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 June 26, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission file number: 1-14092

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, Suite 850, Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)

(617) 368-5000

(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 Stock $0.01 per value	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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	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 12b-2 of the Act.)     Yes  ☐    No  ☒

Number of shares outstanding of each of the issuer’s classes of common stock, as of July 16, 2021:

Class A Common Stock, $.01 par value	10,203,795
Class B Common Stock, $.01 par value	2,078,000
(Title of each class)	(Number of shares)

THE BOSTON BEER COMPANY, INC.

FORM 10-Q

June 26, 2021

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION		PAGE
	Item 1.	Condensed Consolidated Financial Statements (Unaudited)	3
		Condensed Consolidated Balance Sheets as of June 26, 2021 and December 26, 2020	3
		Condensed Consolidated Statements of Comprehensive Income for the thirteen and twenty-six weeks ended June 26, 2021 and June 27, 2020	4
		Condensed Consolidated Statements of Cash Flows for the twenty-six weeks ended June 26, 2021 and June 27, 2020	5
		Condensed Consolidated Statements of Stockholders’ Equity for the thirteen and twenty-six weeks ended June 26, 2021 and June 27, 2020	6
		Notes to Condensed Consolidated Financial Statements	7-16
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17-22
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
	Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	23
	Item 1A.	Risk Factors	23
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
	Item 3.	Defaults Upon Senior Securities	24
	Item 4.	Mine Safety Disclosures	24
	Item 5.	Other Information	24
	Item 6.	Exhibits	25
SIGNATURES			26

EX-31.1 Section 302 CEO Certification

EX-31.2 Section 302 CFO Certification

EX-32.1 Section 906 CEO Certification

EX-32.2 Section 906 CFO Certification

2

PART I. FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

	June 26, 2021			December 26, 2020
Assets
Current Assets:
Cash and cash equivalents	$	102,953		$	163,282
Accounts receivable		113,458			78,358
Inventories		247,550			130,910
Prepaid expenses and other current assets		38,240			30,230
Income tax receivable		12,896			10,393
Total current assets		515,097			413,173
Property, plant and equipment, net		664,200			623,083
Operating right-of-use assets		56,490			58,483
Goodwill		112,529			112,529
Intangible assets		103,804			103,930
Third-party production prepayments		88,683			56,843
Other assets		20,149			10,784
Total assets	$	1,560,952		$	1,378,825
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable	$	201,043		$	121,647
Accrued expenses and other current liabilities		108,036			129,544
Current operating lease liabilities		8,272			8,232
Total current liabilities		317,351			259,423
Deferred income taxes, net		92,681			92,665
Non-current operating lease liabilities		57,040			59,171
Other liabilities		9,745			10,599
Total liabilities		476,817			421,858
Commitments and Contingencies (See Note J)
Stockholders' Equity:
Class A Common Stock, $.01 par value; 22,700,000 shares authorized; 10,165,649    and 10,004,681 issued and outstanding as of  June 26, 2021 and    December 26, 2020, respectively		102			100
Class B Common Stock, $.01 par value; 4,200,000 shares authorized; 2,078,000    and 2,177,983 issued and outstanding as of June 26, 2021 and    December 26, 2020, respectively		21			22
Additional paid-in capital		602,163			599,737
Accumulated other comprehensive loss		(217	)		(252	)
Retained earnings		482,066			357,360
Total stockholders' equity		1,084,135			956,967
Total liabilities and stockholders' equity	$	1,560,952		$	1,378,825

3

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Thirteen weeks ended						Twenty-six weeks ended
	June 26, 2021			June 27, 2020			June 26, 2021			June 27, 2020
Revenue	$	641,314		$	481,089		$	1,223,023		$	833,314
Less excise taxes		38,509			28,951			75,138			50,611
Net revenue		602,805			452,138			1,147,885			782,703
Cost of goods sold		327,116			242,514			622,566			425,106
Gross profit		275,689			209,624			525,319			357,597
Operating expenses:
Advertising, promotional and selling expenses		161,620			100,336			302,479			198,227
General and administrative expenses		32,960			29,685			64,906			56,714
Impairment of assets		1,004			834			1,231			2,355
Total operating expenses		195,584			130,855			368,616			257,296
Operating income		80,105			78,769			156,703			100,301
Other expense:
Interest expense		(29	)		(212	)		(58	)		(149	)
Other income (expense), net		8			(52	)		2			(412	)
Total other expense, net		(21	)		(264	)		(56	)		(561	)
Income before income tax provision		80,084			78,505			156,647			99,740
Income tax provision		20,889			18,364			31,887			21,365
Net income	$	59,195		$	60,141		$	124,760		$	78,375
Net income per common share - basic	$	4.82		$	4.93		$	10.16		$	6.44
Net income per common share - diluted	$	4.75		$	4.88		$	10.01		$	6.37
Weighted-average number of common shares - basic		12,283			12,196			12,277			12,177
Weighted-average number of common shares - diluted		12,465			12,258			12,461			12,221
Net income	$	59,195		$	60,141		$	124,760		$	78,375
Other comprehensive income:
Foreign currency translation adjustment		15			(13	)		35			(71	)
Comprehensive income	$	59,210		$	60,128		$	124,795		$	78,304

4

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Twenty-six weeks ended
	June 26, 2021			June 27, 2020
Cash flows provided by operating activities:
Net income	$	124,760		$	78,375
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		34,174			32,584
Impairment of assets		1,231			2,355
(Gain) loss on disposal of property, plant and equipment		(150	)		39
Change in right-of-use assets		3,954			3,649
Other non-cash (income) expense		(98	)		375
Stock-based compensation expense		10,291			7,103
Deferred income taxes		(39	)		12,407
Changes in operating assets and liabilities:
Accounts receivable		(35,075	)		(45,326	)
Inventories		(120,675	)		(12,795	)
Prepaid expenses, income tax receivable and other current assets		(25,329	)		(3,347	)
Third-party production prepayments		(17,024	)		(11,415	)
Other assets		(5,475	)		(253	)
Accounts payable		78,801			19,560
Accrued expenses and other current liabilities		(14,427	)		20,803
Change in operating lease liabilities		(4,052	)		(80	)
Other liabilities		120			(23	)
Net cash provided by operating activities		30,987			104,011
Cash flows used in investing activities:
Purchases of property, plant and equipment		(83,521	)		(60,072	)
Proceeds from disposal of property, plant and equipment		420			45
Other investing activities		145			260
Net cash used in investing activities		(82,956	)		(59,767	)
Cash flows (used in) provided by financing activities:
Proceeds from exercise of stock options and sale of investment shares		7,944			8,010
Net cash paid on note payable and finance leases		(795	)		(649	)
Cash borrowed on line of credit		—			100,000
Cash paid on line of credit		—			(100,000	)
Payment of tax withholding on stock-based payment awards and investment shares		(15,509	)		(1,559	)
Net cash (used in) provided by financing activities		(8,360	)		5,802
Change in cash and cash equivalents		(60,329	)		50,046
Cash and cash equivalents at beginning of year		163,282			36,670
Cash and cash equivalents at end of period	$	102,953		$	86,716
Supplemental disclosure of cash flow information:
Income taxes paid	$	34,395		$	2,929
Cash paid for amounts included in measurement of lease liabilities
Operating cash flows from operating leases	$	5,212		$	4,532
Operating cash flows from finance leases	$	66		$	75
Financing cash flows from finance leases	$	724		$	581
Right-of-use-assets obtained in exchange for operating lease obligations	$	1,961		$	11,311
Right-of-use-assets obtained in exchange for finance lease obligations	$	-		$	3,856
Change in purchase of property, plant and equipment in accounts payable and    accrued expenses	$	(6,928	)	$	4,920

5

THE BOSTON BEER COMPANY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the thirteen and twenty-six weeks ended June 26, 2021 and June 27, 2020

(in thousands)

(unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements.

			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
Net income																			59,195			59,195
Stock options exercised and restricted    shares activities		13		—									(9,133	)								(9,133	)
Stock-based compensation expense													5,334									5,334
Conversion from Class B to Class A		100		1			(100	)		(1	)											—
Foreign currency translation adjustment																15						15
Balance at June 26, 2021		10,166	$	102			2,078		$	21		$	602,163		$	(217	)	$	482,066		$	1,084,135
			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 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			&