Molson Coors Beverage Company · NYSE:TAP
Molson Coors Beverage — Molson Coors Brewing Company — Q4 2018 Earnings Presentation
37 slides from Molson Coors Beverage's earnings presentation, Feb 12, 2019
Slide 1: Q4 and Full Year 2018 Earnings
Q4 AND FULL YEAR 2018 EARNINGS FEBRUARY 12, 2019
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation includes “forward-looking statements” within the meaning of the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “anticipate,” “project,” “will,” “outlook,” and similar expressions identify forward-looking statements, whic
Slide 3: Mark Hunter, President and CEO
MARK HUNTER PRESIDENT AND CEO 3
Slide 4: State of the Business
STATE OF THE BUSINESS Multiple accomplishments last year despite difficult U.S. market and inflation environment • Restored underlying EBITDA growth Q4 and 2H • Scaled International profit contribution • Continued focus on premiumization • Launched Truss and other disruptive growth initiatives • Ups
Slide 5: Focus: Delivering Growth & Long-Term Shareholder Value
FOCUS: DELIVERING GROWTH & LONG-TERM SHAREHOLDER VALUE EARN MORE USE LESS INVEST WISELY BUILD BRAND LED EXTRAORDINARY DRIVE GROWTH BRANDS SYNERGIES OPPORTUNITIES AND COST STRENGTHEN STRENGTHEN SAVINGS BALANCE CUSTOMER EXCELLENCE SHEET INCREASE DRIVE DISRUPTIVE RETURN CASH TO PRODUCTIVITY SHAREHOLDER
Slide 6: Earn More
EARN MORE ABOVE PREMIUM AS % OF BRAND VOLUME 25% KEY TAKEAWAYS • International gaining strength in focus markets 20% • Europe strengthening core and premiumizing-Staropramen, cider, craft 15% • Canada driven by Belgian Moon, Heineken and Trou du Diable 10% • Expecting further U.S. industry volume co
Slide 7: Use Less: Cost Savings
USE LESS ESTIMATED COST SAVINGS COST SAVINGS 2017-2019 2020-2022 2017-2019 $700 million COST SAVINGS PROGRAM $205 $450 million MILLION 2018E $240 million SAVINGS FROM • World Class Supply Chain 2.0 • Greenfield breweries • Global Business Services $255 • New IT & Procurement million initiatives • Mo
Slide 8: Invest Wisely
INVEST WISELY DEBT / EBITDA MARKETING SPEND 6x S&P 5.1x 5.3x Moody's • Scaling investment behind 5x 4.4x 4.7x 4.5x above premium brands (e.g. 4.0x ~3.75x Blue Moon, Peroni, Sol, 4x Staropramen) and innovation 3x 2.4x • Increasing focus on return on 2.2x 2x marketing investment (ROMI) • Shift to digi
Slide 9: Tracey Joubert, Chief Financial Officer
T R AC E Y J O U B E RT CHIEF FINANCIAL OFFICER 9
Slide 10: Fourth Quarter 2018
FOURTH QUARTER 2018 NSR/HL WW BRAND VOLUME EXCL. REV REC UNDERLYING EBITDA (millions HL) (USD, constant currency) (USD millions, constant currency) -1.5% -0.3% +3.9% $106.78 $106.45 22.4 22.0 $481 $500 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 FINANCIAL VOLUME -6.5% +0.3% REPORTED +1.4% REPORTED Note: Non
Slide 11: Full Year 2018
FULL YEAR 2018 NSR/HL WW BRAND VOLUME EXCL REV REC UNDERLYING EBITDA (millions HL) (USD, constant currency) (USD millions, constant currency) -1.9% -0.1% -1.5% 94.0 92.1 $106.41 $106.29 $2,497 $2,458 2017 2018 2017 2018 2017 2018 FINANCIAL VOLUME -2.9% +0.9% REPORTED -1.7% REPORTED Note: Non-GAAP un
Slide 12: United States Q4 2018 Performance
UNITED STATES Q4 2018 PERFORMANCE NSR/HL UNDERLYING EBITDA BRAND VOLUME EXCL REV REC ($ millions) (millions HL) +6.4% -5.1% +2.1% $348 $370 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 DOMESTIC STWs -8.9% NSR/HL (brand volume basis) +2.7% Note: Non-GAAP underlying earnings before interest, tax, depreciation
Slide 13: United States 2018 Performance
UNITED STATES 2018 PERFORMANCE NSR/HL KEY TAKEAWAYS BRAND VOLUME EXCL REV REC • Distributor inventories declined UNDERLYING EBITDA ($ millions) (millions HL) sequentially to normal levels at year end -1.5% -3.9% +1.6% • Coors Light reversed negative segment share trend in Q4, Miller Lite increased s
Slide 14: Europe Q4 2018 Performance
EUROPE Q4 2018 PERFORMANCE UNDERLYING EBITDA BRAND VOLUME NSR/HL (millions, constant currency) (millions HL) (local currency) -7.8% +3.3% -2.5% $91 $84 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 -11.2% REPORTED FINANCIAL VOLUME+3.0% Note: Non-GAAP underlying earnings before interest, tax, depreciation and
Slide 15: Europe 2018 Performance
EUROPE 2018 PERFORMANCE UNDERLYING EBITDA BRAND VOLUME NSR/HL KEY TAKEAWAYS (millions, constant currency) (millions HL) (local currency) • Europe top and bottom line performance impacted by lapping 2017 indirect tax reversal -8.2% +2.2% -3.4% • Underlying EBITDA excluding the effect of the indirect
Slide 16: Canada Q4 2018 Performance
CANADA Q4 2018 PERFORMANCE NSR/HL UNDERLYING EBITDA BRAND VOLUME EXCL REV REC (millions, constant currency) (millions HL) (local currency) -12.0% -2.0% +2.7% $79 $70 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 -18.3% REPORTED FINANCIAL VOLUME-5.7% NSR/HL (brand volume basis, local currency) -0.7% Note: Non-
Slide 17: Canada 2018 Performance
CANADA 2018 PERFORMANCE NSR/HL UNDERLYING EBITDA BRAND VOLUME EXCL REV REC KEY TAKEAWAYS (millions, constant currency) (millions HL) (local currency) • Industry softness in the West and Ontario partially offset by -4.1% -2.2% +0.9% growth in Quebec • Cost increases driven by inflation and investment
Slide 18: International Q4 2018 Performance
INTERNATIONAL Q4 2018 PERFORMANCE UNDERLYING EBITDA BRAND VOLUME NSR/HL (millions, constant currency) (millions HL) (constant currency) +$3.1M +1.1% -18.0% $3.5 $0.4 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 REPORTED UNDERLYING EBITDA FINANCIAL VOLUME -22.6% NSR/HL (brand volume basis) $2.8M -20.2% Note:
Slide 19: International 2018 Performance
INTERNATIONAL 2018 PERFORMANCE KEY TAKEAWAYS UNDERLYING EBITDA BRAND VOLUME NSR/HL • Increased profitability in (millions, constant currency) (millions HL) (constant currency) Mexico-local production • Increased profitability of focus +$19.0M +2.2% -6.0% brands: Coors Light, MGD, Miller Lite $22.5 •
Slide 20: Outlook
OUTLOOK Expected dividend Payout Ratio 20%-25% of trailing annual underlying LEVERAGE & DIVIDEND EBITDA after achieving ~3.75x leverage around mid 2019 EBITDA MARGIN EXPANSION Unchanged ~$700M 2017-2019 COST SAVINGS $450M 2020-2022 2019 INTERNATIONAL Strong double digit percentage increase constant
Slide 21: Mark Hunter, President and CEO
MARK HUNTER PRESIDENT AND CEO 21
Slide 22: Earn More: Commercial Excellence Drivers
EARN MORE : COMMERCIAL EXCELLENCE DRIVERS ENHANCED COMMERCIAL CAPABILITIES WILL DRIVE TOP & BOTTOM LINE BUILD EXTRAORDINARY STRENGTHEN CUSTOMER DRIVE DISRUPTIVE BRANDS EXCELLENCE GROWTH ENERGIZE CORE BRANDS EXPAND PORTFOLIO GROW ABOVE PREMIUM & CRAFT DIGITAL & E-COMMERCE BUILD GLOBAL BRANDS ACCELERA
Slide 23: United States Commercial Excellence
UNITED STATES COMMERCIAL EXCELLENCE CONSUMER EXCELLENCE CUSTOMER EXCELLENCE ACCELERATE STABILIZE BELOW OFFERING MORE VALUE TO BOLDER RETAIL CONTINUE GROWING ABOVE PREMIUM PREMIUM TO SHARE IN PREMIUM DISTRIBUTORS PARTNERSHIPS & CRAFT EXPAND BEER INNOVATION DRIVING PLACEMENTS BUILDING E-COMMERCE EVOLV
Slide 24: Coors Light and Miller Lite Brand Plans
COORS LIGHT- BACK TO ROCKY MOUNTAIN REFRESHMENT: MILLER LITE –SHARE GROWTH & BOLD COMMUNICATION The World’s Most Refreshing Beer The Original Light Beer 24
Slide 25: Europe Commercial Excellence
EUROPE COMMERCIAL EXCELLENCE CONSUMER EXCELLENCE CUSTOMER EXCELLENCE DRIVING NATIONAL ALL GLOBAL PREMIUM ENHANCED REVENUE MAINTAIN & CHAMPION BRANDS – BRANDS* IN GROWTH MANAGEMENT DEVELOP FIRST VOLUME GROWTH IN ’18 +7.8% IN 2018 APPROACH CHOICE REPUTATION ACCELERATING ABOVE NO/LOW INNOVATION CATEGOR
Slide 26: Carling in the UK in 2019
CARLING IN THE UK IN 2019 MADE LOCAL At Carling, we believe in making it where we’re from. We believe it because it’s what we do. Proudly brewed in Burton-on-Trent. 26
Slide 27: Canada Commercial Excellence
CANADA COMMERCIAL EXCELLENCE CONSUMER EXCELLENCE CUSTOMER EXCELLENCE IMPROVE SHARE IN PREMIUM GROWTH IN ABOVE PREMIUM STRONG FIELD SALES LCBO PILOT BOOSTED CATEGORY MANAGEMENT PROCESSES AND SHARE GROWTH NON-ALC PORTFOLIO INNOVATION SHARE GROWTH IN DRIVING DELIVERING STRONG VALUE SEGMENT GROWTH PLACE
Slide 28: Coors Light and Molson Campaign Launches
COORS LIGHT “THE MOUNTAINS ARE CALLING” MOLSON “HISTORY IS IN YOUR HANDS” NEW CAMPAIGN LAUNCHES IN APRIL NEW PACKAGING INNOVATION LAUNCHES IN MAY 28
Slide 29: Miller TM Portfolio Expansion & Acceleration
MILLER TM PORTFOLIO EXPANSION & ACCELERATION CONTINUE TO BUILD AWARENESS AND DISTRIBUTION FOLLOWING SUCCESSFUL LAUNCH IN 2018 29
Slide 30: International – Step Changing Contribution: Net Sales Revenue
INTERNATIONAL – STEP CHANGING CONTRIBUTION Net Sales Revenue Constant Currency Basis ($ millions) $264.0 $253.4 $163.6 $250.1 China Restructure $156.3 $147.0 $144.5 $137.6 • international FOCUS BRANDS 2012 2013 2014 2015 2016 2017 2018 30
Slide 31: International – Step Changing Contribution: Underlying EBITDA
INTERNATIONAL – STEP CHANGING CONTRIBUTION Underlying EBITDA DRIVERS ($ millions) • 2018 vs. 2017 driven by: • Shift to local production in $22.5 Mexico Constant Currency Basis • Improved pricing structure of global brands $19.3 • Discipline against focus ($26.0) ($13.3) ($10.6) ($15.2) ($3.4) $3.5
Slide 32: International Commercial Excellence
INTERNATIONAL COMMERCIAL EXCELLENCE CONSUMER EXCELLENCE CUSTOMER EXCELLENCE Category Drivers Delivering Category Growth and +6% NPS* % OF BRAND VOLUME IN ABOVE PREMIUM AND CRAFT 2018 GROW EMERGING BRANDS SELECTIVELY EXPLORE SUPPLY CHAIN TRANSFORMATION Above Premium Other MGD SUCCESS IN PARAGUAY 32 *
Slide 33: Building Global Brands
BUILDING GLOBAL BRANDS CHANGING TRAJECTORY OF COORS LIGHT EXPAND MILLER TM GROWTH GLOBALLY ACCELERATE STRONG STAROPRAMEN GROWTH IN EUROPE RENEW BLUE MOON GROWTH IN US AND EXPAND GLOBAL ? 33
Slide 34: Customer Excellence: Staying First Choice for Customers
CUSTOMER EXCELLENCE : STAYING FIRST CHOICE FOR CUSTOMERS BUILD SALES AND CUSTOMER MANAGEMENT CAPABILITY STRENGTHEN CUSTOMER SATISFACTION METRICS (NPS) • BeerMate • U.S. No. 1 in CM Profit Group—including Salesforce platform 1st time ever No. 1 in on-premise ~1000 Salesforce live in 12 months • U.S.
Slide 35: Disruptive Growth Initiatives: Seeding Transformation
DISRUPTIVE GROWTH INITIATIVES: SEEDING TRANSFORMATION RE-ENERGIZE OUR CORE LEAD ON-TREND ALCOHOLIC BEVERAGES Low and no alc grew 4.1% in 2018 DRIVE DISRUPTIVE GROWTH BUILD CAPABILITY Global %’ile 2017 79th 2018 97th +18 pts 35
Slide 36: Focus: Delivering Growth & Long-Term Shareholder Value
FOCUS: DELIVERING GROWTH & LONG-TERM SHAREHOLDER VALUE EARN MORE USE LESS INVEST WISELY BUILD BRAND LED EXTRAORDINARY DRIVE GROWTH BRANDS SYNERGIES OPPORTUNITIES AND COST STRENGTHEN STRENGTHEN SAVINGS BALANCE CUSTOMER EXCELLENCE SHEET INCREASE DRIVE DISRUPTIVE RETURN CASH TO PRODUCTIVITY SHAREHOLDER
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