Molson Coors Beverage Company Q1 FY2025 earnings call

• Macro-economic environment is volatile with geopolitical and trade policy impacts affecting consumer consumption. • Core power brands in the U.S. (Coors Light, Miller Lite, Coors Banquet) saw combined 15.4 volume share, up from 13.5 in Q1 2023. • Premiumization efforts: In the U.S., Blue Moon brand family held share, Blue Moon non-alc gained dollar share; Peroni onshore production driving cost savings and distribution; Beyond Beer focus on non-alc including ZOA and Fever-Tree. • Cost management: Taking actions to control costs, adjusting capital expenditure plans, and focusing on high-priority growth and productivity initiatives.

Consolidated net sales revenue was down 10.4%, underlying pre-tax income was down 49.5%, and underlying earnings per share was down 47.4%. In the Americas, U.S. financial volume was down 15.7% and brand volume was down 8.8%. EMEA and APAC had financial volume down 9.7% but net sales revenue per hectoliter up 5.4% due to favorable sales mix, premiumization, and pricing. Americas net sales revenue per hectoliter was up 4.8% driven by mix benefits from exiting contract brewing volume.

• Now expects low single-digit net sales revenue decline on constant currency basis vs low single-digit growth previously. • Low single-digit underlying pre-tax income decline on constant currency basis vs mid-single-digit growth previously. • Low single-digit underlying earnings per share growth vs high single-digit growth previously. • Capital expenditures reduced to $650 million +/-5% from $750 million +/-5% previously. • Underlying free cash flow guidance remains $1.3 billion +/-10%.

• Volatile global macroeconomic environment due to geopolitical events and trade policy, impacting consumer confidence and consumption trends. • Uncertainty around the duration of macro-driven challenges affecting the beer industry.

Q: Bryan Spillane asked about the U.S. market slowdown and what to watch for in the back half of the year.

A: Gavin Hattersley said the first quarter had expected headwinds but unexpected macroeconomic pressures. The forecast anticipates industry improvement from current trend lines, with plans for Peroni and Fever-Tree hitting in the second quarter.

Q: Bonnie Herzog asked about share retention and month-to-month trends.

A: Gavin Hattersley stated they retained almost all core brand share gained, with share trends improving quarter-over-quarter, and mid-March had some share loss due to Blue Moon pack shift and Simply brand timing issues, but industry improved in April.

Q: Filippo Falorni asked about beer category expectations and tariffs.

A: Gavin Hattersley mentioned industry forecast assumes improvement, and Tracey Joubert discussed minimal impact from tariffs due to domestic sourcing and hedging programs.

Q: Chris Carey asked about cost of goods sold and leadership transition.

A: Gavin Hattersley talked about leadership transition process focusing on capabilities and cultural fit, and Tracey Joubert discussed COGS outlook with inflation impact mitigated by cost savings and hedging.

Q: Peter Grom asked about category growth expectations.

A: Gavin Hattersley said incremental softness is macro-driven, and expectation is industry will move back to historical trends over the balance of the year.

Q: Greg (on behalf of Robert Ottenstein) asked about EMEA and APAC competitive landscape.

A: Gavin Hattersley discussed competitive pressures in U.K. and Central/Eastern Europe, with focus on core brands, premiumization, and beyond beer initiatives.

Q: Andrea Teixeira asked about price architecture and Blue Moon.

A: Gavin Hattersley talked about core brand share retention, Blue Moon pack adjustment impact, and positive momentum for Blue Moon non-alc and new innovations.

Q: Kaumil Gajrawala asked about pricing and promotional activity.

A: Gavin Hattersley said no unusual promotional activity expected, with typical summer competition easing in shoulder months.

Q: Lauren Lieberman asked about CapEx adjustment.

A: Tracey Joubert said they are postponing projects not related to significant cost savings or critical growth initiatives, prioritizing health and safety and growth-driving projects.

Q: Michael Lavery asked about America's price mix and Fever-Tree costs.

A: Gavin Hattersley explained Fever-Tree costs go through MG&A line, and America's price mix has mixed benefits from less contract brewing and premiumization, expecting mix benefits to continue.

Q: Kevin Grundy asked about capital deployment and market perception.

A: Gavin Hattersley highlighted strong balance sheet and cash generation, underappreciation of core brand strength and share retention, and excitement about Fever-Tree partnership.

Q: Eric Serotta asked about midterm category growth.

A: Gavin Hattersley discussed portfolio performance, commitment to above premium space, and expectation of industry normalization from tough first quarter.

Q: Robert Moskow asked about North America forecast changes.

A: Tracey Joubert mentioned first quarter was softer than expected, with drivers including net price increases, shipment recovery, premiumization, and partnerships, with top line drivers varying by quarter.