Thank you. Good afternoon, and welcome to everyone. This is Jim Koch, founder and chairman, and I'm pleased to be here to kick off the 2021 second quarter earnings call for The Boston Beer Company. Joining the call from Boston Beer are Dave Burwick, our CEO, and Frank Smalla, our CFO. I'll begin my remarks this afternoon with a few introductory comments, including some highlights of our results, and then hand over to Dave, who will provide an overview of our business. Dave will turn the call over to Frank, who will focus on the financial details of our second quarter results, as well as our outlook for 2021. Immediately following Frank's comments, we'll open up the lines for questions. During the second quarter, we saw significant growth in the on-premise channel and reopened all of our retail locations as most COVID-19 restrictions have been lifted across the country. However, our 24% depletions growth for the second quarter decelerated from our first quarter growth of 48% and was below our expectations as the hard seltzer category and the overall beer industry were softer than we had anticipated. Hard s eltzer category growth was negatively impacted by several developments. First, slowing growth in household penetration as the market matures and there is less new trial. Second, a gradual transition of industry volume to the on-premise channel as hard seltzers became more regular option in that channel. Third, new hard seltzer brands at retail that have resulted in a proliferation of choices and consumer confusion. Fourth, a challenging comparative period of significant pantry loading related to on-premise restrictions in the second quarter of 2020. We are encouraged that four of our five major brands grew in the second quarter, and we continued to expand our market share. In measured off-premise channels in the first half of this year, where our brand portfolio represented 4% of total industry volume, we've delivered over 45% of industry volume growth, by far the highest of all brewers. We're thankful to our outstanding coworkers, distributors, and retailers for their continued focus and diligence to continue to operate and help grow our business and achieve our 13th consecutive quarter of double-digit volume growth. We will continue to invest behind our brands with a particular emphasis on fueling the momentum behind Truly and Twisted Tea. We recently announced plans to develop new innovative beverages with Beam Suntory that we're planning to launch in early 2022. We believe these new beverages will further demonstrate our ability to innovate and grow our business as drinker preferences evolve. We remain highly positive about the future growth of our brands and that our diversified brand portfolio will continue to fuel double-digit growth. I'll now pass over to Dave for a more detailed overview of our business. Okay. Hey, thanks, Jim. Hello, everybody. Before I review our business results, I'll start with the usual disclaimer. As we state in our earnings release, some of the information we discuss and that may come up on this call reflect the company's or management's expectations or predictions of the future. Such predictions are forward-looking statements. It's important to note that the company's actual results could differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in the company's most recent 10-Q and 10-K. The company does not undertake to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Okay. Now let me share a deeper look at our business performance. Our depletions growth in the second quarter was a result of increases in our Truly Hard Seltzer, Twisted Tea, Samuel Adams, and Dogfish Head brands that were only partially offset by decreases in our Angry Orchard brand. Twisted Tea continues to generate double-digit volume growth rates and is the fastest-growing flavored malt beverage brand family in measured off-premise channels during the first half of this year. Early in 2021, we launched Truly Iced Tea Hard Seltzer, and during the second quarter, we launched Truly Punch Hard Seltzer. Similar to Truly Lemonade, these new products deliver against drinkers' interests in bolder flavor profiles and demonstrate Truly's distinctiveness and innovation leadership within the hard seltzer category. In measured off-premise channels, Truly Iced Tea is the number one innovation in the overall beer industry over the first half of this year, and Truly Punch is the number two innovation over the past four weeks. The overall Truly brand growth rate improved to 2.7 times the hard seltzer category growth rate in the latest 13 weeks, resulting in a four-point share gain and closing the share gap to the number one brand to single digits. We're excited about our new Truly advertising campaign, No One Is Just One Flavor, featuring Grammy Award winner and pop icon, Dua Lipa, and showcasing Truly's superior variety of flavors and the colorful and adventurous nature of Truly drinkers. Based on the brand's innovation leadership, strong brand building, and growing cultural relevance, we believe Truly is well-positioned to continue to grow share. We overestimated the growth of the hard seltzer category in the second quarter and the demand for Truly, which negatively impacted our volume and earnings for the quarter and our estimates for the remainder of the year. We increased our production of Truly to meet our summer peak and have had lower than anticipated demand for certain Truly brand styles, which has resulted in higher than planned inventory levels at our breweries and increased supply chain costs and complexity. At the same time, we've been experiencing out of stocks on certain of our canned products, most significantly on our Twisted Tea brand family. We expect wholesale inventories of Twisted Tea to remain tight for the rest of the summer. Our outlook for the hard seltzer category in the second half of 2021 is uncertain, and we planned our capacity and spending based upon several volume scenarios. We'll continue to manage our capacity requirements through a combination of internal capacity increases and higher usage of third-party breweries. We continue to work hard on our comprehensive program to transform our supply chain with the goal of making our integrated supply chain more efficient, reduce costs, increase our flexibility to better react to mix changes, and allow us to scale up more efficiently. While we're in a very competitive business, we're confident in the continued growth of our current brand portfolio and innovations, and we remain prepared to forsake short-term earnings as we invest to sustain long-term profitable growth. Based on information in hand, year-to-date depletions reported to the company through the 28 weeks ended July 10th, 2021, our estimates have increased approximately 32% from the comparable weeks in 2020. Now Frank will provide the financial details. Thank you. Thank you, Jim and Dave. Good afternoon, everyone. For the second quarter, we reported net income of $59.2 million, a decrease of $0.9 million, or 1.6% from the second quarter of 2020. Earnings per diluted share were $4.75, a decrease of $0.13 per diluted share from the second quarter of 2020. This decrease was primarily due to increases in operating expenses, lower gross margins, and a higher tax rate, partially offset by increased revenue driven by shipment growth. Shipment volume was approximately 2.45 million barrels, a 27.4% increase from the second quarter of 2020. Shipment volume for the first half was significantly higher than depletions volume and resulted in higher distributor inventory as of June 26th, 2021 when compared to June 27th, 2020. The company believes distributor inventory as of June 26th, 2021 averaged approximately five weeks on hand and was an appropriate level for each of its brands except for Twisted Tea, which has significantly lower than planned distributor inventory levels for certain styles and packages. Our second quarter 2021 gross margin of 45.7% decreased from the 46.4% margin realized in the second quarter of 2020, primarily as a result of higher processing and other costs due to increased production at third-party breweries, partially offset by price increases and cost-saving initiatives at company-owned breweries. Second quarter advertising, promotional, and selling expenses increased by $61.3 million from the second quarter of 2020, primarily due to increased brand investments of $41.2 million, mainly driven by higher media, production, and local marketing costs and increased freight to distributors of $20.1 million that was primarily due to higher rates and volumes. General and administrative expenses increased by $3.3 million from the second quarter of 2020, primarily due to increases in external services and salaries and benefits costs. Based on information of which we are currently aware, we are now expecting full year 2021 earnings per diluted share of between $18 and $22, a decrease from the previously communicated range of between $22 and $26, excluding the impact of ASU 2016-09, but actual results could vary significantly from this target. We are currently planning increases in shipments and depletions of between 25% and 40%, a decrease from the previously communicated range of between 40% and 50%. We're targeting national price increases per barrel of between 1% and 3%. Full year 2021 gross margins are currently expected to be between 45% and 47%. We plan increased investments in advertising, promotional, and selling expenses of between $80 million and $100 million for the full year 2021. A decrease from the previously communicated range of between $130 million and $150 million. These amounts do not include any increases in freight costs for the shipment of products to our distributors. We estimate our full year 2021 non-GAAP effective tax rate to be approximately 26%, excluding the impact of ASU 2016-09. We're not able to provide forward guidance on the impact that ASU 2016-09 will have on our 2021 financial statements and full-year effective tax rate, as this will mainly depend upon unpredictable future events, including the timing and value realized upon the exercise of stock options versus the fair value when those options were granted. We are continuing to evaluate 2021 capital expenditures and currently estimate investments of between $180 million and $230 million, a decrease and a narrowing from the previously communicated range of between $250 million and $350 million. The capital will be spent mostly on continued investments in our breweries and could be higher if deemed necessary to meet future growth. We expect that our cash balance of $103 million as of June 26th, 2021, along with our future operating cash flow and unused line of credit of $150 million, will be sufficient to fund future cash requirements. We will now open up the call for questions. At this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary for you to pick up your handset before pressing the star keys. One moment while we poll for questions. Our first question comes to the line of Bonnie Herzog with Goldman Sachs. You may proceed with your question. All right. Thank you. I guess I don't maybe even know where to begin. I understand that the category's been slowing. Everyone is aware of this. That said, I'm Truly struggling, and yes, pun intended, with how meaningfully your results have deteriorated. I guess I'm saying this because even as recently as May, your tone and comments suggested that even with a slowdown in the category, you could still deliver relatively strong growth and hit your full year guidance. I guess for me, this begs the question, how confident are you that you're going to be able to hit your new guidance? Really, how much visibility do you have in your business? Okay, Bonnie, this is Dave. Let me take a shot at that. I think first of all, when we spoke in our call in April, everything at that point, we'd hurdled that first big COVID stock-up period in March and April, we hurdled it really well, and so did the category. Even to the moment of our call, we felt really confident in where the category was going. What seemed to happen, really, the May, June stock-up overlap, we kind of hit that inflection point in the S-curve, where things went from high double-digit growth rate to low double-digit growth rate. That was the first signal, really, as we got into May and June, and we had expected to hit that second bump better. Now, if you look at the brand's performance, okay, just for perspective, Truly has outgrown the category for 11 months straight since last September. Truly has outgrown the category by 2x since January. Truly has outgrown the category by 3x in the last 13 weeks. It's the one brand that's increased household penetration significantly. We've grown our user base by almost 40% for Truly, which means the innovation is working, right? As we mentioned just earlier, Tea's performance is very well. Punch is performed very well. We're growing the business. We're actually bringing in younger and more multicultural consumers. We're seeing that with Tea and with Punch. I guess to get back to the question, the category went down to basically over the last 13 weeks, let's call it 10%, and we were growing between 20% and 30%. It did take a more severe drop. Let me give you a couple other thoughts of why that occurred. You hit the S-curve, you know that we can see that. Unfortunately, that's looking backward. It's kind of hard to see it coming, looking forwards. Jim had referenced some things in his opening remarks. One about, I think, just the proliferation of brands in this category that has occurred. There's a herd-like mentality in this business, broadly, and I think people try to bring new brands into the marketplace, and there's a sameness to these brands. There's a lack of originality, and I think what's happened a little bit, a little bit of the luster, the specialness, the excitement for some consumers has been lost. There's 220 brands and 1,000 SKUs, according to IRI, in the category right now. That's about 50% larger than last year. We're seeing our retail customers are still trying to support all of them. That's gonna change pretty quickly. The dam is gonna break on that one, and the long tail will be pared off. You have that dynamic going on. Also, this move from off-premise to on-premise, 3% of the mix within on-premise is hard seltzer. It's like 10% or 11% now, however you want to look at it. In off-premise, we think it's gonna climb. Actually, our team feels very confident. We've added 4,000 Truly draft lines. We're getting the distribution, but it's not gonna overnight all of a sudden switch from one channel to another. We feel pretty confident that that's gonna continue, and we've always believed, have confidence in that. I'd say maybe we thought it would move more like a light switch than it has been more gradually, but it's moving certainly in that direction. As relates to, just to finish off, I know it's a long answer, but it was an important question. Where's the category goes? How can you guys have faith in your guidance now? We're gonna forecast the category business. That's not what we do well at. We grow brands, we grow businesses. If you look at the third-party data providers, though, that are out there, and you guys all work with them, the range for the full year is about 20%-50%. Okay? That's the range we're coming in at 20%-50%. If it's at the low end of that range, if it is, we can continue to grow two or three times that rate. We've been doing it for a long time now. We feel very confident. If it goes to the high end of that range, we're probably not gonna be growing two or three times 50%, but we know we can grow faster than the category. Again, we think if you look at that range, low end, we can grow significantly more, high end, we can grow more, and we're gonna grow share this year. That is sort of how we're looking at it, and that's how we kind of get to this number. I don't know if Dave has anything else to say on that one. Let me say one more thing. Twisted Tea is growing significantly, and it'll be a half a billion-dollar business this year. We have a lot of confidence in that. We know of a footfall with some of our supply chain activity where we're a little bit short on cans. We're scrambling on that and we're coming back by the end of the summer on that. We feel very confident in Twisted Tea. Obviously on-premise, as you heard, is really unleashed growth for Dogfish and for Sam Adams. I'll stop there, Bonnie. You can follow up if you want to do that. No, I appreciate the color. It's helpful. Thanks for all that. I'll pass it on. Thank you. Our next question comes from the line of Vivien Azer with Cowen. You may proceed with your question. Hi, good afternoon. Thanks very much for that very fulsome answer. That's a great place to pick up. In terms of the on-premise penetration, can you just help dimensionalize that, please? Like 4,000 draft lines of Truly compares to what for your beer portfolio? Or is there an ACV measure we should be thinking about? Just to understand how incremental that could be. To be really precise, it's about 262,000 accounts out there. We're in almost half of them with at least one brand. Let's say we're in 125,000 accounts, not a full portfolio, but at least one of our brands. 4,000 we think is pretty significant. Again, we'll see how it plays out. Certainly cans are going to be the predominant form of package that we deliver, there seems to be a lot of interest among our customers for Truly on draft. We switched, if you remember, when we first tested this idea right before COVID, we had a flavorless version that was intended to be mixed by bartenders. The feedback we got was, "That's too much effort," we have a Wild Berry version, which our customers are liking a lot better. There's no need for mixology or anything like that. That's the extent right now. Again, one more data point for you, we've more than doubled our penetration for Truly in our accounts. It's in about 22%-23% of our accounts, more or less, at the moment, and growing. On-premise. On-premise. That's really helpful. Thank you for that. Just on the margin side, given the reduction to your volume outlook for the full year on ships and depletes, surprised that maybe there wasn't a little bit of improvement in your gross margin outlook. Is that a function of you guys being locked into contracts with third-party manufacturers? How do we think about that? Thanks. Vivien, this is Frank. Yeah, when you look at versus prior year, with the volume growth, it was pretty clear that we're going to grow the Truly variety pack more externally than internally, because we are full out internally, and externally at this point is still more expensive. There was a margin decline because of that. Now, with the volume slowdown that we have experienced in Q2, that relationship or ratio has improved, and depending on where the volume is going to go for the rest of the year, will probably improve based on the revised guidance that we have given. In Q2, you don't see the full benefit of it because there were certain adjustments costs. We have flexible contracts, but the slowdown of the category came pretty suddenly. There are some adjustment costs, and we adjusted the production and incurred some costs for that. That's why you don't see the full extent of that. What I can tell you is that we see the benefits in our internal breweries of our cost reduction efforts and the automation efforts that we're putting in. We haven't changed the full- year guidance yet. We see the savings coming through and expect them definitely for next year. Understood. Thanks. I'll try to squeeze in one last one. You noted that you'll continue to focus on innovation, but also predicted that there will be a category shakeout. I think you guys have been good at predicting cluttered categories. Jim's talked about in the past with craft beer proliferation, and that certainly came out as you guys predicted. How are you guys thinking about innovation in the back half of this year and into 2022, given that the category does look very crowded right now? Thanks. Yep. Thanks, Vivien. Dave again. First of all, we've gained about 60% more space year-over-year on shelf. We're expecting that we could probably pick up another 25% in the fall. There will be change in fall resets. By the way, we have the highest penetration of any brand in the category now. I think our flavor innovation has been able to bring new consumers into the category, to the brand. On that strength, we think we can get more space in the fall. As it relates to innovation in general, consumers in this category, they like innovation, and I think we've figured out how to do it different than others have, and we'll continue to bring innovation. I think the challenge for us is how do we keep doing it in a way that makes it differential and incremental, both to the category and to our brand? Thus far, we've been successful in doing that. We're certainly not going to rest on our laurels or think that maybe the same formula is going to work going forward. We're going to look at other ways to do it. Again, because we're a very strong number two now, and we performed this year, significantly outperformed others. We think we have a lot of latitude and support from our customers to do more. Understood. Thanks very much for the color. Sure. Our next question comes from the line of Eric Serotta with Evercore. You may proceed with your question. Thank you. First quick one for Frank. Your inventories were up pretty substantially, something in the order of $90 million. Sequentially, I know that, I think it was Dave, called out increased inventory at the breweries. How much of that sequential increase in inventories on the balance sheet was related to finished goods at the breweries, and what's the risk of inventory obsolescence costs here? A follow-up for Dave and Jim afterwards. Yeah. The inventory, to your point, we have internal inventory that has clearly increased. That's a function of the business. three reasons. One is the function of the business growth that we have experienced in absolute terms, and we're managing it really in terms of weeks of supply. The second thing is, as we have done in the previous two years, we've pre-built inventory. That's what you see at wholesaler inventory, which has gone up. Now, there's a limit to how much wholesalers can take, so we had to build a little bit more internally rather than passing it to the wholesalers. Came the slowdown. What we have done, and typically that was the curve in the previous two years, we're building up until April, where we reach the peak in inventory, and then we start decreasing our inventory as the demand picks up and eclipses our production capacity. That has happened as well. What has happened, though, in May and June, that that pace has slowed versus what we have predicted. From a weeks of supply, forward-looking perspective, at this point, we don't expect any write-offs. Everything is reflected. There shouldn't be, unless there's another significant slowdown, which we don't expect because our guidance has reflected, and that's why we increased the guidance a little bit also to the lower end to account for that. Okay. Jim and Dave, I was a little bit surprised that in your detailed explanation for the slowdown of the seltzer category that you didn't explicitly call out RTDs. Maybe that's partly what you're referring to in terms of some of the consumer confusion. Although I think that was referring within the hard seltzer categories. The question for you is, do you guys think that some of the hard seltzer slowdown is related to the explosion that we've seen in RTDs? Drizly is obviously talking quite bullishly about what they're seeing on their platform for RTDs, and what sort of interaction are you seeing, and what's the plan to participate in a bigger way? Sure. Hey, Eric, this is Dave. I'll be honest, right now, you're right, I was referencing hard seltzer proliferation, not RTDs or canned cocktails. At this point, we don't see it having an impact on the hard seltzer category or Truly. Just to put it in perspective, you have to break it apart. High Noon actually plays as a hard seltzer. No question about that. High Noon, if you were to put that into the hard seltzer category, would be about a two-share. High Noon is also about a quarter of the entire RTD business, canned cocktail business. Consider the canned cocktail business about 8%, right, of hard seltzer, of which High Noon's got two of it. High Noon does play in that space, and there's no question. You look at the occasions, and again, we're still learning because it's obviously very new. It's a nascent thing, but we're talking to consumers, and we're learning. High Noon does deliver on sort of sessionability better for you. If you look at the other canned cocktails, they do not. If you look at the, it's more special occasions, not the same occasions that hard seltzer are satisfying. If you look at the repeat data, again, it's early, but if you look at the repeat data and the buy rate data on canned cocktails, they are very low compared to hard seltzer. Again, I would say canned cocktails is kind of like, it's this jumble of stuff right now. We're all trying to figure out, what is it? Where does it go? They're not all the same. Honestly, the first thing you got to do is take High Noon out of that equation because it plays very differently. Having said that, we'll participate there because we have to. We have to learn, and we're eyeing it. We think it's important that we do that, and we'll do it in our ways. We talked about taking Sauza into an FMB format as part of our partnership with Beam Suntory. That's one of the things we're going to do. Also, of course, we have Dogfish Head out there now. We're going to learn, and we're going to play. I think this kind of noise that's being created now that, oh my gosh, canned cocktails, it's got to be bringing down the hard seltzer category. We don't see it in the data. When we talk to consumers, we don't see it either with them. Great. Thanks for your perspective, I'll pass it on. Our next question comes from the line of Laurent Grandet with Guggenheim. You may proceed with your question. Thanks, and good evening, everyone. Two questions from me. One is a follow-up from Vivien Azer questions earlier on on-premise. I would need you to help me reconcile the numbers here. It looks like the depletion in the quarter was about 24%, that's pretty much what we are seeing in the Nielsen retail business. It would mean that actually on-premise didn't deliver any upside. If you look at those numbers. Maybe you could share, for the entire company, maybe the performance in on-premise by brands. More specifically on Truly, I've got some follow-up question on for the on-premise. Help me reconcile basically the growth of on-premise during the quarter with what we are seeing in retail. The question is, what's happening with on-premise? If our total number looks like retail, are we growing in on-premise or we're not growing on-premise? Correct. In fact, I can tell you. You said. Yeah. Yeah. Go ahead. Yeah. I'm sorry. No. Yeah, right now we're approaching like the last several weeks, we've been selling at the same levels as 2019. Obviously 2020, we were not selling what we were selling in 2019, so we are growing on-premise. One of the primary reasons why both Sam and Dogfish are back to growth is we're getting tap handles and we're growing. I'm not sure how to, other than sharing the data that we don't normally share, how I can kind of reconcile that, other than say we are growing in on-premise as well. We use IRI. I'm not sure what Nielsen is saying. You said it says 24. I'm not sure how to reconcile those two numbers, to be honest. In the quarter, we very definitely grew faster on-premise than we did off-premise pretty much for every brand. Yeah. Well, okay. Well, difficult to understand this in the numbers. Specifically maybe on Truly. Last year, on-premise for Truly was about 2%-3%, and you're saying it's about 3%. It's not a huge kind of upside versus last year. Where do you think a brand like Truly or hard seltzers in general could become in term of size versus retail? Should we think about these being kind of 8%-10% of the retail sales of Truly or hard seltzer? I'm not thinking that it would go up to 15% like in beer, but should we think about Truly being ultimately 8%-10% of what it is in retail? I think that's reasonable. I think I would start with the likelihood that hard seltzer in general, including Truly, will under index on-premise for the foreseeable future. Unless the draft takes off as a big volume driver. If you don't play on draft, you're missing a sizable hunk of the on-premise low ABV type volume where beer is historically played. We're all begging for a crystal ball here, and none of us has it. If on-premise historically has been between 15%-20% of the business, if you held a gun to my head, I'd say it's gonna be 10-ish, maybe a little less of the seltzer business for the next year or two. Longer term, there may be upside from innovation that we haven't seen yet. Thank you. That's very helpful. It's more on innovation. Sorry if I didn't understand it, could you please maybe explain the nature of the deal with Beam Suntory and what we should expect from What will be the upside for you? I'm not sure I understand what's Truly in the bottle is, to be frank. Yeah. I think we deliberately didn't put a lot of information out there because we don't want to share with our competitors. Basically, we have a partnership, and it's not like a licensing deal. It's a partnership where we can take some of their brands into the FMB space. We do know that there are FMB drinkers who like spirit brands and would like to see those spirit brands in the FMB space. Through our distribution network, collaborative R&D, collaborative marketing, but through our distribution network is where we would take those brands. In return, we think we have a couple brands, the first one being Truly, that have a possibility and a potential to live in the spirits world. To do it the right way, we're gonna go through them and their distribution and use their know-how and expertise in helping us craft, in the first case, a version of Truly that could be a bottled spirit. It's we're mutually helping each other take some of our iconic brands into other worlds where consumers will recognize them and hopefully gravitate toward them. I'd add to that, I think it is our mutual beliefs, us and our partner Beam Suntory, that a spirits-based product will find its best route to market through the spirits system of supplier and distributor. We believe there could be some traction for a Truly Vodka, but not through us, not through our production and distribution system. It should go through a spirits producer. We're fortunate to have someone of the quality of Beam Suntory to partner with in this endeavor. Similarly, a malt-based product, even if it has a tequila brand on it, will find its most success leveraging the beer system, a beer supplier like us and beer wholesalers like our network. Despite the brand names, it keeps the products in their most successful lanes, spirits through the spirit system, and malt-based products through the beer system. Thank you very much for the clarification. I pass it down. Thank you. Our next question comes from the line of Filippo Falorni with Morgan Stanley. You may proceed with your question. Hey, good afternoon, guys. First question, maybe can you explain and give a little bit more color on your expectations for Truly in the second half? I know you said for the full year you expect to at least grow at the low end, two to three times the low end of the 20%-50%. Just any thoughts on the second half as you cycle more normalized comparisons? That would be helpful for us to start. I think the best way to look at it is as a relationship to where the category is going, because at least we have some good historical data over the last year on how we perform relative to the category. What I don't want to do is say what the category is actually going to do because we've proven we're not very good at that. We do think that, again, for the last 13 weeks, we've been about a 3:1 clip versus the category. We think whichever way the category goes, we'll ride it. Look, we believe this in our last call, we do think that, obviously, COVID is up. We're lapping. There's some serious out of stocks that were occurring. On-premise will start to take hold. The category will winnow out. Some of this consumer confusion and retailer support and everything will start to fade the back half of the year. Again, we think through our innovation and through our brand building, we've established ourselves as a brand with a lot of momentum that should take advantage of these things that will happen back half of the year. How that translates into the exact growth, we don't know. By the way, if it goes up, we're ready to go there. We can handle either. Whatever occurrence happens, we'll be ready to take advantage of that. I'm sorry, that doesn't really give you a definitive answer, but that's sort of the best we can do. Got it. Okay. That's helpful. Yeah. Maybe kind of to add on to that, we were expecting a slowdown in May and June because it's really hard to predict, and that's why it's really hard to answer your question, is 2020 was such a roller coaster and had a tremendous volatility. If you recall, May and June was a tremendous stock-up, first by the consumer, then by the retailer, because they wanted to be ready. That was reflected in the depletions and in our volumes, shipment volumes, of course. We were expecting moderation. I think that coincided with a few other factors that Jim and Dave have laid out. The slowdown was a little bit stronger than what we had expected. That is moderating in the back half, but we don't exactly know what the composition is between the natural slowdown of the category and what happened in May, June, and going into early July. We'll have to see that. What we put out as our range is our best estimate based on what we are seeing and what we believe. We are clearly prepared to go beyond that on the upside. We are ready to move there if need be. We're planning for more than what we have or for a broader range than what we gave you as a guidance. Got it. Okay. Dave, you've talked in the past about wanting to build Truly as a mega brand, and you've clearly done a lot of progress in the U.S. market. Thinking about internationally and the potential there, particularly given the U.S. category is starting to slow, why not go a little bit more aggressive on trying to expand internationally, starting with Canada, and then potentially in other markets? Whether you can make some investments to do it in-house or potentially partner with another beverage company on a global basis. Well, we do have a business in Canada that's growing rapidly. We feel good about the progress we're making there. We are just now launching in the U.K. We have a partner in the U.K., Shepherd Neame, is the oldest brewer in the U.K., and our partner for Boston Beer there, and they are launching in the U.K. and Ireland right now as we speak. We'll learn, because we're not quite sure where hard seltzer is going to play outside of North America. We're a little bit hopeful, but we're not betting the farm on it. Shepherd Neame is going to go out there, and the benefit of that is we also have Dua Lipa, who is a U.K. citizen and obviously well-loved in the U.K. We have a great marketing platform to go out there to see what we can do in the U.K. Then we'll see from there. There are other things, obviously, out there, but we're focused on winning in North America, and that's our goal, and I think you can see the effort we've made and what's happened over the last year. We're in a much different place than we were a year ago because we've been really focused on the market that matters the most. Got it. Thanks, guys. Our next question comes from the line of Kevin Grundy with Jefferies. You may proceed with your question. Hey, good evening, guys. I apologize for the background noise. I'm on the road here. This is a question for Dave and for Jim. I'm coming back to the seltzer category. Maybe you could just unpack the factors a little bit driving the slowdown. I hate to belabor this, but I guess going back to your initial guidance to where we are now, as you look at your key performance indicators and household penetration, frequency of consumption, if you could just sort of maybe departmentalize this in some order of magnitude, what you think is driving the slowdown. At a 20,000 ft level, as the industry sort of moves out of this euphoria phase and we move into more normalized level to growth, I apologize, Dave, I know you said you don't want to forecast a category anymore, but being a company that's helped pioneer this category, I think the industry will be curious to hear your views. Where do you think we go now from here? I think the bogey had been like 15% of beer. Does that still seem like a reasonable ambition? Your thoughts on both of those would be helpful. I have a follow-up. Thank you. Sure. Okay. I can start on this. Jim or Frank can jump in. I think in terms of the category, it is kind of that S-curve moment. I think what makes it even harder to recognize is because of all the weird overlaps with COVID. First stock up, second stock up, on-premise opening, et cetera. If you look at the household penetration, year-to-date, the penetration is still growing in the category, and so is the buy rate. You have a lot of people who've come in, I think year-to-date, I'm using Numerator data for those who care, it's up 7% household penetration increase. A year ago, it was 73%. Okay, that's the inflection point. It's still growing, it's slowed down. Buy rates are also increasing. People who are in the category and staying in are actually buying more. That's good. I think my sense is, we obviously went from close to triple digits not too long, nine months ago, whatever, to high double digits. Now it's low double digits, and we think it will stay. We're banking it's going to stay there. It could go up a bit. We said that 20%-50%, again, that's not our forecast. That's all the experts' forecast, and that seems reasonable to us given all the things we've seen. I think, yeah, what's going to make a difference really to quote unquote "getting normalized," we'll know more, obviously, as we get through the summer. Again, there are too many brands out there with not enough shelf space, too much focus, too much sameness. I really believe this firmly, that in categories like this where there's high growth and everybody jumps in, it's not just in our industry, the more companies try to create something that's different, they create non-essential differences and benefits. The problem is everything becomes the same. It does, from a consumer perspective, look the same. I think a lot of those brands will be gone. I think retailers are seeing that now it's going to start happening in the fall. Still, the top two brands are 70 share of the category, more or less. That will continue. I think the smoke will start to clear, and what we're hearing from the other third-party folks, they're saying basically CAGR 15%-25% over the next few years coming out of it. I didn't want to go there yet. Let's just get through the next three to six months and see if it ends up where we think it will. We obviously have more information now than we did even three months ago, a lot more, and hopefully we're closer. Kevin, I don't know if that came close to answering your question. No, that's helpful. Jim, did you have anything to add on this front, particularly where you think the category goes over time now that you kind of reassess here with the slowdown, we move out of this euphoria phase? Anything to add? We're just at a really choppy point. To be totally honest, we were surprised at the sharpness and the suddenness of the change in trajectory. It happens as we're lapping crazy times from last year. We're past the first month of pantry loading, but when we look at May this year versus May of last year, it was a crazy time last year. All the volume had shifted to the off-premise. The numbers are really hard to read. May, even June of this year versus May and June of last year. We're probably as surprised as you were. It shows up in the inventory numbers. From our point of view, we launched Truly Punch, which was quite successful. It hasn't added as much to our volume as we thought. Cannibalized it, some of the other packages, maybe a little more than we thought it would. It's a really murky crystal ball. It's more like looking into a bowling ball. You can't see much. Understood. One quick follow-up, and then I'll pass it on. Just given the slowdown, there is a major brand extension out there. They've recently decided to pull the plug on it, so one would think that there'll be some interest on the part of whole that inventory through the system. Understanding that we're in a difficult commodity cost environment, how do you sort of balance or view those crosscurrents of the category slowdown with higher input costs? And specifically, do you see the risk that the promotion kind of picks up here, given the magnitude of investment and the inventory that's in the channel right? Well, I'll give you my guess. Generally, when brands end up being discontinued like that, there's not that much volume out there. I think the one you're talking about, it was maybe 0.7% share. A lot of them just dwindle. There's not a lot of inventory that gets dumped and puts downward pressure on the category. From retailers and wholesalers and suppliers, it's a very attractive category. We've all made major investments to it, there's not That we need to pay back. I'm not anticipating price wars in the seltzer category. I'm not that worried about it. We all have more inventory than we would like, but it's still selling a lot of product, so we're not really worried about. It has long shelf life, six to 12 months. We're all able to cut our production and work off that inventory in a relatively short period of time. Yeah, I appreciate the time. I think. Go ahead. I would add to the inventory. Last year, we would have been more than happy if we had that level of inventory because we ran out. There's just a lot of seasonality to it. That's one thing. The other thing is also on the pricing. You see also in our Q2 financials, we delivered quite a bit of pricing in the category. The category so far has shown that it's not really a price-driven category. It's the quality of the beverage, the strength of the brand, and the innovation that wins. Price hasn't been really a factor. We don't expect that to change. Okay. Very good. I appreciate the time. Thank you. Good luck. Thank you. Our next question comes from the line of Nadine Sarwat with Bernstein. You may proceed with your question. Hi. Yeah, thank you for taking my question. I want to go back and touch on your comments on the S-curve and really taking a step back and looking at the long term. Are you seeing any evidence that the early adopters of the category are switching out of hard seltzers? Or is what we're seeing now in Q2 really just that the rate of attracting new customers has slowed? Thank you. Hey, Nadine, I think it's much more of the latter. The early adopters are actually, they're there and as I mentioned, the buy rates are increasing, so they're actually buying more and they're moving through the category, and they're experimenting with a lot of different things, but they're there. I'd say it's more the more recent. The household penetration is around 27% now, so it's probably the more recent ones to jump in are more likely to fall out. The good news is we're bringing in younger consumers, we're bringing in Latinos, African Americans. The buy rates for some of those consumers coming in are actually a little bit lower than the first ones in. This is still going to be an $8 billion or thereabout business this year in retail. It's the only real category that's growing within beer, and it's growing double digits. The question is, to how far does it go up, hopefully? Again, just to put that in perspective as well. All right. Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Our next question comes to the line of Eric Serotta with Evercore. You may proceed with your question. Hi, just a quick follow-up. You cut the CapEx guidance pretty significantly for this year. I know you're not going to give us a category forecast for this year or next year, but what sort of range of additional capacity do you have coming online between your own breweries and your co-packers between now and year-end and now and, call it, summer of 2022? Right now, we've got a couple of big pieces of capacity coming on in the next few months. Actually, this month, we're starting to get production out of the City Brewing in Irwindale, California, right outside of L.A. In the fourth quarter, we will get production from Rauch, basically the people who produce Red Bull all over the world. They're bringing up a greenfield facility in Arizona specializing in slim cans. One part of the margin improvement that we'll be starting in the second half of this year is those markets we currently supply largely from Memphis and from Pennsylvania, a little bit from a smaller facility in Arizona. All of those freight costs will be reduced as we begin to supply the western half of the United States from western breweries. Then we put capacity in place for the back half of this year, then especially going into 2022, for very significant growth in seltzer, and that is primarily contract capacity. All that contract capacity coming on stream, which is very favorably located and actually well-designed to make variety packs at Rauch, doesn't involve a great deal of capital compared to building it internally. One of the things we have reduced is high capital cost capacity, which is the internal capacity, because we believe we have really good contract partners with favorable terms and locations and very efficient production. Yeah. Eric, to your question, we started that in the last earnings call where we had reduced that. When we were in this really extreme growth period, when you plan your capital, you look at different options of putting the capital in. There are basically two big buckets of capital that we're looking at. One is increasing capacity, and the other one is investments to bring down the cost. That's the automation of the variety pack. That's the main component which will drive the cost down. When you put that in at the beginning, the plans weren't all specified. As we moved through the year, we found better solutions, as Jim said, that allowed to get to the same result with less capital. If you look at the CapEx reduction in the guidance, the way I would think about it is three quarters is really because we found better ways in implementing our plans, and about one quarter is a delay, and that depends really on the capacity that we really need. We have sufficient capacity for next year, everything will go forward that will decrease our variety packing cost. That's the major cost block, and that's also the major difference that you see in the current P&L between external manufacturing and internal manufacturing. Those are the plans that we have, and that's going to be a key driver for the margin improvement. That's helpful color. Just coming back to the risk with all of this additional capacity that you're going to have access to, could you talk about what degree of flexibility that you have with your partners in other locations and your own breweries to just make sure that you're not too long on capacity or supply next year if the category growth disappoints? We believe we have very flexible contracts with our primary partners. There are shortfall fees, but they don't kick in for a while, for the first piece of volume. We have to go way below our projections before they kick in, and they are reasonable. Our contract partners are very good producers. They're in demand. They make lots of different things. We are the principal customer for most of them and looked at as the most desirable, stable, sizable volume. If we cut some of that back, we've been told by our contract partners that they've got other demand for it. We're lucky in that flex capacity, the last third of it, we basically have options on that. The contracts are structured that way because we were uncertain about just how high was up. We locked in adequate capacity to cover very ambitious upside goals. The shortfall fees are not sizable. Well, thank you. I'll pass it on. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. One moment while we poll for questions. Ladies and gentlemen, we have reached the end of today's question and answer session. I would like to turn this call back over to Mr. Jim Koch for closing remarks. Well, thanks everyone for joining us for this call, and we look forward to speaking to you in another three months when we think we'll have a little more clarity. Maybe the bowling ball will have turned a little more translucent. Thanks, everyone. Thank you. Thank you for joining us today. This concludes today's conference. You may disconnect your lines at this time.