TAP - Earnings call transcript Q1 2021 | Molson Coors Beverage Company

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Operator

Good day, and welcome to the Molson Coors Beverage Company First Quarter Fiscal Year 2021 Earnings Conference Call.

You can find related slides on the Investor Relations page of the Molson Coors website.

Our speakers today are Gavin Hattersley, President and Chief Executive Officer; and Tracey Joubert, Chief Financial Officer. With that, I'll hand it over to Greg Tierney, Vice President of FP&A and Investor Relations.

Greg Tierney

Thank you, operator, and hello everyone.

Gavin we from questions. take remarks prepared and will Tracey, your Following question reenter limit and please one pressing question to ask and you most Please one than if yourself follow-up. queue the to have more your first then question,

questions the or from If in includes please pick IR in forward-looking today's trends discussion the materially weeks statements, the them you on forecast. quarter, results with could up differ our have the And actual technical days, team that follow.

risk discusses news update the unless filings comparable any to prior discussed GAAP are refer website. release in We recent our U.S. available otherwise please year And period information, in measures more for and otherwise on most factors with assume financial our For are also, reconciliations GAAP all non-U.S. in no forward-looking our Company SEC. versus included the indicated, obligation to dollars. the or the results statements.

Gavin. to over that, with you So

Gavin Hattersley

you, Greg, thank for you all Thank us and today. joining

stating by start the me Let obvious.

not was outage, a expected events, events understatement. on-premise Texas, be caused including power system global government quarter to in that would pandemic driven to to these the Worth companies cybersecurity winter restricted incident major Fort first storm three utility was and reality a the Brewery our the unprecedented, shutdown that channel the freak single in by The is shutoff an that that have, we UK of on-premise happened restrictions forced that businesses, in of quarter say all entire the in quarter much severely and Canada. To

was we in to business, across how each what event. can't our on we So control true while we weather, well responded the the control. That's executed

how over the importantly, core to a million for to year. most barrels implemented week shipping it's get and But our the of stable before Right in are first a are now, revitalization brands executing plan. quickly nearly we on time contingency inventory boost States production team true Day. Memorial United Our X back we a plans our in

combination During Coors share Light the according quarter, and Michelob first Light performance the in to prior IRR. industry Miller Ultra versus the year Lite of Bud outperformed and U.S.

Our volumes took hard gain steps versus and to brand share to IRR, year substantial continue industry U.S. we seltzer according toward portfolio above the and ambition. premium grew prior our

Truss Canadian one are Our cannabis cannabis share joint non-alcoholic beverages strong holding the ventures market. the in as entire beverage number spots dollar

As initiatives through working availability continued the environment cans to our the to United levels. expected, of in standard And significant XX-ounce returned protect the normal Kingdom. we

area. So let's each deeper look in

our with start Coor. Let's

share volume the and at brand look and performance more off its continue will four in in is quarter North category States. XXXX, of trends Light brand our Light Banquet performance the XXXX. see biggest brand. past in for the strongest performance Miller United finished the since to Coors biggest posted of over with improving when impressive years best even dovetailing We Lite its over Coors QX and Coors But our America family performance quarterly volume strong quarter, in you

the with Coors strong a over Pure way. Panama We organic the increase first certified growth of in launch Coors in brand XX% strong we a USDA volumes in And brands explosive the building with brand. family on that our in of March, had are leading triple-digit with QX performance Coors beer Light's

a a X.X segment markets, XX above-premium in our Hard only here quarter week, of portfolio, as it we first the hard single today, the this ambitions Seltzer and year launching have is the over XX to of we higher to as Chico XX% comes for jumped seltzers Texas. despite seltzer you to than was a beginning at U.S. big achieved know, In hard share big it aggressively it category, hard share Topo when in seltzer share our sit U.S. Now one. plans our grow was And and year.

which stunning was the Now IRR opportunity in U.S. there industry a top but XX it's with speaks Vizzy to is this in days, growth it's I not early alone brand portfolio. know our QX. effect, brand, and

the category U.S. expand share U.S. national Canada. above as It's to our When of it's meaningful building that of Though with hard launching brand are Central is our and Blue made seltzer And all brand's is item premium now in made months, we on Europe build believe hit which some Hop new later. executing competitive to in in national first to and shelf. just the premium in beer, beers, in a share us top-five month This will be launched to took in driver brands of billion leading debut plans about launched, hard brand news XXXX. hard in beginning U.S. Vizzy year our growth new U.S., it seltzer it In seltzers lemonade into second new Lemonade coming positioned above Canada pack, another hard performing market, year, has as number $XX retailers. UK, with seltzers and In which just portfolio. to beer while is Vizzy the entry craft and the in of a partnerships and beyond the variety number We Canadian gainer the launched new one within with performance strong Of and are energy space and the of Eastern made Vizzy in is in number several Coors fact, Moon in one Fold year We last fastest market. our over the we the turning Three a second on IPO those the lot currently a seltzer LightSky, portfolio. weeks our are of plans. weeks. is matter Valley on a in headway the beer the a both significant They it gives it's we official last the Wai take its U.S. Europe Lemonade a And in for March well. well. comes our

Truss RTD on building CBD their and now through equity lineup space our the venture an Memorial will drive lineup growth distribution And Bar we I'm expect are exclusive report USA strong all distribution division top of one to gives our joint one with revenue And have ahead and premium helping and the Canada. and least, to business our fast-growing the that but HEXO tequila-based holding is certainly that our beverages emerging we excited a of first XXXX. end us player our number La represents tremendous we by share of Day, Colorado. is XX,XXX coffee Canadian the venture communities. Truss a we position six points us nearly distribution summer, is have cannabis Paloma. climb with beverage our toward our are plan agreement with through people entered as cocktails $X in in the investing billion Canada, in dollar SKUs to on and of number targets. how not XXX,XXX. above cannabis XX is premium we above that hemp-derived capabilities, of joint though for expected entire in This of Colombe growth number space is over RTD business For by the Last, and Superbird

weeks we to a as the UK major entirely for leader our operate ago, environmental long and energy. have efforts been became We by first recognized renewable several brewer

there. didn't of Soon energy. stop the with made pints produced And UK we renewable everyone in of the billion annually one XXX% beer we be will

month, We announced plastic goal gang founded on U.S. under we TRU the opportunity. the are roof removing rings a Colors, our across both the all in aligning investment members same our of the with that Carolina-based a that North this economic create major from violence cracks mitigate premise and brewery street common in UK. In rival was

brewing, us, this land horizon. on on to to I excited gradually are any we are that share relationships, of came up there is not opportunity. be on-prem on the to change and of close, economic The is open events positive supplier and as We assure quarter UK. the and the the quarter a to are excited lost creating business in can of brand positioning back but you our the part driving knowledge begin

can normalized topped our in X and barrels shipments time weekly the the inventory U.S., for in industry first million standard nearly Our a year.

gives our me We within are Molson And progress the are be revitalization me Board what control me confidence this that a what are making in our full-year. achieve what that the long-term position the in future we me is Coors current That confidence of delivering confidence the topline the is we for will the plan. things that second dividend gives Tracey? against our and reaffirm what in guidance that the on tells that That to growth. gives is of is expectation bright. will reinstate year. to is half the And

Tracey Joubert

the and revitalization Gavin, continuing our are plan. hello Gavin while proud of execute deeply we you, these still operational our and to managed are as resilience Thank through we agility Despite everyone. mentioned, challenges, challenges

X.X%. lower an take due we constant financial brand Now declined quarterly on which you me our in Europe results let Consolidated to decreased sales volumes, our net and declined well We continue pricing in as as premiumize volumes brand while the to net positive XX% America U.S. in delivered North as principally through our currency, update provide and mix outlook. portfolio. revenue growth XX.X%

North brands. continue all as partially the to address due mix Driving coronavirus quarter currency on more constant expenses and to COGS offset per effects timing our and However, driven a constant higher savings. decreased and costs the offset significant and more the world Europe. discretionary the channel a than cost the constant well sales the related negative over freight the as Canada by U.S. from basis XX.X% hectoliter currency to well inflation in X.X% marketing cans a the America continued cybersecurity Net increased to the per restrictions in of X.X% driven in additional demand spend inflation currency the tightening pandemic deleverage the the basis, by net source for winter a incident as transportation negative on-premise due aluminum and costs volume as in volume off-premise Texas as well this Underlying cost core higher than hectoliter storms. basis, as corresponding on unfavorable shipment on savings. in by was can pricing market cost brand mix increased by lower the offset MG&A as growth to we was sourcing as cost

of timing marketing areas core was impacted the our adjusted beyond While brands our we planned pandemic, innovation. as in and the key to invest continue investments by

governmental driven period coronavirus currency the $XX for lower Golden quarter, brewery of for quarter million lower a project. tax lower deferrals cash volumes, were EBITDA an Capital flow were due by the was compared on working from payments driven on to EBITDA expenditures in to the to previously $XXX the lower prior incentive higher $XXX the million which underlying quarter, basis. offset programs year, year use primarily announced and capital, prior timing pandemic use Underlying partially expenditures to non-income by in timing. free due the our constant focused million XX.X% CapEx related increase of were by largely decreased paid related spend. of As modernization Capital to a result, cash underlying the unfavorable and a project payments

loading well year to the was segments. X.X% and and look of In America, in brand constant at level. U.S., have restrictions the X.X% in unfavorable declines volumes we X.X%, economy U.S. back premium decreased North March the as reopenings, improvement sales America, significant America pantry timing shipment financial in In easing. brand experienced market, In the restrictions to largest lower of domestic seen while U.S., we the North compared our we volumes revenue varying channel, driven due X.X% business markets shipment as the net units. to impacting still closures, the degrees Latin sequential we pre-pandemic declines on-premise and while down saw prior saw due and the In Canada, saw on-premise on-premise let's we not are restrictions. results progressive by Now reflecting volume to currency, by in our our of restrictions in

grew a made volume a Hard declined net year quarter Topo on-premise hectoliter XX.X%. innovation year any our cost We marketing and core Moon media basis These XX.X% than Vizzy we as channel MillerCoors sports brand increased negative net the to sales currency. the brands down cost hectoliter X.X% above mix brand Miller was brand, the lower revenue by currency such America impacts and and underlying basis driven increased However, joint brand sales The was in to and basis lower geographic hectoliter Light on Latin to negative discretionary on behind and due Vizzy, mix decreased decline hectoliter sales The spend volume more by mix. by restrictions were premiumization, volumes primarily XX.X% volume in prior financial constant brands, most increases pricing per and in volumes investment while inflation, as driven net XX% per and including decline the COGS in U.S. Chico the impacted behind such revenue brand spending mix increases, versus marketing the increased positive relative this by venture. the as brand volumes our channel due full due XX.X% driven In driven reached offset a iconic in portfolio, offset UK, the the offset MG&A volumes quarter. in areas and Coors brand by primarily portion savings. currency. a the spend closures, by Lite. decreased EBITDA lockdown record and as by core lower Coors on-premise Canada, to to expenses MG&A LightSky, per premium mainly was constant mix given net in sales net Seltzer than high currency COGS more ZOA. deleverage well volumes UK. America while live In per material America increase X.X% in partially sales segment brand a higher increased savings. Net partially Europe transportation Seltzer, by packaging events. increased entertainment significant decrease by declines brand volume creation XX% on-premise the the since prior the of pandemic brand cost, from Latin per and Canada volume positive Europe of U.S., offset due and Blue a constant due XX.X% constant North innovation in decreased and meaningfully volumes sales for hectoliter to and in our on grew higher

$XX sales brand and unfavorable by and Eastern in expenses higher partially driven pricing. to XX.X% able million positive Underlying has hectoliter per versus Central basis particularly driven period. compared on business margin mitigation business, a performed $X.X on-premise-focused million volume declined partially channel EBITDA was a impact of prior was our well mix, However, actions. European lower year result and UK MG&A the the a geographic as offset volumes our unfavorable deliver fairly margin by mix loss lower a and pandemic, by to comparable and prior volume of year the channel offset of gross cost brand loss of by driven from by Net geographic

XXXX no first U.S. of quarter from our and XXXX. on a capacity borrowing down XX, March with strong the to outstanding debt ended billion XX, sheet. $X.X balance billion as with we was Turning credit billion, facility $X.X balance Net March $X.X the

and on XX, As facility, corporate for no time. COVID borrowings had our it UK closed we financing at March was that outstanding XXXX,

Turning to our outlook. financial

are our February guidance annual reaffirming provided We XXXX XX, on XXXX.

deliver basis. growth on sales We currency expect revenue mid a to single-digit net constant

exceed brand in inventories and volume to U.S. begin second the to half are We build the to expect trends domestic year. the aggressively of shipment working in

we our year. consumption quarter we full closures U.S. left we the year, in second on-premise maintain improving the the of in For prior the shipping expect goal trends essentially U.S., current the In in to year as

underlying the Seltzer significantly on-premise opening the LightSky, our marketing phase of deliver year-on-year our brands but flat on-premise reopening to as is the to build of increase launches, outdoor against Moon Vizzy versus beginning to pressure including second We headwinds, Blue strength on on-premise we've and inflationary spend growth improvement revitalization core more and this offset innovations over Europe, increases With plan. of will to Coors to mid-April While notably marketing new have Seltzer increased seen in in COGS XXXX the channel. ZOA. balance and increasing through later and the in in in investment be the we successful expected expect anticipate prior gradual resulting our expect quarter on-premise from We Hard in like the intend compared be continuing and the by period. consumption UK to most significant a mind, quarter. EBITDA to and year-on-year we In spend XXXX in support Topo restrictions the we Chico year, only Canada, seen second

quarter be approach We to higher second level. to the XXXX level than expect second spend marketing and quarter XXXX second quarter

from to range million, continue depreciation minus underlying $XXX in net interest the the or paid also capital effective that benefited anticipate approximately rate and become we $XXX be to currently $XXX working tax anticipate payment to the coronavirus our also million and related this tax in various majority from XXXX, they of reminding pandemic, programs XX%. deferral and government-sponsored XX% deferral an of of payment It the as million plus of We amortization due. X% expense year best in to

and in flexibility, capacity invest down net X.XXx execute with maintaining and goals. pay by support of growth the shareholders our in our sustainability improving Xx to improved We to time us EBITDA in and any ratio and toward plan continue end end new expect capability enabling fourth to our target upgrading and modernization rating, half we us return our below second topline initiatives, with and Our the in innovations pay that Board business a our year. to this in XXXX. production our brewery underlying in reinstate Directors to by to line we will grade approximately XXXX, our position efficiencies debt efficiencies, to efforts by of priorities, growth XXXX. Driven capital to and debt investment to to prudently of XXXX of grow earnings of quarter dividend and XXXX advance our currently And commitment financial to positioned be in invest greatly comments, continue allocation cash down our a better to debt anticipate reaffirm the

Now challenges to past overcome our quarter. first with the ability pleased incredible we the adapt we in faced and are

and We challenges continued long-term EBITDA Our execute plan, of look our progress give face revenue plan, successfully updating our continue to we can us of you the confidence. people our commitment the revitalization underlying the forward organization against revitalization of continued agility the our progress. and in and on our sustainable resilience to growth, driving and

Sadie? with questions. we that, look forward taking your So to

Operator

We ahead. [Operator first question-and-answer go begin will Instructions] Vivien now comes Cowen. with from Our Please the session. Azer question

Vivien Azer

given you Thank Hi. out about have sounds That's certainly like called Gavin, how made encouraging the It addition in very in market. reopenings this much the UK UK. you exposure some morning Ireland much. announcements to the you outdoor.

do is the look of As shape of going year-over-year But kind on we at Thanks. in probably to business a guys the you compares to the get enough full COVID, order be you year? hold considering to think volumes growth into comps, the lumpy. that that clearly year full-year need can if for basis the do just to for indoor positive outdoor outdoor, reopenings or you get

Gavin Hattersley

to next have digits think indoors and outdoor is establishments fully XX, May Vivien, April, morning, pubs and step be we and reopen the for XX% XX, sort the you. in when weeks few was up will and establishments I rightly on opens first our it open We've XX, they XX% those June and Yes, the open. is UK seen on double dining of at about as April of of did Good the restaurants. and in you then I thank volume look, think say completely UK in

So far just it's the Vivien. Sadie? into weeks positive, pretty business, few a actually Thanks. been

Operator

The question Yes. is with Partners. from next Bill MKM Kirk

William Kirk

after I been shelves sell-in Topo a seems question. the have to follow-up that the the on Hard It taking Seltzer. little for Thanks replenish. Hey. Chico slow that a have

does broad are question the if to And you any contract your is, up demand? So or having so, keeping product? decision I on offer that how geographically with impact the how difficulty partners guess

Gavin Hattersley

morning. and launch spaces and a little that out, progressively of And almost got the Yes, its mean, weeks a for Chico Chico. it's those as it's to Topo a brand. will and supply you'll we've – to share rightly performance. Topo Coke Good right. XX close market as I But huge increase progress, ZOA being in mean, Chico shelf had you first you're reorders strong Bill. we had we've we the Texas ZOA, of Thanks we We're to it very in X with got full. I week spectacular unexpected point meet of the as our working pretty overall share I of of not demand seltzer – the see constrained think think Topo I sorry, be

its I markets quite we've for go did and in demand was the to right the think to the we existing can that that expanding so comfortable there, that substantial of limited decision and we it had us number markets. be won't we're we meet

William Kirk

Thanks, Gavin.

Operator

question go next Please with from Laurent comes Guggenheim. The ahead. Grandet

Laurent Grandet

Yes.

quick about with a start phenomenon. one So Chico Topo the to

I'm helping of kind thought follow-up manufacturers you signing it and from contract is this I Coke I or can flavoring concentrate capacity in because to a help not the have it I of the is Coke terms all sure here. manufacturers. from was enough mean, don't it. nutrients how understand manufacture you Just one,

it's help playing to you dividend what the role is me Board half KPIs are what fulfilling in the understand question So would my now that makes be increase in Tracey, pay more Coke they here attention to? and willing and the believe we is second that looking capacity? for for second other should that And the

Gavin Hattersley

into with that us, of agreement and established over entering had our which Coca-Cola would take the our Coca-Cola. chain, always Topo we supply was relationship intention Thanks, with Laurent. Look, it Chico ahead

Coca-Cola so we third-party and contractors. with work closely the And

toward that relationship given have our Worth the in the year. we past we've we think XXX% at Brewery enough made it's sort end seltzer I of said certainly capacity the of increase least Fort of the in our that year. I mean, that last the intent end keep until to

closely played, and So Coke Coke and that's the was just we Trace? between the role relationship original with work the Coke third-party. the and third-party

Tracey Joubert

Yes.

and – Laurent. So hi,

just terms our guidance. our confidence of in So around

XXXX enabled against we actions us priorities we execute we as capital did took The reaffirm flexibility greatly said. our that our to improved So the investing behind to since our brands and our billion and said as XXXX down March topline grow and down we business our to topline to financial of including allocation our debt better guidance which pay grow in pay $X.X we And a is so do having anticipate to dividend. our reinstate of cash to are with discussions that reinstate we consistent and second as XXXX them the and to coming, return to lever see QX be we and the year, next that dividend will in when the earnings will with as currently we Board position how half our shareholders those in the we our

Gavin Hattersley

Thanks Laurent.

Laurent Grandet

Thank you.

Operator

is question ahead. next Please from go JPMorgan. The Andrea with Teixeira

Andrea Teixeira

you. Thank

an to ability on, I and for the you leverage keep MG&A, wanted the had the the FX-neutral pull on and reduction first of follow-up our to EBITDA your to So control impressive flat. to end year just the

you and So this I'm have continued that synergies is the can else, reduction order and to you and assuming other the be you marketing in how the pull how leverage many been wonder pulling. nevertheless have going long to additional all spend, in T&E fund everything if

basically second as for the way dividend. also is you should plan, a you of for thinking the you on you should I And waiting, that we gap. thinking that follow-up to don't help So the that the waiting anything you is that Tracey. be if you dividend, Board Is go bridge here? us and question quarter guess, that we is then this way reinstate can now into second quarter be you're the kind the if that revise need see by go to the is for

Gavin Hattersley

tell side and Andrea's what, the dividend and you Tracey, marketing can you of side handle I'll your Andrea. of question. if the G&A take the I'll equation

Andrea Teixeira

Gavin. Thanks,

Gavin Hattersley

core behind behind first money brands behind our tenets more revitalization extend our actually quarter, In the to our were also one plan, spend our with behind and brands. of Our increased beyond our going increase brands, that we also premium its spend spend innovations was above-premium. above on beer we the did the to core media we and core

behind In our of particularly innovations. core marketing a or make spent behind, USA Vizzy, money We to expect do in. QX money close a in as Topo a We Light Lite and as in what we'll got take marketing, we spend, Chico levels as closures to spend in spend weren't they and the because obviously Europe the storm, particularly any be like as as to Canada incident I pretty brands plan were or Miller said the or plan starts as the Texas QX in and planning didn't we've the the increasing want Europe Tracey, brands and our adjustments XXXX increase security to QX returning of we in our any substantial our her result to Coors well. said, Europe we fuel the and brands fact, certainly cyber tremendous dividend? to lot you live live that because beyond didn't and remarks G&A spend core marketing our sports of reopen, didn't in in and in concerts we on opening on-premise Tracey momentum we

Tracey Joubert

Yes.

$XXX spending quarter. obviously So odd savings things point for related locked In G&A the entire and program the Andrea in were we the There XXXX just point down million years. to not and we with and T&E do in cost over we behind three in of savings achieve balance view. XXXX, targeted year, to like cost sort I also in roughly $XXX that restrictions of that the view, the announced as remind the want on-premise you from million portions UK that of had savings million $XXX other of that equal example, obviously, last we're well the in we that from was travel a to expect for the achieved XXXX. G&A

enable plan is will topline. against. us to it brands track relief with continuing revitalization are there so our very the and grow our which savings, well That invest behind provide we to to the and And on cost carry some

it the As I conversations having and the are as with to relates Board. Board, said we

be and We are or will we Board assessing how the recommending and reinstate to the exactly when dividend. to

So than to I can't say but more that, more much come.

Andrea Teixeira

it will I pass you. Thank on.

Operator

is Carey Securities. from Please ahead. The next go Chris Fargo with Wells question

Christopher Carey

I to kind not basically trying out, I'm the mentioned, you will but what little a year how this of everyone. the Hi, I guess year. to bit have going of exceed which given shipments understand is half think depletions is just just back play until

you the XXXX replenishment or in XXX start what during QX think expectations that's the – marketing where proxy line quarter if you that? recovery concept North EBITDA, I to the I back on being I heard. together, back in significantly EBITDA, you pull that little the sort and that just to of putting I'm and question, flat like really volume in with all general of America it that? out in slow I'm up with a to up accelerated points in below, see MG&A that example, I And EBITDA financial kind delivery I for something dynamic guess Apologies about a year-over-year slower? What little and any a there, spending, as you line double-digits makes if in happens year And inventory of getting levels more numbers I a on really QX lost basis And putting sense, mean bit implied that's get perspective just half to consumptions and is that for the the a the it's to Do is for then back Thanks. have spend. in this use incidents have you not bit flat get half to appreciate if lot So a then MG&A of know back but the of that QX the kind like a seems all the here that year. in maybe QX, of recovery, of of the in more QX, is. but confirming could

Gavin Hattersley

Chris. Thanks,

that pretty that Tracey and quarterly right? a has that brands mean, and So Leinenkugel's numbers. lot view, recovery of Coors From Lite, Keystone High the stand given Okay, Coors with we're Miller quickly a themselves. full Light, prioritizing year point to plan for will Banquet, put guidance Summer give Moon, you Life, Shandy. let in core there the place in not Blue a is guidance, our obviously, of Light by going we we The on question, I Miller

So that's our primary focus the at moment.

have packs. some that the of Most or moving and de-prioritized economy We cider. space, also discontinued in brands but slower is

using ultimately sure pints Europe. our be Now, The affected much in the incident recover in is supplies supply, capacity. brands at to bottles back Day full by and to the a seltzers the Memorial that wasn't normal, innovation in Can by designed returned it XX-ounce plan make to place frankly, better for and core all. kegs cybersecurity we at

picked some up momentum those remarks to and a brands. guess and bit really only and Light to that innovations performance, us question, half will Trace? I well perspective, of year slower said little I your on spend brands get really perspective. From the de-prioritized landed want moving campaigns opening two are those, imply from will Do and try closer focusing have brands add anything and a So working exciting necessary of and be marketing Coors my putting in lot the the that a to a firepower got which we'll the and of in really be as you only the obviously we'll volume second is be Lite's with strong, the some Miller behind core we've fueling behind

Tracey Joubert

I No, think.

it. good. covered was You That

Gavin Hattersley

Thanks, Chris.

Christopher Carey

perspective. the for Thanks Thank you.

Operator

is Deutsche next Steve from Please with go ahead. Powers Bank. The question

Stephen Powers

of you. first quarter. to hone the in described and recoup those bit you impacts can the And the size more in detail. the to In cybersecurity of how in as the really to is to be rates, out could end maybe now year that effectively run final we're event maybe bit impacts if were consumer storms – channel to in how what just relative a detail over lost the those to guess, as February Thank analysis, the balance I amount dynamic you we just the of here what inventories represent you you're April? of thin we exiting U.S. understand part you expect your versus would volume Chris's full response I presume just and in a that, just Just is And sales impacts of sit what on thank And Yes, as catch-up figure that capacity shipping great. March characterize trying demand question? more you.

Gavin Hattersley

Steve. Thanks,

Let me see.

If did and million what memory cybersecurity to be about So we million thought to towards shift $XXX the serves of we me said an out $XXX the to correctly, going of of X.X the X March, impacts million. a which EBITDA file attack. end million we laid were hectoliters X-K of

those, tell back plan the of I March. in Now, end did chain in sort just recovery you supply a would tremendous teams job that of our

end of of of we I say, were couple to March, we a the where So were hundred barrels expecting thousand ahead by would be.

we it's that bit continue recovery little So I we said in April to plan, today, than as fact the bit. you X-K. little the I impact our can was meet think assume less a sit think and And we exceeded in what here a XX,

our recovery on I improvement have in with where inventory, but are to track just think brands breweries we be And yet. not we we're seen that core So sequential plan. our want well

we brands those be want to fully on to of can brands brands Day, we beyond on to those we second Memorial be that. towards that closer then recovered much in by the expect quarter, paused and in focus then where We the of – and have sort back-end core with

the not impacts, on that's I as I far Steve. as think go may

Stephen Powers

and enough. just that or delay net real cybersecurity intra-quarter kind with material is Okay, Was a event? was carryover fair the the of more there maybe there impact a effect on February that – storms, of just there the

Gavin Hattersley

because closed power us brewery Texas input shut Texas it government knock our in for suppliers the almost and there is good, well. of because down was material on as Texas XX-day, the some are impacts, had obviously on has

Eastern to further So have up impact well. in it did seaboard as an

X.X certainly part So which X Worth obviously hectoliters, cybersecurity of I the Fort was to immaterial. share and it was was incident, but the say, million did not the impact would we lion's shutdown announced. The

Stephen Powers

Understood. you very much. Thank

Operator

The ahead. with next question Please Kevin Jefferies. from comes go Grundy

Kevin Grundy

if Coors been Light market and out related on thanks. Great, called on a the you of priority share could few progress questions I everyone. a course this Hello, Gavin, for company. has the that

about a around seltzer, helpful? I could. your just beer beer And coming talking source if how incrementality of segment? the multi-brand light that just the moment are a of think overall the comments questions, Thank your light been demand marketing given pressures there for given broadly sort so about out growth you here? what of of the lean portfolio spend lastly, if maximizing be and strategy the pandemic related positioning beers shifts you you to then would strategic One, for three could in on expectations in if some Two, you. seltzer a So light of brand the have

Gavin Hattersley

Thanks, Kevin. going A lot on there.

maybe try them me Let then and and off. try knock

pretty So actually over it's last point I'll seltzer more category. the of times tested We've final beer the that half year is outside start the from right consistent. your multiple and of which with actually is than growth number coming

you, other premium seltzers, So obviously what which and ironically may coming actually data but but says. craft places, economy, premium so supplement is less lights it's lights, it the losing from including surprise to are certainly

Light of over drinkers Miller brands creative on the it. seen to with kind continued trailing our on in and for ambitions benefits with a Coors Miller we health that our real and Lite of to the trends big and breakthrough fresh and We them seeing giving we're reason that's with beer have is XXXX core for past had and that off, focus it's connect Light and advertising Lite clutter reach new of and and specifically replacing approaches positive Coors a paying performance quarter strong the the

metrics we're significantly impressions brands which olds in us. key health to increased is Light that up XX Coors positive and household consideration for and years target that a key penetration, year XX example, among market For

we've example our have we ready of for an strongly I drinkers. XX%, on every go in share in both Coors in chillers, with cut growth the think also Latino has in segment how quarter the far by so and more buy it I our they major launched, on market, to the and since but when turned the the more launch loss than campaign premium in continuing increase some as so Light core growing Coors Light And share two brand since that XXXX, is Light's impression positive corner had for consideration campaign seen Coors lights, consumers Miller category the quite establish can chill, itself to was. total the XXXX Lite our are targets resonating detail brands and

almost our premium Blue strategy view, gave us don't well you if core we above LightSky seeing brands, benefits the talked particularly haven't I are packs. and new achieved all Moon exactly industry opening faster that much gaining QX a Vizzy, one of in but revitalization required know lemonade third and So packs a real new mentioned some of about remarks, we've think stats moved launching I I got variety share with we're second also a think together, it's of a in with share. summer. and in it. that and that I than skew I Vizzy, Light doing Seltzer is behind invest our we've footprint From share with winner our doing to and we're the the skew Bud put a point only got we our X% XXXX got pack pack We've and expanding variety variety in

two number market. last pack a week than had sales record pack and variety Vizzy Our Lemonade actually here one, faster turning the fastest seltzer Vizzy number our the week. already lemonade turning is second variety is in

give you gave So helps. you of lot questions, color, answers try me give bit of that a and I'll I hope you a Kevin. lot little to of

Kevin Grundy

that's Gavin No, fantastic.

the and then So quarter congrats good luck on here.

Gavin Hattersley

Thanks.

Operator

The next question Please ahead. from from BofA. is go Bryan Spillane

Bryan Spillane

And thought today some had going a thinking given just Good on be category may question bigger reduced I of and accounts a specifically the kind operator. portion think seltzer about to sanitation. of is a have you or looking much touches, for ways sanitizing growing type guess, do morning, everyone. how I Gavin, on-premise more U.S. North different as reopens, the forward in America. look might Hey, it thanks about on-premise

guess, create on-premise different I on-premise? future look of Coors that so Molson kind gain And that did some opportunities I to share any the for just pre-COVID? think potentially it in if than could So in does

Gavin Hattersley

Yes.

is your the I both questions yes. Bryan think answer to of

certainly the demand as on-premises for pandemic, large question we true directed saw is an brands in increased the at. that's your and During particularly trusted

on as craft I view and focused We brand helps the Lite Moon from Miller on-premise in the and on-premise. that us particularly also where disproportionately in it's brands, is of true Moon and Coors mean brands you moving it's as like largest a Light point but know Blue also well. sticking saw Blue the owners to benefits are faster the obviously it off-premise, – fewer, on-premise it's and

and the So in move to of as trusted seen us a large and the couple of the Lite, in particularly helping and the Blue reopening Miller points tick Moon on-premise brands we've our is a on-premise the Coors with share Light on-premises up reopened.

spectacular sounding had as triple-digit I and right. as that's Chico that in demand given in placements velocity them, been retailers referenced great the distribution tasting Blue opportunities, increasing in launch alliances form consumers scale, large us also innovations that mean certainly for Topo and that is the us out and us reaching to know quickly by they're this You possible, seltzers is try through to going sold we've we're opportunity and we've Moon packaged on-premise particularly absolutely think actually on-premise year our seltzers in to got I and real and created because we we it's products asking actually are when – it's growth for LightSky. get of do our to and like give a applies to

regional seltzers seltzer on-premise. big a our out, certainly how companies for a we're that got but seeing are drive I that, we'll and the cross I see our demand packaged to on uptick Bryan. all launching brands through We plays in in basis of hope

Bryan Spillane

Gavin. Thanks. perspective. helpful It's great. that's No, Yes.

Gavin Hattersley

Thanks.

Operator

Ottenstein ahead. go Please Evercore. with is next The from Rob question

Robert Ottenstein

Great.

Firstly, the just follow-up question. a then quick and main

digit in running kind down obviously are but the kind the STRs, in data, of is are So there offsetting in of U.S. the just where wondering on low-double of you on-premise scanner that. rate terms run current

chance it get it you the international you the than seltzers, U.S. share that like year? is, with do really the double-digit doing you very then a my So business end there sense that of consumer? that question think have And of just in the a better expected seltzers, where with see or the actually some can also get trying is Vizzy, Chico, do with the increased that hard developing confidence hard than to is on Topo do helpful. Gavin, you'll that you're sounds expected those by category And to work seltzers it main better the would then maybe as you side you. Thank how of you're hard referenced be doing markets is on different for is different given as European big a be

Gavin Hattersley

Thanks, Rob.

Okay.

normally exception but going. I'll Look, the give first anymore, an make incident, we think flavor April's for the give some updates know, as you take question these cybersecurity given and how me first. don't I you Let

shift obviously March mean any You I right? the the from year loading including off-premise take week mean doesn't referenced and in into we into last data. the needs it data, so at data scanner scanner context, on-premise. of that is that massive four account I had

four are sales States the last our to single-digits, the mid United in weeks, Over retailers up Rob.

have open XX% The over on-premise a UK So you're quite said in barrels said only what double-digits week We're scanner despite to outdoor I to my the and being XX% for remarks. and the as one of dining. in different million seeing in shipping prepared data. that, I as USA volumes

by or spectacular I in XX second which it's in towards in mean the mean I our heading Topo right. Your a question had goal in of seltzers, very Chico you're double-digits only launch year. the end of we markets. XX% limited markets of around

and think got we've national of the potential potential markets, a continue based reaction to and will high XX on right we here demand meet it's roll we And out I winner So had that in very and confident you're will those got when brand, its clear we strong to the markets I feel that can think this we to roll that markets. future unexpectedly in out are the we look on Vizzy.

winner with real a the have we believe repeat gave. just we won't I stats I think I Vizzy.

us to was for Kevin, the as Vizzy exciting but sales the had Vizzy that it lemonade think we fastest and the or is pleased a performance. for year. is said, particularly Lemonade I second fact last I Bryan think We're with I week record turning seltzer,

inventory We SKU only last year. we have singular We launched and April challenges. in had

brewery. brands to We Fort need execute. we're that get running that we've While seltzer now demand in we've the are think XX% to the That in we more and our space to means got do certainly we all to target. up the now Worth confident the and meeting got Vizzy that capacity our for

you suggests I as the going sure to going think to as is States. I'm that We the it is have that the good. not market in I'm seltzer be any a United don't early data towards be more well to United Central fully in be it data tell it's in yet that ready to in the good support Kingdom we'll – Fold markets has rolling this landed in of that, but certainly already Three the is Eastern Europe, and month. out and Wai in European couple

that So Rob. I hope helps,

Robert Ottenstein

Great, Gavin. you, thank

Operator

with from Goldman go is ahead. next Bonnie Sachs. The question Please Herzog

Bonnie Herzog

just of these that facing the little of about everyone. then And wanted you of back really love pricing on what as just will you're you're offset And expect year? us I'd these Thank pressures touch pressures, thinking of more mitigate on you on the quickly this could give how any hedging you. evolve maybe through pressures? cost kind a some balance year. Thanks. color Hello, lever the you circle maybe you this, cost this the a to on have to I to have place? guys further hear in potential know bit to how are levers you little touched key some a to I but of some

Tracey Joubert

I'll Yes. Bonnie, so questions. take the cost

So XXX with quarter related COGS of increased just half was that – basis of a and points inflation that the X.X% transportation. our in underlying to and the

QX. the entire So improvements of we continue in change the but all the networks. with January advancing to February, about be net think transportation knows the and in QX tight. and beginning as everyone in winter This the showing is storms said I major to market really starts that spoke to and that expected freight we disruptions caused We

it sourcing expect to as a so that, to added our four savings to of $XXX that freight relates did levers cans us, that from in program, the $XXX inflation. actually And continue mitigate we happening continents And have cost see I the in has terms of So to did million in mention then we also million to market. XXXX.

– equal balance to We are COGS. tracking expect well deliver majority far roughly And the on savings. in are that the to those those so of and focused are cost we savings of achieve portions, doing XXXX XXXX and we in

that the want So all inflationary that program, hedging hedging get robust savings don't you We of pressure seeing. we and robust, in to program. but addition we the I are some of commodities, are to we will can, mentioned, the as cost hedge programs how have detail our mitigate help really our we to into hedge,

Gavin Hattersley

Thanks, many Trace. And thanks Trace.

On we side, than COGS, look programs the the our of know, we don't in I programs to pricing have Rather pressures, and higher guidance we've in earlier may in cost give Trace, And Thanks, any Bonnie, well. don't which which cost place fact new Bonnie. as hedging have. that you did in pricing on. Tracey actually forward guidance. the the revenue does that using place into mentioned gave Tracey mentioned terms we savings guidance factored pricing, got which We offset include

Bonnie Herzog

Helpful. you. Thank

Operator

UBS. go is next from Please The question ahead. with Sean King

Sean King

going the you is distributors? question can that progress just second beer any the making, then A be this JV? receptivity, be you're that of Yuengling on move with provide like relationships your question. for has Thanks beyond And with broader how on question impacted would distributor top about that update to

Gavin Hattersley

Thanks, or mean, owner Sean. XXX and Yes I reaches Instagram, extraordinarily Topo distributors in on, look, order the distributors feel in it the and you strong earlier orders received nanosecond. when and my business about was actually a out very by retailers retailers me time us, question got of I with what test just innovation had either the every a was he excitement on that and very I window has about ahead is He not been lands, well answering the followers a it a of we night the frankly, million ZOA are order. just something strong and got ZOA of distributors Chico by on an is alike, excited The Dwayne for Johnson. partnership, first last order together puts celebrity partner how is he night it. true are particularly he tells the as think The well. and before, how our closed, are we've

So we're just getting it the now. with market into

to and don't it – want it's market the in results of myself, has where are So and online some the get the of vitamin I ahead with but GnC stores and been tremendous. been

We distribution year full a excited very view. distribution ZOA story, April that from was supplier La Colombe targets. hit are target we've had and hit we've about short point consumer the La and So we Colombe, with already in retailer for of and them. our our partner and set a

So, stores how in drug and of and chain. that is executed have C the an illustration distributors

in of point into of good, Sean. joint They've has to distributor the setting view, going of distributors Yuengling Texas to gone fall answer brand short So various a year amount and hiring relationships, work the progress From the this in launch gaining tremendous made and Texas. with in very up tremendous the for chain. the is to that talking awarding getting the commitments, venture

are venture. we exactly we the thought say with would I be So we'd Yuengling where joint

Sean King

the very you All Thank best. Great. much.

Gavin Hattersley

Thanks, Sean.

Operator

Please is Gajrawala go Credit Suisse. Kaumil with next from The ahead. question

Kaumil Gajrawala

positive together guidance In your the seltzers revenue you and Hi, everybody. products If question and you incorporating about are there year, of on on we was you’re but give from perhaps Thank for context and comments, is A points. for how it and contribution to Chico, enough, is Is us one give the profit how for obviously, single-digits you thinking think on Can from out. and a than these and impact Topo how could some full ZOA, many a context it owner, different guide contribution just Coke profits do maybe more expect seltzers then the of what lot five as you if with Thanks there maybe should profits mid rolling contribution? there mentioned of sort the taking you're on for seltzer, looks the and you profitability. question. it just the for it big it Is big three? maybe point be? it on you. about of

Gavin Hattersley

I'm to Kaumil, not suppliers, our for all There's premium One, Look is profit time. space. go they're lot premium of brands contribute to a value the actually even our super for and break distributors our in around sort of and for of the bottom for operates both premium innovation above space the above seltzers give contribution retail. line ourselves, over These and our are that going to going premium all two to NSR. almost operates down innovation though. in above super the and the space brand the you some and points to I'll all some

full to the got and we a were year to to as our we Vizzy to in share far for the the the for brands to end, of close think so I not with contribution share. year. seltzers a share on So we at year are a and we've I be the around the essentially last plans, of coming we much had XXXX as seltzers with brand to just put hope repetitive, would concerned, into the I'm are Vizzy both closer point Topo than We've and off behind market, a business these all in excitement that's months eight – that launched seven exited NSR contribution mean of the contribution view you Point's a market business year now from muscle Kaumil. is hold the four got and in balance to Chico. one be of exited Proof last them XXXX. base helpful expect I to low so more very we going the our meaningful our marketing

Kaumil Gajrawala

Got it. Thank you.

Operator

is Please Barclays. go with from The Lieberman next ahead. question Lauren

Lauren Lieberman

of about keep through several company My on and just you up tight. been I just shore make need question to very I'll thinking go-forward system, cybersecurity know to was has years it costs, kind very, sorry. Hi investments of the might times. your tight

degree under-investment a kind that's is factored And kind some there into year, so maybe just process catch-up Thanks. there been need and the next degree which and this to on thought year the the about thinking spend. of which to has to of already or

Tracey Joubert

systems putting around spend but of will are our support, be we upgrading years that cyber you just investigation an our helped with of systems is to don't PP&E and us taking of have it also we North Just are in helping QX, the of various us Canadian in systems. too U.S. our about stage, it number amount incident. consultants we significant the talk talk at on of, the to and and net about expense did we and this said Canada much we as and incident, we I release, just open want it investigation. because earnings incur experts to in a America $X in investments, system when CapEx as million of terms it actually our In terms systems spoken upgrading related for a our the U.S.

that, is really So an I open to don't investigation. want Lauren, give, more than it because

put do to-date. specifically terms costs the some the incidents, minimal we it in as anticipate as of have QX, immaterial really relates it Just through to though we could

Lauren Lieberman

Okay. Thanks much. That's great. so

Gavin Hattersley

Thanks, Lauren.

Operator

This to our question-and-answer any the session. to closing over concludes for like turn I'd conference Hattersley Gavin back remarks.

Gavin Hattersley

you Thanks, year There questions, and as forward everybody the Relations and Investor of which participating to many Debbie. please follow-up technical have be with call. free for team progresses. we look in additional to And may our our with talking feel thanks you

for everybody in and that, with thanks So call have great today's participating a day.

Operator

Thank The you attending conference for is today's concluded. now presentation.

disconnect. now You may

Molson Coors Beverage (TAP) 30 Apr 212021 Q1 Earnings call transcript