Boston Beer Raises Low End of 2026 Margin Outlook

The Tip Desk · October 27, 2026 · 4 min read

Third-quarter net revenue was $520.1 million, down 3.2%, as the brewer lifted the low end of full-year gross-margin and non-GAAP earnings guidance.

The Boston Beer Company (SAM) raised the low end of its 2026 gross-margin and non-GAAP earnings outlook after a third quarter in which the depletion decline narrowed and the margin rate expanded, even as net revenue continued to fall.

Depletions decreased 5% in the 13 weeks ended September 26, 2026, after a 6% decline in the second quarter. Shipment volume was approximately 1.8 million barrels, down 4.9%, after a 4.5% decline in the second quarter. The company said the shipment drop was driven by declines in Twisted Tea, Truly, and Samuel Adams, partially offset by growth in Sun Cruiser and Angry Orchard.

Net revenue of $520.1 million decreased 3.2%, after a 3.3% decline in the second quarter. The company said the revenue decrease reflected lower volume that was only partially offset by favorable product mix and pricing.

Gross margin of 51.7% rose 90 basis points from 50.8% in the third quarter of 2025, after a 60-basis-point year-over-year increase in the second quarter. The company said the margin primarily benefited from favorable product mix, price increases, procurement savings, and improved brewery efficiencies, partially offset by inflationary commodity and tariff costs. The 51.7% rate included $1.6 million of shortfall fees and non-cash expense of third-party production pre-payments, which the company said negatively impacted gross margin by about 31 basis points.

Advertising, promotional and selling expenses were flat year over year. The company said that reflected $9.5 million in higher freight costs, with higher freight rates more than offsetting the benefit of lower shipment volumes, and a $9.0 million reduction in advertising spend. General and administrative expenses decreased $2.1 million, primarily from lower salary and benefit costs.

GAAP diluted income was $4.21 a share, including $0.16 of non-recurring litigation expense related to a supplier dispute. Non-GAAP diluted earnings were $4.37 a share. Litigation expenses of $1.8 million represented post-judgment interest. The company said post-judgment interest through the appeals process will be applied to a combined pre-tax judgment and pre-judgment interest total of $191.0 million at an estimated statutory rate of 3.79%. It continues to deny it breached the contract and said it cannot estimate when or if damages or interest will be paid.

Distributor inventories averaged approximately four weeks on hand as of September 26, 2026, versus four and a half weeks at the end of September 2025. The company said those levels were appropriate.

The company ended the quarter with $308.1 million in cash and no debt. From December 28, 2025, through October 16, 2026, it repurchased $79.5 million of shares, leaving about $149 million on a $1.6 billion buyback limit. It said the cash balance, projected operating cash flows, and an unused $150 million line of credit will be sufficient to fund future cash requirements, including potential litigation-related payments.

For full-year 2026, the company now expects depletions and shipments down mid-single digits, versus prior guidance of down low-single digits to mid-single digits. Gross margin including tariffs is now guided at 49% to 50%, up from 48.5% to 50%. Tariff costs are now $18 million to $22 million, narrowed from $20 million to $30 million. Non-GAAP EPS is now $9.00 to $10.50, up from $8.50 to $10.50. Capital spending is now $55 million to $70 million. Price increases remain 1% to 2%. Advertising, promotion, and selling expense is now expected to be approximately flat year over year. GAAP EPS is ($5.76) to ($4.26), including a ($14.76) litigation impact.

The company said it currently expects modest shipment growth in the fourth quarter, a typically lower-volume period with the year’s lowest gross margin. At the midpoint of the full-year range, it expects year-over-year gross-margin improvement to be most meaningful in the fourth quarter as shortfall fees are expected to be lower than in 2025. Full-year shortfall fees and related non-cash expense are estimated to reduce gross margins by 40 to 60 basis points.

Chairman, Founder and CEO Jim Koch said the demand environment remains challenging and that the company is prioritizing actions within its control to strengthen the business and improve market-share trends. Interim CFO Matt Murphy said the company is raising the low end of gross-margin and earnings guidance while managing a dynamic consumer-demand and input-cost environment.