BOSTON BEER CO INC

Previous wording

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 periods ended March 29, 2025, as compared to the thirteen week period ended March 30, 2024. 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 10-K for the fiscal year ended December 28, 2024.

Current wording

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 and twenty-six week periods ended June 28, 2025, as compared to the thirteen and twenty-six week period ended June 29, 2024. 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 10-K for the fiscal year ended December 28, 2024.

Previous wording

Net revenue. Net revenue increased by $27.8 million, or 6.5%, to $453.9 million for the thirteen weeks ended March 29, 2025, as compared to $426.1 million for the thirteen weeks ended March 30, 2024 primarily due to increased sales volume impacts of $22.7 million, and increased pricing impacts of $5.9 million.

Current wording

Net revenue. Net revenue increased by $8.9 million, or 1.5%, to $587.9 million for the thirteen weeks ended June 28, 2025, as compared to $579.1 million for the thirteen weeks ended June 29, 2024 primarily due to increased pricing of $7.1 million, and favorable product mix of $6.8 million, partially offset by decreased sales volume impacts of $5.0 million.

Previous wording

Net revenue per barrel. Net revenue per barrel increased by 1.2% to $270.64 per barrel for the thirteen weeks ended March 29, 2025, as compared to $267.55 per barrel for the comparable period in 2024, primarily due to pricing.

Current wording

Net revenue per barrel. Net revenue per barrel increased by 2.4% to $274.23 per barrel for the thirteen weeks ended June 28, 2025, as compared to $267.85 per barrel for the comparable period in 2024, primarily due to increased pricing and favorable product mix.

Previous wording

Cost of goods sold. Cost of goods sold was $139.90 per barrel for the thirteen weeks ended March 29, 2025, as compared to $150.53 per barrel for the thirteen weeks ended March 30, 2024. The 2025 decrease in cost of goods sold of $10.63, or 7.1% per barrel was primarily due to contract renegotiations and recipe optimization savings of $9.9 million, or $5.91 per barrel, improved brewery efficiencies of $9.9 million, or $5.91 per barrel, decreases in inventory obsolescence of $2.4 million, or $1.43 per barrel, and lower third-party production payment amortization of $1.6 million, or $0.98 per barrel, partially offset by inflationary impacts of $6.1 million, or $3.64 per barrel.

Current wording

Cost of goods sold. Cost of goods sold was $137.79 per barrel for the thirteen weeks ended June 28, 2025, as compared to $144.61 per barrel for the thirteen weeks ended June 29, 2024. The 2025 decrease in cost of goods sold of $6.82, or 4.7% per barrel was primarily due to improved brewery efficiencies of $13.9 million, or $6.48 per barrel, contract renegotiations and recipe optimization savings of $10.5 million, or $4.90 per barrel, and lower third-party production costs of $2.4 million, or $1.12 per barrel, partially offset by inflationary impacts of $8.5 million, or $3.97 per barrel and increases in inventory obsolescence of $3.7 million, or $1.73 per barrel.

Previous wording

Inflationary impacts of $6.1 million consist primarily of increased raw material costs of $4.2 million and increased internal brewery costs of $1.9 million.

Current wording

Inflationary impacts of $8.5 million consist primarily of increased raw material costs of $7.2 million, inclusive of $2.6 million impact from tariffs, and increased internal brewery costs of $1.3 million.

Previous wording

Gross profit. Gross profit was $130.74 per barrel for the thirteen weeks ended March 29, 2025, as compared to $117.02 per barrel for the thirteen weeks ended March 30, 2024.

Current wording

Gross profit. Gross profit was $136.44 per barrel for the thirteen weeks ended June 28, 2025, as compared to $123.24 per barrel for the thirteen weeks ended June 29, 2024.

Previous wording

Advertising, promotional, and selling expenses. Advertising, promotional and selling expenses increased by $17.3 million, or 14.4%, to $137.5 million for the thirteen weeks ended March 29, 2025, as compared to $120.3 million for the thirteen weeks ended March 30, 2024. Brand and selling costs increased by $15.7 million primarily due to increased investments in media and local marketing, and freight to distributors increased by $1.6 million primarily due to increased shipment volumes.

Current wording

Advertising, promotional, and selling expenses. Advertising, promotional and selling expenses increased by $15.5 million, or 10.7%, to $159.7 million for the thirteen weeks ended June 28, 2025, as compared to $144.2 million for the thirteen weeks ended June 29, 2024. Brand and selling costs increased by $16.4 million primarily due to increased brand investments in media. Freight to distributors decreased by $0.9 million primarily due to decreased shipment volumes.

Previous wording

Advertising, promotional and selling expenses were 30.3% of net revenue, or $82.01 per barrel, for the thirteen weeks ended March 29, 2025, as compared to 28.2% of net revenue, or $75.53 per barrel, for the thirteen weeks ended March 30, 2024. This increase per barrel is primarily due to increased investments in media and local marketing. 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.

Current wording

Advertising, promotional and selling expenses were 27.2% of net revenue, or $74.49 per barrel, for the thirteen weeks ended June 28, 2025, as compared to 24.9% of net revenue, or $66.71 per barrel, for the thirteen weeks ended June 29, 2024. This increase per barrel is primarily due to increased brand media investments. 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.

Previous wording

General and administrative expenses. General and administrative expenses decreased by $2.4 million, or 4.8%, to $48.0 million for the thirteen weeks ended March 29, 2025, as compared to $50.4 million for the thirteen weeks ended March 30, 2024, primarily due to Chief Executive Officer transition costs incurred in the first quarter of 2024.

Current wording

General and administrative expenses. General and administrative expenses decreased by $2.3 million, or 4.7%, to $45.8 million for the thirteen weeks ended June 28, 2025, as compared to $48.0 million for the thirteen weeks ended June 29, 2024, primarily due to a decrease in salaries and benefits costs including lower incentive compensation.

Previous wording

Income tax provision. The Company's effective tax rate of 31.9% decreased from 33.0% in the prior year. The lower rate in the first quarter of 2025 was due to a decrease in the negative impact of non-deductible stock compensation expense.

Current wording

Income tax provision. The Company's effective tax rate of 28.1% decreased from 28.6% in the prior year. The lower rate in the second quarter of 2025 was due to a change in the impact of non-deductible stock compensation expense.

Previous wording

Volume. Total shipment volume increased by 5.3% to 1,677,000 barrels for the thirteen weeks ended March 29, 2025, as compared to 1,592,000 barrels for the thirteen weeks ended March 30, 2024, primarily due to increases in Sun Cruiser, Hard MTN Dew and Twisted Tea brands partially offset by declines in the Truly brand.

Current wording

Volume. Total shipment volume increased by 1.7% to 3,820,000 barrels for the twenty-six weeks ended June 28, 2025, as compared to 3,754,000 barrels for the twenty-six weeks ended June 29, 2024, primarily due to increases in Sun Cruiser and Twisted Tea brands that were partially offset by declines in Truly Hard Seltzer and Samuel Adams brands.

Previous wording

Cash decreased to $152.5 million as of March 29, 2025 from $211.8 million as of December 28, 2024, primarily reflecting repurchases of the Company's Class A common stock, and purchases of property, plant, and equipment, partially offset by net cash provided by operating activities.

Current wording

Cash increased to $212.4 million as of June 28, 2025 from $211.8 million as of December 28, 2024, primarily reflecting cash provided by operating activities and partially offset by the repurchases of the Company's Class A common stock.

Previous wording

Cash provided by operating activities for the thirteen weeks ended March 29, 2025 was comprised of net income of $24.4 million and non-cash items of $15.0 million, partially offset by a net outflows for operating assets and liabilities of $37.5 million. Cash used in operating activities for the thirteen weeks ended March 30, 2024 was comprised of net income of $12.6 million and non-cash items of $32.8 million, offset by net outflows for operating assets and liabilities of $50.3 million. The increase in cash provided by operating activities for the thirteen weeks ended March 29, 2025 compared to March 30, 2024 is primarily due to higher net income.

Current wording

Cash provided by operating activities for the twenty-six weeks ended June 28, 2025 was comprised of net income of $84.8 million and non-cash items of $42.1 million, partially offset by net outflows for operating assets and liabilities of $1.5 million. Cash provided by operating activities for the twenty-six weeks ended June 29, 2024 was comprised of net income of $64.9 million and non-cash items of $65.8 million, partially offset by net a net increase in operating assets and liabilities of $39.6 million. The increase in cash provided by operating activities for the twenty-six weeks ended June 28, 2025 compared to June 29, 2024 is primarily due to higher net income and lower accounts receivable and inventory balances as of June, 28, 2025 when compared to June 29, 2024.

Previous wording

The Company used $9.8 million in investing activities during the thirteen weeks ended March 29, 2025, as compared to $35.7 million during the thirteen weeks ended March 30, 2024. The decrease in investing activity cash outflows is due to a $20.0 million note receivable issued in the prior year. For both periods, capital investments were made mostly in the Company’s breweries to drive efficiencies and cost reductions and support product innovation and future growth.

Current wording

The Company used $24.1 million in investing activities during the twenty-six weeks ended June 28, 2025, as compared to $56.1 million during the twenty-six weeks ended June 29, 2024. The decrease in investing activity cash outflows is due to a $20.0 million note receivable issued in the prior year. For both periods, capital investments were made mostly in the Company’s production facilities to drive efficiencies and cost reductions and support product innovation and future growth.

Previous wording

Cash used in financing activities was $51.4 million during the thirteen weeks ended March 29, 2025, as compared to $52.4 million during the thirteen weeks ended March 30, 2024. The financing activity cash outflows in 2025 and 2024 comprised mostly of the repurchases of the Company's Class A common stock in the period.

Current wording

Cash used in financing activities was $103.7 million during the twenty-six weeks ended June 28, 2025, as compared to $114.2 million during the twenty-six weeks ended June 29, 2024. The financing activity cash outflows in 2025 and 2024 comprised mostly of the repurchases of the Company's Class A common stock in the period.

Previous wording

During the period from December 29, 2024 through April 18, 2025, the Company repurchased and subsequently retired 248,109 shares of its Class A Common Stock for an aggregate purchase price of $60.5 million. As of April 18, 2025, the Company had repurchased a cumulative total of approximately 15.1 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.2 billion and had approximately $367 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors.

Current wording

During the period from December 29, 2024 through July 18, 2025, the Company repurchased and subsequently retired 476,380 shares of its Class A Common Stock for an aggregate purchase price of $110.5 million. As of July 18, 2025, the Company had repurchased a cumulative total of approximately 15.4 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.28 billion and had approximately $317 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors.

Previous wording

The Company expects that its cash balance as of March 29, 2025 of $152.5 million, along with its projected future operating cash flow and its unused line of credit balance of $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 December 16, 2027. As of the date of this filing, the Company was not in violation of any of its covenants to the lender under the credit facility.

Current wording

The Company expects that its cash balance as of June 28, 2025 of $212.4 million, along with its projected future operating cash flow and its unused line of credit balance of $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 December 16, 2027. As of the date of this filing, the Company was not in violation of any of its covenants to the lender under the credit facility.

Previous wording

There were no material changes to the Company’s critical accounting policies during the three-month period ended March 29, 2025.

Current wording

There were no material changes to the Company’s critical accounting policies during the thirteen weeks and twenty-six weeks ended June 28, 2025.

Previous wording

Based on the information currently available and tariff programs announced by the U.S. government as of April 2, 2025, the Company estimates tariffs will have an unfavorable cost impact for the full year 2025 of approximately $20 to $30 million or $1.25 to $1.90 earnings per diluted share. These estimates include an unfavorable gross margin impact of between 50 to 100 basis points.

Current wording

Based on the information currently available and tariff programs announced by the U.S. government as of July 18, 2025, the Company estimates tariffs will have an unfavorable cost impact for the full year 2025 of approximately $15 to $20 million or $0.96 to $1.28 earnings per diluted share. These estimates include an unfavorable gross margin impact of between 70 to 100 basis points.

Previous wording

In this Quarterly Report on Form 10-Q and in other documents incorporated herein, as well as in oral statements made by the Company, statements that are prefaced with the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “designed” and similar expressions, are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, results of operations and financial position. These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no firm assurance. Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect subsequent events or circumstances. Forward-looking statements should not be relied upon as a prediction of actual future financial condition or results. These forward-looking statements, like any forward-looking statements, involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include the factors set forth below in addition to the other information set forth in this Quarterly Report on Form 10-Q and in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024.

Current wording

In this Quarterly Report on Form 10-Q and in other documents incorporated herein, as well as in oral statements made by the Company, statements that are prefaced with the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “designed” and similar expressions, are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect the Company’s future plans of operations, business strategy, results of operations and financial position. These statements are based on the Company’s current expectations and estimates as to prospective events and circumstances about which the Company can give no firm assurance. Further, any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement to reflect subsequent events or circumstances. Forward-looking statements should not be relied upon as a prediction of actual future financial condition or results. These forward-looking statements, like any forward-looking statements, involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include the factors set forth in this Quarterly Report on Form 10-Q and in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 28, 2024.