Boston Beer Q1 Earnings Call Highlights

Key Points

• Boston Beer recorded a $216 million pre-tax litigation charge this quarter that caused a $15.52 negative hit to GAAP EPS; excluding litigation, non-GAAP EPS was $1.64.
• Management said category trends modestly improved but the company still faces volume pressure—Q1 depletions fell 4% and shipments declined 6.9%—and narrowed 2026 volume guidance to down low- to mid-single digits and full-year non-GAAP EPS to $8.50 to $10.50, citing energy and aluminum inflation.
• Brand performance diverged: Sun Cruiser is rapidly growing (now a top-five spirits RTD) and Twisted Tea showed sequential improvement with product and marketing tweaks planned, while Truly continues to lose share despite promotional efforts.

Boston Beer NYSE: SAM executives said the company entered 2026 with modestly improving industry trends but continued brand and macro headwinds, as first-quarter depletions declined and a large litigation charge weighed on GAAP results.

Category trends improve, but Boston Beer still faces volume pressure

Founder, CEO and Chairman Jim Koch said the total beer and ready-to-drink (RTD) category showed “some signs of improvement” in the first quarter, which the company estimates was flat in volume compared with a 4% decline for full-year 2025. Koch added that “beyond beer” continued to outperform traditional beer in measured off-premise channels, rising about 3% in volume during the quarter while traditional beer declined slightly.

Despite the industry improvement, Koch said Boston Beer “have not yet fully participated” in the better category trends. The company continues to expect “volume headwinds for 2026” given a “dynamic macroeconomic environment and evolving geopolitical developments” that may impact consumer spending.

Koch said Twisted Tea and Sun Cruiser together grew depletions, driven by strong Sun Cruiser results and “some sequential improvement” in Twisted Tea. He also said Angry Orchard and Dogfish Head posted four consecutive quarters of growth. However, Koch noted Truly “remains a meaningful portion of our mix and continues to lose share,” and he cited softness in Samuel Hard MTN DEW.

First-quarter results: depletions and shipments down; margins rise

Diego Reynoso, CFO, said first-quarter depletions fell 4% and shipments declined 6.9% year over year, “primarily driven by decreases in our Twisted Tea, Truly, Samuel Hard MTN DEW brands,” partially offset by increases in Sun Cruiser, Angry Orchard, and Dogfish Head. Revenue decreased 4.4% due to lower volume, partially offset by price increases and favorable mix.

Shipments trailed depletions, which both Koch and Reynoso said reflected comparisons to the prior year when distributors built inventory for Sun Cruiser and Truly Unruly innovation. Distributor inventories ended the quarter at about four and a half weeks on hand, down roughly half a week from the prior-year period, which management attributed to supply chain improvements and innovation timing.

Gross margin was 49.3%, up 100 basis points year over year. Reynoso said the increase primarily reflected procurement savings and brewery efficiencies, while pricing and mix benefits were offset by “inflationary commodities and tariff costs.” Advertising, promotional, and selling expenses increased $2.5 million, or 1.8%, due to higher freight rates, partially offset by lower volumes. Brand investment was flat, lapping “mid-teens increases” in first-quarter 2025. General and administrative expense rose $4.4 million, or 9.1%; excluding legal costs tied to a one-time litigation expense, Reynoso said G&A increased $0.4 million primarily due to higher consulting costs.

Litigation expense dominates GAAP results

Reynoso said the company recorded $216 million in total pre-tax litigation expenses in the quarter related to a supplier contract dispute. “We intend to pursue all available post-trial motions and appellate remedies,” he said, adding the company could not estimate “when or if damages or interest will ultimately be paid,” but does not expect the issue to materially impact operating plans.

Reynoso said the litigation expense had a $15.52 negative impact to first-quarter GAAP EPS. Excluding litigation-related expenses, the company reported non-GAAP EPS of $1.64 per diluted share.

Brand updates: Twisted Tea levers, Sun Cruiser expansion, and Truly’s World Cup push

On Twisted Tea, Koch told analysts he did not believe the brand needed a “drastic reset,” but rather “a bunch of tweaks.” He pointed to competitive pressure from vodka-based teas and noted display space shifted in the market, with newer brands taking placements. Koch said combined Twisted Tea and Sun Cruiser volume was up, and he emphasized that mix shift toward Sun Cruiser is “margin and revenue accretive.”

Koch outlined actions including adjusting pricing in certain markets, gaining shelf space in resets (particularly for Twisted Tea Extreme), increasing marketing support and partnerships, and broadening price-pack architecture. He said Twisted Tea Extreme was “growing triple digits,” and pointed to new pack options such as “a four-pack of 16 oz for under $10” and 24-packs.

Sun Cruiser, Koch said, has quickly become a top-five spirits RTD and the “fastest growing brand in the category by volume” across combined measured and off-premise channels, with on-premise trial a key driver. He highlighted a multiyear USGA partnership making Sun Cruiser the official RTD cocktail of the U.S. Open and U.S. Women’s Open, along with sports and music marketing and new package formats including 19.2-ounce single-serve packages.

For Truly, Koch said the brand maintained its No. 2 share position in hard seltzer but still faces challenged share trends. The company plans to invest in new creative and lean into its U.S. Men’s National Soccer Team partnership, including “Drink like a Believer” programming with displays and soccer-themed packs in retail and local activations in host cities. Koch also said Truly Unruly continues to grow in volume and distribution as the company’s second-highest volume 12-pack.

Elsewhere, Koch said Angry Orchard’s growth has been supported by refreshed positioning and programming, and cited Crisp Imperial 19.2-ounce cans as a driver, with measured off-premise Crisp Imperial volume up more than 40% in the first quarter. For Dogfish Head, he said growth has been supported by a cleaned-up product lineup, Grateful Dead collaborations, and the Minute Series IPAs, while also noting growth contributions from Dogfish Head spirits and canned cocktails.

On Samuel Hard MTN DEW, Koch said hard sodas broadly “have not had the appeal on an enduring basis” that many expected. He also cited distribution complications in certain territories as a factor affecting chain distribution and wholesaler support, while saying the company still believes it is a strong brand and is working to find the right niche.

Guidance narrowed amid energy and aluminum inflation; buybacks continue

Management narrowed full-year 2026 volume guidance to down low single digits to down mid-single digits, from prior guidance of flat to down mid-single digits, citing year-to-date depletion trends and market share performance. Reynoso said fiscal-week depletion trends for the first 17 weeks of 2026 were down 4% year over year, a sequential improvement from down 6% in the fourth quarter of 2025.

The company also narrowed its full-year non-GAAP EPS guidance to $8.50 to $10.50 from $8.50 to $11.00, which Reynoso said reflects the latest volume outlook and “additional inflation in energy and aluminum.” He said the company does not hedge commodities and is monitoring market cost increases, and added the company may reduce incremental advertising spending toward the lower end of its guidance range if macro cost pressures increase.

Reynoso reiterated expectations for price increases of 1% to 2% and maintained reported gross margin guidance of 48% to 50% for 2026. The outlook includes a full-year tariff cost estimate of $20 million to $30 million, compared with $11 million for a partial year in 2025, based on tariffs currently being charged by suppliers.

On capital allocation, Reynoso said Boston Beer ended the quarter with $164 million in cash and $150 million available on its line of credit. The company expects 2026 capital expenditures of $70 million to $90 million, primarily for brewery capabilities, efficiencies, and innovation. It repurchased $23.8 million of shares during the quarter and an additional $7.4 million from March 30 through April 24, leaving about $197 million remaining under its $1.6 billion repurchase authorization as of April 24.

About Boston Beer NYSE: SAM

The Boston Beer Company, Inc NYSE: SAM is a leading craft brewer headquartered in Boston, Massachusetts. Since its founding in 1984 by Jim Koch, the company has focused on producing high-quality, distinctive beers and beverages for retail, on-premise, and distribution partners across the United States. Its operations include brewing, packaging, marketing and distribution, supported by a network of wholly owned brewing facilities and strategic partnerships with regional breweries.

Boston Beer's flagship brand, Samuel Adams Boston Lager, helped establish the modern U.S.

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