Boston Beer (SAM) & Chipotle Mexican Grill (CMG) see Q3 revenue gains

Highlights

• Boston Beer Company, Inc. (SAM) posted net revenue of US$561.6 million for the third quarter of 2021, a 14% increase YoY.
• The revenue of Chipotle Mexican Grill, Inc. (CMG) was US$2 billion for Q3, 2021 and its total restaurant count was 2,892 as of September 30. 
• Boston Beer's stock fell 48% YTD, and Chipotle Mexican raked in a 33% year-to-date return.

Boston Beer Company, Inc. and Chipotle Mexican Grill, Inc. declared their third-quarter results in after-market hours on Thursday, October 21.

The stock of Boston Beer Company, Inc.  jumped 1.11%, while that of Chipotle Mexican Grill, Inc.  rose 1.14% on Thursday’s closing.

Boston Beer Company, Inc. closed at US$517.22 and Chipotle Mexican Grill, Inc. at US$1,843.83 on Oct 21, 2021.

Boston Beer Company, Inc.  (NYSE:SAM) Q3 2021 results

The net revenue of Boston Beer was US$561.6 million, a 14% increase from the previous year’s Q3 revenue of US$492.8 million. 

The net loss was US$58.4 million or US$4.76 per share diluted compared to the net income of US$80.77 million or US$6.61 per share diluted for the third quarter in 2020. This net loss in Q3 was primarily due to slower than expected growth of hard seltzer.

There was an increase in depletions in the third quarter by 11%, and shipments increased by 11.2% YoY. Whereas depletions increased 24% and shipments increased 29.7% YTD compared to the previous year.

The gross margin was 30.7%, compared to 48.8% in the previous year’s September quarter due to the volume adjustment costs, hard seltzer slowdown and higher material cost.

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The advertising, promotional and selling expenses increased to US$166.8 million, a 54.4% increase from the previous year, driven by higher media and marketing costs and increased freight to distributors.

The general and administrative expenses increased by 5.7% YoY primarily due to external services increases.

The impairment of assets cost US$14.15 million for Q3 2021, compared to US$0.441 million in the corresponding quarter of 2020. The increase in cost was primarily due to write-downs of equipment related to the hard seltzer category slowdown.

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Projections for the whole of 2021

For the whole year of 2021, the company projects GAAP earnings per diluted share to be in the range of US$2.00 to US$6.00. 

The depletions and shipments increase to remain between 18% to 22% and gross margin between 40% to 42%. 

The investments in advertising, promotional and selling expenses are projected to increase in the range of US$80 million to US$100 million and the estimated capital spending to be within US$160 million to US$200 million.

Preliminary outlook for 2022

The preliminary outlook for 2022 remains positive with expectations of mid-single to double-digit growth in depletion and shipment and gross margin to be between 45% to 48%. The capital expenditure is expected to be between US$140 million to US$190 million, subject to increase if necessary for future growth. 

Boston, Massachusetts-based beverage and craft beer company has a market capitalization of US$6.35 billion and a P/E ratio of 26.99. 

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Source - pixabay

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Chipotle Mexican Grill, Inc.  (NYSE:CMG) 

Chipotle Mexican Grill’s third quarter ended September 30 saw its revenue grow by 21.9% to US$2.0 billion compared to US$1.6 billion for the comparable period in 2020. 

The digital sales were US$840.4 million, representing 42.8% of sales, a growth of 8.6% YoY.  

The company opened 39 new restaurants and had two relocations, making a total of 41 new restaurants in the September quarter. Now the company has a total restaurant count of 2,892. 

Its operating margin was 12.3%, compared to 6.7% in the previous year’s third quarter. The restaurant-level operating margin was 23.5% compared to 19.5% in Q3 2020. 

The food, beverage and packaging costs were 30.3% of the revenue, a decline from 32.8% in the third quarter of 2020. It was primarily due to an increase in menu prices.

The net income for the September quarter was US$204.4 million, compared to US$80.2 million, in the same quarter the previous year. 

Its diluted earnings per share were US$7.18, a 154.6% increase from US$2.82 in Q3 2020. The adjusted earnings per share diluted was US$7.02, compared to EPS diluted of US$3.76, reflecting an 86.7% increase YoY.

As of September 30, Chipotle had US$1.2 billion in cash, investments and restricted cash, and no debt. 

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Fourth quarter outlook

The company expects comparable restaurant sales to grow in the low to the mid, double-digits range in the fourth quarter. It’s anticipating to open 200 or slightly more restaurants and the estimated underlying effective tax rate for Q4 to remain between 25% to 27% before discrete items.

The Newport Beach, California-based Chipotle is a fast-casual chain restaurant and has restaurants in the United States, Canada, and Europe. It employs around 95,000 individuals across these locations.

The company has a current market capitalization of US$51.8 billion and a P/E ratio of 89.68. 

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Bottom line

The Russell 2000 Index (RUT) increased by 16.27% YTD. On the other hand, the consumer segment companies Boston Beer (SAM) stock fell 48% YTD, and Chipotle Mexican (CMG) raked in a 33% year-to-date return. An investor must exercise due diligence before investing.