Beer company Boston Beer (NYSE:SAM) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue up 10.3% year on year to $452.2 million. It made a GAAP profit of $1.04 per share, improving from its loss of $0.73 per share in the same quarter last year.
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Boston Beer (SAM) Q1 CY2024 Highlights:
- Revenue: $452.2 million vs analyst estimates of $412.3 million (9.7% beat)
- Operating profit: $15.3 million vs analyst estimates of roughly breakeven (large beat)
- EPS: $1.04 vs analyst estimates of $0 (39,947% beat)
- EPS guidance for full year 2024 maintained from previous ($9.00 at the midpoint, below current expectations)
- Gross Margin (GAAP): 47%, up from 38% in the same quarter last year
- Free Cash Flow was -$20.62 million, down from $17.44 million in the previous quarter
- Market Capitalization: $3.49 billion
Known for its flavorful beverages challenging the status quo, Boston Beer (NYSE:SAM) is a pioneer in craft brewing and a symbol of American innovation in the alcoholic beverage industry.
Beverages and AlcoholThese companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales GrowthBoston Beer carries some recognizable brands and products but is a mid-sized consumer staples company. Its size could bring disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the other hand, Boston Beer can still achieve high growth rates because its revenue base is not yet monstrous.
As you can see below, the company's annualized revenue growth rate of 1.7% over the last three years was weak for a consumer staples business.
This quarter, Boston Beer reported robust year-on-year revenue growth of 10.3%, and its $452.2 million in revenue exceeded Wall Street's estimates by 9.7%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Boston Beer burned through $20.62 million of cash in Q1, representing a negative 4.6% free cash flow margin. The company increased its cash burn by 41.3% year on year.
Over the last eight quarters, Boston Beer has shown solid cash profitability, giving it the flexibility to reinvest or return capital to investors. The company's free cash flow margin has averaged 8.6%, above the broader consumer staples sector. Furthermore, its margin has averaged year-on-year increases of 3.8 percentage points over the last 12 months. This likely pleases the company's investors.
Key Takeaways from Boston Beer's Q1 Results We were impressed by how significantly Boston Beer blew past analysts' revenue, operating profit, and EPS expectations this quarter. We were also excited its gross margin outperformed Wall Street's estimates. EPS guidance for the full year was maintained, showing that the operating environment and demand trends the management saw three months ago have remained roughly the same. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock is up 8.3% after reporting and currently trades at $311 per share.