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    Molson Coors Beverage Co (TAP)

    Q4 2024 Earnings Summary

    Reported on Feb 18, 2025 (Before Market Open)
    Pre-Earnings Price$53.45Last close (Feb 12, 2025)
    Post-Earnings Price$57.23Open (Feb 13, 2025)
    Price Change
    $3.78(+7.07%)
    • Molson Coors expects their EMEA and APAC businesses to grow faster than North America over time, driven by successful launches in new markets like Bulgaria and plans to enter additional markets in 2025.
    • The company is diversifying into non-alcoholic and beyond beer beverages, aligning with consumer trends towards mindful drinking, with a long-term strategy to build a total beverage portfolio, including offerings like non-alcoholic beers and RTDs.
    • Molson Coors is achieving cost efficiencies and improving margins by investing in brewery operations, eliminating waste, and terminating low-margin contract brewing agreements, which is expected to drive operating leverage and increase earnings per share growth.
    • Significant slowdown in the EMEA and APAC regions due to heightened competition and a softer industry, particularly in the UK and Central and Eastern Europe. This may impact the company's ability to grow in these regions as fast as the rest of the company in 2025.
    • Guidance implies volume declines of 1% to 2%, indicating potential volume pressures in key markets like the U.S. and Europe. This suggests that the company may face challenges in maintaining sales volume growth, which could adversely affect revenue.
    • Potential demand headwinds from younger consumers drinking less frequently and increasing health concerns about alcohol consumption, including links to cancer risk. This trend could negatively impact the overall alcohol industry and directly affect the company's sales.
    MetricYoY ChangeReason

    Total Revenue

    ~2% decline (from $2,790.8M to $2,735.6M)

    Slight decline in total revenue suggests mild market headwinds or lower sales volumes, despite the Americas segment continuing to contribute the vast majority ($2,173.9M) and EMEA & APAC maintaining their historical share. This conservative decrease may reflect pricing or volume challenges relative to the previous period.

    Operating Income (EBIT)

    +95% increase (from $199.3M to $388.1M)

    Operating income nearly doubled as a result of marked operational improvements, indicating effective cost management and better margin dynamics compared to Q4 2023. This sharp improvement likely reflects enhanced operational efficiencies and tighter control over expenses in the current period.

    Net Income

    +172% increase (from $105.5M to $287.8M)

    Substantially higher net income can be attributed to the strong improvement in operating income and likely benefits from lower overall costs or tax efficiencies. The robust surge from the prior period’s $105.5M to $287.8M underscores the impact of operational gains and possibly other favorable financial adjustments.

    Basic Earnings Per Share (EPS)

    +191% increase (from $0.48 to $1.40)

    EPS nearly tripled driven by the significant rise in net income, showing a strong improvement in earnings available to shareholders. This increase builds directly on the prior period’s smaller EPS of $0.48 and reflects the overall enhanced profitability in Q4 2024.

    Depreciation and Amortization

    335% increase (from $174.2M to $759.4M)

    D&A expenses surged dramatically, likely due to accelerated depreciation related to asset impairment and strategic asset realignments (such as winding down or selling certain business units). This one‐off spike contrasts sharply with the previous period’s normal D&A levels and signals significant non-cash charges affecting reported results.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    Net Sales Revenue

    FY 2024

    low single‐digit growth

    down approximately 1%

    lowered

    Underlying Pretax Income

    FY 2024

    mid‐single‐digit growth

    mid‐single‐digit growth

    no change

    Underlying Earnings Per Share (EPS)

    FY 2024

    mid‐single‐digit growth

    mid‐single‐digit growth, narrowed to the higher end of the range

    no change

    Underlying Free Cash Flow

    FY 2024

    no prior guidance

    $1.2 billion, plus or minus 10%

    no prior guidance

    COGS per Hectoliter

    FY 2024

    no prior guidance

    Expected to be impacted by volume deleverage related to U.S. shipment trends

    no prior guidance

    Share Repurchase Program

    FY 2024

    no prior guidance

    Continued execution of the up to $2 billion, 5-year plan, with 29% utilized in the first 4 quarters since its announcement in October 2023

    no prior guidance

    Net Sales Revenue Growth

    FY 2025

    no prior guidance

    Low single‐digit growth

    no prior guidance

    Underlying Pretax Income Growth

    FY 2025

    no prior guidance

    Mid‐single‐digit growth on a constant currency basis

    no prior guidance

    Underlying Earnings Per Share Growth

    FY 2025

    no prior guidance

    High single‐digit growth

    no prior guidance

    Underlying Free Cash Flow

    FY 2025

    no prior guidance

    $1.3 billion, plus or minus 10%

    no prior guidance

    Underlying Depreciation and Amortization

    FY 2025

    no prior guidance

    $675 million, plus or minus 5%

    no prior guidance

    Net Interest Expense

    FY 2025

    no prior guidance

    $215 million, plus or minus 5%

    no prior guidance

    Underlying Effective Tax Rate

    FY 2025

    no prior guidance

    In the range of 22% to 24%

    no prior guidance

    Capital Expenditures

    FY 2025

    no prior guidance

    $750 million, plus or minus 5%

    no prior guidance

    MetricPeriodGuidanceActualPerformance
    Net Sales Revenue
    Q4 2024
    Adjusted to “down approximately 1%” from previous “low single-digit growth”
    Decreased by ~2% year over year (from 2,790.8To 2,735.6)
    Missed
    Underlying Pretax Income (approx.)
    Q4 2024
    Reaffirmed “mid-single-digit growth”
    Operating Income rose from 199.3To 388.1(~95% increase), well above mid-single-digit
    Beat
    Underlying EPS
    Q4 2024
    Reaffirmed “mid-single-digit growth,” narrowed to the higher end of the range
    EPS (Basic) rose from 0.48To 1.40(~192% increase), exceeding mid-single-digit expectations
    Beat
    TopicPrevious MentionsCurrent PeriodTrend

    Ongoing focus on cost efficiencies and margin improvements

    Emphasized in Q1 and Q2 2024, with brewery modernization, hedging, and exit of low-margin contracts reducing COGS and offsetting inflation.

    In Q4 2024, highlighted further cost-saving initiatives, margin expansion, and onshore production of Peroni to optimize marketing reinvestments.

    Consistent mention across periods; further confidence in margin improvements.

    Continued emphasis on premiumization and above-premium brand performance

    Q1 and Q2 2024 stressed above-premium growth (e.g., Blue Moon, Simply Spiked) and global premiumization with Madri, Peroni, and others.

    Q4 2024 reiterated premium focus, success of Madri and Peroni, and goal to have one-third of net brand revenue from above-premium.

    Ongoing priority; remains key driver of future growth.

    Shifting EMEA and APAC performance (from improvements to potential slowdowns)

    Q1 2024 saw modest gains but some softness in the U.K.; Q2 2024 was more positive with strong premiumization.

    Q4 2024 referenced a slowdown in the U.K. and heightened competition, yet Madri still grew double digits.

    Continued caution in certain markets despite premium gains.

    Volume fluctuations and transitions (over-shipments in Q1, deleverage in Q2, projected declines in Q4)

    Q1 2024 deliberately built inventory for strike contingency; Q2 2024 saw volume deleverage from contract exits and planned over-shipments reversing.

    In Q4 2024, inventories normalized, U.S. shipments trailed brand volumes in a planned adjustment; projected headwinds continue into 2025.

    Managed reduction in shipments; planned short-term declines.

    Growing diversification into non-alcoholic and beyond-beer categories (aligned with mindful drinking trends)

    Q1 and Q2 2024 highlighted Blue Moon Non-Alc, Simply Spiked, and expansions into NA cocktails and energy drinks.

    Q4 2024 reinforced non-alc growth (Blue Moon Non-Alc, Peroni 0.0) and beyond-beer plays like ZOA, Fevertree partnership.

    Expanding product range; long-term strategic focus.

    Reduced or no mention of over-shipments after Q1 2024

    Q1 2024 over-shipments were widely discussed; Q2 2024 confirmed a plan to unwind surplus in H2.

    Q4 2024 references a final normalization of inventory, with no further significant mentions of over-shipment issues.

    Issue resolved; no further emphasis.

    Newly emphasized health concerns (cancer risk, younger consumers drinking less)

    No mention in Q1 or Q2 2024 [N/A].

    Q4 2024 addressed potential impact of GLP-1 drugs, long-standing cancer warnings, and younger consumers’ reduced consumption, positioning beer as a “drink of moderation”.

    New topic; could shape future consumer trends.

    Changing sentiment around marketing spend and its impact on brand momentum

    Q1 and Q2 2024 underscored steady or elevated marketing budgets with improved ROI, supporting brand growth.

    Q4 2024 noted marketing spend optimization, redirecting funds from divested brands and onshore production savings into key marketing priorities.

    Continued commitment but more targeted spending.

    Macro pressures (inflation, interest rates, cautious consumer behavior) influencing demand

    Q1 and Q2 2024 cited sticky inflation, rising rates, and cautious consumer shifts in pack sizes.

    Q4 2024 still sees cautious consumers in North America and U.K., though some relief from moderating inflation.

    Persistent headwind; gradual improvement in certain markets.

    1. Demand Outlook & Health Concerns
      Q: How will health trends impact alcohol demand and your strategy?
      A: Gavin acknowledged recent federal reports on alcohol and health, noting that beer has long been the drink of moderation. He emphasized Molson Coors' commitment to diversifying into beyond beer and non-alcoholic products, supporting trends like mindful drinking. Their three-pronged approach includes alcohol replacements like Blue Moon Non-Alc and Peroni 0.0, alcohol adjacents like Every, and pure plays such as ZOA energy drinks. He also highlighted that Coors Banquet is the #1 fastest-growing beer brand, gaining younger consumers and proving growth in traditional beer.

    2. Fevertree Deal Economics
      Q: How will the Fevertree partnership impact your income statement?
      A: Gavin stated they don't provide that level of detail but emphasized the significant growth potential of Fevertree. The partnership is 100% incremental to their business, and 2025 will focus on integration. They expect onetime costs in the tens of millions, not hundreds, associated with the expansion of resources. Fevertree operates at the top end of premium, potentially becoming their #1 brand by revenue per barrel. They will look for cost efficiencies in their supply chain to drive value.

    3. EPS Growth Drivers
      Q: What are the drivers of EPS growth and operating leverage?
      A: Tracey explained that EPS growth will be driven by cost savings and efficiencies from investments in brewery capabilities, waste elimination, and taking out contract brewing. They've focused on improving return on marketing investments, and despite increased spending on innovation and Fevertree, they've redeployed funds from divesting underperforming craft breweries. Bringing Peroni production onshore provides meaningful ocean freight savings, which supports further marketing investments. These actions will help improve margins by driving efficiencies.

    4. Margin Outlook & Aluminum Tariffs
      Q: What's the margin outlook and impact of aluminum tariffs?
      A: Gavin noted that almost all aluminum for U.S. consumption is purchased domestically, mitigating tariff impact. Tracey stated that they expect underlying pretax margin expansion in 2025, building on improvements from the past two years. Drivers include moderating input cost inflation, positive net pricing, positive mix from premiumization, and lower contract brewing volumes which enhance productivity. They continue to pursue cost savings across the business to support margin expansion.

    5. M&A Strategy & Fevertree Investment
      Q: Why not be more aggressive on M&A instead of small stakes like Fevertree?
      A: Gavin explained that partnerships are one of their core competencies, and the Fevertree investment fits their "string-of-pearls" approach. The investment in Fevertree is larger than past ones but still aligns with their strategy. They see real potential in Fevertree, with the U.S. being its biggest growth market. They will include 100% of Fevertree's U.S. performance in their P&L and are now the second-largest shareholder.

    6. Top-Line Guidance & Category Growth
      Q: What's your view on category growth across key geographies?
      A: Gavin noted that in Canada, despite economic pressures, inflation is coming down, and beer trends are similar to the U.S.. Consumers are engaging in channel and pack shifting, with ongoing premiumization supporting their acceleration plan. In the U.K., the economy is improving, with slowing inflation, and conditions are similar to late 2024. Puts and takes in their top-line guidance include contract brewing reductions and the addition of Fevertree. Overall, progress in core brands, premiumization, and beyond beer supports their outlook.

    7. Fevertree Partnership Rationale
      Q: What value does Molson Coors add to Fevertree partnership?
      A: Gavin explained that Fevertree complements their strategy to meet consumer needs across occasions, especially in non-alcoholic beverages. Fevertree is the world's leading supplier of premium carbonated drinks and mixers, fitting at the intersection of beer and non-alcoholic drinks. Molson Coors brings a tremendous network of distributors, servicing over 500,000 outlets, vastly expanding Fevertree's reach from tens of thousands. The partnership adds credibility to their commitment to non-alcoholic beverages.

    8. Share Repurchases & EPS Guidance
      Q: How do share repurchases factor into 2025 EPS growth?
      A: Tracey confirmed that share repurchases contribute to their high single-digit underlying EPS growth guidance. The guidance assumes at minimum repurchases in line with their 10b5-1 plan. Other factors affecting EPS growth include tax and foreign exchange. They've reduced their effective tax rate guidance for 2025 to 22%–24% from 23%–25% in 2024. The share repurchase amount may vary due to factors like capital commitments, e.g., Fevertree investment.

    9. Shelf Space & Fevertree Accounting
      Q: What's the outlook for shelf space, and how will Fevertree be accounted for?
      A: Gavin noted that after unprecedented gains in shelf space in 2024, they expect to hold onto those gains in 2025. They retained more than 80% of share gains with Coors Light, Miller Lite, and Coors Banquet in Q4 , and are 170 basis points of share higher compared to 2023. Tracey explained they will recognize 100% of Fevertree's U.S. revenue, share costs at the EBITDA level, and pay a royalty included in COGS. Their investment in Fevertree will be reported on a cost basis and excluded from underlying results.

    10. Competitive Environment & Promotions
      Q: Are you seeing increased promotional activity in the U.S. market?
      A: Gavin stated they haven't seen anything unusual in terms of promotional activity. Promotions typically occur in summer months (Q2, Q3), and they haven't observed unusual activity in Q4 or Q1. They will continue to take a strategic approach to the competitive landscape and do what's right for their brands.

    11. EMEA APAC Growth Expectations
      Q: Can EMEA APAC grow as fast as the rest of the company in 2025?
      A: Gavin acknowledged that consumer demand in the U.K. was softer in 2024 compared to 2023. They adopted a value-over-volume approach with Carling, their biggest U.K. brand. Despite challenges, they continue to drive volume and value growth and have plans to enter new markets like Bulgaria. Gavin sees no reason why EMEA APAC won't grow quicker than North America over time.

    12. Innovation & High-ABV Products
      Q: How does innovation towards higher alcohol products impact category volumes?
      A: Gavin doesn't see innovation in higher alcohol products negatively impacting beer; in fact, it's positive. The growth in spirits is mainly from the RTD space, where beer companies also compete. They have a convenience-led innovation pipeline with launches like Simply Spiked Bold and Blue Moon Extra at 8% ABV. They also created a Gen Z culture panel to innovate for new legal drinking age consumers, leading to products like Happy Thursday. These innovations help in marketing and reaching consumers through new channels.

    13. Segment Terminology & Brand Positioning
      Q: Should the industry stop using the term "domestic" for beer?
      A: Gavin emphasized that their brands have deep heritage in the U.S. and Canada, and they are proud of their roots. He suggested that consumers are aware of their iconic brands' origins. Their focus remains on their acceleration plans and strengthening their portfolio, with core brands in a great place, having gained substantial share since 2023.

    14. U.S. Brand Volumes & Consumer Behavior
      Q: Can you provide insights on U.S. brand volumes and consumer trends?
      A: Gavin noted that an extra trading day helped U.S. brand volumes, which were down 3%. Consumers had moved away from convenience stores earlier but are now returning to the C-store channel. The on-premise channel continues to slightly outperform.

    15. Beer Category Trends & Share Repurchases
      Q: What are your views on recent beer category trends and share buybacks?
      A: Gavin observed that 2024 had a lot of noise due to trading days, holiday timings, and turbulent weather, with summer being not particularly good. However, they saw progress in Q4, which was the best quarter of industry performance experienced last year. He cautioned against drawing conclusions from short-term data, noting that early 2025 data is utterly dissimilar to 2024. Tracey confirmed they intend to continue executing their $2 billion share repurchase program, having utilized about 40% in the first 5 quarters of the 5-year program announced in October 2023. The execution may vary due to factors like capital commitments, e.g., Fevertree investment.