Boston Beer Company, Inc.

Greetings and welcome to the Boston Beer Company fourth quarter 2023 earnings 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 the conference, please press star zero on your telephone keypad. And as a reminder, this conference is being recorded. It is now my pleasure to introduce to you Mike Andrews, Associate General Counsel and Corporate Secretary. Thank you, Mike. 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 our 2023 fourth quarter earnings call. Joining the call from Boston Beer are Jim Cook, Founder and Chairman, Dave Berwick, our CEO, and Diego Reynoso, 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 reflects 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 Diego, who will focus on the financial details of our fourth quarter results, as well as our outlook for 2024. Immediately following Diego's comments, we will open the line for questions. As I look back on our 2023 performance, I'm encouraged that we saw steady, sequential improvement in depletions as we move through the year. On a comparable week's basis, our depletions improved from a decrease of 7% in the first half to a decrease of 3% in the third quarter and a decrease of 1% in the fourth quarter. We've made progress across the portfolio, and we have innovations that are launching this quarter, which Dave will review in more detail. Gross margins improved by 120 basis points in 2023 as we made progress on our operating plans to generate procurement savings, improve brewery efficiency, lower waste, and optimize our network. Our entire organization is focused on driving margin improvement, and I want to thank all of our cross-functional teams for their continuing efforts. Diego will provide more details on our gross margin outlook in his remarks and why we feel good about our long-term gross margin potential. As we move into 2024, we have the strategy and team in place to continue to deliver progress on depletions and margins. We've provided a range of guidance for 2024 with the pace of improvement depending on how the consumer environment plays out and the pace and success of our innovations. We continue to have a highly cash-generative business that delivered over $200 million in free cash flow and ended the year at an all-time high cash balance of almost $300 million and no debt. Our strong balance sheet enables us to invest in our brands and continue to return cash to shareholders with over $128 million in stock repurchased over the last 14 months. Overall, I'm confident that our diversified portfolio across categories, strong brand equities, and the best sales force in the industry position us well for long-term success. And finally, I am thankful to our outstanding coworkers, distributors, and retailers who continue to support our business. And I'd like to close with some comments on the press release we issued today regarding Dave's retirement from Boston Beer, which is effective April 1st. I've known and collaborated with Dave for the past 19 years, first as a valued board member, and then for the past six years, when he served as our CEO in an extraordinary period. During that time, Dave has had a tremendous impact on our company. We've grown from $850 million in revenue when he began as CEO to more than $2 billion in revenue with a portfolio of powerful brands and attractive categories. He's built a strong team across the company and his deep beverage industry expertise and brand building and innovation skills have fortified our portfolio to successfully compete in the broader alcoholic beverage environment. Dave has positioned the company very well for ongoing success in 2024 and beyond. I can't thank Dave enough for his partnership with me over the last two decades, and I wish him the very best. And I know many of you on this call have known Dave for years, and have experienced his intelligence and integrity. I have certainly been proud to have him represent Boston Beer Company to the community of investors and analysts. And I look forward to introducing you to our incoming CEO, Michael Spillane, on the April earnings call. Michael joined Boston Beer's board in 2016 and has been our lead director since May of last year. He has a broad business background with extensive consumer products experience and has spent the past 17 years at Nike. Given his already extensive knowledge of our company and our culture, we expect Michael to hit the ground running as he steps in to help lead us into our next chapter. I will now pass the call over to Dave.