SAM 10-K & 10-Q changes, risk factors and insider trading

The two largest brewers in the United States, AB InBev and Molson Coors, participate actively in the US Beer Market, through numerous offerings including beers, flavored malt beverages, hard seltzers and spirit RTDs. Imported beers, such as Modelo Especial®, Corona®, Heineken®, Guinness®, and Stella Artois®, continue to compete aggressively in the United States and have gained market share over the last ten years. Constellation Brands (owner of the United States distribution rights to Modelo Especial and Corona) and Heineken may have substantially greater financial resources, marketing strength and distribution networks than the Company. The Company anticipates competition will remain strong as existing beverage companies continue adding more SKUs and styles. The potential for growth in the sales of flavored malt beverages, hard seltzers, domestic beers, imported beers and spirits RTDs is expected to increase the competition in the market for Beyond beer and Traditional beer occasions within the United States and, as a result, the Company may well face competitive pricing pressures and the demand for and market share of the Company’s products may fluctuate and possibly decline.

Several large non-alcoholic beverage companies including Coca-Cola Company (“Coke"),Coke, Pepsi, Monster Beverage Corporation (“Monster”) and Arizona Beverage Company ("Arizona") have entered the alcoholic beverage market directly or through licensing agreements with alcoholic beverage companies to develop alcohol versions of existing traditional non-alcohol brands. As previously discussed, the Company has entered into an agreement with Pepsi to develop, market and sell alcohol beverages which include Hard Mountain Dew, a flavored malt beverage, to take advantage of this trend.

The alcoholic beverage industry has been the subject of considerable societal and political attention for several years, due to public concern over alcohol-related social problems, including driving under the influence, underage drinking and health consequences from alcohol and the misuse of alcohol, including alcoholism. More recently, younger generations including Millennials and Gen Z, are embracing moderation or abstinence, influenced by wellness trends and the rise of non-alcoholic alternatives. Some drinkers are embracing the “sober curious” movement, which encourages individuals to question their relationship with alcohol and explore alternatives. As an outgrowth of these concerns, the possibility exists that industry volumes could further decline, advertising by alcoholic beverage producers could be restricted, that additional cautionary labeling or packaging requirements might be imposed, that further restrictions on the sale of alcohol might be imposed or that there may be renewed efforts to impose increased excise or other taxes on beer sold in the United States.

The US Beer Market has experienced a decline in shipments over the last ten years. More recently in 2025 these declines accelerated to an approximate decline of 4% in volume. The Company believes that this decline is due to declining alcohol consumption per person in the population, economic uncertainty, health and wellness trends and increased competition from winewine, spirits and spiritsother beverage companies. If consumption of the Company’s products in general were to come into disfavor among domestic drinkers, or if the domestic alcohol beverage industry were subjected to significant additional societal pressure or governmental regulations, the Company’s business could be materially adversely affected.

Additionally, certainmany states are considering or have passed laws and regulations that allow the sale and distribution of cannabis.cannabis and hemp based products. In December 2025, cannabis was reclassified from a Schedule I controlled substance to Schedule III by the federal government, reflecting its recognized medical use and lower potential for abuse. In certain states hemp derived beverages are competing with alcoholic beverages for shelf space and drinkers, despite recent federal regulations which restrict their availability after November 2026. Currently, it is not possible to predict the impact of this on sales of alcohol, but it is possible that legal cannabis usageand hemp derived beverage consumption could adversely impact the demand for the Company’s products. The company has a cannabis-based beverage product in Canada and could be ready to produce that in the United States if the regulatory environment changes.

Beginning in the second half of 2021, the market for hard seltzer products experienced decelerating growth trends, which contributed to the Company’s depletion volume decline of 5% in 2022, 6% in 2023 (5% decline on a 52-week comparable basis) and, 2% in 2024.2024 and 4% in 2025. The slowdown in growth trends greatly impacted the Company's volume of production and shipments, as well as its volume projections for the future. TheDuring 2021 through 2024, the volume reduction alsoreductions resulted in increased supply chain related costs. These costs include the destruction of excess inventory, provisions for excess and obsolete inventories, property, plant and equipment impairments, write-offs of third-party production prepayments and provisions for costs associated with the termination of various third-party production contracts.

TheIn 2026, the Company is targeting a percentage change in shipments and depletion volume of between flat and down single digits to upmid- single digits. The Company’s ability to meet these targets may be affected by an increasing number of competing beverages. The development of new products by the Company to meet these challenges may lead to reduced sales of the Company’s existing brands and there is no guarantee that these new product initiatives will generate stable long term volume. While the Company believes that a combination of innovation, new brand messaging and the use of traditional and social media, and increased investment in sales execution can lead to increased demand, there is no guarantee that the Company’s actions will be successful in maintaining the Company’s historical levels of profitability. Reduced sales, among other factors, could lead to lower brewery utilization, lower funds available to invest in brand support and reduced profitability, and these challenges may require a different mix and level of marketing investments to stabilize and grow volumes. A lower growth environment or periods of sales declines will present challenges for the Company to motivate and retain employees, maintain the current levels of distributor and retailer support of its brands, and fund its current brand investment levels. This could potentially lead to a review of long term organization and capacity needs. Currently, the Company believes it can meet its volume targets in 20252026 and return to volume growth in future years, but there is no guarantee its efforts will be successful or profitable.

Historically, during periods of growth, the Company has faced challenges in meeting demand. The challenges were both production constraints, primarily resulting from canning and variety pack capacity limitations, and can supply constraints. During these periods of growth, the Company experienced increased inventory obsolescence, and operational, and freight costs, as it reacted. In response to these issues, the Company significantly increased its capacity and personnel to address these challenges.

The Company has made and expects to continue to make, significant advertising and promotional expenditures to enhance its existing brands and promote new brands. These expenditures may adversely affect the Company’s results of operations in a particular quarter or even for the full year, and may not result in increased sales. Variations in the levels of advertising and promotional expenditures have in the past caused, and are expected in the future to continue to cause, variability in the Company’s quarterly results of operations. During 2025 the Company significantly increased its spending on advertising and promotion by $61.0 million or 13.6% and during 2026 the Company currently estimates it will further increase spending by between $20 million and $40 million. While the Company attempts to invest only in effective advertising and promotional activities, it is difficult to correlate such investments with sales results, and there is no guarantee that the Company’s expenditures will be effective in building brand equity or growing long term sales.

The Company maintains competitive sources for the supply of packaging materials, such as cans, glass and cardboard. The Company enters into limited-term supply agreements with certain vendors in order to receive preferential pricing. In 2024,2024 and 2025, certain flavorings, crowns, and labels were each supplied by single sources. The loss of any of the Company’s packaging materials suppliers could, in the short-term, adversely affect the Company’s results of operations, cash flows and financial position until alternative supply arrangements were secured. Additionally, there has been acquisition, change in control and consolidation activity in several of the packaging supplier networks which could potentially lead to further disruption in supply and changes in economics. If packaging costs continue to increase, there is no guarantee that such costs can be fully passed along through increased prices. The company's long-term supply agreements have varying lengths and terms and there is no guarantee that the economics of these contracts can be replicated when renewed. The Company’s inability to preserve the current economics on renewal could expose the Company to significant cost increases in future years. Some of these contracts require the Company to make commitments on minimum volume of purchases based on Company forecasts. If the Company's needs decline significantly from its forecasts, the Company would likely incur storage costs for excess production or contractual penalties that might be significant and could have a material adverse impact on the Company's financial results.

The Company purchases a substantial portion of the ingredients used in its beverages, including its flavorings, fruit juice, malt, hops, apples, and other ingredients, from a limited number of domestic and foreign suppliers. There can be no assurance that the Company would be able to acquire such ingredients from substitute sources on a timely or cost-effective basis, if current suppliers could not adequately fulfill orders or if tariffs significantly increase costs. The loss or significant reduction in the capability or increase of costs of a supplier to support the Company’s requirements could, in the short-term, adversely affect the Company’s business and financial results, until alternative supply arrangements are secured.

The Company’s contracts for certain hops and apples are payable in Euros, Pounds Sterling and New Zealand dollars, and therefore, the Company is subject to the risk that the currencies may fluctuate adversely against the U.S. dollar. The Company has, as a practice, not hedged this exposure, although this practice is regularly reviewed. The cost of hops has increased in recent years due to the rising market price of hops and exchange rate changes. The continuation of these trends will impact the Company’s product cost and potentially the Company’s ability to meet the demand for its beers. The Company buys some other ingredients and capital equipment from foreign suppliers for which the Company also carries exposure to foreign exchange rate and tariff changes. Significant adverse fluctuations in foreign currency exchange rates and increased tariffs may have a material adverse effect on the Company’s business and financial results.

During 2024,2025, the Company produced approximately 74%86% of its domestic volume at breweries owned by the Company and, as noted above, anticipates producing 80%over 90% of its domestic volume at breweries owned by the Company in 2025.2026. While, on balance, the Company views greater reliance on its own breweries favorably, this reliance on its own breweries exposes the Company to capacity constraints and risk of disruption of supply, as these breweries are operating at or close to current capacity in peak months. As volumes at the Pennsylvania Brewery increase, severe interruptions there would be problematic, particularly during peak seasons. Potential interruptions at breweries include labor issues, governmental action, quality issues, contractual disputes, machinery failures, operational shutdowns, pandemic-related or other staffing shortages, or natural or unavoidable catastrophes. If interruptions were to occur, the Company could face significant delays in starting replacement brewing locations and its operating results could be materially adversely affected.

The Company continues to avail itself of capacity at third-party production facilities. Also as noted above, during 2024,2025, approximately 26%14% of the Company’s annual domestic shipment volume was produced under production service agreements with City Brewing Company, LLC and its subsidiaries. In selecting third party production facilities for production services arrangements, the Company carefully weighs a facility's sleek can packaging and automated variety packaging capability and capacity, its quality control capabilities throughout the production process. To the extent that the Company needs to avail itself of a third-party production services arrangement, it exposes itself to higher than planned costs of operating under such contract arrangements than would apply at the Company-owned breweries, potential lower service levels and reliability than internal production, and potential unexpected declines in the production capacity available to it, any of which could have a material adverse effect on the Company’s business and financial results. The use of such third party facilities also creates higher logistical costs and uncertainty in the ability to deliver product to the Company’s customers efficiently and on time.

As the beer industry continues to consolidate and the Company has grown, the capacity and willingness of breweries owned by others where the Company could brew, ferment or package some of its products, if necessary, has become a more significant concern and, thus, there is no guarantee that the Company’s needs will be uniformly met. The Company continues to work at its Company-owned breweries and with its third-party production partners to attempt to minimize any potential disruptions. Nevertheless, shouldShould an interruption occur, the Company could experience temporary shortfalls in production and/or increased production and/or distribution costs and be required to make significant capital investments to secure alternative capacity for certain brands and packages, the combination of which could have a material adverse effect on the Company’s business and financial results. A production interruption caused by an acquisition or change of control or bankruptcy of City Brewing Company, LLC, or its subsidiaries, or a simultaneous interruption at several of the Company’s other production locations would likely cause significant disruption, increased costs and, potentially, lost sales.

The Company’s emphasis on owning production facilities requires it to continue to make a significant level of capital expenditure to maintain and improve these facilities and to incur significant fixed operating costs to support them. In an uncertain volume environment, the Company faces the risk of not being able to support the owned brewery operating costs, if volumes were to decline.decline further. At the same time, despite making these expenditures and incurring these costs, if demand were to further increase above current volume estimates, the Company could still face the risk of not being able to meet the increased demand.

During both 2024 and 2025 the Company has had transition of its Chief Executive Officer. The Company has and is likely to experience future changes in key leadership or key positions regularly. The departure of key leadership personnel can take from the Company significant knowledge and experience. This loss of knowledge and experience can be mitigated through successful succession planning or external hiring and transition, but there can be no assurance that the Company will be successful in such efforts. Attracting, retaining, integrating and developing high performance individuals in key roles is a core component of the Company’s strategy for addressing its business opportunities. Attracting and retaining qualified senior leadership may be more challenging under adverse business conditions, such as the current declining growth environment the Company is facing. Failure to attract and retain the right talent, or to manage the transition of responsibilities resulting from such turnover smoothly, would affect the Company's ability to meet its challenges and may cause the Company to miss performance objectives or financial targets.

The Company has significantly increased the number of commercially available flavored malt beverages, hard seltzers, beers, hard ciders, and spirits RTDs that it produces. In the last five years, the Company has developed, introduced and reformulated many new and existing beverage styles under the Twisted Tea, Truly Hard Seltzer, Samuel Adams, Dogfish Head, Angry Orchard, Sun Cruiser and Hard Mountain Dew brands. The Company currently operates 9nine retail locations where its beverages are sold and consumed on-premise, including six brewery tap rooms, an apple orchard and innovation cidery, a restaurant and a boutique inn. The Company’s most significant innovations in 2024 was the introduction of its Sun Cruiser brand, a new vodka based RTD, as well as the launch of its Truly Unruly Mix Pack and Twisted Tea Extreme. In the first quarter of 2025, the Company is planning to launch Truly Unruly Lemonade Mix Pack, Sun Cruiser vodka based hard lemonade and Dogfish Head Grateful Dead Juicy Pale Ale. During the rest of 2025, the Company has plans to add new beverage styles and may reformulate existing styles of beverages.

In addition to these inherent brand risks, C. James Koch, the founderfounder, Chief Executive Officer and Chairman of the Company, as well as the founders of Dogfish Head brand, Samuel Calagione, Founder and Brewer, Dogfish Head Brewery and Mariah Calagione, Founder and Communitarian, Dogfish Head Brewery, are an integral part of the Company’s history, brand equity and current and potential future brand messaging and the Company relies on the positive public perception of these founders. Mariah Calagione has recently announced her retirementretired from the Company effective during 2025. The role of these founders as founders, brewers, leaders or former leaders of the Company is emphasized as part of the Company’s brand communication and has appeal to some drinkers. If these founders were not available to the Company, this could negatively affect the strength of the Company’s messaging and, accordingly, the Company’s growth prospects. The Company and its brands may also be impacted if drinkers’ perceptions of these founders, including their social or political views, were to change negatively. If any negative changes were to occur, the Company might need to adapt its strategy for communicating its key messages regarding its history, equity, and current and potential future brand messaging. Any such change in the Company’s messaging strategy might have a detrimental impact on the future growth of the Company.

The Company’s Class A Common Stock is not entitled to any voting rights except for the right as a class to (1) approve certain mergers, charter amendments and by-law amendments and (2) elect a minority of the directors of the Company. Although not as a matter of right, the Class A stockholders have also been afforded the opportunity to vote on an advisory basis on executive compensation. Consequently, the election of a majority of the Company’s directors and all other matters requiring stockholder approval are currently decided by C. James Koch, who is the founderfounder, Chairman and ChairmanChief Executive Officer of the Company, as the holder of 100% of the voting rights to the outstanding shares of the Company’s Class B Common Stock. As a result, Mr. Koch is able to exercise substantial influence over all matters requiring stockholder approval, including the composition of the board of directors, approval of equity-based and other executive compensation and other significant corporate and governance matters, such as approval of the Company’s independent registered public accounting firm. This could have the effect of delaying or preventing a change in control of the Company and makes most material transactions difficult or impossible to accomplish without the support of Mr. Koch. While Mr. Koch is currently the 100% holder of the Company’s Class B Common Stock, there is nothing that prevents Mr. Koch or his heirs from transferring some or all shares of the Class B Common Stock to others.

Volatility, uncertainty, and inflation in the financial markets and economic conditions generally may directly or indirectly affect the Company’s performance and operating results in a variety of ways, including: (a) prices for energy, labor, packaging, ingredients, and agricultural products may rise faster than current estimates, including increases resulting from currency fluctuations; (b) the Company’s key suppliers may not be able to fund their capital requirements, resulting in disruption in the supplies of the Company’s raw and packaging materials; (c) the credit risks of the Company’s Distributors may increase; (d) the impact of currency fluctuations onmay impact amounts owed to the Company by distributors that pay in foreign currencies; (e) the Company’s credit facility, or portion thereof, may become unavailable at a time when needed by the Company to meet critical needs; (f) overall alcoholic beverage consumption may decline; or (g) drinkers of the Company’s products may change their purchase preferences and frequency, which might result in sales declines.

Net revenue. Net revenue increaseddecreased by $4.3$47.9 million, or 0.2%,2.4%, to $1,965.0 million for the year ended December 27, 2025, as compared to $2,012.9 million for the year ended December 28, 2024, as compared to $2,008.6 million for the year ended December 30, 2023,primarily due to pricedecreased increasessales volume impacts of $38.3 million and lower returns of $13.0$94.8 million, partially offset by theincreased impactpricing of lower$27.1 shipmentmillion, volumeand favorable product mix of $48.3$19.1 million.

Volume. Total shipment volume of 7,493,0007,140,000 barrels for the year ended December 28,27, 20242025 decreased by 2.4%4.7% over 20232024 levels of 7,678,0007,493,000 barrels, primarily due to decreases in theTwisted Company’sTea, Truly brands,Hard Seltzer and Samuel Adams brands that were only partially offset by increasesgrowth in itsthe TwistedCompany’s TeaSun Cruiser, Angry Orchard and SunDogfish CruiserHead brands.

The Company believes distributor inventory as of December 28,27, 20242025 was at appropriate levels and averaged approximately four weeks on hand andwhich wasis atwithin anthe appropriateCompany’s leveltarget forwholesaler eachinventory of its brands.levels.

Net Revenue per barrel. The net revenue per barrel increased by 2.7%2.4% to $275.21 per barrel for the year ended December 27, 2025, as compared to $268.64 per barrel for the year ended December 28, 2024, as compared to $261.61 per barrel for the year ended December 30, 2023, primarily due to price increases and lowerfavorable returns.product mix.

Cost of goods sold. Cost of goods sold was $141.79 per barrel for the fifty-two weeks ended December 27, 2025, as compared to $149.36 per barrel for the fifty-two weeks ended December 28, 2024, as compared to $150.59 per barrel for the fifty-two weeks ended December 30, 2023.2024. The 20242025 decrease in cost of goods sold of $1.23,$7.57 per barrel, or 3.2% per barrel5.1% was primarily due to contract renegotiations and recipe optimization savings of $24.1$37.4 million, or $3.22$5.24 per barrel, improved brewery efficiencies of $34.1 million, or $4.78 per barrel, decreases in inventory obsolescence of $10.3 million, or $1.44 per barrel and lower third-party production costs of $9.6 million, or $1.34 per barrel, partially offset by inflationary impactsimpacts, including tariffs, of $18.6$36.8 million, or $2.48$5.15 per barrel.

Inflationary impacts of $18.6$36.8 million consist primarily of increased raw material costs of $10.2$30.5 million, inclusive of $10.1 million impact from tariffs, and increased internal brewery costs of $8.4$6.3 million.

Gross profit. Gross profit was $133.41 per barrel for the year ended December 27, 2025, as compared to $119.27 per barrel for the year ended December 28, 2024,2024. asGross comparedmargin towas $111.01 per barrel48.5% for the year ended December 30,27, 2023.2025, Grossas margincompared wasto 44.4% for the year ended December 28, 2024, as compared to 42.4% for the year ended December 30, 2023.2024. Gross margin primarily benefited from price increases, contract renegotiations and recipe optimization savingssavings, improved brewery efficiencies, price increases and lowerfavorable returns,product mix. These benefits were partially offset by higher brewery processing costs per barrel due to lower volumes and increased inflationary and tariff costs.

Advertising, promotional, and selling expenses. Advertising, promotional and selling expenses, decreasedincreased $4.0$57.9 million, or 0.7%,10.5%, to $610.0 million for the year ended December 27, 2025, as compared to $552.0 million for the year ended December 28, 2024, as compared to $556.0 million for the year ended December 30, 2023.2024. The decreaseincrease was primarily duedriven toby decreasedhigher freightmedia to distributorsspend of $10.5$27.0 millionmillion, fromincreased lowerlocal ratesmarketing of $10.7 million, higher production and volumes.other Brand and sellingnon‑media costs increasedof $6.5$7.6 million, primarilyincreased duepoint‑of‑sale toinvestments of $5.9 million, increased brandnational mediapromotions investmentsof $4.3 million, and higher salaries and benefits.benefits of $4.3 million. These increases were partially offset by a $3.0 million reduction in freight costs due to lower volumes.

General and administrative expenses. General and administrative expenses increased by $15.4$0.9 million, or 8.8%,0.5%, to $189.9$190.8 million for the year ended December 28,27, 2024,2025, as compared to $174.5$189.9 million for the comparable period in 2023.2024. The increase was primarily due to higher salaries and benefits costs resulting from Chief Executive Officer transition costs recorded in the first quarter as well as increased inflationary costs.

Impairment of intangible assets. ImpairmentIn offiscal 2025, the Company recorded no impairment charges related to intangible assetsassets. reflectsIn fiscal 2024, the Company recorded a $42.6 million non-cashnon‑cash impairment charge recorded($29.1 formillion net of tax) primarily related to the Dogfish Head brand, takenbased as a result ofon the Company’s annual impairment analysisassessment performed as of September 1, 2024. TheBeginning impairment determination was primarily based onin the latestfourth forecastsquarter of brand performance which have been below the Company’s previous projections. In fiscal 2023,2024, the Company recordedcommenced an impairment chargeamortization of $16.4the million primarily for theremaining Dogfish Head brand.intangible Seeasset furtherover discussionan inestimated Noteuseful H to the Consolidated Financial Statements within Part II, Item 8life of this10 Form 10-K.years.

Impairment of brewery assets. Impairment of brewery assets of $7.2$7.0 million increaseddecreased by $1.8$0.2 million from the prior fiscal year, due to higherlower write-offs of equipment at third party and Company-owned breweries.production facilities.

Contract settlement costs. ContractThe Company did not record any contract settlement costs in fiscal 2025. In fiscal 2024, the Company recorded contract settlement costs of $26 million due to an amendment and restatement in its entirety of an existing production agreement with a third-party supplier, Rauch. This amendment adjustsadjusted the existing production agreement to better match the Company’s future capacity requirements and results in increased production flexibility and more favorable termination rights to the Company.

Income tax provision. The Company’s effective tax rate for fiscal 20242025 was 31.9%29.3% compared to 30.2%31.9% in fiscal 2023,2024, primarily due to lowerhigher pre-tax net income withand noa correspondinglower reductionnegative inimpact of non-deductible expenses. The Company estimates the lower pre-tax income resulting from the impairment of intangible assets and the contract settlement negatively impacted the 2024 effective tax rate by approximately 300 basis points.

Cash and cash equivalents decreasedincreased to $223.4 million as of December 27, 2025 from $211.8 million as of December 28, 2024 from $298.5 million as of December 30, 2023,2024, primarily reflecting net cash provided by operating activities, partially offset by repurchases of the Company's Class A common stock, a note receivable issued, and purchases of property, plant, and equipment, partially offset by net cash provided by operating activities.equipment.

The Company used $96.3$54.5 million in investing activities during the year ended December 28,27, 2024,2025, as compared to $62.4$96.3 million during the year ended December 30,28, 2023.2024. The increasedecrease in investing activity cash outflows is due to a $20.0 million note receivable issued in 2024 and a $12.2$21.7 million increasedecrease in capital investments. For both periods, capital investments were made mostly in the Company’s breweries to drive efficiencies and cost reductions and support product innovation and future growth.reductions.

Cash used in financing activities was $204.1 million during the year ended December 27, 2025, as compared to $239.3 million during the year ended December 28, 2024,2024. asThe compared to $84.8$35.2 million during the year ended December 30, 2023. The $154.5 million increasedecrease in financing activity cash outflows in 20242025 compared to 20232024 is primarily due to higherlower repurchases of the Company's Class A common stock in the current year.

The carrying value of property, plant, and equipment, net of accumulated depreciation, at December 28,27, 20242025 was $616.2$578.1 million. For purposes of determining whether there are any impairment losses on brewery assets, as further discussed below, management has historically examined the carrying value of the Company’s identifiable long-lived assets, including their useful lives, semi-annually, or more frequently when indicators of impairment are present. Evaluations of whether indicators of impairment exist involve judgments regarding the current and future business environment and the length of time the Company intends to use the asset. If an impairment loss is identified based on the fair value of the asset, as compared to the carrying value of the asset, such loss would be charged to expense in the period the impairment is identified. Furthermore, if the review of the carrying values of the long-lived assets indicates impairment of such assets, the Company may determine that shorter estimated useful lives are more appropriate. In that event, the Company will be required to record additionalaccelerate depreciation in future periods, which will reduce earnings. Estimating the amount of impairment, if any, requires significant judgments including identification of potential impairments, market comparison to similar assets, estimated cash flows to be generated by the asset, discount rates, the remaining useful life of the asset, and the usefulness of the asset in consideration of future business plans. Impairment ofcharges included in operating expenses related to brewery assets classified as property, plant, and equipment includedwere in$6.4 operating expenses wasmillion, $7.2 million, and $5.0 million and $2.6 million infor fiscal years 2025, 2024, and 2023, respectively. Impairment charges related to brewery assets classified as operating right‑of‑use assets were $0.6 million, $0.0 million, and 2022,$0.4 million for fiscal years 2025, 2024, and 2023, respectively.

Customer programs and incentives are a common practice in the alcohol beverage industry. Amounts paid in connection with customer programs and incentives are recorded as reductions to net revenue or as advertising, promotional and selling expenses, based on the nature of the expenditure. Customer incentives and other payments made to Distributors are primarily based upon the performance of certain marketing and advertising activities. Depending on applicable state laws and regulations, these activities promoting the Company’s products may include, but are not limited to, discounts, point-of-sale and merchandise placement, samples, product displays, promotional programs at retail locations and meals, travel and entertainment. Amounts paid to customers in connection with these programs that were recorded as reductions to net revenue or as advertising, promotional and selling expenses totaled $112.3$123.1 million, $106.4$112.3 million and $95.9$106.4 million in fiscal years 2025, 2024, 2023, and 2022,2023, respectively. Estimates are based on historical and projected experience for each type of program or customer and have historically been in line with actual costs incurred.

Customer incentives and other payments are made primarily to Distributors based upon the performance of certain marketing and advertising activities. Depending on applicable state laws and regulations, these activities promoting the Company’s products may include, but are not limited to, discounts, point-of-sale and merchandise placement, samples, product displays, promotional programs at retail locations and meals, travel and entertainment. Amounts paid to customers in connection with these programs in fiscal years 2025, 2024, 2023, and 20222023 were $51.3$57.9 million, $43.8$51.3 million and $41.1$43.8 million, respectively. In fiscal years 2025, 2024, 2023, and 2022,2023, the Company recorded certain of these costs in the total amount of $32.2$38.4 million, $31.4$32.2 million and $29.9$31.4 million, respectively as reductions to net revenue. Costs recognized in net revenues include, but are not limited to, promotional discounts, sales incentives and certain other promotional activities. Costs recognized in advertising, promotional and selling expenses include point of sale materials, samples and media advertising expenditures in local markets. These costs are recorded as incurred, generally when invoices are received; however certain estimates are required at the period end. Estimates are based on historical and projected experience for each type of program or customer and have historically been in line with actual costs incurred.

The Beyond beer and Traditional beer categories within the United States are highly competitive due to large domestic and international brewers and the large number of craft brewers in this category who distribute similar products that have similar pricing and target drinkers. The Company believes that its pricing is appropriate given the quality and reputation of its brands, while realizing that economic pricing pressures may affect future pricing levels. Large domestic and international brewers are able to compete more aggressively than the Company, as they have substantially greater resources, marketing strength and distribution networks than the Company. The Company also increasingly competes with winewine, spirits and spiritsother beverage companies, some of which have significantly greater resources than the Company. This competitive environment may affect the Company’s overall performance within the Beyond beer and Traditional beer categories. As the market continues to consolidate, the Company believes that companies that are well-positioned in terms of brand equity, marketing and distribution will have greater success than those who do not. With its over 300 Distributors nationwide and the Company’s sales force of over 475550 people, as well as a commitment to maintaining its innovation capability, brand equity and quality, the Company believes it is well positioned to compete in the Beyond beer and Traditional beer categories.

The following is a discussion of the significant factors affecting the consolidated operating results, financial condition and liquidity and cash flows of the Company for the thirteen and twenty-six week periods ended MarchJune 28,27, 2026, as compared to the thirteen and twenty-six week periodperiods ended MarchJune 29,28, 2025. This discussion should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the Consolidated Financial Statements of the Company and Notes theretothere to included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 27, 2025.

Thirteen Weeks Ended MarchJune 28,27, 2026 compared to Thirteen Weeks Ended MarchJune 29,28, 2025

Net revenue. Net revenue decreased by $19.9$19.6 million, or 4.4%,3.3%, to $433.9$568.3 million for the thirteen weeks ended MarchJune 28,27, 2026, as compared to $453.9$587.9 million for the thirteen weeks ended MarchJune 29,28, 2025 primarily due to decreased sales volume impacts of $31.4$26.6 million and increased sales incentives of $6.3 million, partially offset by increased pricing of $9.1 million, and favorable product mix of $0.9$8.4 million, and increased pricing of $5.4 million.

The Company believes distributor inventory as of MarchJune 28,27, 2026 was at an appropriate level for each of its brands and averaged approximately four and a half weeks which was consistent with the weeks on hand compared to five weeks at the end of the first quarter ofJune 2025.

Net revenue per barrel. Net revenue per barrel increased by 2.7%1.2% to $277.98$277.64 per barrel for the thirteen weeks ended MarchJune 28,27, 2026, as compared to $270.64$274.23 per barrel for the comparable period in 2025, primarily due to increased pricing and favorable product mix.

Cost of goods sold. Cost of goods sold was $140.92$137.75 per barrel for the thirteen weeks ended MarchJune 28,27, 2026, as compared to $139.90$137.79 per barrel for the thirteen weeks ended MarchJune 29,28, 2025. The 2026 increase in cost of goods sold of $1.02, or 0.7% per barrel was flat to 2025 primarily due to inflationary impacts of $12.5$19.2 million, or $8.01$9.38 per barrel, partially offset by brewery efficiencies of $10.9 million, or $5.33 per barrel, contract renegotiations and recipe optimization savings of $5.5$5.2 million, or $3.52 per barrel, improved logistics optimization of $2.7 million, or $1.73 per barrel, lower third-party production payment amortization of $2.0 million, or $1.28$2.54 per barrel, and decreases in inventory obsolescence of $0.9$3.9 million, or $0.58$1.91 per barrel.

Inflationary impacts of $12.5$19.2 million consist primarily of increased aluminummaterial costscosts, mainly from aluminum, of $11.0$18.2 million, inclusive of $4.3$2.9 million aluminum impact from tariffs, with total tariff-related impacts to cost of goods sold of $5.2 million, and increased internal brewery costs of $1.5$1.0 million.

Gross profit. Gross profit was $137.06$139.89 per barrel for the thirteen weeks ended MarchJune 28,27, 2026, as compared to $130.74$136.44 per barrel for the thirteen weeks ended MarchJune 29,28, 2025.

Advertising, promotional, and selling expenses. Advertising, promotional and selling expenses increased by $2.5$26.2 million, or 1.8%,16.4%, to $140.1$185.9 million for the thirteen weeks ended MarchJune 28,27, 2026, as compared to $137.5$159.7 million for the thirteen weeks ended MarchJune 29,28, 2025 resulting from higher increased brand local marketing and point of sale investments of $17.5 million and higher freight costs of $2.5$8.6 million due to higher rates partially offset by lower volumes. The Company’s brand investments were flat compared to the first quarter of 2025.rates.

Advertising, promotional and selling expenses were 32.3%32.7% of net revenue, or $89.73$90.81 per barrel, for the thirteen weeks ended MarchJune 28,27, 2026, as compared to 30.3%27.2% of net revenue, or $82.01$74.49 per barrel, for the thirteen weeks ended MarchJune 29,28, 2025. This increase per barrel is primarily due to increased spend in local marketing and freight rates. The Company invests in advertising and promotional campaigns that it believes will be effective, but there is no guarantee that such investments will generate sales growth.

General and administrative expenses. General and administrative expenses increased by $4.4$3.1 million, or 9.1%,6.8%, to $52.3$48.9 million for the thirteen weeks ended MarchJune 28,27, 2026, as compared to $48.0$45.8 million for the thirteen weeks ended MarchJune 29,28, 2025, primarily due to higherincreases in salaries and benefits costs of $1.2 million, and increases in legal and consulting costs. Excluding legal costs related to the non-recurring litigation expense discussed below, general and administrative expenses increased by $0.4 million from the first quarterfees of 2025$1.1 primarily due to increased consulting costs.million.

Income tax provision. The Company's effective tax rate was a benefitprovision of 23.1%,28.7%, decreasedan increase from 31.9%28.1% in the prior year. TheThis changeincrease in the tax rate foris thedue thirteen weeks ended March 28, 2026 as comparedprimarily to the thirteenincreased weeks ended March 29, 2025, is primarily due to a pre-tax loss in the first quarter of 2026 compared to pre-tax income in the first quarter of 2025 and the change innegative impact of non-deductible expenses.stock compensation.

Cash usedincreased into or$265.5 million as of June 27, 2026 from $223.4 million as of December 27, 2025, primarily reflecting cash provided by operating activities and partially offset by the repurchase of the Company's A common stock Cash provided by operating activities consists of net (loss) income, adjusted for certain non-cash items, such as depreciation and amortization, stock-based compensation expense, litigation expense and other non-cash itemsadjustments included in operating results, and changes in operating assets and liabilities, such as accounts receivable, inventory, accounts payable, and accrued expenses.

The Company used $12.3$22.8 million in investing activities during the thirteentwenty-six weeks ended MarchJune 28,27, 2026, as compared to $9.8$24.1 million during the thirteentwenty-six weeks ended MarchJune 29,28, 2025. The increasedecrease in investing activity cash outflows is due to higherlower investment in the breweries during the current year. For both periods, capital investments were made mostlyprimarily in thecompany-owned Company’sand breweriesthird-party production facilities to drive efficiencies andefficiencies, cost reductions andreductions, support product innovation and enable potential future growth.

Cash used in financing activities was $26.5$52.6 million during the thirteentwenty-six weeks ended MarchJune 28,27, 2026, as compared to $51.4$103.7 million during the thirteentwenty-six weeks ended MarchJune 29,28, 2025. The financing activity cash outflows in 2026 and 2025 comprised mostly of the repurchases of the Company's Class A common stock in the period.

During the period from December 28, 2025 through AprilJuly 24,17, 2026, the Company repurchased and subsequently retired 137,912262,665 shares of its Class A Common Stock for an aggregate purchase price of $31.2$54.1 million. As of AprilJuly 25,17, 2026, the Company had repurchased a cumulative total of approximately 15.916.0 million shares of its Class A Common Stock for an aggregate purchase price of approximately $1.4$1.43 billion and had approximately $197$174 million remaining on the $1.6 billion stock repurchase expenditure limit set by the Board of Directors.

The Company expects that its cash balance as of MarchJune 28,27, 2026 of $164.1$265.5 million, along with its projected future operating cash flow and its unused line of credit balance of $150.0 million, will be sufficient to fund future cash requirements, including the potential litigation-related payments. The Company’s $150.0 million credit facility has a term not scheduled to expire until December 16, 2027. As of the date of this filing, the Company was not in violation of any of its covenants to the lender under the credit facility.

There were no material changes to the Company’s critical accounting policies during the three-monththirteen periodand twenty-six weeks ended MarchJune 28,27, 2026.

Based on the information currently available and tariff programs announced by the U.S. government, the Company estimates tariffs will have an unfavorable cost impact for the full year 2026 of approximately $20 million to $30 million. Total tariff costs for the twenty-six weeks ended June 27, 2026 were $12.1 million.