Third Quarter 2026 (13 weeks ended September 26, 2026)
Filed Oct 22, 2026Boston Beer reported lower third-quarter volume and net revenue, while gross-margin expansion and lower general and administrative expense supported GAAP diluted income per share of $4.21 and non-GAAP diluted earnings per share of $4.37.
Depletions, shipments and net revenue declined, but gross margin expanded 90 basis points year over year, the company generated $194,202 of operating cash flow during the 39-week period, and it raised the low ends of gross-margin and non-GAAP EPS guidance.
Actuals vs. the company’s prior outlook
from its previous release| Metric | Guided | Reported | Verdict |
|---|---|---|---|
| Depletions and Shipments Percentage Change | Down low-single digits to mid-single digits | Depletions year-to-date decreased 5%; shipment volume year-to-date was approximately 5.4 million barrels, a 5.4% decrease from the prior year | n/a |
| Gross Margin (including Tariffs) | 48.5% to 50% | Year-to-date gross margin of 50.5% | n/a |
| GAAP EPS (Income/ (Loss)) | ($6.23) to ($4.23) | Year-to-date diluted income (loss) per share of $ (4.87) | n/a |
| Non GAAP EPS | $8.50 to $10.50 | Year-to-date non-GAAP diluted earnings per share of $9.64 | n/a |
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Third quarter depletionsother | decreased 5% | – | decreased 5% |
| Third quarter shipment volumeother | approximately 1.8 million barrels | – | a 4.9% decrease |
| Third quarter revenueGAAP | $555.5M | – | – |
| Third quarter excise taxesGAAP | $35.36M | – | – |
| Third quarter net revenueGAAP | $520.1M | – | decreased 3.2% |
| Third quarter cost of goods soldGAAP | $251.0M | – | – |
| Third quarter gross profitGAAP | $269.1M | – | – |
| Third quarter gross marginGAAP | 51.7% | – | an increase of 90 basis points year over year |
| Third quarter advertising, promotional, and selling expensesGAAP | $165.2M | – | flat year over year |
| Third quarter general and administrative expensesGAAP | $42.85M | – | decreased by $2.1 million |
| Third quarter impairment of brewery assetsGAAP | $2.89M | – | increased by $1.5 million |
| Third quarter litigation expenseGAAP | $1.82M | – | – |
| Third quarter total operating expensesGAAP | $212.7M | – | – |
| Third quarter operating incomeGAAP | $56.33M | – | – |
| Third quarter interest income, netGAAP | $2.71M | – | – |
| Third quarter other expense, netGAAP | −$138K | – | – |
| Third quarter total other income, netGAAP | $2.58M | – | – |
| Third quarter income before income tax provisionGAAP | $58.91M | – | – |
| Third quarter income tax provisionGAAP | $15.74M | – | – |
| Third quarter effective tax rateGAAP | 26.7% | – | – |
| Third quarter net incomeGAAP | $43.17M | – | – |
| Third quarter diluted income per shareGAAP | $4.21 | – | – |
| Third quarter non-GAAP diluted earnings per sharenon-GAAP | $4.37 | – | – |
| Year-to-date depletionsother | decreased 5% | – | decreased 5% |
| Year-to-date shipment volumeother | approximately 5.4 million barrels | – | a 5.4% decrease |
| Year-to-date revenueGAAP | $1.62B | – | – |
| Year-to-date excise taxesGAAP | $102.4M | – | – |
| Year-to-date net revenueGAAP | $1.52B | – | decreased 3.6% |
| Year-to-date gross marginGAAP | 50.5% | – | an increase of 80 basis points year over year |
| Year-to-date advertising, promotional, and selling expensesGAAP | $491.1M | – | increased $29.2 million or 6.3% |
| Year-to-date general and administrative expensesGAAP | $144.0M | – | increased $5.4 million or 3.9% |
| Year-to-date impairment of brewery assetsGAAP | $3.12M | – | decreased by $3.3 million |
| Year-to-date litigation expenseGAAP | $194.5M | – | – |
| Year-to-date operating income (loss)GAAP | −$63.36M | – | – |
| Year-to-date income tax provision (benefit)GAAP | −$7.18M | – | – |
| Year-to-date effective tax rateGAAP | a benefit of 12.4% | – | – |
| Year-to-date net income (loss)GAAP | −$50.53M | – | – |
| Year-to-date diluted income (loss) per shareGAAP | $ (4.87) | – | – |
| Year-to-date non-GAAP diluted earnings per sharenon-GAAP | $9.64 | – | – |
| Thirty-nine weeks ended September 26, 2026 net cash provided by operating activitiesGAAP | $194.2M | – | – |
| Thirty-nine weeks ended September 26, 2026 purchases of property, plant, and equipmentGAAP | −$31.23M | – | – |
| Cash and cash equivalents as of September 26, 2026GAAP | $308.1M | – | – |
| Accrued litigation expenses as of September 26, 2026GAAP | $194.5M | – | – |
Full Year 2026 Current Guidance outlook
- Gross margin49% to 50%
- Operating expensesAdvertising, Promotion, and Selling Expense Year Over Year Change ($ million): Approximately Flat
- Tax rateGAAP Tax Rate (Benefit)/ Provision: (11.0%) to (12.0%); Non GAAP Tax Rate Provision: 29% to 30%
- NoteDepletions and Shipments Percentage Change: Down mid-single digits
- NotePrice Increases: 1% to 2%
- NoteTariff Costs ($ million): $18 to $22
- NoteGAAP EPS (Income/ (Loss)): ($5.76) to ($4.26)
- NoteNon-recurring Litigation Expenses impact per share: ($14.76)
- NoteNon GAAP EPS: $9.00 to $10.50
- NoteCapital Spending ($ million): $55 to $70
- NoteThe Company estimates shortfall fees and non-cash expense of third-party production pre-payments in total will negatively impact gross margins by 40 to 60 basis points.
- NoteThe Company currently expects modest shipment growth in the fourth quarter.
Capital returns
- During the 39-week period ended September 26, 2026, the Company repurchased shares of its Class A Common Stock in the amount of $73.5 million.
- During the period from September 27, 2026 through October 16, 2026, the Company repurchased shares of its Class A Common Stock in the amount of $6.0 million.
- The Company repurchased $79.5 million in shares from December 28, 2025 to October 16, 2026.
- As of October 16, 2026, the Company had approximately $149 million remaining on the $1.6 billion share buyback expenditure limit set by the Board of Directors.
- Repurchases and retirement of Class A common stock during the thirty-nine weeks ended September 26, 2026 were $ (75,338) (in thousands), compared with $ (152,423) (in thousands) in the prior-year period.
What drove it
- Third-quarter shipment declines in Twisted Tea, Truly, and Samuel Adams were partially offset by growth in Sun Cruiser and Angry Orchard.
- Revenue declined due to lower volume, partially offset by favorable product mix and pricing.
- Third-quarter gross margin benefited from favorable product mix, price increases, procurement savings and improved brewery efficiencies.
- Year-to-date gross margin benefited from price increases, favorable product mix, procurement savings and improved brewery efficiencies.
- Third-quarter advertising, promotional and selling expense reflected $9.5 million in higher freight costs and a $9.0 million reduction in advertising spend.
- Year-to-date advertising, promotional and selling expense increased due to higher freight costs of $20.6 million and increased brand local marketing investments of $8.5 million.
- The company cited continued progress from its multi-year supply chain transformation, disciplined investment and productivity initiatives.
Concerns
- Depletions decreased 5% in the third quarter and year-to-date, while third-quarter shipments decreased 4.9% and year-to-date shipments decreased 5.4%.
- The company described the demand environment as challenging and said its projections are highly sensitive to changes in volume projections, supply chain performance, inflationary and commodity impacts and tariff policy.
- Inflationary commodity and tariff costs partially offset third-quarter and year-to-date gross-margin benefits.
- Higher freight rates more than offset the benefit of lower shipment volumes in freight costs.
- The supplier dispute generated $194.5 million of year-to-date litigation expense and $5.8 million of related legal expenses, with an after-tax negative impact on earnings per share of $14.51.
- Post-judgment interest is estimated to be 3.79%, and the company cannot estimate when or if damages or interest will ultimately be paid or when the matter will be resolved.
What to watch
- Year-to-date depletions through the 42-week period ended October 17, 2026 are estimated to have decreased approximately 5% from the comparable period in 2025.
- The company currently expects modest shipment growth in the fourth quarter.
- The fourth quarter is typically a lower volume quarter and the lowest gross margin rate of the year.
- At the midpoint of full-year guidance, the company expects year-over-year gross-margin-rate improvement to be most meaningful in the fourth quarter.
- The company expects advertising investment levels to decline year over year in the fourth quarter.
- Tariff cost projections, net of a $3 million refund received in the third quarter, are $18 to $22 for full year 2026.
- The company plans to provide full-year 2027 financial guidance during its fourth-quarter earnings call in February 2027.
Balance sheet and cash flow
- The Company ended the third quarter with $308.1 million in cash and no debt.
- Cash and cash equivalents were $ 308,072 (in thousands) as of September 26, 2026, compared with $ 223,378 (in thousands) as of December 27, 2025.
- The unused balance on the Company's line of credit was $150 million.
- Net cash provided by operating activities was $ 194,202 (in thousands) for the thirty-nine weeks ended September 26, 2026, compared with $ 230,218 (in thousands) in the prior-year period.
- Purchases of property, plant, and equipment were $ (31,234) (in thousands) for the thirty-nine weeks ended September 26, 2026, compared with $ (36,717) (in thousands) in the prior-year period.
- Net cash used in financing activities was $ (78,362) (in thousands), compared with $ (154,913) (in thousands) in the prior-year period.
- Cash and cash equivalents at the end of the period were $ 308,072 (in thousands), compared with $ 250,454 (in thousands) in the prior-year period.
Analysis
Boston Beer’s third-quarter demand indicators remained under pressure. Depletions decreased 5%, shipments declined 4.9% to approximately 1.8 million barrels, and net revenue decreased 3.2% to $520.1 million. The shipment decline reflected lower Twisted Tea, Truly, and Samuel Adams volumes, partly offset by Sun Cruiser and Angry Orchard growth. Distributor inventory averaged approximately four weeks on hand at September 26, 2026, below four and a half weeks at the end of September 2025, and the company described inventories as appropriate.
The quarter showed substantial gross-margin progress despite weaker volume. Gross margin rose to 51.7% from 50.8%, benefiting from favorable product mix, price increases, procurement savings and improved brewery efficiencies. Inflationary commodity and tariff costs offset part of those gains. Shortfall fees and non-cash expense of third-party production pre-payments totaled $1.6 million and reduced third-quarter gross margin by approximately 31 basis points on an absolute basis. Advertising, promotional and selling expense was flat year over year, as $9.5 million of higher freight costs and a $9.0 million reduction in advertising spend shaped the cost outcome.
GAAP profitability declined modestly in the quarter, with net income of $43,166 (in thousands) and diluted income per share of $4.21, compared with $46,155 (in thousands) and $4.25. The quarter included $2.2 million of combined pre-tax supplier-dispute legal and litigation expense, reducing earnings per share by $0.16; non-GAAP diluted earnings per share were $4.37. Year-to-date results were heavily affected by the dispute: litigation expense was $194,471 (in thousands), related legal expense was $5.8 million, and the combined after-tax impact was $14.51 per share. This drove a year-to-date GAAP net loss of $50,529 (in thousands), or $ (4.87) per diluted share, while year-to-date non-GAAP diluted earnings per share were $9.64.
Cash generation remained positive despite the year-to-date GAAP loss. Operating cash flow was $194,202 (in thousands) for the 39-week period, capital spending was $ (31,234) (in thousands), and cash and cash equivalents were $308.1 million at quarter end. The company reported no debt, $150 million of unused line-of-credit capacity, and $79.5 million of share repurchases through October 16, 2026. Accrued litigation expenses were $194,471 (in thousands) at September 26, 2026, and the company said it cannot estimate when or if damages or interest will ultimately be paid.
Management raised the low end of full-year gross-margin guidance to 49% to 50% from 48.5% to 50% and the low end of non-GAAP EPS guidance to $9.00 to $10.50 from $8.50 to $10.50. Full-year shipment and depletion guidance now calls for a mid-single-digit decline, while tariff-cost guidance was reduced to $18 to $22 from $20 to $30 and capital-spending guidance was reduced to $55 to $70 from $60 to $80. The company expects modest shipment growth in the fourth quarter, but also noted that the period is typically its lowest volume quarter and lowest gross-margin-rate quarter.
Management, verbatim
The demand environment remains challenging, and we are prioritizing actions within our control to strengthen our business and improve market share trends.
Jim Koch, Chairman, Founder and CEO
We are encouraged by the strong performance of Sun Cruiser and remain focused on marketplace execution, while our continued emphasis on productivity and strong cash generation provide a solid foundation to invest behind our brands and drive long-term value.
Jim Koch, Chairman, Founder and CEO
We delivered strong gross margin expansion and are raising the low end of our gross margin and earnings guidance, while managing through a dynamic consumer demand and input cost environment.
Matt Murphy, Interim CFO and Chief Accounting Officer
Not in the filing
stated, not guessed- Segment revenue and segment profitability were not reported.
- Free cash flow was not reported.
- Dividend payments or dividend guidance were not reported.
- A precise debt balance was not reported; the company stated that it had no debt.
- Third-quarter and year-to-date prior-quarter comparisons were not reported.
- Year-over-year percentage changes were not reported for most GAAP income-statement line items.
- Full-year 2027 financial guidance was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.