MOLSON COORS BEVERAGE CO

Previous wording

The following table highlights summarized components of our unaudited condensed consolidated statements of operations for the three months ended March 31, 2024 and 2023. See Part I.—Item 1. Financial Statements for additional details of our U.S. GAAP results.

Current wording

The following table highlights summarized components of our unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2024 and 2023. See Part I.—Item 1. Financial Statements for additional details of our U.S. GAAP results.

Previous wording

The impacts of foreign currency movements on our consolidated USD results described above for the three months ended March 31, 2024 were primarily due to the weakening of the USD compared to the GBP.

Current wording

The impacts of foreign currency movements on our consolidated USD results described above for the three months ended June 30, 2024 were primarily due to the strengthening of the USD compared to the CAD and CZK, partially offset by the weakening of the USD compared to the GBP.

Previous wording

•Net sales- Favorable impact of $12.6 million (favorable impact for EMEA&APAC and Americas of $11.8 million and $0.8 million, respectively).

Current wording

•Net sales - Favorable impact of $0.4 million (favorable impact for EMEA&APAC of $6.5 million, partially offset by the unfavorable impact of Americas of $6.1 million).

Previous wording

•MG&A - Unfavorable impact of $3.8 million (unfavorable impact for EMEA&APAC and Americas of $3.6 million and $0.2 million, respectively).

Current wording

•MG&A- Unfavorable impact of $0.3 million (unfavorable impact for EMEA&APAC of $1.9 million, partially offset by the favorable impact of Americas of $1.6 million).

Previous wording

Price and sales mix favorably impacted net sales for the three months ended March 31, 2024 by 4.4% primarily due to increased net pricing as well as favorable sales mix as a result of lower contract brewing volume in the the Americas segment.

Current wording

Price and sales mix favorably impacted net sales for the three months ended June 30, 2024 by 4.0%, primarily due to increased net pricing as well as favorable sales mix for both segments, including as a result of lower contract brewing volumes in the U.S.

Previous wording

Cost of goods sold increased 3.6% for the three months ended March 31, 2024, compared to prior year, primarily due to higher financial volumes and unfavorable foreign currency impacts, partially offset by lower cost of goods sold per hectoliter. Cost of goods sold per hectoliter improved 1.9% for the three months ended March 31, 2024 compared to prior year, including unfavorable foreign currency impacts of 0.6%, primarily due to the favorable changes in our unrealized mark-to-market derivative positions of $52.6 million, the benefits of cost savings and volume leverage, partially offset by cost inflation related to materials and manufacturing expenses and unfavorable mix driven by lower contract brewing volumes in the Americas segment.

Current wording

Cost of goods sold decreased 6.1% for the three months ended June 30, 2024, compared to prior year, primarily due to lower financial volumes, lower cost of goods sold per hectoliter and favorable foreign currency impacts. Cost of goods sold per hectoliter improved 2.1% for the three months ended June 30, 2024, compared to prior year, including favorable foreign currency impacts of 0.4%, primarily due to the favorable changes in our unrealized mark-to-market derivative positions of $91.5 million and cost savings initiatives, partially offset by cost inflation related to materials and manufacturing expenses, volume deleverage and unfavorable mix driven by lower contract brewing volumes in the Americas segment.

Previous wording

MG&A expenses increased 6.4% for the three months ended March 31, 2024 compared to prior year, primarily due to increased marketing investment to support our brands and innovations and unfavorable foreign currency impacts.

Current wording

MG&A expenses increased 2.5% for the six months ended June 30, 2024 compared to prior year, primarily due to increased marketing investment to support our brands and innovations, partially offset by lower incentive compensation expense.

Previous wording

Total non-operating expense, net improved 13.1% for the three months ended March 31, 2024, compared to prior year, primarily due to lower net interest expense of 18.1% as a result of higher interest income from higher cash balances and higher interest rates as well as our continued deleveraging actions and higher pension and OPEB non-service net benefit, partially offset by unfavorable transactional foreign currency impacts.

Current wording

Total non-operating expense, net improved 14.6% for the six months ended June 30, 2024, compared to prior year, primarily due to lower net interest expense as a result of higher interest income from higher cash balances as well as higher pension and OPEB non-service net benefit, partially offset by unfavorable transactional foreign currency impacts.

Previous wording

The lower effective tax rate for the three months ended March 31, 2024 compared to the same period in the prior year was primarily due to a decrease in net discrete tax expense. We recognized a $5.7 million discrete tax benefit in the three months ended March 31, 2024 compared to $7.5 million discrete tax expense in the three months ended March 31, 2023.

Current wording

The higher effective tax rate for the three months ended June 30, 2024 compared to the prior year was primarily due to tax expense items recognized in the three months ended June 30, 2024, which in the aggregate were immaterial, as compared to tax benefit items recognized in the three months ended June 30, 2023, which in the aggregate were also immaterial.

Previous wording

(2)Excludes royalty volume of 0.591 million hectoliters and 0.618 million hectoliters for the three months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

(2)Excludes royalty volume of 0.578 million hectoliters and 1.169 million hectoliters for the three and six months ended June 30, 2024, respectively, and excludes royalty volume of 0.645 million hectoliters and 1.263 million hectoliters for the three and six months ended June 30, 2023, respectively.

Previous wording

Price and sales mix favorably impacted net sales for the three months ended March 31, 2024 by 3.1% primarily due to increased net pricing and favorable sales mix as a result of lower contract brewing volumes in the U.S. related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024.

Current wording

Financial volumes decreased 5.6% for the three months ended June 30, 2024, compared to prior year, primarily due to lower contract brewing volumes in the U.S. related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024, partially offset by favorable U.S. shipment timing.

Previous wording

Financial volumes increased 7.5% for the three months ended March 31, 2024, compared to prior year, primarily due to an increase in U.S. volumes driven by volume growth in our core brands, partially offset by lower contract brewing volumes related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024. The increase in U.S. volume was impacted by the continued shifts in consumer purchasing behavior largely within the premium beer segment and the building of distributor inventory levels to support the peak summer selling season and to mitigate the impact of the Fort Worth brewery strike that commenced in mid-February 2024.

Current wording

Financial volumes were flat for the six months ended June 30, 2024, compared to prior year, primarily due to an increase in U.S. volumes driven by favorable shipment timing to increase distributor inventory levels ahead of and during a brewery strike which ended in late May, offset by lower contract brewing volumes related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024.

Previous wording

Income before income taxes improved 37.4% for the three months ended March 31, 2024 compared to prior year, primarily due to higher financial volumes, increased net pricing, favorable sales mix and cost savings initiatives, partially offset by cost inflation related to materials and manufacturing expenses, as well as higher MG&A expense. Higher MG&A spend was primarily due to increased marketing investment to support our brands and innovations.

Current wording

Income before income taxes improved 12.1% for the six months ended June 30, 2024 compared to prior year, primarily due to increased net pricing, favorable sales mix and cost savings initiatives, partially offset by cost inflation related to materials and manufacturing expenses.

Previous wording

(2)Excludes royalty volume of 0.218 million hectoliters and 0.156 million hectoliters for the three months ended March 31, 2024 and March 31, 2023 respectively.

Current wording

(2)Excludes royalty volume of 0.325 million hectoliters and 0.543 million hectoliters for the three and six months ended June 30, 2024, respectively, and excludes royalty volume of 0.250 million hectoliters and 0.406 million hectoliters for the three and six months ended June 30, 2023, respectively.

Previous wording

Price and sales mix favorably impacted net sales for the three months ended March 31, 2024 by 8.2%, primarily due to increased net pricing to customers and favorable sales mix driven by premiumization.

Current wording

Price and sales mix favorably impacted net sales for the three months ended June 30, 2024, compared to prior year, by 5.8%, primarily due to increased net pricing and favorable sales mix driven by premiumization.

Previous wording

Loss before income taxes improved $14.4 million or 56.7% for the three months ended March 31, 2024, compared to the prior year, primarily due to increased net pricing to customers and favorable sales mix, partially offset by higher MG&A expense. Higher MG&A spend was primarily due to increased marketing to support our brands and innovations as well as cost inflation and unfavorable foreign currency impacts.

Current wording

Income before income taxes improved 26.5% and 80.9% for the three and six months ended June 30, 2024, respectively, compared to the prior year, primarily due to increased net pricing, favorable sales mix and cost savings initiatives, partially offset by higher MG&A expense and unfavorable foreign currency impacts. Higher MG&A expense was primarily due to increased marketing to support our brands and innovations as well as cost inflation.

Previous wording

We have certain activity that is not allocated to our segments, which has been reflected as "Unallocated" below. Specifically, "Unallocated" activity primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances and realized and unrealized changes in fair value on instruments not designated in hedging relationships 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.

Current wording

We have certain activity that is not allocated to our segments, which has been reflected as "Unallocated" below. Specifically, "Unallocated" activity primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances and realized and unrealized changes in fair value on instruments not designated in hedging relationships related to financing and other treasury-related activities. Unallocated activity also includes 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. Only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated.

Previous wording

The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for the three months ended March 31, 2024 and March 31, 2023. As the exposure we are managing is realized, we reclassify the gain or loss on our commodity derivatives 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. See Part I.—Item 1. Financial Statements, Note 8, "Derivative Instruments and Hedging Activities" for further information.

Current wording

The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for the three and six months ended June 30, 2024 and June 30, 2023, respectively. As the exposure we are managing is realized, we reclassify the gain or loss on our commodity derivatives 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. See Part I.—Item 1. Financial Statements, Note 8, "Derivative Instruments and Hedging Activities" for further information.

Previous wording

While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD. As of March 31, 2024, approximately 54% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. Fluctuations in foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances. Cash balances in foreign countries are often subject to additional restrictions. We may, therefore, have difficulties timely repatriating cash held outside the U.S., and such repatriation may be subject to tax. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. and other countries and may adversely affect our liquidity. To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries as they are earned. We may utilize tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We periodically review and evaluate these plans and strategies, including externally committed and non-committed credit agreements accessible by our Company and each of our operating subsidiaries. We believe these financing arrangements, along with the cash generated from the operations of our U.S. business, are sufficient to fund our current cash needs in the U.S.

Current wording

While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD. Excluding euro-denominated cash and cash equivalents held for the repayment of our EUR 800 million 1.25% notes in July 2024, as of June 30, 2024, approximately 58% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. Fluctuations in foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances. Cash balances in foreign countries are often subject to additional restrictions. We may, therefore, have difficulties timely repatriating cash held outside the U.S., and such repatriation may be subject to tax. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. and other countries and may adversely affect our liquidity. To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries as they are earned. We may utilize tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We periodically review and evaluate these plans and strategies, including externally committed and non-committed credit agreements accessible by our Company and each of our operating subsidiaries. We believe these financing arrangements, along with cash flows from operating activities within the U.S., are sufficient to fund our current cash needs in the U.S.

Previous wording

Net cash provided by operating activities of $25.4 million for the three months ended March 31, 2024 increased $22.0 million compared to $3.4 million for the three months ended March 31, 2023. The increase in net cash provided by operating activities was primarily due to higher net income and lower interest paid, partially offset by the unfavorable timing of working capital. The unfavorable timing of working capital was primarily driven by the timing of cash receipts on trade receivables as well as higher payments for prior year annual incentive compensation.

Current wording

Net cash provided by operating activities of $894.6 million for the six months ended June 30, 2024 increased $0.2 million compared to $894.4 million for the six months ended June 30, 2023. The increase in net cash provided by operating activities was primarily due to higher net income offset by lower non-cash expense and the unfavorable change in working capital. The unfavorable change in working capital was primarily driven by the timing of cash receipts as well as higher payments for annual incentive compensation.

Previous wording

Net cash used in investing activities of $212.5 million for the three months ended March 31, 2024 increased $35.1 million compared to $177.4 million for the three months ended March 31, 2023. The increase in net cash used in investing activities was primarily due to higher capital expenditures driven by the timing of capital projects.

Current wording

Net cash used in investing activities of $381.4 million for the six months ended June 30, 2024 increased $40.8 million compared to $340.6 million for the six months ended June 30, 2023. The increase in net cash used in investing activities was primarily due to higher capital expenditures resulting from the timing of capital projects.

Previous wording

Net cash used in financing activities of $216.2 million for the three months ended March 31, 2024 increased $113.7 million compared to $102.5 million for the three months ended March 31, 2023. The increase in net cash used in financing activities was primarily due to higher Class B common stock share repurchases and higher dividend payments.

Current wording

Net cash provided by financing activities of $285.6 million for the six months ended June 30, 2024 improved $487.5 million compared to net cash used in financing activities of $201.9 million for the six months ended June 30, 2023. The improvement in net cash provided by financing activities was primarily due to the issuance of new EUR 800 million 3.8% notes due 2032, partially offset by higher Class B common stock repurchases.

Previous wording

As of March 31, 2024, we had total cash and cash equivalents of $458.4 million, compared to $868.9 million as of December 31, 2023 and $328.2 million as of March 31, 2023. The decrease in cash and cash equivalents from December 31, 2023 was primarily due to capital expenditures, Class B common stock share repurchases and dividends paid, partially offset by the net proceeds from operating activities. The increase in cash and cash equivalents from March 31, 2023 was primarily due to the net cash provided by operating activities, partially offset by capital expenditures, net debt repayments, including the repayment of our CAD 500 million 2.84% notes which matured in July 2023, dividend payments, Class B common stock share repurchases as well as cash paid for acquisitions.

Current wording

As of June 30, 2024, we had total cash and cash equivalents of $1,647.3 million, compared to $868.9 million as of December 31, 2023 and $960.9 million as of June 30, 2023. The increase in cash and cash equivalents from December 31, 2023 was primarily due to the net cash provided by operating activities, as well as the proceeds from the issuance of new EUR 800 million 3.8% notes due in 2032 partially offset by capital expenditures, Class B common stock share repurchases and dividends paid. The increase in cash and cash equivalents from June 30, 2023 was primarily due to the net cash provided by operating activities, as well as the issuance of new EUR 800 million 3.8% notes due in 2032, partially offset by capital expenditures, Class B common stock repurchases, net debt repayments, including the repayment of our CAD 500 million 2.84% notes which matured in July 2023, dividend payments and cash paid for acquisitions.

Previous wording

Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to draw on our amended and restated revolving credit facility if the need arises. As of March 31, 2024, we had $2.0 billion available to draw on our $2.0 billion amended and restated revolving credit facility. As of March 31, 2024, we had no borrowings drawn on this amended and restated revolving credit facility and no commercial paper borrowings.

Current wording

Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to draw on our revolving credit facility if the need arises. On June 3, 2024, we amended our existing $2.0 billion multi-currency revolving credit facility to, among other things, extend the maturity date from June 26, 2028 to June 26, 2029. As of June 30, 2024, we had $2.0 billion available to draw on our amended and restated $2.0 billion multi-currency revolving credit facility. As of June 30, 2024, we had no borrowings drawn on this amended and restated multi-currency revolving credit facility and no commercial paper borrowings.

Previous wording

The maximum net debt to EBITDA leverage ratio, as defined by the amended and restated revolving credit facility agreement, was 4.00x as of March 31, 2024 and December 31, 2023. As of March 31, 2024 and December 31, 2023, we were in compliance with all of these restrictions and covenants, have met such financial ratios and have met all debt payment obligations. All of our outstanding senior notes as of March 31, 2024 rank pari-passu.

Current wording

The maximum net debt to EBITDA leverage ratio, as defined by the amended and restated multi-currency revolving credit facility agreement, was 4.00x as of June 30, 2024 and December 31, 2023. As of June 30, 2024 and December 31, 2023, we were in compliance with all of these restrictions and covenants, have met such financial ratios and have met all debt payment obligations. All of our outstanding senior notes as of June 30, 2024 rank pari-passu.

Previous wording

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture and the July 2016 Indenture. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our Americas segment.

Current wording

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our Americas segment.

Previous wording

Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024. The issuances of the senior notes issued under the May 2012 Indenture and the July 2016 Indenture were registered under the Securities Act of 1933, as amended. These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed in Exhibit 22 of this Quarterly Report on Form 10-Q (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group"). Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer. The guarantees are full and unconditional and joint and several.

Current wording

Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024 (subsequently repaid upon maturity on July 15, 2024). Further, pursuant to the indenture dated May 29, 2024 ("May 2024 Indenture"), MCBC issued its outstanding 3.8% senior notes due 2032. The issuances of the senior notes under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture were registered under the Securities Act of 1933, as amended. These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed in Exhibit 22 of this Quarterly Report on Form 10-Q (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group"). Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer. The guarantees are full and unconditional and joint and several.

Previous wording

We incurred $143.9 million, and paid $214.7 million, for capital improvement projects worldwide in the three months ended March 31, 2024, excluding capital spending by equity method joint ventures, representing a decrease of $5.1 million from the $149.0 million of capital expenditures incurred in the three months ended March 31, 2023. We continue to focus on where and how we employ our planned capital expenditures, with an emphasis on strengthening our focus on required returns on invested capital as we determine how to best allocate cash within the business.

Current wording

We incurred $299.5 million, and paid $392.2 million, for capital improvement projects worldwide in the six months ended June 30, 2024, excluding capital spending by equity method joint ventures, representing a decrease of $3.2 million from the $302.7 million of capital expenditures incurred in the six months ended June 30, 2023. We continue to focus on where and how we employ our planned capital expenditures, with an emphasis on obtaining required returns on invested capital as we determine how to best allocate cash within the business.

Previous wording

Our accounting policies and accounting estimates critical to our financial condition and results of operations are set forth in our Annual Report and did not change during the three months ended March 31, 2024. See Part I.—Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for discussion of recently adopted accounting pronouncements. See also Part I.—Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets" for discussion of the results of our 2023 annual impairment testing analysis, the related risks to our indefinite-lived intangible brand assets and the goodwill amounts associated with our reporting units.

Current wording

Our accounting policies and accounting estimates critical to our financial condition and results of operations are set forth in our Annual Report and did not change during the six months ended June 30, 2024. See Part I.—Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for discussion of any recently adopted accounting pronouncements. See also Part I.—Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets" for discussion of the results of our 2023 annual impairment testing analysis, the related risks to our indefinite-lived intangible brand assets and the goodwill amounts associated with our reporting units.