Company Reports Strong Third Quarter
Performance and Meaningful Progress on the Revitalization Plan
Despite Challenges from Coronavirus
Net Sales Revenue Decreased 3.1% Reported
and 3.6% in Constant Currency
U.S. GAAP Net Income of $343 Million ($1.58
Per Share) and
Non-GAAP EPS of $1.62 increased 9.5%
Underlying EBITDA of $713 Million Increased
0.5% in Constant Currency
Molson Coors Beverage Company (NYSE: TAP; TSX: TPX) today
reported results for the 2020 third quarter. Molson Coors president
and chief executive officer Gavin Hattersley said:
"We are very pleased with our performance in the third quarter,
as we beat top and bottom-line expectations and made tangible
progress on our revitalization plan. We had bold plans for our
business at the beginning of 2020: to build on the strength of our
iconic core brands, aggressively grow our above premium portfolio,
expand beyond the beer aisle, invest in our capabilities and
support our people and our communities."
Gavin continued, "The challenges throughout the year presented a
lot of new obstacles, for us and every other business around the
world. But we met each challenge head on and we never lost sight of
our goals or the path we set out on early in the year. Now we are
showing what's possible when we execute that plan and it’s our
strategy that will allow us to reach further as we drive toward
top-line growth."
Revitalization Plan Update
In October 2019, Molson Coors Beverage Company (“Molson Coors”
or the “Company”) laid out a revitalization plan aimed at
streamlining the organization and reinvesting resources into its
brands and capabilities. The plan was designed to accomplish three
goals: 1) build on the strength of its iconic core brands, 2)
aggressively grow its above premium portfolio and 3) plant the
seeds for future growth outside the beer aisle. To make its plan
possible, the Company said it would invest in its capabilities –
from supply chain to data to sales platforms – and invest in its
people and communities.
Exactly one year later, the Company is reporting tangible
progress against the plan – even in spite of the challenges posed
by the global coronavirus pandemic. The following highlights are
examples of the progress the Company is making as it implements the
previously announced revitalization plan and its goal of driving
top-line growth:
As the Company builds on the strength of its iconic core
brands:
- Coors Light and Miller Lite grew 6.0% and 9.5%, respectively,
in the U.S. off-premise so far this year.
- The combined U.S. segment share for Coors Light and Miller Lite
has now grown for 24 consecutive quarters – six straight years, per
Nielsen. The Company aims to move beyond these segment share gains
to stabilize its biggest brands in the total beer category.
- Our national champion brands in Europe saw significant volume
trend improvement compared to the second quarter due to the phased
re-opening, with restrictions, of the on-premise.
As the Company aggressively grows its above premium
portfolio:
- Above premium products hit a record high portion of the
Company’s U.S. portfolio in the third quarter, the highest it has
been since the formation of the MillerCoors joint venture in
2008.
- Blue Moon LightSky has become the top selling new beer in the
U.S. in 2020, per Nielsen.
- Blue Moon, the largest craft brand family in the U.S., has seen
the largest growth in the off-premise among all craft brand
families in 2020, per Nielsen.
- The Company announced the creation of a new joint venture with
Yuengling to bring its iconic beers westward in the U.S. for the
first time.
- Duvel was added to the Company’s Canadian portfolio under a new
distribution agreement.
- The Company acquired Atwater Brewing, filling a geographic gap
in its U.S. craft portfolio.
- Vizzy Hard Seltzer has risen to #8 on the Nielsen top-10 growth
brands chart in 2020.
- The Company launched Coors Seltzer at the end of August and
sold over 500,000 cases in the first month. The Company believes it
can become the #1 beer brand in the segment.
- The Company entered into an exclusive agreement with The
Coca-Cola Company to manufacture, market and distribute Topo Chico
Hard Seltzer in the U.S., which we expect to launch in the first
half of 2021.
- The Company believes it can capture a double-digit share of the
U.S. seltzer market by the end of next year – backed by arguably
the most complete seltzer portfolio in the business comprised of
highly differentiated products.
- In the Europe business and outside of its primary market, the
Staropramen brand grew brand volumes by approximately 9% in the
third quarter of 2020 versus 2019.
- The export and license team grew brand volumes by approximately
3% in the third quarter of 2020 versus 2019, thereby expanding the
footprint and size of our premium-positioned brands across the
Europe business.
As the Company expands beyond the beer aisle:
- Truss, the Company’s Canadian cannabis joint venture, has
quickly become a market share leader of ready-to-drink cannabis
beverages in Canada – we estimate a market share of over 50% in key
markets, such as Quebec.
- The Company launched a new line of non-alcohol products created
by beverage incubator LA Libations LLC.
- The Company took a minority stake in Zen Beverages LLC and its
brand ZenWTR, by noted beverage innovator Lance Collins.
- The Company launched Vyne Botanicals hop water in Canada.
- The Company signed a distribution deal for La Colombe’s line up
of ready-to-drink coffees in off-premise outlets, starting with
drug and convenience store channels.
As the Company invests in its capabilities:
- The Company is expanding its hard seltzer production capacity
by over 400%, which is expected to be completed by the end of
2020.
- The Company is expanding production capacity for Blue Moon
LightSky by approximately 400% to support its continued
growth.
- The Company has commissioned a new sleek can production line,
capable of producing 750 million cans per year, at the Rocky
Mountain Metal Company – the Company’s joint venture with Ball
Corporation.
- It has started a major modernization project at the Coors
Brewery in Golden, Colorado.
- During the coronavirus pandemic, the Company has boosted online
sales in the U.S. by approximately 200% through the three-tier
structure, while also developing new e-commerce and direct to
consumer channels for our business in Canada.
As the Company supports its people and communities:
- The Company has delivered progress against its stated goal of
increasing representation of people of color by 25% across the
U.S., among salaried employees and also in leadership positions by
the end of 2023.
- The Company provided new support to 25 national and local
organizations working to address issues of equality, empowerment,
racial justice and community building.
- The U.S. craft beer division, Tenth & Blake, launched a new
scholarship program supporting people of color and LGBTQ+ students
seeking degrees in brewing or fermentation sciences.
- Through the brewery modernization project in Golden, Colorado,
the Company intends to significantly reduce CO2 emissions from the
brewery, reduce energy usage by 15% and reduce water usage by 100
million gallons per year.
Consolidated Performance - Third Quarter 2020
Three Months Ended
($ in millions, except per share data)
(Unaudited)
September 30,
2020
September 30,
2019
Reported
Increase
(Decrease)
Foreign
Exchange
Impact
Constant
Currency
Increase
(Decrease)(2)
Net Sales
$
2,753.5
$
2,841.6
(3.1
)
%
$
14.6
(3.6
)
%
U.S. GAAP Net income (loss)(1)
$
342.8
$
(402.8
)
N/M
Per diluted share
$
1.58
$
(1.86
)
N/M
Underlying Net income (loss)(2)
$
350.8
$
321.2
9.2
%
Per diluted share
$
1.62
$
1.48
9.5
%
Underlying EBITDA(2)
$
712.5
$
702.6
1.4
%
$
6.1
0.5
%
Nine Months Ended
($ in millions, except per share data)
(Unaudited)
September 30,
2020
September 30,
2019
Reported
Increase
(Decrease)
Foreign
Exchange
Impact
Constant
Currency
Increase
(Decrease)(2)
Net Sales
$
7,359.7
$
8,093.2
(9.1
)
%
$
(18.4
)
(8.8
)
%
U.S. GAAP Net income (loss)(1)
$
420.8
$
78.0
N/M
Per diluted share
$
1.94
$
0.36
N/M
Underlying Net income (loss)(2)
$
765.1
$
763.5
0.2
%
Per diluted share
$
3.53
$
3.52
0.3
%
Underlying EBITDA(2)
$
1,757.0
$
1,800.9
(2.4
)
%
$
3.9
(2.7
)
%
N/M = Not meaningful
(1)
Net income (loss) attributable to
MCBC.
(2)
Represents net income (loss) and EBITDA
adjusted for non-GAAP items. See Appendix for definitions and
reconciliations of non-GAAP financial measures including constant
currency.
Net Sales Drivers
Three Months Ended September
30, 2020
Reported
Percent change
Financial
Volume
Price, Product
and
Geography
Mix
Currency
Net Sales
Net Sales per
hectoliter (BV
basis)(1)
Brand
Volume
Consolidated
(5.0
)
%
1.4
%
0.5
%
(3.1
)
%
2.1
%
(5.2
)
%
North America
(4.0
)
%
3.2
%
(0.2
)
%
(1.0
)
%
3.6
%
(5.2
)
%
Europe
(7.7
)
%
(7.6
)
%
3.1
%
(12.2
)
%
(5.9
)
%
(5.4
)
%
Nine Months Ended September
30, 2020
Reported
Percent change
Financial
Volume
Price, Product
and
Geography
Mix
Currency
Net Sales
Net Sales per
hectoliter (BV
basis)(1)
Brand
Volume
Consolidated
(8.7
)
%
(0.1
)
%
(0.3
)
%
(9.1
)
%
0.4
%
(6.6
)
%
North America
(6.7
)
%
1.4
%
(0.2
)
%
(5.5
)
%
1.2
%
(4.6
)
%
Europe
(14.5
)
%
(10.3
)
%
(0.1
)
%
(24.9
)
%
(8.0
)
%
(12.0
)
%
(1)
Our net sales per hectoliter performance
discussions are reflected on a brand volume ("BV") basis,
reflecting owned and actively managed brand volume, along with
royalty volume, in the denominator, as well as the financial impact
of these sales (in constant currency) in the numerator, unless
otherwise indicated.
Quarterly Highlights (versus Third Quarter 2019
Results)
- Revenue: Net sales decreased 3.1% on a reported basis,
and 3.6% in constant currency driven by financial volume declines
related to continued on-premise restrictions from the coronavirus
pandemic, as well as unfavorable channel mix across all major
markets, partially offset by higher net pricing in the U.S. and
Canada as well as positive brand and package mix in the U.S. While
the health of our core brands remains strong, the on-premise
restrictions and North America packaging material constraints
contributed to lower brand and financial volumes, particularly in
the economy and premium segments. North America shipment timing was
positive in the third quarter, but remained negatively impacted by
packaging material constraints.
- Cost of goods sold (COGS) per hectoliter: decreased 3.1%
on a reported basis primarily driven by changes to our unrealized
mark-to-market commodity positions and delivery of cost savings,
partially offset by cost inflation and volume deleverage.
Underlying COGS per hectoliter: increased 1.5% in constant
currency primarily driven by cost inflation and volume deleverage,
partially offset by cost savings.
- Marketing, general & administrative (MG&A):
decreased 8.1% on a reported basis. Underlying MG&A:
decreased 7.6% in constant currency as a result of adjusting
marketing spend related to areas impacted by the coronavirus
pandemic, particularly sports and live entertainment events, cost
savings related to the revitalization plan and targeted cost
mitigation actions. These reductions are partially offset by
cycling lower incentive compensation in the prior year and higher
current year media investment in North America.
- U.S. GAAP pretax income: income of $450.4 million
compared to a loss of $308.6 million in the prior year was driven
by lower special charges of approximately $644 million primarily
due to cycling a $668.3 million goodwill impairment charge
recognized in our North America segment in the third quarter of
2019, partially offset by higher current year asset impairment
losses in Europe, an approximate $90 million year-over-year
variance resulting from favorable unrealized mark-to-market changes
on our commodity positions and HEXO warrants as well as lower
MG&A costs, as described above, and positive pricing in the
U.S. and Canada, partially offset by lower financial volume.
- Underlying EBITDA: increased 0.5% in constant currency,
driven by lower MG&A costs, as described above, and positive
pricing in the U.S. and Canada, partially offset by lower financial
volume.
- U.S. GAAP cash from operations: net cash provided by
operating activities was $1,493.2 million for the nine months ended
September 30, 2020 compared to $1,288.2 million in the prior year.
This increase was primarily driven by favorable timing of working
capital. Notably, working capital has benefited from the deferral
of over $200 million in tax payments from various
government-sponsored payment deferral programs initiated in
response to the coronavirus pandemic, of which we currently
anticipate approximately half to be paid in the fourth quarter of
2020 with the remaining amounts to be paid beyond this fiscal year
as they become due.
- Underlying free cash flow: cash received of $1,160.3
million for the nine months ended September 30, 2020, which
represents an increase in cash received of $275.5 million from the
prior year, primarily due to favorable timing of working capital,
as discussed above.
- Debt: Total debt at the end of the third quarter 2020
was $8.4 billion, and cash and cash equivalents totaled $731.3
million, resulting in net debt of $7.6 billion. This represents a
reduction in net debt of $874.0 million since December 31,
2019.
Quarterly Segment Highlights (versus Third Quarter 2019
Results)
North America Business
- Revenue: Net sales on a reported basis, decreased 1.0%
and 0.8% in constant currency due to financial volume declines of
4.0%, reflecting lower brand volume, partially offset by favorable
year-over-year shipment timing in the U.S. reducing a year-to-date
under-shipment position attributed to aluminum can supply
constraints. North America brand volumes decreased 5.2% due to
on-premise outlet restrictions as well as packaging material
constraints contributing to declines in the economy and premium
segments. In the U.S., brand volumes decreased 5.3% compared to
domestic shipment declines of 3.9%. We currently expect U.S.
domestic shipment trends to be higher than brand volume trends in
the fourth quarter as we build distributor inventories for the
balance of the year. Canada and Latin America brand volumes
declined 4.2% and 4.6%, respectively, in the quarter. Net sales per
hectoliter on a brand volume basis increased 3.6% driven by
favorable brand and package mix in the U.S. as well as net pricing
increases in the U.S. and Canada, partially offset by negative
brand and channel mix in Canada attributed to the shift of volume
from on-premise to off-premise. In the U.S., net sales per
hectoliter on a brand volume basis increased 4.6% driven by
positive mix aided by strong performance of new brands Vizzy, Blue
Moon LightSky and Coors Seltzer and net pricing increases. In
Canada, negative mix more than offset the net pricing increases,
while Latin America net sales per hectoliter on a brand volume
basis was largely consistent with prior year.
- U.S. GAAP pretax income: income of $400.8 million
compared to a loss of $287.4 million in the prior year driven by
lower special charges, net pricing increases in the U.S. and
Canada, favorable brand and package mix in the U.S., lower MG&A
expense and cost savings in cost of goods sold, partially offset by
lower financial volume and cost of goods sold inflation. The lower
MG&A expense was driven by lower marketing spend in areas
impacted by the coronavirus pandemic, such as sports and live
entertainment events, and other cost mitigating actions, as well as
cost savings related to the revitalization plan, partially offset
by cycling lower incentive compensation in the prior year and
higher current year media investment.
- Underlying EBITDA: increased 2.5% in constant currency
due to the same factors as U.S. GAAP pretax income results with the
exception of the lower special charges.
Europe Business
- Revenue: Net sales on a reported basis, decreased 12.2%
and 15.3% in constant currency due to lower volumes and lower net
sales per hectoliter as a result of the impacts of the coronavirus
pandemic. Net sales per hectoliter on a brand volume basis declined
5.9% driven by unfavorable channel, brand and geographic mix,
particularly from our higher margin U.K. business, which has a more
significant exposure to the on-premise channel which re-opened with
restrictions in the third quarter of 2020. Financial volume
decreased 7.7% and brand volumes decreased 5.4%.
- U.S. GAAP pretax income: decreased 22.7% primarily due
to lower gross profit as a result of the impacts of the coronavirus
pandemic and higher special charges, partially offset by lower
MG&A expense driven by cost mitigation actions.
- Underlying EBITDA: decreased 8.0% in constant currency
driven by gross profit impacts of volume declines and unfavorable
geographic and channel mix, partially offset by lower MG&A
expense as a result of cost mitigation actions to navigate the
coronavirus pandemic.
Segment Recast
Effective January 1, 2020, we changed our management structure
from a corporate center and four segments to two segments - North
America and Europe. We also have certain activity that is not
allocated to our segments, which has been reflected as
"Unallocated". Specifically, "Unallocated" activity primarily
includes financing related costs such as interest expense and
income, foreign exchange gains and losses on intercompany balances
related to financing and other treasury-related activities, and the
unrealized changes in fair value on our commodity swaps not
designated in hedging relationships recorded within cost of goods
sold, which are later reclassified when realized to the segment in
which the underlying exposure resides. Additionally, only the
service cost component of net periodic pension and OPEB cost is
reported within each operating segment, and all other components
remain unallocated. Prior period results have been recast to
retrospectively reflect these changes in segment reporting, with no
impact to our consolidated prior period results. Please see 2019
segment recasts by quarter on the Investor Relations section of our
website.
Other Results
Effective Income
Tax Rates
Three Months Ended
September 30, 2020
September 30, 2019
U.S. GAAP effective tax rate
23
%
(29
)
%
Underlying effective tax rate
20
%
24
%
- The change in our U.S. GAAP effective tax rate
was primarily driven by a $668.3 million impairment charge to
nondeductible goodwill within our North America segment recognized
in the third quarter of 2019.
- The decrease in our Underlying effective tax rate
was primarily due to lower net discrete tax expenses recognized in
the third quarter of 2020 versus the third quarter of 2019.
Special and Other Non-Core
Items
The following special and other non-core items have been
excluded from underlying results. See the Appendix for
reconciliations of non-GAAP financial measures.
- During the third quarter of 2020, we recognized a net
special charge of $59.7 million, primarily driven by an
impairment loss of $30.0 million related to the held for sale
classification of a portion of our India business, representing an
insignificant part of our Europe segment, accelerated depreciation
related to the two previously announced brewery closures in North
America and restructuring charges related to the revitalization
plan.
- Additionally during the third quarter of 2020, we recorded
other non-core net benefits of $68.5 million primarily
driven by changes in our unrealized mark-to-market positions on
commodity hedges.
2020 Outlook
On March 27, 2020, we withdrew, in its entirety, our financial
outlook for 2020 and beyond that we previously provided on February
12, 2020. We currently remain unable to provide an updated detailed
financial outlook given the ongoing coronavirus pandemic. However,
note the following related to the deferral of certain tax payments,
as well as new U.S. federal income tax regulations.
As discussed above, the working capital within our U.S. GAAP
cash from operations and underlying free cash flow for the nine
months ended September 30, 2020, benefited from the deferral of
over $200 million in tax payments from various government-sponsored
payment deferral programs initiated in response to the coronavirus
pandemic, of which we currently anticipate approximately half to be
paid in the fourth quarter of 2020 with the remaining amounts to be
paid beyond this fiscal year.
In the second quarter of 2020, the U.S. Department of Treasury
enacted final hybrid regulations which impact tax positions we took
in 2018 and 2019 and have resulted in additional income tax expense
of approximately $135 million recognized during the second quarter
of 2020. The impact of the finalized regulations could result in
cash tax outflows up to this amount in 2021. We continue to analyze
the potential cash impacts of the final regulations to minimize any
cash outflows.
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, 2020, compared to the
third quarter ended September 30, 2019. Some numbers may not sum
due to rounding.
2020 Third Quarter Conference Call
Molson Coors Beverage Company will conduct an earnings
conference call with financial analysts and investors at 11:00 a.m.
Eastern Time today to discuss the Company’s 2020 third quarter
results. The live webcast will be accessible via our website,
www.molsoncoors.com. An online replay of the webcast will be
available until 11:59 p.m. Eastern Time on February 10, 2021. The
Company will post this release and related financial statements on
its website today.
Overview of Molson Coors
For over two centuries Molson Coors has been brewing beverages
that unite people for all of life’s moments. From Coors Light,
Miller Lite, Molson Canadian, Carling, and Staropramen to Coors
Banquet, Blue Moon Belgian White, Blue Moon LightSky, Vizzy,
Leinenkugel’s Summer Shandy, Creemore Springs and more, Molson
Coors produces some of the most beloved and iconic beer brands ever
made. While the company’s history is rooted in beer, Molson Coors
offers a modern portfolio that expands beyond the beer aisle as
well.
Our reporting segments include: North America, operating in the
U.S., Canada and various countries in Latin and South America; and
Europe, operating in Bulgaria, Croatia, Czech Republic, Hungary,
Montenegro, the Republic of Ireland, Romania, Serbia, the U.K.,
various other European countries, and certain countries within
Africa and Asia Pacific. In addition to our reporting segments, we
also have certain items that are unallocated to our reporting
segments and reported as "Unallocated", which primarily include
financing related costs and impacts of other treasury-related
activities. Quarterly and year-to-date 2019 segment financial
information has been recast to reflect the segment changes as part
of the revitalization plan. Please see 2019 segment recast by
quarter on the Investor Relations section of our website. The
company’s commitment to raising industry standards and leaving a
positive imprint on our employees, consumers, communities and the
environment is reflected in Our Imprint and our 2025 sustainability
targets. To learn more about Molson Coors Beverage Company, visit
molsoncoors.com, MolsonCoorsOurImprint.com or on Twitter through
@MolsonCoors.
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 “believe,” "aims," “expect,” “intend,” “anticipate,”
“project,” “will,” “outlook,” and similar expressions identify
forward-looking statements, which generally are not historic in
nature. Statements that refer to projections of our future
financial performance, our anticipated results, cost savings 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
"Revitalization Plan Update" and "2020 Outlook," expectations
regarding the impacts of the coronavirus pandemic on our business,
overall volume trends, consumer preferences, pricing trends,
industry forces, cost reduction strategies, including our
revitalization plan announced in 2019 and the estimated range of
related charges and timing of cash charges, anticipated results,
expectations for funding future capital expenditures and
operations, debt service capabilities, timing and amounts of debt
and leverage levels, shipment levels and profitability, market
share and the sufficiency of capital resources. 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”). These factors
include, among others, the impact of the coronavirus pandemic, the
impact of increased competition resulting from further
consolidation of brewers, competitive pricing and product
pressures; health of the beer industry and our brands in our
markets; economic conditions in our markets; additional impairment
charges; our ability to maintain manufacturer/distribution
agreements; changes in our supply chain system; availability or
increase in the cost of packaging materials; success of our joint
ventures; risks relating to operations in developing and emerging
markets; changes in legal and regulatory requirements, including
the regulation of distribution systems; fluctuations in foreign
currency exchange rates; increase in the cost of commodities used
in the business; the impact of climate change and the availability
and quality of water; loss or closure of a major brewery or other
key facility; our ability to implement our strategic initiatives,
including executing and realizing cost savings; pension plan and
other post-retirement benefit costs; failure to comply with debt
covenants or deterioration in our credit rating; our ability to
maintain good labor relations; our ability to maintain brand image,
reputation and product quality; and other 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.
Appendix
Statements of Operations - Molson Coors Beverage Company and
Subsidiaries
Condensed
Consolidated Statements of Operations
(In millions, except per share data)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2020
September 30, 2019
September 30, 2020
September 30, 2019
Financial volume in hectoliters
23.789
25.044
64.803
70.956
Sales
$
3,378.4
$
3,498.0
$
8,946.0
$
9,918.1
Excise taxes
(624.9
)
(656.4
)
(1,586.3
)
(1,824.9
)
Net sales
2,753.5
2,841.6
7,359.7
8,093.2
Cost of goods sold
(1,551.0
)
(1,685.4
)
(4,486.6
)
(4,858.2
)
Gross profit
1,202.5
1,156.2
2,873.1
3,235.0
Marketing, general and administrative
expenses
(634.5
)
(690.2
)
(1,788.7
)
(2,115.1
)
Special items, net
(59.7
)
(703.3
)
(210.6
)
(666.4
)
Operating income (loss)
508.3
(237.3
)
873.8
453.5
Interest income (expense), net
(67.9
)
(65.6
)
(206.5
)
(204.5
)
Other pension and postretirement benefits
(costs), net
7.6
8.0
22.7
25.0
Other income (expense), net
2.4
(13.7
)
3.4
(0.7
)
Income (loss) before income taxes
450.4
(308.6
)
693.4
273.3
Income tax benefit (expense)
(104.0
)
(90.7
)
(265.2
)
(193.3
)
Net income (loss)
346.4
(399.3
)
428.2
80.0
Net (income) loss attributable to
noncontrolling interests
(3.6
)
(3.5
)
(7.4
)
(2.0
)
Net income (loss) attributable to MCBC
$
342.8
$
(402.8
)
$
420.8
$
78.0
Basic net income (loss) attributable to
MCBC per share:
$
1.58
$
(1.86
)
$
1.94
$
0.36
Diluted net income (loss) attributable to
MCBC per share:
$
1.58
$
(1.86
)
$
1.94
$
0.36
Weighted average shares - basic
216.9
216.6
216.8
216.6
Weighted average shares - diluted
217.0
216.6
217.0
216.9
Dividends per share
$
—
$
0.57
$
0.57
$
1.39
Balance Sheets - Molson Coors Beverage Company and
Subsidiaries
Condensed
Consolidated Balance Sheets
(In millions, except par value)
(Unaudited)
As of
September 30, 2020
December 31, 2019
Assets
Current assets:
Cash and cash equivalents
$
731.3
$
523.4
Accounts receivable, net
694.2
714.8
Other receivables, net
123.1
105.5
Inventories, net
657.7
615.9
Other current assets, net
434.2
224.8
Total current assets
2,640.5
2,184.4
Properties, net
4,180.1
4,546.5
Goodwill
7,624.1
7,631.4
Other intangibles, net
13,410.4
13,656.0
Other assets
820.2
841.5
Total assets
$
28,675.3
$
28,859.8
Liabilities and equity
Current liabilities:
Accounts payable and other current
liabilities
$
3,068.4
$
2,767.3
Current portion of long-term debt and
short-term borrowings
1,242.1
928.2
Total current liabilities
4,310.5
3,695.5
Long-term debt
7,129.5
8,109.5
Pension and postretirement benefits
691.5
716.6
Deferred tax liabilities
2,276.0
2,258.6
Other liabilities
492.2
406.5
Total liabilities
14,899.7
15,186.7
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 per
share (authorized: 500.0 shares; issued and outstanding: 2.6 shares
and 2.6 shares, respectively)
—
—
Class B common stock, $0.01 par value per
share (authorized: 500.0 shares; issued: 209.8 shares and 205.7
shares, respectively)
2.1
2.1
Class A exchangeable shares, no par value
(issued and outstanding: 2.7 shares and 2.7 shares,
respectively)
102.3
102.5
Class B exchangeable shares, no par value
(issued and outstanding: 11.1 shares and 14.8 shares,
respectively)
417.8
557.8
Paid-in capital
6,931.3
6,773.6
Retained earnings
7,914.0
7,617.0
Accumulated other comprehensive income
(loss)
(1,383.4
)
(1,162.2
)
Class B common stock held in treasury at
cost (9.5 shares and 9.5 shares, respectively)
(471.4
)
(471.4
)
Total Molson Coors Beverage Company
stockholders' equity
13,512.7
13,419.4
Noncontrolling interests
262.9
253.7
Total equity
13,775.6
13,673.1
Total liabilities and equity
$
28,675.3
$
28,859.8
Cash Flow Statements - Molson Coors Beverage Company and
Subsidiaries
Condensed
Consolidated Statements of Cash Flows
(In millions) (Unaudited)
Nine Months Ended
September 30, 2020
September 30, 2019
Cash flows from operating activities:
Net income (loss) including noncontrolling
interests
$
428.2
$
80.0
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
714.9
641.4
Amortization of debt issuance costs and
discounts
6.3
11.2
Share-based compensation
18.0
7.5
(Gain) loss on sale or impairment of
properties and other assets, net
39.8
630.6
Unrealized (gain) loss on foreign currency
fluctuations and derivative instruments, net
(25.9
)
16.2
Income tax (benefit) expense
265.2
193.3
Income tax (paid) received
(75.7
)
(50.3
)
Interest expense, excluding interest
amortization
202.5
207.0
Interest paid
(236.1
)
(249.5
)
Change in current assets and liabilities
and other
156.0
(199.2
)
Net cash provided by (used in) operating
activities
1,493.2
1,288.2
Cash flows from investing activities:
Additions to properties
(456.4
)
(457.3
)
Proceeds from sales of properties and
other assets
4.6
101.0
Other
0.5
37.3
Net cash provided by (used in) investing
activities
(451.3
)
(319.0
)
Cash flows from financing activities:
Exercise of stock options under equity
compensation plans
4.0
1.5
Dividends paid
(125.3
)
(300.9
)
Payments on debt and borrowings
(913.5
)
(1,575.9
)
Proceeds on debt and borrowings
1.5
—
Net proceeds from (payments on) revolving
credit facilities and commercial paper
224.6
262.9
Change in overdraft balances and other
(32.6
)
(1.2
)
Net cash provided by (used in) financing
activities
(841.3
)
(1,613.6
)
Cash and cash equivalents:
Net increase (decrease) in cash and cash
equivalents
200.6
(644.4
)
Effect of foreign exchange rate changes on
cash and cash equivalents
7.3
(3.3
)
Balance at beginning of year
523.4
1,057.9
Balance at end of period
$
731.3
$
410.2
Summarized Segment Results ($ in millions) (Unaudited)
North America
Q3 2020
Q3 2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
YTD
2020
YTD
2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
Financial volume(2)(3)
17.329
18.050
(4.0
)
%
49.433
52.972
(6.7
)
%
Net sales(3)
$
2,252.3
$
2,274.3
(1.0
)
%
$
(3.5
)
(0.8
)
%
$
6,242.2
$
6,607.5
(5.5
)
%
$
(16.7
)
(5.3
)
%
COGS(3)
(1,304.4
)
(1,322.3
)
(1.4
)
%
(3,738.8
)
(3,896.2
)
(4.0
)
%
MG&A
(517.3
)
(552.9
)
(6.4
)
%
(1,439.1
)
(1,674.9
)
(14.1
)
%
Pretax income (loss)
$
400.8
$
(287.4
)
N/M
$
(0.5
)
N/M
$
888.5
$
407.0
118.3
%
$
(1.8
)
118.7
%
Underlying EBITDA
$
581.5
$
568.2
2.3
%
$
(0.7
)
2.5
%
$
1,582.0
$
1,540.4
2.7
%
$
(4.2
)
3.0
%
Europe
Q3 2020
Q3 2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
YTD
2020
YTD
2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
Financial volume(2)(3)
6.478
7.020
(7.7
)
%
15.443
18.066
(14.5
)
%
Net sales(3)
$
504.1
$
574.0
(12.2
)
%
$
18.1
(15.3
)
%
$
1,128.8
$
1,503.8
(24.9
)
%
$
(1.7
)
(24.8
)
%
COGS(3)
(313.9
)
(354.9
)
(11.6
)
%
(783.8
)
(968.1
)
(19.0
)
%
MG&A
(117.2
)
(137.3
)
(14.6
)
%
(349.6
)
(440.2
)
(20.6
)
%
Pretax income (loss)
$
40.9
$
52.9
(22.7
)
%
$
—
(22.7
)
%
$
(46.9
)
$
57.9
N/M
$
4.0
N/M
Underlying EBITDA
$
120.4
$
126.9
(5.1
)
%
$
3.7
(8.0
)
%
$
147.3
$
235.3
(37.4
)
%
$
3.3
(38.8
)
%
Unallocated &
Eliminations
Q3 2020
Q3 2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
YTD
2020
YTD
2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
Financial volume
(0.018
)
(0.026
)
(30.8
)
%
(0.073
)
(0.082
)
(11.0
)
%
Net Sales
$
(2.9
)
$
(6.7
)
(56.7
)
%
$
(11.3
)
$
(18.1
)
(37.6
)
%
COGS(3)
67.3
(8.2
)
N/M
36.0
6.1
N/M
Pretax income (loss)
$
8.7
$
(74.1
)
N/M
$
3.3
N/M
$
(148.2
)
$
(191.6
)
(22.7
)
%
$
5.6
(19.7
)
%
Underlying EBITDA
$
10.6
$
7.5
41.3
%
$
3.1
—
%
$
27.7
$
25.2
9.9
%
$
4.8
(9.1
)
%
Consolidated
Q3 2020
Q3 2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
YTD
2020
YTD
2019(1)
Reported
Change
FX
Impact
Constant
Currency
Change
Financial volume(2)
23.789
25.044
(5.0
)
%
64.803
70.956
(8.7
)
%
Net sales
$
2,753.5
$
2,841.6
(3.1
)
%
$
14.6
(3.6
)
%
$
7,359.7
$
8,093.2
(9.1
)
%
$
(18.4
)
(8.8
)
%
COGS
(1,551.0
)
(1,685.4
)
(8.0
)
%
(4,486.6
)
(4,858.2
)
(7.6
)
%
MG&A
(634.5
)
(690.2
)
(8.1
)
%
(1,788.7
)
(2,115.1
)
(15.4
)
%
Pretax income (loss)
$
450.4
$
(308.6
)
N/M
$
2.8
N/M
$
693.4
$
273.3
153.7
%
$
7.8
150.9
%
Underlying EBITDA
$
712.5
$
702.6
1.4
%
$
6.1
0.5
%
$
1,757.0
$
1,800.9
(2.4
)
%
$
3.9
(2.7
)
%
N/M = Not meaningful
(1)
Quarterly and year-to-date 2019 segment
financial information has been recast to reflect the segment
changes as part of the revitalization plan. Please see 2019 segment
recast by quarter on the Investor Relations section of our
website.
(2)
Financial volume in hectoliters for North
America and Europe excludes royalty volume of 0.584 million
hectoliters and 0.532 million hectoliters for the three months
ended September 30, 2020, respectively, and excludes royalty
volume of 0.632 million hectoliters and 0.537 million hectoliters
for three months ended September 30, 2019, respectively.
Financial volume in hectoliters for North America and Europe
excludes royalty volume of 1.387 million hectoliters and 1.281
million hectoliters for the nine months ended September 30,
2020, respectively, and excludes royalty volume of 1.550 million
hectoliters and 1.396 million hectoliters for nine months ended
September 30, 2019, respectively.
(3)
Includes gross inter-segment volumes,
sales and purchases, which are eliminated in the consolidated
totals. The unrealized changes in fair value on our commodity
swaps, which are economic hedges, are recorded as cost of goods
sold 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.
Worldwide Brand and Financial Volume
(In millions of hectoliters)
(Unaudited)
Three Months Ended
September 30,
2020
September 30,
2019
Change
Financial Volume
23.789
25.044
(5.0
)
%
Contract brewing and wholesaler volume
(1.739
)
(1.986
)
(12.4
)
%
Royalty volume
1.116
1.169
(4.5
)
%
Sales-To-Wholesaler to Sales-To-Retail
adjustment
0.211
0.441
(52.2
)
%
Total Worldwide Brand Volume
23.377
24.668
(5.2
)
%
Worldwide Brand Volume by
Segment
North America
16.561
17.461
(5.2
)
%
Europe
6.816
7.207
(5.4
)
%
Total
23.377
24.668
(5.2
)
%
Worldwide brand volume (or "brand volume" when discussed by
segment) reflects only owned 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. Contract brewing and wholesaler 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. 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. Brand volumes presented for
the U.S. segment are on a trading day adjusted basis as
applicable.
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 present constant currency, "underlying COGS per hectoliter"
(COGS adjusted for non-GAAP items divided by reported financial
volume), "underlying MG&A," "underlying net income,"
"underlying income per diluted share," "underlying effective tax
rate" and "underlying free cash flow" as well as net sales and
pre-tax income in constant currency, among others, which are
non-GAAP measures and should be viewed as supplements to (not
substitutes for) our results of operations presented under U.S.
GAAP. We also present underlying earnings before interest, taxes,
depreciation, and amortization ("underlying EBITDA") as a non-GAAP
measure. Our management uses underlying income, underlying income
per diluted share, underlying EBITDA and underlying effective tax
rate as measures of operating performance, as well as underlying
free cash flow in the measure of cash generated from core
operations, 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 that underlying income,
underlying income per diluted share, underlying EBITDA and
underlying effective tax rate performance are used by, and are
useful to, investors and other users of our financial statements in
evaluating our operating performance, as well as underlying free
cash flow in evaluating our generation of cash from core
operations, because they provide an additional tool to evaluate our
performance without regard to special and non-core items, which can
vary substantially from company to company depending upon
accounting methods and book value of assets and capital structure.
In addition to the reasons discussed 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-core items. In
addition, constant-currency results exclude the impact of foreign
currency movements. For discussion and analysis of our liquidity,
see the consolidated statements of cash flows and the Liquidity and
Capital Resources section of our Management’s Discussion and
Analysis of Financial Condition and Results of Operations in our
latest Form 10-K and 10-Q filings with the SEC.
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. These adjustments consist of special items
from our U.S. GAAP financial statements as well as other non-core
items, such as integration related costs, unrealized mark-to-market
gains and losses, and gains and losses on sales of non-operating
assets, 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 and involve significant management
judgment.
Constant currency is a non-GAAP measure utilized by Molson Coors
management 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. This information is non-GAAP and should be
viewed as a supplement to (not a substitute for) our reported
results of operations under U.S. GAAP. We present all percentage
changes for net sales, underlying COGS, underlying MG&A and
underlying EBITDA 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 non-operating transactional
foreign currency impacts, reported within the Other Income/Expense,
net line item, from our current period results.
Reconciliation to Nearest U.S. GAAP Measures
Underlying
EBITDA
($ in millions) (Unaudited)
Three Months Ended
September 30,
2020
September 30,
2019
Change
U.S. GAAP: Net income (loss)
attributable to MCBC
$
342.8
$
(402.8
)
N/M
Add: Net income (loss) attributable to
noncontrolling interests
3.6
3.5
2.9
%
U.S. GAAP: Net income (loss)
346.4
(399.3
)
N/M
Add: Interest expense (income), net
67.9
65.6
3.5
%
Add: Income tax expense (benefit)
104.0
90.7
14.7
%
Add: Depreciation and amortization
220.7
211.7
4.3
%
Adjustments included in underlying
income(1)
(8.8
)
737.4
N/M
Adjustments to arrive at underlying
EBITDA(2)
(17.7
)
(3.5
)
N/M
Underlying EBITDA
$
712.5
$
702.6
1.4
%
($ in millions) (Unaudited)
Nine Months Ended
September 30,
2020
September 30,
2019
Change
U.S. GAAP: Net income (loss)
attributable to MCBC
$
420.8
$
78.0
N/M
Add: Net income (loss) attributable to
noncontrolling interests
7.4
2.0
N/M
U.S. GAAP: Net income (loss)
428.2
80.0
N/M
Add: Interest expense (income), net
206.5
204.5
1.0
%
Add: Income tax expense (benefit)
265.2
193.3
37.2
%
Add: Depreciation and amortization
714.9
641.4
11.5
%
Adjustments included in underlying
income(1)
249.8
701.8
(64.4
)
%
Adjustments to arrive at underlying
EBITDA(2)
(107.6
)
(20.1
)
N/M
Underlying EBITDA
$
1,757.0
$
1,800.9
(2.4
)
%
N/M = Not meaningful
(1)
Includes adjustments to non-GAAP
underlying income related to special and non-core items. See
Reconciliations to Nearest U.S. GAAP Measures by Line Item table
for detailed adjustments.
(2)
Represents adjustments to remove amounts
related to interest, depreciation and amortization included in the
adjustments to non-GAAP underlying income above, as these items are
added back as adjustments to net income attributable to MCBC.
Underlying Free
Cash Flow
(In millions) (Unaudited)
Nine Months Ended
September 30,
2020
September 30,
2019
U.S. GAAP:
Net Cash Provided by (Used In)
Operating Activities
$
1,493.2
$
1,288.2
Less:
Additions to properties(1)
(456.4
)
(457.3
)
Add/Less:
Cash impact of special items(2)
72.2
29.0
Add/Less:
Cash impact of other non-core items(3)
51.3
24.9
Non-GAAP:
Underlying Free Cash Flow
$
1,160.3
$
884.8
(1)
Included in net cash 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, 2020 and September 30, 2019.
(3)
Included in net cash provided by (used in)
operating activities and primarily reflects costs paid for
on-premise keg sales returns and "thank you" pay for certain
essential North America brewery employees for the nine months ended
September 30, 2020, and integration costs paid associated with
the acquisition of 58% of MillerCoors, LLC, and the Miller
International business for the nine months ended September 30,
2019.
Reconciliation by
Line Item
Third Quarter 2020
Three Months Ended September
30, 2020
(In millions, except per share data)
(Unaudited)
Net sales
Cost of
goods sold
Marketing,
general and
administrative
expenses
Operating
income (loss)
Other
income
(expense),
net
Net income
(loss)
attributable
to MCBC
Net income
(loss)
attributable
to MCBC
per diluted
share
Reported (U.S. GAAP)
$
2,753.5
$
(1,551.0
)
$
(634.5
)
$
508.3
$
2.4
$
342.8
$
1.58
Adjustments to arrive at underlying:
Special items, net
Employee-related charges
—
—
—
8.9
—
8.9
0.04
Impairments or asset abandonment
charges
—
—
—
50.7
—
50.7
0.24
Termination fees and other (gains)
losses
—
—
0.1
—
0.1
—
Non-Core items
On-premise keg sales returns and inventory
obsolescence reserves(1)
(0.7
)
(4.2
)
—
(4.9
)
—
(4.9
)
(0.02
)
Unrealized mark-to-market (gains)
losses
—
(64.4
)
—
(64.4
)
—
(64.4
)
(0.30
)
Other non-core items
—
—
0.1
0.1
0.7
0.8
—
Total Special and Other Non-Core items
$
(0.7
)
$
(68.6
)
$
0.1
$
(9.5
)
$
0.7
$
(8.8
)
$
(0.04
)
Tax effects on special and non-GAAP
items
—
—
—
—
—
16.8
0.08
Underlying (Non-GAAP)
$
2,752.8
$
(1,619.6
)
$
(634.4
)
$
498.8
$
3.1
$
350.8
$
1.62
(1)
Includes estimated keg sales returns and
estimated finished goods obsolescence reserves and costs related to
the on-premise impacts resulting from the coronavirus pandemic.
Non-GAAP adjustments do not include any estimates of lost revenue
resulting from the coronavirus pandemic.
YTD Third Quarter 2020
Nine Months Ended September
30, 2020
(In millions, except per share data)
(Unaudited)
Net sales
Cost of
goods sold
Marketing,
general and
administrative
expenses
Operating
income (loss)
Other
income
(expense),
net
Net income
(loss)
attributable
to MCBC
Net income
(loss)
attributable
to MCBC
per diluted
share
Reported (U.S. GAAP)
$
7,359.7
$
(4,486.6
)
$
(1,788.7
)
$
873.8
$
3.4
$
420.8
$
1.94
Adjustments to arrive at underlying:
Special items, net
Employee-related charges
—
—
—
61.8
—
61.8
0.28
Impairments or asset abandonment
charges
—
—
—
148.7
—
148.7
0.69
Termination fees and other (gains)
losses
—
—
—
0.1
—
0.1
—
Non-Core items
On-premise keg sales returns and inventory
obsolescence reserves(1)
31.1
12.6
—
43.7
—
43.7
0.20
Temporary "thank you" pay(1)
—
15.5
—
15.5
—
15.5
0.07
Unrealized mark-to-market (gains)
losses
—
(24.7
)
—
(24.7
)
—
(24.7
)
(0.11
)
Other non-core items
—
0.3
2.2
2.5
2.1
4.6
0.02
Non-core other pension and postretirement
benefits (costs), net
—
—
—
—
0.1
0.1
—
Total Special and Other Non-Core items
$
31.1
$
3.7
$
2.2
$
247.6
$
2.2
$
249.8
$
1.15
Tax effects on special and non-GAAP
items
—
—
—
—
—
94.5
0.44
Underlying (Non-GAAP)
$
7,390.8
$
(4,482.9
)
$
(1,786.5
)
$
1,121.4
$
5.6
$
765.1
$
3.53
(1)
Includes estimated keg sales returns and
estimated finished goods obsolescence reserves and costs related to
the on-premise impacts resulting from the coronavirus pandemic.
Additionally, includes temporary "thank you" pay for certain
essential North America brewery employees. Non-GAAP adjustments do
not include any estimates of lost revenue resulting from the
coronavirus pandemic.
Reconciliation to
Underlying EBITDA by Segment
(In millions) (Unaudited)
Three Months Ended September
30, 2020
North America
Europe
Unallocated
Consolidated
Income (loss) before income
taxes
$
400.8
$
40.9
$
8.7
$
450.4
Add/(less):
Net sales(1)
(5.5
)
4.8
—
(0.7
)
Cost of goods sold(1)(2)
(2.5
)
(1.7
)
(64.4
)
(68.6
)
Marketing, general &
administrative
0.1
—
—
0.1
Special items, net(3)
29.3
30.4
—
59.7
Other income/expense non-core items
0.7
—
—
0.7
Total Special and other Non-Core items
$
22.1
$
33.5
$
(64.4
)
$
(8.8
)
Underlying pretax income (loss)
$
422.9
$
74.4
$
(55.7
)
$
441.6
Interest expense (income), net
0.3
1.3
66.3
67.9
Depreciation and amortization
176.0
44.7
—
220.7
Adjustments to arrive at underlying
EBITDA(4)
(17.7
)
—
—
(17.7
)
Underlying EBITDA
$
581.5
$
120.4
$
10.6
$
712.5
(In millions) (Unaudited)
Nine Months Ended September
30, 2020
North America
Europe
Unallocated
Consolidated
Income (loss) before income
taxes
$
888.5
$
(46.9
)
$
(148.2
)
$
693.4
Add/(less):
Net sales(1)
14.1
17.0
—
31.1
Cost of goods sold(1)(2)
25.5
2.9
(24.7
)
3.7
Marketing, general &
administrative
2.2
—
—
2.2
Special items, net(3)
172.5
38.1
—
210.6
Other income/expense non-core items
2.1
—
0.1
2.2
Total Special and other Non-Core items
$
216.4
$
58.0
$
(24.6
)
$
249.8
Underlying pretax income (loss)
$
1,104.9
$
11.1
$
(172.8
)
$
943.2
Interest expense (income), net
2.0
4.0
200.5
206.5
Depreciation and amortization
582.7
132.2
—
714.9
Adjustments to arrive at underlying
EBITDA(4)
(107.6
)
—
—
(107.6
)
Underlying EBITDA
$
1,582.0
$
147.3
$
27.7
$
1,757.0
(1)
Includes estimated keg sales returns and
estimated finished goods obsolescence reserves and costs related to
the on-premise impacts resulting from the coronavirus pandemic.
Additionally, for the nine months ended September 30, 2020,
includes temporary "thank you" pay for certain essential North
America brewery employees. Non-GAAP adjustments do not include any
estimates of lost revenue resulting from the coronavirus
pandemic.
(2)
The unrealized changes in fair value on
our commodity swaps, which are economic hedges, are recorded as
cost of goods sold 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)
See Part I—Item 1. Financial
Statements, Note 5, "Special Items" of the Form 10-Q for detailed
discussion of special items. Special items for the three and nine
months ended September 30, 2020, includes accelerated
depreciation in excess of normal depreciation of $17.7 million and
$107.6 million, respectively. These accelerated depreciation
charges in excess of normal depreciation are included in our
adjustments to arrive at underlying EBITDA.
(4)
Represents adjustments to remove amounts
related to interest, depreciation and amortization included in the
adjustments to underlying income above, as these items are added
back as adjustments to net income attributable to MCBC.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029005414/en/
News Media Marty Maloney,
(312) 496-5669
Investor Relations Greg
Tierney, (414) 931-3303 Traci Mangini, (415) 308-0151
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