Molson Coors Delivers Fifth Consecutive Quarter of Top-Line
Growth on a Constant Currency Basis
Successes Against the Revitalization Plan Drive Favorable Shifts
to Product Portfolio and Strong Global Core Brands Performance
Company Reaffirms 2022 Guidance for Top and Bottom-Line Growth,
Continuing to Deliver on its Revitalization Plan and Manage
Costs
Molson Coors Beverage Company ("MCBC") (NYSE: TAP, TAP.A; TSX:
TPX.A, TPX.B) today reported results for the 2022 second
quarter.
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2022 SECOND QUARTER FINANCIAL HIGHLIGHTS
- Net sales decreased 0.6% reported and increased 2.2% in
constant currency, as the impact of positive net pricing and
favorable sales mix more than offset lower financial volumes.
- Net sales per hectoliter on a brand volume basis in constant
currency increased 7.1%, primarily due to positive net pricing and
favorable brand and channel mix resulting from portfolio
premiumization and fewer on-premise channel restrictions.
- U.S. GAAP income before income taxes of $54.9 million declined
89.5% reported and 88.9% in constant currency.
- Underlying (Non-GAAP) income before income taxes of $328.1
million declined 24.3% reported and 22.8% in constant
currency.
- U.S. GAAP net income attributable to MCBC of $47.3 million,
$0.22 per share on a diluted basis. Non-GAAP diluted earnings per
share ("EPS") of $1.19 decreased $0.39 per share.
CEO AND CFO PERSPECTIVES
Molson Coors again delivered against its revitalization plan on
a global basis in the second quarter of 2022. The Company grew
dollar share in the U.S. in the 13-week quarter, for the first time
in over a decade. In the second quarter, Coors Light, Miller Lite
and Coors Banquet combined to grow total industry share in the U.S.
driven by distinctive brand positionings and more effective
marketing. In each of our major markets, Molson Coors has core
brands gaining share of the beer industry. In Canada, Molson
Canadian grew share of the total beer industry for the first time
in eight years. In the U.K., Carling, the largest beer brand in the
U.K., managed to further solidify its number one position in the
total market and national champion brands in Central and Eastern
Europe grew share in the majority of markets.
Molson Coors is changing the shape of its product portfolio,
increasing its concentration in growth areas while continuing to
offer strong core brands in all segments of the market. Net sales
of the Company’s U.S. above premium portfolio is now higher than
that of its U.S. economy portfolio. That trend has been driven by
the rapid growth of its hard seltzers, the strong launch of Simply
Spiked Lemonade, and Blue Moon and Peroni’s continued rise coming
out of the pandemic. The Company also maintained the strength of
its economy portfolio, which has benefited from improved focus and
efficiency following the SKU de-prioritization which started in the
second quarter last year.
Gavin Hattersley, President and Chief Executive Officer
Statement:
“After growing the top-line for the first time in a decade last
year, we have now generated net sales growth for five straight
quarters for the first time in over a decade on a constant currency
basis. On an aggregate basis, we outpaced the industry in our three
largest markets and continued to grow the top line globally in the
quarter. We believe we have the portfolio to compete and win across
all segments and a strong backstop in challenging economic times.
This is our Revitalization Plan at work, and I am incredibly proud
of our teams around the world who are working to deliver these
results.”
Tracey Joubert, Chief Financial Officer Statement:
“We delivered another quarter of top-line growth on a constant
currency basis and achieved income before income tax at the
favorable end of our anticipated range, all while continuing to
invest in our business, reduce net debt and return cash to
shareholders. We also did this while navigating global inflationary
pressures, a strike at our Montreal/Longueuil, Québec brewery and
distribution centers and the cycling of a strong shipment quarter
in the prior year period. Our performance and agility demonstrate
our successes against our Revitalization Plan and provide us the
confidence to reaffirm our guidance for mid-single digit top-line
and high single digit bottom-line growth for the year.”
CONSOLIDATED PERFORMANCE - SECOND
QUARTER 2022
For the Three Months
Ended
($ in millions, except per share data)
(Unaudited)
June 30, 2022
June 30, 2021
Reported Increase
(Decrease)
Foreign Exchange
Impact
Constant Currency Increase
(Decrease)(1)
Net sales
$
2,921.7
$
2,939.4
(0.6
)%
$
(82.5
)
2.2
%
U.S. GAAP income (loss) before income
taxes
$
54.9
$
522.6
(89.5
)%
$
(2.9
)
(88.9
)%
Underlying income (loss) before income
taxes(1)
$
328.1
$
433.2
(24.3
)%
$
(6.5
)
(22.8
)%
U.S. GAAP net income (loss)(2)
$
47.3
$
388.6
(87.8
)%
Per diluted share
$
0.22
$
1.79
(87.7
)%
Underlying net income (loss)(1)
$
260.1
$
343.8
(24.3
)%
Per diluted share
$
1.19
$
1.58
(24.7
)%
For the Six Months
Ended
($ in millions, except per share data)
(Unaudited)
June 30, 2022
June 30, 2021
Reported Increase
(Decrease)
Foreign Exchange
Impact
Constant Currency Increase
(Decrease)(1)
Net sales
$
5,136.3
$
4,837.8
6.2
%
$
(99.7
)
8.2
%
U.S. GAAP income (loss) before income
taxes
$
228.6
$
648.9
(64.8
)%
$
(3.3
)
(64.3
)%
Underlying income (loss) before income
taxes(1)
$
411.6
$
450.4
(8.6
)%
$
(6.1
)
(7.3
)%
U.S. GAAP net income (loss)(2)
$
198.8
$
472.7
(57.9
)%
Per diluted share
$
0.91
$
2.17
(58.1
)%
Underlying net income (loss)(1)
$
323.9
$
345.4
(6.2
)%
Per diluted share
$
1.49
$
1.59
(6.3
)%
N/M = Not meaningful
(1)
Represents income (loss) before income
taxes and net income (loss) attributable to MCBC adjusted for
non-GAAP items. See Appendix for definitions and reconciliations of
non-GAAP financial measures including constant currency.
(2)
Net income (loss) attributable to
MCBC.
NET SALES DRIVERS
For the Three Months Ended
June 30, 2022
Reported
Percent change versus comparable prior
year period
Financial Volume
Price and Sales Mix
Currency
Net Sales
Net Sales per hectoliter (BV
basis)(1)
Brand Volume
Consolidated
(4.6
)%
6.8
%
(2.8
)%
(0.6
)%
7.1
%
(1.8
)%
Americas
(8.1
)%
6.4
%
(0.6
)%
(2.3
)%
6.2
%
(2.2
)%
EMEA&APAC
6.2
%
14.3
%
(13.3
)%
7.2
%
15.5
%
(0.7
)%
For the Six Months Ended June
30, 2022
Reported
Percent change versus comparable prior
year period
Financial Volume
Price and Sales Mix
Currency
Net Sales
Net Sales per hectoliter (BV
basis)(1)
Brand Volume
Consolidated
(0.7
)%
8.9
%
(2.0
)%
6.2
%
8.3
%
(0.3
)%
Americas
(5.0
)%
7.5
%
(0.3
)%
2.2
%
7.6
%
(2.6
)%
EMEA&APAC
14.3
%
26.7
%
(11.9
)%
29.1
%
19.4
%
6.6
%
(1)
Our net sales per hectoliter performance
discussions are presented on a brand volume ("BV") basis, which
reflects owned or 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 CONSOLIDATED HIGHLIGHTS (VERSUS SECOND QUARTER 2021
RESULTS)
- Net sales: decreased 0.6% on a reported basis, and
increased 2.2% in constant currency primarily due to positive net
pricing and favorable brand and channel mix resulting from
portfolio premiumization and fewer on-premise channel restrictions,
partially offset by lower financial volumes. Financial volumes
decreased 4.6%, primarily due to the cycling of U.S. distributor
inventory recovery in the prior year as a result of the
cybersecurity incident and Texas storm in the first quarter of 2021
and lower shipments in Canada this quarter, partially offset by
higher EMEA&APAC financial volumes driven by higher brand
volumes in Western Europe, as well as Central and Eastern Europe,
along with higher factored volumes. Lower shipments in Canada this
quarter was a result of the Montreal/Longueuil, Québec brewery and
distribution centers labor strike which began at the end of March
2022 and ended in mid-June 2022. Brand volumes decreased 1.8%
primarily due to a 2.2% decline in the Americas as a result of
softer industry performance and the impacts of the Québec labor
strike and a 0.7% decline in EMEA&APAC due to markets impacted
by the Russia-Ukraine conflict, largely offset by growth in Western
Europe as well as Central and Eastern Europe. Net sales per
hectoliter on a brand volume basis in constant currency increased
7.1%, primarily due to positive net pricing and favorable brand and
channel mix resulting from portfolio premiumization and fewer
on-premise channel restrictions.
- Cost of goods sold (COGS) per hectoliter: increased
32.0% on a reported basis primarily due to a $374.7 million
increase as a result of changes in our unrealized mark-to-market
commodity positions, cost inflation mainly on materials,
transportation and energy costs, volume deleverage and mix impacts
from both portfolio premiumization and higher factored volumes,
partially offset by the favorable impact of foreign currencies and
lower depreciation expense. Underlying COGS per hectoliter:
increased 11.5% in constant currency, primarily due to cost
inflation mainly on materials, transportation and energy costs,
volume deleverage and mix impacts from both portfolio
premiumization and higher factored volumes, partially offset by
lower depreciation expense.
- Marketing, general & administrative (MG&A):
increased 3.8% on a reported basis, primarily due to higher general
and administrative expenses driven by the cycling of lower people
related costs in the prior year, including travel and
entertainment, and higher marketing investment to support our core
brands, new innovations and increased local sponsorship and events,
partially offset by the favorable impact of foreign currencies.
Underlying MG&A: increased 7.5% in constant
currency.
- U.S. GAAP income (loss) before income taxes: declined
89.5% on a reported basis primarily due to changes in our
unrealized mark-to-market commodity positions, lower financial
volumes, cost inflation mainly on materials, transportation and
energy costs, higher MG&A spend and the unfavorable impact of
foreign currencies partially offset by positive net pricing, lower
depreciation expense and favorable sales mix.
- Underlying income (loss) before income taxes: declined
22.8% in constant currency primarily due to lower financial
volumes, cost inflation mainly on materials, transportation and
energy costs and higher MG&A spend, partially offset by
positive net pricing, lower depreciation expense and favorable
sales mix.
QUARTERLY SEGMENT HIGHLIGHTS (VERSUS SECOND QUARTER 2021
RESULTS)
Americas Segment
- Net sales: decreased 2.3% on a reported basis and 1.7%
in constant currency primarily due to an 8.1% decrease in financial
volumes, partially offset by positive net pricing and favorable
sales mix. Financial volumes decreased primarily due to an 8.2%
decline in U.S. domestic shipments attributed to the cycling of the
U.S. distributor inventory recovery in the prior year as a result
of the first quarter of 2021 cybersecurity incident and Texas
storm, as well as lower shipments in Canada this quarter attributed
to the Québec labor strike more than offsetting growth in certain
other provinces. Americas brand volumes decreased 2.2% primarily
due to a 1.7% decline in the U.S. as a result of softer industry
performance and an 8.0% decline in Canada due to the impacts of the
Québec labor strike more than offsetting growth in certain other
provinces, partially offset by growth in the above premium
portfolio driven by hard seltzers and the launch of Simply Spiked
Lemonade and 1.8% growth in Latin America. Net sales per hectoliter
on a brand volume basis in constant currency increased 6.2% for the
Americas segment primarily due to positive net pricing and
favorable brand mix.
- U.S. GAAP income (loss) before income taxes: declined
18.7% on a reported basis primarily due to lower financial volumes,
cost inflation mainly on materials, transportation and energy costs
and higher MG&A spend, partially offset by positive net
pricing, lower depreciation expense and favorable sales mix. Higher
MG&A spend was primarily due to higher general and
administrative expenses driven by the cycling of lower people
related costs in the prior year, including travel and entertainment
and higher marketing investment in Coors Light, Miller Lite and
Topo Chico Hard Seltzer.
- Underlying income (loss) before income taxes: declined
20.0% in constant currency primarily due to lower financial
volumes, cost inflation and higher MG&A spend, partially offset
by positive net pricing, lower depreciation expense and favorable
sales mix.
EMEA&APAC Segment
- Net sales: increased 7.2% on a reported basis and 20.5%
in constant currency, primarily due to higher financial volumes,
favorable sales mix and positive net pricing. Financial volumes
growth of 6.2% was primarily due to higher brand volumes in Western
Europe, as well as Central and Eastern Europe, driven by growth in
our above premium portfolio including the cycling of significant
on-premise closures and restrictions that occurred during the
second quarter of 2021, particularly in the U.K., and higher
factored volumes. Brand volumes decreased 0.7% primarily due to
volume declines as a result of the Russia-Ukraine conflict,
partially offset by higher brand volumes in Western Europe, as well
as Central and Eastern Europe. Net sales per hectoliter on a brand
volume basis in constant currency increased 15.5% primarily due to
favorable sales mix and positive net pricing.
- U.S. GAAP income (loss) before income taxes: declined
27.4% on a reported basis, primarily due to cost inflation mainly
on materials, transportation and energy costs, higher MG&A
spend and unfavorable foreign currency movements, partially offset
by higher financial volumes, favorable mix and positive net
pricing. Higher MG&A spend was primarily due to the cycling of
lower spend in the prior year due to cost mitigation efforts and
increased marketing spend as we accelerate investment behind our
brands and as on-premise channel and events return.
- Underlying income (loss) before income taxes: declined
22.7% in constant currency, primarily due to cost inflation mainly
on materials, transportation and energy costs and higher MG&A
spend, partially offset by higher financial volumes, favorable mix
and positive net pricing.
CASH FLOW AND LIQUIDITY HIGHLIGHTS
- U.S. GAAP cash from operations: net cash provided by
operating activities was $666.8 million for the six months ended
June 30, 2022, compared to $748.5 million in the prior year. The
decrease in cash provided by operating activities was primarily due
to lower net income adjusted for non-cash items, partially offset
by lower income taxes paid as well as lower payments for incentive
compensation.
- Underlying free cash flow: cash received of $287.2
million for the six months ended June 30, 2022, compared to cash
received of $558.2 million in the prior year. The decrease in cash
received was primarily due to higher capital expenditures and lower
net income adjusted for non-cash items, partially offset by lower
income taxes paid as well as lower payments for incentive
compensation.
- Debt: Total debt at the end of the second quarter of
2022 was $6,804.8 million, and cash and cash equivalents totaled
$442.1 million, resulting in net debt of $6,362.7 million and a net
debt to underlying EBITDA ratio of 3.20x. As of June 30, 2021, our
net debt to underlying EBITDA ratio was 3.35x. We repaid our $500
million 3.5% USD notes upon their maturity on May 1, 2022, using a
combination of commercial paper borrowings and cash on hand.
- Dividends: On May 19, 2022, our Company's Board of
Directors declared a cash dividend of $0.38 per share, paid on June
15, 2022, to shareholders of Class A and Class B common stock as of
the June 3, 2022 record date. Shareholders of exchangeable shares
received the CAD equivalent of dividends declared on Class A and
Class B common stock, equal to CAD 0.48 per share. For the six
months ended June 30, 2022, the Company declared total cash
dividends of $0.76 per share.
- Share Repurchase Program: On February 17, 2022, our
Company's Board of Directors approved a share repurchase program up
to an aggregate of $200 million of our Company's Class B common
stock through March 31, 2026, with repurchases primarily intended
to offset annual employee equity award grants. For the six months
ended June 30, 2022, we repurchased 510,000 shares under the share
repurchase program at a weighted average price of $51.40 per share,
including brokerage commissions, for an aggregate value of $26.2
million.
OTHER RESULTS
Tax Rates Table
(Unaudited)
For the Three Months
Ended
June 30, 2022
June 30, 2021
U.S. GAAP effective tax rate
13%
25%
Underlying effective tax rate(1)
21%
20%
(1)
See Appendix for definitions and
reconciliations of non-GAAP financial measures.
- The lower second quarter U.S. GAAP effective tax
rate was primarily due to a decrease in net discrete tax
expense in combination with lower income before income taxes. We
recognized $2.3 million of net discrete tax benefit in the second
quarter of 2022 and recognized $20.4 million of net discrete tax
expense in the second quarter of 2021. The difference is primarily
driven by the recognition of additional discrete tax expense of
approximately $18 million in the second quarter of 2021 related to
the remeasurement of our deferred tax liabilities in the U.K. due
to the higher income tax rate enacted in the quarter. For the
second quarter of 2022, there was a disproportionate impact from
the discrete tax benefit recorded on our effective tax rate due to
the lower income before income taxes.
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 second quarter of 2022, we recognized net special
items charges of $0.6 million.
- Additionally during the second quarter of 2022, we recorded
other non-core net charges of $272.6 million primarily
consisting of changes in our unrealized mark-to-market positions on
commodity hedges.
2022 OUTLOOK
We continue to expect to achieve the following targets for full
year 2022. However, the inherent uncertainties that exist in the
macroeconomic environment, including continued significant cost
inflation and the ongoing coronavirus pandemic could impact our
financial performance.
- Net sales: mid single-digit increase versus 2021 on a
constant currency basis.
- Underlying income (loss) before income taxes: high
single-digit increase compared to 2021 on a constant currency
basis.
- Deleverage: We expect to achieve a net debt to
underlying EBITDA ratio below 3.0x by the end of 2022.
- Underlying free cash flow: $1.0 billion, plus or minus
10%.
- Underlying depreciation and amortization: approximately
$750 million, plus or minus 5%.
- Consolidated net interest expense: approximately $265
million, plus or minus 5%.
- Underlying effective tax rate: in the range of 22% to
24% for 2022.
On July 14, 2022 our Board of Directors declared a quarterly
dividend on its Class A and Class B common shares of $0.38 per
share, payable September 15, 2022, to shareholders of record on
September 2, 2022. Similarly, the board of directors of Molson
Coors Canada Inc., an indirect wholly owned subsidiary of the
Company, on July 14, 2022, declared a quarterly dividend of
approximately CDN$0.49 per share (the Canadian dollar equivalent of
the dividend declared on Molson Coors stock) payable on September
15, 2022 to its Class A and Class B exchangeable shareholders of
record on September 2, 2022.
On July 27, 2022, we purchased an annuity contract to transfer
approximately $340 million, or approximately twenty percent, of
U.S. qualified pension plan liabilities and the associated
administration of benefits to an insurance company using U.S.
qualified pension plan assets. This transaction will have no impact
on the amount, timing or form of the retirement benefit payments to
the affected retirees and beneficiaries. As a result of the
transaction, we will have a reduction to our U.S. qualified pension
plan liabilities and assets, and we will remeasure the remaining
pension plan assets and obligations using updated actuarial
assumptions. Further, a settlement gain (loss) will be measured and
reflected in the unaudited condensed consolidated statements of
operations during the third quarter of 2022.
NOTES
Unless otherwise indicated in this release, all $ amounts are in
U.S. Dollars, and all quarterly comparative results are for the
Company’s second quarter ended June 30, 2022, compared to the
second quarter ended June 30, 2021. Some numbers may not sum due to
rounding.
2022 SECOND QUARTER INVESTOR 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 2022 second quarter
results. The live webcast will be accessible via our website,
ir.molsoncoors.com. An online replay of the webcast will be
available until 11:59 p.m. Eastern Time on October 31, 2022. The
Company will post this release and related financial statements on
its website today.
OVERVIEW OF MOLSON COORS BEVERAGE COMPANY
For more than two centuries Molson Coors Beverage Company has
been brewing beverages that unite people for all life’s moments.
From Coors Light, Miller Lite, Molson Canadian, Carling, and
Staropramen to Coors Banquet, Blue Moon Belgian White, Blue Moon
LightSky, Vizzy, Coors Seltzer, Leinenkugel’s Summer Shandy,
Creemore Springs, Hop Valley and more, Molson Coors produces many
beloved and iconic beer brands. 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: Americas, operating in the U.S.,
Canada and various countries in the Caribbean, Latin and South
America; and EMEA&APAC, 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 the Middle East, 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. Our Environmental,
Social and Governance ("ESG") strategy is focused on People and
Planet with a strong commitment to raising industry standards and
leaving a positive imprint on our employees, consumers, communities
and the environment. 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 "expects", "intend," "goals," "plans," "believes,"
"continues," "may," "anticipate," "seek," "estimate," "outlook,"
"trends," "future benefits," "potential," "projects," "strategies,"
and variations of such words and similar expressions are intended
to identify forward-looking statements. Statements that refer to
projections of our future financial performance, our anticipated
growth 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 heading "2022
Outlook," with respect to expectations regarding the impact of the
coronavirus pandemic on our operations, liquidity, financial
condition and financial results, expectations regarding future
dividends, overall volume trends, consumer preferences, pricing
trends, industry forces, cost reduction strategies, including our
revitalization plan, expectations of cost inflation, 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; the health of the beer industry and our brands in our
markets; economic conditions in our markets; our ability to
maintain brand image, reputation and product quality; ESG issues;
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 maintain good labor relations; labor strikes, work
stoppages and other employee-related issues; our reliance on third
party service providers and internal and outsourced systems; a
breach of our information systems; investment performance of
pension plan holdings and related pension plan costs; failure to
comply with debt covenants or deterioration in our credit rating;
increase in the cost of commodities used in the business;
dependence on the global supply chain and impacts of supply chain
constraints and inflationary pressures, including the adverse
impacts of the Russia-Ukraine conflict; additional impairment
charges; estimates and assumptions on which our financial
projections are based which may prove to be inaccurate; our ability
to implement our strategic initiatives, including executing and
realizing cost savings; availability or increase in cost of
packaging materials; unfavorable legal or regulatory outcomes
affecting the business; 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; success of our joint ventures; 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,
except as required by law.
MARKET AND INDUSTRY DATA
The market and industry data used, if any, in this press release
are based on independent industry publications, customer specific
data, trade or business organizations, reports by market research
firms and other published statistical information from third
parties, including Information Resources, Inc. for U.S. market data
and Beer Canada for Canadian market data (collectively, the “Third
Party Information”), as well as information based on management’s
good faith estimates, which we derive from our review of internal
information and independent sources. Such Third Party Information
generally states that the information contained therein or provided
by such sources has been obtained from sources believed to be
reliable.
APPENDIX
STATEMENTS OF OPERATIONS - MOLSON COORS
BEVERAGE COMPANY AND SUBSIDIARIES
Condensed Consolidated Statements of
Operations
(In millions, except per share data)
(Unaudited)
For the Three Months
Ended
For the Six Months
Ended
June 30, 2022
June 30, 2021
June 30, 2022
June 30, 2021
Sales
$
3,501.4
$
3,564.0
$
6,144.7
$
5,820.1
Excise taxes
(579.7
)
(624.6
)
(1,008.4
)
(982.3
)
Net sales
2,921.7
2,939.4
5,136.3
4,837.8
Cost of goods sold
(2,101.7
)
(1,667.9
)
(3,388.5
)
(2,835.3
)
Gross profit
820.0
1,271.5
1,747.8
2,002.5
Marketing, general and administrative
expenses
(707.6
)
(681.7
)
(1,383.3
)
(1,224.6
)
Special items, net
(0.6
)
(9.0
)
(28.2
)
(19.9
)
Equity income (loss)
2.7
—
2.6
—
Operating income (loss)
114.5
580.8
338.9
758.0
Interest income (expense), net
(66.6
)
(67.9
)
(129.9
)
(133.2
)
Other pension and postretirement benefits
(costs), net
10.3
13.0
20.9
26.0
Other income (expense), net
(3.3
)
(3.3
)
(1.3
)
(1.9
)
Income (loss) before income taxes
54.9
522.6
228.6
648.9
Income tax benefit (expense)
(7.0
)
(132.3
)
(43.4
)
(176.6
)
Net income (loss)
47.9
390.3
185.2
472.3
Net (income) loss attributable to
noncontrolling interests
(0.6
)
(1.7
)
13.6
0.4
Net income (loss) attributable to MCBC
$
47.3
$
388.6
$
198.8
$
472.7
Basic net income (loss) attributable to
MCBC per share
$
0.22
$
1.79
$
0.92
$
2.18
Diluted net income (loss) attributable to
MCBC per share
$
0.22
$
1.79
$
0.91
$
2.17
Weighted average shares outstanding -
basic
217.0
217.1
217.1
217.1
Weighted average shares outstanding -
diluted
217.8
217.6
217.8
217.5
Dividends per share
$
0.38
$
—
$
0.76
$
—
BALANCE SHEETS - MOLSON COORS BEVERAGE COMPANY AND
SUBSIDIARIES
Condensed Consolidated Balance
Sheets
(In millions, except par value)
(Unaudited)
As of
June 30, 2022
December 31, 2021
Assets
Current assets
Cash and cash equivalents
$
442.1
$
637.4
Accounts receivable, net
885.2
678.9
Other receivables, net
206.5
200.5
Inventories, net
872.4
804.7
Other current assets, net
465.7
457.2
Total current assets
2,871.9
2,778.7
Properties, net
4,169.7
4,192.4
Goodwill
6,148.5
6,152.6
Other intangibles, net
12,993.5
13,286.8
Other assets
1,204.3
1,208.5
Total assets
$
27,387.9
$
27,619.0
Liabilities and equity
Current liabilities
Accounts payable and other current
liabilities
$
3,267.3
$
3,107.3
Current portion of long-term debt and
short-term borrowings
247.0
514.9
Total current liabilities
3,514.3
3,622.2
Long-term debt
6,557.8
6,647.2
Pension and postretirement benefits
640.0
654.4
Deferred tax liabilities
2,782.7
2,704.6
Other liabilities
290.3
326.5
Total liabilities
13,785.1
13,954.9
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
(authorized: 500.0 shares; issued and outstanding: 2.6 shares and
2.6 shares, respectively)
—
—
Class B common stock, $0.01 par value
(authorized: 500.0 shares; issued: 210.3 shares and 210.1 shares,
respectively)
2.1
2.1
Class A exchangeable shares, no par value
(issued and outstanding: 2.7 shares and 2.7 shares,
respectively)
102.2
102.2
Class B exchangeable shares, no par value
(issued and outstanding: 11.1 shares and 11.1 shares,
respectively)
417.2
417.8
Paid-in capital
6,984.1
6,970.9
Retained earnings
7,433.8
7,401.5
Accumulated other comprehensive income
(loss)
(1,069.0
)
(1,006.0
)
Class B common stock held in treasury at
cost (10.0 shares and 9.5 shares, respectively)
(497.6
)
(471.4
)
Total Molson Coors Beverage Company
stockholders' equity
13,372.8
13,417.1
Noncontrolling interests
230.0
247.0
Total equity
13,602.8
13,664.1
Total liabilities and equity
$
27,387.9
$
27,619.0
CASH FLOW STATEMENTS - MOLSON COORS BEVERAGE COMPANY AND
SUBSIDIARIES
Condensed Consolidated Statements of
Cash Flows
(In millions) (Unaudited)
For the Six Months
Ended
June 30, 2022
June 30, 2021
Cash flows from operating
activities
Net income (loss) including noncontrolling
interests
$
185.2
$
472.3
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities
Depreciation and amortization
345.4
403.9
Amortization of debt issuance costs and
discounts
4.1
3.1
Share-based compensation
16.9
16.5
(Gain) loss on sale or impairment of
properties and other assets, net
21.6
2.5
Unrealized (gain) loss on foreign currency
fluctuations and derivative instruments, net
105.7
(222.7
)
Equity (income) loss
(2.6
)
—
Income tax (benefit) expense
43.4
176.6
Income tax (paid) received
(7.8
)
(58.0
)
Interest expense, excluding amortization
of debt issuance costs and discounts
127.2
131.2
Interest paid
(119.5
)
(122.5
)
Change in current assets and liabilities
and other
(52.8
)
(54.4
)
Net cash provided by (used in) operating
activities
666.8
748.5
Cash flows from investing
activities
Additions to properties
(388.7
)
(211.9
)
Proceeds from sales of properties and
other assets
15.0
3.2
Other
4.2
8.6
Net cash provided by (used in) investing
activities
(369.5
)
(200.1
)
Cash flows from financing
activities
Exercise of stock options under equity
compensation plans
1.5
4.5
Dividends paid
(164.9
)
(0.2
)
Payments on debt and borrowings
(502.4
)
(1.9
)
Proceeds on debt and borrowings
5.0
—
Purchases of treasury stock
(26.2
)
—
Net proceeds from (payments on) revolving
credit facilities and commercial paper
225.9
1.4
Change in overdraft balances and other
(8.7
)
(7.7
)
Net cash provided by (used in) financing
activities
(469.8
)
(3.9
)
Cash and cash equivalents
Net increase (decrease) in cash and cash
equivalents
(172.5
)
544.5
Effect of foreign exchange rate changes on
cash and cash equivalents
(22.8
)
(5.7
)
Balance at beginning of year
637.4
770.1
Balance at end of period
$
442.1
$
1,308.9
SUMMARIZED SEGMENT RESULTS (volume and $ in millions)
(Unaudited)
Americas
Q2 2022
Q2 2021
Reported % Change
FX Impact
Constant Currency %
Change
YTD 2022
YTD 2021
Reported % Change
FX Impact
Constant Currency %
Change
Net sales(1)
$
2,367.4
$
2,422.4
(2.3
)
$
(13.3
)
(1.7
)
$
4,203.6
$
4,114.4
2.2
$
(13.8
)
2.5
COGS(2)
$
(1,457.8
)
$
(1,448.6
)
(0.6
)
$
(2,636.3
)
$
(2,561.9
)
(2.9
)
MG&A
$
(561.5
)
$
(537.8
)
(4.4
)
$
(1,109.1
)
$
(968.2
)
(14.6
)
Income (loss) before income taxes
$
348.0
$
428.2
(18.7
)
$
(0.4
)
(18.6
)
$
435.1
$
572.4
(24.0
)
$
0.6
(24.1
)
Underlying income (loss) before income
taxes
$
348.1
$
435.3
(20.0
)
$
(0.3
)
(20.0
)
$
514.8
$
587.5
(12.4
)
$
0.5
(12.5
)
Financial volume(1)(3)
16.536
17.986
(8.1
)
29.535
31.088
(5.0
)
Brand volume
15.639
15.986
(2.2
)
28.075
28.817
(2.6
)
EMEA&APAC
Q2 2022
Q2 2021
Reported % Change
FX Impact
Constant Currency %
Change
YTD 2022
YTD 2021
Reported % Change
FX Impact
Constant Currency %
Change
Net sales(1)
$
558.2
$
520.5
7.2
$
(69.2
)
20.5
$
939.4
$
727.4
29.1
$
(85.9
)
41.0
COGS(2)
$
(375.0
)
$
(324.7
)
(15.5
)
$
(656.9
)
$
(500.8
)
(31.2
)
MG&A
$
(146.1
)
$
(143.9
)
(1.5
)
$
(274.2
)
$
(256.4
)
(6.9
)
Income (loss) before income taxes
$
34.4
$
47.4
(27.4
)
$
(6.1
)
(14.6
)
$
2.2
$
(42.0
)
N/M
$
(5.1
)
N/M
Underlying income (loss) before income
taxes
$
34.7
$
52.8
(34.3
)
$
(6.1
)
(22.7
)
$
3.5
$
(32.2
)
N/M
$
(5.1
)
N/M
Financial volume(1)(3)
6.207
5.844
6.2
10.246
8.966
14.3
Brand volume
6.101
6.145
(0.7
)
10.196
9.562
6.6
Unallocated & Eliminations
Q2 2022
Q2 2021
Reported % Change
FX Impact
Constant Currency %
Change
YTD 2022
YTD 2021
Reported % Change
FX Impact
Constant Currency %
Change
Net sales
$
(3.9
)
$
(3.5
)
(11.4
)
$
(6.7
)
$
(4.0
)
(67.5
)
COGS(2)
$
(268.9
)
$
105.4
N/M
$
(95.3
)
$
227.4
N/M
Income (loss) before income taxes
$
(327.5
)
$
47.0
N/M
$
3.6
N/M
$
(208.7
)
$
118.5
N/M
$
1.2
N/M
Underlying income (loss) before income
taxes
$
(54.7
)
$
(54.9
)
0.4
$
(0.1
)
0.5
$
(106.7
)
$
(104.9
)
(1.7
)
$
(1.5
)
N/M
Financial volume
(0.004
)
(0.007
)
42.9
(0.005
)
(0.014
)
64.3
Consolidated
Q2 2022
Q2 2021
Reported % Change
FX Impact
Constant Currency %
Change
YTD 2022
YTD 2021
Reported % Change
FX Impact
Constant Currency %
Change
Net sales
$
2,921.7
$
2,939.4
(0.6
)
$
(82.5
)
2.2
$
5,136.3
$
4,837.8
6.2
$
(99.7
)
8.2
COGS
$
(2,101.7
)
$
(1,667.9
)
(26.0
)
(3,388.5
)
(2,835.3
)
(19.5
)
MG&A
$
(707.6
)
$
(681.7
)
(3.8
)
(1,383.3
)
(1,224.6
)
(13.0
)
Income (loss) before income taxes
$
54.9
$
522.6
(89.5
)
$
(2.9
)
(88.9
)
$
228.6
$
648.9
(64.8
)
$
(3.3
)
(64.3
)
Underlying income (loss) before income
taxes
$
328.1
$
433.2
(24.3
)
$
(6.5
)
(22.8
)
$
411.6
$
450.4
(8.6
)
$
(6.1
)
(7.3
)
Financial volume(3)
22.739
23.823
(4.6
)
39.776
40.040
(0.7
)
Brand volume
21.740
22.131
(1.8
)
38.271
38.379
(0.3
)
The reported percent change and the constant currency percent
change in the above table are presented as (unfavorable)
favorable.
N/M = Not meaningful
(1)
Includes gross inter-segment volumes, sales and purchases, which
are eliminated in the consolidated totals.
(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)
Financial volume in hectoliters for Americas and EMEA&APAC
excludes royalty volume of 0.645 million hectoliters and 0.218
million hectoliters for the three months ended June 30, 2022,
respectively, and excludes royalty volume of 0.585 million
hectoliters and 0.539 million hectoliters for three months ended
June 30, 2021, respectively. Financial volume in hectoliters for
Americas and EMEA&APAC excludes royalty volume of 1.246 million
hectoliters and 0.537 million hectoliters for the six months ended
June 30, 2022, respectively, and excludes royalty volume of 1.152
million hectoliters and 0.898 million hectoliters for the six
months ended June 30, 2021, respectively.
WORLDWIDE BRAND AND FINANCIAL
VOLUME
(In millions of hectoliters)
(Unaudited)
For the Three Months
Ended
June 30, 2022
June 30, 2021
Change
Financial Volume
22.739
23.823
(4.6
)%
Contract brewing and wholesale/factored
volume
(1.858
)
(1.833
)
1.4
%
Royalty volume
0.863
1.124
(23.2
)%
Sales-To-Wholesaler to Sales-To-Retail
adjustment
(0.004
)
(0.983
)
N/M
Total Worldwide Brand Volume
21.740
22.131
(1.8
)%
Worldwide brand volume (or "brand volume" when discussed by
segment) reflects owned or actively managed 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. Financial volume represents owned brands
sold to unrelated external customers within our geographical
markets, net of returns and allowances as well as contract brewing,
wholesale non-owned brand volume and company-owned distribution
volume. Contract brewing and wholesale/factored 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. Factored volume in our EMEA&APAC segment
is the distribution of beer, wine, spirits and other products owned
and produced by other companies to the on-premise channel, which is
a common arrangement in the U.K. Royalty volume consists of our
brands produced and sold by third parties under various license and
contract-brewing agreements and because this is owned volume, it is
included in worldwide brand volume. 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.
As part of the revitalization plan strategy to grow our above
premium portfolio and expand beyond the beer aisle, we have
de-prioritized and rationalized certain non-core economy SKUs. This
strategy is intended to drive sustainable net sales growth and
earnings growth, despite potential volume declines as the portfolio
mix shifts towards a higher composition of above premium
products.
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 use non-GAAP financial measures, as listed and defined
below, for operational and financial decision making and to assess
Company and segment business performance. These non-GAAP measures
should be viewed as supplements to (not substitutes for) our
results of operations presented under U.S. GAAP. 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.
Our management uses these metrics 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 these measures are used by, and are useful to, investors
and other users of our financial statements in evaluating our
operating performance.
- Underlying Income (Loss) before Income Taxes (Closest GAAP
Metric: Income (Loss) Before Income Taxes) – Measure of
Company’s income (loss) before income taxes excluding the impact of
special items from our U.S. GAAP financial statements as well as
other pre-tax non-core items. These pre-tax non-core items, as
referred to throughout the definitions below, include integration
related costs, unrealized mark-to-market gains and losses,
potential or incurred losses related to certain litigation accruals
and settlements and gains and losses on sales of non-operating
assets, among other items 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, involve significant
management judgment and can vary substantially from company to
company.
- Underlying COGS (Closest GAAP Metric: COGS) – Measure of
Company’s COGS adjusted to exclude any special or non-core items
(as defined above) which impact the reported GAAP COGS balance.
These non-core items include the impact of unrealized
mark-to-market gains and losses on our commodity derivative
instruments, which are economic hedges, and are recorded through
COGS 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 derivatives without the resulting
unrealized mark-to-market volatility.
- Underlying MG&A (Closest GAAP Metric:
MG&A) – Measure of Company’s MG&A expense excluding the
impact of certain special and non-core items (as defined
above).
- Underlying net income (loss) attributable to MCBC (Closest
GAAP Metric: Net income (loss) attributable to MCBC) – Measure
of net income (loss) attributable to MCBC excluding the impact of
special and non-core items (as defined above), the related tax
effects of special and non-core items, and certain other discrete
and other non-core tax items.
- Underlying net income (loss) attributable to MCBC per
diluted share (Closest GAAP Metric: Net Income (Loss) attributable
to MCBC per diluted share) – Measure of underlying net income
(loss) attributable to MCBC as defined above per diluted
share.
- Underlying effective tax rate (Closest GAAP Metric:
Effective Tax Rate) – Measure of the Company’s effective tax
rate excluding the related tax impact of pre-tax special and
non-core items and certain other discrete and non-core tax items.
Discrete and other non-core tax items include significant tax audit
and prior year reserve adjustments, impact of significant tax
legislation and tax rate changes and significant non-recurring and
period specific tax items.
- Underlying free cash flow (Closest GAAP Metric: Net Cash
Provided by (Used in) Operating Activities) – Measure of the
Company’s operating cash flow calculated as Net Cash Provided by
(Used In) Operating Activities less Additions to Properties and
excluding the pre-tax impact of certain special and non-core items
(as defined 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, which can vary
substantially from company to company depending upon accounting
methods and book value of assets and capital structure.
- Underlying depreciation and amortization (Closest GAAP
Metric: Depreciation & Amortization) – Measure of the
Company’s depreciation and amortization excluding the impact of
special and non-core items (as defined above). These adjustments
primarily consist of accelerated depreciation or amortization taken
related to the Company’s strategic exit or restructuring
activities.
- Net debt to underlying earnings before interest, taxes,
depreciation, and amortization ("underlying EBITDA")
(Closest GAAP Metrics: Cash, Debt, & Income (Loss) Before
Income Taxes) – Measure of the Company’s leverage calculated as
Net debt (defined as current portion of long-term debt and
short-term borrowings plus long-term debt less cash and cash
equivalents) divided by the trailing twelve month underlying
EBITDA. Underlying EBITDA is calculated as Net Income (Loss)
excluding Interest expense (income), income tax expense (benefit),
depreciation and amortization, and the impact of special and
non-core items (as defined above). This measure does not represent
the company’s maximum leverage ratio as defined under its revolving
credit facility, which allows for other adjustments in the
calculation of net debt to EBITDA.
- Constant currency - Constant currency is a non-GAAP
measure utilized 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. We present all percentage changes for net
sales, underlying COGS, underlying MG&A and underlying income
(loss) before income taxes 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.
Our guidance for any of the measures noted above are also
non-GAAP financial measures that exclude or otherwise have been
adjusted for special items from our U.S. GAAP financial statements
as well as other non-core items as described above. When we provide
guidance for any of the various non-GAAP metrics described above,
we do not provide reconciliations of the U.S. GAAP measures as we
are unable to predict with a reasonable degree of certainty the
actual impact of the special and other non-core items. By their
very nature, special and other non-core items are difficult to
anticipate with precision because they are generally associated
with unexpected and unplanned events that impact our company and
its financial results. Therefore, we are unable to provide a
reconciliation of these measures without unreasonable efforts.
RECONCILIATION TO NEAREST U.S. GAAP
MEASURES
Reconciliation by Line Item
(In millions, except per share data)
(Unaudited)
For the Three Months Ended
June 30, 2022
Cost of goods sold
Marketing, general and
administrative expenses
Other income (expense),
net
Income (loss) before income
taxes
Net income (loss) attributable
to MCBC
Net income (loss) attributable
to MCBC per diluted share
Reported (U.S. GAAP)
$
(2,101.7
)
$
(707.6
)
$
(3.3
)
$
54.9
$
47.3
$
0.22
Adjustments to arrive at underlying:
Special items, net
Employee-related charges
—
—
—
0.2
0.2
—
Impairments or asset abandonment
charges
—
—
—
0.1
0.1
—
Termination fees and other (gains)
losses
—
—
—
0.3
0.3
—
Non-Core items
Unrealized mark-to-market (gains)
losses
272.8
—
—
272.8
272.8
1.25
Other non-core items
—
—
(0.2
)
(0.2
)
(0.2
)
—
Total Special and Other Non-Core items
$
272.8
$
—
$
(0.2
)
$
273.2
$
273.2
$
1.25
Tax effects on special and other non-core
items
—
—
—
—
(60.4
)
(0.28
)
Discrete tax items
—
—
—
—
—
—
Underlying (Non-GAAP)
$
(1,828.9
)
$
(707.6
)
$
(3.5
)
$
328.1
$
260.1
$
1.19
(In millions, except per share data)
(Unaudited)
For the Six Months Ended June
30, 2022
Cost of goods sold
Marketing, general and
administrative expenses
Other income (expense),
net
Income (loss) before income
taxes
Net income (loss) attributable
to MCBC
Net income (loss) attributable
to MCBC per diluted share
Reported (U.S. GAAP)
$
(3,388.5
)
$
(1,383.3
)
$
(1.3
)
$
228.6
$
198.8
$
0.91
Adjustments to arrive at underlying:
Special items, net
Employee-related charges
—
—
—
0.5
0.5
—
Impairments or asset abandonment
charges(1)
—
—
—
29.7
17.6
0.08
Termination fees and other (gains)
losses
—
—
—
(2.0
)
(2.0
)
(0.01
)
Non-Core items
Unrealized mark-to-market (gains)
losses
102.0
—
—
102.0
102.0
0.47
Other non-core items(2)
—
56.0
(3.2
)
52.8
52.8
0.24
Total Special and Other Non-Core items
$
102.0
$
56.0
$
(3.2
)
$
183.0
$
170.9
0.78
Tax effect on special and other non-core
items
—
—
—
—
(40.7
)
(0.19
)
Discrete tax Items
—
—
—
—
(5.1
)
(0.02
)
Underlying (Non-GAAP)
$
(3,286.5
)
$
(1,327.3
)
$
(4.5
)
$
411.6
$
323.9
$
1.49
(1)
During the first quarter of 2022, we
identified a triggering event related to the Truss LP joint venture
asset group within our Americas segment and recognized an
impairment loss of $28.6 million, of which $12.1 million was
attributable to the noncontrolling interest.
(2)
During the first quarter of 2022, we
recorded an accrued liability of $56 million within MG&A
related to potential losses as a result of the ongoing Keystone
litigation case.
Reconciliation to Underlying Income (Loss) Before Income
Taxes by Segment
(In millions) (Unaudited)
For the Three Months Ended
June 30, 2022
Americas
EMEA&APAC
Unallocated
Consolidated
Income (loss) before income
taxes
$
348.0
$
34.4
$
(327.5
)
$
54.9
Add/(less):
Cost of goods sold(1)
—
—
272.8
272.8
Special items, net(2)
0.3
0.3
—
0.6
Other income/expense non-core items
(0.2
)
—
—
(0.2
)
Total Special and other Non-Core items
$
0.1
$
0.3
$
272.8
$
273.2
Underlying income (loss) before income
taxes
$
348.1
$
34.7
$
(54.7
)
$
328.1
(In millions) (Unaudited)
For the Six Months Ended June
30, 2022
Americas
EMEA&APAC
Unallocated
Consolidated
Income (loss) before income
taxes
$
435.1
$
2.2
$
(208.7
)
$
228.6
Add/(less):
Cost of goods sold(1)
—
—
102.0
102.0
Marketing, general &
administrative(3)
56.0
—
—
56.0
Special items, net(2)
26.9
1.3
—
28.2
Other income/expense non-core items
(3.2
)
—
—
(3.2
)
Total Special and other Non-Core items
$
79.7
$
1.3
$
102.0
$
183.0
Underlying income (loss) before income
taxes
$
514.8
$
3.5
$
(106.7
)
$
411.6
(1)
Reflects changes in our mark-to-market
positions on our commodity hedges 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.
(2)
See Part I - Item 1. Financial Statements,
Note 5, "Special Items" of our Quarterly Report on Form 10-Q for
the quarterly period ended June 30, 2022, as filed with the SEC,
for a detailed discussion of special items.
(3)
As of March 31, 2022, we accrued a
liability of $56.0 million within other liabilities in our
unaudited condensed consolidated balance sheet as the best estimate
of probable loss in the Keystone litigation case based on the jury
verdict.
Effective Tax Rate
Reconciliation
(Unaudited)
For the Three Months
Ended
June 30, 2022
June 30, 2021
GAAP Effective Tax Rate
13
%
25
%
Add/(less):(1)
Tax effect of special and other non-core
items
8
%
(1
%)
Discrete and other non-core tax
items(2)
—
%
(4
%)
Underlying (Non-GAAP) Effective Tax
Rate
21
%
20
%
(1)
Adjustments related to the tax effect of
special items, net and non-core items as well as certain discrete
tax items excluded from our underlying effective tax rate. Discrete
and other non-core tax items include significant tax audit and
prior year reserve adjustments, impact of significant tax
legislation and tax rate changes and significant non-recurring and
period specific tax items.
(2)
The change in the tax effect of discrete
and other non-core tax items is primarily due to the removal of
approximately $18 million of discrete tax expense in 2021 related
to the remeasurement of deferred tax liabilities due to an increase
in the U.K. corporate income tax rate from 19% to 25% as compared
to no removal of discrete tax in 2022.
Underlying Free Cash Flow
(In millions) (Unaudited)
For the Six Months
Ended
June 30, 2022
June 30, 2021
U.S. GAAP:
Net Cash Provided by (Used In)
Operating Activities
$
666.8
$
748.5
Less:
Additions to properties(1)
(388.7
)
(211.9
)
Add/Less:
Cash impact of special items(2)
9.1
20.9
Add/Less:
Cash impact of other non-core items(3)
—
0.7
Non-GAAP:
Underlying Free Cash Flow
$
287.2
$
558.2
(1)
Included in net cash provided by (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 six months ended June 30, 2022 and
June 30, 2021.
(3)
Included in net cash provided by (used in)
operating activities and primarily reflects costs paid for the
cybersecurity incident, net of insurance recoveries, in the
Americas segment for the six months ended June 30, 2021.
Net Debt to Underlying EBITDA
Ratio
(In millions) (Unaudited)
As of
June 30, 2022
June 30, 2021
U.S. GAAP
Current portion of long-term debt and
short-term borrowings
$ 247.0
$ 1,521.1
Add:
Long-term debt
6,557.8
6,701.9
Less:
Cash and cash equivalents
442.1
1,308.9
Net debt
$ 6,362.7
$ 6,914.1
Q2 Underlying EBITDA
566.4
697.8
Q1 Underlying EBITDA
320.5
280.0
Q4 Underlying EBITDA
457.3
375.1
Q3 Underlying EBITDA
642.6
712.5
Non-GAAP
Underlying EBITDA(1)
$ 1,986.8
$ 2,065.4
Net debt to underlying EBITDA
ratio
3.20
3.35
(1)
Represents underlying EBITDA on a trailing
twelve month basis.
Underlying EBITDA Reconciliation
(In millions) (Unaudited)
For the Three Months
Ended
June 30, 2022
June 30, 2021
U.S. GAAP: Net income (loss)
attributable to MCBC
$
47.3
$
388.6
Add: Net income (loss) attributable to
noncontrolling interests
0.6
1.7
U.S. GAAP: Net income (loss)
47.9
390.3
Add: Interest expense (income), net
66.6
67.9
Add: Income tax expense (benefit)
7.0
132.3
Add: Depreciation and amortization
171.7
201.6
Adjustments included in underlying
income(1)
273.2
(89.4
)
Adjustments to arrive at underlying
EBITDA(1)
—
(4.9
)
Non-GAAP Underlying EBITDA
$
566.4
$
697.8
(1)
Includes adjustments to income (loss)
before income taxes related to special and non-core items. See
Reconciliations to Nearest U.S. GAAP Measures by Line Item table
for detailed adjustments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220802005120/en/
Investor Relations Greg Tierney, (414) 931-3303 Traci
Mangini, (415) 308-0151 News Media Jennifer Martinez, (773)
520-2538
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