.50. Including tariffs, EPS is expected to be between $6.72 and $9.54. Tariffs are estimated to have an unfavorable cost impact of approximately $15 million to $20 million or $0.96 to $1.28 per diluted share.
Advertising and Promotional Expenses: Increases in advertising, promotional, and selling expenses are expected to range from $30 million to $50 million, with most of the increase occurring in the first half of the year.
Capital Expenditure Guidance: The company has lowered its capital expenditure guidance range by $20 million to between $70 million and $90 million, focusing on supporting productivity programs.
Shipment Trends: Shipments were ahead of depletion trends for the first half of the year but are expected to reverse in the second half. Most of the 2025 shipment reversal is expected to occur in the third quarter, with shipment declines anticipated to be in the low to mid-teens.
Operating cash flow: The business generated over $125 million in operating cash flow in the first half of 2025.
Cash returns to shareholders: $111 million in cash returns to shareholders year-to-date.
Share buyback program: During the 13-week period ended June 28, 2025, and the period from June 29, 2025 through July 18, 2025, the company repurchased shares in the amount of $50 million and $11.3 million respectively. As of July 18, 2025, approximately $317 million remained on the $1.6 billion share repurchase authorization.
The earnings call reveals a mixed sentiment. While there are positive aspects such as improved gross margin, strong operating cash flow, and optimism for certain products, there are also concerns. These include expected shipment declines, increased expenses, and a loss-making Q4. The Q&A highlights cautious optimism but also acknowledges challenges like market dynamics and specific product concerns. The company's market cap suggests moderate sensitivity to these factors. Overall, the mixed signals and market cap lead to a neutral prediction for stock price movement over the next two weeks.
The earnings call summary shows mixed sentiments: strong EPS growth and margin improvements are positive, but the Q&A reveals industry challenges and cautious guidance. The company faces headwinds in the beer market, with slow summer sales and macroeconomic pressures. While new product launches and margin enhancements are promising, the widened guidance range and lack of clear growth catalysts suggest uncertainty. Given the market cap, the stock is likely to see minimal movement, leading to a neutral sentiment rating.
The earnings call highlights strong financial performance with a 6.5% revenue increase and a significant gross margin improvement. Despite a minor depletion decrease, shipments rose 5.3%, and EPS more than doubled, indicating robust operational efficiency. The share repurchase program suggests confidence in long-term growth. However, concerns over consumer behavior changes and cost pressures from tariffs were noted. The Q&A provided optimism about future distribution and market share improvements. Given the company's mid-cap status, the positive financial metrics and strategic plans suggest a likely stock price increase in the 2% to 8% range.
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