Molson Coors Delivers First Quarter Top-Line Growth Across All
Business Units
First Quarter Income Before Income Taxes Decreased 41%, First
Quarter Underlying Income Before Income Taxes Increased 83% on a
Constant Currency Basis
Reaffirms 2023 Full Year Guidance for Continued Growth While
Navigating Global Inflationary Pressures
Molson Coors Beverage Company ("MCBC" or "Molson Coors") (NYSE:
TAP, TAP.A; TSX: TPX.A, TPX.B) today reported results for the 2023
first quarter.
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the full release here:
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2023 FIRST QUARTER FINANCIAL HIGHLIGHTS1
- Net sales increased 5.9% reported and 8.2% in constant
currency, primarily due to positive net pricing and favorable sales
mix, partially offset by a slight decline in financial volume.
- Net sales per hectoliter increased 6.1% reported and 8.4% in
constant currency, primarily due to positive net pricing and
favorable sales mix driven by premiumization.
- U.S. GAAP income before income taxes of $101.9 million declined
41.3% reported and 45.3% in constant currency.
- Underlying (Non-GAAP) income before income taxes of $157.8
million improved 82.8% in constant currency.
- U.S. GAAP net income attributable to MCBC of $72.5 million,
$0.33 per share on a diluted basis. Underlying (Non-GAAP) diluted
earnings per share ("EPS") of $0.54 per share increased 86.2%.
1 See Appendix for definitions and reconciliations of non-GAAP
financial measures including constant currency.
CEO AND CFO PERSPECTIVES
In the first quarter of 2023, Molson Coors delivered strong net
sales growth and increased its underlying income before income
taxes on a constant currency basis by high double digits. These
results benefited from particularly strong rollover pricing
compared to the prior year and were achieved despite continued
macro-economic pressures. After growing both these metrics on a
full-year basis in 2022, the company continues to deliver against
its priorities, growing revenue across both business units in the
first quarter and reaffirming its full-year 2023 guidance.
Molson Coors’ core brands in the U.S. continue to see strong,
stable performance, and in Canada, Molson Canadian and Coors Light
both grew brand volume in the quarter. In the U.K, Carling remains
the number one brand in the market, and more broadly, Molson Coors’
EMEA&APAC business grew total financial volume in the quarter.
This growth was supported by Molson Coors’ global premiumization
strategy and the continued strength of Madri, which is now the
eighth-largest brand in the U.K. In the U.S., Molson Coors
continued to expand its presence beyond traditional beer including
Simply Spiked, a top five industry growth brand, and the release of
Simply Spiked Peach. In addition, the Company launched its first
foray into ready-to-drink spirits under the Topo Chico Spirited
banner.
Gavin Hattersley, President and Chief Executive Officer
Statement:
“Our results in the first quarter of 2023 demonstrate the
strength of Molson Coors’ foundation across our portfolio of
winning brands and business units. These results also reaffirm our
belief that we’ve laid the right groundwork to continue growing
sustainably in 2023 and in the future. We’ve delivered our eighth
consecutive quarter of top-line growth and increased our
bottom-line on an underlying and constant currency basis by high
double digits. Our iconic core brands remain healthy, and our
premiumization strategy is working as we see continued momentum
across our newest brands in Above Premium Beer and beyond.”
Tracey Joubert, Chief Financial Officer Statement:
“We are pleased with our first quarter performance, achieving
strong net sales revenue and underlying income before taxes growth,
while continuing to invest in our business and return cash to
shareholders. While we remain mindful of the dynamic global
macro-economic environment and beer industry softness, our first
quarter performance coupled with the strong foundation we have laid
over the last three years, provide us confidence to reaffirm our
2023 annual guidance. Achievement of this guidance would mark
another year of growth on a constant-currency basis – delivering on
our goal of sustainable top and bottom-line growth.”
CONSOLIDATED PERFORMANCE - FIRST
QUARTER 2023
For the Three Months
Ended
($ in millions, except per share data)
(Unaudited)
March 31, 2023
March 31, 2022
Reported Increase
(Decrease)
Foreign Exchange
Impact
Constant Currency Increase
(Decrease)(1)
Net sales
$
2,346.3
$
2,214.6
5.9
%
$
(49.7
)
8.2
%
U.S. GAAP income (loss) before income
taxes
$
101.9
$
173.7
(41.3
)%
$
6.9
(45.3
)%
Underlying income (loss) before income
taxes(1)
$
157.8
$
83.5
89.0
%
$
5.2
82.8
%
U.S. GAAP net income (loss)(2)
$
72.5
$
151.5
(52.1
)%
Per diluted share
$
0.33
$
0.70
(52.9
)%
Underlying net income (loss)(1)
$
116.3
$
63.8
82.3
%
Per diluted share
$
0.54
$
0.29
86.2
%
(1)
Represents income (loss) before income
taxes and net income (loss) attributable to MCBC adjusted for
non-GAAP items. See Appendix for definitions and reconciliations of
non-GAAP financial measures including constant currency.
(2)
Net income (loss) attributable to
MCBC.
QUARTERLY CONSOLIDATED HIGHLIGHTS (VERSUS FIRST QUARTER 2022
RESULTS)
- Net sales: The following table highlights the drivers of
the change in net sales and net sales per hectoliter for the three
months ended March 31, 2023 compared to March 31, 2022 (in
percentages):
For the Three Months Ended
March 31, 2023
Financial Volume
Price and Sales Mix
Currency
Net Sales
Consolidated - Net sales
(0.2
)%
8.4
%
(2.3
)%
5.9
%
Consolidated - Net sales per
hectoliter
N/A
8.4
%
(2.3
)%
6.1
%
Net sales increased 5.9% reported and 8.2% in
constant currency driven by favorable price and sales mix offset by
a slight decline in financial volume.
Financial volumes decreased 0.2%, primarily
due to lower volumes in the Americas segment, partially offset by
an increase in EMEA&APAC financial volumes. Brand volumes
declined 2.1% due to a 1.5% decline in the Americas as well as a
decline in EMEA&APAC.
Price and sales mix favorably impacted net
sales and net sales per hectoliter by 8.4% due to increased net
pricing to customers including the rollover benefit of taking
several price increases in the previous year as well as favorable
sales mix driven by premiumization and geographic mix.
- Cost of goods sold (COGS): increased 22.4% on a reported
basis, primarily due to higher cost of goods sold per hectoliter
partially offset by favorable currency impacts. Cost of goods
sold per hectoliter: increased 22.7% primarily due to
changes to our unrealized mark-to-market commodity positions
driving more than two-thirds of the increase, cost inflation
related to materials, conversion and energy costs and mix impacts
due to portfolio premiumization, partially offset by our cost
savings initiatives. Underlying COGS per hectoliter:
increased 7.4% in constant currency, primarily due to cost
inflation related to materials, conversion and energy costs and mix
impacts due to portfolio premiumization, partially offset by our
cost savings initiatives.
- Marketing, general & administrative ("MG&A"):
decreased 9.0% on a reported basis, primarily due to cycling the
recording of a $56.0 million accrued liability related to potential
losses as a result of the ongoing Keystone litigation case.
Underlying MG&A: increased 1.3% in constant
currency.
- U.S. GAAP income (loss) before income taxes: declined
41.3% on a reported basis, primarily due to unfavorable changes to
our unrealized mark-to-market commodity positions of $223 million
and cost inflation related to materials, conversion and energy
costs, partially offset by increased net pricing to customers,
lower MG&A expense due to cycling the recording of a $56.0
million accrued liability related to potential losses as a result
of the ongoing Keystone litigation case, the cycling of the
non-cash impairment charge taken on our Truss LP joint venture
asset group in the prior year and favorable sales mix.
- Underlying income (loss) before income taxes: improved
82.8% in constant currency, primarily due to increased net pricing
to customers and favorable sales mix, partially offset by cost
inflation related to materials, conversion and energy costs.
QUARTERLY SEGMENT HIGHLIGHTS (VERSUS FIRST QUARTER 2022
RESULTS)
Americas Segment
- Net sales: The following table highlights the drivers of
the change in net sales and net sales per hectoliter for the three
months ended March 31, 2023 compared to March 31, 2022 (in
percentages):
For the Three Months Ended
March 31, 2023
Financial Volume
Price and Sales Mix
Currency
Net Sales
Americas - Net sales
(0.5
)%
7.0
%
(0.9
)%
5.6
%
Americas - Net sales per hectoliter
N/A
7.1
%
(1.0
)%
6.1
%
Net sales increased 5.6% reported and 6.5% in
constant currency, driven by price and sales mix, partially offset
by a decline in financial volume.
Financial volumes decreased 0.5% primarily
due to industry softness, lower Latin America financial volumes and
lower contract volumes, partially offset by an increase in U.S.
domestic shipments to build distributor inventory levels to a
stronger position compared to the prior year primarily in our core
brands. Americas brand volumes decreased 1.5% including a 1.2%
decline in the U.S. driven by softer industry performance and lower
economy portfolio volumes, partially offset by the timing impact
related to one more trading day in the current quarter. Canada
brand volumes increased 4.9% due to growth in core brands and in
part due to cycling softer on-premise performance in the prior year
due to Omicron restrictions. Latin America declined 12.4% largely
due to industry softness in some of our major markets in the
region.
Price and sales mix favorably impacted net
sales and net sales per hectoliter by 7.0% and 7.1%, respectively,
primarily due to increased net pricing to customers including the
rollover benefit of several price increases taken in the previous
year and favorable sales mix driven by brand mix and geographic
mix.
- U.S. GAAP income (loss) before income taxes: improved
168.0% on a reported basis, primarily due to increased net pricing,
lower MG&A expense driven by cycling the recording of a $56.0
million accrued liability related to potential losses as a result
of the ongoing Keystone litigation case, the cycling of the
non-cash impairment charge taken on our Truss LP joint venture
asset group in the prior year and favorable sales mix, partially
offset by cost inflation mainly on materials, conversion and energy
costs.
- Underlying income (loss) before income taxes: improved
37.7% in constant currency, primarily due to increased net pricing
and favorable sales mix, partially offset by cost inflation mainly
on materials, conversion and energy costs.
EMEA&APAC Segment
- Net sales: The following table highlights the drivers of
the change in net sales and net sales per hectoliter for the three
months ended March 31, 2023 compared to March 31, 2022 (in
percentages):
For the Three Months Ended
March 31, 2023
Financial Volume
Price and Sales Mix
Currency
Net Sales
EMEA&APAC - Net sales
0.8
%
15.3
%
(8.5
)%
7.6
%
EMEA&APAC - Net sales per
hectoliter
N/A
15.1
%
(8.4
)%
6.7
%
Net sales increased 7.6% reported and 16.1%
in constant currency driven by favorable price and sales mix and an
increase in financial volume.
Financial volumes increased 0.8% primarily
due to above premium volumes in the U.K. and higher factored
volumes, partially offset by inflationary pressures impacting
Central and Eastern European consumers' discretionary purchases.
EMEA&APAC brand volumes declined 3.9% primarily due to the
Russia-Ukraine conflict and inflationary pressures impacting
Central and Eastern European countries, partly offset by growth in
Western Europe.
Price and sales mix favorably impacted net
sales and net sales per hectoliter by 15.3% and 15.1%,
respectively, primarily due to increased net pricing to customers
including the rollover benefits from price increases taken in the
previous year as well as favorable sales mix driven by
premiumization and geographic mix.
- U.S. GAAP income (loss) before income taxes: loss of
$25.4 million improved 21.1% on a reported basis, primarily due to
increased net pricing to customers, favorable sales mix and higher
financial volumes, partially offset by cost inflation on materials,
transportation and energy, as well as higher MG&A spend. Higher
MG&A spend was primarily due to cost inflation.
- Underlying income (loss) before income taxes: loss of
$21.8 million improved 27.6% in constant currency, primarily due to
increased net pricing to customers, favorable sales mix and higher
financial volumes, partially offset by cost inflation on materials,
transportation and energy, as well as higher MG&A spend.
CASH FLOW AND LIQUIDITY HIGHLIGHTS
- U.S. GAAP cash from operations: net cash provided by
operating activities was $3.4 million for the three months ended
March 31, 2023 which improved $122.7 million compared to the prior
year primarily due to higher net income adjusted for non-cash
add-backs, which includes a $222.1 million change in the add-back
related to our unrealized mark-to-market commodity positions, as
well as the favorable timing of working capital in the
Americas.
- Underlying free cash flow: cash used of $173.7 million
for the three months ended March 31, 2023 which represents a
decrease in cash used of $185.1 million from the prior year,
primarily due to higher net cash provided by operating activities
and lower capital expenditures as result of the timing of capital
projects.
- Debt: Total debt as of March 31, 2023 was $6,590.4
million and cash and cash equivalents totaled $328.2 million,
resulting in net debt of $6,262.2 million and a net debt to
underlying EBITDA ratio of 2.98x. As of March 31, 2022, our net
debt to underlying EBITDA ratio was 3.28x.
- Dividends: On February 20, 2023, our Company's Board of
Directors declared a cash dividend of $0.41 per share, paid on
March 17, 2023, to shareholders of Class A and Class B common stock
of record on March 3, 2023. Shareholders of exchangeable shares
received the CAD equivalent of dividends declared on Class A and
Class B common stock, equal to CAD 0.55 per share.
- Share Repurchase Program: For the three months ended
March 31, 2023, we repurchased 275,000 shares under the share
repurchase program, which was approved on February 17, 2022, at a
weighted average price of $52.95 per share, including brokerage
commissions, for an aggregate value of $14.6 million.
OTHER RESULTS
Tax Rates Table
(Unaudited)
For the Three Months
Ended
March 31, 2023
March 31, 2022
U.S. GAAP effective tax rate
28
%
21
%
Underlying effective tax rate(1)
26
%
26
%
(1)
See Appendix for definitions and
reconciliations of non-GAAP financial measures.
- The increase in our first quarter U.S. GAAP effective
tax rate was primarily due to an increase in net discrete tax
expense. We recognized discrete tax expense of $7.5 million in the
first quarter of 2023 versus discrete tax benefit of $0.9 million
in the prior year.
2023 OUTLOOK
We continue to expect to achieve the following key financial
targets for full year 2023. However, inherent uncertainties still
exist with beer industry softness and the impacts of continued
global inflationary cost pressures.
- Net sales: low single-digit increase versus 2022 on a
constant currency basis.
- Underlying income (loss) before income taxes: low
single-digit increase compared to 2022 on a constant currency
basis.
- Capital Expenditures: $700 million incurred, plus or
minus 5%.
- Underlying free cash flow: $1.0 billion, plus or minus
10%.
- Underlying depreciation and amortization: $690 million,
plus or minus 5%.
- Consolidated net interest expense: $240 million, plus or
minus 5%.
- Underlying effective tax rate: in the range of 21% to
23% for 2023.
NOTES
Unless otherwise indicated in this release, all $ amounts are in
U.S. Dollars, and all quarterly comparative results are for the
Company’s first quarter ended March 31, 2023 compared to the first
quarter ended March 31, 2022. Some numbers may not sum due to
rounding.
2023 FIRST QUARTER INVESTOR CONFERENCE CALL
Molson Coors Beverage Company will conduct an earnings
conference call with financial analysts and investors at 11:00 a.m.
Eastern Time today to discuss the Company’s 2023 first quarter
results. The live webcast will be accessible via our website,
ir.molsoncoors.com. An online replay of the webcast will be
available until 11:59 p.m. Eastern Time on July 31, 2023. The
Company will post this release and related financial statements on
its website today.
OVERVIEW OF MOLSON COORS BEVERAGE COMPANY
For more than two centuries Molson Coors Beverage Company has
been brewing beverages that unite people to celebrate all life’s
moments. From Coors Light, Miller Lite, Molson Canadian, Carling
and Staropramen to Coors Banquet, Blue Moon Belgian White, Vizzy
Hard Seltzer, Leinenkugel’s Summer Shandy, Miller High Life and
more, Molson Coors produces many beloved and iconic beer brands.
While the company’s history is rooted in beer, Molson Coors offers
a modern portfolio that expands beyond the beer aisle as well.
Our reporting segments include: Americas, operating in the U.S.,
Canada and various countries in the Caribbean, Latin and South
America; and EMEA&APAC, operating in Bulgaria, Croatia, Czech
Republic, Hungary, Montenegro, the Republic of Ireland, Romania,
Serbia, the U.K., various other European countries, and certain
countries within the Middle East, Africa and Asia Pacific. In
addition to our reporting segments, we also have certain activity
that is not allocated to our reporting segments and reported as
"Unallocated", which primarily includes financing-related costs
such as interest expense and income, foreign exchange gains and
losses on intercompany balances related to financing and other
treasury-related activities, and the unrealized changes in fair
value on our commodity swaps not designated in hedging
relationships recorded within cost of goods sold, which are later
reclassified when realized to the segment in which the underlying
exposure resides. Additionally, only the service cost component of
net periodic pension and OPEB cost is reported within each
operating segment, and all other components remain unallocated.
Our Environmental, Social and Governance ("ESG") strategy is
focused on People and Planet with a strong commitment to raising
industry standards and leaving a positive imprint on our employees,
consumers, communities and the environment. To learn more about
Molson Coors Beverage Company, visit molsoncoors.com,
MolsonCoorsOurImprint.com or on Twitter through @MolsonCoors.
ABOUT MOLSON COORS CANADA INC.
Molson Coors Canada Inc. (MCCI) is a subsidiary of Molson Coors
Beverage Company. MCCI Class A and Class B exchangeable shares
offer substantially the same economic and voting rights as the
respective classes of common shares of MCBC, as described in MCBC’s
annual proxy statement and Form 10-K filings with the U.S.
Securities and Exchange Commission. The trustee holder of the
special Class A voting stock and the special Class B voting stock
has the right to cast a number of votes equal to the number of then
outstanding Class A exchangeable shares and Class B exchangeable
shares, respectively.
FORWARD-LOOKING STATEMENTS
This press release includes “forward-looking statements” within
the meaning of the U.S. federal securities laws. Generally, the
words "expects," "intend," "goals," "plans," "believes,"
"continues," "may," "anticipate," "seek," "estimate," "outlook,"
"trends," "future benefits," "potential," "projects," "strategies,"
and variations of such words and similar expressions are intended
to identify forward-looking statements. Statements that refer to
projections of our future financial performance, our anticipated
growth and trends in our businesses, and other characterizations of
future events or circumstances are forward-looking statements, and
include, but are not limited to, statements under the headings "CEO
and CFO Perspectives" and "2023 Outlook," with respect to
expectations of cost inflation, limited consumer disposable income,
consumer preferences, overall volume trends, pricing trends,
industry forces, cost reduction strategies, shipment levels and
profitability, the sufficiency of capital resources, anticipated
results, expectations for funding future capital expenditures and
operations, debt service capabilities, timing and amounts of debt
and leverage levels, market share and expectations regarding future
dividends. In addition, statements that we make in this press
release that are not statements of historical fact may also be
forward-looking statements.
Although the Company believes that the assumptions upon which
its forward-looking statements are based are reasonable, it can
give no assurance that these assumptions will prove to be correct.
Important factors that could cause actual results to differ
materially from the Company’s historical experience, and present
projections and expectations are disclosed in the Company’s filings
with the Securities and Exchange Commission (“SEC”). These factors
include, among other things, the deterioration of general economic,
political, credit and/or capital market conditions, including those
caused by the ongoing Russia-Ukraine conflict or other geopolitical
tensions; our dependence on the global supply chain and significant
exposure to changes in commodity and other input prices and the
impacts of supply chain constraints and inflationary pressures;
weak, or weakening of, economic, social and other conditions in the
markets in which we do business, including cost inflation and
reductions in discretionary consumer spending; loss, operational
disruptions or closure of a major brewery or other key facility,
including those of our suppliers, due to unforeseen or catastrophic
events or otherwise; cybersecurity incidents impacting our
information systems, and violations of data privacy laws and
regulations; our reliance on brand image, reputation, product
quality and protection of intellectual property; constant evolution
of the global beer industry and the broader alcohol industry, and
our position within the global beer industry and success of our
product in our markets; competition in our markets; our ability to
successfully and timely innovate beyond beer; changes in the social
acceptability, perceptions and the political view of the beverage
categories in which we operate, including alcohol and cannabis;
labor strikes, work stoppages or other employee-related issues; ESG
issues, including those related to climate change and
sustainability; climate change and other weather events; inadequate
supply or availability of quality water; our dependence on key
personnel; our reliance on third party service providers and
internal and outsourced systems for our information technology and
certain other administrative functions; impacts related to the
coronavirus pandemic; investment performance of pension plan
holdings and other factors impacting related pension plan costs and
contributions; our significant debt level subjects us to financial
and operating risks, and the agreements governing such debt, which
subject us to financial and operating covenants and restrictions;
deterioration in our credit rating; default by, or failure of, our
counterparty financial institutions; impairments of the carrying
value of our goodwill and other intangible assets; the estimates
and assumptions on which our financial projections are based may
prove to be inaccurate; our reliance on a small number of suppliers
to obtain the input materials we need to operate our business;
termination or changes of one or more manufacturer, distribution or
production agreements, or issues caused by our dependence on the
parties to these agreements; unfavorable outcomes of legal or
regulatory matters; our operations in developing and emerging
markets; changes to the regulation of the distribution systems for
our products; our consolidated financial statements are subject to
fluctuations in foreign exchange rates; changes in tax,
environmental, trade or other regulations or failure to comply with
existing licensing, trade and other regulations; risks associated
with operating our joint ventures; failure to successfully
identify, complete or integrate attractive acquisitions and joint
ventures into our existing operations; the dependence of our U.S.
business on independent distributors to sell our products, with no
assurance that these distributors will effectively sell our
products, and distributor consolidation in the U.S.; government
mandated changes to the retail distribution model resulting from
new regulations on our Canada business; risks our Americas business
joint venture face in the Canadian cannabis industry; indemnities
provided to the purchaser of our previous interest in the
Cervejarias Kaiser Brasil S.A. business in Brazil; economic trends
and intense competition in European markets; the potential for
Pentland and the Coors Trust to disagree on a matter submitted to
our stockholders or the super-majority of our board of directors to
disagree on certain actions; the interests of the controlling
stockholders may differ from those of other stockholders;
shareholder activism efforts or unsolicited offers from a third
party; and other risks discussed in our filings with the SEC,
including our most recent Annual Report on Form 10-K and our
Quarterly Reports on Form 10-Q. All forward-looking statements in
this press release are expressly qualified by such cautionary
statements and by reference to the underlying assumptions. You
should not place undue reliance on forward-looking statements,
which speak only as of the date they are made. We do not undertake
to update forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
MARKET AND INDUSTRY DATA
The market and industry data used, if any, in this press release
are based on independent industry publications, customer specific
data, trade or business organizations, reports by market research
firms and other published statistical information from third
parties, including Circana (formerly Information Resources, Inc.)
for U.S. market data and Beer Canada for Canadian market data
(collectively, the “Third Party Information”), as well as
information based on management’s good faith estimates, which we
derive from our review of internal information and independent
sources. Such Third Party Information generally states that the
information contained therein or provided by such sources has been
obtained from sources believed to be reliable.
APPENDIX
STATEMENTS OF OPERATIONS - MOLSON COORS
BEVERAGE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of
Operations
(In millions, except per share data)
(Unaudited)
For the Three Months
Ended
March 31, 2023
March 31, 2022
Sales
$
2,774.8
$
2,643.3
Excise taxes
(428.5
)
(428.7
)
Net sales
2,346.3
2,214.6
Cost of goods sold
(1,575.6
)
(1,286.8
)
Gross profit
770.7
927.8
Marketing, general and administrative
expenses
(615.0
)
(675.7
)
Other operating income (expense), net
(0.5
)
(27.6
)
Equity income (loss)
3.0
(0.1
)
Operating income (loss)
158.2
224.4
Interest income (expense), net
(59.1
)
(63.3
)
Other pension and postretirement benefits
(costs), net
2.6
10.6
Other non-operating income (expense),
net
0.2
2.0
Income (loss) before income taxes
101.9
173.7
Income tax benefit (expense)
(28.7
)
(36.4
)
Net income (loss)
73.2
137.3
Net (income) loss attributable to
noncontrolling interests
(0.7
)
14.2
Net income (loss) attributable to MCBC
$
72.5
$
151.5
Basic net income (loss) attributable to
MCBC per share
$
0.33
$
0.70
Diluted net income (loss) attributable to
MCBC per share
$
0.33
$
0.70
Weighted average shares outstanding -
basic
216.5
217.2
Weighted average shares outstanding -
diluted
217.3
217.8
Dividends per share
$
0.41
$
0.38
BALANCE SHEETS - MOLSON COORS BEVERAGE COMPANY AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In millions, except par value)
(Unaudited)
As of
March 31, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
328.2
$
600.0
Accounts receivable, net
803.8
739.8
Other receivables, net
121.6
126.4
Inventories, net
915.6
792.9
Other current assets, net
382.4
378.9
Total current assets
2,551.6
2,638.0
Properties, net
4,270.1
4,222.8
Goodwill
5,292.4
5,291.9
Other intangibles, net
12,799.3
12,800.1
Other assets
939.1
915.5
Total assets
$
25,852.5
$
25,868.3
Liabilities and equity
Current liabilities
Accounts payable and other current
liabilities
$
2,893.5
$
2,978.3
Current portion of long-term debt and
short-term borrowings
412.7
397.1
Total current liabilities
3,306.2
3,375.4
Long-term debt
6,177.7
6,165.2
Pension and postretirement benefits
470.0
473.3
Deferred tax liabilities
2,658.6
2,646.4
Other liabilities
321.0
292.8
Total liabilities
12,933.5
12,953.1
Molson Coors Beverage Company
stockholders' equity
Capital stock
Preferred stock, $0.01 par value
(authorized: 25.0 shares; none issued)
—
—
Class A common stock, $0.01 par value
(authorized: 500.0 shares; issued and outstanding: 2.6 shares and
2.6 shares, respectively)
—
—
Class B common stock, $0.01 par value
(authorized: 500.0 shares; issued: 211.1 shares and 210.5 shares,
respectively)
2.1
2.1
Class A exchangeable shares, no par value
(issued and outstanding: 2.7 shares and 2.7 shares,
respectively)
102.2
102.2
Class B exchangeable shares, no par value
(issued and outstanding: 10.6 shares and 11.0 shares,
respectively)
397.7
413.3
Paid-in capital
7,025.6
7,006.4
Retained earnings
6,877.0
6,894.1
Accumulated other comprehensive income
(loss)
(1,170.6
)
(1,205.5
)
Class B common stock held in treasury at
cost (10.7 shares and 10.5 shares, respectively)
(537.5
)
(522.9
)
Total Molson Coors Beverage Company
stockholders' equity
12,696.5
12,689.7
Noncontrolling interests
222.5
225.5
Total equity
12,919.0
12,915.2
Total liabilities and equity
$
25,852.5
$
25,868.3
CASH FLOW STATEMENTS - MOLSON COORS BEVERAGE COMPANY AND
SUBSIDIARIES
Condensed Consolidated Statements of
Cash Flows
(In millions) (Unaudited)
For the Three Months
Ended
March 31, 2023
March 31, 2022
Cash flows from operating
activities
Net income (loss) including noncontrolling
interests
$
73.2
$
137.3
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities
Depreciation and amortization
171.5
173.7
Amortization of debt issuance costs and
discounts
1.5
1.6
Share-based compensation
9.8
8.5
(Gain) loss on sale or impairment of
properties and other assets, net
(2.5
)
22.4
Unrealized (gain) loss on foreign currency
fluctuations and derivative instruments, net
52.5
(169.6
)
Equity (income) loss
(3.0
)
0.1
Income tax (benefit) expense
28.7
36.4
Income tax (paid) received
(10.0
)
(3.1
)
Interest expense, excluding amortization
of debt issuance costs and discounts
59.7
62.2
Interest paid
(80.4
)
(81.2
)
Change in current assets and liabilities
and other
(297.6
)
(307.6
)
Net cash provided by (used in) operating
activities
3.4
(119.3
)
Cash flows from investing
activities
Additions to properties
(181.4
)
(243.8
)
Proceeds from sales of properties and
other assets
4.6
13.2
Other
(0.6
)
4.4
Net cash provided by (used in) investing
activities
(177.4
)
(226.2
)
Cash flows from financing
activities
Exercise of stock options under equity
compensation plans
—
0.9
Dividends paid
(89.5
)
(82.4
)
Payments for purchases of treasury
stock
(14.6
)
(14.1
)
Payments on debt and borrowings
(1.6
)
(1.1
)
Proceeds on debt and borrowings
3.0
5.0
Net proceeds from (payments on) revolving
credit facilities and commercial paper
—
156.3
Other
0.2
7.9
Net cash provided by (used in) financing
activities
(102.5
)
72.5
Effect of foreign exchange rate changes on
cash and cash equivalents
4.7
(5.7
)
Net increase (decrease) in cash and cash
equivalents
(271.8
)
(278.7
)
Balance at beginning of year
600.0
637.4
Balance at end of period
$
328.2
$
358.7
SUMMARIZED SEGMENT RESULTS (hectoliter volume and $ in
millions) (Unaudited)
Americas
Q1 2023
Q1 2022
Reported % Change
FX Impact
Constant Currency %
Change
Net sales(1)
$
1,939.0
$
1,836.2
5.6
$
(17.4
)
6.5
COGS(2)
$
(1,223.7
)
$
(1,178.5
)
(3.8
)
MG&A
$
(484.7
)
$
(547.6
)
11.5
Income (loss) before income taxes
$
233.4
$
87.1
168.0
$
4.3
163.0
Underlying income (loss) before income
taxes
$
233.9
$
166.7
40.3
$
4.3
37.7
Financial volume(1)(3)
12.936
12.999
(0.5
)
Brand volume
12.246
12.436
(1.5
)
EMEA&APAC
Q1 2023
Q1 2022
Reported % Change
FX Impact
Constant Currency %
Change
Net sales(1)
$
410.1
$
381.2
7.6
$
(32.3
)
16.1
COGS(2)
$
(304.0
)
$
(281.9
)
(7.8
)
MG&A
$
(130.3
)
$
(128.1
)
(1.7
)
Income (loss) before income taxes
$
(25.4
)
$
(32.2
)
21.1
$
1.2
17.4
Underlying income (loss) before income
taxes
$
(21.8
)
$
(31.2
)
30.1
$
0.8
27.6
Financial volume(1)(3)
4.071
4.039
0.8
Brand volume
3.935
4.095
(3.9
)
Unallocated & Eliminations
Q1 2023
Q1 2022
Reported % Change
FX Impact
Constant Currency %
Change
Net sales
$
(2.8
)
$
(2.8
)
—
COGS(2)
$
(47.9
)
$
173.6
N/M
Income (loss) before income taxes
$
(106.1
)
$
118.8
N/M
$
1.4
N/M
Underlying income (loss) before income
taxes
$
(54.3
)
$
(52.0
)
(4.4
)
$
0.1
(4.6
)
Financial volume
(0.001
)
(0.001
)
N/M
Consolidated
Q1 2023
Q1 2022
Reported % Change
FX Impact
Constant Currency %
Change
Net sales
$
2,346.3
$
2,214.6
5.9
$
(49.7
)
8.2
COGS
$
(1,575.6
)
$
(1,286.8
)
(22.4
)
MG&A
$
(615.0
)
$
(675.7
)
9.0
Income (loss) before income taxes
$
101.9
$
173.7
(41.3
)
$
6.9
(45.3
)
Underlying income (loss) before income
taxes
$
157.8
$
83.5
89.0
$
5.2
82.8
Financial volume(3)
17.006
17.037
(0.2
)
Brand volume
16.181
16.531
(2.1
)
The reported percent change and the
constant currency percent change in the above table are presented
as (unfavorable) favorable.
N/M = Not meaningful
(1)
Includes gross inter-segment volumes,
sales and purchases, which are eliminated in the consolidated
totals.
(2)
The unrealized changes in fair value on
our commodity swaps, which are economic hedges, are recorded as
cost of goods sold within Unallocated. As the exposure we are
managing is realized, we reclassify the gain or loss to the segment
in which the underlying exposure resides, allowing our segments to
realize the economic effects of the derivative without the
resulting unrealized mark-to-market volatility.
(3)
Financial volume in hectoliters for
Americas and EMEA&APAC excludes royalty volume of 0.618 million
hectoliters and 0.156 million hectoliters, respectively, for the
three months ended March 31, 2023, and excludes royalty volume of
0.601 million hectoliters and 0.319 million hectoliters,
respectively for the three months ended March 31, 2022.
WORLDWIDE BRAND AND FINANCIAL VOLUME
(In millions of hectoliters)
(Unaudited)
For the Three Months
Ended
March 31, 2023
March 31, 2022
Change
Financial Volume
17.006
17.037
(0.2
)%
Contract brewing and wholesale/factored
volume
(1.493
)
(1.502
)
(0.6
)%
Royalty volume
0.774
0.920
(15.9
)%
Sales-To-Wholesaler to Sales-To-Retail
adjustment
(0.106
)
0.076
N/M
Total Worldwide Brand Volume
16.181
16.531
(2.1
)%
Worldwide brand volume (or "brand volume" when discussed by
segment) reflects owned or actively managed brands sold to
unrelated external customers within our geographic markets (net of
returns and allowances), royalty volume and our proportionate share
of equity investment worldwide brand volume calculated consistently
with MCBC owned volume. Financial volume represents owned or
actively managed brands sold to unrelated external customers within
our geographical markets, net of returns and allowances as well as
contract brewing, wholesale non-owned brand volume and
company-owned distribution volume. Contract brewing and
wholesale/factored volume is included within financial volume, but
is removed from worldwide brand volume, as this is non-owned volume
for which we do not directly control performance. Factored volume
in our EMEA&APAC segment is the distribution of beer, wine,
spirits and other products owned and produced by other companies to
the on-premise channel, which is a common arrangement in the U.K.
Royalty volume consists of our brands produced and sold by third
parties under various license and contract-brewing agreements and
because this is owned volume, it is included in worldwide brand
volume. Our worldwide brand volume definition also includes an
adjustment from Sales-to-Wholesaler ("STW") volume to
Sales-to-Retailer ("STR") volume. We believe the brand volume
metric is important because, unlike financial volume and STWs, it
provides the closest indication of the performance of our brands in
relation to market and competitor sales trends.
We also utilize net sales per hectoliter and cost of goods sold
per hectoliter, as well as the year over year changes in such
metrics, as key metrics for analyzing our results. These metrics
are calculated as net sales and cost of goods sold, respectively,
per our consolidated statement of operations divided by financial
volume for the respective period. We believe these metrics are
important and useful for investors and management because it
provides an indication of the trends in pricing and sales mix on
our net sales and the trends of sales mix and other cost impacts
such as inflation on our cost of goods sold.
USE OF NON-GAAP MEASURES
In addition to financial measures presented on the basis of
accounting principles generally accepted in the U.S. (“U.S. GAAP”),
we also use non-GAAP financial measures, as listed and defined
below, for operational and financial decision making and to assess
Company and segment business performance. These non-GAAP measures
should be viewed as supplements to (not substitutes for) our
results of operations presented under U.S. GAAP. We have provided
reconciliations of all historical non-GAAP measures to their
nearest U.S. GAAP measure and have consistently applied the
adjustments within our reconciliations in arriving at each non-GAAP
measure.
Our management uses these metrics to assist in comparing
performance from period to period on a consistent basis; as a
measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations; in
communications with the board of directors, stockholders, analysts
and investors concerning our financial performance; as useful
comparisons to the performance of our competitors; and as metrics
of certain management incentive compensation calculations. We
believe these measures are used by, and are useful to, investors
and other users of our financial statements in evaluating our
operating performance.
- Underlying Income (Loss) before Income Taxes (Closest GAAP
Metric: Income (Loss) Before Income Taxes) – Measure of the
Company’s income (loss) before income taxes excluding the impact of
certain non-GAAP adjustment items from our U.S. GAAP financial
statements. Non-GAAP adjustment items include goodwill and other
intangible and tangible asset impairments, restructuring and
integration related costs, unrealized mark-to-market gains and
losses, potential or incurred losses related to certain litigation
accruals and settlements and gains and losses on sales of
non-operating assets, among other items included in our U.S. GAAP
results that warrant adjustment to arrive at non-GAAP results. We
consider these items to be necessary adjustments for purposes of
evaluating our ongoing business performance and are often
considered non-recurring. Such adjustments are subjective, involve
significant management judgment and can vary substantially from
company to company.
- Underlying COGS (Closest GAAP Metric: COGS) – Measure of
the Company’s COGS adjusted to exclude non-GAAP adjustment items
(as defined above). Non-GAAP adjustment items include the impact of
unrealized mark-to-market gains and losses on our commodity
derivative instruments, which are economic hedges, and are recorded
through COGS within Unallocated. As the exposure we are managing is
realized, we reclassify the gain or loss to the segment in which
the underlying exposure resides, allowing our segments to realize
the economic effects of the derivatives without the resulting
unrealized mark-to-market volatility.
- Underlying MG&A (Closest GAAP Metric:
MG&A) – Measure of the Company’s MG&A expense excluding
the impact of certain non-GAAP adjustment items (as defined
above).
- Underlying net income (loss) attributable to MCBC (Closest
GAAP Metric: Net income (loss) attributable to MCBC) – Measure
of net income (loss) attributable to MCBC excluding the impact of
non-GAAP adjustment items (as defined above), the related tax
effects of non-GAAP adjustment items and certain other discrete tax
items.
- Underlying net income (loss) attributable to MCBC per
diluted share (Closest GAAP Metric: Net income (loss) attributable
to MCBC per diluted share) – Measure of underlying net income
(loss) attributable to MCBC (as defined above) per diluted share.
If applicable, a reported net loss attributable to MCBC per diluted
share is calculated using the basic share count due to dilutive
shares being antidilutive. If underlying net income (loss)
attributable to MCBC becomes income excluding the impact of our
non-GAAP adjustment items, we include the incremental dilutive
shares, using the treasury stock method, into the dilutive shares
outstanding.
- Underlying effective tax rate (Closest GAAP Metric:
Effective Tax Rate) – Measure of the Company’s effective tax
rate excluding the related tax impact of pre-tax non-GAAP
adjustment items (as defined above) and certain other discrete tax
items. Discrete tax items include certain significant tax audit and
prior year reserve adjustments, impact of significant tax
legislation and tax rate changes and significant non-recurring and
period specific tax items.
- Underlying free cash flow (Closest GAAP Metric: Net Cash
Provided by (Used in) Operating Activities) – Measure of the
Company’s operating cash flow calculated as Net Cash Provided by
(Used In) Operating Activities less Additions to Properties and
excluding the pre-tax cash flow impact of certain non-GAAP
adjustment items (as defined above). We consider underlying free
cash flow an important measure of our ability to generate cash,
grow our business and enhance shareholder value, driven by core
operations and after adjusting for non-GAAP adjustment items, which
can vary substantially from company to company depending upon
accounting methods and book value of assets and capital
structure.
- Underlying depreciation and amortization (Closest GAAP
Metric: Depreciation & Amortization) – Measure of the
Company’s depreciation and amortization excluding the impact of
non-GAAP adjustment items (as defined above). These adjustments
primarily consist of accelerated depreciation or amortization taken
related to the Company’s strategic exit or restructuring
activities.
- Net debt to underlying earnings before interest, taxes,
depreciation, and amortization ("underlying EBITDA")
(Closest GAAP Metrics: Cash, Debt, & Income (Loss) Before
Income Taxes) – Measure of the Company’s leverage calculated as
Net debt (defined as current portion of long-term debt and
short-term borrowings plus long-term debt less cash and cash
equivalents) divided by the trailing twelve month underlying
EBITDA. Underlying EBITDA is calculated as Net Income (Loss)
excluding Interest expense (income), income tax expense (benefit),
depreciation and amortization, and the impact of non-GAAP
adjustment items (as defined above). This measure is not the same
as the company’s maximum leverage ratio as defined under its
revolving credit facility, which allows for other adjustments in
the calculation of net debt to EBITDA.
- Constant currency - Constant currency is a non-GAAP
measure utilized to measure performance, excluding the impact of
translational and certain transactional foreign currency movements,
and is intended to be indicative of results in local currency. As
we operate in various foreign countries where the local currency
may strengthen or weaken significantly versus the U.S. dollar or
other currencies used in operations, we utilize a constant currency
measure as an additional metric to evaluate the underlying
performance of each business without consideration of foreign
currency movements. We present all percentage changes for net
sales, underlying COGS, underlying MG&A and underlying income
(loss) before income taxes in constant currency and calculate the
impact of foreign exchange by translating our current period local
currency results (that also include the impact of the comparable
prior period currency hedging activities) at the average exchange
rates during the respective period throughout the year used to
translate the financial statements in the comparable prior year
period. The result is the current period results in U.S. dollars,
as if foreign exchange rates had not changed from the prior year
period. Additionally, we exclude any transactional foreign currency
impacts, reported within the other non-operating income (expense),
net line item, from our current period results.
Our guidance for any of the measures noted above are also
non-GAAP financial measures that exclude or otherwise have been
adjusted for non-GAAP adjustment items from our U.S. GAAP financial
statements. When we provide guidance for any of the various
non-GAAP metrics described above, we do not provide reconciliations
of the U.S. GAAP measures as we are unable to predict with a
reasonable degree of certainty the actual impact of the non-GAAP
adjustment items. By their very nature, non-GAAP adjustment items
are difficult to anticipate with precision because they are
generally associated with unexpected and unplanned events that
impact our company and its financial results. Therefore, we are
unable to provide a reconciliation of these measures without
unreasonable efforts.
RECONCILIATION TO NEAREST U.S. GAAP
MEASURES
Reconciliation by Line Item
(In millions, except per share data)
(Unaudited)
For the Three Months Ended
March 31, 2023
Cost of goods sold
Marketing, general and
administrative expenses
Income (loss) before income
taxes
Net income
(loss) attributable to
MCBC
Net income (loss) attributable
to MCBC per diluted share
Reported (U.S. GAAP)
$
(1,575.6
)
$
(615.0
)
$
101.9
$
72.5
$
0.33
Adjustments to arrive at underlying
Restructuring
—
—
0.5
0.5
—
Unrealized mark-to-market (gains)
losses
51.8
—
51.8
51.8
0.24
Other items
—
3.6
3.6
3.6
0.02
Total
$
51.8
$
3.6
$
55.9
$
55.9
$
0.26
Tax effects on non-GAAP adjustments
—
—
—
(12.1
)
(0.06
)
Underlying (Non-GAAP)
$
(1,523.8
)
$
(611.4
)
$
157.8
$
116.3
$
0.54
Reconciliation to Underlying Income
(Loss) Before Income Taxes by Segment
(In millions) (Unaudited)
For the Three Months Ended
March 31, 2023
Americas
EMEA&APAC
Unallocated
Consolidated
Income (loss) before income
taxes
$
233.4
$
(25.4
)
$
(106.1
)
$
101.9
Add/Less:
Cost of goods sold(1)
—
—
51.8
51.8
Marketing, general &
administrative
0.5
3.1
—
3.6
Other non-GAAP adjustment items
—
0.5
—
0.5
Total non-GAAP adjustment items
$
0.5
$
3.6
$
51.8
$
55.9
Underlying income (loss) before income
taxes
$
233.9
$
(21.8
)
$
(54.3
)
$
157.8
(1)
Reflects changes in our mark-to-market
positions on our commodity hedges recorded as cost of goods sold
within Unallocated. As the exposure we are managing is realized, we
reclassify the gain or loss to the segment in which the underlying
exposure resides, allowing our segments to realize the economic
effects of the derivative without the resulting unrealized
mark-to-market volatility.
Effective Tax Rate
Reconciliation
(Unaudited)
For the Three Months
Ended
March 31, 2023
March 31, 2022
U.S. GAAP
Effective Tax Rate
28
%
21
%
Add/Less:
Tax effect of non-GAAP adjustment
items(1)
(2
%)
2
%
Add/Less:
Discrete tax items(1)(2)
—
%
3
%
Non-GAAP
Underlying (Non-GAAP) Effective Tax
Rate
26
%
26
%
(1)
Adjustments related to the tax effect of
non-GAAP adjustment items, as well as certain discrete tax items
excluded from our underlying effective tax rate. Discrete tax items
include certain significant tax audit and prior year reserve
adjustments, impact of significant tax legislation and tax rate
changes and significant non-recurring and period specific tax
items.
(2)
The change in the tax effect of discrete
tax items from prior year is primarily due to the recognition of
approximately $5 million of discrete tax benefit recorded in U.S.
GAAP and removed from underlying for the three months ended March
31, 2022.
Underlying Free Cash Flow
(In millions) (Unaudited)
For the Three Months
Ended
March 31, 2023
March 31, 2022
U.S. GAAP
Net Cash Provided by (Used In)
Operating Activities
$
3.4
$
(119.3
)
Less:
Additions to properties(1)
(181.4
)
(243.8
)
Add/Less:
Cash impact of non-GAAP adjustment
items(2)
4.3
4.3
Non-GAAP
Underlying Free Cash Flow
$
(173.7
)
$
(358.8
)
(1)
Included in net cash provided by (used in)
investing activities.
(2)
Included in net cash provided by (used in)
operating activities and primarily reflects costs paid for
restructuring activities for the three months ended March 31, 2023
and March 31, 2022.
Net Debt to Underlying EBITDA
Ratio
(In millions except net debt to underlying
EBITDA ratio) (Unaudited)
As of
March 31, 2023
March 31, 2022
U.S. GAAP
Current portion of long-term debt and
short-term borrowings
$
412.7
$
681.9
Add:
Long-term debt
6,177.7
6,631.5
Less:
Cash and cash equivalents
328.2
358.7
Net debt
$
6,262.2
$
6,954.7
Q1 Underlying EBITDA
388.4
320.5
Q4 Underlying EBITDA
555.5
457.3
Q3 Underlying EBITDA
593.5
642.6
Q2 Underlying EBITDA
566.4
697.8
Non-GAAP
Underlying EBITDA(1)
$
2,103.8
$
2,118.2
Net debt to underlying EBITDA
ratio
2.98
3.28
(1)
Represents underlying EBITDA on a trailing
twelve month basis.
Underlying EBITDA Reconciliation
(In millions) (Unaudited)
For the Three Months
Ended
March 31, 2023
March 31, 2022
Change
U.S. GAAP
Net income (loss) attributable to
MCBC
$
72.5
$
151.5
(52.1
)%
Add:
Net income (loss) attributable to
noncontrolling interests
0.7
(14.2
)
N/M
U.S. GAAP
Net income (loss)
73.2
137.3
(46.7
)%
Add:
Interest expense (income), net
59.1
63.3
(6.6
)%
Income tax expense (benefit)
28.7
36.4
(21.2
)%
Depreciation and amortization
171.5
173.7
(1.3
)%
Adjustments included in underlying
income(1)
55.9
(90.2
)
N/M
Non-GAAP
Underlying EBITDA
$
388.4
$
320.5
21.2
%
N/M = Not meaningful
(1)
Includes adjustments to income (loss)
before income taxes related to non-GAAP adjustment items. See
Reconciliations to Nearest U.S. GAAP Measures by Line Item table
for detailed adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502005190/en/
Investor Relations Greg Tierney, (414) 931-3303 Traci
Mangini, (415) 308-0151
News Media Rachel Dickens, (314) 452-9673
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