Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Molson Coors Beverage Company Fourth Quarter and Fiscal Year 2022 Earnings Conference Call.

You can find related slides on the Investor Relations page of 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 over to Greg Tierney, Vice President of FP&A and Investor Relations. Please go ahead.

Greg Tierney

hello, and operator, you, everyone. Thank

ask today Following will many and yourself we we Gavin your prepared questions one questions. possible, as remarks take address In Tracey, to limit from an question. you that as to effort

questions the you in please pick IR and the weeks the them If on quarter, with up technical our have days team that follow.

forward-looking Actual differ our forecast. could results materially trends Today’s or statements. discussion includes from

when the refer please reconciliations most to the We discussed our to Unless the factors prior percentage period. obligation release. year the comparable our with GAAP changes financial results for year measures GAAP information, prior risk recent are in Company currency discusses update filings period included in news more and discussing SEC. indicated, non-U.S. versus dollars statements. no assume the otherwise from in are U.S. all For forward-looking constant any in

GAAP simplify Further, per underlying income taxes in now instead which to remarks in income, metrics financial volume basis. a our align of sales will we today, underlying net our reported pre-tax equates to basis, on on and of before with brand filings the hectoliter consolidated on condensed, statements to references a volume Also, better in income be order reference operations. will reporting,

over With you, that, Gavin. to

Gavin Hattersley

thank for Greg joining all you Thanks, and us this morning.

plans we X deliver after to our launching didn’t Plan under to exactly almost that grew despite brought top-line We Revitalization pledging leverage our turnaround done We We strategy and and pleased times. very could. after we ratio think grew and the that delivered tell stuck the X%. people to bottom-line fact We by to many we three business, X%. years by the and I’m that. our our bottom-line have years three you this growth, top

Star. questioned ability years. And has past consistent To of North there’s and on this well the been bottom-line top we doing and growth be it just three downs in our a achieving been to through And our road But to many execute ups sure, the lot are all, that. plan.

a to arrived take want at to I break So, how of couple this we down moment. minutes

streamlined we significant business early drive XXXX savings. to our in and First, XXXX

combined of the plus we results, Lite brands revenues built States. our Collectively, Light past performance quarter. both core the Lite combination XXXX volume dollar Miller Bud share three the grew strength and and years. fourth Coors both of Ultra even Light in for U.S. to levels for United the on the the share volume are fourth The U.S. quarter. well Light above and and Coors Michelob Second, outperform They in Miller in

the one share in And share industry appear. in XXXX. exceeded Miller result In fourth and Canada, suddenly brand in Molson to continues we’re investment. tracked also the be of brand in and Canadian And brand UK, as grew volume Coors the combined They’re the trends number revenue messaging, quarter market. These Carling more Lite’s channels. in effective just Light strength and Light consistent didn’t Bud seeing the

our global of sales up from have portfolio, above our our net XXXX. premium in XX% portfolio. XX% Today, now we premiumized revenue Thirdly, over aggressively comes from

Our of brewers share dollar U.S. the in U.S. portfolio major XXXX. second premium above all gained most

want the revenues the even LightSky. in seltzer of Blue hard the the revenues industry to our the progress Moon successful compared XXXX. in skews understand two Moon’s Simply XXXX division though I category. the global aided summer, volume our the were XXXX, we new U.S. our top to premium become And by just XXXX were portfolio, U.S. Canada, the And continues to today. introduced on-premise. one of above last FAB grew Excepcional growing heavily which brand a XXXX digits Spiked, only the in brand of years while that UK. to double Madrí course, market. innovation size launch really share portfolio less our gaining also In we fastest portfolio the quickly higher by star was tremendous it became Blue than you double of levels, standout seltzer. in compared up seltzer contributor, Peroni’s But craft U.S. brand growth be has In more is in our driven than to and brands five of its globally. this have digits

strongly. the where up fourth Fourthly, quarter. very we with trend foundations which and strength we in in continued the spaces and full volumes acceleration to quarter us. have totally ZOA laid beer, in digits spirits, were triple energy for solid expanded are the full Brand beyond grow drinks new both year,

Spirited first the fast-growing we are expanding compete full our on to is And continued more ready-to-drink this select Trail expanded states markets. to Company Coca-Cola Topo spirit Seltzer, in Topo enjoying release distribution international the spring of Our Five and strength with cocktail Chico Chico success building Hard space. to the partnership

supports a building in us deliver facility have goals. we our improved added sustainability our throughout efficiencies Colorado of capabilities of invested of in production completing modern new packing hard build midst our state-of-the-art brewery in slim Golden modernization finally, And Texas. brewery, new variety Canada, And capabilities can and future. our two breweries in adding the We’ve and large-scale network, we’re a the seltzer which and helps

results aren’t shows XXXX an work aberration This or a moment time. our in

of work and line Revitalization the of our years hard Plan. growth top under bottom Our is three product

intend this are the profitably, we company ahead. continue years demonstrating grow proving We in and that can to

caution many the immediate beer, but this goods years. we And consumer Of course, like see have year, for reasons goods and in consumer broadly. landscape downs about various not term, more we ups reported next for the expect consumer just companies that for the over other few just

year. very Beer much is in year. has as volumes a true beer to tough traditionally industry a during fourth it attributed they U.S. rate economic fell than earlier maintained its at price had in has been in Yet the retail. been the of share quarter times. has And most that higher of industry-wide the resilient the beer second a this taking of basket at yet Much category beer calendar increase

reducing So staples. beer purchasing consumers not favor of in other are

actually gained alcohol Beer share in Additionally, total beverage the quarter. of

are consumers we beverages. large in see And comments switching So, by XXXX other markets still pricing the not notwithstanding a year. the across in taken upstream earlier fact, made supplier, this alcohol to sticking our

are So, were a seen beer subset other and sizes. staples pricing that. beverage softer if trends, pack we consumer would of the industry smaller the alcohol adversely other who trading impact value-conscious into down U.S. seen expected reason it relative or categories, is we the driving to to behind have haven’t have industry what But actively we consumers

the We strengthen. seen segment to economy have continue also

in expect revenue At by we above-premium time, we guidance The this delivering than medium uncertainty approximately more are expect in improvement line rates term. portfolio This upcoming relatively margin XXXX over are for we and growth outlook despite our top facing to trends is global the XXXX. our a same year, reach our supported consumer to broad these anticipate higher that the see bottom the goal factor one-third the more for medium where companies sales net modest driving medium our term. our optimistic all term for over in of

Molson the our challenging this long-term against a and North Coors in and margin Plan of climate, by deliver Star consistent Revitalization expect on even with uncertain we basis. to growth top bottom So, achieving improvement economic at line

than fact for the simple That reflection of in some beer stability they a competitors the tiers that But Our gives have that is portfolio Coors’ stronger are and economic climate. in our greater is today. profit is range of the across us of years, strategically business healthier and revenue pricing built than been within strength our of any industry. some Molson trajectories

much a business are in leaner XXXX. we We were than

seeing strength. across powerful that markets are have We renewed global brands core our

premiumizing are world. strong the with our portfolio We around innovations

diversifying offerings to are We consumers. our

We’re building tomorrow. today capabilities this power that business the will

we for investing in our delivering results. first the We’re while, people. in real are time And a

of work around what the long consistently the the world. expect Molson from of term the Thanks That’s as to us story Coors over that’s and people thousands all should well. today, you of

to financials Tracey give to detail our the Joubert. Now hand Officer, more Financial Tracy? Chief it on and I’ll over outlook, you

Tracey Joubert

you, Thank everyone. Gavin, hello, and

the we our But delivered pretax performance global we our macroeconomic XXXX, industry constant in basis, achieve. a despite our and our levels with which net challenging underlying income pretax quarter, underlying X%, to income environment we In all and X.X%, a shareholders. on XX.X%. softer This record beer this fourth could business exceeding guidance revenue enhancing We returning financial questioned income to cash many did up invest in sales pretax a flexibility and and delivering guidance. continuing resulted for while currency grew underlying

basis. a Now, take on results reminder, performance you outlook, our business our a and we before as currency through I constant discussed

top million our the U.S. However, dollar $XX the currency reported a in million headwind revenue have line net resulted of meaningful for on impact sales a the to quarter fourth did and strong and $XXX results in impact year. from

talk drivers Now performance. let’s some of about of the fourth the quarter

build a Our fairly Financial as were cycling the and significant prior resulting restrictions growth. Americas X.X%. brand both net the take volumes and biggest declined deliver to per hectoliter positive units sales lower in strong across ability business mix pricing net to XX.X% global given sales The drivers led volumes U.S. as year volumes and softness Omicron-related from distributor EMEA the year inventory Conversely, resilient in in well APAC prior in cycling the financial industry a increased, UK consumer period. the

costs. to Turning

per hectoliter a be pressures up headwind in inflationary COGS the quarter, expected, XX.X%. As underlying to driving continued

energy targeted $XXX provided you over transportation was XXXX. two-thirds savings inflation, see drove that cost we pleased from approximately cost XXXX costs we another we which from due successful can increase depreciation, report million and mostly into inflation the materials, offset, other cost and savings As costs. savings delivering items; are the areas: and and program, cost bucket to higher inflation/other, to three deleverage. and slide, to The in completed includes the savings bucket of cost Cost mix; some

freight to of program, volume can generally it for hectoliter. while have inflationary per has Mix COGS, deleverage. helped mix is for it is a was the a certain and an mitigate premiumization margin costs like and positive these remember, linked due be and premiumization. And third-party And to pressures. and Other increase, COGS to Now, per contracts are COGS. be indexes gross also cost hectoliter costs we But to were material was hedged about drivers negative costs extensive of contributors XX% these manufacturing material and some and conversion hedging PPI. cannot raw like it largely

to Turning marketing.

continued put strong exceeded planned, comparison in prior period the core innovation. our quarter and year significantly down said, the for investments when simply XXXX was That behind level. pressure spend year-over-year brands And the As the to it fourth higher quarter. commercial we reflects

lower-than-anticipated in unit rising on quarter. P&L this million our effective a noncash Now to a future an annual rate Americas This partial on of in that Also, to I quarter macroeconomic charge tax items for we expect like other to underlying reduced benefit, excluded two full recorded which repeat. wanted results. performance, move goodwill flows resulted $XX year. cash was and to in in out the our near due business had not impairment call factors We review underlying term. rates I and before million the to We from tax our the interest the increased charge for our and discrete Cost $XXX inflation medium impairment our expected result is do

discussed favorable net the Now up increased let’s mix. a per pricing builds were year XX.X%. XX.X%, grew in to declined also while lower strong look brand X.X%, the down Americas, was prior and which quarterly period, In benefiting down This significant They Financial the from income units. results cycling were last business X.X%. sales volumes was pretax due inventory revenue volumes, growth in result we hectoliter net U.S. distributor of quarter. our net which brand sales Americas’ underlying U.S. XX.X%. at by

look deeper region, the accounts a U.S. brand X.X%. at Taking by volumes

items that performance. Now, we some timing had this impacted

trading less quarter. day one the was in there First,

on adjusted trading volumes were down basis, U.S. day a So, X.X%. brand

in of price Additionally, volume we the the fourth shifted from out as with quarter. any that four experienced volume increase, load increase price

volume in premium premium. brand grew X.X%. in industry and day by in gains segment, price best economy economy in portfolios of up industry Canada, and and declines But were America, on softness X%, single adjusted low premium brand trend digits. despite Latin the our single share non-trading Looking in improvement were brands share In high basis, at volume down down quarter, they industry digits our a U.S. resulted

similar the to per COGS hectoliter XX.X%. for MG&A the increased were The while XX.X%, On side, cost discussed underlying results. drivers Americas decreased those consolidated

brands in premiumization and on growth Turning grew portfolio, Net strength drove like record XXX% volumes of net income net year APAC. to above Madrí on and the Omicron-related sales fueled or restrictions increased our underlying XX.X%. declined strength of mix prior sales revenue sales EMEA volumes the mix of cycling per benefits X%. $XX over pricing, including and favorable premium channel million. the hectoliter increased Brand Financial XX.X% of by Positive pretax positive X.X% period. the

While the UK by offset Central and than brand more by Eastern markets our war volumes grew and license were export Russian business they in in Ukraine. declines and Europe, impacted in in the

side, cost materials, due is transportation to COGS underlying XX.X%, mix mainly well as this largely the cost premiumization. On costs higher hectoliter per and inflation, energy as from increased

softer Quebec XXXX. on and U.S. second UK third in were up brand up declined the year. due essentially brand the look quarters impacted business Conversely, Financial were that X.X% were units. strike sales pricing let’s X.X% given year restrictions. which full the Net Financial prior were beer Now, Canada’s resilience on-premise also with and on to strong net brand at quarter both and volumes, industry per global line financial declines where Americas X%. the of and in positive labor volumes the down mix and consumer UK, sales of the the hectoliter cycling declined and in volumes volume volumes across X.X%, the

Turning up our increase and this unit, mix, And was approximately fourth to which underlying Underlying the looking per hectare of as drivers cost and nearly EMEA Americas And up which XX% by increased COGS varies XX%, Notably, inflation, at the quarter. over increase to per nearly hectoliter similar significantly and in business of was bucket, driver XX%. the was [Ph] biggest the followed contributed with profitability. to when due cost to APAC by to XX% XX%. increase. cost

innovation. for when Marketing to for higher MG&A invest due the increased key in investments full G&A spend people-related strongly discontinued And year brands mainly the costs. and up core X.X%. This but our brands. fact, marketing was behind year, to we declined excluding continued was

our offset $XXX down cash We delivered due working the for to partially underlying free higher was million lower capital year. by in us capital Underlying This working of unfavorable do movements unfavorable cash primarily these of not million, free XXXX. movements timing cash compared expectations. range, and to our flow below capital expenditures, due We $XXX impact was taxes. largely working cash initial flow expect in to guidance capital to

Turning to capital allocation.

to up and efficiencies, business net $XXX return we were discussed. to to drive for line top year, Our shareholders. paid invest million debt priorities our million remain and in $XXX reduce expand growth continue as cash our Capital expenditures Gavin the to capabilities, as

by $XXX rate. to continued our We improve reducing balance year the during $X is We sheet net the essentially of debt at net which debt by billion, million the all fixed with health year. of ended

at times at guidance X.X This coming in from commercial ratio floating zero in X.X times, to our improvement Our of XXXX rate as the a the limited exposure credit had MillerCoors which acquisition. net paper to facility, X under achieved debt and year-end. times dramatic to time debt a the outstanding balance is year-end. our We EBITDA revolving of is at underlying of

to and committed maintaining target investment-grade strive anytime, a remain longer-term times. ratio of our approximately leverage rating We towards X.X improving

we And since returning XXth, XXXX, intention long we to And X%. second our $X.XX shareholders dividend declared dividend. per per increase dividend paid cash our of cash sustainably our an in of quarterly aligns of increase with the our reinstated $X.XX is with our continued cash February a This it and a in fourth dividend the share, increase quarterly the share to of on Board quarter. history

recall and growth Now, in year-over-year rate let’s discuss our we that currency. provide outlook constant

of the and anticipates impact inflationary the guidance global pressures. despite softness growth cost industry Our continued in beer XXXX continued

revenue plus both income flow $X for free sales underlying cash net pretax We minus expect low-single-digit billion, XX%. and and or underlying of growth

walk Now, through let the me some of underlying assumptions.

as On to benefit in we be driven pricing premiumization. we continue strong from expect rate top line, growth as global more the volume as XXXX to net well than we the that took

our the in and first largest XXXX increase into in in average quarter we reminder, fourth beginning an quarter. U.S., September another X% the took in a As the X% market, and

a with cost, gross terms both per efforts to ongoing units. continue But, to -- in continued expect expect cost we premiumization, margin our grow be business In and pricing to we headwind. inflation of savings hectoliter

We commodities hedged I costs, our But can in comfortable also material be again, cannot discussed, are remain with hedge and there certain XXXX. coverage that to COGS. be as contributors

to We also core the expect increase and and plan in XXXX prior investments versus marketing continue to brands support dollar strongly key year. our innovations to

expenditures $XXX guidance $XXX or or $XXX rate range tax minus or expect and plus expense of XX% amortization in secondary we million, effective and the X%; plus XX%. of incurred metrics, capital minus of plus million, of minus underlying net our X%; underlying X%; million, for depreciation interest an As to

we inflationary on environment. financial remain that a are to focused and of across to us accomplishments closing, the macroeconomic long-term to In pressures. amidst strong all dynamic global significant business our have prudently XXXX, in growth. of the we enables proud to are navigate continue flexibility support price segments play brands invest continuing We that in to particularly our And portfolio pleased

to With your Operator? that, forward we answering questions. look

Operator

[Operator from Instructions] Our Goldman first Herzog Sachs. question comes Bonnie of

Unidentified Analyst

couple I [ph] for Hi Thanks for is Kanada Patty there. on had the your performance. them EMEA-APAC This questions. of just a on Bonnie.

last could a you of seeing update were you cycling year. you a for there? volumes the one-off in consumer hoping out recovered terms benefits across on broader contribution? the were World any better that Your in then, consumer tailwind region? And Thank at restrictions was? us and given Did us Could little that And give the on expected. region much the like specifically than dig you. be the And an on you’re trends pointed much break financial pressures you Europe, volumes Cup demand just the this of may about seeing out you’re the other what actually that of Central in bit say Eastern on-premise more how talking level we demand to

Gavin Hattersley

and very Thanks much, good morning.

reached As yes, restrictions, in is I far quarter. pricing but cycle. for portfolio the Madrí. from strong we contributor, well. and out they had a in our of much above premium cycling mix frankly, as the benefited was couple strength on reasons. EMEA We concerned, brand expected, big But, of like from had record And World Omicron-related is did as One of on-premise And was yes, line Cup drove which growth wasn’t the it APAC and mean, success a top as we it we benefit XXXX. as levels

it’s So, secondly, there summer. strikes rail And normally in significant played time. the the were UK around in that

not as only in did World which Both -- mute the demand parties for so XXXX. through, was better EMEA-APAC things we the where came holiday spirit expected. were due muted XXXX Cup, to were that what also obviously, consumer and performance it had the we had hoping hoped. the those but happen Notwithstanding expected than demand substantially And in that of didn’t we and nearly than that, less Christmas

is are we’re there those in in economy. EMEA-APAC about UK look, conditions specific more There’s markets. as that. And Obviously, doubt far facing impacts no there from notable challenges inflationary are As are concerned, in Russia’s war the that affecting Europe Ukraine. the

demand been the Europe resilient, UK remains But brands. including a So Central for Eastern in premium our above market. -- has date, demand for to challenged market

Operator

of go open. comes ahead. Peter, Please next is line UBS. from Peter Grom Our your question

Unidentified Analyst

on Adams an Grom. [ph] quarter. awesome Congrats Peter for This is Bryan on

line single-digit thinking in towards along provide how still it I continue to affair single portfolio that the you the you mix that some digits Thanks. low a ‘XX? a to price mostly outlined volume? this driven growth now, shift pricing breakdown we year, and for third broader broader probably that premium. mix. just that to between should about XXXX low top But effort the the guys positive know above think of be through with So through and through should just going from a price-mix in Is talked targeting morning, benefit just Tracey, rollover you’re thinking

Gavin Hattersley

impacts, volume. as Tracey in going it’s any consumer it’s be is term, mean, you I can than Yes. to going to in consumer as remarks, be behavior company Obviously, see said goods rate and challenging. near consumer her more

from And so we’re a a little there cautious perspective. volume

going that coming I So, more rate our an to line in which contract got top other known large it’s brewing, well right? we’ve we’re exiting the And end. than our mean, volume thing a for brewing on is contract sure. arrangement,

next year is I And think the year. a year. end it’s of transition this

it. chunk volume So amount of that decent a with carries obviously it’s comes that’s a And fair out. of NSR

we make are structure, reduce of take will our going a it’s out cost complexity us Now, a that efficient. and of whole just and our more business it lot to overall lot confident

So, we’re well. as the in transition from year that

[Ph] So hopefully, that answers that, Bryan.

Operator

ROTH question comes of from Our Bill MKM. next Kirk

Bill Kirk

of on So seeing my year-over-year increase ad some the is had ad competitors But XQ brands. level what right question their Obviously, you’re is their core spend? declines. the spending

So, should competitors I adjust you maybe of some about marketing guess from strategies question is, the need think extra are we to putting How do the XXXX in the to your levels? response marketing the marketplace?

Gavin Hattersley

of our And the behind for the continue pleased Look, invested that. and marketing. innovations, and strength core Thanks to strongly with we’re I effectiveness of the that plan we do brands mean, and to Bill. we marketing key very our question,

for marketing in on for aggregate I the think constant not if our was Tracey’s were spend also that currency. iconic up year core year. brands, you our was discontinued it actually Marketing prepared the mine, investments brands, exclude in remarks, up in

So, we is marketing think working. our

and as some media saw approach return our Super make We’ve betting, spend we that streaming We’ve ad to hard way and overhauled us. work got marketing our changed best predictions effectiveness. make that spend channels. absolute approach We completely Bowl to We’ve latest performance-based in sure the you to for of also dollars our completely in And approach from to program. places into investment marketing we’re than like get sports maximize podcasting on and a And to our videos. XX% our view. have digital leading more to from our our media the we’ve made been changes of point sure now really

long-winded dollar making as work of I as single possible. saying, So, way a us hard Bill, for every that’s we’re guess,

of our are our like I I’m to they health some relates like a of view. they point to where I And it I -- a something if low are X times of mean, said, spend a to I brands, to going number. low behind Tracey XXXX. not relatively where our we’re and are As yes, still to as of you increase share And in from ad view, where a from planning relatively increase competitors, it’s invest competitors. base, our relative like brands we heavily our point are continue

Operator

Our Morgan. from of Andrea next comes question Teixeira JP

Drew Levine

This planned of you guidance? top is just XXXX, kind a I is perspective you on the of taking kind and to Drew the from do the around Levine about to you the on conservatism then, for Thank just you for talk currently? additional think and for pause. Were question. that’s Can this wanted a in the Can what giving clarify into volume transecting obviously, based industry. pick baked guidance tough And going end you had I marketplace the given the guess, environment? consumer up our or year-to-date off Andrea. year how some you’re much Gavin, you something pricing you Thank discussion for if year. are seeing of XXXX maybe line you. seeing you

Gavin Hattersley

Okay. there. Drew, a on going lot

that. I sure can all me catch Let make

in strong increase price of price look and year, strong we a the took what back spring We point in a stand just increase reasonably Let’s or XXXX. the pricing fall. of pricing we view and another environment did from took last in at

less the In I actually fact, put The at And still GI than historical spring months elasticities expected. historical from four but were our increases, it it higher below that was really point elevated has bit, a which they we pricing since in we’d of mean, it was levels. out guidance the that price of below there view. the couple data, a a still well that is price of levels. it’s elasticity, we were but end what of saw is

been of So, couple it’s only months. a

consumers year, fall, environment I view my price put the from the price markets in we well, of to a promotion eye know, in how didn’t most of country are there continue point hasn’t take The you increases, price some on reacting. as in we close were a fall. elevated keep pricing but remarks. as large We this where the said And

the spring increases year, think of the I localized, And price would a a expect out so where price closer so, to be we in historical point year, view. from this I And balance It look of fall there. been the of see as not broad few you’ll to to increases be will the fairly our a sway. they’ve in

to X% X%. So,

think how and consumer obviously, that. fourth around volume we’re point point your of was consumer about other every changed see question did view, From I we a goods Well, was behavior feeling spend from the volume quarter down. like company, just other consumer a view. of

trading in which the sales day adjust retail So There was quarter, we fourth in for or results. less one reported the our quarter also volumes. fourth that impacted brand don’t

meaningful QX that pull And into little into had QX -- bit So, of price of increase. that a impact. from from forward was QX ahead a there is big

muted is terribly we we’ve and after volume you obviously, we’re but not give I gone would that from year, volume a year, some behavior not saw through, perspective which this number price you increase not absolute our going that, tell because fall spring performance the after saw into the far we bouncing volume that improved back. we saw has and after dissimilar an where increase, Year-to-date than muted as a I’m the to trading

for I all I questions. captured So, of you. summarizes And kind that’s your hope -- that

Operator

Kevin of Our next from question comes Jefferies. Grundy

Kevin Grundy

to I just that; afternoon. Gavin, on just outlook, return longer-term drill could. made of Great. a And Thanks. me, Tracey, year. then you congrats one wanted Good and for everyone on a Two comment on the down good on capital. if

mind longer the growth with that’s does imply line one, that term? number two, one. top in just I I the that you it’s all of outlook. to sort what to drill Gavin, Maybe your higher Tracey. And growth argue optimism that But those follow-up forward that I two down, and bit noncash. guess, of line on understand Company for your sort then, around for first expects impairment the with share comment things. I’d you. price, that So a just Gavin, Thank you and expect a little going bottom maybe We Number have a mid-single-digit get just much some interest top of you. if of charge. EBT noted XXXX. relative not get We Also sort reconcile there’s reconcile on used. being wouldn’t rate discount the higher

Gavin Hattersley

Yes. Kevin. Okay,

basket putting P&L we point as our the has projects guidance our midterm in in brands the out additional expect through of environment come sold expect ad with we’re plans innovation what’s APAC, efficiency a of view the rebounding in what obviously, we a goods pipeline, point happening spend impact, as investment of in increase a more EMEA, pricing and in and cost our normalized from well. performance from as So look our total Canada Canada of that point an place of as XXXX, view, the we and from look at And we brand the years. at view, what

of a impairment, you There environment Well, a caution had are the second Tracey. How bit uncertain a the does us impairment? more gives what handle interest rate around guidance higher role… that. have part give little level was that and currently the a for I than there’s to confidence medium-term Obviously, a term, bit where that So, meaningful more think things near is we question? that the can at little

Tracey Joubert

Yes.

and costs. about the are you optimistic think really as inflationary you’re do So, we’re you’re -- the big impairment impact we’re then, we in and is exercise. Kevin, line America outlook cash The on remain Gavin a aware the everywhere, our input required seeing annual particular, the mathematical our rise big company, our an business cost, that the interest that performance the But to and line we future units, committed around sure bottom mentioned, growth. growth top mentioned, flow. of and XXXX. optimism seeing achieving to equation I that the for beyond as in driver, our And And it’s I’m

Gavin Hattersley

to was Plan, top in to bottom get we to Revitalization line started XXXX. So We that mean, did both, Kevin, when tie both, goal our I obviously, and the growth.

deliver in are that a that point our now of And with XXXX. to given brands structure. forward, view our consistent basis and company we we guiding overall where a going cost on to expect We’re from

question. a second said think you you I had

Kevin Grundy

Yes, No, that I’ll follow sense. Yes. makes up.

progress currents cross for debt can important, few past with going delivery made say, to monopolize forward chat I quick, over environment. offline. it’s tremendous rate. leverage the Tracey, in time. the higher have Gavin, would I not and I you extremely and Tracey real between But years, think But the discount then, volatile Just with better guys your Greg you optimism with

you. expense which leverage, So X.X I’ll where shareholders, seem the EPS stock the to in is leveraging. target much to very is your to interest share perspective, greater even given from return Thank it X.X line repurchase to we’ve returning a while you comment particularly now is a a accretive, greater near down on recently pass debt be would on Company Maybe would times bit times, seen the than cash on. trading? comment an for Board’s the and can be time

Tracey Joubert

we same. we’re allocation which the breweries, our And mentioned, our bottom We’ve Look, efficiencies. going always growth. Gavin are drive into business as Yes. Thanks, cost modernizing capital remain want got to our invest and our the business in We where upgrades savings delivering line in help and top priorities some in put to that money Kevin. breweries. sustainable

second The is bucket debt. reducing the

think made And shareholders. view. have flexibility desire third times, leverage your of returning much give X.X rating. and to of and is a point, have which more of allocation our ratio over now bucket, progress us investment-grade improve will then, we to this time have tremendous I cash capital the from a point given sort to We maintain And target

So, our dividend. we’ve raised in reinstating our dividend intention twice And it since increase that to sustainably is XXXX.

have models for influencing our have do that And a essentially continue we --, through grants. bigger, buyback Now, in aware anything an return of, employee our to with capital we’ll us, anti-dilution would conversations equity shareholders. we our the our But run of for those all allocation you’re program provide terms program greatest decisions Board. small we

Operator

Our Azer next & of Co. Cowen question comes from Vivien

Vivien Azer

Certainly, non-alcoholic? beyond year the for key dimensionalize seemingly versus would was the you from would your beyond Hey you shift. expand could beer Gavin, beer that. be perhaps you contributor contributions on medium-term positive continued your alcoholic hoping mix I to a could that But aspiration expect

Gavin Hattersley

XX% mean, It process. to progress we we’ve I Revitalization said, And our a XX% pillars and started taken above Thanks, Plan. of the Vivien. think record as Look, on Yes. was of I that, level premium made tremendous now beer our I core it of premiumize aggressively tenet actually we’ve our our beyond and was when a was portfolio. plan this to

brands obviously, Blue Moon So continued We’ve efforts Simply this and Peroni emerging brands and like and Chico Spiked Europe. Topo ZOA and in continue. in growth our like got space

Madrí. got said I As we’ve

grow. So, that premium. term we to to an NSR to out us from number there I continue area in certainly a almost a is above And third medium premium of the of expect is our above put come going would

So, our that mix. overall will improve certainly

both the that, with the coming top laid for. expectations Trail for really in spirits nice of Five have innovation Topo we’ve Chico high we’ve nice got but both On year, which Topo current also for in a space, we bottle, this of foundation Chico, Spirited a -- and in large

that would can part portfolio get part of all be to So, of larger portfolio, through ever above the P&L. premium ever larger the you has and an an our expect way obviously -- benefits our

Operator

ISI. Our next question comes of from Robert Ottenstein Evercore

Unidentified Analyst

This Robert. is for Greg on

quick on just we great. just on kind color a went just cost that, But please. the you maybe is one targets of quick question from new any through your a savings, kind what And million through that? Just then saving should that delivered Any you cost after which to above that. and $XXX then, follow-up is of follow-up and how the Thanks. here, outlook after

Tracey Joubert

take Thanks, I’ll question. Yes. that Greg.

yes, -- savings. were we million were happy are overdeliver that cost we we that $XXX very on So, able slightly of to

implemented we formal program we’re new savings internal that cost communicating have externally. obviously haven’t a we targets. But do Now,

way Coors. cost Molson just expect to a life it’s at of continue savings. We But,

in efficiencies improve like be to. seeking marketing our ways whether to always that We’re Gavin terms of areas production just spoke that other or

to for can to at continue we’ll we stage. formal program look cost ways savings, no So, this continue deliver but that

Unidentified Analyst

quick emerging Great. That your follow-up is a growth then, portfolio. on And just makes sense.

at $X brands that, guys. core the if the moved growth of If all obviously see which just the the over La you or some the other changes going billion versus went a -- for how sales driving you’re Thanks, of you you with like do Maybe of it’s about through could majority maybe things Colombe previously months. and and talk about past thinking of target some forward? target just few kind

Gavin Hattersley

volatile. NSR business. is drinks fairly out industry and challenging Greg. to in in could is Thanks, target that’s little a $X and La only remains those We from American a economic craft, Blake view, be sure, to the operating that of XXXX and There softness also of point our we’re goal. mark our Latin in billion political impacted slight our are which discontinuation our U.S. that But Truss rightly you U.S. Look, Colombe MSR the mindful because both business, challenged ambition. in And of our be point Tenth our environment business. economic we’re achieve to particularly, CBD obviously, headwinds and

We growth going at a or our objective in NSR be and with margins and top absolutely Not an going not line NSR, improve the space, targets as try all balance aspirations this our we’re division overall and to absolutely, costs. successful whole. deliver to any to efforts are our emerging

us, to market. both energy over full-strength drinks bottle Not the short-term and the spirits ZOA lot this Greg. which see to a in remarks; bringing on a of to years. side. strong brands ready-to-drink three how Spirited, in we’re We’ve We’ve a performance, is my and last And terms coming changes moving we’ve got we’re made scale in some learned also ZOA year. Topo So, the we I for opening play where mentioned Chico

we’ve I nice think -- made for has been beer in foundation us. has a the progress beyond laid

Operator

Our from question Morgan Stanley. next Eric Serotta comes of

Eric Serotta

The color us the but years the profit guidance terms Tracey. in and nowhere close phasing of for nothing Any were normal. First of the you year? delivery clearly could versus to few for give revenue last

So, these some judge you little unusual really bit stand versus of it’s tough a to where comparisons.

Chico. from And Gavin, for past then, the some particularly hard Topo how and you soft. great Topo has incremental at seltzer this are been year, innovation, particularly the you launch national contribution contribution as of course, you simply, had And looking the cycle Chico category really year, outsized innovation

So this year? about are incremental innovation you thinking how

Gavin Hattersley

for lots innovations can we mean year. I I Tracey, with I upside Simply the Eric. got take then the other the meet be of that demand we amazingly able will the take about we place of Thanks, second I’ll launched last one. year question we the to we process this in demand think to and you Look, I still meet Spiked We’ve where And first. in there’s reception that mean, packed positive, middle and launched the think as year. very able weren’t it. was were

well, with upside Simply coming. lots with great innovation as in So of Spiked, the that brand got Peach we’ve right, and coming

looking we’re at at looking way is -- innovations broadly. our flavor The we’re more

when any second than it we’re share of weeks. you We’ve hard number got includes share Topo Chico in supplier We’ve Vizzy. Chico. XX seltzer in together, So, seltzers, large X it growing other look Canada, more and the and the last And only FMBs at and grew but RTDs. includes X also we the those Topo fastest seltzers And got in brewer the with seltzer. hard growing segments

of with existing So, we we’ve just that innovations upside our launched. still lots got

I Peach extension as said, this for lot a we’re line largest year. in Spirited Spiked. Chico And launching We’ve got is Chico Topo awareness Topo nice less And Simply still the than its on a competitor. with

Chico lot Topo So, of to and a momentum got improve for the drive we think more awareness opportunity there. we’ve

Tracey, right? momentum, do cover digits. growing So, off already -- triple to you -- improving on that? momentum the want It’s maintain

Tracey Joubert

expect shipment of But don’t as look, always years. going mean, of to Yes. we and inventory swings levels. the quarter-to-quarter terms to in several phasing, past have have in the we’re seen I we magnitude shipments same our swings Eric, over have

about bit little a top that’s So, line. the

of back we’re to In slightly the half the in terms expect the moderate in be to for do expect and But still the our inflationary year. continue inflation year. and pressure cost, inflationary we the the we period, a impact an of cost and COGS cost headwind of

of don’t helps but you. yes, quarter-by-quarter that So, guidance, hopefully, we give sort

Operator

Thank you.

Our next Bernstein. Nadine question comes Sarwat from of

Nadine Sarwat

questions please. for Two me,

pack input full guidance. brand consumers consumer provide a seeing consumer you you on have to and cost headwinds What able baked be your is to it guidance? spoke the Could little to earlier another profit remarks, assumptions then, bit on you XXXX the first health anticipating of you more one consumers smaller Are also this my this your the Are that down-trading pricing question, type prepared The into your you from year color the or year? sizes? pack behavior? at you sizes. the out actively that underlying called offset the XXXX second trade just down And on about moment, of about down-trading fully will in

Gavin Hattersley

Thanks, Nadine. Tracey, take do you want guidance to the question?

Tracey Joubert

Yes.

mix. expect look, the the line as to and be pricing we do rate-driven, top Gavin XXXX said, from So benefiting

grow as I We’re per obviously said, we’ve and of to impact taken into and costs margin consumer own our business the hectoliter in we mindful expect also gross -- both both, consideration. But to inflationary units. costs, input the our that do

line. So margin expansion was... on the And I margin think that gross

Gavin Hattersley

Yes.

and Nadine, behavior. The consumers your consumer question, other around was of side

fast-moving seeing different any other good. not terribly than anything consumer I I’d overarchingly, think say we’re

the there. So industry no beer different is

not significant which our your other part portfolio, across question, trade observing the of in frankly, was the or down, We’re industry.

to a pack or it’s a of from XX that to view or consumers a to as mix XX contraction, a portfolio that from is in but ideal deal we that, in actually negative the we seeing to point I positive this Of a course, that comes, organization. point said a remarks, got our haven’t my it volume prepared seen are a perspective, from maybe time. we Obviously, trading at actually if think we’ve but with XX And XX XX down for X.

your question. So answers hopefully, that

Operator

you. Thank

Chris from comes question Fargo. next of Wells Carey Our

Chris Carey

to made Did a to COGS So, inflation be about and at fading. up specific this guess, -- you for or non-commodity per any into maybe your comment to COGS hectoliter these going at you’re stay But, a meant single-digit -- what trail there? of front to I freight. of hectoliter just bit costs and some inflation in commodities more conversion follow the the quickly you half And just wanted really about Can looking and then high ask you per and Tracey, mid- mean between you there? is just inflation perspective down then level of half? just think there rate you like that driving you what underlying, the I level back then a running, So question. and the this be kind

So clarify I to just wanted that.

Tracey Joubert

don’t Chris. per We hectoliter give cost guidance. Thanks, Yes.

didn’t I So, I is say the to in say inflation year. clarify, to expect moderate do at the back just want level. we this what did half But that I the of

sit we headwinds expect do but and half, period. forward for in in still We an the moderating inflationary in again, for So curves a see we what of the the year, driven back lot commodities. that’s on

Chris Carey

meant said year you when expansion, -- total margin for gross year? next you then, the enterprise And Okay.

Tracey Joubert

what margin gross -- both per so hectoliter expansion talking growth our I’m I Yes. is units business said. of in

Chris Carey

lead company gross expansion? margin And to would total that

Tracey Joubert

Yes…

Chris Carey

Great. Yes.

Thanks run much. implies your that. for and I single. at if just down G&A high clarifying a so on XX-K, it Then about Okay. -- marketing Thanks rate look up obviously

the because down be think was up very clear marketing the SKUs, and of were investing would be I discontinued year. you’d marketing you next and that

costs G&A, so so item? see And can talk just everything how that are much. inflation, And next there’s so next you that’s ability wage G&A rate, And -- year, your we just very to clear. to year? bit where expect marketing manage or But you talking ease would about underlying you that excluding line that another year there’s for a more conceptually now? So, about thanks

Tracey Joubert

Yes.

to manage well, we’ll invest business. innovations. our said We’ll particularly we Gavin G&A manage related G&A, continue to invest G&A. as I brands brands, look, I’ve really our specifically give to continue guidance. core costs behind think, our But the we’ll our We the said, and and to don’t So, and continue behind

than So, can’t that, Chris, give without more guidance. giving the much you I

Operator

you. Thank

comes Our Filippo of from Citi. next question Falorni

Filippo Falorni

on beer industry. U.S. question First the

improved volume QX, in performance industry January. soft like mentioned and it in sounded You

the share those Coors your done performance a two year? you. assuming Light balance lot question you can in the and then, the XXXX? second brands share, Miller progress market are of gains for And both in expectations So, of talk you the improving Thank about Lite, you’ve of for on share market

Gavin Hattersley

Thanks, we compared year in of in Yes, rebound this performance the Filippo. experienced year. fourth first quarter what in part the we last have seen a to of volume

full I brewing I fact than think saw think more I’d around from is healthier in to share far driven. around contract guidance bit are performance in in Coors concerned, mean, you years. trajectory that clarification in they rate top And comments second yes, and of and Canada, you the point volume been the XXXX. and I than point in Light we Lite point is posted gave of rightly be Lite both that a out as driven that as Miller that U.S. for a We Light over that little grew they in half. year grew Miller view. dollar to Coors upward Tracey’s our continues the I And NSR NSR a the strong their And they’ve combined strongest decade. line

for You. Coors on those and owns Light Beer we’ve position think done foundations Light Coors programs to and differentiated a Lite’s Miller very Miller I brand with that excellent we’ve Miller So, owns Lite of beer an built very of clear And marketing Point job and Light, strong obviously, refreshment, ensuring Chill taste. Lite consistent Coors Made have

of actually and largest chain execution strong our across both Light and that, Bud retailers. display for And And got then sales chain we’ve on top of we’ve outpaced grocery. in feature seven

of all share gains translates So, our into versus that good competitors.

in we’ll Bowl, got was Super with that, before Bowl. It leverage the just Super we’ve really wasn’t a XXXX, a for the buildup that which starting and to think time. post programs for strong months I point continue several

away dollars position that well, going How into share got for our So, we’ve the let’s that we -- the don’t to and from pretty hard the versus And gains, competitors. shy see. challenger us. we’re challenger it worked in translates being make for wait

Operator

from of Gajrawala comes question Kaumil next Credit Our Suisse.

Kaumil Gajrawala

Can what -- how volumes? about thinking with you given bit looking can you’re you capacity talk observing about a a forward, bit we’re and cap talk utilization

Gavin Hattersley

it, giving sentence. first were part of last you us it your like but of missed part I first part complement, of the sounded your the Kaumil,

going I’m to we’ll that, it. with run So I think take and

we perfectly. terms of As so, concerned, far it malt need view, it, from as capacity where we’re capacity right, and is of -- our of variety point we think Look, a capability. that -- part flavored I capacity I heard in seltzers, beverages, our expanding packing

there. our breweries So don’t at in capacity in Golden good a We And our modernization specifics the we’re the last current doing We’ve and and project utilization, but U.S. our lot. Canada, on we capacity utilization. its We we’re new few expanding about feel breweries just over state-of-the-art built closed two brewery. utilization two improved multiyear provide years. that a

ways So, that, look for more how we’re And line efficient of optimize view happy at point a can always brewery from of our within we look course, and with we footprint. to that. be

Operator

today Thank from Christian you. Junquera of comes final And Bank our question of America.

Christian Junquera

ready-to-drink XXXX. and category cocktail for Bryan would seltzer taking for could you share for helpful outlook on Christian It have if for You hard Spillane. Thanks the our be your question.

Gavin Hattersley

that -- we’re is the we’re a at now Thanks, segment. I stay. And we answer there, I a right? we’ve here to Christian. in flavors premiumization said which an from specific shied earlier foundational haven’t in seltzers the looks part think it’s that, that of our said categories, But to shied seeing seltzers on question, mean, broadly. strategy as guidance away we beer challenging hard because hard Look, why little is saying away trends are giving what overall they’re Having from new about more realistic and

only but So, seltzers, it’s RTDs. not it’s FMBs and

got launched in launching Simply year. Spiked for Arnold us, Seltzer. first hot to continue earlier, In of well. as us also We behind has Spiked. the been strong X. you this XXXX. Chico Topo Chico said as since And a X can said tea share of I quarter Topo proposition growing is summer Spirited -- with launched Chico as number Palmer Coors it just success massive in Vizzy We’ve a is And that the country, we’re expect and earlier, I Vizzy Topo on Chico Topo Canada, so, nicely the we’re in number focusing

So, to we’ve momentum flavor. in we’re XXXX. preferences. from and And think And it portfolio diversified allows win consumer to I and to benefit confident we we us even further that got in both saw regionally. the shifting intend nationally approach to XXXX, the accelerate It the in

Operator

I’ll currently we At have back questions. over for this Hattersley remarks. you. no hand to time, Gavin any further closing Thank

Gavin Hattersley

will hand I it to And over Greg.

Greg Tierney

All us. right. you spending Very I appreciate all good. time operator. Thanks, Gavin. Thanks, with

the you have next and able with were did year of we -- you ask to were our look come. thanks If additional for to Investor you And follow not up great over today, that Relations or talking ask that not Have please with to days questions call. in today’s to able as many with everybody day. forward progresses. participating But weeks the that, a team

Operator

and Ladies thank for gentlemen, call. joining you today’s

disconnect You lines. now your may

Molson Coors Beverage (TAP) 21 Feb 232022 Q4 Earnings call transcript