Boston Beer Company, Inc.

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 2025 second 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 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 Michael, who will provide an overview of our operating results. Michael will then turn the call over to Diego, who will focus on the financial details of our second quarter results, as well as our updated financial outlook for 2025. Immediately following Diego's comments, we will open the line for questions. As I mentioned on our last call, we are operating in a challenging and unpredictable macroeconomic environment. There are near-term factors such as economic uncertainty and household budget tightening, along with pressure on Hispanic drinkers that are negatively impacting consumer demand across the overall beer industry. Additionally, the second quarter had especially poor weather in key selling weeks. Despite these industry headwinds, we see long-term growth opportunities in Beyond Beer, which we often call the fourth category. Beyond Beer represents more than 85% of our volume and is outperforming the legacy three categories of beer, wine, and spirits. We have strong brands, and over the last year, one in three beer-drinking households in the U.S. have purchased at least one Boston beer product from our diverse portfolio. We've built a culture of innovation for over 40 years, which allows us to quickly move to where consumer demand is going. The latest example is SunCruiser, which was one of the top volume gainers in RTD spirits so far this year. With that as context, let's move on to our results and our updated 2025 outlook. In the first half, our depletions were down 3%, and we gained share compared to an overall beer industry that we estimate to be down over 4%. In the second quarter, our depletions were down 5%, and as expected, shipments were significantly ahead of depletions at down only 1%. This was mostly driven by the timing of wholesaler demand for our Sun Cruiser and Truly Unruly innovations, along with lower-than-target wholesaler inventory levels last June. Despite a weaker than expected volume environment, we delivered strong margin expansion and EPS growth in the quarter. This was driven by continued progress on our productivity initiatives, which Diego will discuss in his remarks. These efforts have allowed us to raise our gross margin guidance for the year while also absorbing tariff costs. Our business generated over $125 million in operating cash flow in the first half, which enables investments in our brands as well as $111 million in cash returns to shareholders year to date. We believe increased brand investments are needed to support the national launch of SunCruiser and to ensure our full portfolio is well positioned when the industry improves. As always, we'll be disciplined in our approach and we'll only invest where we see clear opportunities. We're encouraged by the strong consumer reception for Sun Cruiser, as well as growth in our smaller brands, such as Angry Orchard and Dogfish Head. However, as Michael will discuss, industry headwinds are impacting our larger brands in the near term. As a result, we do expect shipment declines in the second half of the year as shipments rebalance in line with depletion trends. In summary, I'm confident we have the right strategies and team in place. We're continuing to invest in our brands, we're building a strong innovation pipeline, and we're making progress on our multi-year productivity initiatives. Importantly, we're focused on controlling what we can control. We're executing in the marketplace to improve share trends and expand our margins. I'd like to thank our Boston Beer team, distributors, and retailers for their continued support. I will now pass the call over to Michael.

Thanks, Jim, and good afternoon, everyone. Our strategy to nurture all our core brands, pursue a fewer things better approach to innovation, and transform our supply chain is gaining traction. While we still have work to do, this strategy helped us deliver significant margin expansion and earnings per share growth in the second quarter, while growing depletions on four of our seven brands. We also hit a record high in customer service levels and reached nearly 50% in gross margin. As Jim noted, the macroeconomic environment is dynamic, and as such, our depletions have softened since the last earnings call. Beginning in May and accelerating to June, we saw higher than expected industry declines in the FMV category, which in measured off-premise channels was down 3% in dollar sales year-to-date after growing 7% for the full year in 2024. Our current assessment is that economic uncertainty is driving lower traffic at retail as well as fewer social occasions. Also, while we remain under-penetrated with Hispanic consumers, they are a sizable portion of the consumer base for alcoholic beverages and do have some impact on our volume performance. We've maintained healthy points of distribution for our portfolio and gained shelf space in the spring resets for Twisted Tea, Suncruiser, Samuel Adams, Angry Orchard, and Howard Mountain Dew. However, traffic levels are down across retail channels and consumers have become somewhat more focused on absolute dollar spec. This has slowed velocities on our larger brands, Twisted Tea and Truly, which are more exposed to overall economic trends and generate a higher percentage of their sales mix from larger pack sizes. Given these trends, we've lowered our volume forecast for the year, as Diego will further discuss in his remarks. Now I'll provide an update on our brand performance and plans. Twisted Tea held share of the overall FMB category, with dollar sales declining 4% in measured channels last quarter. As we expected, Twisted Tea's shelf space increased mid-single digits in the spring resets as retailers began trimming their assortments. Twisted Tea brand equities remain strong, with a very large organic social following and some of the highest engagement among the top 10 beer brands. The Twisted Tea portfolio continues to grow households and has improved its penetration with Hispanic consumers. While that has not provided the growth we initially expected in 2025, it should benefit the brand in the long term. Twisted Tea Light and Twisted Tea Extreme are growing shelf space and velocities. Our packaging redesign has improved sales per point of Twisted Tea Light Twisted Tea Extreme Lemon and Twisted Tea Blue Razz are still the top two growth SKUs in the convenience channel among all FMBs. Twisted Tea Light and Twisted Tea Extreme will be growth drivers for the brand for the remainder of 25 and beyond. We have strong advertising plans for the rest of summer to position us well when the overall category improves. Campaigns include high-performing tea drop ads and our annual America Parties with Tea program. We will also come back in the fall for the fourth year of our college football program. This program now includes in-game advertising, sponsorships with ESPN and expanded retailer programs with team specific packages in key markets. In summary, Twisted Tea is our largest brand. We're continuing to fully support it with advertising, investment and innovation. We continue to believe that despite near term challenges, These actions, coupled with an improvement in the macro environment, will return the brand to growth for the long term. Moving to SunCruiser, which launched last summer and went national in January of this year, SunCruiser is a gross margin accretive and has been very well received by wholesalers, retailers, and drinkers. SunCruiser has quickly grown to a foreshare of the RTD spirits category and continues to grow volumes week over week as distribution expands. While SunCruiser mainly sources from other RTD spirits, it does have some interaction with Twisted Tea. After an initial regional launch focused on independent and on-premise accounts, SunCruiser is now on shelf in larger national chain retailers. This has helped us triple our points of distribution this summer compared to earlier in the year. As these placements drive volume, we expect a greater presence for SunCruiser in measured off-premise channel data. It's worth noting that through the first half, only a small portion of SunCruiser's total volume was captured in measured off-premise channel data. We believe SunCruiser will be the next iconic brand for the company and an important growth contributor for the Beyond Beer category. Many consumers discovered it in the on-premise channel, which is a great place to build brands. It's putting up great trial and repeat numbers. It's also showing up on paid social and digital advertising as well as big sports moment television advertising and music and sports venues, sponsorships like the HEG Concert Series and Madison Square Garden. Additionally, Sun Cruise's presence in the AVP Beach Volleyball and the World Surf League further reinforce its positioning as a brand for sun, sand, and fun. Turning to hard seltzer, the overall hard seltzer category declined 7% in dollars in measured off-premise channels in the second quarter as consumer preferences shift towards more premium RTD spirits-based beverages. While Truly continues to be a top two hard seltzer brand and a top four beyond beer brand, we're not satisfied with its performance. We're refreshing our marketing strategy and continuing to support the Truly Unruly high ABV innovation and as we work to stabilize the brand we will be launching a new creative platform with a significant investment in regional media and key markets later in the third quarter truly will continue to sponsor u.s soccer as we begin the year-long lead-up to the 2026 world cup which will take place in north america for the first time in more than three decades truly also will continue to sponsor barstool sports podcasts pardon my take and chicks in the office and activate strong retail campaigns. High ABV offerings continue to be a bright spot in hard seltzer. Truly Unruly has grown to a 3% volume share of hard seltzer, and the Truly Unruly Variety Pack is the number one dollar 12-pack share gainer in Beyond Beer the last 12 months. Our second variety pack, Truly Unruly Lemonade, launched in April and is helping Truly Unruly build momentum and gain shelf space. Our beer brand Samuel Adams and Dogfish Head continue to be important parts of our portfolio. Samuel Adams American Light launched in glass bottles to support its positioning as the most premium light beer in America. American Light is also featured in our summer patriotic program along with Sam Adams Summer Ale. These initiatives have helped the Samuel Adams brand family gain shelf space even while overall craft beer shelf space declines. Dogfish Head grew depletions in the second quarter for the first time in many years, behind the successful launch of Grateful Dead Juicy Pale Ale. This is the largest launch in Dogfish Head's 30-year history and continues to build volume and distribution, especially in music venues and other key on-premise accounts. Partnering with the Grateful Dead has allowed our team to gain distribution not only in our core Dogfish markets, but beyond, including the Sphere in Las Vegas for the Dead & Company concerts. We also developed a limited edition Grateful Dead 60th anniversary single serve package that will be sold at the Dead & Company concert series in San Francisco next month. Insider, Angry Orchard has also returned to growth behind a consumer trend back to more flavorful options. Depletions grew in the second quarter, driven by a higher level of focus for the organization, including increased investment and new sponsorships. The new campaign, Don't Get Angry, Get Orchard, And our sponsorships of WWE wrestling positively impacted the results and helped the brand gave shelf space. Later this summer, we're launching an exciting program featuring Friday the 13th movie themed advertising, promotions, packaging, and displays for Halloween and the peak fall cider season. With respect to Hard Mountain Dew, we're encouraged to see positive depletions for four straight quarter. Hard Mountain Dew Code Red, which was released earlier this year, is now distributed in single serve. Earlier this month, we launched a cross merchandising partnership with Tostitos that is being utilized to help support further growth. We continue to expect growth for Hard Mountain Dew this year, but it will be a multi-year effort for this product to become a meaningful part of our volume mix. In closing, we continue to make progress as an organization. We're executing our commercial plans to take advantage of the rest of the summer selling season, and we're continuing our longer-term innovation and productivity initiatives. While current industry trends are challenging, we continue to believe we will create long-term value for shareholders through innovation, focused execution, and margin improvement. I'd like to thank our team for all their hard work executing this summer season and for remaining agile in a dynamic operating environment. I'll now pass the call over to Diego to review our second quarter financial results in 2025 guidance.