Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Twisted Tea continues to be a strong brand with 15% growth in dollars and increased market share.
- Positive early feedback and improving sales trends for new products like Sun Cruiser.
- Successful launch of higher ABV Truly Unruly, performing well in grocery channels.
- Modernizing supply chain and achieving savings in ingredient purchasing.
- Strong operating cash flow allows for continued investment and share repurchases.
Negative Points
- Overall hard seltzer category is declining, with Truly Hard Seltzers down 22.8%.
- Lower than targeted wholesaler inventory levels due to variability in demand.
- Revenue for the quarter decreased by 4% due to lower volumes.
- General and administrative expenses increased by 7% year over year due to inflation in salaries and benefits.
- Challenges in improving line efficiencies in breweries, impacting cost savings.
Q & A Highlights
Q: I am elected digging a little bit on your commentary that sort of April was the trough and things are getting better. Just curious what you're seeing specifically on is it related to some of your own launches in your own work? Or is it sort of more macro and what you're seeing for the category overall?
A: I thought I heard this is Diego. I what I would say is if you look at the overall industry had a really for the quarter hub and also our brands within that had some challenges. As we've seen the rest of the quarter come back. We've seen both our brands, particularly in Twisted Tea and some of the overall category we recover throughout the quarter. We are expecting the back of the year to look more like Q1 one, less like Q2.
Q: Okay, got it. And then though, when it came to us Mountain Dew and Horn Mountain Dew, is it just the transition that was slower? Or is it the from something going on certain brand and the marketing?
A: Yes, it was a fairly complex transition. So, um, that was really it was it with some more complex than we thought and it took longer than we thought.
Q: Great. Thank you. Tom, I was wondering if you could talk a little bit about how you see that the development and any I mean, any new thoughts in terms of how you see the development in the year? And specifically Surf Side is kind of been the star product this year by many accounts on why you think it's doing so well, what does that say about the category? Does it suggest any pivoting on your side? And then I have a follow-up.
A: I think first and foremost, the search side product is a great product that resonates with consumers, both of them, the taste and just a certain part of the market. And we've been very thoughtful about where we launched it. We've learned over the course of time to be very thoughtful and make sure that the launches resource correctly. So we think it's a new drinker and we're finding that it some it's not at the expense of Twisted Tea, but it's in addition to. So again, to build on a model that we're talking about, some crews are sold out. So you are correct of IT side, I think has been a good product. We've launched Stoker's or which we think is an even better product and it's doing well in the markets that we'd love to Michael's total. Yes. Sorry, apologize that we are so deep in Sun cruiser year that that you are mentioning that because we just had a discussion about that. But we have a product that is right up against that zone of performing really well. And you'll be hearing more about that as we go along.
Q: Great. And then as I was wondering if we could just kind of touch on on the flip side of the business, which we really haven't paid much attention to for a number of years. I mean, you've got the best sales force arguably up there on how are you thinking about this business because the volumes keep going down and the the levels of the decline or at least in the scanner data are are not encouraging. And so what can be done to stem that it does the portfolio need to be pruned? What are you thinking is missing on on the beer side of the business?
A: Jan, would you like to take that question? David, we're having some technical, okay. I think we lost you there. If I look at, I think from our American Light is a good example of how we're approaching the category where we've got to be younger drinker. And we've done a very thoughtful launch, as I've mentioned before, like we have with Sun Cruiser and where we're getting it into the right place. And we plan to scale it up at the right pace from the macro, um, proposition here that just overall beer is that a particular place. But we feel very strongly that with the right attention, a big part of our opportunity here is that through the disruption in seltzer, both the write-up and the write down and the steady increase in Twisted Tea, we could have given more attention to the rest of our portfolio. So when I talked last time about supporting and growing, our core is the intent will be to do that through a balanced portfolio and supporting all our brands. And there is a big part of that.
Q: Thank you. And a yes, I would add, if can you hear me? Okay. On this. Yes, yes, yes. Okay. I would add that we and particularly took our eye off of draft along with our wholesalers. So we are seeing changes in the priorities for our salespeople to move some of the calls that they made with that the explosion of truly and now the rise of T cells or off-premise brand. Michael kind of alluded, we neglected the on-premise since we are reorienting our sales force and expect to see more lines in more on-premise business or Sam Adams and for Angry Orchard.
Q: Thank you. And just to unpack the SG&A piece a little bit better. You've called out the higher marketing and push in the second half. Overall SG&A was flat in first half versus or are there some non-marketed savings that are meaningful enough that you are suggesting might still run flat year for marketing guide on this year? What are we right to think that it could be going up in the second half as well?
A: So so just to just to clarify, just to clarify where we are down in the first half of the year, that marketing spend that were down in the first half of the year will come back in the second half of the year where most of our spend is. So the second half of the year should be higher than the previous year. We think there's opportunities to support some of our key launches like some crews are in a market like which we have high hopes for from a volume point of view. So that it's where you will see the increase in marketing spend in the second half. Overall, as we've said before, the savings that we're looking for on the operation piece, partially used to increase the gross margin so that we can reinvest some of our brands. So as we see the performance of the different brands will reallocate accordingly.
Q: Okay. That's just back on hard Nam Du. You've got the transition sounds like mostly on or any of the state that might have on sooner than later. Have you seen some executional improvements or uptick?
A: Just that would suggest that some of the branded already in better hands, even though it's still quite early. It's still early. We're seeing fairly consistent results across all the territories. So I would like we probably have a better handle on the China after next quarter.
Q: Thanks, operator out there on how we're doing well. So going back to
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
