UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the quarterly period ended March 28, 2020
OR
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 |
For the transition period from
Commission file number:
THE BOSTON BEER COMPANY, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS | 04-3284048 | |
(State or other jurisdiction of incorporation or organization) | ( State or other jurisdiction of incorporation Identification No.) | |
One Design Center Place, | 02210 | |
(Address of principal executive offices) | (Zip Code) |
(617)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act.
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A Common | SAM | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||
Non-accelerated | ☐ | Smaller reporting company | ☐ | |||||||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule
Number of shares outstanding of each of the issuer’s classes of common stock, as of April 17, 2020:
Class A Common Stock, $.01 par value | 10,108,792 | |||
Class B Common Stock, $.01 par value | 2,177,983 | |||
(Title of each class) | (Number of shares) |
THE BOSTON BEER COMPANY, INC.
FORM
March 28, 2020
TABLE OF CONTENTS
PART I. | FINANCIAL INFORMATION | PAGE | |||||||
Item 1. | |||||||||
3 | |||||||||
3 | |||||||||
4 | |||||||||
Consolidated Statements of Cash Flows for the thirteen weeks ended March 27, 2021 and March 28, 2020 | 5 | ||||||||
6 | |||||||||
7-16 | |||||||||
Item 2. |
| 16-20 | |||||||
Item 3. | |||||||||
20 | |||||||||
Item 4. | |||||||||
20 | |||||||||
PART II. | OTHER INFORMATION | ||||||||
Item 1. | 21 | ||||||||
Item 1A. | 21 | ||||||||
Item 2. | |||||||||
22 | |||||||||
Item 3. | |||||||||
22 | |||||||||
Item 4. | |||||||||
22 | |||||||||
Item 5. | 22 | ||||||||
Item 6. | 23 | ||||||||
24 |
EX-31.1
EX-31.2
EX-32.1
EX-32.2
2
PART I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(unaudited)
|
| March 27, |
|
| December 26, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Assets |
|
|
|
|
|
|
|
|
Current Assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 144,658 |
|
| $ | 163,282 |
|
Accounts receivable |
|
| 105,042 |
|
|
| 78,358 |
|
Inventories |
|
| 160,671 |
|
|
| 130,910 |
|
Prepaid expenses and other current assets |
|
| 36,061 |
|
|
| 30,230 |
|
Income tax receivable |
|
| 4,115 |
|
|
| 10,393 |
|
Total current assets |
|
| 450,547 |
|
|
| 413,173 |
|
Property, plant and equipment, net |
|
| 636,007 |
|
|
| 623,083 |
|
Operating right-of-use assets |
|
| 56,518 |
|
|
| 58,483 |
|
Goodwill |
|
| 112,529 |
|
|
| 112,529 |
|
Intangible assets |
|
| 103,867 |
|
|
| 103,930 |
|
Third-party production prepayments |
|
| 93,243 |
|
|
| 56,843 |
|
Other assets |
|
| 11,459 |
|
|
| 10,784 |
|
Total assets |
| $ | 1,464,170 |
|
| $ | 1,378,825 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 157,085 |
|
| $ | 121,647 |
|
Accrued expenses and other current liabilities |
|
| 106,361 |
|
|
| 129,544 |
|
Current operating lease liabilities |
|
| 8,183 |
|
|
| 8,232 |
|
Total current liabilities |
|
| 271,629 |
|
|
| 259,423 |
|
Deferred income taxes, net |
|
| 97,284 |
|
|
| 92,665 |
|
Non-current operating lease liabilities |
|
| 57,200 |
|
|
| 59,171 |
|
Other liabilities |
|
| 9,333 |
|
|
| 10,599 |
|
Total liabilities |
| $ | 435,446 |
|
| $ | 421,858 |
|
Commitments and Contingencies (See Note J) |
|
|
|
|
|
|
|
|
Stockholders' Equity: |
|
|
|
|
|
|
|
|
Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,052,711 and 10,004,681 issued and outstanding as of March 27, 2021 and December 26, 2020, respectively |
|
| 101 |
|
|
| 100 |
|
Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,177,983 and 2,177,983 issued and outstanding as of March 27, 2021 and December 26, 2020, respectively |
|
| 22 |
|
|
| 22 |
|
Additional paid-in capital |
|
| 605,962 |
|
|
| 599,737 |
|
Accumulated other comprehensive loss |
|
| (232 | ) |
|
| (252 | ) |
Retained earnings |
|
| 422,871 |
|
|
| 357,360 |
|
Total stockholders' equity |
| $ | 1,028,724 |
|
| $ | 956,967 |
|
Total liabilities and stockholders' equity |
| $ | 1,464,170 |
|
| $ | 1,378,825 |
|
March 28, | December 28, | |||||||
2020 | 2019 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 129,504 | $ | 36,670 | ||||
Accounts receivable | 58,253 | 54,404 | ||||||
Inventories | 124,529 | 106,038 | ||||||
Prepaid expenses and other current assets | 14,894 | 12,077 | ||||||
Income tax receivable | 8,823 | 9,459 | ||||||
Total current assets | 336,003 | 218,648 | ||||||
Property, plant and equipment, net | 550,030 | 541,068 | ||||||
Operating right-of-use assets | 63,039 | 53,758 | ||||||
Goodwill | 112,529 | 112,529 | ||||||
Intangible assets | 104,209 | 104,272 | ||||||
Other assets | 27,754 | 23,782 | ||||||
Total assets | $ | 1,193,564 | $ | 1,054,057 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 92,247 | $ | 76,374 | ||||
Accrued expenses and other current liabilities | 89,078 | 99,107 | ||||||
Current operating lease liabilities | 5,459 | 5,168 | ||||||
Total current liabilities | 186,784 | 180,649 | ||||||
Deferred income taxes, net | 77,389 | 75,010 | ||||||
Line of credit | 100,000 | — | ||||||
Non-current operating lease liabilities | 63,248 | 53,940 | ||||||
Other liabilities | 7,907 | 8,822 | ||||||
Total liabilities | 435,328 | 318,421 | ||||||
Commitments and Contingencies (See Note K) | ||||||||
Stockholders’ Equity: | ||||||||
Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 9,559,200 and 9,370,526 issued and outstanding as of March 28, 2020 and December 28, 2019, respectively | 96 | 94 | ||||||
Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,522,983 and 2,672,983 issued and outstanding as of March 28, 2020 and December 28, 2019, respectively | 25 | 27 | ||||||
Additional paid-in capital | 576,208 | 571,784 | ||||||
Accumulated other comprehensive loss, net of tax | (1,727 | ) | (1,669 | ) | ||||
Retained earnings | 183,634 | 165,400 | ||||||
Total stockholders’ equity | 758,236 | 735,636 | ||||||
Total liabilities and stockholders’ equity | $ | 1,193,564 | $ | 1,054,057 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
3
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OFINCOME AND COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited)
|
| Thirteen weeks ended |
| |||||
|
| March 27, |
|
| March 28, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Revenue |
| $ | 581,709 |
|
| $ | 352,225 |
|
Less excise taxes |
|
| 36,629 |
|
|
| 21,660 |
|
Net revenue |
|
| 545,080 |
|
|
| 330,565 |
|
Cost of goods sold |
|
| 295,450 |
|
|
| 182,592 |
|
Gross profit |
|
| 249,630 |
|
|
| 147,973 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Advertising, promotional and selling expenses |
|
| 140,859 |
|
|
| 97,891 |
|
General and administrative expenses |
|
| 31,946 |
|
|
| 27,029 |
|
Impairment of assets |
|
| 227 |
|
|
| 1,521 |
|
Total operating expenses |
|
| 173,032 |
|
|
| 126,441 |
|
Operating income |
|
| 76,598 |
|
|
| 21,532 |
|
Other (expense) income, net: |
|
|
|
|
|
|
|
|
Interest (expense) income, net |
|
| (29 | ) |
|
| 63 |
|
Other (expense) income, net |
|
| (6 | ) |
|
| (360 | ) |
Total other (expense) income, net |
|
| (35 | ) |
|
| (297 | ) |
Income before income tax provision |
|
| 76,563 |
|
|
| 21,235 |
|
Income tax provision |
|
| 10,998 |
|
|
| 3,001 |
|
Net income |
| $ | 65,565 |
|
| $ | 18,234 |
|
Net income per common share - basic |
| $ | 5.34 |
|
| $ | 1.50 |
|
Net income per common share - diluted |
| $ | 5.26 |
|
| $ | 1.49 |
|
Weighted-average number of common shares - basic |
|
| 12,271 |
|
|
| 12,157 |
|
Weighted-average number of common shares - diluted |
|
| 12,457 |
|
|
| 12,186 |
|
Net income |
| $ | 65,565 |
|
| $ | 18,234 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| 20 |
|
|
| (58 | ) |
Comprehensive income |
| $ | 65,585 |
|
| $ | 18,176 |
|
Thirteen weeks ended | ||||||||
March 28, 2020 | March 30, 2019 | |||||||
Revenue | $ | 352,225 | $ | 267,559 | ||||
Less excise taxes | 21,660 | 15,908 | ||||||
Net revenue | 330,565 | 251,651 | ||||||
Cost of goods sold | 182,592 | 127,111 | ||||||
Gross profit | 147,973 | 124,540 | ||||||
Operating expenses: | ||||||||
Advertising, promotional and selling expenses | 97,891 | 71,723 | ||||||
General and administrative expenses | 27,029 | 23,374 | ||||||
Impairment of assets | 1,521 | — | ||||||
Total operating expenses | 126,441 | 95,097 | ||||||
Operating income | 21,532 | 29,443 | ||||||
Other (expense) income, net: | ||||||||
Interest income, net | 63 | 637 | ||||||
Other (expense) income, net | (360 | ) | (252 | ) | ||||
Total other (expense) income, net | (297 | ) | 385 | |||||
Income before income tax provision | 21,235 | 29,828 | ||||||
Income tax provision | 3,001 | 6,134 | ||||||
Net income | $ | 18,234 | $ | 23,694 | ||||
Net income per common share - basic | $ | 1.50 | $ | 2.04 | ||||
Net income per common share - diluted | $ | 1.49 | $ | 2.02 | ||||
Weighted-average number of common shares - Class A basic | 9,425 | 8,606 | ||||||
Weighted-average number of common shares - Class B basic | 2,645 | 2,918 | ||||||
Weighted-average number of common shares - | 12,186 | 11,636 | ||||||
Net income | $ | 18,234 | $ | 23,694 | ||||
Other comprehensive income: | ||||||||
Foreign currency translation adjustment | (58 | ) | 37 | |||||
Comprehensive income | $ | 18,176 | $ | 23,731 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
4
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
|
| Thirteen weeks ended |
| |||||
|
| March 27, 2021 |
|
| March 28, 2020 |
| ||
Cash flows provided by operating activities: |
|
|
|
|
|
|
|
|
Net income |
| $ | 65,565 |
|
| $ | 18,234 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 16,996 |
|
|
| 15,945 |
|
Impairment of assets |
|
| 227 |
|
|
| 1,521 |
|
Gain on disposal of property, plant and equipment |
|
| (36 | ) |
|
| — |
|
Change in right-of-use assets |
|
| 1,965 |
|
|
| 1,807 |
|
Credit loss (recovery) expense |
|
| (48 | ) |
|
| 552 |
|
Stock-based compensation expense |
|
| 4,957 |
|
|
| 2,566 |
|
Deferred income taxes |
|
| 4,565 |
|
|
| 2,379 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| (26,723 | ) |
|
| (4,436 | ) |
Inventories |
|
| (30,581 | ) |
|
| (23,856 | ) |
Prepaid expenses, income tax receivable and other current assets |
|
| (14,369 | ) |
|
| (2,077 | ) |
Third-party production prepayments |
|
| (21,584 | ) |
|
| 1,234 |
|
Other assets |
|
| — |
|
|
| (41 | ) |
Accounts payable |
|
| 36,912 |
|
|
| 14,264 |
|
Accrued expenses and other current liabilities |
|
| (16,095 | ) |
|
| (7,579 | ) |
Change in operating lease liabilities |
|
| (2,020 | ) |
|
| (1,489 | ) |
Other liabilities |
|
| 76 |
|
|
| (100 | ) |
Net cash provided by operating activities |
|
| 19,807 |
|
|
| 18,924 |
|
Cash flows used in investing activities: |
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
| (39,278 | ) |
|
| (27,394 | ) |
Proceeds from disposal of property, plant and equipment |
|
| 320 |
|
|
| 35 |
|
Other investing activities |
|
| 145 |
|
|
| 96 |
|
Net cash used in investing activities |
|
| (38,813 | ) |
|
| (27,263 | ) |
Cash flows provided by financing activities: |
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options and sale of investment shares |
|
| 6,768 |
|
|
| 2,941 |
|
Net cash paid on note payable and finance leases |
|
| (435 | ) |
|
| (209 | ) |
Cash borrowed on line of credit |
|
| — |
|
|
| 100,000 |
|
Payment of tax withholding on stock-based payment awards and investment shares |
|
| (5,951 | ) |
|
| (1,559 | ) |
Net cash provided by financing activities |
|
| 382 |
|
|
| 101,173 |
|
Change in cash and cash equivalents |
|
| (18,624 | ) |
|
| 92,834 |
|
Cash and cash equivalents at beginning of year |
|
| 163,282 |
|
|
| 36,670 |
|
Cash and cash equivalents at end of period |
| $ | 144,658 |
|
| $ | 129,504 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Income taxes paid |
| $ | 4 |
|
| $ | 5 |
|
Cash paid for amounts included in measurement of lease liabilities |
|
|
|
|
|
|
|
|
Operating cash flows from operating leases |
| $ | 2,602 |
|
| $ | 2,097 |
|
Operating cash flows from finance leases |
| $ | 34 |
|
| $ | 22 |
|
Financing cash flows from finance leases |
| $ | 364 |
|
| $ | 141 |
|
Right-of-use-assets obtained in exchange for operating lease obligations |
| $ | - |
|
| $ | 11,088 |
|
Change in purchase of property, plant and equipment in accounts payable and accrued expenses |
| $ | (8,997 | ) |
| $ | (1,029 | ) |
Class A Common Shares | Class A Common Stock, Par | Class B Common Shares | Class B Common Stock, Par | Additional Paid-in Capital | Accumulated Other Comprehensive Loss, net of tax | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||||||
Balance at December 28, 2019 | 9,371 | $ | 94 | 2,673 | $ | 27 | $ | 571,784 | $ | (1,669 | ) | $ | 165,400 | $ | 735,636 | |||||||||||||||||
Net income | 18,234 | 18,234 | ||||||||||||||||||||||||||||||
Stock options exercised and restricted shares activities | 38 | — | 1,858 | 1,858 | ||||||||||||||||||||||||||||
Stock-based compensation expense | 2,566 | 2,566 | ||||||||||||||||||||||||||||||
Conversion from Class B to Class A | 150 | 2 | (150 | ) | (2 | ) | — | |||||||||||||||||||||||||
Currency translation adjustment | (58 | ) | (58 | ) | ||||||||||||||||||||||||||||
Balance at March 28 , 2020 | 9,559 | $ | 96 | 2,523 | $ | 25 | $ | 576,208 | $ | (1,727 | ) | $ | 183,634 | $ | 758,236 | |||||||||||||||||
Class A Common Shares | Class A Common Stock, Par | Class B Common Shares | Class B Common Stock, Par | Additional Paid-in Capital | Accumulated Other Comprehensive Loss, net of tax | Retained Earnings | Total Stockholders’ Equity | |||||||||||||||||||||||||
Balance at December 29, 2018 | 8,580 | $ | 86 | 2,918 | $ | 29 | $ | 405,711 | $ | (1,197 | ) | $ | 55,688 | $ | 460,317 | |||||||||||||||||
Net income | 23,694 | 23,694 | ||||||||||||||||||||||||||||||
Stock options exercised and restricted shares activities | 54 | — | 3,704 | 3,704 | ||||||||||||||||||||||||||||
Stock-based compensation expense | 2,066 | 2,066 | ||||||||||||||||||||||||||||||
Currency translation adjustment | 37 | 37 | ||||||||||||||||||||||||||||||
Balance at March 30, 2019 | 8,634 | $ | 86 | 2,918 | $ | 29 | $ | 411,481 | $ | (1,160 | ) | $ | 79,382 | $ | 489,818 | |||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
For the thirteen weeks ended March 27, 2021 and March 28, 2020
(in thousands)
(unaudited)
|
|
|
|
|
| Class A |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| ||
|
| Class A |
|
| Common |
|
| Class B |
|
| Class B |
|
| Additional |
|
| Other |
|
|
|
|
|
| Total |
| |||||||
|
| Common |
|
| Stock, |
|
| Common |
|
| Common |
|
| Paid-in |
|
| Comprehensive |
|
| Retained |
|
| Stockholders’ |
| ||||||||
|
| Shares |
|
| Par |
|
| Shares |
|
| Stock, Par |
|
| Capital |
|
| Loss |
|
| Earnings |
|
| Equity |
| ||||||||
Balance at December 26, 2020 |
|
| 10,005 |
|
| $ | 100 |
|
|
| 2,178 |
|
| $ | 22 |
|
| $ | 599,737 |
|
| $ | (252 | ) |
| $ | 357,360 |
|
| $ | 956,967 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 65,565 |
|
|
| 65,565 |
|
Stock options exercised and restricted shares activities |
|
| 48 |
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
| 1,268 |
|
|
|
|
|
|
|
|
|
|
| 1,269 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4,957 |
|
|
|
|
|
|
|
|
|
|
| 4,957 |
|
Adoption of ASU 2019-12, Simplifying the accounting for income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (54 | ) |
|
| (54 | ) |
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 20 |
|
|
|
|
|
|
| 20 |
|
Balance at March 27, 2021 |
|
| 10,053 |
|
| $ | 101 |
|
|
| 2,178 |
|
| $ | 22 |
|
| $ | 605,962 |
|
| $ | (232 | ) |
| $ | 422,871 |
|
| $ | 1,028,724 |
|
|
|
|
|
|
| Class A |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
|
|
|
| ||
|
| Class A |
|
| Common |
|
| Class B |
|
| Class B |
|
| Additional |
|
| Other |
|
|
|
|
|
| Total |
| |||||||
|
| Common |
|
| Stock, |
|
| Common |
|
| Common |
|
| Paid-in |
|
| Comprehensive |
|
| Retained |
|
| Stockholders’ |
| ||||||||
|
| Shares |
|
| Par |
|
| Shares |
|
| Stock, Par |
|
| Capital |
|
| Loss, net of tax |
|
| Earnings |
|
| Equity |
| ||||||||
Balance at December 28, 2019 |
|
| 9,371 |
|
| $ | 94 |
|
|
| 2,673 |
|
| $ | 27 |
|
| $ | 571,784 |
|
| $ | (1,669 | ) |
| $ | 165,400 |
|
| $ | 735,636 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 18,234 |
|
|
| 18,234 |
|
Stock options exercised and restricted shares activities |
|
| 38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,858 |
|
|
|
|
|
|
|
|
|
|
| 1,858 |
|
Stock-based compensation expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,566 |
|
|
|
|
|
|
|
|
|
|
| 2,566 |
|
Conversion from Class B to Class A |
|
| 150 |
|
|
| 2 |
|
|
| (150 | ) |
|
| (2 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (58 | ) |
|
|
|
|
|
| (58 | ) |
Balance at March 28, 2020 |
|
| 9,559 |
|
| $ | 96 |
|
|
| 2,523 |
|
| $ | 25 |
|
| $ | 576,208 |
|
| $ | (1,727 | ) |
| $ | 183,634 |
|
| $ | 758,236 |
|
Thirteen weeks ended | ||||||||
March 28, | March 30, | |||||||
2020 | 2019 | |||||||
Cash flows provided by operating activities: | ||||||||
Net income | $ | 18,234 | $ | 23,694 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 15,945 | 12,863 | ||||||
Impairment of assets | 1,521 | — | ||||||
Loss on disposal of property, plant and equipment | — | 271 | ||||||
Change in ROU assets | 1,807 | 859 | ||||||
Credit loss expense | 552 | — | ||||||
Stock-based compensation expense | 2,566 | 2,066 | ||||||
Deferred income taxes | 2,379 | 1,029 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (4,436 | ) | (20,452 | ) | ||||
Inventories | (23,856 | ) | (15,353 | ) | ||||
Prepaid expenses, income tax receivable and other assets | (884 | ) | 1,336 | |||||
Accounts payable | 14,264 | 14,400 | ||||||
Accrued expenses and other current liabilities | (7,579 | ) | (6,465 | ) | ||||
Change in operating lease liability | (1,489 | ) | (624 | ) | ||||
Other liabilities | (100 | ) | 19 | |||||
Net cash provided by operating activities | 18,924 | 13,643 | ||||||
Cash flows used in investing activities: | ||||||||
Purchases of property, plant and equipment | (27,394 | ) | (22,080 | ) | ||||
Proceeds from disposal of property, plant and equipment | 35 | 1 | ||||||
Other investing activities | 96 | 28 | ||||||
Net cash used in investing activities | (27,263 | ) | (22,051 | ) | ||||
Cash flows provided by financing activities: | ||||||||
Proceeds from exercise of stock options and sale of investment shares | 2,941 | 2,968 | ||||||
Net cash paid on note payable and finance leases | (209 | ) | (72 | ) | ||||
Payment of tax withholdings on stock-based payment awards and investment shares | (1,559 | ) | — | |||||
Cash borrowed on line of credit | 100,000 | — | ||||||
Net cash provided by financing activities | 101,173 | 2,896 | ||||||
Change in cash and cash equivalents | 92,834 | (5,512 | ) | |||||
Cash and cash equivalents at beginning of year | 36,670 | 108,399 | ||||||
Cash and cash equivalents at end of period | $ | 129,504 | $ | 102,887 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Income taxes paid | $ | 5 | $ | 207 | ||||
Cash paid for amounts included in measurement of lease liabilities | ||||||||
Operating cash flows from operating leases | $ | 2,097 | $ | 885 | ||||
Operating cash flows from finance leases | $ | 22 | $ | 8 | ||||
Financing cash flows from finance leases | $ | 141 | $ | 7 | ||||
Right-of-use assets obtained in exchange for operating lease obligations | $ | 11,088 | $ | 27,034 | ||||
Right-of-use assets obtained in exchange for finance lease obligations | $ | — | $ | 3 | ||||
Change in purchase of property, plant and equipment in accounts payable and accrued expenses | $ | (1,029 | ) | $ | 118 | |||
The accompanying notes are an integral part of these consolidated financial statements.
6
THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A.Organization and Basis of Presentation
The Boston Beer Company, Inc. and certain subsidiaries (the “Company”) are engaged in the business of selling alcohol beverages throughout the United States and in selected international markets, under the trade names “The Boston Beer Company
The accompanying unaudited consolidated balance sheet as of March 28, 2020,27, 2021, and the unaudited consolidated statements of income and comprehensive income, stockholders’ equity, and cash flows for the interim periods ended March 28, 202027, 2021 and March 30, 201928, 2020 have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnotes normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. All intercompany accounts and transactions have been eliminated. These consolidated financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form
In the opinion of the Company’s management, the Company’s unaudited consolidated balance sheet as of March 28, 202027, 2021 and the results of its consolidated operations, stockholders’ equity, and cash flows for the interim periods ended March 28, 202027, 2021 and March 30, 2019,28, 2020, reflect all adjustments (consisting only of normal and recurring adjustments) necessary to present fairly the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.
B.COVID-19 Pandemic
The Company began seeing the impact of the
Total (In | ||||
Cash and cash equivalents | $ | 7,476 | ||
Accounts receivable | 8,081 | |||
Inventories | 9,286 | |||
Prepaid expenses and other current assets | 847 | |||
Property, plant and equipment | 106,964 | |||
Goodwill | 108,846 | |||
Brand | 98,500 | |||
Other intangible assets | 3,800 | |||
Other assets | 378 | |||
Total assets acquired | 344,178 | |||
Accounts payable | 3,861 | |||
Accrued expenses and other current liabilities | 4,085 | |||
Deferred income taxes | 18,437 | |||
Other liabilities | 59 | |||
Total liabilities assumed | 26,442 | |||
Net assets acquired | $ | 317,736 | ||
Cash consideration | $ | 172,993 | ||
Nominal value of equity issued | 162,999 | |||
Fair Value reduction due to liquidity | (18,256 | ) | ||
Estimated total purchase price | $ | 317,736 | ||
C. Goodwill and are sold to the same types of customers in similar size quantities at similar price points and through the same channels of distribution.
Thirteen weeks ended | ||||||||
March 28, | March 30, | |||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Net revenue | $ | 330,565 | $ | 276,739 | ||||
Net income | $ | 18,234 | $ | 24,664 | ||||
Basic earnings per share | $ | 1.50 | $ | 2.04 | ||||
Diluted earnings per share | $ | 1.49 | $ | 2.02 |
There were no0 changes in the carrying value of goodwill during the thirteen weeks ended March 28, 202027, 2021 and March 30, 2019.
The Company’s intangible assets as of March 28, 202027, 2021 and December 28, 201926, 2020 were as follows:
|
|
|
|
|
| As of March 27, 2021 |
|
| As of December 26, 2020 |
| ||||||||||||||||||
|
| Estimated Useful |
|
| Gross Carrying |
|
| Accumulated |
|
| Net Book |
|
| Gross Carrying |
|
| Accumulated |
|
| Net Book |
| |||||||
|
| Life (Years) |
|
| Value |
|
| Amortization |
|
| Value |
|
| Value |
|
| Amortization |
|
| Value |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
| |
Customer Relationships |
|
| 15 |
|
| $ | 3,800 |
|
| $ | (443 | ) |
| $ | 3,357 |
|
| $ | 3,800 |
|
| $ | (380 | ) |
| $ | 3,420 |
|
Trade Names |
| Indefinite |
|
|
| 100,510 |
|
|
| — |
|
|
| 100,510 |
|
|
| 100,510 |
|
|
| — |
|
|
| 100,510 |
| |
Total intangible assets |
|
|
|
|
| $ | 104,310 |
|
| $ | (443 | ) |
| $ | 103,867 |
|
| $ | 104,310 |
|
| $ | (380 | ) |
| $ | 103,930 |
|
As of March 28, 2020 | As of December 28, 2019 | |||||||||||||||||||||||||||
Estimated Useful | Gross Carrying | Accumulated | Net Book | Gross Carrying | Accumulated | Net Book | ||||||||||||||||||||||
Life (Years) | Value | Amortization | Value | Value | Amortization | Value | ||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||
Custmer Relationships | 15 | $ | 3,800 | $ | (190 | ) | $ | 3,610 | $ | 3,800 | $ | (127 | ) | $ | 3,673 | |||||||||||||
Trade Names | Indefinite | 100,599 | — | 100,599 | 100,599 | — | 100,599 | |||||||||||||||||||||
Total intangible assets | $ | 104,399 | $ | (190 | ) | $ | 104,209 | $ | 104,399 | $ | (127 | ) | $ | 104,272 | ||||||||||||||
7
The Company acquired intangible assets as part of the Dogfish Head Transactionin fiscal year 2019 that consists of $98.5 million for the value of the Dogfish Head brand name and $3.8 million for the value of customer relationships. The customer relationship intangible will be amortized on a straight-line basis over the 15 year useful life. Amortization expense in the thirteen weeks ended March 28, 202027, 2021 was approximately $63,000. The Company expects to record amortization expense as follows over the remaining current year and the five subsequent years:
Fiscal Year |
| Amount (in thousands) |
| |
Remainder of 2021 |
| $ | 190 |
|
2022 |
|
| 253 |
|
2023 |
|
| 253 |
|
2024 |
|
| 253 |
|
2025 |
|
| 253 |
|
2026 |
|
| 253 |
|
Fiscal Year | Amount (in thou sands) | |||
Remainder of 2020 | $ | 190 | ||
2021 | 253 | |||
2022 | 253 | |||
2023 | 253 | |||
2024 | 253 | |||
2025 | 253 |
D.Recent Accounting Pronouncements
Accounting Pronouncements Recently Adopted
In December 2019, the FASB issued ASU
E. Revenue Recognition
During the adoptionthirteen weeks ended March 27, 2021 approximately 97% of this guidancethe Company’s revenue was from shipments of its products to have a material impact on its consolidated financial statements.
The Company recognizes revenue when obligations under the terms of a contract with its customer are satisfied; generally, this occurs with the transfer of control of its products. Revenue is measured as the amount of consideration expected to be received in exchange for transferring products. If the conditions for revenue recognition are not met, the Company defers the revenue until all conditions are met. As of March 28, 202027, 2021 and December 28, 2019,26, 2020, the Company has deferred $13.9$24.3 million and $7.0$13.9 million, respectively, in revenue related to product shipped prior to these dates. These amounts are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.
Customer promotional discount programs are entered into by the Company with distributors for certain periods of time. The reimbursements for discounts to distributors are recorded as reductions to net revenue and were $8.2$23.4 million and $6.2$8.2 million for the thirteen weeks ended March 28, 202027, 2021 and March 30, 2019,28, 2020, respectively. The agreed-upon discount rates are applied to certain distributors’distributors' sales to retailers, based on volume metrics, in order to determine the total discounted amount. The computation of the discount allowance requires that management make certain estimates and assumptions that affect the timing and amounts of revenue and liabilities recorded. Actual promotional discounts owed and paid have historically been in line with allowances recorded by the Company,Company; however, the amounts could differ from the estimated allowance.
Customer programs and incentives are a common practice in the alcohol beverage industry. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses,
8
when invoices are received; however certain estimates are required at the period end. Estimates are based on historical and projected experience for each type of program or customer and have historically been in line with actual costs incurred.
Shipment volume for the quarter was significantly higher than depletions volume and resulted in significantly higher distributor inventory as of March 28, 202027, 2021 when compared to March 30, 2019.28, 2020. The Company believes distributor inventory as of March 28, 202027, 2021 averaged approximately 6 weeks7 weeks on hand and was at an appropriate level, based on the supply chain capacity constraints and inventory requirements to support the forecasted growth of Truly and Twisted Tea brands over the summer. The Company expects wholesaler inventory levels in terms of weeks on hand to return to more normal levelsbe between 3 and 7 weeks for the remainder of approximately 4 weeks on hand later in the year.
F. Inventories
Inventories consist of raw materials, work in process and finished goods. Raw materials, which principally consist of hops,
|
| March 27, 2021 |
|
| December 26, 2020 |
| ||
|
| (in thousands) |
| |||||
Current inventory: |
|
|
|
|
|
|
|
|
Raw materials |
| $ | 75,545 |
|
| $ | 69,272 |
|
Work in process |
|
| 16,679 |
|
|
| 16,846 |
|
Finished goods |
|
| 68,447 |
|
|
| 44,792 |
|
Total current inventory |
|
| 160,671 |
|
|
| 130,910 |
|
Long term inventory |
|
| 10,459 |
|
|
| 9,639 |
|
Total inventory |
| $ | 171,130 |
|
| $ | 140,549 |
|
March 28, | December 28, | |||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Current inventory: | ||||||||
Raw materials | $ | 73,267 | $ | 61,522 | ||||
Work in process | 14,775 | 12,631 | ||||||
Finished goods | 36,487 | 31,885 | ||||||
Total current inventory | 124,529 | 106,038 | ||||||
Long term inventory | 15,413 | 10,048 | ||||||
Total inventory | $ | 139,942 | $ | 116,086 | ||||
Classification | Leases | |||||||||
March 28, | December 28, | |||||||||
2020 | 2019 | |||||||||
(in thousands) | ||||||||||
Right-of-use assets | ||||||||||
Operating lease assets | Operating right-of-use assets | $ | 63,039 | $ | 53,758 | |||||
Finance lease assets | Property, plant and equipment, net | 2,398 | 2,531 | |||||||
Lease Liabilities | ||||||||||
Current | ||||||||||
Operating lease liabilities | Current operating lease liabilities | 5,459 | 5,168 | |||||||
Finance lease liabilities | Accrued expenses and other current liabilities | 551 | 546 | |||||||
Non-current | ||||||||||
Operating lease liabilities | Non-current operating lease liabilities | 63,248 | 53,940 | |||||||
Finance lease liabilities | Other liabilities | 1,896 | 2,042 |
Finance Leases | ||||||||
March 28, | December 28, | |||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Gross value | $ | 2,837 | $ | 2,837 | ||||
Accumulated amortization | (439 | ) | (306 | ) | ||||
Carrying value | $ | 2,398 | $ | 2,531 | ||||
G.Third-party production prepayments
During the thirteen weeks ended March 28,27, 2021, the Company brewed and packaged approximately 57% of its volume at Company-owned breweries. In the normal course of its business, the Company has historically entered into various production arrangements with other brewing companies. Pursuant to these arrangements, the Company generally supplies raw materials and packaging to those brewing companies, and incurs conversion fees for labor at the time the liquid is produced and packaged. The Company has made payments for capital improvements at these third-party brewing facilities that it expenses over the period of the contracts. As of March 27, 2021, and December 26, 2020 and March 30, 2019total third-party production prepayments were as follows:
|
| March 27, 2021 |
|
| December 26, 2020 |
| ||
|
| (in thousands) |
| |||||
Prepaid expenses and other current assets |
| $ | - |
|
| $ | 14,816 |
|
Third-party production prepayments |
|
| 93,243 |
|
|
| 56,843 |
|
Total third-party production prepayments |
| $ | 93,243 |
|
| $ | 71,659 |
|
Lease Cost | ||||||||
March 28, | March 30, | |||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Operating lease cost | $ | 2,415 | $ | 1,128 | ||||
Variable lease costs not included in liability | 485 | 199 | ||||||
Finance lease cost: | ||||||||
Amortization of right-of-use asset | 133 | — | ||||||
Interest on lease liabilities | 22 | — | ||||||
Total finance lease cost | $ | 155 | $ | — | ||||
The Company will expense the total prepaid amount of lease liabilities$93.2 million as a component of cost of goods sold over the contractual period ending December 31, 2025.
During the thirteen weeks ended March 27, 2021, the Company entered into a master transaction agreement with one of its existing brewing services providers to ensure access to capacity at a new location and continued access at certain existing locations. The agreement is effective upon the closing of the purchase of the new location by the third-party brewing services provider, expected to complete in April 2021. As part of the master transaction agreement, the Company paid $10.0 million for capital improvements for the new location, which amount is included within the third-party production prepayments balance as of March 28, 2020 were as follows:
Operating Leases | Capital Leases | Weighted-Average | ||||||||||||||
Operating | Capital | |||||||||||||||
(in thousands) | ||||||||||||||||
2020 | $ | 3,962 | $ | 464 | ||||||||||||
2021 | 9,816 | 626 | ||||||||||||||
2022 | 9,695 | 626 | ||||||||||||||
2023 | 9,694 | 626 | ||||||||||||||
2024 | 9,470 | 265 | ||||||||||||||
Thereafter | 39,524 | 23 | ||||||||||||||
Total lease payments | 82,161 | 2,630 | ||||||||||||||
Less imputed interest (based on 3.5% weighted-average discount rate) | (13,454 | ) | (183 | ) | ||||||||||||
Present value of lease liability | $ | 68,707 | $ | 2,447 | 9.4 | 4.5 | ||||||||||
9
reduced below the minimum annual volume commitments and the Company estimates that shortfall fees will be incurred, the Company will expense the estimated shortfall fees in the period when incurring the shortfall fees becomes probable. As of March 28, 2020, and as such, have not been recognized on27, 2021, if volume for the Company’s Consolidated balance sheet. These leases are expected to commence during the second quarter of 2020 with aremaining term of three years.
H.Net Income per Share
The Company calculates net income per share using the
The Class A Common Stock has no voting rights, except (1) as required by law, (2) for the election of Class A Directors, and (3) that the approval of the holders of the Class A Common Stock is required for (a) certain future authorizations or issuances of additional securities which have rights senior to Class A Common Stock, (b) certain alterations of rights or terms of the Class A or Class B Common Stock as set forth in the Articles of Organization of the Company, (c) other amendments of the Articles of Organization of the Company, (d) certain mergers or consolidations with, or acquisitions of, other entities, and (e) sales or dispositions of any significant portion of the Company’s assets.
The Class B Common Stock has full voting rights, including the right to (1) elect a majority of the members of the Company’s Board of Directors and (2) approve all (a) amendments to the Company’s Articles of Organization, (b) mergers or consolidations with, or acquisitions of, other entities, (c) sales or dispositions of any significant portion of the Company’s assets, and (d) equity-based and other executive compensation and other significant corporate matters. The Company’s Class B Common Stock is not listed for trading. Each share of the Class B Common Stock is freely convertible into one share of Class A Common Stock, upon request of the respective Class B holder, and participates equally in dividends.
The Company’s unvested share-based payment awards include unvested shares (1) issued under the Company’s investment share program, which permits employees who have been with the Company for at least one year to purchase shares of Class A Common Stock and to purchase those shares at a discount ranging from 20% to 40% below market value based on years of employment starting after two years of employment, and (2) awarded as restricted stock awards at the discretion of the Company’s Board of Directors. The investment shares and restricted stock awards generally vest over five years in equal number of shares. The unvested shares participate equally in dividends. See Note O for a discussion of the current year unvested stock awards and issuances.
Included in the computation of net income per diluted common share are dilutive outstanding stock options and restricted stock that are vested or expected to vest. At its discretion, the Board of Directors grants stock options and restricted stock to senior management and certain key employees. The terms of the employee stock options are determined by the Board of Directors at the time of grant. To date, stock options granted to employees vest over various service periods and/or based on the attainment of certain performance criteria and generally expire after ten years. In December 2018, the Employee Equity Incentive Plan was amended to permit the grant of restricted stock units. The restricted stock units generally vest over four years in equal number of shares. Each restricted stock unit represents an unfunded and unsecured right to receive one share of Class A Stock upon satisfaction of the vesting criteria. The unvested shares participate equally in dividends and are forfeitable. Prior to March 1, 2019, the Company granted restricted stock awards, generally vesting over five years in equal number of shares. The Company also grants stock options to its
The following table sets forth the computation of basic net income per share using the two-class method:
|
| Thirteen weeks ended |
| |||||
|
| March 27, 2021 |
|
| March 28, 2020 |
| ||
|
| (in thousands, except per share data) |
| |||||
Net income |
| $ | 65,565 |
|
| $ | 18,234 |
|
Allocation of net income for basic: |
|
|
|
|
|
|
|
|
Class A Common Stock |
| $ | 53,628 |
|
| $ | 14,136 |
|
Class B Common Stock |
|
| 11,638 |
|
|
| 3,967 |
|
Unvested participating shares |
|
| 299 |
|
|
| 131 |
|
|
| $ | 65,565 |
|
| $ | 18,234 |
|
Weighted average number of shares for basic: |
|
|
|
|
|
|
|
|
Class A Common Stock |
|
| 10,037 |
|
|
| 9,425 |
|
Class B Common Stock* |
|
| 2,178 |
|
|
| 2,645 |
|
Unvested participating shares |
|
| 56 |
|
|
| 87 |
|
|
|
| 12,271 |
|
|
| 12,157 |
|
Net income per share for basic: |
|
|
|
|
|
|
|
|
Class A Common Stock |
| $ | 5.34 |
|
| $ | 1.50 |
|
Class B Common Stock |
| $ | 5.34 |
|
| $ | 1.50 |
|
Thirteen weeks ended | ||||||||
March 28, | March 30, | |||||||
2020 | 2019 | |||||||
(in thousands, except per share data) | ||||||||
Net income | $ | 18,234 | $ | 23,694 | ||||
Allocation of net income for basic: | ||||||||
Class A Common Stock | $ | 14,136 | $ | 17,525 | ||||
Class B Common Stock | 3,967 | 5,942 | ||||||
Unvested participating shares | 131 | 227 | ||||||
$ | 18,234 | $ | 23,694 | |||||
Weighted average number of shares for basic: | ||||||||
Class A Common Stock | 9,425 | 8,606 | ||||||
Class B Common Stock* | 2,645 | 2,918 | ||||||
Unvested participating shares | 87 | 111 | ||||||
12,157 | 11,635 | |||||||
Net income per share for basic: | ||||||||
Class A Common Stock | $ | 1.50 | $ | 2.04 | ||||
Class B Common Stock | $ | 1.50 | $ | 2.04 | ||||
* | Change in Class B Common Stock resulted from the conversion |
Net Income per Common Share
The Company calculates diluted net income per share for common stock using the more dilutive of (1) the treasury stock method, or (2) the
The following table sets forth the computation of diluted net income per share, assuming the conversion of all Class B Common Stock into Class A Common Stock for the thirteen weeks ended March 27, 2021 and usingfor the thirteen weeks ended March 28, 2020:
|
| Thirteen weeks ended |
| |||||||||||||||||||||
|
| March 27, 2021 |
|
| March 28, 2020 |
| ||||||||||||||||||
|
| Earnings to Common Shareholders |
|
| Common Shares |
|
| EPS |
|
| Earnings to Common Shareholders |
|
| Common Shares |
|
| EPS |
| ||||||
|
| (in thousands, except per share data) |
| |||||||||||||||||||||
As reported - basic |
| $ | 53,628 |
|
|
| 10,037 |
|
| $ | 5.34 |
|
| $ | 14,136 |
|
|
| 9,425 |
|
| $ | 1.50 |
|
Add: effect of dilutive potential common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based awards |
|
| — |
|
|
| 162 |
|
|
|
|
|
|
| — |
|
|
| 116 |
|
|
|
|
|
Class B Common Stock |
|
| 11,638 |
|
|
| 2,178 |
|
|
|
|
|
|
| 3,967 |
|
|
| 2,645 |
|
|
|
|
|
Net effect of unvested participating shares |
| 299 |
|
|
| 80 |
|
|
|
|
|
|
| 1 |
|
|
| — |
|
|
|
|
| |
Net income per common share - diluted |
| $ | 65,565 |
|
|
| 12,457 |
|
| $ | 5.26 |
|
| $ | 18,104 |
|
|
| 12,186 |
|
| $ | 1.49 |
|
In accordance with the treasury stock method, for unvested participating shares:
Thirteen weeks ended | ||||||||||||||||||||||||
March 28, 2020 | March 30, 2019 | |||||||||||||||||||||||
Earnings to Common Shareholders | Common Shares | EPS | Earnings to Common Shareholders | Common Shares | EPS | |||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||||||
As reported - basic | $ | 14,136 | 9,425 | $ | 1.50 | $ | 17,525 | 8,606 | $ | 2.04 | ||||||||||||||
Add: effect of dilutive potential common shares | ||||||||||||||||||||||||
Share-based awards | — | 116 | — | 112 | ||||||||||||||||||||
Class B Common Stock | 3,967 | 2,645 | 5,942 | 2,918 | ||||||||||||||||||||
Net effect of unvested participating shares | 1 | — | 2 | — | ||||||||||||||||||||
Net income per common share - diluted | $ | 18,104 | 12,186 | $ | 1.49 | $ | 23,469 | 11,636 | $ | 2.02 | ||||||||||||||
11
were outstanding as of March 28, 2020 and March 30, 2019, respectively, but not included in computing diluted income per common share because the performance criteria of these stock options were not met as of the end of the reporting period.
I.a key employee.
Comprehensive income or loss represents net income or loss plus defined benefit plans liability adjustment, net of tax effect and foreign currency translation adjustment. The defined benefit plans liability and foreign currency translation adjustments for the interim periods ended March 28, 202027, 2021 and March 28, 20192020 were not material.
J. Commitments and Contingencies
Contract Obligations
As of March 27, 2021, projected cash outflows under non-cancelable contractual obligations are as follows:
|
| Commitments |
| |
|
| (in thousands) |
| |
Brand support |
| $ | 104,494 |
|
Equipment and machinery |
|
| 86,645 |
|
Ingredients (excluding hops and malt) |
|
| 82,902 |
|
Hops and malt |
|
| 47,658 |
|
Other |
|
| 15,176 |
|
Total commitments |
| $ | 336,875 |
|
The Company had outstanding total
Litigation
The Company is not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect upon its financial condition or the results of its operations. In general, while the Company believes it conducts its business appropriately in accordance with laws, regulations and industry guidelines, claims, whether or not meritorious, could be asserted against the Company that might adversely impact the Company’s results.
K. Income Taxes
As of March 28, 202027, 2021 and December 28, 2019,26, 2020, the Company had approximately $0.8 million and $0.8 million, respectively, of unrecognized income tax benefits.
The Company’s practice is to classify interest and penalties related to income tax matters in income tax expense. As of March 28, 202027, 2021 and December 28, 2019,26, 2020, the Company had $0.1$0.2 million and $0.1$0.2 million, respectively, accrued for interest and penalties recorded in other liabilities.
The Internal Revenue Service completed an examination of the 2015 consolidated corporate income tax return and issued a no change report in 2018. The Company’s state income tax returns remain subject to examination for three or four years depending on the state’s statute of limitations. The Company is not currently under anytwo state income tax audits as of March 28, 2020. In addition, the Company is generally obligated to report changes in taxable income arising from federal income tax
The following table provides a summary of the income tax provision for the thirteen weeks ended March 27, 2021 and March 28, 2020:
|
| Thirteen weeks ended |
| |||||
|
| March 27, 2021 |
|
| March 28, 2020 |
| ||
|
| (in thousands) |
| |||||
Summary of income tax provision |
|
|
|
|
|
|
|
|
Tax provision based on net income |
| $ | 19,613 |
|
| $ | 5,005 |
|
Benefit of ASU 2016-09 |
|
| (8,615 | ) |
|
| (2,004 | ) |
Total income tax provision |
| $ | 10,998 |
|
| $ | 3,001 |
|
12
The benefit of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, increased by $6.6 million to $8.6 million for the thirteen weeks ended March 27, 2021 as compared to $2.0 million for the thirteen weeks ended March 28, 2020, primarily due to increases in number of shares exercised and March 30, 2019:
Thirteen weeks ended | ||||||||
March 28, | March 30, | |||||||
2020 | 2019 | |||||||
(in thousands) | ||||||||
Summary of income tax provision | ||||||||
Tax provision based on net income | $ | 5,005 | $ | 7,909 | ||||
Benefit of ASU 2016-09 | (2,004 | ) | (1,775 | ) | ||||
Total income tax provision | $ | 3,001 | $ | 6,134 | ||||
The Company’s effective tax rate for the thirteen weeks ended March 28, 2020,27, 2021, excluding the impact of ASU
L.Revolving Line of Credit
In March 2018, the Company amended its existing credit facility in place that provides for a $150.0 million revolving line of credit to extend the scheduled expiration date to March 31, 2023. On March 12, 2020, the Company withdrew $100.0
M.Fair Value Measures
The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hi
• | Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. |
• | Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. |
• | Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date. |
The Company’s money market funds are measured at fair value on a recurring basis (at least annually) and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. The money market funds are invested substantially in United States Treasury and government securities. The Company does not adjust the quoted market price for such financial instruments. Cash, receivables and payables are carried at their cost, which approximates fair value, because of their short-term nature.
At March 28, 202027, 2021 and December 28, 201
Information related to stock options under the Restated Employee Equity Incentive Plan and the Stock Option Plan for
|
| Shares |
|
| Weighted- Average Exercise Price |
|
| Weighted- Average Remaining Contractual Term in Years |
|
| Aggregate Intrinsic Value (in thousands) |
| ||||
Outstanding at December 26, 2020 |
|
| 241,847 |
|
| $ | 228.58 |
|
|
|
|
|
|
|
|
|
Granted |
|
| 18,998 |
|
|
| 1,028.71 |
|
|
|
|
|
|
|
|
|
Forfeited |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
Expired |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
Exercised |
|
| (31,020 | ) |
|
| 195.05 |
|
|
|
|
|
|
|
|
|
Outstanding at March 27, 2021 |
|
| 229,825 |
|
| $ | 229.25 |
|
|
| 3.30 |
|
| $ | 120,540 |
|
Exercisable at March 27, 2021 |
|
| 81,710 |
|
| $ | 214.22 |
|
|
| 3.30 |
|
| $ | 197,820 |
|
Vested and expected to vest at March 27, 2021 |
|
| 210,570 |
|
| $ | 294.96 |
|
|
| 3.30 |
|
| $ | 182,149 |
|
Shares | Weighted- A verageExercise | Weighted-Average Contractual | Aggregate Value (in thousands) | |||||||||||||
Outstanding at December 28, 2019 | 315,678 | $ | 186.53 | |||||||||||||
Granted | 22,970 | 370.43 | ||||||||||||||
Forfeited | (2,595 | ) | 241.84 | |||||||||||||
Expired | — | — | ||||||||||||||
Exercised | (23,233 | ) | 103.99 | |||||||||||||
Outstanding at March 28, 2020 | 312,820 | $ | 205.70 | 6.08 | $ | 47,034 | ||||||||||
Exercisable at March 28, 2020 | 105,636 | $ | 164.80 | 4.63 | $ | 20,091 | ||||||||||
Vested and expected to vest at March 28, 2020 | 285,886 | $ | 203.74 | 6.01 | $ | 43,532 | ||||||||||
Of the total options outstanding at March 28, 2020, 42,00027, 2021, 23,019 shares were performance-based options for which the performance criteria had yet to be achieved.
On January 31, 2020,March 1, 2021, the Company granted options to purchase an aggregate of 978 shares of the Company’s Class A Common Stock to the Company’s newly appointed
On March 2, 2020,1, 2021 the Company granted options to purchase an aggregate of 7,03010,935 shares of the Company’s Class A Common Stock to the Company’s newly appointed Chief PeopleExecutive Officer with a weighted average fair value of $142.23$457.25 per share,
Weighted average assumptions used to estimate fair values of stock options on the date of grants are as follows:
2021 | |||||
Expected Volatility | 36.1 | % | |||
Risk-free interest rate | 1.4 | % | |||
Expected Dividends | 0.0 | % | |||
Exercise factor | 2.5 times | ||||
Discount for post-vesting restrictions | 0.0 | % |
Non-Vested
The following table summarizes vesting activities of shares issued under the investment share program and restricted stock awards:
|
| Number of Shares |
|
| Weighted Average Fair Value |
| ||
Non-vested at December 26, 2020 |
|
| 114,316 |
|
| $ | 263.47 |
|
Granted |
|
| 17,632 |
|
|
| 880.81 |
|
Vested |
|
| (22,885 | ) |
|
| 221.81 |
|
Forfeited |
|
| (196 | ) |
|
| 150.24 |
|
Non-vested at March 27, 2021 |
|
| 108,867 |
|
| $ | 373.08 |
|
Number | Weighted Fair | |||||||
Non-vested at December 28, 2019 | 122,142 | $ | 213.52 | |||||
Granted | 40,316 | 318.07 | ||||||
Vested | (19,589 | ) | 187.26 | |||||
Forfeited | (2,845 | ) | 245.17 | |||||
Non-vested at March 28, 2020 | 140,024 | $ | 243.80 | |||||
Of the total shares outstanding at March 27, 2021, 2,696 shares were performance-based shares for which the performance criteria had yet to be achieved.
On March 1, 2020,2021, the Company granted 15,011a combined 7,817 shares of restricted stock units to certain officers, senior managers and key employees, of which all shares vest ratably over service periods of four years. Additionally on March 1, 2020, the Company granted a combined 13,4824,861 shares of restricted stock units to select senior management employees with various service and performance based vesting conditions.the Chief Executive Officer, of which all shares vest over five years. On March 1, 2020, 2021,
14
employees elected to purchase 9,127a combined 4,954 shares under the Company’s investment share program. The weighted average fair value of the restricted stock units and investment shares, which are sold to employees at discount under its investment share program, was $370.79$1,028.71 and $169.43$502.32 per share, respectively.
Stock-Based Compensation
The following table provides information regarding stock-based compensation expense related to share-based awards recognizedincluded in operating expenses in the thirteen weeks ended March 28, 2020 and March 30, 2019 was $2.6 million and $2.1 million, respectively, and was calculated based on awards expected to
|
| Thirteen weeks ended |
| |||||
|
| March 27, 2021 |
|
| March 28, 2020 |
| ||
|
| (in thousands) |
| |||||
Amounts included in advertising, promotional and selling expenses |
| $ | 1,672 |
|
| $ | 705 |
|
Amounts included in general and administrative expenses |
|
| 3,285 |
|
|
| 1,861 |
|
Total stock-based compensation expense |
| $ | 4,957 |
|
| $ | 2,566 |
|
O.Related Party Transactions
In connection with the Dogfish Head Transaction, the Company has entered a lease with the Dogfish Head founders and other owners of buildings used in certain of the Company’s restaurant operations. The lease is for ten years with renewal options. The total payments due under the initial ten year term is $3.6 million. Total related party expense recognized for the thirteen weeks ended March 28, 202027, 2021 related to the lease was approximately $91,000. Additionally, during the thirteen weeks ended March 27, 2021, the Company incurred expenses of less than $5,000$50,000 to various other suppliers affiliated with the Dogfish Head founders.
P.Subsequent Events
The Company evaluated subsequent events occurring after the
15
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the significant factors affecting the consolidated operating results, financial condition and liquidity and cash flows of the Company for the thirteen week period ended March 28, 2020,27, 2021, as compared to the thirteen week period ended March 30, 2019.28, 2020. This discussion should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements of the Company and Notes thereto included in the Company’s Annual Report on Form
RESULTS OF OPERATIONS
Thirteen Weeks Ended March 28, 202027, 2021 compared to Thirteen Weeks Ended March 30, 201928, 2020
|
| Thirteen Weeks Ended (in thousands, except per barrel) |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
|
| March 27, 2021 |
|
| March 28, 2020 |
|
| Amount change |
|
| % change |
|
| Per barrel change |
| |||||||||||||||||||||
Barrels sold |
| 2,278 |
|
| 1,423 |
|
|
| 855 |
|
|
| 60.1 | % |
|
|
|
| ||||||||||||||||||
|
|
|
|
|
| Per barrel |
|
| % of net revenue |
|
|
|
|
|
| Per barrel |
|
| % of net revenue |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net revenue |
| $ | 545,080 |
|
| $ | 239.31 |
|
|
| 100.0 | % |
| $ | 330,565 |
|
| $ | 232.24 |
|
|
| 100.0 | % |
| $ | 214,515 |
|
|
| 64.9 | % |
| $ | 7.07 |
|
Cost of goods |
|
| 295,450 |
|
|
| 129.71 |
|
|
| 54.2 | % |
|
| 182,592 |
|
|
| 128.28 |
|
|
| 55.2 | % |
|
| 112,858 |
|
|
| 61.8 | % |
|
| 1.43 |
|
Gross profit |
|
| 249,630 |
|
|
| 109.60 |
|
|
| 45.8 | % |
|
| 147,973 |
|
|
| 103.96 |
|
|
| 44.8 | % |
|
| 101,657 |
|
|
| 68.7 | % |
|
| 5.64 |
|
Advertising, promotional and selling expenses |
|
| 140,859 |
|
|
| 61.84 |
|
|
| 25.8 | % |
|
| 97,891 |
|
|
| 68.78 |
|
|
| 29.6 | % |
|
| 42,968 |
|
|
| 43.9 | % |
|
| (6.94 | ) |
General and administrative expenses |
|
| 31,946 |
|
|
| 14.03 |
|
|
| 5.9 | % |
|
| 27,029 |
|
|
| 18.99 |
|
|
| 8.2 | % |
|
| 4,917 |
|
|
| 18.2 | % |
|
| (4.96 | ) |
Impairment of assets |
|
| 227 |
|
|
| 0.10 |
|
|
| 0.0 | % |
|
| 1,521 |
|
|
| 1.07 |
|
|
| 0.5 | % |
|
| (1,294 | ) |
|
| (85.1 | )% |
|
| (0.97 | ) |
Total operating expenses |
|
| 173,032 |
|
|
| 75.97 |
|
|
| 31.7 | % |
|
| 126,441 |
|
|
| 88.83 |
|
|
| 38.2 | % |
|
| 46,591 |
|
|
| 36.8 | % |
|
| (12.87 | ) |
Operating income |
|
| 76,598 |
|
|
| 33.63 |
|
|
| 14.1 | % |
|
| 21,532 |
|
|
| 15.13 |
|
|
| 6.5 | % |
|
| 55,066 |
|
|
| 255.7 | % |
|
| 18.51 |
|
Other (expense) income, net |
|
| (35 | ) |
|
| (0.02 | ) |
|
| (0.0 | )% |
|
| (297 | ) |
|
| (0.21 | ) |
|
| (0.1 | )% |
|
| 262 |
|
|
| (88.2 | )% |
|
| 0.19 |
|
Income before income tax expense |
|
| 76,563 |
|
|
| 33.61 |
|
|
| 14.0 | % |
|
| 21,235 |
|
|
| 14.92 |
|
|
| 6.4 | % |
|
| 55,328 |
|
|
| 260.6 | % |
|
| 18.70 |
|
Income tax expense |
|
| 10,998 |
|
|
| 4.83 |
|
|
| 2.0 | % |
|
| 3,001 |
|
|
| 2.11 |
|
|
| 0.9 | % |
|
| 7,997 |
|
|
| 266.5 | % |
|
| 2.72 |
|
Net income |
| $ | 65,565 |
|
| $ | 28.78 |
|
|
| 12.0 | % |
| $ | 18,234 |
|
| $ | 12.81 |
|
|
| 5.5 | % |
| $ | 47,331 |
|
|
| 259.6 | % |
| $ | 15.98 |
|
Thirteen Weeks Ended (in thousands, except per barrel) | ||||||||||||||||||||||||||||||||||||
March 28, 2020 | March 30, 2019 | Amount change | % change | Per barrel change | ||||||||||||||||||||||||||||||||
Barrels sold | 1,423 | 1,076 | 347 | 32.2 | % | |||||||||||||||||||||||||||||||
Per barrel | % of net revenue | Per barrel | % of net revenue | |||||||||||||||||||||||||||||||||
Net revenue | $ | 330,565 | $ | 232.24 | 100.0 | % | $ | 251,651 | $ | 233.77 | 100.0 | % | $ | 78,914 | 31.4 | % | $ | (1.53 | ) | |||||||||||||||||
Cost of goods | 182,592 | 128.28 | 55.2 | % | 127,111 | 118.08 | 50.5 | % | 55,481 | 43.6 | % | 10.20 | ||||||||||||||||||||||||
Gross profit | 147,973 | 103.96 | 44.8 | % | 124,540 | 115.69 | 49.5 | % | 23,433 | 18.8 | % | (11.73 | ) | |||||||||||||||||||||||
Advertising, promotional and selling expenses | 97,891 | 68.78 | 29.6 | % | 71,723 | 66.63 | 28.5 | % | 26,168 | 36.5 | % | 2.15 | ||||||||||||||||||||||||
General and administrative expenses | 27,029 | 18.99 | 8.2 | % | 23,374 | 21.71 | 9.3 | % | 3,655 | 15.6 | % | (2.72 | ) | |||||||||||||||||||||||
Impairment of assets | 1,521 | 1.07 | 0.5 | % | — | — | 0.0 | % | 1,521 | 0.0 | % | 1.07 | ||||||||||||||||||||||||
Total operating expenses | 126,441 | 88.83 | 38.2 | % | 95,097 | 88.34 | 37.8 | % | 31,344 | 33.0 | % | 0.49 | ||||||||||||||||||||||||
Operating income | 21,532 | 15.13 | 6.5 | % | 29,443 | 27.35 | 11.7 | % | (7,911 | ) | -26.9 | % | (12.22 | ) | ||||||||||||||||||||||
Other (expense) income, net | (297 | ) | (0.21 | ) | -0.1 | % | 385 | 0.36 | 0.2 | % | (682 | ) | -177.1 | % | (0.57 | ) | ||||||||||||||||||||
Income before income tax expense | 21,235 | 14.92 | 6.4 | % | 29,828 | 27.71 | 11.9 | % | (8,593 | ) | -28.8 | % | (12.79 | ) | ||||||||||||||||||||||
Income tax expense | 3,001 | 2.11 | 0.9 | % | 6,134 | 5.70 | 2.4 | % | (3,133 | ) | -51.1 | % | (3.59 | ) | ||||||||||||||||||||||
Net income | $ | 18,234 | $ | 12.81 | 5.5 | % | $ | 23,694 | $ | 22.01 | 9.4 | % | $ | (5,460 | ) | -23.0 | % | $ | (9.20 | ) | ||||||||||||||||
Net revenue.
Volume.
Depletions, or sales by distributors to retailers, of the Company’s products for the thirteen weeks ended March 28, 202027, 2021 increased by approximately 36%48% compared to the thirteen weeks ended March 30, 2019,28, 2020, primarily due toincreases in depletions of Truly Hard Seltzer and Twisted Tea brand products, and the addition of Dogfish Head brand products, partially offset by decreases in Dogfish Head, Angry Orchard and Samuel Adams brand products.
The Company believes distributor inventory as of March 28, 202027, 2021 averaged approximately 67 weeks on hand and was at an appropriate level based on the supply chain capacity constraints and inventory requirements to support the forecasted growth of Truly and Twisted Tea brands over the summer. The Company expects wholesaler inventory levels in terms of weeks on hand to return to more normal levelsbe between 3 and 7 weeks for the remainder of approximately 4 weeks on hand later in the year.
Net revenue per barrel
16
Table of $5.8 million, partially offset by price increases and package mix.
Cost of goods sold.
Gross profit.
The Company includes freight charges related to the movement of finished goods from its manufacturing locations to distributor locations in its advertising, promotional and selling expense line item. As such, the Company’s gross margins may not be comparable to those of other entities that classify costs related to distribution differently.
Advertising, promotional and selling.
Advertising, promotional and selling expenses were 25.8% of net revenue, or $61.84 per barrel, for the thirteen weeks ended March 27, 2021, as compared to 29.6% of net revenue, or $68.78 per barrel, for the thirteen weeks ended March 28, 2020 as compared to 28.5% of net revenue, or $66.63 per barrel, for the thirteen weeks ended March 30, 2019.. This increasedecrease per barrel is primarily due to advertising,advertising, promotional and selling expenses growing at a higherlower rate than shipments. The Company invests in advertising and promotional campaigns that it believes will be effective, but there is no guarantee that such investments will generate sales growth.
The Company conducts certain advertising and promotional activities in its distributors’ markets, and the distributors make contributions to the Company for such efforts. These amounts are included in the Company’s statements of comprehensive income as reductions to advertising, promotional and selling expenses. Historically, contributions from distributors for advertising and promotional activities have amounted to between 2% and 3% of net sales. The Company may adjust its promotional efforts in the distributors’ markets, if changes occur in these promotional contribution arrangements, depending on industry and market conditions.
General and administrative.
Impairment of assets.
I
LIQUIDITY AND CAPITAL RESOURCES
Cash increaseddecreased to $129.5$144.7 million as of March 28, 202027, 2021 from $36.7$163.6 million as of December 28, 2019, 26, 2020, reflecting cash borrowed on the Company’s line of credit and cash provided by operating activities, partially offset by purchases of property, plant and equipment.
Cash provided by operating activities consists of net income, adjusted for certain
Cash provided by operating activities for the thirteen weeks ended March 27, 2021 was $19.8 million and primarily consisted of net income of $65.6 million and non-cash items of $28.6 million, partially offset by a net increase in operating assets and liabilities of $74.4 million. Cash provided by operating activities for the thirteen weeks ended March 28, 2020 was $18.9 million and primarily consisted of net income of $18.2 million and
17
The Company used $27.3$38.8 million in investing activities during the thirteen weeks ended March 28, 2020,27, 2021, as compared to $22.1$27.3 million during the thirteen weeks ended March 30, 2019.28, 2020. Investing activities primarily consisted of capital investments made mostly in the Company’s breweries to drive efficiencies and cost reductions and support product innovation and future growth.
Cash provided by financing activities was $101.2$0.4 million during the thirteen weeks ended March 28, 2020,27, 2021, as compared to $2.9$101.2 million provided by financing activities during the thirteen weeks ended March 30, 2019.27, 2020. The $98.3$100.8 million increasedecrease in cash provided by financing activities in 20202021 from 20192020 is primarily due to $100.0 million$100.0M of borrowings on the Company’s line of credit to enhance its ability to addressfacility during the impact of
During the thirteen weeks ended March 28, 202027, 2021 and the period from March 29, 202028, 2021 through April 17, 202016, 2021, the Company did not repurchase any shares of its Class A Common Stock. As of April 17, 2020,16, 2021, the Company had repurchased a cumulative total of approximately 13.8 million shares of its Class A Common Stock for an aggregate purchase price of $840.7 million and had approximately $90.3 million remaining on the $931.0 million stock repurchase expenditure limit set by the Board of Directors.
The Company expects that its cash balance as of March 28, 202027, 2021 of $129.5$144.7 million, along with future operating cash flow and the unused balance of the Company’s line of credit of $50.0$150.0 million, will be sufficient to fund future cash requirements. The Company’s $150.0 million credit facility has a term not scheduled to expire until March 31, 2023. As of the date of this filing, the Company had $100.0 million in borrowings and was not in violation of any of its covenants to the lender under the credit facility.
2021 Outlook
Year-to-date
The Company began seeingis currently estimating 2021 depletions and shipments growth of between 40% and 50%, an increase from the previously communicated range of between 35% and 45%. The Company is targeting national price increases of between 1% and 3%, an increase from the previously communicated range of between 1% and 2%. Full-year 2021 gross margins are currently expected to be between 45% and 47%. The Company intends to increase advertising, promotional and selling expenses by between $130million and $150 million for the full year 2021, an increase from the previously communicated range of between $120 million and $140 million, not including any changes in freight costs for the shipment of products to Distributors. The Company intends to increase its investment in its brands in 2021, commensurate with the opportunities for growth that it sees, but there is no guarantee that such increased investments will result in increased volumes.
The Company currently projects Non-GAAP earnings per diluted share, which excludes the impact of ASU 2016-09, for 2021 of between $22.00 and $26.00, an increase from the
The Company is continuing to evaluate 2021 capital expenditures. Its current estimates are between $250million and $350million, a decrease of the previously communicated range of between $300 million and $400 million, consisting mostly of investments in a position to accurately forecastcapacity and supply chain efficiency improvements. The actual total amount spent on 2021 capital expenditures may well be different from these estimates. Based on information currently available, the future impactsCompany believes that its capacity requirements for 2021 can be covered by its Company-owned breweries and is withdrawing its full-year fiscal 2020 financial guidance.
THE POTENTIAL IMPACT OF KNOWN FACTS, COMMITMENTS, EVENTS AND UNCERTAINTIES
Off-balance Sheet Arrangements
At March 28, 2020,27, 2021, the Company did not have
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Contractual Obligations
There were no material changes outside of the ordinary course of the Company’s business to contractual obligations during the three-month period ended March 28, 2020.
Critical Accounting Policies
There were no material changes to the Company’s critical accounting policies during the three-month period ended March 28, 2020.
FORWARD-LOOKING STATEMENTS
In this Quarterly Report on Form
Since December 28, 2019,26, 2020, there have been no significant changes in the Company’s exposures to interest rate or foreign currency rate fluctuations. The Company currently does not enter into derivatives or other market risk sensitive instruments for the purpose of hedging or for trading purposes.
Item 4.CONTROLS AND PROCEDURES
As of March 28, 2020,27, 2021, the Company conducted an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) regarding the effectiveness of the design and operation of the Company’s disclosure controls and procedures as defined in Rule
As a result of the
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PART II.OTHER INFORMATION
Item 1. LEGALLEGAL PROCEEDINGS
During the thirteen weeks ended March 28, 2020,27, 2021, there were no material changes to the disclosure made in the Company’s Annual Report on Form
Item 1A. RISKRISK FACTORS
In addition to the other information set forth in this report, careful consideration should be given to the factors discussed in Part I, “Item"Item 1A. Risk Factors”Factors" in the Company’s Annual Report on Form
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Item 2.UNREGISTERED SALES OF EQUITYEQUITY SECURITIES AND USE OF PROCEEDS
As of April 17, 2020,16, 2021, the Company had repurchased a cumulative total of approximately 13.8 million shares of its Class A Common Stock for an aggregate purchase price of $840.7 million and had $90.3 million remaining on the $931.0 million share buyback expenditure limit set by the Board of Directors. During the thirteen weeks ended March 28, 2020,27, 2021, the Company did not repurchase any shares of its Class A Common Stock under the previously announced repurchase program.
During the thirteen weeks ended March 28, 2020,27, 2021, the Company repurchased 225183 shares of its Class A Common Stock, of which all represent repurchases of unvested investment shares issued under the Investment Share Program of the Company’s Employee Equity Incentive Plan, as illustrated in the table below:
Period |
| Total Number of Shares Purchased |
|
| Average Price Paid per Share |
|
| Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
| Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs |
| ||||
December 27, 2020 to January 30, 2021 |
|
| - |
|
| $ | - |
|
|
| — |
|
| $ | 90,335 |
|
January 31, 2021 to February 27, 2021 |
|
| 20 |
|
|
| 218.79 |
|
|
| — |
|
|
| 90,335 |
|
February 27, 2021 to March 27, 2021 |
|
| 163 |
|
|
| 192.77 |
|
|
| — |
|
|
| 90,335 |
|
Total |
|
| 183 |
|
| $ | 195.62 |
|
|
| — |
|
| $ | 90,335 |
|
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||
December 29, 2020 to February 1, 2020 | 167 | $ | 132.37 | — | $ | 90,335 | ||||||||||
February 2, 2020 to February 29, 2020 | — | — | — | 90,335 | ||||||||||||
March 1, 2020 to March 28, 2020 | 58 | 105.56 | — | 90,335 | ||||||||||||
Total | 225 | $ | 125.46 | — | 90,335 | |||||||||||
As of April 17, 2020,16, 2021, the Company had 9.710.1 million shares of Class A Common Stock outstanding and 2.52.2 million shares of Class B Common Stock outstanding.
Item 3.DEFAULTS UPONUPON SENIOR SECURITIES
Not Applicable
Item 4.MINE SAFETY DISCLOSURES
Not Applicable
Item 5.OTHER INFORMATION
Not Applicable
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Item 6. EXHIBITS
Exhibit No. | Title | |||
**10.1 | ||||
**10.2 | ||||
*31.1 | ||||
. | ||||
*31.2 | . | |||
*32.1 | . | |||
*32.2 | . | |||
*101.INS | XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||
*101.SCH | XBRL Taxonomy Extension Schema Document | |||
*101.CAL | XBRL Taxonomy Calculation Linkbase Document | |||
*101.LAB | XBRL Taxonomy Label Linkbase Document | |||
*101.PRE | XBRL Taxonomy Presentation Linkbase Document | |||
*101.DEF | XBRL Definition Linkbase Document | |||
*104 | The cover page from this Quarterly Report on Form 10-Q for the quarter ended March |
* | Filed with this report |
** | Designates management contract or compensatory plan or arrangement |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form
THE BOSTON BEER COMPANY, | ||||||
(Registrant) |
Date: April 22, | /s/ David A. Burwick | |||||
David A. Burwick | ||||||
President and Chief Executive Officer | ||||||
(principal executive officer) |
Date: April 22, | /s/ Frank H. Smalla | |||||
Frank H. Smalla | ||||||
Chief Financial Officer | ||||||
(principal financial officer) |
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