Boston Beer Co. Inc.'s Q1: Light Revenue, Heavy Earnings

Boston Beer Co. just served up another mixed quarter. But unlike last quarter's dizzyingpost-earnings drop, this time the market seems to like what it's tasting.

Shares of the craft brewer climbed around 2% in Wednesday's after-hours trading after it said first-quarter revenue climbed 8.5% year over year to $199.5 million, For that, Boston Beer primarily credits core shipment growth of 6%. Analysts, for their part, were hoping for slightly higher sales of $204.2 million.

At the same time, however, Boston Beer also saw net income jump 65% over the same period to $13.7 million, or $1.00 per diluted share. Analysts, on average, were expecting net income of only $0.68 per share.

Boston Beer founder and Chairman Jim Koch noted that Boston Beer's spring seasonal, Samuel Adams Cold Snap, was "well received by drinkers, retailers, and distributors." But more importantly, Koch confirmed that Boston Beer had a smooth transition late in the quarter from Cold Snap to its wildly popular summer seasonal, Samuel Adams Summer Ale. Finally, Koch highlighted "great support" from distributors and retailers for its Rebel-series IPAs -- though it still remains to be seen whether Rebel IPA can truly win the hearts of craft-beerconnoisseurs over the long term.

Quarterly depletions -- a measure for how fast products travel from warehouses to consumer outlets -- continued to improve, growing 8% from the same year-ago period but down from 13% last quarter. The sequential decline in depletions growth was an expected result, as Boston Beer left its previous estimated full-year depletion growth estimate unchanged at between 8% and 12%.

With regard to year-over-year depletions growth, Boston Beer CEO Martin Roper credited "strength in our Angry Orchard, Twisted Tea, and Traveler brands that offset slight declines in some of our Samuel Adams styles." Roper also pointed out that Boston Beer's national rollout of the Traveler brand is under way and being well supported by drinkers, distributors, and retailers alike. But it's still too early to tell whether the rollout is a complete success just yet.

Meanwhile, Boston Beer's bottom line benefited from a 2% price increase during the quarter, as well as a 2% decrease (or $1 million) in advertising, promotional, and selling expenses mostly resulting from timing of spending related to new product launches. Boston Beer also saw notable improvements in its supply chain through improved training, stable scheduling, and operating efficiencies. Roper further promised, "We will continue to make supply chain improvements intended to improve the freshness of our beers and enhance customer service."

But arguably most encouraging to long-term investors was this statement from Roper: "Looking forward, we expect to maintain a high level of brand investment, as we pursue sustainable growth and innovation. We remain prepared toforsakethe earnings that may be lost as a result of these investments in the short term, as we pursue long term profitable growth."

Perhaps that's part of the reason the market is forgiving Boston Beer's decision to simply reiterate its previous full-year guidance forearningsper diluted share between $7.10 and $7.50. That's slightly below Wall Street's models for 2015 earnings of $7.59 per share. Of course, if last year's results are any indication, it's also worth noting that Boston Beer has demonstrated a knack for issuing conservative guidance in favor of outperforming later.

Either way, apart from that and its slight top line miss, there was plenty to like about this solid performance from Boston Beer.

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