MOLSON COORS BEVERAGE CO Q2 FY2024 earnings call

• Pleased with Q2 results, largely as expected. Acknowledged near term timing dynamics. • Consolidated net sales revenue down 0.1%, underlying pretax income up 5.2%, underlying EPS up 7.9% in Q2. • H1 net sales revenue up 4.2%, underlying pretax income up 20.4%, underlying EPS up 23.8%. • U.S. shipment timing: increased inventories ahead of Fort Worth brewery strike, STWs exceeded STRs in Q1 and Q2, expected to unwind in Q3 and Q4. • Pabst contract brewing volume exit reduced Q2 financial volume by 580,000 hectoliters, H1 by over 900,000 hectoliters. • Core power brands: Coors Light, Miller Lite, Coors Banquet retained 80% of peak share gains. Coors Banquet performing well, grew volume nearly 13% in H1. • Premiumization: above premium portfolio over 26% of net brand revenue. Success in EMEA & APAC, Canada, Latin America. Work to do in U.S. with above premium. • Beyond Beer: focus on flavor innovation, Simply Spiked built to $100 million in 2 years, Peroni onshoring production in US planned. • Strategic investments: multiyear modernization of Golden, Colorado brewery nearing completion; new multiyear project in U.K. to increase brewing and packaging capacity. • Marketing capabilities: overhauled strategy, built in house agency, improved return on marketing investment since 2019. • Cash return to shareholders: paid $188 million in cash dividends in H1, raised dividend 3rd consecutive year; repurchased 4.6 million shares in Q2, total 8.8 million since plan inception.

Consolidated net sales revenue was down 0.1% in Q2. Underlying pretax income grew 5.2%, underlying earnings per share grew 7.9%. EMEA & APAC business contributed meaningfully due to favorable net pricing, premiumization and brand volume growth. For H1, net sales revenue increased 4.2%, underlying pretax income 20.4%, underlying earnings per share 23.8%. In US, Coors Light, Miller Lite and Coors Banquet combined volume share down 0.5 share point vs year ago but up 2 full share points vs Q2 2022. Coors Banquet grew brand volume nearly 13% in H1. In Canada, Coors Light is number two brand, Molson family gained volume share. In EMEA & APAC, Ožujsko gained nearly 2 value share points, Caraiman launched in Romania, Carling's benefited from FA Cup partnership. Above premium portfolio over 26% of total net brand revenue for 12 months ended June 30. EMEA & APAC above premium share over 50%, up nearly 10 ppt from 2019. Americas above premium share over 21%, up nearly 2 ppt from 2019. Blue Moon family has new campaign, repositioning, line extensions. Simply Spiked is $100 million brand in 2 years. Peroni onshoring production in US planned to drive scale and margin.

• Reaffirming 2024 guidance: low single-digit net sales revenue growth constant currency, mid-single-digit underlying pretax income and EPS growth, underlying free cash flow $1.2 billion ±10%. • Shipment timing impact: in US, deliberately shipped ahead 1.1 million hectoliters in H1, expect reversal in H2, mostly Q3. • Pabst contract termination impact: expected 2 million hectoliters or 3% of Americas financial volume impact, about 1 million hectoliters remaining in H2, over half in Q3. • Volume deleverage expected in H2 due to shipment timing and Pabst exit. • Anticipated benefits: roll forward pricing, premiumization, moderating inflation, cost savings to partially offset volume deleverage. • SG&A expected down in H2 vs prior year due to lower market investment and incentive compensation in H2 2023.

• U.S. shipment timing dynamics: impact on volume and financial results in H2. • Pabst contract brewing volume exit: continued decline in volume and financial impact. • Inflation headwind: cost per hectoliter increased 2.9% in Q2, driven by Americas business, ongoing inflationary pressure and volume deleverage. • Market share volatility: near term fluctuations in market share due to timing factors and competitive landscape. • Premiumization challenges in U.S.: need to reinvigorate above premium brands like Blue Moon.

Q: Bonnie Herzog from Goldman Sachs asked about guidance deceleration, volume deleverage impact, offsets to margins, and marketing spend levels.

A: Tracey Joubert said volume deleverage in COGS expected in H2, driven by deleverage and mix, hedging program, cost savings from brewery efficiencies to offset. Marketing spend expected lower in H2 vs H1, but 2024 marketing to be up meaningfully from 2022.

Q: Drew Levine from JPMorgan asked about monthly brand volume progression in US, industry performance.

A: Gavin Hattersley said April, May soft, improvement in June, Q2 continuation of trend, can't predict quarter based on few weeks. Tracey Joubert added on US shipments, deliberately shipped ahead 1.1 million hectoliters in H1, expect reversal in H2.

Q: Bill Kirk from ROTH Capital Partners asked about on-premise strategy, kegs in on-premise.

A: Gavin Hattersley said on-premise performing slightly better than off-premise in Q2, kegs important part of on-premise strategy.

Q: Rob Ottenstein from Evercore asked about Blue Moon, Peroni premium initiatives.

A: Gavin Hattersley said work to do in US premiumization, committed to reinvigorating Blue Moon with new packaging, campaign, innovation; Peroni onshoring production in US to improve supply, pack formats, margin.

Q: Chris Carey from Wells Fargo asked about consumer appetite, July category engagement.

A: Gavin Hattersley said industry trends similar to recent years, Central and Eastern Europe showing signs of improvement, UK consumer resilient, Canada performance pleasing, US seeing channel and pack shifting but not brand shifting.

Q: Victor Ma from TD Cowen asked about price/mix in Americas, recession resiliency.

A: Gavin Hattersley said net pricing in Americas over half of increase, balance from mix, no specific guidance on future price/mix but trends expected to continue.

Q: Bryan Spillane from Bank of America asked about US shelf sets, space gains, depletion.

A: Gavin Hattersley said expected 13% share of space increase for core brands in large format stores, retained 80% of peak share gains, depletions planned to meet share levels, supply chain did well.

Q: Unidentified Analyst from UBS asked about price/mix contribution in Americas, volumes in Americas.

A: Gavin Hattersley said pricing expected to land at historical 1-2% increase level, mix favorable with Pabst exit; Tracey Joubert said shipped ahead 1.1 million hectoliters in H1, expect reversal in H2, mostly Q3, Pabst volume remaining, over half in Q3.

Q: Michael Lavery from Piper Sandler asked about shelf reset adjustments, Romanian brand launch.

A: Gavin Hattersley said shelf resets allowed more SKUs, pack formats, improved holding power; Caraiman launched in Romania as innovation filling gap, performing well.

Q: Lauren Lieberman from Barclays asked about US industry volume, market share.

A: Gavin Hattersley said core power brands retained 80% of peak share gains, industry volume trends balanced, shipment strategy deliberate to avoid inventory challenges.

Q: Eric Serotta from Morgan Stanley asked about spirits vs beer share, innovation contribution.

A: Gavin Hattersley said beer gaining share vs spirits, Simply Spiked built to $100 million in 2 years, other innovations like Madri, Happy Thursday, ZOA showing progress.