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 and twenty-six week periods ended June 27, 2026, as compared to the thirteen and twenty-six week periods ended June 28, 2025. 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 there to included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025.

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 thirty-nine week periods ended September 26, 2026, as compared to the thirteen and thirty-nine week periods ended September 27, 2025. 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 there to included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025.

Previous wording

Net revenue. Net revenue decreased by $19.6 million, or 3.3%, to $568.3 million for the thirteen weeks ended June 27, 2026, as compared to $587.9 million for the thirteen weeks ended June 28, 2025 primarily due to decreased sales volume impacts of $26.6 million and increased sales incentives of $6.3 million, partially offset by favorable product mix of $8.4 million, and increased pricing of $5.4 million.

Current wording

Net revenue. Net revenue decreased by $17.4 million, or 3.2%, to $520.1 million for the thirteen weeks ended September 26, 2026, as compared to $537.5 million for the thirteen weeks ended September 27, 2025 primarily due to decreased sales volume impacts of $26.4 million, partially offset by favorable product mix of $7.7 million, and increased pricing of $4.9 million.

Previous wording

Volume. Total shipment volume decreased by 4.5% to 2,047,000 barrels for the thirteen weeks ended June 27, 2026, as compared to 2,144,000 barrels for the thirteen weeks ended June 28, 2025. The decrease was primarily driven by decreases in Twisted Tea, Truly, Samuel Adams and Hard Mountain Dew brands that were partially offset by increases in Sun Cruiser and Angry Orchard brands.

Current wording

Volume. Total shipment volume decreased by 4.9% to 1,841,000 barrels for the thirteen weeks ended September 26, 2026, as compared to 1,936,000 barrels for the thirteen weeks ended September 27, 2025. The decrease was primarily driven by decreases in Twisted Tea, Truly, Samuel Adams and Hard Mountain Dew brands that were partially offset by increases in Sun Cruiser and Angry Orchard brands.

Previous wording

The Company believes distributor inventory as of June 27, 2026 was at an appropriate level for each of its brands and averaged approximately four and a half weeks which was consistent with the weeks on hand at the end of June 2025.

Current wording

The Company believes distributor inventory as of September 26, 2026 was at an appropriate level for each of its brands and averaged approximately four weeks on hand, compared to four and a half weeks on hand at the end of September 2025.

Previous wording

Net revenue per barrel. Net revenue per barrel increased by 1.2% to $277.64 per barrel for the thirteen weeks ended June 27, 2026, as compared to $274.23 per barrel for the comparable period in 2025, primarily due to increased pricing and favorable product mix.

Current wording

Net revenue per barrel. Net revenue per barrel increased by 1.8% to $282.51 per barrel for the thirteen weeks ended September 26, 2026, as compared to $277.63 per barrel for the comparable period in 2025, primarily due to favorable product mix and increased pricing.

Previous wording

Cost of goods sold. Cost of goods sold was $137.75 per barrel for the thirteen weeks ended June 27, 2026, as compared to $137.79 per barrel for the thirteen weeks ended June 28, 2025. The 2026 cost of goods sold per barrel was flat to 2025 primarily due to inflationary impacts of $19.2 million, or $9.38 per barrel, offset by brewery efficiencies of $10.9 million, or $5.33 per barrel, contract renegotiations and recipe optimization savings of $5.2 million, or $2.54 per barrel, and decreases in inventory obsolescence of $3.9 million, or $1.91 per barrel.

Current wording

Cost of goods sold. Cost of goods sold was $136.35 per barrel for the thirteen weeks ended September 26, 2026, as compared to$136.56 per barrel for the thirteen weeks ended September 27, 2025. The 2026 cost of goods sold per barrel was flat to 2025 primarily due to inflationary impacts of $10.2 million, or $5.54 per barrel, partially offset by contract renegotiations and recipe optimization savings of $3.4 million, or $1.85 per barrel, brewery efficiencies of $1.5 million, or $0.81 per barrel, and lower third-party production payment amortization of $1.3 million, or $0.71 per barrel.

Previous wording

Inflationary impacts of $19.2 million consist primarily of increased material costs, mainly from aluminum, of $18.2 million, inclusive of $2.9 million impact from tariffs, and increased internal brewery costs of $1.0 million.

Current wording

Inflationary impacts of $10.2 million consist primarily of increased material costs, mainly from aluminum, of $7.6 million, inclusive of $0.8 million impact from tariffs, and increased internal brewery costs of $0.5 million.

Previous wording

Gross profit. Gross profit was $139.89 per barrel for the thirteen weeks ended June 27, 2026, as compared to $136.44 per barrel for the thirteen weeks ended June 28, 2025.

Current wording

Gross profit. Gross profit was $146.16 per barrel for the thirteen weeks ended September 26, 2026, as compared to $141.07 per barrel for the thirteen weeks ended September 27, 2025. The increase in gross profit per barrel was primarily driven by favorable product mix, pricing, and cost savings, more than offsetting inflationary impacts.

Previous wording

Advertising, promotional and selling expenses were 32.7% of net revenue, or $90.81 per barrel, for the thirteen weeks ended June 27, 2026, as compared to 27.2% of net revenue, or $74.49 per barrel, for the thirteen weeks ended June 28, 2025. This increase per barrel is primarily due to increased spend in local marketing and freight rates. 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 31.8% of net revenue, or $89.72 per barrel, for the thirteen weeks ended September 26, 2026, as compared to 30.6% of net revenue, or $85.09 per barrel, for the thirteen weeks ended September 27, 2025. This increase per barrel is primarily due to increased freight rates. 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 increased by $3.1 million, or 6.8%, to $48.9 million for the thirteen weeks ended June 27, 2026, as compared to $45.8 million for the thirteen weeks ended June 28, 2025, primarily due to increases in salaries and benefits costs of $1.2 million, and increases in legal fees of $1.1 million.

Current wording

General and administrative expenses. General and administrative expenses decreased by $2.1 million, or 4.6%, to $42.9 million for the thirteen weeks ended September 26, 2026, as compared to $44.9 million for the thirteen weeks ended September 27, 2025, primarily due to a decrease in salaries and benefits costs of $3.4 million, partially offset by higher legal fees.

Previous wording

Impairment of brewery assets. Impairment of brewery assets of $0.2 million decreased by $4.7 million from 2025, due to decreased write-offs of equipment at third party and Company-owned breweries.

Current wording

Impairment of brewery assets. Impairment of brewery assets of $2.9 million increased by $1.5 million from 2025, due to write-offs of equipment at Company-owned breweries.

Previous wording

Litigation reduction. For the thirteen weeks ended June 27, 2026, the Company recorded non-recurring pre-tax litigation reduction of $19.4 million, related to the supplier dispute, consisting of a favorable adjustment to pre-judgement interest of $21.0 million and post-judgement interest expense of $1.7 million.

Current wording

Litigation expense. For the thirteen weeks ended September 26, 2026, the Company recorded non-recurring pre-tax litigation expense of $1.8 million, related to the supplier dispute, consisting of post-judgment interest expense.

Previous wording

Income tax provision. The Company's effective tax rate was a provision of 28.7%, an increase from 28.1% in the prior year. This increase in rate is due primarily to the increased negative impact of non-deductible stock compensation.

Current wording

Income tax provision. The Company's effective tax rate was a provision of 26.7%, a decrease from 28.1% in the prior year. This decreasein rate is due primarily to the positive impact of non-deductible stock compensation.

Previous wording

Net revenue. Net revenue decreased by $39.5 million, or 3.8%, to $1.002 billion for the twenty-six weeks ended June 27, 2026, as compared to $1.042 billion for the twenty-six weeks ended June 28, 2025, primarily due to decreased sales volume impacts of $58.1 million and increased sales incentives of $5.5 million, partially offset by increased pricing of $14.2 million and favorable product mix of $9.7 million.

Current wording

Net revenue. Net revenue decreased by $56.9 million, or 3.6%, to $1.522 billion for the thirty-nine weeks ended September 26, 2026, as compared to $1.579 billion for the thirty-nine weeks ended September 27, 2025, primarily due to decreased sales volume impacts of $84.5 million and increased sales incentives of $6.1 million, partially offset by increased pricing of $19.1 million and favorable product mix of $17.4 million.

Previous wording

Volume. Total shipment volume decreased by 5.6% to 3,607,000 barrels for the twenty-six weeks ended June 27, 2026, as compared to 3,820,000 barrels for the twenty-six weeks ended June 28, 2025, primarily due to decreases in Twisted Tea, Truly, Samuel Adams, Hard Mountain Dew and Dogfish Head brands that were partially offset by increases in Sun Cruiser and Angry Orchard brands.

Current wording

Volume. Total shipment volume decreased by 5.4% to 5,448,000 barrels for the thirty-nine weeks ended September 26, 2026, as compared to 5,756,000 barrels for the thirty-nine weeks ended September 27, 2025, primarily due to decreases in Twisted Tea, Truly, Samuel Adams, Hard Mountain Dew and Dogfish Head brands that were partially offset by increases in Sun Cruiser and Angry Orchard brands.

Previous wording

Net revenue per barrel. Net revenue per barrel increased by 1.9% to $277.87 per barrel for the twenty-six weeks ended June 27, 2026, as compared to $272.73 per barrel for the comparable period in 2025, primarily due to pricing and favorable product mix.

Current wording

Net revenue per barrel. Net revenue per barrel increased by 1.8% to $279.44 per barrel for the thirty-nine weeks ended September 26, 2026, as compared to $274.38 per barrel for the comparable period in 2025, primarily due to increased pricing and favorable product mix.

Previous wording

Cost of goods sold. Cost of goods sold was $139.16 per barrel for the twenty-six weeks ended June 27, 2026, as compared to $138.75 per barrel for the twenty-six weeks ended June 28, 2025. The 2026 increase in cost of goods sold of $0.41, or 0.3% per barrel was primarily due to inflationary impacts of $31.7 million, or $8.79 per barrel, partially offset by brewery efficiencies of $11.1 million, or $3.08 per barrel, contract renegotiations and recipe optimization savings of $10.7 million, or $2.97 per barrel, decreases in inventory obsolescence of $4.8 million, or $1.33 per barrel, and lower third-party production payment amortization of $4.0 million, or $1.11 per barrel.

Current wording

Cost of goods sold. Cost of goods sold was $138.21 per barrel for the thirty-nine weeks ended September 26, 2026, as compared to $138.01 per barrel for the thirty-nine weeks ended September 27, 2025. The 2026 cost of goods sold per barrel was flat to 2025 primarily due to inflationary impacts of $39.1 million, or $7.18 per barrel, offset by contract renegotiations and recipe optimization savings of $14.1 million, or $2.59 per barrel, brewery efficiencies of $12.6 million, or $2.31 per barrel, inventory waste reduction and network optimization savings of $6.0 million, or $1.10 per barrel and lower third-party production payment amortization of $5.3 million, or $0.97 per barrel.

Previous wording

Inflationary impacts of $31.7 million consist primarily of increased material costs, mainly from aluminum, of $29.2 million, inclusive of $9.8 million impact from tariffs, and increased internal brewery costs of $2.5 million.

Current wording

Inflationary impacts of $39.1 million consist primarily of increased material costs, mainly from aluminum, of $31.6 million, inclusive of $7.6 million impact from tariffs, and increased internal brewery costs of $3.0 million.

Previous wording

Advertising, promotional, and selling expenses. Advertising, promotional and selling expenses increased by $26.2 million, or 16.4%, to $185.9 million for the thirteen weeks ended June 27, 2026, as compared to $159.7 million for the thirteen weeks ended June 28, 2025 resulting from higher increased brand local marketing and point of sale investments of $17.5 million and higher freight costs of $8.6 million due to higher rates.

Current wording

Advertising, promotional, and selling expenses. Advertising, promotional and selling expenses increased by $29.2 million, or 6.3%, to $491.1 million for the thirty-nine weeks ended September 26, 2026, as compared to $462.0 million for thirty-nine weeks ended September 27, 2025. Resulting from higher freight costs of $20.6 million as freight rates increased more than offsetting the benefit of lower shipment volumes, and increased brand local marketing investments of $8.5 million.

Previous wording

Advertising, promotional and selling expenses were 32.5% of net revenue, or $90.37 per barrel, for the twenty-six weeks ended June 27, 2026, as compared to 28.5% of net revenue, or $77.81 per barrel, for the twenty-six weeks ended June 28, 2025. This increase per barrel is primarily due to increased spend in local marketing and freight rates. 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 32.3% of net revenue, or $90.15 per barrel for the thirty-nine weeks ended September 26, 2026. This increase per barrel is primarily due to freight rates. 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

Impairment of brewery assets. Impairment of brewery assets of $0.2 million decreased by $4.8 million from 2025, due to decreased write-offs of equipment at third-party and Company-owned breweries.

Current wording

Impairment of brewery assets. Impairment of brewery assets of $3.1 million decreased by $3.3 million from 2025, due to decreased write-offs of equipment at third party and Company-owned breweries.

Previous wording

Litigation expense. For the twenty-six weeks ended June, 27, 2026, the Company recorded non-recurring pre-tax litigation expense of $192.6 million, related to the supplier dispute, consists of the judgement of $175.5 million, pre-judgement interest of $15.5 million and post-judgement interest expense of $1.7 million.

Current wording

Litigation expense. For the thirty-nine weeks ended September 26, 2026, the Company recorded non-recurring pre-tax litigation expense of $194.5 million, related to the supplier dispute, consisting of the judgment of $175.5 million, pre-judgment interest of $15.5 million and post-judgment interest expense of $3.5 million.

Previous wording

For the twenty-six weeks ended June 27, 2026, the combined pre-tax expense related to the supplier dispute litigation of $198.0 million consists of legal expenses of $5.4 million, recorded in general and administrative expenses, and litigation expense of $192.6 million.

Current wording

For the thirty-nine weeks ended September 26, 2026, the combined pre-tax expense related to the supplier dispute litigation of $200.3 million consists of legal expenses of $5.8 million, recorded in general and administrative expenses, and litigation expense of $194.5 million.

Previous wording

Income tax (benefit) provision. The Company’s effective tax rate of 19.7% decreased from 29.2% in the prior year. The decrease is primarily due to a pre-tax loss in 2026 compared to pre-tax income in 2025 and the change in impact of non-deductible expenses.

Current wording

Income tax (benefit) provision. The Company’s effective tax rate of 12.4% decreased from 28.8% in the prior year. The decrease is primarily due to a pre-tax loss in 2026 compared to pre-tax income in 2025 and the change in impact of non-deductible expenses.

Previous wording

Cash increased to $265.5 million as of June 27, 2026 from $223.4 million as of December 27, 2025, primarily reflecting cash provided by operating activities and partially offset by the repurchase of the Company's A common stock

Current wording

Cash increased to $308.1 million as of September 26, 2026 from $223.4 million as of December 27, 2025, primarily reflecting cash provided by operating activities partially offset by the repurchase of the Company's A common stock.

Previous wording

Cash provided by operating activities for the twenty-six weeks ended June 27, 2026 reflected $208.6 million of non-cash adjustments and $2.6 million of net cash inflows from changes in operating assets and liabilities, partially offset by a net loss of $93.7 million. The non‑cash adjustments primarily consisted of $192.6 million of litigation expense. Cash provided by operating activities for the twenty-six weeks ended June 28, 2025 reflected a net income of $84.8 million, non-cash adjustments of $42.1 million, and net cash inflows of $1.5 million for changes in operating assets and liabilities. The decrease in cash provided by operating activities for the twenty-six weeks ended June 27, 2026 compared to the twenty-six weeks ended June 28, 2025 was primarily attributable to lower operating cash flow generation resulting from lower earnings, net of non-cash adjustments, in 2026.

Current wording

Cash provided by operating activities for the thirty-nine weeks ended September 26, 2026 reflected $240.8 million of non-cash adjustments and $3.9 million of net cash inflows from changes in operating assets and liabilities, partially offset by a net loss of $50.5 million. The non‑cash adjustments primarily consisted of $194.5 million of litigation expense. Cash provided by operating activities for the thirty-nine weeks ended September 27, 2025 reflected a net income of $131.0 million, non-cash adjustments of $67.3 million, and net cash inflows of $31.9 million for changes in operating assets and liabilities. The decrease in cash provided by operating activities for the thirty-nine weeks ended September 26, 2026 compared to the thirty-nine weeks ended September 27, 2025 was primarily attributable to lower operating cash flow generation resulting from lower earnings, net of non-cash adjustments, in 2026.

Previous wording

The Company used $22.8 million in investing activities during the twenty-six weeks ended June 27, 2026, as compared to $24.1 million during the twenty-six weeks ended June 28, 2025. The decrease in investing activity cash outflows is due to lower investment in the breweries during the current year. For both periods, capital investments were made primarily in company-owned and third-party production facilities to drive efficiencies, cost reductions, support product innovation and enable potential future growth.

Current wording

The Company used$31.1 million in investing activities during the thirty-nine weeks ended September 26, 2026, as compared to $36.7 million during the thirty-nine weeks ended September 27, 2025. The decrease in investing activity cash outflows is due to lower investment in the breweries during the current year. For both periods, capital investments were made primarily in company-owned and third-party production facilities to drive efficiencies, cost reductions, support product innovation and enable potential future growth.

Previous wording

Cash used in financing activities was $52.6 million during the twenty-six weeks ended June 27, 2026, as compared to $103.7 million during the twenty-six weeks ended June 28, 2025. The financing activity cash outflows in 2026 and 2025 comprised mostly of the repurchases of the Company's Class A common stock in the period.

Current wording

Cash used in financing activities was $78.4 million during the thirty-nine weeks ended September 26, 2026, as compared to$154.9 million during the thirty-nine weeks ended September 27, 2025. The financing activity cash outflows in 2026 and 2025 comprised mostly of the repurchases of the Company's Class A common stock in the period.

Previous wording

During the period from December 28, 2025 through July 17, 2026, the Company repurchased and subsequently retired 262,665 shares of its Class A Common Stock for an aggregate purchase price of $54.1 million. As of July 17, 2026, the Company had repurchased a cumulative total of approximately 16.0 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.43 billion and had approximately $174 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors.

Current wording

During the period from December 28, 2025 through October 16, 2026, the Company repurchased and subsequently retired 406,840 shares of its Class A Common Stock for an aggregate purchase price of $79.5 million. As of October 16, 2026, the Company had repurchased a cumulative total of approximately 16.2 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.45 billion and had approximately $149 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 June 27, 2026 of $265.5 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, including the potential litigation-related payments. 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 September 26, 2026 of $308.1 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, including the potential litigation-related payments. 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 thirteen and twenty-six weeks ended June 27, 2026.

Current wording

There were no material changes to the Company’s critical accounting policies during the thirteen and thirty-nine weeks ended September 26, 2026.

Previous wording

Based on the information currently available and tariff programs announced by the U.S. government, the Company estimates tariffs will have an unfavorable cost impact for the full year 2026 of approximately $20 million to $30 million. Total tariff costs for the twenty-six weeks ended June 27, 2026 were $12.1 million.

Current wording

Based on the information currently available and tariff programs announced by the U.S. government, the Company estimates tariffs will have an unfavorable cost impact for the full year 2026 of approximately $18 million to $22 million. Total tariff costs for the thirty-nine weeks ended September 26, 2026 were $14.2 million.