SAM – EPS Miss on Increased Brand Investment

SAM reported Q1 2013 EPS of $0.51 vs consensus of $0.64 and $0.56 in Q1 ’12 last night. It had a very healthy 20% top-line gain year-on-year (versus a reasonably difficult comparison) with +1% pricing during the quarter. Ciders and teas offset weakness in Samuel Adams, and SAM sees continued competition from domestic specialty and craft beers. FY EPS guidance was unchanged at $4.70 to $5.10.  Great company, great beer - nothing for us do at with this multiple and the stock off 11% today. 

 

What we liked:

  • Revenue $135.9 million (vs consensus $131.3 million), a 20% year-over-year increase
  • Core shipment volume was approximately 632,000 barrels, an 18% increase compared to Q1 ‘12
  • Momentum continues behind ciders and teas
  • Maintained full-year gross margin guidance
  • FY EPS guidance unchanged at $4.70 to $5.10

What we didn’t like:

  • EPS $0.51 vs consensus of $0.64
  • Gross margin declined to 50% vs 55% in Q1 ‘13
  • In the quarter, advertising, promotional and selling expenses increased $5 million versus the prior year, and FY guidance raised by $18 million to $26 million - the craft segment might be getting a little toppy here
  • G&A increased $3.1 million versus the prior year

The company is introducing its Samuel Adams Boston Lager in a can this May, with the new innovation ready for summer occasions where glass bottles are not prohibited. Be on the look out!

 

Rob

 

Robert Campagnino

Managing Director

HEDGEYE RISK MANAGEMENT, LLC

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Matt Hedrick

Senior Analyst


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