Sam Adams, Truly Hard Seltzer Owner Boston Beer Rallies On Q2 Beat

Sam Adams parent company Boston Beer Company Inc SAM reported second-quarter results Friday that exceeded estimates and sent the stock soaring. 

What Happened: Boston Beer said it earned $4.88 per share in the second quarter on revenue of $452.1 million versus expectations of $2.42 per share and revenue of $429.58 million.

Net income of $60.1 million represents a 116% year-over-year increase, driven mostly by shipment growth of 39.8%, according to Boston Beer.

Excluding the addition of Dogfish Head, which was acquired in 2019, shipments were higher by 35.3%.

The gross margin was lower from 49.9% last year to 46.4%. The figure was impacted by COVID-19 related safety measures, including shifting more volume to third-party breweries at a higher production cost.

Why It's Important: The pandemic impacted keg demand for the on-premise channel.

Yet the strong top-and-bottom line beat shows that demand for the company's alcohol products remains strong, and that consumers are replacing away-from-home alcohol consumption with drinking at home. 

Part of the beat can be attributed to strong growth in non-beer alcoholic drinks, especially Truly.

Truly is the only hard seltzer beverage that was not introduced in 2020 that has grown its market share this year, Boston Beer said.

Twisted Tea also showed double-digit volume growth rates in the quarter, and this is "well above" full-year 2019 trends, according to the company. 

What's Next: Boston Beer withdrew its 2020 outlook in April due to the uncertainty of the pandemic, but provided some new insight in Friday's report. The company now expects full-year 2020 shipments and depletions growth to be between 27% to 35%.

Boston Beer is also targeting a full-year growth margin of 46% to 48%. Full-year 2020 non-GAAP EPS is projected to fall between $11.70 to $12.70.

SAM Price Action: Boston Beer shares were trading 22.94% higher to $806.46 at last check Friday. 

Related Links:

Constellation Brands CEO Talks New Corona Hard Seltzer, 'Pretty Good' Q1

7 Sin Stocks To Buy During The Coronavirus Shutdown

Photo courtesy of Boston Beer.