Molson Coors Beverage Company Q4 FY2023 earnings call

• In 2023, global net revenue grew over 9% and bottom line by nearly 37%, setting new baseline. Top 5 brands drove over 2 million more hectoliters.
• U.S. core brands growing distribution and space; expect more space in spring. Grew more share of on-premise than other brewers.
• Core brands in other markets: Coors Light and Molson Canadian #1 and #2 in Canada, Miller Lite growing in Canada, Ožujsko in Croatia at record share, Carling in U.K. growing value share.
• Flavor portfolio: Simply Spiked doubled volume in U.S., launching new flavors like Simply Spiked Lemonade and happy Thursday.

In 2023, Americas brand volume increased 6.7%, led by the U.S. where brand volumes were up 8.5% with Coors Light, Miller Lite, and Coors Banquet performing strongly (each up double digits). Canada had 0.7% brand volume growth but grew share, while Latin America had mix improvement but brand volume down 5% due to economic conditions. EMEA and APAC financial volume declined 3% on lower brand volumes, with brand volume down 2.2% due to industry softness in the U.K. off-premise and inflation in Central and Eastern Europe. The above premium portfolio comprised 27% of total net brand revenue for the year.

• 2024 guidance: low single-digit net sales revenue growth (constant currency), mid-single-digit underlying pre-tax income growth (constant currency), mid-single-digit underlying EPS growth, underlying free cash flow $1.2B ±10%, underlying depreciation and amortization $700M ±5%, net interest expense $210M ±5%, underlying effective tax rate 23%-25%, capital expenditures $750M ±5%.
• Assumptions include historical net pricing, mix benefits from premiumization, impact of PEPs contract brewing, and moderation of inflation but still headwinds from certain commodity hedges.

• Macro environment risks with inflation still a concern.
• Impact of PEPs contract brewing wind down on financial volume.
• Persistent inflationary pressure in EMEA and APAC affecting cost of goods sold.

Q: On portfolio outside U.S. and cash deployment, how are businesses set up?

A: Gavin Hattersley said Canada has strong share growth in core and flavor, LatAm seeing improvement, Central Eastern Europe signs of inflation slowing, U.K. cautious but portfolio strong. Greg Tierney added capital allocation priorities: invest in business, delever balance sheet, return cash to shareholders with dividend and buyback.

Q: On Blue Moon and cannabis risk, any updates and impact?

A: Gavin Hattersley said Blue Moon has new packaging, campaign, and innovations, positive feedback. On cannabis, no meaningful impact on beverage alcohol from smoking cannabis in developed markets like Canada.

Q: On U.S. beer category volume and pricing vs other beverages, your view?

A: Gavin Hattersley said U.S. beer industry volume trends improved in 2023, expectation is category back to flat to slightly down volume, up value, with pricing in 1%-2% range, consistent with historical expectations.