Mr. Gavin Hattersley reports

MOLSON COORS BEVERAGE COMPANY REPORTS 2024 FIRST QUARTER RESULTS

Molson Coors Canada Inc. parent Molson Coors Beverage Company (MCBC) has released its results for the 2024 first quarter.

Unless otherwise indicated in this release, all amounts are in United States dollars, and all quarterly comparative results are for the company's first quarter ended March 31, 2024, compared with the first quarter ended March 31, 2023. Some numbers may not sum due to rounding.

Two thousand twenty-four first quarter financial highlights:

• Net sales increased 10.7 per cent reported and 10.1 per cent in constant currency;
• United States GAAP (generally accepted accounting principles) income before income taxes of $265.4-million increased 160.5 per cent reported;
• Underlying (non-GAAP) income before income taxes of $258.8-million improved 68.8 per cent in constant currency;
• U.S. GAAP net income attributable to MCBC of $207.8-million, 97 cents per share on a diluted basis. Underlying (non-GAAP) diluted earnings per share (EPS) of 95 cents per share increased 75.9 per cent.

Chief executive officer and chief financial officer perspectives

The first quarter of 2024 was a strong start to the year for Molson Coors. Net sales grew 10.1 per cent on a constant currency basis, while underlying income before income taxes increased 68.8 per cent on a constant currency basis. Results were driven by both business units and were strongly supported by elevated demand and favourable shipment timing in the U.S., the company's largest market.

The quarterly performance underscores great progress against Molson's acceleration plan. The strength of its core power brands led to double-digit brand volume growth for Coors Light and Coors Banquet, and high-single-digit brand volume growth for Miller Lite in the U.S., and double-digit brand volume growth for Ozujsko in Croatia. Molson's above premium portfolio, including both beer and beyond beer, benefited from continued growth from winning innovations like Madri in the United Kingdom, and Simply Spiked in the U.S. and Canada.

The trajectory of the business has been improving for several years -- Molson believes positioning it well to benefit from the accelerated demand for its core brands and to sustain its share gains in the U.S. In partnership with the company's distributors, Molson has demonstrated its ability to supply the elevated level of demand, to secure more shelf space in retail and more tap handles in the on-premise, and to successfully execute targeted commercial plans that promote trial and retention of consumers, among others.

Molson's significant progress has been achieved amidst industry softness in the U.S. and Canada so far this year. It remains confident in its business and its strategy, but incrementally more cautious on the outlook for the industry this year, given early April industry performance. Given this, Molson believes it prudent to reiterate its guidance for top- and bottom-line growth in 2024.

Gavin Hattersley, president and chief executive officer, stated:

"After back-to-back years of delivering on our growth objectives, we continued that momentum in the first quarter of 2024 with double-digit top- and bottom-line growth. We believe our strategy is working and we remain committed to achieving growth in 2024, and in the years to come."

Tracey Joubert, chief financial officer, stated:

"Strong Americas' volume and favourable net pricing across both business units resulted in double-digit top-line growth, while volume leverage and ongoing cost-savings drove meaningful margin expansion in the quarter. We achieved this all while continuing to invest in our business, and returning over $200-million to shareholders through a quarterly cash dividend and share repurchases."

Quarterly consolidated highlights (versus first quarter 2023 results):

• Net sales: The associated table highlights the drivers of the change in net sales for the three months ended March 31, 2024, compared with March 31, 2023 (in percentages).

• Net sales increased 10.7 per cent, driven by higher financial volumes, favourable price and sales mix, and favourable foreign currency impacts. Net sales increased 10.1 per cent in constant currency.
• Financial volumes increased 5.7 per cent, primarily due to higher financial volumes in the Americas segment. Brand volumes increased 4.4 per cent due to a 5.3-per-cent increase in the Americas, as well as a 1.9-per-cent increase in EMEA (Europe, the Middle East and Africa) and APAC (Asia Pacific).
• Price and sales mix favourably impacted net sales by 4.4 per cent, primarily due to increased net pricing as well as favourable sales mix as a result of lower contract brewing volume in the Americas segment.
• Cost of goods sold (COGS) increased 3.6 per cent on a reported basis, primarily due to higher financial volumes and unfavourable foreign currency impacts, partially offset by lower COGS per hectolitre. COGS per hectolitre improved 1.9 per cent on a reported basis, including an unfavourable foreign currency impact of 0.6 per cent, primarily due to favourable changes to the company's 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 unfavourable mix driven by lower contract brewing volumes in the Americas segment. Underlying COGS per hectolitre increased 0.9 per cent in constant currency, primarily due to cost inflation related to materials and manufacturing expenses, and unfavourable mix driven by lower contract brewing volumes in the Americas segment, partially offset by cost-savings and volume leverage.
• Marketing, general and administrative (MG&A) increased 6.4 per cent on a reported basis, primarily due to increased marketing investment to support the company's brands and innovations, and unfavourable foreign currency impacts. Underlying MG&A increased 6.4 per cent in constant currency.
• United States GAAP income (loss) before income taxes improved 160.5 per cent on a reported basis, primarily due to higher financial volume, increased net pricing, the favourable changes to Molson's unrealized mark-to-market derivative positions and favourable sales mix, partially offset by cost inflation related to materials and manufacturing expenses, and higher MG&A expense.
• Underlying income (loss) before income taxes improved 68.8 per cent in constant currency, primarily due to higher financial volume, increased net pricing and favourable sales mix, partially offset by cost inflation related to materials and manufacturing expenses, and higher MG&A expense.

Quarterly segment highlights (versus first quarter 2023 results)

Americas segment:

• The associated table highlights the Americas segment results for the three months ended March 31, 2024, compared with March 31, 2023.

• Net sales: The associated table highlights the drivers of the change in net sales for the three months ended March 31, 2024, compared with March 31, 2023 (in percentages).

• Net sales increased 10.6 per cent, driven by higher financial volumes and favourable price and sales mix.
• Financial volumes increased 7.5 per cent, primarily due to an increase in U.S. volumes driven by volume growth in Molson's core brands, partially offset by lower contract brewing volume. The increase in U.S. volume was impacted by the continued shifts in consumer purchasing behaviour, largely within the premium beer segment. In addition, the company's U.S. volume sales to wholesalers exceeded its sales to retailers in the quarter by 750,000 hectolitres, driven by the accelerated 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. Americas brand volumes increased 5.3 per cent, including a 5.8-per-cent increase in the U.S., primarily due to growth in the company's core brands, with Coors Light and Coors Banquet each up double digits, and Miller Lite up high single digits. Canada brand volumes increased 3.6 per cent, driven by growth in Molson's above-premium brands.
• Price and sales mix favourably impacted net sales by 3.1 per cent, primarily due to favourable impacts from both increased net pricing and sales mix. Favourable sales mix was due to lower contract brewing volume in the U.S.
• U.S. GAAP and underlying income (loss) before income taxes improved 37.4 per cent on a reported basis and underlying income before income taxes improved 37.8 per cent in constant currency, primarily due to higher financial volumes, increased net pricing, favourable 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 the company's brands and innovations.

EMEA and APAC segment:

• The associated table highlights the EMEA and APAC segment results for the three months ended March 31, 2024, compared with March 31, 2023.

• Net sales: The associated table highlights the drivers of the change in net sales for the three months ended March 31, 2024, compared with March 31, 2023 (in percentages).

• Net sales increased 10.9 per cent, driven by favourable price and sales mix, as well as favourable foreign currency impacts, partially offset by slightly unfavourable financial volumes. Net sales increased 8 per cent in constant currency.
• Financial volumes slightly decreased, 0.2 per cent, due to lower volumes in Western Europe, impacted by challenges in the United Kingdom off-premise, partially offset by increased volumes in Central and Eastern Europe, as inflation pressures ease for this market. Brand volumes increased 1.9 per cent, primarily due to increased volumes in Central and Eastern Europe as a result of easing inflationary pressures on the consumer, partially offset by lower volumes in Western Europe.
• Price and sales mix favourably impacted net sales by 8.2 per cent, primarily due to increased net pricing to customers and favourable sales mix driven by premiumization.
• U.S. GAAP and underlying income (loss) before income taxes improved 56.7 per cent on a reported basis and underlying loss before income taxes improved 28.4 per cent in constant currency, primarily due to increased net pricing to customers and favourable sales mix, partially offset by higher MG&A expense. Higher MG&A spend was primarily due to increased marketing to support Molson's brands and innovations, as well as cost inflation and unfavourable foreign currency impacts.

Cash flow and liquidity highlights:

• U.S. GAAP cash from operations: Net cash provided by operating activities was $25.4-million for the three months ended March 31, 2024, which increased $22-million compared with the prior year, primarily due to higher net income and lower interest paid, partially offset by the unfavourable timing of working capital. The unfavourable 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.
• Underlying free cash flow: Cash used of $188.6-million for the three months ended March 31, 2024, which represents an increase in cash used of $14.9-million from the prior year, was primarily due to higher capital expenditures, driven by the timing of capital projects, partially offset by higher net cash provided by operating activities.
• Debt: Total debt as of March 31, 2024, was $6,217.7-million, and cash and cash equivalents totalled $458.4-million, resulting in net debt of $5,759.3-million and a net debt to underlying EBITDA ratio of 2.29 times. As of March 31, 2023, Molson's net debt to underlying EBITDA ratio was 2.98 per cent.
• Dividends: On Feb. 13, 2024, the company's board of directors declared a cash dividend of 44 cents per share, equivalent to 59 Canadian cents per share, paid on March 15, 2024, to eligible shareholders of record on March 1, 2024. On Feb. 20, 2023, the company's board of directors declared a cash dividend of 41 cents per share, equivalent to 55 Canadian cents per share, paid on March 17, 2023, to eligible shareholders of record on March 3, 2023.
• Share repurchase program: For the three months ended March 31, 2024, Molson repurchased 1,760,115 shares under the share repurchase program, which was approved on Sept. 29, 2023, through a combination of open-market purchases and Rule 10b5-1 trading arrangements, for an aggregate value of $111.2-million, including brokerage commissions and excise taxes. For the three months ended March 31, 2023, the company repurchased 275,000 shares under the share repurchase program approved on Feb. 17, 2022, for an aggregate value of $14.6-million, including brokerage commissions and excise taxes.

Other results:

• The decrease in the company's first quarter U.S. GAAP effective tax rate and underlying effective tax rate was primarily due to the impact of discrete tax. Molson recognized a $5.7-million GAAP discrete tax benefit in the three months ended March 31, 2024, compared with $7.5-million of GAAP discrete tax expense in the prior year.

Two thousand twenty-four outlook

Molson continues to expect to achieve the following key financial targets for full-year 2024:

• Net sales: low single-digit increase versus 2023 on a constant currency basis;
• Underlying income (loss) before income taxes: mid-single-digit increase compared with 2023 on a constant currency basis;
• Underlying diluted earnings per share: mid-single-digit increase compared with 2023;
• Capital expenditures: $750-million incurred, plus or minus 5 per cent;
• Underlying free cash flow: $1.2-billion, plus or minus 10 per cent;
• Underlying depreciation and amortization: $700-million, plus or minus 5 per cent;
• Consolidated net interest expense: $210-million, plus or minus 5 per cent;
• Underlying effective tax rate: in the range of 23 per cent to 25 per cent for 2024.

These targets are based on the following key considerations:

• U.S. brand volume is expected to outpace domestic shipment volume during the remaining three quarters of 2024. For perspective, first quarter of 2024 U.S. volume sales to wholesalers exceeded volume sales to retailers by over 750,000 hectolitres, while in the first quarter of 2023, this difference was only approximately 100,000 hectolitres.
• The wind down of a contract brewing agreement leading up to the termination by the end of 2024 is expected to result in a reduction in Americas' financial volume by 1.6 million hectolitres for the balance of the year.
• Underlying COGS per hectolitre are expected to be higher in full-year 2024 as compared with full-year 2023. This is due to expected continued, albeit moderating inflation, mix impacts from premiumization and a lower volume leverage impact as compared with full-year 2023 and the first quarter of 2024.
• MG&A expense for full-year 2024 is expected to be relatively flat to full-year 2023.

Two thousand twenty-four first quarter investor conference call

Molson Coors Beverage Company will conduct an earnings conference call with financial analysts and investors at 11 a.m. Eastern Time today to discuss the company's 2024 first-quarter results. The live webcast will be accessible at the company's website. An on-line replay of the webcast will be available until 11:59 p.m. Eastern Time on Aug. 5, 2024. The company will post this release and related financial statements on its website today.

About Molson Coors Canada Inc.

Molson Coors Canada is a subsidiary of Molson Coors Beverage Company. Its 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.

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