Boston Beer Company, Inc.

Greetings and welcome to the Boston Beer Company third quarter 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, 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 2024 third quarter earnings call. Joining the call from Boston Beer are Jim Cook, Founder and Chairman, Michael Spillane, 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 facts 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 Michael, who will provide his view of the business and the actions we're taking to position the company for improvement in 2025. Michael will then turn the call over to Diego, who will focus on the financial details of our third quarter results. as well as our updated outlook for 2024. Immediately following Diego's comments, we'll open up the line for questions. I'd like to begin my remarks with an overview of the market environment. There continues to be noise in month-to-month volume trends in the alcoholic beverage industry. We expect near-term industry volume trends to continue to move around month-to-month, given the macroeconomic consumer environment. Importantly, we're seeing the pricing environment remain stable. and are achieving price increases of approximately 2%, which was at the high end of our prior guidance range. From a Boston Beer perspective, we mentioned on our last call that we undershift demand in the second quarter as trends improved late in the quarter and we were not able to fulfill all orders. By the end of the third quarter, our wholesaler inventories normalized at approximately five and a half weeks, and shipments and depletion trends year-to-date are consistent at down 3%. We've narrowed our volume guidance for the full year to reflect three-quarters of results and a range of outcomes for the fourth quarter given the near-term consumer environment. From a long-term perspective, we continue to believe that there is a significant opportunity in the fourth category as lines continue to blur beyond the traditional three categories of beer, wine, and spirits, and consumers seek newness and variety. These fourth category beverages are typically sold in a can, need to be available in the cold box, and are closer to beer in terms of pricing and margin structure and production requirements. We believe Boston Beer Company is well positioned to take advantage of this growth, given our proven track record of creating new products and getting them into the hands of drinkers through both our best-in-class sales force and wholesaler relationships. We have strong core brands and a strong innovation pipeline for 2025, including Sun Cruiser and Samuel Adams American White. Our margin initiatives continue to show strong progress with gross margin up 190 basis points year to date. The systems and infrastructure we built to support a diversified portfolio are showing results and there is significant long-term margin opportunity ahead as we continue to execute on our productivity plans, launching margin accretive innovation and return to growth. In summary, Our priorities are to support our category-leading brands to improve market share, nurture the innovation pipeline in a disciplined manner, and improve our execution to unlock revenue opportunities and lower costs. We're focused on responding to and taking advantage of the trends we can control and implementing operating plans to position the company well in 2025. The highly cash-generative nature of our businesses and our strong balance sheet allows us to invest to return to long-term growth while continuing to return cash to shareholders. We've generated over $200 million in operating cash flow this year and have a cash balance of $256 million at the end of the third quarter with no debt. Based on our view of long-term growth prospects for the company and our philosophy of returning excess cash to shareholders, We've repurchased $191 million in shares year-to-date and recently expanded our share repurchase authorization by $400 million. To close, I'd like to thank our Boston Beer team, our distributors, and our retailers for their continued support. And now, I'll pass the call to Michael.