The Boston Beer Company, Inc. (NYSE:SAM) Q2 2018 Earnings Conference Call - Final Transcript

Jul 26, 2018 • 05:00 pm ET


The Boston Beer Company, Inc. (NYSE:SAM) Q2 2018 Earnings Conference Call - Final Transcript


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Good day ladies and gentlemen and welcome to the Quarter Two 2018 Boston Beer Company Earnings Conference Call. At this time, all participant are in a listen-only mode. Later we'll conduct the question-and-answer session and instructions will follow at that time. (Operator Instructions)

I would now like to turn the conference over to Founder and Chairman, Jim Koch. Sir, you may begin.

Jim Koch

Thank you. Good afternoon and welcome to everybody. This is Jim Koch, Founder and Chairman, and I'm pleased to be here to kick-off the 2018 second quarter earnings call for the Boston Beer Company. Joining the call from Boston Beer are Dave Burwick, our CEO; and Frank Smalla, our CFO.

I'll begin my remarks this afternoon with a few introductory comments including some highlights of our results, then hand over the microphone to Dave who will provide an overview of our business. Dave will then turn the call over to Frank who focus on the financial details for the second quarter, as well as a review of our outlook for 2018. Immediately following Frank's comments, we will open the line up for questions.

We achieved depletions growth of 12% in the second quarter, an increase from depletions growth of 8% in the first quarter. I am tremendously proud of the efforts of our people in achieving double digit growth and record total depletions, while maintaining a focus on quality and innovation. I believe that our depletions growth is attributable to our key innovations, to our quality and strong brands, as well as sales execution and support from our distributors.

While our total growth is a testament to our strategy of a diversified brand portfolio, our Sam Adams volume has continued to decline, despite the early success of our launches of Sam '76 and Samuel Adams New England IPA. We continue to work very hard on our Sam Adams brand messaging, particularly around Sam Adams Boston Lager and Seasonals, with the goal of significantly improving these trends and returning Samuel Adams back to growth.

We were delighted to learn that for the eighth year out of the last ten, distributors ranked us the number one beer supplier in the industry, in the annual poll of beer distributors conducted by Tamarron Consulting, a consulting firm specializing in the alcohol beverage distribution industry. This is due to the efforts of all Boston Beer Company people to service and support our distributors' businesses and to the relationships we have built with them. Overall, our brand portfolio is healthy and we remain positive about the future of craft beer.

I will now pass over to Dave for a more detailed overview of our business.

Dave Burwick

Thanks, Jim. Good afternoon everyone.

(Forward-Looking Cautionary Statements)

Now, that the disclaimers are out of the way, let me share a deeper look in to our business results for Q2.

Our depletions growth in the second quarter was a result of increases in our Truly Spiked & Sparkling, Twisted Tea and Angry Orchard brands that were only partially offset by