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Boston Beer (NYSE:SAM) rallied early on Friday after the beer company topped expectations with its Q2 earnings report.
The second quarter numbers were better than feared as strong growth in Twisted Tea offset continuing challenges in the hard seltzer category. Depletions in the quarter decreased 3% from a year ago, reflecting decreases in the Truly Hard Seltzer, Angry Orchard, Hard Mountain Dew and Samuel Adams brands, partially offset by increases in its Twisted Tea and Dogfish Head brands. Shipment volume for the quarter was approximately 2.3M barrels, a 4.5% decrease from last year, reflecting decreases in the Truly Hard Seltzer, Angry Orchard, Samuel Adams, Hard Mountain Dew and Dogfish Head brands, partially offset by increases in its Twisted Tea brand.
Gross margin rose 230 basis points year-over-year to 45.4% of sales. Gross margin primarily benefited from strong price realization and procurement savings, which more than offset increased inflationary costs.
Looking ahead, Boston Beer (SAM) plans to increase the balance of year spend behind both the Truly and Twisted Tea brands as the company believe its messaging is effective and the business will respond over the short-and longer-term to those investments. "We are focused on enhancing our productivity to continue to improve our gross margin and in turn incrementally invest to further strengthen our brands," noted CEO Dave Burwick.
On the earnings call, Boston Beer (SAM) management said it believes the Beyond Beer category, where the company thinks it has an advantaged portfolio, will grow faster than the traditional beer market over the next several years.
Boston Beer (SAM) shot up 11.00% in premarket trading on Friday to $348.00.