Boston Beer Company Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Lavery - Piper Sandler. - Analyst : Thank you. Good evening. Just wanted to come back to how to think about 4Q. I know you've got the full year volume guidance that gives us a good -- some guardrails on how to think about it. But you have been talking about some new distribution pipeline fill for Hard Mountain Dew driving some potential upside against sell-through it sounds like the inventory build in 3Q more than makes up for that and maybe some of the other new innovation getting ready to go out in early 2025. Is that the right way to think about it? And can you just talk about some of the puts and takes besides just the current inventory level?

Question: Michael Lavery - Piper Sandler. - Analyst : Okay. That's helpful. That makes sense. And can I just follow up on Twisted Extreme and Truly Unruly. You've got a few things that are going from a 5% to an 8% ABV with some of these extensions I think you mentioned some competitive offerings that drove some of the thinking there. But is that also just a consumer that's seeking value and wants the bang for the buck or how do you think about just where the consumer's head is and how they approach that and what the initial read is on traction?

Question: Michael Lavery - Piper Sandler. - Analyst : Okay. Thanks. I'll pass on.

Question: Robert Ottenstein - EVERCORE ISI - Analyst : Great. Two questions. One, just wonder if you could give us any kind of early sense of how October looks things getting a little bit better. I understand some pricing came into the market in certain areas. Any reactions to that? And then second, if you kind of go into Twisted Tea in a little bit more depth, at least in the scanner data, it's slowed a bit, velocities seem to be down, and wondered what you're kind of diagnostic is for that and maybe we're not reading the data right, but that's what we're seeing. And how do you think about the momentum of the brand going into 2025?

Question: Eric Serotta - Morgan Stanley. - Analyst : Yes, good afternoon, everyone. Hoping, you could talk a bit about Sun Cruiser, maybe talk a bit about what your expectations are in terms of shelf space for next year? And where do you expect that space to come from in accounts that are able to sell small based and spirits based? And then at the consumer level, what are you seeing in terms of interaction between Sun Cruiser and Twisted? Obviously, significantly incremental, but for the part that does overlap, what do you -- what kind of trade-offs are you seeing at the consumer level? And then a quick follow-up.

Question: Eric Serotta - Morgan Stanley. - Analyst : Great. And then just a quick follow-up for Diego or housekeeping item. I think you called out higher obsolescence cost, what was that related to in terms of product and brand? And what's your picture on that going forward?

Question: Eric Serotta - Morgan Stanley. - Analyst : Great. Very helpful. I'll pass it on and come back in queue. Thank you.

Question: Bonnie Herzog - Goldman Sachs - Analyst : Thank you. Hi, everyone. I had a question on Truly. You mentioned you're not satisfied overall with Truly's performance. So, I guess I'm hoping for some more color on some of your initiatives. First, you mentioned adjusting your marketing strategy. So, I'd love to hear maybe some of the changes you might be making. And then second, you mentioned success with lighter flavors. So, could you give us a sense of what percentage of Chili's mix is lighter right now? And then, I guess, finally, you also talked about possible pruning. So again, hoping maybe for a little bit more color on that? And what percentage of Truly's volume you might consider discontinuing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 24, 2024 / 9:00PM, SAM.N - Q3 2024 Boston Beer Company Inc Earnings Call

Question: Bonnie Herzog - Goldman Sachs - Analyst : Okay. And then maybe a quick follow-up. If you're -- I guess, [indiscernible], if you're unable to stabilize or revive it, do you think Twisted and then possibly Sun Cruiser next year will be enough to offset and your volumes can return to growth? Is that I'm just trying to think through this if some of these efforts aren't successful on Truly?

Question: Bonnie Herzog - Goldman Sachs - Analyst : Okay. I'll pass it on. Thank you.

Question: Filippo Falorni - Citi - Analyst : I wanted to ask a broader question about the beer industry. We've clearly seen some softness this year into the summer, particularly a bit of an improvement if you include the fourth category, as you guys talked about. How are you seeing the evolution for the balance of the year and into next year? You think this was like more of a temporary headwind in '24 that might lap it to '25? Or do you see any more structural headwinds that might continue into next year?

Question: William Kirk - Roth MKM - Analyst : Hi. So, I'm trying to understand the earnings outlook a bit better. I have year-to-date adjusted EPS at $10.76 and so at the midpoint of the 8 to 10 guided range, that would imply almost negative $2 in EPS for 4Q. Looking back at the model, that's one of the lowest 4Qs I can see. Is that math right? Am I missing something in the comparable or something? Or if it is right, can you help us better understand the details that would drive such a loss in 4Q?

Question: William Kirk - Roth MKM - Analyst : And on that external capacity comment, year-to-date, it shows that 68% of your needs have been in heat production. I think the full year goal was 76% in-house production. So, is there a big step-up in production in 4Q? Or is 76% or I guess, ask differently, 76% still capable?