Exciting News in Craft Brew Alliance Inc (BREW)’s Earnings Call: Boston Beer Co Inc (SAM)

Craft Brew Alliance Inc (NASDAQ:BREW) released fourth quarter earnings and discussed fiscal year 2012 results with shareholders on Wednesday. Earnings per share were flat year-over-year and earnings for 2012 were in line with November’s revised guidance at $.13 per diluted share. The share price barely moved on the report but the conference call contained exciting news for Craft Brew Alliance Inc (NASDAQ:BREW)Craft Brew Alliance shareholders, as well as areas of concern.


Once again, Craft Brew Alliance Inc (NASDAQ:BREW) had a mediocre quarter balance sheet-wise and CEO Terry Michaelson began with an apology that sounded awful similar to statements from the second and third quarter conference calls. As previously stated, EPS were flat in the fourth quarter. Revenue grew 13.5% in 2012, which isn’t much helping Craft Brew Alliance grow into its P/E of 50. Craft Brew Alliance did not offer EPS or revenue guidance for 2013, but did project depletions growth between seven and 11%, and gross margins between 28.5% and 30.5%. This puts Craft Brew Alliance behind competitor Boston Beer Co Inc (NYSE:SAM) on some important metrics. Boston Beer’s shares soared in recent months on upwards of 20% revenue growth, but even with the run up, the company sports a P/E of 36, lower than Craft Brew Alliance’s 50. Boston Beer Co Inc (NYSE:SAM)’s depletions growth for 2013 should be a modest 13%, but its 60% gross margin crushes Craft Brew Alliance Inc (NASDAQ:BREW). Michaelson once again stated that investment and long-term strategic decisions compressed earnings growth but should eventually pay off.

Widmer’s slow turnaround, variety, and depletion

Widmer once again declined, with depletions contracting 5%. However, shareholders should note that Widmer depletions declined less than in previous quarters, and that most of the decline comes from lower depletions of hefeweizen in the West, particularly in California. Importantly, Widmer’s other beers grew, with volumes of the high-end Reserve line doubling. In other words, while past quarters pointed to a flailing brand, the fourth quarter showed that Craft Brew Alliance’s strategies to retool the Widmer brand have worked, and that the problem is now confined to a single beer.