Third Quarter Net Sales Declined 7.8% and Income Before Income
Taxes Decreased 39.1% or 8.7% on an Underlying Basis in Constant
Currency
Continues to Return Cash to Shareholders Through Dividend and
Share Repurchases of $153 Million
Reaffirms 2024 Full Year Guidance for Bottom-Line Growth
including Narrowing to the High End for Underlying Diluted Earnings
per Share While Reducing Top-Line Guidance Reflecting Macroeconomic
Challenges in the U.S.
Molson Coors Beverage Company ("MCBC," "Molson Coors" or "the
Company") (NYSE: TAP, TAP.A; TSX: TPX.A, TPX.B) today reported
results for the 2024 third quarter.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20241107763285/en/
2024 THIRD QUARTER FINANCIAL HIGHLIGHTS1
- Net sales decreased 7.8% reported.
- U.S. GAAP income before income taxes of $331.4 million
decreased 39.1% reported.
- Underlying (Non-GAAP) income before income taxes of $479.5
million decreased 8.7% in constant currency.
- U.S. GAAP net income attributable to MCBC of $199.8 million,
$0.96 per share on a diluted basis. Underlying (Non-GAAP) diluted
earnings per share of $1.80 per share decreased 6.2%.
____________________
1
See Appendix for definitions and
reconciliations of non-GAAP financial measures including constant
currency.
CEO AND CFO PERSPECTIVES
In the third quarter of 2024, net sales declined 7.8% and
underlying income before income taxes declined 8.7% on a constant
currency basis. Our EMEA&APAC business unit performed strongly
as did Canada within our Americas business unit. However, the U.S.
was challenged with the macroeconomic environment along with
anticipated unfavorable shipment timing and the wind down of a
contract brewing agreement contributing to a U.S. financial volume
decline of 17.9%.
Given the impacts the macroeconomic environment has had on the
U.S. beer industry and our U.S. financial volumes during this
year's peak selling season, we are adjusting our 2024 top-line
guidance to down approximately 1% from previous guidance of up low
single-digits, both on a constant currency basis. However, we are
reaffirming our underlying income (loss) before income taxes on a
constant currency basis for the year because of an improved cost
outlook related to packaging materials, transportation and general
and administrative expenses. And we are reaffirming our underlying
diluted earnings per share guidance of mid single-digit growth, but
narrowing to the higher end of the range, driven by the accelerated
pace of our share repurchase program.
Despite the U.S. macroeconomic environment, our core power
brands remain healthy. According to Circana, in the third quarter
in the U.S., Coors Light, Miller Lite and Coors Banquet retained a
substantial portion of their combined volume share gains of
industry versus a year ago when we saw strong share increases.
These brands were up 1.9 share points compared to the third quarter
of 2022.
In Canada, broad strength across our portfolio fueled strong
revenue and share performance amid a challenging backdrop in the
third quarter.
In EMEA&APAC, continued growth of our highly successful
above premium innovation Madri in the U.K., and market leader
Ožujsko in Croatia, along with the successful launch of legacy
brand Caraiman in Romania, helped to offset some impact of the
increasingly competitive environment in the U.K.
With strong cash flow, we continued to invest in our business,
supporting our brands globally and building capabilities that help
drive long-term, sustainable and profitable growth. We did this
while returning $717 million in cash to shareholders in the first
nine months through both dividends and our share repurchase
program.
Gavin Hattersley, President and Chief
Executive Officer Statement:
"We have continued to advance our
Acceleration Plan and remain confident in our long-term growth
potential. While the U.S. industry was softer than expected during
the summer, our core power brands remain strong. Our businesses in
EMEA&APAC and in Canada are performing strongly. Not only are
they supporting our premiumization goals, but they serve as proven
examples to the U.S. where we have targeted plans in both above
premium beer and beyond beer. And underpinning all of this are our
robust capabilities that fuel insights-led innovation, commercial
effectiveness, and supply chain efficiencies - all of which help
drive sustained, long-term profitable growth."
Tracey Joubert, Chief Financial Officer
Statement:
"We are reaffirming our bottom-line growth
and Underlying Free Cash Flow guidance for this year, while
continuing to invest in our business to achieve our long-term
financial and strategic goals and return cash to shareholders.
While the U.S. shipment timing and exit of contract brewing volume
will continue to impact us in the fourth quarter, these near-term
headwinds do not diminish our confidence in our long-term growth
algorithm."
CONSOLIDATED PERFORMANCE - THIRD
QUARTER 2024
For the Three Months
Ended
($ in millions, except per share data)
(Unaudited)
September 30, 2024
September 30, 2023
Reported Increase
(Decrease)
Foreign Exchange
Impact
Constant Currency Increase
(Decrease)(1)
Net sales
$
3,042.7
$
3,298.4
(7.8
)%
$
1.2
(7.8
)%
U.S. GAAP income (loss) before income
taxes
$
331.4
$
544.0
(39.1
)%
$
(0.1
)
(39.1
)%
Underlying income (loss) before income
taxes(1)
$
479.5
$
525.4
(8.7
)%
$
(0.4
)
(8.7
)%
U.S. GAAP net income (loss)(2)(3)
$
199.8
$
430.7
(53.6
)%
Per diluted share
$
0.96
$
1.98
(51.5
)%
Underlying net income (loss)(1)
$
374.4
$
418.5
(10.5
)%
Per diluted share
$
1.80
$
1.92
(6.2
)%
Financial volume(4)
20.629
23.532
(12.3
)%
Brand volume(4)
21.332
22.322
(4.4
)%
For the Nine Months
Ended
($ in millions, except per share data)
(Unaudited)
September 30, 2024
September 30, 2023
Reported Increase
(Decrease)
Foreign Exchange
Impact
Constant Currency Increase
(Decrease)(1)
Net sales
$
8,891.4
$
8,911.3
(0.2
)%
$
1.6
(0.2
)%
U.S. GAAP income (loss) before income
taxes
$
1,156.7
$
1,087.0
6.4
%
$
(5.1
)
6.9
%
Underlying income (loss) before income
taxes(1)
$
1,269.5
$
1,185.4
7.1
%
$
(5.2
)
7.5
%
U.S. GAAP net income (loss)(2)(3)
$
834.6
$
845.6
(1.3
)%
Per diluted share
$
3.96
$
3.89
1.8
%
Underlying net income (loss)(1)
$
981.4
$
922.0
6.4
%
Per diluted share
$
4.65
$
4.24
9.7
%
Financial volume(4)
61.033
63.923
(4.5
)%
Brand volume(4)
59.946
61.325
(2.2
)%
(1)
Represents income (loss) before
income taxes and net income (loss) attributable to MCBC adjusted
for non-GAAP items. See Appendix for definitions and
reconciliations of non-GAAP financial measures including constant
currency.
(2)
Net income (loss) attributable to
MCBC.
(3)
During the three months ended
September 30, 2024, we identified certain errors in the historical
accounting for noncontrolling interest (“NCI”) with redemption
features outside of our control under the terms of our Cobra Beer
Partnership, Ltd. ("Cobra U.K." or "CBPL") partnership agreement
and within certain other immaterial investments. Since the
inception of these partnerships dating back to as early as 2002, we
had historically accounted for the NCI within permanent equity with
no adjustments to redemption value. Rather, our partners' shares
should have been presented as redeemable NCI through the date of
exercise of the redemption feature, with adjustments to the
redemption value being recorded each reporting period as necessary.
Specific to CBPL, since the option redemption price was not at fair
value, the historical adjustments should have been recorded to net
(income) loss attributable to noncontrolling interests in the
unaudited condensed consolidated statements of operations, based on
our accounting policy to reflect the entire change in the
redemption amount as a deemed dividend and earnings per share
adjustment (resulting from the redemption feature) as part of the
attribution of consolidated net income to the noncontrolling
interest (as reported on the face of the income statement).
Furthermore, in March 2024, our CBPL partner exercised its put
option requiring us to acquire their 49.9% ownership interest.
Since the exercise was irrevocable, the NCI became mandatorily
redeemable at that time and should have been reclassified to
accounts payable and other current liabilities. These errors
resulted in a reclassification of $65 million from noncontrolling
interests, of which $49 million was reclassified to accounts
payable and other current liabilities for CBPL and $16 million was
reclassified to redeemable noncontrolling interests for the other
immaterial investments in our unaudited condensed consolidated
balance sheets. In addition, the errors resulted in a cumulative
understatement of $34.5 million to net income attributable to NCI
and a corresponding cumulative overstatement to net income
attributable to MCBC in our unaudited condensed consolidated
statements of operations. The errors were corrected through an out
of period adjustment as of and for the three months ended September
30, 2024. Management assessed the impact of the errors and deemed
them to not be material to any prior periods or to forecasted
results for 2024. In October 2024, we obtained a final redemption
value that would be due to acquire the 49.9% NCI of the CBPL
partnership. As a result, during the three months ended September
30, 2024, we recorded an adjustment of $45.8 million to increase
the mandatorily redeemable NCI liability to the final redemption
value, with the adjustment recorded to interest expense.
The CBPL buyout was finalized on
October 21, 2024, resulting in a cash payment of $89 million which
will be recorded as a cash outflow from financing activities in the
consolidated statement of cash flows in the fourth quarter of
2024.
(4)
See Worldwide and Segmented Brand
and Financial Volume in the Appendix for definitions of financial
volume and brand volume as well as the reconciliation from
financial volume to brand volume.
QUARTERLY CONSOLIDATED HIGHLIGHTS (VERSUS THIRD QUARTER 2023
RESULTS)
- Net sales: The following table highlights the drivers of
the change in net sales for the three months ended September 30,
2024 compared to September 30, 2023 (in percentages):
Net Sales Drivers
(unaudited)
Financial volume
(12.3
%)
Price and sales mix
4.5
%
Currency
—
%
Total consolidated net sales
(7.8
%)
Net sales decreased 7.8%, driven by lower
financial volumes, partially offset by favorable price and sales
mix.
Financial volumes decreased 12.3%, primarily
due to lower shipments including lower contract brewing volumes in
the Americas. Brand volumes decreased 4.4%, including a 5.4%
decrease in the Americas as well as a 1.8% decrease in
EMEA&APAC.
Price and sales mix favorably impacted net
sales by 4.5%, primarily due to increased net pricing as well as
favorable sales mix for both segments, including as a result of
lower contract brewing volumes in the U.S.
- Cost of goods sold ("COGS"): decreased 5.7% on a
reported basis, primarily due to lower financial volumes, partially
offset by higher cost of goods sold per hectoliter. COGS per
hectoliter: increased 7.5% on a reported basis, primarily due
to volume deleverage in the Americas segment, unfavorable mix
driven by lower contract brewing volumes in the Americas segment,
unfavorable changes in our unrealized mark-to-market commodity
derivative positions of $34.4 million and cost inflation related to
materials and manufacturing expenses, partially offset by cost
savings initiatives. Underlying COGS per hectoliter:
increased 5.6% in constant currency, primarily due to volume
deleverage in the Americas segment, unfavorable mix driven by lower
contract brewing volumes in the Americas segment and cost inflation
related to materials and manufacturing expenses, partially offset
by cost savings initiatives.
- Marketing, general & administrative ("MG&A"):
decreased 8.3% on a reported basis, primarily due to lower
marketing investment resulting from cycling higher spend levels in
the prior year and lower incentive compensation expense.
Underlying MG&A: decreased 8.4% in constant
currency.
- U.S. GAAP income (loss) before income taxes: U.S. GAAP
income before income taxes decreased 39.1% on a reported basis,
primarily due to lower financial volumes, higher other operating
expense as a result of the exit of our U.S. craft businesses and
related restructuring costs, higher interest expense driven by a
$45.8 million adjustment to increase our mandatorily redeemable NCI
liability to the final redemption value for CBPL, unfavorable
changes in our unrealized mark-to-market commodity derivative
positions of $34.4 million, a settlement loss of $34.0 million
recorded as a result of Canadian pension plan annuity purchases and
cost inflation related to materials and manufacturing expenses,
partially offset by increased net pricing, lower MG&A expense
and favorable sales mix.
- Underlying income (loss) before income taxes: Underlying
income before income taxes decreased 8.7% in constant currency,
primarily due to lower financial volumes and cost inflation related
to materials and manufacturing expenses, partially offset by
increased net pricing, lower MG&A expenses and favorable sales
mix.
- Effective Tax Rate and Underlying Effective Tax
Rate
(Unaudited)
For the Three Months
Ended
September 30, 2024
September 30, 2023
U.S. GAAP effective tax rate
31
%
21
%
Underlying effective tax rate(1)
24
%
20
%
(1) See Appendix for definitions
and reconciliations of non-GAAP financial measures.
The increase in our third quarter U.S.
GAAP effective tax rate was in part due to a $16.4
million valuation allowance recorded year to date on deferred tax
assets. The divestment of certain of our U.S. craft businesses in
the third quarter of 2024 resulted in the realization of a capital
loss for U.S. tax purposes. We believe it is more likely than not
that the deferred tax asset generated by the capital loss will not
be recognized, resulting in the valuation allowance recorded. The
higher effective tax rate was also due to the $45.8 million
increase in the mandatorily redeemable NCI liability of CBPL to the
final redemption value in the third quarter of 2024, which was
recorded to interest expense and is non-deductible for tax
purposes. Finally, the higher effective tax rate was due to a
decrease in discrete tax benefit.
The increase in our third quarter
Underlying effective tax rate was primarily due to a
decrease in discrete tax benefit.
- Net income (loss) attributable to MCBC per diluted
share: Net income attributable to MCBC per diluted share
declined 51.5% primarily due to a decrease in U.S. GAAP income
before income taxes, a $34.5 million out of period adjustment to
net income (loss) attributable to noncontrolling interests
described above and an increase in the effective tax rate,
partially offset by a decrease in the weighted average of diluted
shares outstanding driven by share repurchases.
- Underlying net income (loss) attributable to MCBC per
diluted share: Underlying net income attributable to MCBC per
diluted share declined 6.2% primarily due to a decrease in
underlying income before income taxes as well as an increase in the
underlying effective tax rate, partially offset by a decrease in
the weighted average of diluted shares outstanding driven by share
repurchases.
QUARTERLY SEGMENT HIGHLIGHTS (VERSUS THIRD QUARTER 2023
RESULTS)
Americas Segment Overview
The following table highlights the Americas segment results for
the three and nine months ended September 30, 2024 compared to
September 30, 2023.
For the Three Months
Ended
($ in millions, except per share data)
(Unaudited)
September 30, 2024
September 30, 2023
Reported % Change
FX Impact
Constant Currency %
Change(2)
Net sales(1)
$
2,345.0
$
2,633.4
(11.0
)
$
(7.4
)
(10.7
)
Income (loss) before income taxes(1)
$
353.8
$
483.5
(26.8
)
$
(1.5
)
(26.5
)
Underlying income (loss) before income
taxes(1)(2)
$
419.8
$
494.1
(15.0
)
$
(1.5
)
(14.7
)
For the Nine Months
Ended
($ in millions, except per share data)
(Unaudited)
September 30, 2024
September 30, 2023
Reported % Change
FX Impact
Constant Currency %
Change(2)
Net sales(1)
$
7,066.3
$
7,194.1
(1.8
)
$
(13.5
)
(1.6
)
Income (loss) before income taxes(1)
$
1,161.5
$
1,204.2
(3.5
)
$
(3.9
)
(3.2
)
Underlying income (loss) before income
taxes(1)(2)
$
1,228.3
$
1,215.6
1.0
$
(3.9
)
1.4
The reported percent change and the constant currency percent
change in the above table are presented as (unfavorable) favorable.
(1)
Includes gross inter-segment volumes,
sales and purchases, which are eliminated in the consolidated
totals.
(2)
Represents income (loss) before income
taxes adjusted for non-GAAP items. See Appendix for definitions and
reconciliations of non-GAAP financial measures including constant
currency.
Americas Segment Highlights (Versus Third Quarter 2023
Results)
- Net sales: The following table highlights the drivers of
the change in net sales for the three months ended September 30,
2024 compared to September 30, 2023 (in percentages):
Net Sales Drivers
(unaudited)
Financial volume
(15.6
%)
Price and sales mix
4.9
%
Currency
(0.3
%)
Total Americas net sales
(11.0
%)
Net sales decreased 11.0% driven by lower
financial volumes and unfavorable foreign currency impacts,
partially offset by favorable price and sales mix.
Financial volumes decreased 15.6% primarily
due to the timing of U.S. shipments as well as lower U.S. volumes
due to the macroeconomic environment resulting in industry
softness. In addition, of the 15.6% decrease, 260bps relates to
lower contract brewing volumes in the U.S. related to the wind down
of a contract brewing arrangement leading up to the termination by
the end of 2024. Americas brand volumes decreased 5.4%, including a
6.2% decrease in the U.S., primarily due to cycling double digit
growth in our core power brands and lower above premium volumes,
partially offset by one additional trading day in the current
quarter and favorable holiday timing. Canada brand volumes
increased 3.9% driven by our above premium portfolio.
Price and sales mix favorably impacted net
sales by 4.9% primarily due to increased net pricing and favorable
sales mix as a result of lower contract brewing volumes.
- U.S. GAAP income (loss) before income taxes: U.S. GAAP
income before income taxes declined 26.8% on a reported basis
primarily due to lower financial volumes, higher other operating
expense as a result of the exit of our U.S. craft businesses and
related restructuring costs and cost inflation related to materials
and manufacturing expenses, partially offset by lower MG&A
expense, increased net pricing, favorable sales mix and cost
savings initiatives. Lower MG&A expense was driven by lower
marketing spend resulting from the cycling of higher spend levels
in the prior year and lower incentive compensation expense.
- Underlying income (loss) before income taxes: Underlying
income before income taxes declined 14.7% in constant currency,
primarily due to lower financial volumes and cost inflation related
to materials and manufacturing expenses, partially offset by lower
MG&A expense, increased net pricing, favorable sales mix and
cost savings initiatives.
EMEA&APAC Segment Overview
The following table highlights the EMEA&APAC segment results
for the three and nine months ended September 30, 2024 compared to
September 30, 2023.
For the Three Months
Ended
($ in millions, except per share data)
(Unaudited)
September 30, 2024
September 30, 2023
Reported % Change
FX Impact
Constant Currency %
Change(2)
Net sales(1)
$
704.4
$
670.4
5.1
$
8.6
3.8
Income (loss) before income taxes(1)
$
51.6
$
67.5
(23.6
)
$
1.0
(25.0
)
Underlying income (loss) before income
taxes(1)(2)
$
98.0
$
69.1
41.8
$
0.9
40.5
For the Nine Months
Ended
($ in millions, except per share data)
(Unaudited)
September 30, 2024
September 30, 2023
Reported % Change
FX Impact
Constant Currency %
Change(2)
Net sales(1)
$
1,842.4
$
1,729.5
6.5
$
15.1
5.7
Income (loss) before income taxes(1)
$
121.8
$
106.3
14.6
$
(2.8
)
17.2
Underlying income (loss) before income
taxes(1)(2)
$
161.7
$
111.5
45.0
$
(2.6
)
47.4
The reported percent change and the constant currency percent
change in the above table are presented as (unfavorable) favorable.
(1)
Includes gross inter-segment
volumes, sales and purchases, which are eliminated in the
consolidated totals.
(2)
Represents income (loss) before
income taxes adjusted for non-GAAP items. See Appendix for
definitions and reconciliations of non-GAAP financial measures
including constant currency.
EMEA&APAC Segment Highlights (Versus Third Quarter 2023
Results)
- Net sales: The following table highlights the drivers of
the change in net sales for the three months ended September 30,
2024 compared to September 30, 2023 (in percentages):
Net Sales Drivers
(unaudited)
Financial volume
(3.0
%)
Price and sales mix
6.8
%
Currency
1.3
%
Total EMEA&APAC net sales
5.1
%
Net sales increased 5.1%, driven by favorable
price and sales mix as well as favorable foreign currency impacts,
partially offset by lower financial volumes. Net sales increased
3.8% in constant currency.
Financial volumes decreased 3.0% and brand
volumes decreased 1.8%, primarily driven by lower volumes in
Western Europe due to soft market demand and high promotional
activity from the competition.
Price and sales mix favorably impacted net
sales by 6.8%, primarily due to increased net pricing and favorable
sales mix driven by premiumization and favorable channel mix.
- U.S. GAAP income (loss) before income taxes: U.S. GAAP
income before income taxes declined 23.6% on a reported basis,
primarily due to higher interest expense as a result of the
adjustment of $45.8 million to increase our mandatorily redeemable
NCI liability to the final redemption value related to the CBPL
buyout, lower financial volumes and higher MG&A expense,
partially offset by increased net pricing and favorable sales
mix.
- Underlying income (loss) before income taxes: Underlying
income before income taxes improved 40.5% in constant currency,
primarily due to increased net pricing and favorable sales mix,
partially offset by lower financial volumes and higher MG&A
expense.
CASH FLOW AND LIQUIDITY HIGHLIGHTS
- U.S. GAAP cash from operations: Net cash provided by
operating activities was $1,415.8 million for the nine months ended
September 30, 2024 which decreased $188.7 million compared to the
prior year, primarily due to the unfavorable timing of working
capital, partially offset by higher net income adjusted for
non-cash addbacks and the timing of income taxes paid. The
unfavorable timing of working capital was primarily driven by the
timing of cash paid for our payables as well as higher payments for
2023 annual incentive compensation, partially offset by the timing
of cash receipts.
- Underlying free cash flow: Cash generated of $856.0
million for the nine months ended September 30, 2024 represents a
decrease in cash provided of $265.6 million from the prior year,
which was primarily due to lower net cash provided by operating
activities and an increase in capital expenditures driven by the
timing of capital projects.
- Debt: Upon maturity on July 15, 2024, we repaid our EUR
800 million 1.25% senior notes using the proceeds from our EUR 800
million 3.8% senior notes issued on May 29, 2024 and cash on hand.
Total debt as of September 30, 2024 was $6,240.7 million and cash
and cash equivalents totaled $1,021.7 million, resulting in net
debt of $5,219.0 million and a net debt to underlying EBITDA ratio
of 2.10x. As of September 30, 2023, our net debt to underlying
EBITDA ratio was 2.23x.
- Dividends: We paid cash dividends of $279.4 million and
$266.7 million for the nine months ended September 30, 2024 and
September 30, 2023, respectively.
- Share Repurchase Program: We paid $437.4 million and
$60.9 million, including brokerage commissions, for share
repurchases during the nine months ended September 30, 2024 and
September 30, 2023, respectively. The current year share
repurchases were made under the share repurchase program approved
on September 29, 2023 and the prior year share repurchases were
made under the share repurchase program approved on February 17,
2022.
2024 OUTLOOK
As a result of the impact of the macroeconomic environment on
the U.S. beer industry and on our volumes during this year's peak
selling season, we are adjusting our full year 2024 top-line
guidance. We continue to expect to achieve the remaining targets
for the full year 2024. However, the inherent uncertainties and
challenges that exist in the U.S. macroeconomic environment could
continue to impact our financial performance.
- Net Sales: Approximate 1% decline versus 2023 on a
constant currency basis from our previous guidance of low
single-digit increase versus 2023 on a constant currency basis. The
adjustment is due to the softness in the U.S. beer industry over
the peak selling season.
- Underlying income (loss) before income taxes: mid
single-digit increase compared to 2023 on a constant currency
basis.
- Underlying diluted earnings per share: mid single-digit
increase compared to 2023 but narrowing to the high end of the
range.
- Capital expenditures: $750 million incurred, plus or
minus 5%.
- Underlying free cash flow: $1.2 billion, plus or minus
10%.
- Underlying depreciation and amortization: $700 million,
plus or minus 5%.
- Underlying net interest income (expense), net: $210
million expense, plus or minus 5%.
- Underlying effective tax rate: in the range of 23% to
25% for 2024.
These targets are based on the following key considerations:
- In the U.S., our sales to wholesalers were deliberately ahead
of sales to retailers by about 1.1 million hectoliters in the first
half of the year as compared to sales to wholesalers being behind
sales to retailers by about 0.4 million in the first half of 2023.
Of the 1.1 million hectoliters, 0.9 million hectoliters reversed in
the third quarter. As such, we expect sales to retailers to outpace
sales to wholesalers by about 0.2 million hectoliters in the fourth
quarter.
- We expect a remaining headwind of about 0.5 million hectoliters
to Americas financial volume related to the termination of the
Pabst contract brewing agreement at year end.
- Underlying COGS per hectoliter are expected to be higher in
full year 2024 as compared to full year 2023. This is due to
expected continued, albeit moderating inflation, mix impacts from
the wind down of contract brewing volume and volume deleverage
related to the U.S. shipment drivers previously mentioned.
- MG&A expense is expected to be lower than 2023 as we cycle
both higher marketing investment which was up approximately $50
million in the fourth quarter last year to support the momentum in
our brands, as well as higher incentive compensation in the prior
year.
SUBSEQUENT EVENTS
The CBPL buyout was finalized on October 21, 2024, resulting in
a cash payment of $89 million which will be recorded as a cash
outflow from financing activities in the consolidated statements of
cash flows in the fourth quarter of 2024.
In October 2024, we increased our investment in ZOA Energy, LLC
("ZOA") for cash consideration of $53 million, bringing our
ownership interest to 51% subsequent to the closing of the
transaction. The transaction will be recorded as a business
combination, and ZOA will be included in our consolidated financial
statements from the date of acquisition within the Americas
reporting segment.
NOTES
Unless otherwise indicated in this release, all $ amounts are in
U.S. Dollars, and all quarterly comparative results are for the
Company’s third quarter ended September 30, 2024 compared to the
third quarter ended September 30, 2023. Some numbers may not sum
due to rounding.
2024 THIRD QUARTER INVESTOR CONFERENCE CALL
Molson Coors Beverage Company will conduct an earnings
conference call with financial analysts and investors at 8:30 a.m.
Eastern Time today to discuss the Company’s 2024 third quarter
results. The live webcast will be accessible via our website,
ir.molsoncoors.com. An online replay of the webcast is expected to
be posted within two hours following the live webcast. The Company
will post this release and related financial statements on its
website today.
OVERVIEW OF MOLSON COORS BEVERAGE COMPANY
For more than two centuries, Molson Coors Beverage Company has
brewed beverages that unite people to celebrate all life’s moments.
From our core power brands Coors Light, Miller Lite, Coors Banquet,
Molson Canadian, Carling and Ožujsko to our above premium brands
including Madri Excepcional, Staropramen, Blue Moon Belgian White
and Leinenkugel’s Summer Shandy, to our economy and value brands
like Miller High Life and Keystone Light, we produce many beloved
and iconic beers. While our Company's history is rooted in beer, we
offer a modern portfolio that expands beyond the beer aisle as
well, including flavored beverages like Vizzy Hard Seltzer, spirits
like Five Trail whiskey and non-alcoholic beverages. As a business,
our ambition is to be the first choice for our people, our
consumers and our customers, and our success depends on our ability
to make our products available to meet a wide range of consumer
segments and occasions.
To learn more about Molson Coors Beverage Company, visit
molsoncoors.com.
ABOUT MOLSON COORS CANADA INC.
Molson Coors Canada Inc. ("MCCI") is a subsidiary of Molson
Coors Beverage Company. MCCI Class A and Class B exchangeable
shares offer substantially the same economic and voting rights as
the respective classes of common shares of MCBC, as described in
MCBC’s annual proxy statement and Form 10-K filings with the U.S.
Securities and Exchange Commission. The trustee holder of the
special Class A voting stock and the special Class B voting stock
has the right to cast a number of votes equal to the number of then
outstanding Class A exchangeable shares and Class B exchangeable
shares, respectively.
FORWARD-LOOKING STATEMENTS
This press release includes “forward-looking statements” within
the meaning of the U.S. federal securities laws. Generally, the
words "expects," "intend," "goals," "plans," "believes,"
"continues," "may," "anticipate," "seek," "estimate," "outlook,"
"trends," "future benefits," "potential," "projects," "strategies,"
"implies," and variations of such words and similar expressions are
intended to identify forward-looking statements. Statements that
refer to projections of our future financial performance, our
anticipated growth and trends in our businesses, and other
characterizations of future events or circumstances are
forward-looking statements, and include, but are not limited to,
statements under the headings "CEO and CFO Perspectives" and "2024
Outlook," with respect to, among others, expectations of cost
inflation, limited consumer disposable income, consumer
preferences, overall volume and market share trends, pricing
trends, industry forces, cost reduction strategies, shipment levels
and profitability, the sufficiency of capital resources,
anticipated results, expectations for funding future capital
expenditures and operations, effective tax rate, debt service
capabilities, timing and amounts of debt and leverage levels,
Preserving the Planet and related initiatives and expectations
regarding future dividends and share repurchases. In addition,
statements that we make in this press release that are not
statements of historical fact may also be forward-looking
statements.
Although the Company believes that the assumptions upon which
its forward-looking statements are based are reasonable, it can
give no assurance that these assumptions will prove to be correct.
Important factors that could cause actual results to differ
materially from the Company’s historical experience, and present
projections and expectations are disclosed in the Company’s filings
with the Securities and Exchange Commission (“SEC”), including the
risks discussed in our filings with the SEC, including our most
recent Annual Report on Form 10-K and our Quarterly Reports on Form
10-Q. All forward-looking statements in this press release are
expressly qualified by such cautionary statements and by reference
to the underlying assumptions. You should not place undue reliance
on forward-looking statements, which speak only as of the date they
are made. We do not undertake to update forward-looking statements,
whether as a result of new information, future events or otherwise,
except as required by law.
MARKET AND INDUSTRY DATA
The market and industry data used, if any, in this press release
are based on independent industry publications, customer specific
data, trade or business organizations, reports by market research
firms and other published statistical information from third
parties, including Circana (formerly Information Resources, Inc.)
for U.S. market data and Beer Canada for Canadian market data
(collectively, the “Third Party Information”), as well as
information based on management’s good faith estimates, which we
derive from our review of internal information and independent
sources. Such Third Party Information generally states that the
information contained therein or provided by such sources has been
obtained from sources believed to be reliable.
APPENDIX
STATEMENTS OF OPERATIONS - MOLSON COORS
BEVERAGE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of
Operations
(In millions, except per share data)
(Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Sales
$
3,603.3
$
3,905.6
$
10,490.7
$
10,551.5
Excise taxes
(560.6
)
(607.2
)
(1,599.3
)
(1,640.2
)
Net sales
3,042.7
3,298.4
8,891.4
8,911.3
Cost of goods sold
(1,840.2
)
(1,952.2
)
(5,395.5
)
(5,575.5
)
Gross profit
1,202.5
1,346.2
3,495.9
3,335.8
Marketing, general and administrative
expenses
(684.7
)
(746.8
)
(2,067.8
)
(2,096.7
)
Other operating income (expense), net
(65.8
)
(12.7
)
(59.4
)
(13.0
)
Equity income (loss)
(0.8
)
5.5
(3.6
)
12.8
Operating income (loss)
451.2
592.2
1,365.1
1,238.9
Interest income (expense), net
(93.1
)
(48.8
)
(192.7
)
(162.5
)
Other pension and postretirement benefits
(costs), net
(26.6
)
2.5
(11.9
)
7.7
Other non-operating income (expense),
net
(0.1
)
(1.9
)
(3.8
)
2.9
Income (loss) before income taxes
331.4
544.0
1,156.7
1,087.0
Income tax benefit (expense)
(102.6
)
(112.4
)
(292.7
)
(236.1
)
Net income (loss)
228.8
431.6
864.0
850.9
Net (income) loss attributable to
noncontrolling interests
(29.0
)
(0.9
)
(29.4
)
(5.3
)
Net income (loss) attributable to MCBC
$
199.8
$
430.7
$
834.6
$
845.6
Basic net income (loss) attributable to
MCBC per share
$
0.96
$
1.99
$
3.98
$
3.91
Diluted net income (loss) attributable to
MCBC per share
$
0.96
$
1.98
$
3.96
$
3.89
Weighted average shares outstanding -
basic
207.2
216.1
209.9
216.3
Weighted average shares outstanding -
diluted
208.0
217.6
211.0
217.6
Dividends per share
$
0.44
$
0.41
$
1.32
$
1.23
BALANCE SHEETS - MOLSON COORS BEVERAGE
COMPANY AND SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In millions, except par value)
(Unaudited)
As of
September 30, 2024
December 31, 2023
Assets
Current assets
Cash and cash equivalents
$
1,021.7
$
868.9
Trade receivables, net
873.5
757.8
Other receivables, net
144.6
121.6
Inventories, net
833.3
802.3
Other current assets, net
356.4
297.9
Total current assets
3,229.5
2,848.5
Property, plant and equipment, net
4,497.0
4,444.5
Goodwill
5,317.6
5,325.3
Other intangibles, net
12,408.0
12,614.6
Other assets
1,183.2
1,142.2
Total assets
$
26,635.3
$
26,375.1
Liabilities and equity
Current liabilities
Accounts payable and other current
liabilities
$
3,210.5
$
3,180.8
Current portion of long-term debt and
short-term borrowings
37.7
911.8
Total current liabilities
3,248.2
4,092.6
Long-term debt
6,203.0
5,312.1
Pension and postretirement benefits
452.6
465.8
Deferred tax liabilities
2,795.3
2,697.2
Other liabilities
368.5
372.3
Total liabilities
13,067.6
12,940.0
Redeemable noncontrolling interest
42.2
27.9
Molson Coors Beverage Company
stockholders' equity
Capital stock
Preferred stock, $0.01 par value
(authorized: 25.0 shares; none issued)
—
—
Class A common stock, $0.01 par value
(authorized: 500.0 shares; issued and outstanding: 2.6 shares and
2.6 shares, respectively)
—
—
Class B common stock, $0.01 par value
(authorized: 500.0 shares; issued: 215.4 shares and 212.5 shares,
respectively)
2.1
2.1
Class A exchangeable shares, no par value
(issued and outstanding: 2.7 shares and 2.7 shares,
respectively)
100.8
100.8
Class B exchangeable shares, no par value
(issued and outstanding: 7.2 shares and 9.4 shares,
respectively)
271.1
352.3
Paid-in capital
7,211.0
7,108.4
Retained earnings
8,040.2
7,484.3
Accumulated other comprehensive income
(loss)
(1,107.1
)
(1,116.3
)
Class B common stock held in treasury at
cost (21.4 shares and 13.9 shares, respectively)
(1,172.8
)
(735.6
)
Total Molson Coors Beverage Company
stockholders' equity
13,345.3
13,196.0
Noncontrolling interests
180.2
211.2
Total equity
13,525.5
13,407.2
Total liabilities and equity
$
26,635.3
$
26,375.1
CASH FLOW STATEMENTS - MOLSON COORS
BEVERAGE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of
Cash Flows
(In millions) (Unaudited)
For the Nine Months
Ended
September 30, 2024
September 30, 2023
Cash flows from operating
activities
Net income (loss) including noncontrolling
interests
$
864.0
$
850.9
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities
Depreciation and amortization
512.1
508.6
Amortization of debt issuance costs and
discounts
4.1
4.4
Interest expense related to mandatorily
redeemable noncontrolling interest
45.8
—
Share-based compensation
34.6
34.1
(Gain) loss on sale or impairment of
property, plant, equipment and other assets, net
37.3
8.2
Unrealized (gain) loss on foreign currency
fluctuations and derivative instruments, net
(25.1
)
84.6
Equity (income) loss
3.6
(12.8
)
Income tax (benefit) expense
292.7
236.1
Income tax (paid) received
(116.7
)
(170.1
)
Interest expense, excluding amortization
of debt issuance costs and discounts and mandatorily redeemable
noncontrolling interest
169.7
174.0
Interest paid
(186.9
)
(201.5
)
Change in current assets and liabilities
and other
(219.4
)
88.0
Net cash provided by (used in) operating
activities
1,415.8
1,604.5
Cash flows from investing
activities
Additions to property, plant and
equipment
(563.0
)
(494.1
)
Proceeds from sales of property, plant,
equipment and other assets
14.9
7.3
Acquisition of business, net of cash
acquired
—
(63.9
)
Other
17.8
(117.8
)
Net cash provided by (used in) investing
activities
(530.3
)
(668.5
)
Cash flows from financing
activities
Dividends paid
(279.4
)
(266.7
)
Payments for purchases of treasury
stock
(437.4
)
(60.9
)
Payments on debt and borrowings
(879.0
)
(402.9
)
Proceeds on debt and borrowings
863.7
7.0
Other
(12.7
)
(5.1
)
Net cash provided by (used in) financing
activities
(744.8
)
(728.6
)
Effect of foreign exchange rate changes on
cash and cash equivalents
12.1
(5.7
)
Net increase (decrease) in cash and cash
equivalents
152.8
201.7
Balance at beginning of year
868.9
600.0
Balance at end of period
$
1,021.7
$
801.7
SUMMARIZED SEGMENT RESULTS (hectoliter
volume and $ in millions) (Unaudited)
Americas
Q3 2024
Q3 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
YTD 2024
YTD 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
Net sales(1)
$
2,345.0
$
2,633.4
(11.0
)
$
(7.4
)
(10.7
)
$
7,066.3
$
7,194.1
(1.8
)
$
(13.5
)
(1.6
)
COGS(1)(2)
$
(1,403.1
)
$
(1,552.0
)
9.6
$
4.3
9.3
$
(4,244.3
)
$
(4,332.5
)
2.0
$
8.3
1.8
MG&A
$
(521.7
)
$
(589.3
)
11.5
$
1.5
11.2
$
(1,589.1
)
$
(1,658.1
)
4.2
$
3.1
4.0
Income (loss) before income taxes
$
353.8
$
483.5
(26.8
)
$
(1.5
)
(26.5
)
$
1,161.5
$
1,204.2
(3.5
)
$
(3.9
)
(3.2
)
Underlying income (loss) before income
taxes(3)
$
419.8
$
494.1
(15.0
)
$
(1.5
)
(14.7
)
$
1,228.3
$
1,215.6
1.0
$
(3.9
)
1.4
Financial volume(1)(4)
14.695
17.414
(15.6
)
45.001
47.718
(5.7
)
Brand volume
15.367
16.245
(5.4
)
43.928
45.386
(3.2
)
EMEA&APAC
Q3 2024
Q3 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
YTD 2024
YTD 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
Net sales(1)
$
704.4
$
670.4
5.1
$
8.6
3.8
$
1,842.4
$
1,729.5
6.5
$
15.1
5.7
COGS(1)(2)
$
(441.9
)
$
(440.9
)
(0.2
)
$
(5.7
)
1.1
$
(1,195.4
)
$
(1,178.2
)
(1.5
)
$
(10.4
)
(0.6
)
MG&A
$
(163.0
)
$
(157.5
)
(3.5
)
$
(1.9
)
(2.3
)
$
(478.7
)
$
(438.6
)
(9.1
)
$
(3.8
)
(8.3
)
Income (loss) before income taxes
$
51.6
$
67.5
(23.6
)
$
1.0
(25.0
)
$
121.8
$
106.3
14.6
$
(2.8
)
17.2
Underlying income (loss) before income
taxes(3)
$
98.0
$
69.1
41.8
$
0.9
40.5
$
161.7
$
111.5
45.0
$
(2.6
)
47.4
Financial volume(1)(4)
5.938
6.120
(3.0
)
16.039
16.209
(1.0
)
Brand volume
5.965
6.077
(1.8
)
16.018
15.939
0.5
Unallocated &
Eliminations
Q3 2024
Q3 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
YTD 2024
YTD 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
Net sales
$
(6.7
)
$
(5.4
)
(24.1
)
$
(17.3
)
$
(12.3
)
(40.7
)
COGS(2)
$
4.8
$
40.7
88.2
$
44.2
$
(64.8
)
N/M
Income (loss) before income taxes
$
(74.0
)
$
(7.0
)
(957.1
)
$
0.4
(962.9
)
$
(126.6
)
$
(223.5
)
43.4
$
1.6
42.6
Underlying income (loss) before income
taxes(3)
$
(38.3
)
$
(37.8
)
(1.3
)
$
0.2
(1.9
)
$
(120.5
)
$
(141.7
)
15.0
$
1.3
14.0
Financial volume
(0.004
)
(0.002
)
N/M
(0.007
)
(0.004
)
N/M
Consolidated
Q3 2024
Q3 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
YTD 2024
YTD 2023
Reported % Change
FX Impact
Constant Currency %
Change(3)
Net sales
$
3,042.7
$
3,298.4
(7.8
)
$
1.2
(7.8
)
$
8,891.4
$
8,911.3
(0.2
)
$
1.6
(0.2
)
COGS
$
(1,840.2
)
$
(1,952.2
)
5.7
$
(1.1
)
5.8
$
(5,395.5
)
$
(5,575.5
)
3.2
$
(1.7
)
3.3
MG&A
$
(684.7
)
$
(746.8
)
8.3
$
(0.4
)
8.4
$
(2,067.8
)
$
(2,096.7
)
1.4
$
(0.7
)
1.4
Income (loss) before income taxes
$
331.4
$
544.0
(39.1
)
$
(0.1
)
(39.1
)
$
1,156.7
$
1,087.0
6.4
$
(5.1
)
6.9
Underlying income (loss) before income
taxes(3)
$
479.5
$
525.4
(8.7
)
$
(0.4
)
(8.7
)
$
1,269.5
$
1,185.4
7.1
$
(5.2
)
7.5
Financial volume(4)
20.629
23.532
(12.3
)
61.033
63.923
(4.5
)
Brand volume
21.332
22.322
(4.4
)
59.946
61.325
(2.2
)
N/M = Not meaningful The reported percent change and the
constant currency percent change in the above table are presented
as (unfavorable) favorable.
(1)
Includes gross inter-segment
volumes, sales and purchases, which are eliminated in the
consolidated totals.
(2)
The unrealized changes in fair
value on our commodity swaps, which are economic hedges, are
recorded as COGS within Unallocated. As the exposure we are
managing is realized, we reclassify the gain or loss to the segment
in which the underlying exposure resides, allowing our segments to
realize the economic effects of the derivative without the
resulting unrealized mark-to-market volatility.
(3)
Represents income (loss) before
taxes adjusted for non-GAAP items. See the Non-GAAP Measures and
Reconciliations section for definitions and reconciliations of
non-GAAP financial measures including constant currency.
(4)
Financial volume in hectoliters
for the Americas and EMEA&APAC segments excludes royalty volume
of 0.626 million hectoliters and 0.356 million hectoliters,
respectively, for the three months ended September 30, 2024, and
excludes royalty volume of 0.692 million hectoliters and 0.291
million hectoliters, respectively, for the three months ended
September 30, 2023. Financial volume in hectoliters for the
Americas and EMEA&APAC segments excludes royalty volume of
1.795 million hectoliters and 0.899 million hectoliters,
respectively, for the nine months ended September 30, 2024, and
excludes royalty volume of 1.955 million hectoliters and 0.697
million hectoliters respectively, for the nine months ended
September 30, 2023.
WORLDWIDE AND SEGMENT BRAND AND
FINANCIAL VOLUME (in millions of hectoliters)
(Unaudited)
For the Three Months
Ended
Americas
September 30, 2024
September 30, 2023
Change
Financial Volume
14.695
17.414
(15.6
)%
Contract brewing and wholesale/factored
volume
(0.804
)
(1.503
)
(46.5
)%
Royalty volume
0.626
0.692
(9.5
)%
Sales-To-Wholesaler to Sales-To-Retail
adjustment and other(1)
0.850
(0.358
)
N/M
Total Americas Brand Volume
15.367
16.245
(5.4
)%
EMEA&APAC
September 30, 2024
September 30, 2023
Change
Financial Volume
5.938
6.120
(3.0
)%
Contract brewing and wholesale/factored
volume
(0.329
)
(0.334
)
(1.5
)%
Royalty volume
0.356
0.291
22.3
%
Total EMEA&APAC Brand
Volume
5.965
6.077
(1.8
)%
Consolidated
September 30, 2024
September 30, 2023
Change
Financial Volume
20.629
23.532
(12.3
)%
Contract brewing and wholesale/factored
volume
(1.133
)
(1.837
)
(38.3
)%
Royalty volume
0.982
0.983
(0.1
)%
Sales-To-Wholesaler to Sales-To-Retail
adjustment and other
0.854
(0.356
)
N/M
Total Worldwide Brand Volume
21.332
22.322
(4.4
)%
For the Nine Months
Ended
Americas
September 30, 2024
September 30, 2023
Change
Financial Volume
45.001
47.718
(5.7
)%
Contract brewing and wholesale/factored
volume
(2.604
)
(4.316
)
(39.7
)%
Royalty volume
1.795
1.955
(8.2
)%
Sales-To-Wholesaler to Sales-To-Retail
adjustment and other(1)
(0.264
)
0.029
N/M
Total Americas Brand Volume
43.928
45.386
(3.2
)%
EMEA&APAC
September 30, 2024
September 30, 2023
Change
Financial Volume
16.039
16.209
(1.0
)%
Contract brewing and wholesale/factored
volume
(0.920
)
(0.966
)
(4.8
)%
Royalty volume
0.899
0.697
29.0
%
Sales-To-Wholesaler to Sales-To-Retail
adjustment and other(1)
—
(0.001
)
N/M
Total EMEA&APAC Brand
Volume
16.018
15.939
0.5
%
Consolidated
September 30, 2024
September 30, 2023
Change
Financial Volume
61.033
63.923
(4.5
)%
Contract brewing and wholesale/factored
volume
(3.524
)
(5.282
)
(33.3
)%
Royalty volume
2.694
2.652
1.6
%
Sales-To-Wholesaler to Sales-To-Retail
adjustment and other
(0.257
)
0.032
N/M
Total Worldwide Brand Volume
59.946
61.325
(2.2
)%
N/M = Not meaningful
(1)
Includes gross inter-segment
volumes which are eliminated in the consolidated totals.
Worldwide brand volume (or "brand volume" when discussed by
segment) reflects owned or actively managed brands sold to
unrelated external customers within our geographic markets (net of
returns and allowances), royalty volume and our proportionate share
of equity investment worldwide brand volume calculated consistently
with MCBC owned volume. Financial volume represents owned or
actively managed brands sold to unrelated external customers within
our geographical markets, net of returns and allowances as well as
contract brewing, wholesale non-owned brand volume and
company-owned distribution volume. Contract brewing and
wholesale/factored volume is included within financial volume, but
is removed from worldwide brand volume, as this is non-owned volume
for which we do not directly control performance. Factored volume
in our EMEA&APAC segment is the distribution of beer, wine,
spirits and other products owned and produced by other companies to
the on-premise channel, which is a common arrangement in the U.K.
Royalty volume consists of our brands produced and sold by third
parties under various license and contract brewing agreements and,
because this is owned volume, it is included in worldwide brand
volume. Our worldwide brand volume definition also includes an
adjustment from Sales-to-Wholesaler ("STW") volume to
Sales-to-Retailer ("STR") volume. We believe the brand volume
metric is important because, unlike financial volume and STWs, it
provides the closest indication of the performance of our brands in
relation to market and competitor sales trends.
We also utilize COGS per hectoliter, as well as the year over
year changes in this metric, as a key metric for analyzing our
results. This metric is calculated as COGS per our unaudited
condensed consolidated statements of operations divided by
financial volume for the respective period. We believe this metric
is important and useful for investors and management because it
provides an indication of the trends of sales mix and other cost
impacts on our COGS.
NON-GAAP MEASURES AND RECONCILIATIONS
Use of Non-GAAP Measures
In addition to financial measures presented on the basis of
accounting principles generally accepted in the U.S. (“U.S. GAAP”),
we also use non-GAAP financial measures, as listed and defined
below, for operational and financial decision making and to assess
Company and segment business performance. These non-GAAP measures
should be viewed as supplements to (not substitutes for) our
results of operations presented under U.S. GAAP. We have provided
reconciliations of all historical non-GAAP measures to their
nearest U.S. GAAP measure and have consistently applied the
adjustments within our reconciliations in arriving at each non-GAAP
measure.
Our management uses these metrics to assist in comparing
performance from period to period on a consistent basis; as a
measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations; in
communications with the Board of Directors, stockholders, analysts
and investors concerning our financial performance; as useful
comparisons to the performance of our competitors; and as metrics
of certain management incentive compensation calculations. We
believe these measures are used by, and are useful to, investors
and other users of our financial statements in evaluating our
operating performance.
- Underlying Income (Loss) before Income Taxes (Closest GAAP
Metric: Income (Loss) Before Income Taxes) – Measure of the
Company’s or segment's income (loss) before income taxes excluding
the impact of certain non-GAAP adjustment items from our U.S. GAAP
financial statements. Non-GAAP adjustment items include goodwill
and other intangible and tangible asset impairments, restructuring
and integration related costs, unrealized mark-to-market gains and
losses, adjustments to the redemption value of mandatorily
redeemable noncontrolling interests, potential or incurred losses
related to certain litigation accruals and settlements and gains
and losses on sales of non-operating assets, among other items
included in our U.S. GAAP results that warrant adjustment to arrive
at non-GAAP results. We consider these items to be necessary
adjustments for purposes of evaluating our ongoing business
performance and are often considered non-recurring. Such
adjustments are subjective, involve significant management judgment
and can vary substantially from company to company.
- Underlying COGS (Closest GAAP Metric: COGS) – Measure of
the Company’s COGS adjusted to exclude non-GAAP adjustment items
(as defined above). Non-GAAP adjustment items include the impact of
unrealized mark-to-market gains and losses on our commodity
derivative instruments, which are economic hedges, and are recorded
through COGS within Unallocated. As the exposure we are managing is
realized, we reclassify the gain or loss to the segment in which
the underlying exposure resides, allowing our segments to realize
the economic effects of the derivatives without the resulting
unrealized mark-to-market volatility. We also use underlying COGS
per hectoliter, as well as the year over year change in such
metric, as a key metric for analyzing our results. This metric is
calculated as underlying COGS divided by financial volume for the
respective period.
- Underlying MG&A (Closest GAAP Metric:
MG&A) – Measure of the Company’s MG&A expense excluding
the impact of certain non-GAAP adjustment items (as defined
above).
- Underlying net interest income (expense), net (Closest GAAP
Metric: Interest income (expense), net) – Measure of the
Company's net interest expense adjusted to exclude adjustments to
the redemption value of mandatorily redeemable noncontrolling
interests.
- Underlying net income (loss) attributable to MCBC (Closest
GAAP Metric: Net income (loss) attributable to MCBC) – Measure
of net income (loss) attributable to MCBC excluding the impact of
income (loss) before income tax non-GAAP adjustment items (as
defined above), adjustments to the carrying value of redeemable
noncontrolling interests resulting from subsequent changes in the
redemption value of such interests, the related tax effects of
non-GAAP adjustment items and certain other discrete tax
items.
- Underlying net income (loss) attributable to MCBC per
diluted share (also referred to as Underlying Diluted Earnings per
Share) (Closest GAAP Metric: Net income (loss) attributable to MCBC
per diluted share) – Measure of underlying net income (loss)
attributable to MCBC (as defined above) per diluted share. If
applicable, a reported net loss attributable to MCBC per diluted
share is calculated using the basic share count due to dilutive
shares being antidilutive. If underlying net income (loss)
attributable to MCBC becomes income excluding the impact of our
non-GAAP adjustment items, we include the incremental dilutive
shares, using the treasury stock method, into the dilutive shares
outstanding.
- Underlying effective tax rate (Closest GAAP Metric:
Effective Tax Rate) – Measure of the Company’s effective tax
rate excluding the related tax impact of pre-tax non-GAAP
adjustment items (as defined above) and certain other discrete tax
items. Discrete tax items include certain significant tax audit and
prior year reserve adjustments, impact of significant tax
legislation and tax rate changes and significant non-recurring and
period specific tax items.
- Underlying free cash flow (Closest GAAP Metric: Net Cash
Provided by (Used in) Operating Activities) – Measure of the
Company’s operating cash flow calculated as Net Cash Provided by
(Used In) Operating Activities less Additions to property, plant
and equipment, net and excluding the pre-tax cash flow impact of
certain non-GAAP adjustment items (as defined above). We consider
underlying free cash flow an important measure of our ability to
generate cash, grow our business and enhance shareholder value,
driven by core operations and after adjusting for non-GAAP
adjustment items, which can vary substantially from company to
company depending upon accounting methods, book value of assets and
capital structure.
- Underlying depreciation and amortization (Closest GAAP
Metric: Depreciation & Amortization) – Measure of the
Company’s depreciation and amortization excluding the impact of
non-GAAP adjustment items (as defined above). These adjustments
primarily consist of accelerated depreciation or amortization taken
related to the Company’s strategic exit or restructuring
activities.
- Net debt and net debt to underlying earnings before
interest, taxes, depreciation, and amortization ("underlying
EBITDA") (Closest GAAP Metrics: Cash, Debt, & Net Income
(Loss)) – Measure of the Company’s leverage calculated as net
debt (defined as current portion of long-term debt and short-term
borrowings plus long-term debt less cash and cash equivalents)
divided by the trailing twelve month underlying EBITDA. Underlying
EBITDA is calculated as Net income (loss) excluding Interest
expense (income), net, Income tax expense (benefit), depreciation
and amortization, and the impact of non-GAAP adjustment items (as
defined above). This measure is not the same as the Company’s
maximum leverage ratio as defined under its revolving credit
facility, which allows for other adjustments in the calculation of
net debt to EBITDA.
- Constant currency - Constant currency is a non-GAAP
measure utilized to measure performance, excluding the impact of
translational and certain transactional foreign currency movements,
and is intended to be indicative of results in local currency. As
we operate in various foreign countries where the local currency
may strengthen or weaken significantly versus the U.S. dollar or
other currencies used in operations, we utilize a constant currency
measure as an additional metric to evaluate the underlying
performance of each business without consideration of foreign
currency movements. We present all percentage changes for net
sales, underlying COGS, underlying MG&A and underlying income
(loss) before income taxes in constant currency and calculate the
impact of foreign exchange by translating our current period local
currency results (that also include the impact of the comparable
prior period currency hedging activities) at the average exchange
rates during the respective period throughout the year used to
translate the financial statements in the comparable prior year
period. The result is the current period results in U.S. dollars,
as if foreign exchange rates had not changed from the prior year
period. Additionally, we exclude any transactional foreign currency
impacts, reported within the other non-operating income (expense),
net line item, from our current period results.
Our guidance or long-term targets for any of the measures noted
above are also non-GAAP financial measures that exclude or
otherwise have been adjusted for non-GAAP adjustment items from our
U.S. GAAP financial statements. When we provide guidance for any of
the various non-GAAP metrics described above, we do not provide
reconciliations of the U.S. GAAP measures as we are unable to
predict with a reasonable degree of certainty the actual impact of
the non-GAAP adjustment items. By their very nature, non-GAAP
adjustment items are difficult to anticipate with precision because
they are generally associated with unexpected and unplanned events
that impact our Company and its financial results. Therefore, we
are unable to provide a reconciliation of these measures without
unreasonable efforts.
RECONCILIATION TO NEAREST U.S. GAAP
MEASURES
Reconciliation by Line Item
(In millions, except per share data)
(Unaudited)
For the Three Months Ended
September 30, 2024
Cost of goods sold
Marketing, general and
administrative expenses
Income (loss) before income
taxes
Net income (loss) attributable
to MCBC
Diluted earnings per
share
Reported (U.S. GAAP)
$
(1,840.2
)
$
(684.7
)
$
331.4
$
199.8
$
0.96
Non-GAAP adjustments (pre-tax)
Restructuring(1)
—
—
24.1
24.1
0.12
(Gains) losses on other disposals(1)
—
—
41.7
41.7
0.20
Unrealized mark-to-market (gains)
losses
1.7
—
1.7
1.7
0.01
Other items(2)(3)
—
0.8
80.6
80.6
0.39
Tax effects of income before income tax
non-GAAP adjustments and discrete tax items
—
—
—
(10.1
)
(0.05
)
Adjustment for redeemable noncontrolling
interest recorded to the redemption value(3)
—
—
—
36.6
0.18
Underlying (Non-GAAP)
$
(1,838.5
)
$
(683.9
)
$
479.5
$
374.4
$
1.80
(In millions, except per share data)
(Unaudited)
For the Three Months Ended
September 30, 2023
Cost of goods sold
Marketing, general and
administrative expenses
Income (loss) before income
taxes
Net income (loss) attributable
to MCBC
Diluted earnings per
share
Reported (U.S. GAAP)
$
(1,952.2
)
$
(746.8
)
$
544.0
$
430.7
$
1.98
Non-GAAP adjustments (pre-tax)
Restructuring
—
—
1.5
1.5
0.01
Intangible and tangible asset impairments,
excluding goodwill
—
—
0.1
0.1
—
(Gains) and losses on other
disposals(4)
—
—
11.1
11.1
0.05
Unrealized mark-to-market (gains)
losses
(32.7
)
—
(30.8
)
(30.8
)
(0.14
)
Other items
—
0.7
(0.5
)
(0.5
)
—
Tax effects of income before income tax
non-GAAP adjustments and discrete tax items
—
—
—
6.4
0.03
Underlying (Non-GAAP)
$
(1,984.9
)
$
(746.1
)
$
525.4
$
418.5
$
1.92
(In millions, except per share data)
(Unaudited)
For the Nine Months Ended
September 30, 2024
Cost of goods sold
Marketing, general and
administrative expenses
Income (loss) before income
taxes
Net income (loss) attributable
to MCBC
Diluted earnings per
share
Reported (U.S. GAAP)
$
(5,395.5
)
$
(2,067.8
)
$
1,156.7
$
834.6
$
3.96
Non-GAAP adjustments (pre-tax)
Restructuring(1)
—
—
23.0
23.0
0.11
(Gains) losses on other disposals(1)
—
—
36.4
36.4
0.17
Unrealized mark-to-market (gains)
losses
(27.9
)
—
(27.9
)
(27.9
)
(0.13
)
Other items(2)(3)
—
1.7
81.3
81.3
0.39
Tax effects of income before income tax
non-GAAP adjustments and discrete tax items
—
—
—
(2.6
)
(0.01
)
Adjustment for redeemable noncontrolling
interest recorded to the redemption value(3)
—
—
—
36.6
0.17
Underlying (Non-GAAP)
$
(5,423.4
)
$
(2,066.1
)
$
1,269.5
$
981.4
$
4.65
(In millions, except per share data)
(Unaudited)
For the Nine Months Ended
September 30, 2023
Cost of goods sold
Marketing, general and
administrative expenses
Income (loss) before income
taxes
Net income (loss) attributable
to MCBC
Diluted earnings per
share
Reported (U.S. GAAP)
$
(5,575.5
)
$
(2,096.7
)
$
1,087.0
$
845.6
$
3.89
Non-GAAP adjustments (pre-tax)
Restructuring
—
—
1.8
1.8
0.01
Intangible and tangible asset impairments,
excluding goodwill
—
—
0.1
0.1
—
(Gains) and losses on other
disposals(4)
—
—
11.1
11.1
0.05
Unrealized mark-to-market (gains)
losses
81.8
—
81.8
81.8
0.38
Other items
—
5.0
3.6
3.6
0.02
Tax effects of income before income tax
non-GAAP adjustments and discrete tax items
—
—
—
(22.0
)
(0.10
)
Underlying (Non-GAAP)
$
(5,493.7
)
$
(2,091.7
)
$
1,185.4
$
922.0
$
4.24
(1)
During the three months ended
September 30, 2024, we made the decision to wind down or sell
certain of our U.S. craft businesses and related facilities within
our Americas segment and recorded employee-related and asset
abandonment charges, including accelerated depreciation in excess
of normal depreciation. In addition, we recognized a loss of $41.1
million on the disposal of the sold businesses.
(2)
During the three months ended
September 30, 2024, we recorded a non-cash pension settlement loss
of $34.0 million within other pension and postretirement benefits
(costs), net in Unallocated as a result of annuity purchases for
two of our Canadian pension plans.
(3)
During the three months ended
September 30, 2024, we recorded an increase in interest expense
within our EMEA&APAC segment driven by a $45.8 million
adjustment to increase our mandatorily redeemable NCI liability to
the final redemption value related to the buyout of the remaining
ownership interest in CBPL. In addition, we recorded a $36.6
million adjustment to net (income) loss attributable to
noncontrolling interests related to the change in redemption value
of CBPL. See the Consolidated Performance table earlier in this
document for further information on this adjustment.
(4)
During the three months ended
September 30, 2023, we sold our controlling interest in the Truss
joint venture within our Americas segment and recognized a loss of
$11.1 million.
Reconciliation to Underlying Income
(Loss) Before Income Taxes by Segment
(In millions) (Unaudited)
For the Three Months Ended
September 30, 2024
Americas
EMEA&APAC
Unallocated
Consolidated
Income (loss) before income
taxes
$
353.8
$
51.6
$
(74.0
)
$
331.4
Cost of goods sold(1)
—
—
1.7
1.7
Marketing, general &
administrative
0.7
0.1
—
0.8
Other non-GAAP adjustment items(2)
65.3
46.3
34.0
145.6
Total non-GAAP adjustment items
$
66.0
$
46.4
$
35.7
$
148.1
Underlying income (loss) before income
taxes
$
419.8
$
98.0
$
(38.3
)
$
479.5
(In millions) (Unaudited)
For the Three Months Ended
September 30, 2023
Americas
EMEA&APAC
Unallocated
Consolidated
Income (loss) before income
taxes
$
483.5
$
67.5
$
(7.0
)
$
544.0
Cost of goods sold(1)
—
—
(32.7
)
(32.7
)
Marketing, general &
administrative
0.7
—
—
0.7
Other non-GAAP adjustment items(2)
9.9
1.6
1.9
13.4
Total non-GAAP adjustment items
$
10.6
$
1.6
$
(30.8
)
$
(18.6
)
Underlying income (loss) before income
taxes
$
494.1
$
69.1
$
(37.8
)
$
525.4
(In millions) (Unaudited)
For the Nine Months Ended
September 30, 2024
Americas
EMEA&APAC
Unallocated
Consolidated
Income (loss) before income
taxes
$
1,161.5
$
121.8
$
(126.6
)
$
1,156.7
Cost of goods sold(1)
—
—
(27.9
)
(27.9
)
Marketing, general &
administrative
1.7
—
—
1.7
Other non-GAAP adjustment items(2)
65.1
39.9
34.0
139.0
Total non-GAAP adjustment items
$
66.8
$
39.9
$
6.1
$
112.8
Underlying income (loss) before income
taxes
$
1,228.3
$
161.7
$
(120.5
)
$
1,269.5
(In millions) (Unaudited)
For the Nine Months Ended
September 30, 2023
Americas
EMEA&APAC
Unallocated
Consolidated
Income (loss) before income
taxes
$
1,204.2
$
106.3
$
(223.5
)
$
1,087.0
Cost of goods sold(1)
—
—
81.8
81.8
Marketing, general &
administrative
1.7
3.3
—
5.0
Other non-GAAP adjustment items(2)
9.7
1.9
—
11.6
Total non-GAAP adjustment items
$
11.4
$
5.2
$
81.8
$
98.4
Underlying income (loss) before income
taxes
$
1,215.6
$
111.5
$
(141.7
)
$
1,185.4
(1)
Reflects changes in our
mark-to-market positions on our derivative hedges recorded as COGS
within Unallocated. As the exposure we are managing is realized, we
reclassify the gain or loss to the segment in which the underlying
exposure resides, allowing our segments to realize the economic
effects of the derivative without the resulting unrealized
mark-to-market volatility.
(2)
See the Reconciliations by Line
Item table for further information on our non-GAAP adjustments.
Underlying Depreciation and
Amortization Reconciliation
(In millions) (Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
U.S. GAAP depreciation and
amortization
$
(175.4
)
$
(168.7
)
$
(512.1
)
$
(508.6
)
Accelerated depreciation(1)
9.9
—
9.9
—
Non-GAAP Underlying depreciation and
amortization
$
(165.5
)
$
(168.7
)
$
(502.2
)
$
(508.6
)
(1)
During the three months ended
September 30, 2024, we made the decision to wind down or sell
certain of our U.S. craft businesses and related facilities within
our Americas segment and recorded accelerated depreciation in
excess of normal depreciation of $9.9 million.
Underlying Net Interest Income
(Expense), net Reconciliation
(In millions) (Unaudited)
For the Three Months
Ended
For the Nine Months
Ended
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
U.S. GAAP Interest income (expense),
net
$
(93.1
)
$
(48.8
)
$
(192.7
)
$
(162.5
)
Adjustment to the redemption value of
mandatorily redeemable noncontrolling interest(1)
45.8
—
45.8
—
Non-GAAP Underlying net interest income
(expense), net
$
(47.3
)
$
(48.8
)
$
(146.9
)
$
(162.5
)
(1)
During the three months ended
September 30, 2024, we recorded an increase in interest expense
driven by a $45.8 million adjustment to increase our mandatorily
redeemable NCI liability related to CBPL to its final redemption
value. See the Consolidated Performance table earlier in this
document for further information on this adjustment.
Effective Tax Rate
Reconciliation
(Unaudited)
For the Three Months
Ended
September 30, 2024
September 30, 2023
U.S. GAAP Effective Tax Rate
31
%
21
%
Tax effect of non-GAAP adjustment
items(1)
(7
%)
(1
%)
Non-GAAP Underlying Effective Tax
Rate
24
%
20
%
(1)
Adjustments related to the tax
effect of non-GAAP adjustment items, including a non-deductible
$45.8 million adjustment recorded to interest expense to increase
the mandatorily redeemable NCI liability related to CBPL to the
final redemption value in the third quarter of 2024 as well as a
valuation allowance on deferred tax assets recorded in the third
quarter of 2024 from the sale of certain U.S. craft businesses.
Underlying Free Cash Flow
(In millions) (Unaudited)
For the Nine Months
Ended
September 30, 2024
September 30, 2023
U.S. GAAP Net Cash Provided by (Used
In) Operating Activities
$
1,415.8
$
1,604.5
Additions to property, plant and
equipment, net(1)
(563.0
)
(494.1
)
Cash impact of non-GAAP adjustment
items(2)
3.2
11.2
Non-GAAP Underlying Free Cash
Flow
$
856.0
$
1,121.6
(1)
Included in net cash provided by
(used in) investing activities.
(2)
Included in net cash provided by
(used in) operating activities and primarily reflects costs paid
for restructuring activities for the nine months ended September
30, 2024 and September 30, 2023.
Net Debt and Net Debt to Underlying
EBITDA Ratio
(In millions except net debt to underlying
EBITDA ratio) (Unaudited)
As of
September 30, 2024
September 30, 2023
U.S. GAAP Current portion of long-term
debt and short-term borrowings
$
37.7
$
878.8
Add/Less:
Long-term debt
6,203.0
5,301.1
Cash and cash equivalents
1,021.7
801.7
Net debt
5,219.0
$
5,378.2
Q3 Underlying EBITDA
692.3
742.9
Q2 Underlying EBITDA
750.1
725.2
Q1 Underlying EBITDA
476.2
388.4
Q4 Underlying EBITDA
566.1
555.5
Non-GAAP Underlying EBITDA(1)
$
2,484.7
$
2,412.0
Net debt to underlying EBITDA
ratio
2.10
2.23
(1)
Represents underlying EBITDA on a
trailing twelve month basis.
Underlying EBITDA
Reconciliation
(In millions) (Unaudited)
For the Three Months
Ended
September 30, 2024
September 30, 2023
U.S. GAAP Net income (loss)
228.8
431.6
Add/Less:
Interest expense (income), net
93.1
48.8
Income tax expense (benefit)
102.6
112.4
Depreciation and amortization
175.4
168.7
Non-GAAP adjustments to arrive at
underlying EBITDA(1)
92.4
(18.6
)
Non-GAAP Underlying EBITDA
$
692.3
$
742.9
(1)
Includes pre-tax adjustments to
Net income (loss) related to non-GAAP adjustment items as described
in other non-GAAP reconciliation tables above excluding non-GAAP
adjustments to interest expense (income), net, and depreciation and
amortization. See the above tables (i) Reconciliations to Nearest
U.S. GAAP Measures by Line Item, (ii) Underlying Depreciation and
Amortization Reconciliation and (iii) Underlying Net Interest
Income (Expense), net Reconciliation tables for further information
on our non-GAAP adjustments.
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version on businesswire.com: https://www.businesswire.com/news/home/20241107763285/en/
Investor Relations Traci Mangini, (415) 308-0151 News
Media Rachel Dickens, (314) 452-9673
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