Boston Beer Company, Inc.

Greetings and welcome to the Boston Beer Company fourth quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn this conference over to Mr. Mike Andrews, Associate General Counsel and Corporate Secretary. Thank you, sir. You may begin.

Thank you. Good afternoon and welcome. This is Mike Andrews, Associate General Counsel and Corporate Secretary of the Boston Beer Company. I'm pleased to kick off the 2021 fourth quarter earnings call for the Boston Beer Company. Joining the call from Boston Beer are Jim Cook, our founder and chairman, Dave Berwick, our CEO, and Frank Smala, our CFO. Before we discuss our business, I'll start with our disclaimer. As we state in our earnings release, some of the information we discuss and that may come up on this call, reflect the company's or management's expectations or predictions of the future. Such predictions are forward-looking statements. It's important to note that the company's actual results could differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's most recent 10Q and 10K. The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. I will now pass it over to Jim for some introductory comments.

Thanks, Mike. I'll begin my remarks this afternoon with a few introductory comments and then hand over to Dave, who will provide an overview of our business. Dave will then turn the call over to Frank, who will focus on the financial details of the fourth quarter results, as well as the outlook for 2022. And immediately after Frank's comments, we'll open up the line for questions. Our fourth quarter depletions growth was 15% and full year depletions growth was 22%. Despite these strong depletion results, we experienced a decline in shipments in the fourth quarter as we continue to work through challenges with our supply chain and the impacts of the slowdown in Hart's seltzer. Fourth quarter shipments declined 24.5% compared to last year's fourth quarter as a result of more aggressive wholesaler inventory reduction than expected around truly. And then beginning in early 2022, our service levels to wholesalers declined due to supply chain constraints. This led to increased out of stocks for certain brands and packages with our wholesalers. Additionally, the beer industry is off to a slow start in 2022, likely as a result of the large outbreak of Omicron, the continued broad scale supply chain issues, and commodity inflation that is affecting consumer purchases. As a result, thus far in 2022, lower shipment trends have continued, and now our depletions are also declining compared to last year's comparable period. mostly attributable to the significant shipments from truly inventory pre-build and sell-through one year ago, and partly as a result of out-of-stocks. We are focused on resolving our supply chain issues as quickly as possible, but believe they will continue to negatively impact our business until the inventory levels have recovered, which we expect will happen by the end of the first quarter. In measured off-premise channels, through December 26, 2021, where our brand portfolio represents only 4.3 of the total beer industry volume. We delivered 43% of the total industry volume growth, the highest by far of all brewers. In addition, we're pleased that all five of our brands grew depletions during the fourth quarter, a good sign of the inherent demand for our products. We have a broad portfolio of healthy brands, and we expect that our business will recover and grow volume between 4 and 10% for the full year in 2022. We're thankful to our outstanding coworkers, distributors, and retailers whose continued support helped grow our business during 2021. I will now pass it over to Dave for a more detailed overview of our business.