The Molson Coors Beverage Company held their First Quarter Earnings Conference Call, where they discussed their financial results and progress on their acceleration plan. They saw growth in net sales revenue and underlying pre-tax income, as well as significant margin improvement. The company reminded listeners of their forward-looking statements and provided GAAP reconciliations. The call was led by Vice President of FP&A Commercial Finance and Investor Relations, Greg Tierney, and CEO Gavin Hattersley.

The company reaffirmed its full year guidance and remains confident in its ability to achieve top and bottom line growth, despite challenges in the industry. They saw improvement in March but are closely monitoring April's trends. Retailers and distributors are also confident in the company's brands, and the core brands saw strong performance in the first quarter. The company's first priority is to grow the revenue of its core brands, which saw double-digit growth for Coors Light, Coors Banquet, and Ožujsko, and high-single-digit growth for Miller Lite.

In the past four months, Molson Coors has launched successful long-term campaigns for their core brands, with Coors Light becoming the top dollar share gainer in the US and Canada. Their new campaign, Choose To, has helped drive Coors Light's momentum and has also contributed to the growth of Coors Banquet. The brand is expected to see significant distribution growth in the coming years, driven by increased demand in regions where it has historically under-performed. This success is a result of consumer demand, which has also boosted confidence among distributors and retailers.

In the coming year, the company plans to increase media coverage through television advertising and partnerships in various industries. The Miller Lite brand has seen strong growth in the US, with a new campaign featuring celebrity partners. In Canada, Miller Lite has also seen success, as well as the Molson trademark. The company has also announced a partnership with the professional women's hockey league and will be sponsoring Team Canada at the Olympics. In the UK, Carling's partnership with the FA Cup is expected to bring sustained success, as it is highly associated with professional soccer.

The core brands of the company, including Ožujsko, have continued to perform well in Croatia and a new campaign has been launched to further grow the brand. The high-end brand, Madri Excepcional, has shown significant growth in the UK and has been successfully launched in Canada. Efforts are also being made to improve the performance of Blue Moon, with a new packaging and campaign. Blue Moon non-alc is also performing well in the competitive non-alcoholic beer market.

The company is pleased with the progress of their brand Blue Moon and is committed to driving its turnaround. They have also seen success with their new brand Simply Spiked, which has grown in volume and received positive media attention. Another new brand, Happy Thursday, has also received a positive response from consumers. The company is focused on growing their core power brands and investing in their capabilities to ensure future success. They are committed to their long-term strategy and have consistently delivered on it in the past. The financials and drivers of their guidance will be discussed by Tracey.

The speaker, Tracey Joubert, is reporting on the strong performance of the company in the past quarter. Net sales revenue grew by 10.1% due to increased volume and favorable pricing. The company also saw growth in financial volume, particularly in the US, despite a decrease in low-margin contract brewing volume. This was due to strong demand and inventory building ahead of peak season, as well as measures taken during a brewery strike. Overall, consolidated brand volume grew by 4.4%.

The Americas region saw significant growth, led by the US, with key brands like Coors Light and Miller Lite performing well. Canada also contributed to growth, but the market remains challenging. Inflation was a headwind, but volume leverage and lower logistics costs helped offset it. EMEA and APAC also saw growth, driven by Central and Eastern Europe. Marketing spend was increased for core brands and capital was allocated towards productivity and sustainability initiatives, such as the Golden Brewery modernization project.

The company has raised its quarterly dividend by 7% and has been actively executing its $2 billion share repurchase program. They have already repurchased 1.8 million shares for a total cost of $110 million in the quarter and 4.3 million shares for $260 million since the inception of the plan. The company is reiterating its 2024 guidance but is cautious due to softening in the US and Canada beer industries. They expect low single-digit net sales revenue growth, mid-single-digit underlying pre-tax income growth, mid-single-digit underlying earnings per share growth, and underlying free cash flow of $1.2 billion, plus or minus 10%. The company expects US brand volumes to exceed shipment volumes for the remainder of the year and a 1.6 million hectoliter headwind from the termination of a contract brewing agreement. They also anticipate positive pricing and expect pricing in the US and Canada to be between 1% and 2%, in line with historical averages.

In this paragraph, the speaker discusses their expectations for premiumization and cost in the upcoming year, as well as their strong momentum and confidence in their strategy. They also mention their plans for supporting their core brands and key innovations. The paragraph ends with the speaker looking forward to answering questions.

Bonnie asks Gavin Hattersley about the company's Q1 results and if they were better than expected. Hattersley confirms that they were and credits their supply chain team for exceeding expectations. He also mentions a contingency plan for the strike in Fort Worth. He expects the over shipment to balance out over the next nine months. The industry had a slow start due to weather conditions, but March improved. April has been inconsistent, with the first two weeks being poor.

The speaker explains that there were some disruptions in the industry in April, including timing issues and holidays, which led to caution about the outlook for the industry. The summer season will be a determining factor for the full year. The next question asks about the softness in April and its impact on different income levels and segments. The speaker also discusses shelf space gains and their sustainability.

The speaker understands the desire to monitor the industry on a weekly basis given the changes in the market, such as the decline of Bud Light and growth of their own brands. The industry also took pricing this spring and there was an Easter mismatch. Shelf resets are expected to give their core brands more space in stores, which should result in increased volume. However, it is difficult to predict the exact impact on volume. From an overall industry perspective, there is uncertainty due to volatile times, but there is no data to suggest that specific factors, such as GLP-1, are significantly affecting the alcohol space.

The speaker acknowledges that inflation is having an impact on consumer behavior and the company is being cautious in its outlook. However, they are confident in their ability to meet their guidance for the year and are expecting a decrease in underlying income for the next nine months due to a higher number of shipments in the first quarter. This is above their original expectations, but they are managing supply well and outperforming their contingency plan.

The company deliberately increased shipments in Q1 to meet extra demand from shelf resets and expects to maintain share gains despite recent data showing a slight decline in share for Coors Light and Miller Lite. The company believes it can continue to hold share and has seen consistent gains in the past year. As of the first quarter, the company's core brands hold 15.6% volume share of the industry, up 2 share points from the beginning of 2023.

The speaker discusses the expected choppiness in Q2 and advises caution in drawing conclusions from week-to-week share data. They also mention that their share gains in Q1 are consistent with the second half of last year and that shelf resets are expected to bring about significant increases in sales. However, the speaker notes that the overall industry is being approached with more caution compared to previous optimism expressed at CAGNY.

The first two weeks of April were difficult for the industry, but there was a slight improvement in the third week. The overall industry is more cautious due to recent data. The company is confident in meeting its guidance despite industry trends. In the US, the performance of on and off-premise sales is uncertain and will not be fully understood until the end of summer. In the UK, there is a question about whether the softness in the US is more concentrated in on or off-trade. The company is also looking at how volumes are performing around merchandising events to understand consumer behavior.

The UK consumer remains resilient despite facing severe inflation, with on-premise sales performing well. However, there has been a decline in off-premise sales due to a large excise tax increase and increased competition in promotional activities. In Central and Eastern Europe, there has been a reversal of the previous trend of declining volumes due to improvements in consumer confidence and disposable income. In the US, on-premise sales continue to outperform off-premise sales, and there has been a shift in consumer behavior towards smaller and larger pack sizes.

The speaker does not have any data to suggest that consumers' consumption and purchasing behavior has changed more meaningfully than that of the brand they represent. They have not seen any significant changes in trends by region in the US and are not attributing the slow start to the year to weather. They have a capital allocation strategy in place and will use models to make the right decisions. The slow start to the year is more related to consumer behavior and confidence rather than weather.

The company's shipments were better than expected in the first quarter due to a preplanned increase in inventory and an unexpected over-delivery by the supply chain team. The increase in inventory was to meet demand from a shaft reset and to maintain momentum behind the company's brands. The strike in Fort Worth was also a factor in the increased shipments.

The company is confident in their current plans and is not planning on changing their marketing and spending strategy despite potential industry challenges. They believe their current strategies are working and are focused on maintaining their success.

The company believes that their marketing plans have been well received by consumers and retailers, especially with their recent expansion into Canada. They have tools to monitor the effectiveness of their marketing and can make changes if necessary. The company is confident in their acceleration plan and the health of their brands. The questioner asks for an update on the company's outlook for US beer category volume and the company's response is not specified. The company has received positive feedback from retailers and has potentially gained more shelf space. There is mention of a wholesaler index showing strong purchasing intent in April, but it is unclear if the company has seen this data.

The speaker believes that retailers are confident and excited about their plans and have allocated them more space. They do not expect a large expansion in the overall beer category, but anticipate changes within it. They are cautious about updating their outlook on the industry and will wait until after the biggest selling season. The speaker does not see any structural headwinds, but is keeping an eye on potential concerns. They also mentioned initiatives for Blue Moon.

Gavin Hattersley, CEO of Molson Coors, states that it is too soon to draw conclusions about the industry's performance in the first three weeks of April. He acknowledges the challenges faced by the craft beer segment, but remains committed to reinvigorating the Blue Moon brand through new campaigns, packaging, and a foray into the non-alcoholic space. He believes that with these efforts, the momentum of the brand can be changed.

The speaker discusses the early success of a new plan that has been in place for a month, and answers a question about the impact of a strike on the company's operations and costs. They state that the strike has not had a significant impact on inventory levels or costs, and that the company's supply to distributors is on track. They also address concerns about the soft beer industry.

The speaker is discussing the narrowing gap in performance between spirits and beer in the US over the past year, and asks the CEO for his perspective on whether this is a permanent trend or a temporary one. The CEO believes that the work done in the category, such as introducing flavors and non-alcoholic options, has had a positive impact and is not transitory. The speaker then asks about the company's above premium strategy, particularly in regards to their acquisition of Blue Run, a small but premium brand.

During the Q&A portion of the call, an analyst asked the CEO about the company's goal of driving increased contribution to above premium and whether incremental M&A would be necessary to achieve this. The CEO responded by stating that their move into beyond beer is broader than just spirits, with a focus on flavor and non-alcoholic options. He also mentioned their progress in the spirits space and the need for more understanding and effectiveness in this area. The call concluded with the CEO thanking everyone for participating and inviting further questions through the IR team.

This summary was generated with AI and may contain some inaccuracies.