US brewer Boston Beer Company has reported a non-cash impairment linked mainly to its Dogfish Head brand, which it acquired in 2020.
The move followed a review of the “latest forecasts of brand performance” in September, which was “below our projections made on the acquisition date”, the group said in a statement yesterday (24 October).
Sitting alongside Boston Beer’s results for the third quarter ended 28 September, the Samuel Adams owner said it had booked a $42.6m impairment “recorded primarily for the Dogfish Head brand”.
As a result of the impairment, the company’s effective tax rate for the third quarter increased from 29.3% in 2023 to 31.7%.
Boston Beer added it planned to pay off the impairment charge by settling up $14.4m on an annual basis over a ten-year period.
The Angry Orchard hard cider producer said it did “not expect any future impairments related to the Dogfish Head brand”.
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By GlobalDataThe company has already booked two separate impairment charges related to the Dogfish Head beers in the third quarters of 2023 and 2022.
In the third quarter of 2022, Boston Beer recorded a $27.1m impairment charge, while, in the same quarter a year later, it logged a charge of $16.4m.
In its third-quarter results, Boston Beer booked a 26% decline in net income at $33.5m, attributed to the impairment and consequential increased tax rate. In the the nine-month period, net income increased 4.3% year on year, to $98.5m.
Net revenues in the thirteen weeks grew 0.6% to $605.5m. In the thirty-nine weeks, they remained flat, decreasing slightly by 0.3% to $1.6bn.
Operating income in the third quarter dropped 26.8% on the year prior to $45.8m. In the nine months, it grew 4.8% to $132m.
Depletions in the third quarter were down 3% on 2023, while shipment volumes dropped 1.9% to 2.24 million barrels, caused by decreases from Truly Hard Seltzer.
In the first nine months of the year, depletions dropped 3% and shipment volumes were down 2.9%, at six million barrels, declines also attributed to Truly Hard Seltzer.
Boston Beer also made changes to its guidance for its full-year results for 2024.
The group now sees its gross margins increasing 44% to 45%, compared to its previous prediction of 43% to 45%. It also expects full-year depletions and shipments to decrease by “low single digits”. Boston Beer had previously forecast “low single digit to zero”.
Capital spending projections have also been cut for the full year from a $90m to $110m range, to $80 to $95m.
