Molson Coors Beverage Company · NYSE:TAP
Molson Coors Beverage — Molson Coors — Barclays Consumer Staples Conference 2018
54 slides from Molson Coors Beverage's conference presentation, Sep 5, 2018
Slide 1: Barclays Consumer Staples Conference
BARCLAYS CONSUMER STAPLES CONFERENCE SEPTEMBER 5, 2018 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation includes estimates or projections that constitute “forward-looking statements” within the meaning of the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “anticipate,” “project,” “will,” and similar expressions identify fo
Slide 3: Barclays Consumer Staples Conference Agenda
Barclays Consumer Staples Conference , September 5, 2018 MARK HUNTER, CEO Corporate Overview and Strategic Focus T R A C E Y J O U B E R T, C F O Strategies to grow profit, cash, total shareholder return CLOSING REMARKS Q&A
Slide 4: Molson Coors Priorities
MOLSON COORS PRIORITIES COMMITTED TO DEBT PAYDOWN ACCELERATE REWARD 2018 GUIDANCE & MAXIMIZING TOP-LINE VIA SHAREHOLDERS DESPITE H1 CASH, PROTECT COMMERCIAL WITH CAPITAL CHALLENGES BOTTOM-LINE EXCELLENCE RETURNS 4
Slide 5: Molson Coors Today – A Bigger, Better Business
MOLSON COORS TODAY – A BIGGER, BETTER BUSINESS MILLERCOORS TRANSACTION ALMOST DOUBLED COMPANY SIZE Absolute FY 2015 FY 2017 Growth Worldwide Brand 58 million 94 million 62% Volume (HL)* Net Sales* $6.8 billion $11.0 billion 62% Underlying EBITDA $1.3 billion $2.5 billion 88% Underlying FCF $704 mill
Slide 6: Earning More to Drive Value
EARNING MORE TO DRIVE VALUE TRANSACTION STEP CHANGES EBITDA SCALE UNDERLYING EBITDA (1) (USD MILLIONS) 29% $3,000 27% $2,497 $2,500 $2,404 25% $2,000 23% $1,469 $1,471 22.7% $1,500 $1,398 $1,267 $1,331 21.9% 21% $1,000 19.6% 19.8% 19% 19.5% 19.5% 18.9% $500 17% $0 15% 2011 2012 2013 2014 2015 2016PF
Slide 7: Molson Coors 2017
MOLSON COORS 2017 WORLDWIDE UNDERLYING BRAND VOLUME EBITDA Actual 5% (FY 2017) 16% <1% 25% 13% Net Sales $11.0B 62% 8% 71% WW Brand Volume 94M HLs Underlying EBITDA $2.5B USA Canada Europe International Note: Non-GAAP underlying earnings before interest, tax, depreciation and amortization (EBITDA) i
Slide 8: Q2 2018 Consolidated Performance
Q2 2018 CONSOLIDATED PERFORMANCE UNDERLYING EBITDA NSR/HL WW BRAND VOLUME KEY TAKEAWAYS (U SD m i l l i ons, consta nt cur r ency ) (U SD , consta nt cur r ency ) (m i l l i ons HL) • Underlying EPS growth of 10.6% -3.8% -0.3% -2.4% • Sequential improvements reflect $804 $105.31 $104.99 26.4 $774 25
Slide 9: Earn More, Use Less, Invest Wisely
FOCUS: DELIVERING GROWTH & LONG-TERM SHAREHOLDER VALUE A DISCIPLINED APPROACH TO EARNING MORE, USING LESS AND INVESTING WISELY EARN MORE USE LESS INVEST WISELY BUILD BRAND LED EXTRAORDINARY DRIVE GROWTH BRANDS SYNERGIES OPPORTUNITIES AND COST STRENGTHEN STRENGTHEN SAVINGS BALANCE CUSTOMER EXCELLENCE
Slide 10: Earn More
THE WORLD'S MOST _~ REFRESHING gg@iinn’ BEER gute
Slide 11: Commercial Excellence Drivers
COMMERCIAL EXCELLENCE EARN MORE : COMMERCIAL EXCELLENCE DRIVERS E N H A N C E D C O M M E R C I A L C A PA B I L I T I E S W I L L D R I V E TO P & B OT TO M L I N E BUILD EXTRAORDINARY STRENGTHEN CUSTOMER DRIVE DISRUPTIVE BRANDS EXCELLENCE GROWTH ENERGIZE CORE BRANDS EXPAND PORTFOLIO GROW ABOVE PRE
Slide 12: Energizing Core Brands
ENERGIZING CORE BRANDS ALMOST HALF OF BEER SOLD IN US, CANADA & EUROPE IS PREMIUM OR PREMIUM LIGHTS (MAINSTREAM) No.2 No.1 No.3 No.2 IMPROVING SHARE TREND IN CANADA GAINING SEGMENT SHARE x15 QS MAINTAINED SHARE POSITION AND #1 POSITION 11 OF LAST 13 Qs OF SEGMENT GROWTH IN THE US 12 Source: Nielsen
Slide 13: Energize U.S. Core Brands – Continue to Grow Share in Premium
EARN MORE ENERGIZE U.S. CORE BRANDS – CONTINUE TO GROW SHARE IN PREMIUM 9.4 24.0 20.0 9.2 9.0 23.5 8.8 19.5 8.6 8.4 23.0 8.2 19.0 8.0 22.5 7.8 7.6 7.4 22.0 18.5 2015 2016 2017 2015 2016 2017 2015 2016 2017 Gained share of 2017 marked 11th straight Focused on improving segment for 15th year of growth
Slide 14: Commercials
COMMERCIALS-ML, CL 14 14
Slide 15: National Champions
NATIONAL CHAMPIONS ELEVEN NO.1 OR NO.2 POSITIONS IN CORE MARKET SEGMENTS STAROPRAMEN STAROPRAMEN SLOVAKIA #2 COORS LIGHT MOLSON CZECH #4 CANADA #2 CANADIAN CANADA #4 BORSODI #2 MILLER UK HUNGARY BERGENBIER LITE ROMANIA #2 USA #3 CARLING CZECH CANADA UK #1 SLOVAKIA OZUJSKO HUNGARY CROATIA #1 ROMANIA
Slide 16: Growing Above Premium & Craft
GROWING ABOVE PREMIUM & CRAFT CRAFT, CIDER, FMBS AND IMPORTS CRAFT CIDER FMBS IMPORTS ABOVE PREMIUM BRANDS : 20% OF MCBC PORTFIOLIO AND GROWING AT 21% MCI 82% PORTFOLIO Above Premium % and growth figures based on Full Year 2017 volume 16
Slide 17: U.S. Premiumization Through Craft Portfolio
EARN MORE U.S. PREMIUMIZATION THROUGH CRAFT PORTFOLIO #1 CRAFT BRAND in USA #3 CRAFT BRAND in USA Leading Regional craft brands –outpacing craft industry STRs 2016 2017 2016 2017 2016 2017 2016 2017 17 Source: Nielsen Data
Slide 18: U.S. Premiumization Through FMBs & Cider Portfolio
EARN MORE U.S. PREMIUMIZATION THROUGH FMBS & CIDER PORTFOLIO Evolving FMB position via innovation CIDER: YTD fastest growing segment Led by Crispin Rosé, Crispin outpacing industry Great start in growing segment • Fastest growing FMB innovation 2.4m • Attracting new drinkers CASES 1.9m • Sourcing fr
Slide 19: U.S. Premiumization Through Import Portfolio
EARN MORE U.S.-PREMIUMIZATION THROUGH IMPORT PORTFOLIO Fastest Growing Brand in Fastest Growing Franchise European Imports in Mexican Imports Top 10 European Import Brands Volume YTD $ Growth 13.9% 2018 YTD Since Redesign Case Volume YTD ending Case Volume L13wk ending 8.2% 7/14/18 7/14/18 2.3% +135
Slide 20: Commercials
COMMERCIALS-Sol 20 20
Slide 21: Europe – Premiumization with Staropramen
EARN MORE E U R O P E – P R E M I U M I Z AT I O N W I T H S TA R O P R A M E N ( O U T S I D E C Z ) Staropramen Europe Financial Volume KEY PROGRAMS DRIVING BRAND GROWTH 2018 VS 2017 2013-2017 Premium quality Brand activation Digital brand credentials via food & music engagement LIFE YOUR WAY : Ne
Slide 22: UK & Ireland – Premiumize & Energize Core Brands
EARN MORE UK & IRELAND –PREMIUMIZE & ENERGIZE CORE BRANDS OUTPERFORM PREMIUM No. 1 LAGER ‘ESTEEM 4%’ LEADER CIDER SEGMENT TOP 10 WORLD BEER Most valuable Sales up on-premise +18.8% +5.8% +15.8% brand, growing sales sales growth to 38.9% value share to share growth 43.2% No1 CASK BRAND 2 TOP 15 ‘WORL
Slide 23: Customer Excellence
CUSTOMER EXCELLENCE
Slide 24: Strengthening Customer Excellence
STRENGTHENING CUSTOMER EXCELLENCE MOLSON COORS ADVANTAGE - BUSINESS BUILDING FOR CUSTOMERS 70+ CATEGORY CAPTAINCIES & 30 SUPPLIER AWARDS IN 2 YEARS SURVEY No.1 24
Slide 25: Customer Excellence in Action
CUSTOMER EXCELLENCE IN ACTION DRIVING PROFITABLE CATEGORY GROWTH BUILDING FOUNDATIONS FOR GROWTH WITH AMAZON BEST IN CLASS UK ONLINE PARTNERSHIP +132% +120% +37% +223% +31% BEER CATEGORY VOLUME TURNAROUND IN LCBO EUROPE : FIRST CO-BRANDED SOLUTION WITH NESTLE 25
Slide 26: Drive Disruptive Growth
DRIVE DISRUPTIVE GROWTH
Slide 27: Expanding Portfolio
EXPANDING PORTFOLIO DRIVING & EXPANDING CATEGORY VALUE GROW THE BEER CATEGORY GROW SHARE OF BEER/FMB/CIDER ENHANCING CONSUMER & CUSTOMER EXPERIENCE ENHANCING CONSUMER & CUSTOMER EXPERIENCE GROW BEYOND BEER CREATE VALUE IN SUPPLY CHAIN BREWED, FERMENTED OR DISTILLED BREWING PROCESS INNOVATION 27
Slide 28: Molson Coors Canada and Hexo Announce Definitive Agreement to Create JV
EXPANDING PORTFOLIO NON-ALCOHOLIC, CANNABIS INFUSED BEVERAGES FOR CANADA GROW SHARE OF BEER/FMB/CIDER CANADA Molson Coors Canada and Hexo announce definitive agreement to create JV • Explore highly anticipated consumables cannabis market • Expected to be legally permissible in Canada in 2019 • Stand
Slide 29: Building Global Brands
BUILDING GLOBAL BRANDS ACCELERATING INTERNATIONAL PLANS 50 MARKETS 20 MARKETS 40 MARKETS 5 MARKETS 20+ MARKETS 35 MARKETS NEW VISUAL IDENTITY ROLLED NEW VISUAL ID DRIVING DOUBLE IN ITS 5th YEAR, MGD MUSIC COORS LIGHT +5% GROWTH ACCELERATION OF BLUE OUT IN 20 COUNTRIES DIGIT GROWTH (OUTSIDE CZ) SUPPO
Slide 30: Accelerating International Growth
ACCELERATING INTERNATIONAL GROWTH MOLSON COORS INTERNATIONAL – GROWING CONTRIBUTOR TO TOP & BOTTOM-LINE CONSUMER EXCELLENCE CUSTOMER EXCELLENCE GROW FOCUS BRANDS GROW EMERGING BRANDS OPTIMIZE ROUTEROUTE TO EARN MORE IN OPTIMIZE EXPLORE SUPPLY CHAIN AGGRESSIVELY SELECTIVELY TO MARKET MARKET FOCUS MAR
Slide 31: Accelerating International Growth: Paraguay, South Korea, Argentina
ACCELERATING INTERNATIONAL GROWTH MGD SHOWING STRONG GROWTH IN PARAGUAY, SOUTH KOREA AND ARGENTINA PARAGUAY SOUTH KOREA ARGENTINA PREMIUM MARKET SHARE MGD 26.3 • South Korea- MGD • Strong volume and volume +23% YTD profit growth • MGD volume +71% • Lotte is a strong partner, YTD proven brand builder
Slide 32: Accelerating International Growth: Progress to $20-25 Million EBITDA
ACCELERATING INTERNATIONAL GROWTH PROGRESS TO $20-25 MILLION EBITDA $20-25M Underlying EBITDA ($ millions) $3.5 ($26.0) ($13.3) ($10.6) ($15.2) ($3.4) $13.6 1H 2018 Results 2012 2013 2014 2015 2016 2017 2018E INTERNATIONAL FOCUS BRANDS 32 Note: Non-GAAP underlying earnings before interest, tax, depr
Slide 33: Earn More, Use Less, Invest Wisely
FOCUS: DELIVERING GROWTH & LONG-TERM SHAREHOLDER VALUE A DISCIPLINED APPROACH TO EARNING MORE, USING LESS AND INVESTING WISELY EARN MORE USE LESS INVEST WISELY BUILD BRAND LED EXTRAORDINARY DRIVE GROWTH BRANDS SYNERGIES OPPORTUNITIES AND COST STRENGTHEN STRENGTHEN SAVINGS BALANCE CUSTOMER EXCELLENCE
Slide 34: Tracey Joubert, CFO
TRACEY JOUBERT, CFO 34
Slide 35: Earn More, Use Less, Invest Wisely
FOCUS: DELIVERING GROWTH & LONG-TERM SHAREHOLDER VALUE A DISCIPLINED APPROACH TO EARNING MORE, USING LESS AND INVESTING WISELY EARN MORE USE LESS INVEST WISELY BUILD BRAND LED EXTRAORDINARY DRIVE GROWTH BRANDS SYNERGIES OPPORTUNITIES AND COST STRENGTHEN STRENGTHEN SAVINGS CUSTOMER BALANCE EXCELLENCE
Slide 36: Earning More
EARNING MORE STRONG, STABLE UNDERLYING FCF AND EBITDA PERFORMANCE UNDERLYING EBITDA (1) UNDERLYING FREE CASH FLOW (USD MILLIONS) 29% $3,000 $2,497 27% $2,500 $2,404 $1.5 billion +/- 10% 25% $2,000 23% $1.45 billion $1,398 $1,469 $1,471 $1,500 $1,331 22.7% $1,267 21% 21.9% $1,000 19.6% 19.8% 19% 19.5
Slide 37: Use Less
USE LESS
Slide 38: $600 Million Cost Savings Program
USE LESS D R I V I N G T H E B OT TO M - L I N E BY E X PA N D I N G E B I T D A M A R G I N E N H A N C E D C O M M E R C I A L C A PA B I L I T I E S W I L L D R I V E TO P & B OT TO M L I N E EARN MORE USE LESS INVEST WISELY DRIVE SYNERGIES & COST SAVINGS INCREASE PRODUCTIVITY N. AMERICA SUPPLY C
Slide 39: Estimated Savings Drivers 3 Year Program
DRIVE SYNERGIES AND COST SAVINGS CO S T S AV I N G S P RO G R A M 2017-2019 $600 ESTIMATED 3 YEAR PROGRAM COST SAVINGS million PROGRAM SAVINGS DRIVERS TARGET OF $600M TARGET $135 million • Improved efficiency in N. AMERICA SUPPLY CHAIN cost to capture savings 2018E 40% • Cost to capture of $250m $21
Slide 40: U.S.: Use Less, Invest Wisely
U.S.: USE LESS, INVEST WISELY REDUCING COSTS WHILE MAINTAINING MARKETPLACE PRESSURE MAINTAINING MARKETPLACE PRESSURE WITH REDUCING MG&A SMARTER, MORE EFFICIENT MARKETING INVESTMENT MG&A Expense YR3 Benefit YR2 Benefit YR1 Benefit 2015 2016 2017 2015 Pro forma 2016 Pro forma 2017 Cumulative % EBITDA
Slide 41: Productivity Drivers: Supply Chain
PRODUCTIVITY DRIVERS DRIVING GLOBAL EFFICIENCIES VIA SUPPLY CHAIN A LOWER COST, MORE EFFICIENT SUPPLY CHAIN WCSC 2.0 WILL DELIVER ‘ONE WAY’ BUSINESS RESULTS US BUSINESS UNIT Brewery rationalization -Closed Eden, North Carolina, Q3 2016 CANADA BUSINESS UNIT 2 greenfield breweries -British Columbia br
Slide 42: GBS Roadmap
PRODUCTIVITY DRIVERS IMPROVING SCALE AND VALUE WITH GLOBAL BUSINESS SERVICES (GBS) GBS CENTERS CONTRIBUTING NEAR & LONG TERM OPPORTUNITIES ARE OPEN IN TO CURRENT TO IMPROVE SCALE & VALUE BUCHAREST, AND FUTURE • Finance • Commercial ROMANIA and SAVINGS • Supply Chain • HR MILWAUKEE, WI • Data • Repor
Slide 43: Working Capital
I M P R O V I N G W O R K I N G C A P I TA L A S % O F N E T S A L E S TRACK RECORD OF IMPROVING WORKING CAPITAL & DRIVING HIGHER CASH RETURNS 15% Consistently driving WORKING 2012 working capital 10% improvements CAPITAL since 2012 Expecting $100m in 2013 5% additional 2014 improvement 2015 0% by t
Slide 44: Capital Allocation
I N V E S T W I S E LY CAPITAL ALLOCATION
Slide 45: Capital Allocation Priorities
INVEST WISELY DRIVING SHAREHOLDER RETURN EARN MORE USE LESS INVEST WISELY CAPITAL ALLOCATION PRIORITIES BRAND LED GROWTH STRENGTHEN RETURN CASH TO OPPORTUNITIES BALANCE SHEET SHAREHOLDERS Underpinned by PACC model 45
Slide 46: Cash Use Priorities
I N V E S T W I S E LY C L E A R C A P I TA L A L L O C AT I O N P R I O R I T I E S CASH USE PRIORITIES USE LESS INVEST WISELY BRAND GROWTH STRENGTHEN RETURN CASH TO OPPORTUNITIES BALANCE SHEET SHAREHOLDERS Invest in organic Maintain Reward existing growth and investment grade shareholders via cons
Slide 47: Strengthen Balance Sheet: Focus on Paying Down Debt
STRENGTHEN BAL ANCE SHEET FOCUS ON PAYING DOWN DEBT S&P, MOODY’S DEBT / EBITDA 6x S&P 5.3x 5.1x Moody's 5x 4.7x 4.3x 4.4x Net debt reduced by 4.4x >$1.5 billion ~4x 4x ~3.75x 3.0x COMMITMENT 3x 2.8x 2.1x 2.6x 2.2x 2.4x TO MAINTAINING 2x INVESTMENT- 1x GRADE RATING 0x 2012 2013 2014 2015 2016 PF 2017
Slide 48: Return Cash to Shareholders
R E T U R N C A S H TO S H A R E H O L D E R S STRONG TRACK RECORD DIVIDENDS PAID $2.00 (ANNUAL PER SHARE) $1.80 $1.64 $1.64 $1.64 $1.60 $1.48 $1.40 $1.24 $1.28 $1.28 $1.20 $1.08 $1.00 $0.92 $0.80 $0.76 $0.64 $0.60 $0.40 $0.20 $0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 48
Slide 49: Reinstitute Dividend Payout Ratio
R E T U R N C A S H TO S H A R E H O L D E R S R E I N S T I T U T E D I V I D E N D PAY O U T R AT I O We expect to implement a Dividend Payout Ratio of 20%-25% of trailing annual underlying EBITDA after achieving ~3.75x leverage around mid 2019 • ~40% to ~75% higher than the current level (using F
Slide 50: Earn More, Use Less, Invest Wisely
FOCUS: DELIVERING GROWTH & LONG-TERM SHAREHOLDER VALUE A DISCIPLINED APPROACH TO EARNING MORE, USING LESS AND INVESTING WISELY EARN MORE USE LESS INVEST WISELY BUILD BRAND LED EXTRAORDINARY DRIVE GROWTH BRANDS SYNERGIES OPPORTUNITIES AND COST STRENGTHEN STRENGTHEN SAVINGS BALANCE CUSTOMER EXCELLENCE
Slide 51: Mark Hunter, CEO
MARK HUNTER, CEO 51
Slide 52: Earn More, Use Less, Invest Wisely
FOCUS: DELIVERING GROWTH & LONG-TERM SHAREHOLDER VALUE A DISCIPLINED APPROACH TO EARNING MORE, USING LESS AND INVESTING WISELY EARN MORE USE LESS INVEST WISELY BUILD BRAND LED EXTRAORDINARY DRIVE GROWTH BRANDS SYNERGIES OPPORTUNITIES AND COST STRENGTHEN STRENGTHEN SAVINGS BALANCE CUSTOMER EXCELLENCE
Slide 53: Committed to 2018 Guidance Despite H1 Challenges
MOLSON COORS PRIORITIES COMMITTED TO DEBT PAYDOWN ACCELERATE REWARD 2018 GUIDANCE & MAXIMIZING TOP-LINE VIA SHAREHOLDERS DESPITE H1 CASH, PROTECT COMMERCIAL WITH CAPITAL CHALLENGES BOTTOM-LINE EXCELLENCE RETURNS 53
Slide 54: Barclays Consumer Staples Conference
BARCLAYS CONSUMER STAPLES CONFERENCE SEPTEMBER 5, 2018 54
Molson Coors — Barclays Consumer Staples Conference 2018 on 6ix