SAM - Boston Beer stock pops after posting quarterly profit

Boston Beer Company ( NYSE: SAM ) bounced sharply upward on Friday after posting a return to profits in the third quarter.

For the third quarter, the brewer notched net income of $27.3M up significantly from a $58.4M loss in the prior year quarter. The company credited not only a revenue increase, but cuts to spending on advertising and promotions for the improved performance. Adjusted EPS of $3.82 came in $0.65 above expectations while $596.45M in revenue was $30.03M above estimates.

While depletions declined 6% from the prior year due to declining demand for hard seltzer, Twisted Tea and Hard Mountain Dew were cited as positive growth drivers. Excluding the Truly declines, management said that depletions would have increased 14%.

"We delivered revenue, shipment and cash flow growth in the third quarter, with strong pricing performance across our portfolio, continued growth in depletions and shipments in Twisted Tea, and positive early progress in Hard Mountain Dew," CEO Dave Burwick said. "We launched Truly Vodka Seltzer earlier this month and we are continuing to execute on our plans to support the base Truly business."

Shares of Boston Beer ( SAM ) rose 11.17% shortly after Friday’s market open.

To be sure, management also updated its full year guidance for depletions to a range of a 4% to 7% decline from a prior guide of a 2% to 8% drop, gross margins to a range of 42% to 43.5% from a prior 43% to 45% guide, and price hikes to a range of 4% to 5% as opposed to the prior forecast of 3% to 5% increases. The company now expects adjusted EPS to range from $7 to $10, narrowed from the previous forecasts of $6 to $11.

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