Q4 2021 Molson Coors Beverage Co Earnings Call
Speaker 1: Now as you recall in our third quarter call, we said that uncertainty as it pertains to potential surges in the coronavirus and or its variants to varying degrees by market could have an impact on our financial performance. Unfortunately that is exactly what happened.
With our third quarter call, we said that uncertainty as it pertains to potential surges in the coronavirus and all its variance to varying degrees by market could have an impact on our financial performance and unfortunately that is exactly what happened.
Speaker 1: Beyond premise, much of you may have experienced increased restrictions beginning in the middle of the fourth quarter as the Omicron variant surged.
The on premise and much of you may have experienced increased restrictions beginning in the middle of the fourth quarter as the omicron Varian searched.
Speaker 1: In the UK, the Christmas holiday period is one of the most important sales windows of the whole year. And due to government restrictions for pubs and restaurants, and more cautious consumer behavior, we fell to below 80% of 2019 net sales revenue.
In the UK the Christmas holiday period, as one of the most important sales windows at the whole year and due to government restrictions for pubs and restaurants and.
And more cautious consumer behavior, we fell to below 80% of 2019 net sales revenue.
Speaker 1: The UK is our third largest global market by net sales revenue, and the on-premise accounted for 65% of our business there in 2021.
The UK is our third largest global market by new sales revenue and the on premise accounted for 65% of our business there in 2021.
Speaker 1: SaaS was well established earlier in the pandemic. When that channel is restricted or shut down, it has a meaningful impact on our business. And we felt that in the fourth quarter.
<unk> was well established earlier in the pandemic when that channel is restricted or shut down it has a meaningful impact on our business and we felt that in the fourth quarter.
Speaker 1: But we know from experience over the past two years of the pandemic that this has been temporary. When the on-premise channel has reopened and when consumers are comfortable re-entering bars and restaurants, they came right back.
But we know from experience over the past two years as the pandemic if this as being temporary.
In the on premise channel has reopened and when consumers are comfortable reentering bars, and restaurants that came right back.
And I'm proud to announce that we are ranked number one in the UK advantage Group survey.
Speaker 1: And I'm proud to announce that we are ranked number one in the UK Advantage Group service.
Speaker 1: That is an independent industry-wide survey on how the big on-premise national customers across the UK view brand owners. And the results speak volumes about our...
It is an independent industrywide survey on how the <unk>.
Big on premise national customers across the UK view brand owners.
And the results speak volumes about our hardworking team.
Speaker 1: Additionally, some of our U.S. suppliers had renewed challenges providing materials, like bottle crowns at the end of the year which had knock-on effects on our products.
Additionally, some of our U S suppliers that renewed challenges providing materials like bottled craft with title in the end of the year, which had knock on effects on our production.
Speaker 1: But this has certainly eased in the time since. We've taken matters into our own hands by increasing the number of suppliers we work with to limit these kind of issues going forward.
So this is certainly eased in the thompsons, we've taken matters into our enhanced by increasing the number of suppliers we work with.
Limit these kind of issues going forward.
One point I want to make clear that I said, while pandemic driven issues with freight availability in our global supply chain continued to challenge us in the fourth quarter, we made significant improvements with our distributor inventory in the U S.
Speaker 1: One point I want to make clear though is that while pandemic driven issues with freight availability in the global supply chain continue to challenge us in the fourth quarter, we made significant improvements with our distributed inventory in the US.
Speaker 1: We closed 2021 with about 700,000 more barrels of distributed inventory than we did in 2020.
We closed 2021 with about 700000 more barrels of distributor inventory than we did in 2020.
Speaker 1: And that progress puts us in a far better inventory position heading into 2022. In fact, our stocks for core brands and techs are at their lowest levels since before the pandemic.
And that progress puts us in a far better inventory position heading into 2022 and four.
Factor out of stocks for core brands and packs so at the lowest levels since before the pandemic.
Speaker 1: Today our top line is growing fast for the first time in 10 years. Our core brands are growing net sales revenue for the first time in years. Our portfolio is premiumizing to levels never before achieved. We are moving to scale beyond beer and are taking tangible progress towards achieving the goals of our revitalization plan. We are set up for a strong 2022.
Today, our topline is growing fast for the first time in 10 years, our core brands are growing net sales revenue for the first time in years, our portfolio is premium rising to levels Naval before achieved we are moving to scale beyond <unk>.
And are making tangible progress towards achieving the goals of our revitalization plan we have.
Set up for a strong 2022.
I wanted to dig in a little deeper starting with our core brands.
For the past few years, you've heard us talk about things like Sigma share in brand health as leading indicators that Coors light and Miller Lite remained strong foundations of our global business.
Speaker 1: For the past few years, you've heard us talk about things like segment share and brand health as leading indicators that Coors Light and Miller Light remain strong foundations of our global business.
Speaker 1: Today I'm very happy to tell you that each brand grew net sales revenue in the US in 2021. Quiz life by 4.4% and middle life by 7.6%
And today I'm very happy to tell you that each brand grew net sales revenue in the U S. In 2021, who is like by four 4% and metal lag by seven 6%.
Speaker 1: We also saw double digit growth in our on-premise placements for Miller Lite versus last year.
We also saw double digit growth in our on premise placements for Miller lite versus last year.
Speaker 1: In Canada, Quizlet also reported revenue growth in the fourth quarter, while Miller Lite revenue was up double digits for the full year, with acceleration in the fourth quarter.
In Canada Coors Light also reported revenue growth in the fourth quarter, while Miller Lite revenue was up double digits for the full year with acceleration in the fourth quarter.
Our portfolio continues to premium on our above premium net sales revenue has grown over 15% in 2021.
Speaker 1: Our portfolio continues to premiumize. Our above premium net sales revenue has grown over 15% in 2021.
Speaker 1: The biggest driver of that premiumization was our growth in U.S. hard felt.
The biggest driver of that premium amortization was our growth in U S hard seltzer.
Speaker 1: Despite ending the year with only one nationally distributed hard shelter brand, our portfolio grew triple digits over the course of 2021. And we generated the largest growth rate in this space among any of the major beverage suppliers per ROI.
Despite ending the year with any one nationally distributed hard seltzer brands, our portfolio grew triple digits over the course of 2021, and we generated the largest growth rates in this space among any of the major beverage suppliers.
Hi.
Speaker 1: Today we have two of the top five hard filter brands in the US with Papachico hard filter and busy, and we see more upside ahead.
Today, we have two of the top five hard seltzer brands in the U S with type of Chico heartfelt and busy and we see more upside ahead.
Speaker 1: But the cut in hard sell to franchises, busy is the only one that has existed for multiple years and has never lost hard sell to share in a quarter.
But.
In hard Seltzer franchises busy is the only one that has existed for multiple years and has never lost hard seltzer share in a quarter.
Speaker 1: In 2022, that success is continuing with Busy growing both industry and hard sell-to share.
In 2022 that fixes success is continuing with busy growing both industry and hard seltzer share.
Speaker 1: And while it's still early, we are very optimistic about the national launch of Papachiko hard Seltzer. Papachiko hard Seltzer has jumped to the fifth fastest turning hard Seltzer.
And while it's still early we are very optimistic about the national launch type of Chico hard seltzer.
<unk> jumped to the.
Turning heartfelt.
Speaker 1: nationally and we believe it can become a top three hard-sulture in the US.
Nationally and we believe it can become a top three hard seltzer in the U S.
Speaker 1: For IRR, Topo ChicoHod Seltzer's improved industry share each week since its national launch.
Per IRI <unk> Chica hard Seltzer is improved industry share each week since its national launch.
Speaker 1: Even in markets where the Topo Chico mineral water is less known, we are seeing strong results. For our eye, Topo Chico hard seltzer alone has already reached a five share of hard seltzer in seven new markets since launch.
Even in markets with the type of Chico mineral water is less known we are seeing strong results.
Alright temperature hard Seltzer alone has already reached a five share of hard seltzer in seven new markets since launch.
And we're bringing new <unk> to the brand with bottles Margarita hard Seltzer and Ron shorter that is already driving results.
Speaker 1: And we're bringing new packs to the brand with bottles, margarita hard seltzer and raunchwater that is already driving results.
Our 12 pack of type of Chico's launch water is not only the fastest turning launch order in Texas, it's the fastest tuning in the United States.
Speaker 1: Our 12-pack of purple chica ranch water is not only the fastest turning ranch water in Texas, it's the fastest turning in the United States.
Our heartfelt to progress extends to Canada, where we achieved a non sharing hog celsis in less than nine months that was driven by both busy and Chris Seltzer with both brands, finishing the year in the top 10 hard Seltzer brands in Canada.
Speaker 1: Our hard sell for progress extends to Canada, where we achieved a nine share in hard sell for in less than nine months. That was driven by both Visy and Quest Salts, with both brands finishing the year in the top 10 hard sell for brands in Canada.
Above premium beer continues to be a growth driver for us as well in the U S. Blue Moon Belgian White grew net sales revenue by high single digits in 2021, and so double digit growth in the fourth quarter.
Speaker 1: Above premium beer continues to be a growth driver for us as well. In the US, blue moon Belgian white grew net sales revenue by high single digits in 2021 and so double digit growth in the fourth quarter.
Peroni earn double digit growth in 2021, and our U S regional craft portfolio once again outpaced the category.
Speaker 1: Peroni earned double digit growth in 2021. And our US regional craft portfolio once again not priced to category.
Speaker 1: And we are gaining total share of the craft segment in Canada as well, led by the strong performance of Brassiere de Montreal and Froude Piablier.
And we are gaining total share of the craft segment in Canada as well led by the strong performance of Brasilia to Montreal and food <unk>.
We also continued to premium bonds, our EMEA and APAC business.
Speaker 1: We also continue to premiumise our EMAIL and APAC business. Madri Exceptional has continued to accelerate as the world bear category grows in the UK and in Ireland.
<unk> now has continued to accelerate as the world that category grows in the UK and in Ireland.
Speaker 1: As of today, it's now delivering the fourth highest rate of sale of all draft world largest per CGA. And in 2021, Prada became the fastest growing premium 4% larger per CGA.
As of today, it's not delivering the fourth highest rate of sale of all dropped world's largest per Cta and in 2021 private became the fastest growing premium 4% lager because CGI.
Speaker 1: We're also bringing an exciting innovation to market in the US through an expanded agreement with the Coca-Cola company. Simply Spiked Lemonade will be a full flavor alcohol beverage inspired by the number one overall juice brand, a growing billion dollar brand and the second largest brand in Coke's portfolio. Simply can already be found in one out of every two American households and the brand continues to grow.
We are also bringing an exciting new innovation to market in the U S through an expanded agreement with the Coca Cola company simply Sparkle M&A it will be a full flavor alcohol beverage expired by the number one overall juice brand and growing $1 billion brand and the second largest brand coach portfolio.
We can already be founded one out of every two American households, and the brand continues to grow.
Speaker 1: So we're very excited about this opportunity to shake up the full flavor alcohol beverage space as more legal aid consumers look for bolder flavor.
So we're very excited about this opportunity to shake up the full flavored alcohol beverage space.
As more legalized consumers look for bold flavor.
Speaker 1: In 2021, we put teeth behind our talk of becoming a total beverage company. Our Beyond Beer products are performing very well and helping to fuel our emerging growth business, which contributed approximately $800 million to 2021 net sales revenue, checking ahead of our $1 billion annual revenue target by 2023.
In 2021, we put teeth behind acto could becoming a total beverage company or.
<unk> products are performing very well.
Hoping to fuel our emerging business, which contributed approximately $800 million to 2021 net sales revenue.
Checking ahead of our $1 billion annual revenue target by 2023.
<unk> has already proven to be a success with a lot of opportunity still ahead as we continue to expand distribution.
Speaker 1: Zillow has already proven to be a success, with a lot of opportunities still ahead as we continue to expand distribution.
In less than 10 months. It has gone from nonexistent to the fastest growing energy drink in the U S for IRR and it is number two in health and drug sales in the C store channel.
Speaker 1: In less than 10 months, it has gone from non-existent to the fastest growing energy drink in the US per IRR. And it is number two in health and drink sales in the C-Store channel.
Speaker 1: Latin America closed out 2021 with stellar performance, generating double digit growth across this part of the business and record sales in many of the markets in which we operate. And we're backing it all.
Latin America caused our 2021 was stellar performance generating double digit growth across this part of the business and record sales in many of the markets in which we operate.
And we are backing it all up by investing in our capabilities.
Speaker 1: There are the physical investments which are of course foundational. New heart self-production capabilities will be coming online in the US. We will soon turn on the new heart self-serve and spurred production line in Toronto. A new state of the art brewery is online in Montreal and we're adding new cutting and production capabilities in the UK.
Further physical investments, which are of course foundational new hard seltzer production capabilities will be coming online in the U S. We will soon turn on a new hard seltzer and spirits production line in Toronto.
Our new state of the Art brewery is on plan in Montreal, and we're adding new Canning and production capabilities in the UK.
Speaker 1: And then there are the investments we are making behind our brands. We increased marketing behind our core brands and key innovations and we've become much more effective with those dollars as we accelerated our digital marketing capabilities.
And then there are the investments, we're making behind our brands with increased marketing behind our core brands and key innovations.
We've become much more effective with those dollars as we accelerated our digital marketing capabilities.
Speaker 1: Folks, over the past two years, we have laid the foundation of sustainable, long-term, top-end, bottom-line growth at Mozambique. Today our core power brand
Folks out of the past two years, we have laid the foundation for sustainable long term top and bottom line growth with Molson Coors.
Today, our core power brands are growing dollar sales.
Speaker 1: Today, more of our portfolio is in the above-preium space than ever before.
More of our portfolio is in the above premium space than ever before.
Speaker 1: Today we are moving to scale beyond the BRI. Today we have stronger capabilities to drive future growth.
Today, where we are moving to scale beyond the bureau today, we have stronger capabilities to drive future growth.
Speaker 1: And because of all of that, but this is a foundation we have laid over the past two years. It gains great odds and in a historically challenging environment, we can give guidance that in 2022, Moulsen Coors expects to deliver highest top and bottom line growth in over a decade.
And because of all of that so these are the foundation, we have laid over the past two years against great odds and in the historically challenging environment. We can give guidance that in 2022, Molson Coors expects to deliver.
Highest top and bottomline growth in over a decade.
Speaker 1: We will continue to invest in our business to drive towards sustainable long-term top and bottom line growth.
We will continue to invest in our business to drive towards sustainable long term top and bottom line growth.
Speaker 1: And not to give you greater details on that, I'd like to hand it over to our chief financial officer, Tracy Gibbe. Trey.
And not to give you greater details on that I would like to hand, it over to our Chief Financial Officer Tracy debate.
Yes.
Speaker 2: Thank you, Gavin and hello everyone. As Gavin Hanla said, 2021 was the year of tremendous progress to the JNSA revitalization plan.
Thank you, Kevin and Hello, everyone.
Kevin.
Thank you. Thank you.
Maintenance pricing again <unk>.
Yes.
Speaker 2: Despite the challenges that we and so many other companies face, we achieved a top-down guidance of most single-digit growth for the year, delivered strong free cash flow, enabling us to further reduce our leverage ratio, and return cash to shareholders.
Despite the challenges that we and many other company.
We achieved our guidance of mid single digit price per the yet.
Strong free cash back and editing efficacy <unk> bank yet.
Thanks Michelle.
Hold it.
Speaker 2: We continue to execute our revitalization plan, building a strong foundation for future growth, and the issued fiscal 2022 guidance that underscores that progress.
Continued key carryback location.
Building, a strong foundation for future clay and the issued fiscal thank you. Thank you Keith.
And it's that kind of thing.
Before I take you through our quarterly ethylene performance asset I would like to update you in a couple of naming convention changes in our business units up 14.
Speaker 2: Before I take you to our quarterly, our full year performance and our outlook, I would like to update on a couple of naming convention changes in our business unit report.
Speaker 2: This does not change our reported results for these segments and was done for the name they to restrict the geographies within the state.
This does not change our reported results for these segments and return of the named data with baked.
<unk> said in the statement.
Speaker 2: As of December 31, 2021, our reporting statements are the America, formerly called North America, and a near and apex formerly called Europe .
As of December 30, <unk> 2021 out of 14 statements.
Bailey.
Formerly called North America, and EMEA and APAC, formerly called <unk>.
Now, let's discuss the fourth quarter.
Speaker 2: We delivered strong top line and EBITDA performance. While we benefited from sparking significant on-premise restrictions in the prior year, we were still impacted by the rapid emergence of the Omicron variant in mid-November, which resulted in overall on-premise toughness compared to the third quarter.
We delivered strong top line and EBITDA performing well.
While we benefited from factoring significant on payments just to extend in a prior yet they were still impacted by the rapid and maintenance of the omnicom aliens in mid November which resulted in overall unemployment basket on pay to the third quarter.
Speaker 2: In December , the US on-premise net sales revenue was approximately 86% of December 2019 net sales revenue, down from third-quarter levels of approximately 88%.
In December .
Based on famous MIT saving us approximately 86% of the same as 2019 net revenue down from third quarter levels of approximately 88%.
Speaker 2: Canada was approximately 60% of the same to 2019 next sales revenue down from third quarter levels of approximately 80% and the UK was below 80% after being
Canada was approximately 60% of the theme of 2019 net sales revenue.
From third quarter levels of approximately 80%.
In the UK was below 80% occupancy.
18, 7%.
Speaker 2: ...Amia and APAC growth of 56.5% and America...
EMEA and APAC growth of 56, 5%.
And then maybe.
Speaker 2: The new growth was driven by higher financial volume, positive global met pricing, and favorable brand and economic due to premiumization, and fewer on-premise restrictions due to the prior year.
Revenue growth was driven by higher financial volume.
We will make pricing and favorable brand and Ken will make future premium amortization and fewer on famous jurisdiction basis the prior year.
Speaker 2: In fact, consolidated net sales revenue increased 4.3% compared to 2019.
Consolidated net sales revenue increased four 3% compared to 2019.
Consolidated financial volume increased seven 4%.
Speaker 2: Confirmated financial volume increased 7.4% as we rebode US domestic industries and group brand volumes 2.3% driven by a near-a-pass, yet forests and forests. ME as a global assessment of Un ???ichese
Both units to meet the inventory and great brand volumes, two 3% driven by EMEA and APAC, Canada and Latin America.
Speaker 2: This is partially of the primary US economy brand volume as a result of our economy's few de-sacrification and red-
This was partially offset by lower U S economy brand volume as a result of our economy.
Great.
And rationalization program.
In the U S. We grew net sales revenue six 3% with domestic shipments at three 3%.
Speaker 2: In the US, we grew net sales revenue 6.3% with domestic shipments up 3.3%, reflecting our efforts to build distributed inventory for the five disruptions in 2021.
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Both distributor inventory.
Yes.
Supply disruptions in 2021.
Speaker 2: US brand volumes declined 3.8% but this was driven entirely by the economy's portfolio which was down double digits. While our premium portfolio grew low single digits and the first premium portfolio was at double digits for the quarter.
U S brand volumes declined three 8%, but this was driven entirely by the economy portfolio, which was down double digits.
Our premium portfolio grew low single digits and you bought premium portfolio was up double digits for the quarter.
Speaker 2: Canada, our net sales revenue increased 9.9% on strong brand volume growth of 6%, while Latin America, the net sales revenue increased 15.9% on brand volume growth of 12.4%.
And it sounds waving your increased nine 9% on strong brand volume growth of 6%, while Latin America net sales revenue increased 15, 9% on brand volume growth of 12, 4%.
EMEA and APAC net sales revenue grew 56, 5% driven largely by weakness in Europe , but also clothing thankful in eastern Europe .
Speaker 2: Amir and ATAG Neck Tels, where the new GRU 56.5% driven not only by Western Europe , but also growth in central and Eastern Europe .
Strength in our core brands and new innovations like mcbee, basically double digit growth in above premium and premium volume.
Speaker 2: Strength in our core brand, the new innovations last mid-degree, lead to double digit growth in the best premium and premium volume, partially offset by double digit decline in the economy.
Hospitals are double digit declines in economy.
Net sales per hectoliter on a brand volume basis increased three 8% driven.
Speaker 2: Next, help the Hickson detail on a brand volume basis increased 3.8% driven by global next processing growth and positive brand and channel mix with premiumization delivered across both business units.
Driven by global make product input and positive brand and channel mix with premium amortization delivered across both business units.
Speaker 2: underlying cost per hectare increase 5.2% driven by cost inflation including higher inputs and transportation costs and mixed impacts from premiumization.
Underlying cogs per hectoliter increased five 2% driven by cost inflation, including higher input and transportation costs.
And mix impact from premium amortization.
Speaker 2: So we benefited from volume leverage due to higher production volumes and continued progress on our cost savings program.
So we benefited from volume leverage due to higher production volumes and continued progress on our cost savings program.
Speaker 2: underlying NGNA in the quarter increased 2.4% as we continue to be behind our core brands and innovations across both business units while GNA was flat.
Underlying G&A in the quarter increased two 4% as we continue to invest behind our core brands and innovations across both business units, while G&A was flat.
Speaker 2: As planned, we increased marketing investments in the process to levels about the fourth quarters in 2020 and 2019, providing strong commercial support behind our brand as of 2022.
As planned we increased marketing investments in the quarter to levels above the fourth quarter's impact 2020, and 2019, providing strong commercial support behind our brands.
2022.
Speaker 2: As a result of these tests, underlying EBITDA increased 21.9%.
As a result of these factors underlying EBITDA increased 21, 9%.
Speaker 2: And restressing the school year, contaminated nest cells leaving you increased 4.7% with a miraculous active 2% and a MENA test at 19.6%
And recapping our full year consolidated net sales revenue increased four 7% with Americas cheaper things in EMEA and APAC at 19, 6%.
Speaker 2: Topline growth was driven by global net pricing, favorable brand and channel mix from premiumization and fewer on-premise restrictions, and a mere ATAC volume growth.
Topline growth was driven by global make costing favorable brand and channel mix from premium amortization and fewer on premise restriction.
In EMEA and APAC volume growth.
This was partially offset by lower financial volume in America.
Speaker 2: This was largely of the??clubers financial one you put on Mary.
Speaker 2: Consuminated financial volumes declined 0.5% while brand volumes declined 1.7%
Consolidated financial volumes declined <unk>, 5% of our brand volumes declined one 7%.
Speaker 2: America's grand volume is the current 3.2% as a result of the economy's huge deparitalization, which began in the second quarter of 2021, and re-synastization program, which was announced last July . That was the current 2.2% as a result of the economy's massive droid— theki ? four inches
America's brand volumes declined three 2% as a result of the economy SKU D prioritization, which began in the second quarter of 2021, and rationalization program, which was announced last July .
EMEA and APAC brand volumes were up 3%.
Speaker 2: Let's sell for a hectare litre on a brand volume basis, grew 3.8% due to global net pricing growth and favorable sales needs.
Okay.
The detail on a brand volume basis grew three 8% Q2 global make processing growth and favorable sales mix.
Speaker 2: In the US, net sales per hectarelita on a brand volume basis was up 4.4% for the year, driven by net passing roads and the participation of both premium products, including ribbe, trapecik or hot cell phones, with living room family and corona.
In the U S net sales per hectoliter on a brand volume basis was up four 4% for the year.
Driven by mid proxy votes, and Mr baked in above premium products, including <unk>.
Chico Hot cell phone with Libre and family and for revenue.
Speaker 2: Underlying cost to hecticity increased 6.9% driven by cost inflation, including high inputs and transportation costs, mixed impacts from premiumization, and volume deleverage. However, with the benefit of our robust hectic and cost savings program, we were able to mitigate some of the inflationary pressure.
Underlying cogs per hectoliter increased six 9% driven by cost inflation, including high inputs and transportation cost mixed impacts from premium amortization and volume deleverage.
With the benefit of our robust taking and cost savings program, we were able to mitigate some of the inflationary pressure.
Speaker 2: Underlying NGNA increased 2.9%, largely due to higher marketing investments.
Underlying G&A increased two 9% largely due to higher marketing investments into 2020.
Speaker 2: In the second half of 2021, we began to progressively increase marketing standards with the revampion of more sports and live events.
In the second half of 2021, we began to put basically increase marketing spend with a resumption of more sports and live events.
Speaker 2: NGNA increases were also driven by lasting cost mitigation actions in 2020 due to the coronavirus pandemic and were partially offset by our cost savings program.
<unk> increases were also driven by lick lifting opposite cost mitigation actions in 2020 due to the coronavirus pandemic and was partially offset by our cost savings program.
Speaker 2: Since 2021, we delivered a cost of approximately $220 million across NGNA and across the good sold in our three-year, $600 million cost-diving program.
In 2021, we delivered approximately $220 million across in G&A and cost of goods sold in our three year $600 million cost savings program.
Speaker 2: Over the 2020 through 2021 period, we have delivered an aggregate $490 million, placing us well on track to meet our $600 million target in total growth savings by the end of 2022.
Other the swing between Q3 2021 period, we have delivered an aggregate $490 million.
That's well on track to meet our $600 million target in total gross savings by the end of 2020.
Speaker 2: As a result of these factors, underlying EBITDA decreased 3.5%. This was slightly below the guidance of a proximity flat and was driven by the on-premise toughness as a result of...
As a result of these factors underlying EBITDA decreased three 5%.
Both slightly below guidance of approximately flat and was driven by the unfinished softness as a result.
The omnicom variance.
Speaker 2: However, underlying net income before income taxes is approximately flat for the year as a result of lower interest and depreciation.
However, underlying net income before income taxes was approximately flat for the year as a result of lower interest and depreciation.
Speaker 2: 5.6% underlying EPS growth compared to the prior year.
Five 6% underlying EPS growth compared to the prior year.
Speaker 2: underlying free cash flow was $1.1 billion for the year, a decrease of $183 million from the prior.
Underlying free cash flow was $1 $1 billion for the year.
A decrease of $183 million from the prior year.
Speaker 2: This decline can be wholly attributed to the repayment of approximately $100 million of taxes related to various government sponsored deferral programs related to the pandemic, which benefited the prior year free cash flow by $160 million, creating a negative swing factor of about $250 million on our 2021 free cash flow.
This decline can be highly attributed to the repayments of approximately $100 million of Texas.
With the various government sponsored deferral programs related to the pandemic, which benefited the prior year free cash flow by $110 million, creating a negative thing factor of about $250 million on our 2021 free cash flow.
Speaker 2: excluding these changes, networking capital movements were favourable to the prior year.
Excluding these changes net working capital movements were favorable to the prior year.
Capital expenditures paid with 523 million.
Speaker 2: Capital expenditure paid with 523 million here, down from 575 million dollars in 2020, and focused on expanding our production capacity and capability programs, such as the previously announced Golden Brewery Modernization Project, a new Montreal Brewery, which opened during the fourth quarter, and expanding our hard-felt capacity in Canada and the UK.
Down from $575 million in 2020, and focus on expanding our production capacity and capability programs.
Such as the previously announced Golden Glory modernization project, a new Montreal brewery, which opened during the fourth quarter and expanding our heartfelt the capacity in Canada and the UK.
We have continued to make great progress strengthening the balance sheet and improving our financial flexibility.
Speaker 2: We have continued to make great progress, strengthening the balance sheet and improving our financial flexibility.
Speaker 2: We reduced our net debt by nearly $1 billion in 2021 and our claiming 12 months net debt to underlying even our ratio to 3.14 times greater than our gardens of approximately 3.25 times. And down from 3.5 times as is the end of December 2020 and down substantially from 4.8 times in 2016 at the time of the Milicoose acquisition.
We reduced our net debt by nearly $1 billion in 2021, and our trailing 12 months net underlying EBITDA ratio to three one for Tom.
And our guidance of approximately three to five times and down from three five times as of the end of the same between 'twenty and down substantially from four eight times in 2016 at the time of the <unk> acquisition.
Speaker 2: We ended the year with strong borrowing capacity, with no borrowings outstanding on a $1.5 billion U.A. for involving credit for civility.
We ended the year with strong borrowing capacity with no borrowings outstanding on our one 5 billion revolving credit facility.
That takes me to Axa.
Speaker 2: They take me to our article, which calls for both tough and vital loan growth in 2022 for the first time in over a decade. Before we go through our own conversation.
Which calls for both top and bottom line growth in 2022 for the first time in over a decade.
Before we go to on constant currency basis.
We are adjusting the metric provided debased along with the bulk of our revitalization Kim.
Speaker 2: We are adjusting the metrics provided to best align with the goals of our revitalization plan.
Speaker 2: also in consistent with our historical commentary and certainty as a 50 degree firm market.
Also and consistent with our historical commentary uncertainty is at 50 degrees by market.
Yes.
And all reinstated in some of our larger markets. This could have a significant impact on our farms.
Speaker 2: and all reinstated in some of our large markets. This could have a significant impact on our economy.
Financial performance during that period.
Speaker 2: For 2022, we expected another most single digit net sales where the new growth underlying income before income tax was gross and underlying free cash flow of $1 billion plus or minus 10%.
For 2022 we expect to deliver mid single digit net sales revenue growth underlying income before income taxes plus.
And underlying free cash flow of $1 billion, plus or minus 10%.
Speaker 2: This guidance implies that we will shift to consumption in the U.S. for the year.
This guidance implies that we will ship to consumption in the U S for the year.
Speaker 2: In terms of phasing, recall that we will start lasting the economy's due deparatization and rationalization in the second quarter of 2022.
In terms of phasing recall that we will start lifting the economy do de prioritization and rationalization in the second quarter of 2022.
In addition, we expect to face continued inflation pressure, including transportation and material costs.
Speaker 2: In addition, we expect to face continued inflation and pressure, including transportation and material costs.
Speaker 2: while we have leaders to offer their conversation, including part-time, next from premiumization and our cost savings and hedging programs, these have been very specific to continue to press a growth margin, but have been built in Chagad.
While we have needed to offtake inflation, including pricing mix from premium amortization, and our cost savings and hedging program.
Savings are expected to continue to pressure gross margin, but have been bolt in to our guidance.
Speaker 2: And we expect to kind of be using this behind our core brands and key innovations, which entails increasing the level of marketing investments from the prior year.
And we expect to Colombia, initially lag behind our core brands and key innovations, which entails increasing the level of marketing investment from the prior year.
Given the on premise restrictions in the first half of 2021, we expect greater year over year increases in marketing spend in the first half of 2022.
We all thank Jean Kinsey behind our capabilities with cash capital expenditures anticipated to return to more normal pre pandemic levels.
Other guidance metrics include underlying depreciation and amortization of approximately $750 million capital minus processing ripped.
Speaker 2: Other guidance metrics include underlying depreciation and amortization of approximately $750 million plus or minus 5% reported, net interest expense of $265 million plus or minus 5%, and an underlying effective tax rate in the range of 22 to 24%.
Reported.
Net interest expense of $265 million, plus or minus 5% and.
And an underlying effective tax rate in the range of 22% to 24%.
Speaker 2: Turning to capital allocation, our priorities remain to invest in our business to drive top-down growth and efficiencies, reduce next date, and to return cash to shareholders.
Turning to capital allocation, our priorities remain investing our business to drive top line growth and efficiencies.
<unk> date and to return cash to shareholders.
Speaker 2: We are maintaining our target net depth to underlying evadoration of below three times by the end of 2022. And we have a strong desire to maintain and in time upgrade our investment grade rate.
We are maintaining our target needed to underlying EBITDA ratio of below three times by the end of 2022, and we have a strong desire to maintain and in time upgrade our investment grade rating.
And on February the 22nd 2022, the Baltic paid a dividend of 2018 sushi.
Speaker 2: And on February the 22nd, 2022, the board received a dividend of $0.58 per share.
An increase of 12%.
Speaker 2: Also on February 17th, 2022, the Board of Directors approved the share research program, authorizing the company to purchase us an aggregate of $200 million of the company's class C common stuff through March the 31st, 2026, would researchers primarily intended to offset annual employing equity or wall-growing.
Also on February 17th 2022, the board of Directors approved a share repurchase program authorizing the company to purchase up to an aggregate of $200 million of that.
Company's class B common stock.
March 31, 2020 with repurchases primarily intended to offtake annual employee equity award grants.
In closing 2021 was a volatile yet, but it did not deter us from executing our plan.
Speaker 2: In closing, 2021 was a volatile year, but it did not deter us from executing our plan. The progress we have made has laid a strong foundation to achieve our goals of sustainable long term.
Progress we have made has laid a strong foundation to achieve our goal of sustainable long term.
Speaker 2: HUB and Bottom Line Growth and our 2022 guidance demonstrates our confidence we are on the last part.
Top and bottom line growth and our 2020 key guidance demonstrates our confidence we are on the last call.
Speaker 2: and with that we look forward to answering your questions. Operator.
And with that we look forward to answering your questions.
Operator.
Speaker 3: We will now begin the Q&A portion of the call. If you would like to ask a question during this time, simply press star followed by one on your telephone keypad. If you would like to withdraw your question, press star followed by two. In consideration of others and to allow more of you to participate in this call, we ask that you limit yourself to one question. If you have additional questions or follow-ups, please rejoin the queue. We will now pause to compile the Q&A roster.
We will now begin the Q&A portion of the call.
Like to ask a question during this time simply press star followed by one on your telephone keypad. If you would like to withdraw your question Press Star followed by two in consideration of others and to allow more of you to participate in this call. We ask that you limit yourself to one question. If you have additional questions or follow ups. Please rejoin the queue.
We will now pause to compile the Q&A roster.
Our first question goes to Kevin Grundy with Jefferies. Kevin. Your line is open go ahead.
Speaker 3: Our first question goes to Kevin Grendy with Jeffries. Seven for Linus Open. You can go ahead.
Great. Thanks, Good morning, everyone and congratulations on the continued progress, particularly in the difficult environment.
Speaker 4: Great. Thank you. Good morning, everyone. And congratulations on the continued progress, particularly in the difficult environment. I want to start with the sales guidance for the year. Tracy, this may be for you. Maybe just spend a moment on how you expect that to break down between volume and net sales per hectaliter within net sales per hectaliter. Maybe just comment broadly on the contribution you're hoping for between price and mix, particularly from pricing perspective, given the difficult input cost environment. And the Gavin, maybe just at a high level coming off of what's been a strong year for your key brands, just offer some thoughts if you wouldn't mind on your outlook for course light and Miller Light in the upcoming year. And then I'll pass it on. Thank you for that.
I wanted to start with the sales guidance for the year.
So this may be for you maybe just spend a moment on how you expect that to breakdown between volume and net sales per hectoliter.
We've been net sales per hectoliter, maybe just comment broadly on the contribution youre, hoping for between price and mix, particularly from pricing perspective, given the difficult input cost environment and then Kevin maybe just at a high level coming off of.
What's been a strong year for your key brands just offer some thoughts if you wouldn't mind on your outlook for Coors light and Miller Lite in the upcoming year and then I'll pass it on thank you for that.
Speaker 1: Thanks Kevin and good morning. Let me start and then Tracy can take you to some of the guides around Costa de Soles and so on for 2022. But from a pricing point of view, obviously we're experiencing you know, patiently presses. We expect them to continue well into into this year.
Thanks, Kevin and good morning.
Let me start and then Tracey can take you through some of the guidance around cost of goods sold and so on.
2022, but from a pricing point of view obviously.
Experiencing.
Any pressures, we expect them to continue well into two into this year.
Speaker 1: And while we have historically taken price increases in the spring of every year, this year we actually announced price increases a little earlier than that.
While we have historically taken price increases in the spring of every every every year. This year, we actually announced price increases a little earlier than that.
Speaker 1: and we went with price increase of between 3 and 5%. That took place mostly in January and the early part of February . And obviously the amount and the timing of pricing increases does.
We went through the price increases of between three and 5%.
That took place mostly in January and the early part of February and obviously, the amount and the timing of pricing increases does.
Speaker 1: does vary by market. We do have more leverage than just pricing of course, right? We have the mixed shift which
Does vary by market.
We do have more leverage than just.
Pricing of course right.
The mix shift, which is fundamentally part of our revitalization plan is to shift our mix into the above premium and emerging growth in emerging growth is almost entirely above premium so spoke about that.
Speaker 1: is fundamentally part of our revitalization plan is to shift our mixing to the above premium and emerging growth. And emerging growth is almost entirely above premium. So I spoke about that in my...
<unk>.
Speaker 1: in my opening remarks. And the trace lunch talk about hedging the hedging program, maybe a mental circle back on the ground. Okay, yeah, I mean.
And my.
Opening remarks.
I wanted to talk about hedging the hedging program.
And then I'll circle back on that Brian .
Yes, I mean.
Speaker 2: You know, we've spoken before about our Rova Paging Program and how we recover all our kin commodities. So, you know, as we look into 2022 and 2022, you know, we're really comfortable with our target positions. And that Paging Program is gonna play a part in mitigating some of the information that we see.
We've spoken before about our robot taking program.
And and how we cover all our key commodity.
As we look into 2022 and 2023, we're really comfortable with that.
<unk> been dedicating program is going to pay up costs in <unk>.
Mitigating some of the inflation that you've seen.
Speaker 1: Thanks, Trace. You know, Kevin, look, I mean, our business at the end of 2021 is fundamentally more strong than it was at the beginning of the revitalization plan, particularly with our brands and your reference queries.
Thanks Tracy.
Kevin look I mean, our business at the end of 2021 is fundamentally more settled than it was the beginning of the revitalization plan, particularly with our with our brands and you referenced Coors light.
Speaker 1: You know, we ended the year with both of those brands growing the top line, which we haven't done for quite some time. Quer's life, you know, the May to Chill campaign continues to work hard for us, both regionally and nationally, and at a local level. It's resonating and attracting 21 to 29 year old consumers.
We ended the year with.
With both of those of those brands are growing the top line, which we haven't done for four quarters from Coors light made.
Made to Chill campaign continues to work.
For us both regionally and nationally.
<unk>.
At a local level.
It's resonating and attracting 21 to 29 year olds.
Consumers.
Speaker 1: And you know, middle life has, you know, despite some of the the military challenges and some of the tough comps, we had to overcome it, had just sequentially improved over the year.
Miller Lite has.
Despite some of the inventory challenges and some of the tough comps.
We had to overcome.
Sequentially improved over the over the year.
Speaker 1: You know, that can you to focus on on a true BS BS through, you know, all sorts of different brand acts like the
Continue to focus on our <unk>.
Sorts of different brand X directly but could be in amongst the more recently the explore exploration into the into the mid <unk>.
Speaker 1: I could be an immense more recently the exploration into the metaverse. So, you know, we feel like those two brands are really well placed heading into 2022. And then...
We feel like those two brands.
Really well placed hitting into 2022 and then.
Speaker 1: You know, looking beyond that, above premium blue moon is balanced back very strongly. I emerging growth division, as I said, is ahead of our plan to get to a billion dollars. Canada's growing, poor lives, has grown to share. It's as healthy as it's been for a while. And Europe is bouncing back now that we're heading through the...
Looking beyond that the above premium Blue Moon bounced back very strongly our emerging growth division as I said is ahead of us.
Our plan to get to $1 billion, Canada's growing Coors light is growing share.
It's as healthy as it's been for a while in Europe is bouncing back now that we're hitting through the.
Speaker 1: Omicron variant and restrictions have been lifted and we've got strong about premium innovation which is a very strong on-premise third bias.
Ami convergent and restrictions have been have been.
Lifted and we've got strong above premium innovation, which has a very strong on premise bias.
I think hopefully that answers your Kevin your question Kevin.
Speaker 1: I think hopefully that answers your question, Kevin.
Yeah.
Speaker 4: Yeah, that fits very thorough. Thank you very much. I have a number of questions. I'll take off line with Greg and Tracy, but continue to success. Thank you. Thank you.
Yes, that's very thorough thank you very much I have a number of questions I'll take offline with Greg and Tracey, but continued success. Thank you.
Thank you.
Thank you Kevin.
Speaker 3: Our next question goes to Rob Ottensdine with Evercore. Rob, your line is open, you can go ahead. Great, thank you very much. Do you have any of those?
Our next question goes to Rob <unk> with Evercore, Rob. Your line is open you can go ahead.
Great. Thank you very much.
Kevin I was wondering if you could talk a little bit about.
Speaker 3: how business is starting off this year. I mean, we all see the public information. January was a very tough start for the whole industry. How much of that do you think is the, maybe sticker shock from price increases?
How business starting off this year I mean, we all see the public information January was a very tough start for the whole industry.
How much of that do you think is the maybe sticker shock from price increases on the core on the weather.
Speaker 3: uh... omnicron the weather uh... maybe people had a lot of you know a lot of beer in their pantries you know given that you know a lot of holiday parties may have gotten canceled i'm just trying to get a little bit more of a sense of of what the beer industry and your business looks like uh... and and maybe what what you're seeing in February to give you confidence uh... to underscore your guidance thank you
Maybe people had a lot of a lot of beer in their pantries, given that a lot of holiday parties may have gotten canceled.
Trying to get a little bit more of a sense of what the beer industry and your business looks like.
And maybe what Youre seeing in February to give you confidence to underscore your guidance. Thank you.
Speaker 1: Thanks Rob. Look, I'm not going to repeat what I said to Kevin as far as our overall brands are concerned, but if you look to the two January , yeah, I mean the data that's publicly available will say that the whole industry, you know, it wasn't the easiest of months. I don't think pricing's got anything to do with it because the pricing increases came...
Thanks, Rob.
Im going to repeat what I said to Kevin as far as our overall brands are concerned, but if you look to the two two January yes.
The data that's publicly available we will say that the <unk>.
Our industry.
It wasn't the easiest of months out.
Don't think pricing has got anything to do with it because the pricing increases.
Speaker 1: in the month and even into February to impact January trends. I don't think it's better than to do with it. And frankly, the price increases, as I just said, you know, for us, 3 to 5 percent.
In the months and even into February to impact January trends.
And I think it's got nothing to do with it.
Frankly, the price increases as I, just said for us 3% to 5%.
Speaker 1: you know, well lower than the inflation rates which are sticking in the consumers' minds. I'd point a finger squealier at the second point you raised there, which is Omicron. Right? You know, consumers were resistance to...
Well lower than that.
Inflation rates, which are which are sticky in the consumer's months I'd point, a finger squarely at the second point you raised there which is Army Corp Raj.
Consumers were resistant.
Speaker 1: to going out into the on-premise December and into January . And as we've got further into January and known to February , we seem to consume as come back to the on-premise, particularly in European businesses, where restrictions have been largely listed, but also in the United States and to a lesser degree in Canada. So, I'm going to point the finger-squaredly at Omicron Rob.
Going up into the on premise.
December and into January .
We've got further into January and into February we've seen the consumers come back to the on premise, particularly in our European businesses, where restrictions have been largely lifted but also in the United States and to a lesser degree in Canada.
I'm going to point, a finger squarely at omicron Rob.
Speaker 3: And so I guess tight-tied it at you, it would be your sense, you're not expecting much in the way of demand, the elasticity on the price increases, maybe less than historical.
And so I guess tied to that would be your sense youre not expecting.
Much in the way of demand elasticity on the price increases maybe maybe less than the historical.
Speaker 1: Well, we always, we, we understand pricing electricity in a normal world, right? And I think we're operating in, in some way, the under-interitory. So, you know,
Well, we always we understand pricing elasticity in a normal world drives and I think we're operating in somewhat unknown territory.
Sure.
Speaker 1: I think it's a little too soon to tell exactly what the various price increases that have gone into the market. What impact that will have from a volume perspective, Rob? I think as we head into spring and summer, we shall see. Chris, thank you very much.
I think it's a little too soon to tell exactly what the various price increases that have gone into the markets. We're in.
In fact that will have from a from a from a volume.
Rob.
I think as we head into spring and summer we shall see.
Terrific. Thank you very much.
Okay.
Thank you Rob our next question goes to Andrea Teixeira with Jpmorgan Andrea Your line is open go ahead.
Speaker 1: Our next question goes to Andrea Tashira with JC Morgan. Andrea, your line is open. You can go ahead.
Speaker 5: Thank you, good morning. So my question is the assumption of the journey savings, because your earnings kind of is in bad faster growth if I'm just right correctly on the bottom line. And I understand from Tracy comments that Gross Margin will go, will be pressure these year, in spite of the timing of the head, which I'm assuming are going to be better in the first half of the year and then give back some in the second half. So are you betting your EG Damarantine or expanding 2022 to reach your profit guidance. And then related to that, I think the investors that I got that restricted, in the description, does not tell you about that. It turns all that down. The
Thank you and good morning.
So my question is the assumption of the G&A savings you earnings guidance Inbev faster growth, if I understood correctly on the bottom line and I understand from Tracy comments that gross margin will go will be pressured into euro inspires all of us.
Is that timing of the hedges, which I'm assuming are going to be better than the first half of the year and then give back some in the second half. So are you embedding.
EBITDA margin, we're expanding furniture nature to reach your profit guidance.
And then related to that I think the investors that I got that I spoke this morning or.
Asking about what drove the EBITDA Miss in the quarter and also the year end.
Speaker 5: asking about what drove the EBDA Miss in the quarter and also the year and also the reason to refrain from giving guidance on the EBDA basis for 2022 and use earnings before taxing. Just a clarification there, thank you.
Also the reason to refrain from giving guidance on EBITDA basis for 2022 in earnings before taxes.
Clarification there thank you.
Speaker 1: Thanks Andrea, I think Trace, why did you take all those? Okay, so first of all, I think you spoke that you asked that at the Martin Expension.
Thank you Sandra.
If you take all those and first of all I think you spoke of you asked about the margin expansion.
Okay.
Speaker 2: add our mid-single digit top line and and high single digit income before task line. There's a couple of things that need to be considered. So first of all, you write, we are seeing an inflationary environment with electricity inflation continuing commodities and packaging materials and we also expect the face markets to remain tight. So that will create a cobb's headwind.
Ed.
Mid single digit top line.
And high single digits and income before tax plan and there is a couple of things that need to be considered first of all you're right. We are seeing an inflationary environment, we expect to see.
Inflation continue on commodities and packaging materials, and we will take the freight market remains tough, but that will create a cogs headwind.
Speaker 2: And the to mitigate that we have a very robust and aging program as you mentioned, you know, specifically
But to mitigate that we have a very robust.
The hedging program as you mentioned we.
Typically hedge.
Speaker 2: the first year summary between one and three years, depending on the commodity and the liquidity of that commodity. But in the first year, our hedges are obviously, you know, higher than the after years, which are so far too lower. So we have a robust hedging program. As we look now into 2022 and 2023, we are very comfortable with our hedge positions. In addition to that, we've got the cost savings.
Thank you somewhere between one and three years, depending on the on the commodity and the liquidity of that commodity but in the phase III, our hedges are obviously higher than that.
The <unk>, which are typically lower so we have a robot taking program as we look now into 2022 and 2023, we are very comfortable with.
With our hedge positions. In addition to that we've got the cost savings program.
Speaker 2: You know, this is the part of that $600 million program we will already, you know, delivered $490 million of that. We've got items like the new set of the arts, more efficient breweries in Canada. They've been so about that they've come online so they're certainly going to help from the cross point of view.
Yes.
Is that part of that $600 million.
Program, we've already delivered $490 million Opex, we've got actions like the new state of the art more efficient breweries in Canada.
We spoke about that that would come on line. So that's certainly going to help from a from a cost point of view. We've got the continued premium validation of our portfolio, which is really all about what the revitalization plan is driving.
Speaker 2: We've got the continued premiumization of our portfolio, which is really all about what the revitalization plan is driving, obviously it's both a little bit about it.
We obviously expect a little bit about.
Speaker 2: And then this year we have a fundier of contribution of our equity income from our young link, just growing venture. So, you know, we've got a couple of those items that'll say arcing 2022, but having said that, we're gonna continue to invest in our business and behind our brand, as you saw in Q4 of 2021.
And then.
We have a full year contribution of our equity income from our ganglion joint venture. So we've got a couple of those.
Often that will pay off in 2022.
But having said that we are going to continue to invest in our business and behind our brands as you saw in Q4 of 2021.
Speaker 2: So in terms of the Q4, so we think we assume our gardens at the end of October based on the plans that we had in place and more importantly what we were seeing in terms of very strong, unser form,
So in terms of EBITDA.
Q4, and so we did reaffirm our guidance at the end of October based on the plans that we had in place.
And more importantly, what we were seeing and intend to very strong <unk> performance.
Speaker 2: during Q3 and going into Q4. We stated on the call at that time that if restrictions were reinstated in some of our larger markets, it would have a significant impact on our financial performance.
During Q3 and going into Q4.
We stated on the call at that time that if restrictions were reinstated in some of our larger markets. It would have a significant impact on our financial performance.
Speaker 2: over the next few months and we saw that with the Omicron re-emergence in mid-November and we saw a turn to both governments imposed restrictions as well as changes to consumer behavior and that impacted our on-premise performance in all our markets but particularly in the UK where we've spoken about just what a big part of our our business the on-premise is. But having seen that we've come here to our mid-single days at top line
The next few months and we saw that with Omnicom.
Re emergence.
In mid November and <unk> will retain to both government imposed restrictions as well as changes to consumer behavior and that impacted our on premise performance in all our markets, but particularly in the U K. We've spoken about this what a big part of our business the on premise.
But having said that we still hit our mid single digit top line.
Speaker 2: And we continue to invest in our brand. So that was important, so we did not pull back on the investment which helps us stay up to 2022 this Sunday.
And we continue to invest in our brands. So that was important to us we did not pull back on investments, which makes which sort of helps us stay at 2022.
A strong foundation.
Speaker 2: So that was really the Q4. And then, you know, the gardens in terms of either dark, so what we have done is we have, we believe this alarm with our revitalization panel of driving both top and bottom line growth. We've added in addition to the net-
So that was really the Q4.
And then the <unk>.
Guidance in terms of EBITDA from what we have done is we.
<unk>.
We believe based along with our revitalization plan goals of driving both top and bottom line growth.
And we've added in addition to the mid <unk>.
Income before tax we've added.
Speaker 2: The income before tax. We've added the...
The the.
Speaker 2: the pre-station and amortization which we normally give, we've given naked interest and we've given
Depreciation and amortization, which we normally give we have given the interest and we've given.
Then the effective tax rate as well as our free cash flow David Talbot Glacier.
Speaker 2: than the effects of text rates, as well as a pre-cass for a average tolerator. So, you know, if you add those, that you will get back to the EBITDA range. So, we just believe that this is, you know, data guidance in terms that our re-vacalization can. Thanks, first. Thank you.
If you add those back we will get back to the EBITDA and <unk>.
So we just believe that this is.
In a bit of guidance in chimps at all.
Revitalization plan.
Thanks, guys.
Thank you.
Thank you Andrea.
Speaker 1: Our next question is to build Kirk with MKM partners. Bill, your line is open, you can go ahead.
Our next question goes to Bill Kirk with MK and partners your.
Your line is open you can go ahead.
Okay. Thank you and good morning, everybody Tracy bus with some <unk> phasing items.
Speaker 6: Thank you. Good morning, everybody. Tracy, plus with some one queue phasing items, I think you have about two million hectolators shifting back into the first quarter in related to the Texas freeze and the cyber security events. But I guess what about prior year cost comparisons? Are they easier in some ways since the prior year had those disruptions and maybe made servicing the wholesalers more expensive?
Thank you have about 2 million hectoliter shifting back into the first quarter.
Weighted to the Texas freeze in the cyber security events.
But I guess what about prior year cost comparisons are they any easier in some ways since the prior year had those disruptions and maybe made servicing the wholesalers more expensive.
Yes so.
Speaker 2: You know, we don't specifically give quarter by quarter guidance, but maybe some of the things you think about is, you know, from a marketing point of view, you know, marketing will be higher in the third half of the year as we start with some of the, you know, on-premise shutdowns and things like that. So we're all expecting, absolutely a marketing in 2022 to be higher than 2021, but really, more so in the third half.
If you don't specifically give quarter by quarter guidance, but maybe some of the things.
<unk>.
Is from a marketing point of view.
Marketing will be will be higher.
In the first half of the year as we cycle some of the on premise shutdowns and things like that but.
Taking our full year marketing in 2022 to be higher than in 2021, but really.
More so in the first half.
Speaker 2: In terms of other cogs, obviously, we're going to be in-text design space as updates. But some of the other things to consider is, assuming that we don't see the levels of on-premise restrictions in the first half of 2022.
Tens of other Cogs.
Obviously, we're still going to be impacted by inflation as upbeat, but some of the other things to consider is assuming that we don't see levels of unfinished restrictions in the first half of 2020.
Speaker 2: Will explain to you some benefit from volume leverage particularly in our in their and I tax business.
We will expect to see some benefit from volume leverage, particularly in our EMEA and APAC business.
Speaker 2: We'll also expect to see both channel and geographic mixed benefits as we cycle the first half restrictions in a near and A path, which have a lower overall cost per hectaleter.
We would also expect to see both channel and geographic mix benefits as we cycle. The first half restrictions in EMEA and APAC, which.
Have a lower overall cost per hectoliter.
Speaker 2: cogs for HIP-Selida. And then again, you know, just do want to mention our AROBA taking program, we recover all commodities and you're really comfortable with, you know, we're visiting.
Cogs per hectoliter.
And and then again just do you want to mention Irobot, taking program, we cover all commodities and you're really comfortable with babysitting.
Speaker 2: Obviously we've also got our cross-stating program which will deliver as well.
Obviously, we've also got a cost savings program, which will deliver as well so.
Speaker 2: I'd say those are some of the things you consider for at least the first half of this year. And the other thing I'd add to that bill is the other side of some of that positive which you mentioned which is a Texas storm and a cyber security attack is obviously our economy ski reduction and rationalization right. So we'll have the headwind of that if you if you if you recall in the fourth quarter we actually all of our volume loss in the fourth quarter in the US was driven by
And I'd say those are some of the thing to consider for at least the first half of this year and the only other thing I would add to that bill is.
Other side of some of the positive, which you mentioned, which is it takes a storm in the cyber security protect is obviously our economy SKU reduction rationalization rod. So this will have the headwind there.
Sure.
If you recall in the fourth quarter.
Actually all of us.
Volume loss in the fourth quarter in the U S was driven by.
Speaker 7: freedom is premium, and that's the opinion as
Our economy is premium blocks.
Above above above premium is.
Speaker 7: as well. And of course we became into the year with robust inventory so we're not expecting any meaningful out of stocks and I think as I said in my opening remarks we are.
As well and of course, we we came into the year with.
Robust inventory, so we're not expecting any.
Any meaningful.
Stocks.
As I said in my opening remarks, we are.
Speaker 7: We're actually operating at levels lower than pre-pandemic at the moment, which obviously we very pleased about, and I'm sure I've distributed this off too.
We're actually operating at levels lower than pre pandemic at the Maryland, which obviously, we're very pleased about and I'm sure our distributor for us too.
Speaker 6: Thank you, Gavin. And as a follow-up there, as I think you mentioned, Topicico was, the heart's out there, was the number two turning heart's health there. Retailers are finishing up their spring shelf resets right now. Did they respond the way you wanted to with Topicico here with their resets given those velocity stats?
Thank you, Kevin and as a follow up there is I think you mentioned Copa Chico was the hard Seltzer was the number two turning hard seltzer.
Retailers are finishing up their spring shelf resets right now did they did they respond the way you wanted to with total Chico here with their resets given that given those velocity stuff.
Speaker 7: Yes, they did. We've got a national road out of Turbachiko has been very well received by both big and small retailers.
Yes.
We've got a national rollout of <unk> has been very well received by both.
Big and small retailers.
Okay. Thank you.
Thank you.
Thank you Bill.
Speaker 1: Our next question goes to Steve Powers with Deutsche Bank. Steve, your line is open, you can go ahead.
Our next question goes to Steve powers with Deutsche Bank, Steve. Your line is open go ahead.
Yes, hey, thank you very much a couple of follow ups on things I guess, mostly for Tracy we've covered before.
Speaker 3: Yes, hey, thank you very much. A couple of follow-ups on things, I guess mostly for Tracy, we've covered before, on the hedging program. I guess, are you able to be any more specific around where you think your cogs per hecto leader?
On the hedging program.
I guess are you able to be any more specific around where.
You think your Cogs per hectoliter.
Speaker 3: I guess what your outlook is for the coming year, but before any productivity offsets, I think the stock market would indicate potentially double digit type.
I guess, what your outlook is for the coming year, but before any productivity offsets.
I think the spot market, which would indicate.
Actually a double digit type inflation, it sounds like you're well below that so I'm just trying to.
Speaker 3: Inplacian, it sounds like you're going to well below that. I'm just trying to
Speaker 3: you know, get a sense for order of magnitude and how much inflation may be deferred into 23. Let's question number, you know, kind of one. And then two.
Get a sense for order of magnitude and how much inflation may be deferred into 'twenty. Three that's question number.
One and then two.
Speaker 3: I know I'm still the only one, but if you can on the second one on on EBITDA, just to remove away from its publicity to dog guidance, I think all the piece parts that you gave us, you know, do allow us to back into EBITDA, but I think it results in a wider range than you might typically.
With only have one but if you could.
On the second one on.
EBITDA just to remove away from explicit EBITDA guidance I think although all the piece parts that you gave us do allow us to back into EBITDA, but I don't think it results in a wider range than you might typically.
Speaker 3: You know, land on so is that intentional?
Land answer is that intentional shall we.
Speaker 3: We'd be thinking kind of the midpoint of all those things, most things that just type, you could just increase or you intentionally leaving a little bit of water. So thank you for both of us.
We'd be thinking kind of the midpoint of all those things low single digit type EBITDA increase.
Or are you do you.
Are you intentionally leaving a little bit water. So thank you for both of us.
Thank you both for your dress pants or any any products.
Speaker 5: That's great for you, Trace. Yeah, so let me try this. So, Steve, look, we didn't give COGS previously the guidance, but it is built into our bottom-line guidance. So, you know, the high single-digit net income or income before tax guidance, that is built in there. Some of the things maybe that can just help put a bit of colour around our COGS outlook is, you know,
Steve look we didn't give and Cogs basically the guidance, but it is both into our bottom line guidance.
The high single digits.
Net income or income before tax guidance that is both in the some of the things.
Maybe that can just help put a bit of color around our cogs outlook.
<unk>.
Speaker 2: As I said previously, we will continue to be impacted by inflation on our commodities and our packaging materials in particular. And we do expect the faith marker to remain tight. In Q4, we actually saw some noticeable impact from inflation on our MIA and A-Tech business. And we expect to see that continue into 2022. But inflation is just one component of our cost charge. And maybe a couple of additional items just to consider to add some color. S.
As I said previously we will continue to be impacted by inflation on commodities and packaging materials in particular, and we do expect the <unk> market to remain tight in Q4, we actually saw some noticeable impact from inflation on EMEA and APAC business and we expect to see that continue into 2022.
But in fact is just one component of our Cogs charge and maybe a couple of additional items 50 to consider to add some color.
Speaker 2: Again, assuming we don't see the similar levels of on-premise restrictions as we saw in the first half of 2021, we do expect to see some data for particularly
Again, assuming we don't see the similar levels of on premise restrictions as we saw in the first.
<unk> 2021 .
We do expect to see some benefit.
Particularly.
Speaker 2: and they are an A-Tech business around volume leverage.
In EMEA and APAC business around volume leverage.
Speaker 2: Also mentioned earlier that you could seek to see channel and geographic next benefit again in the APEC, which has a lower overall cost based impact the Elevator?.
I also mentioned earlier that we expect to see channel and geographic mix benefit again in EMEA.
EMEA, APAC, which has a lower overall cogs per hectoliter cost.
Speaker 2: I have mentioned our hedging program, you know, we don't get into specific details around that other than saying that we typically hedge anywhere between one and three years depending on commodities, depending on liquidity, depending on our outlook of the commodities and again at this point we are comfortable with our hedge positions as we look forward over the next couple of years.
And I have mentioned that hedging program, we don't get into specific details around that other than.
Saying that we typically take anywhere between one and three years.
On commodity depending on liquidity, depending on our outlook.
Of the commodities and again at this point, we are comfortable with our hedge positions as we look forward over the next couple of years.
Speaker 2: Maybe just one more answer to consider around COS is we also are expecting some depreciation benefits as we are starting out of a five year period of the effort to value exercise which relates to the molecular acquisition.
Maybe just one more often to consider on Cogs is.
We also are expecting some depreciation benefits as we are backing out of a five year period of the exit fee value exercise, which related to the Millercoors acquisition. So youll see some data thats coming out of that.
Speaker 2: So you'll see some benefits coming out of that. Other than that, we've got a number of actions across our supply chain.
We've got a number of actions across our supply chain.
Speaker 2: And other leaders that we can pull to deliver a tough and bottom line, but the cost article is both into our bottom garden.
And other levers that we can pull to deliver top and bottom line, but the cost outlook is both into our bottoms Garden and then just in terms of EBITDA I mean really the intention is to.
Speaker 2: And in just in terms of Eva Diamonds, really the intention is to
More closely align the matrix sovereigns matrix with a revitalization kangols such that's all about driving both top and bottom line growth.
Speaker 2: more closely aligned, the metrics, guidance metrics with our revitalization can goal. So, you know, that's all about driving both top and bottom line growth. There's, you know, there's no intention other than that. We just want a more closely aligned with, you know, how we run the business.
Yes.
No.
<unk> and other than that we just want to more closely align with how we run the business.
Speaker 2: So again, we have added the other metrics that hopefully we'll get to an even arranged meeting with us giving you specific answers. Thanks Steve. Thank you.
So again, we have added the other metrics that husky will get you to an EBITDA range I mean without getting specific thanks, Jack Thanks, Steve.
Thank you.
Thank you Steve.
Go ahead.
Speaker 8: Hi guys, thanks for taking my question. I want to push a little bit more on Gross Margin. Pretty much any you mentioned and provided some helpful color on all of the moving parts. And in your prepare remarks, you did say that Gross Margin we're gonna continue to be pressured.
Hi, guys. Thanks for taking my question I wanted to push a little bit more on gross margins Cristiano you mentioned and provided some helpful color on all of the moving parts in your prepared remarks, you did say that gross margins were going to continue to be pressured.
Speaker 8: But pushing in a little bit more on that, can you give more precise expectations as to gross margins for this year? What I'm trying to understand is, do you expect to be able to take in a price plus that positive mix? Should we be expecting gross margin to be a compression on a year on your basis? Thanks. Can you open the window? Yes, please. Please be alert.
But pushing it a little bit more on that can you give more precise expectations as to gross margins for this year.
What I'm trying to understand is do you expect to be able to take enough price plus that positive mix, how should we be expecting gross margin.
Compression on a year on year basis. Thanks.
Hey, Deane.
Either.
Just given where the components are.
So, but I mean, if you look at it.
Speaker 7: Look at our piano, obviously we have a strong push in our revitalization.
Look at our P&L obviously.
We have a strong pushing our revitalization.
Speaker 7: to change the shape of our portfolio and I think we've been pretty successful at that last year. As I said, our brands are healthy, our mix is really strong.
So you can plan to change the shape of our portfolio and I think we've been pretty successful at that last year.
As I said our brands are healthy.
Mix is really strong.
Yeah.
Coors light Millilux core brands.
Speaker 7: Coors Light, Merillat, our core brands have grown very nicely. So you've got a couple of things going on in the top line. You've got the pricing which I referenced. I gave you the U.S. pricing but obviously there's pricing in Europe and Canada coming through as well. We've got strong positive mix across the economy portfolio in the first sort of
It's growing very nicely. So you've got you've got a couple of things going on in the top line, you've got the pricing, which I referenced David.
The U S pricing, but obviously this pricing in Europe , and Canada coming through as well.
We've got strong positive mix phosphate economy portfolio.
In the first sort of.
Speaker 7: first and second quarter will drive positivity from a from a real margin point of view. We we do have.
First and second quarter will drive positivity.
From a from a rural margins.
Point of view.
<unk>.
We do have.
Speaker 7: the emerging growth, which is all operating in the above in the above above premium. And we're going to continue to invest in our business. We're going to continue to put money into marketing. We made that. Tracy made the point. We were very choiceful in December once we realized that Omicron was going to impact us. We very choicefully chose not to pull the marketing lever because we couldn't. And we wanted to set ourselves up for a strong 2022 increased marketing, as Tracy said.
The emerging growth, which is all operating in the above in the above above premium and we're going to continue to invest in our business. We're going to continue to put money into marketing. We made the choice. We made the point we've been very thoughtful in December once we realized that omnicom was going to impact us we very choice for you chose not to pull the marketing lever because we bring in.
We wanted to set ourselves up for a strong 2022%.
Increased marketing as Tracy said.
Okay.
Speaker 7: in 2022, both in the in in in in US and and I'm not going to repeat everything. Tracey said.
In 2020 22 both in the.
In U S.
I'm not going to repeat everything you said.
Speaker 3: about the cost of good soil's line and all the levels that go in there. But we've got some positive momentum in the top line.
What about the cost of goods sold line on all the levers that.
That go in there.
Yes.
We've got some positive momentum.
In the top line.
Okay.
Thanks, David.
Thank you.
Thank you Nadeem.
Speaker 1: Our next question goes to Chris Kerry. It was Wells Fargo. Chris, your line is open. You can go ahead.
Our next question goes to Chris Carey Wells.
Wells Fargo, Chris Your line is open go ahead.
Okay.
Hey, everyone. Thanks for the question.
Speaker 9: So, Gavin, I'm trying to, you know, just understand a little bit on the, you know, it is a question on the group, and it's just how you're thinking about, you know, a channel next to 2022. And, and you did say that, you know, that the Yvda would have been, you know, kind of like in line, if on a crime.
So David I'm trying to.
Just understand a little bit on the.
And it is a question on <unk>.
Is it just how youre thinking about channel mix in 2022.
And you did say that.
Debt to EBITDA would have been.
Kind of like in line on a crime.
Speaker 9: had not created the volatility at the end of a quarter. But sales came in line, which I suppose implies margin impact and specifically channel mix with the on premise. And if I just run that math on the difference between the four year guys and what kind of came through, maybe it's like a $70 million difference or a few hundred basis points on margin. I could do that. Is that how we should be thinking?
Not.
Created the volatility at the end of the quarter, but sales came in line, which I suppose implied margin impact.
And specifically channel mix with the on premise and if I just run that math on the difference between the full year guide.
And.
What kind of came through maybe it's like $70 million difference or a few hundred basis points of margin.
Yes.
Is that how we should be thinking about.
Speaker 9: the potential benefit of channel next going into next year as that potential offset in your business. Tracy did mention that in the cost for hectoliter. It is a tailwind to the business just because of different packaging mix. And you're gonna get some volume leverage. So I mean clearly we're all trying to figure out how the cost for hectoliter versus NGNA dynamic.
Just.
The potential benefit of channel mix going into next year.
Potential offset new business.
You did mention that in the Cogs per hectoliter. It is it is a tailwind to the business just because of different packaging mix.
And youre going to get some volume leverage so.
I mean, clearly we're all trying to figure out how the cost per hectoliter was and G&A dynamics.
Speaker 9: you know, place out. And if you could just maybe offer some perspective on, you know, what you think the channel makes that you don't in the quarter and, and I guess, you know, really how we should be thinking about the potential tail on those, or the business on a profit and margin and background the next year.
Plays out.
And if you could just maybe offer some perspective on what you think the channel mix at the EBITDA in the quarter.
I think thats really how we should be thinking about.
Tailwind of the business.
Profit and margin impact going into next year.
Speaker 3: Right, because yeah, a lot of getting on in that creation, let me see if I can help.
Christy a lot going on in that question, let me see if I can help.
Speaker 3: Look, I think it's safe to say that in the fourth quarter, we were expecting our revenues to be higher than what we actually ended up with. So although we met the guidance of mid-single digits, our expectation at the end of October was that was gonna be higher. And obviously it wasn't because of the Omicron impact, but there's a range there, right? Of I think mid-single digit guidance is three, six, two, seven, four, roughly, right? So we were expecting that number to be higher. From a channel mix point.
Look I mean, it's safe to say that in the fourth quarter, we were expecting our revenues to be higher than what we actually ended up with soda we met the guidance of mid six because it is our expectation.
<unk> at the end of October was that was going to be higher.
And obviously it wasn't because of the of the.
Recon impact because it is a range there out of I think mid single digit guidance is $3 67 for recipe right. So we were expecting that number to be higher from it from a channel mix point of view.
Speaker 7: Obviously, particularly in Europe , it's very positive for us when the on-premise is open. We're extremely efficient at that and the margins are good.
Obviously, particularly in Europe , it's very positive for us within the on premise is open.
We're extremely efficient with that and the margins are good.
Speaker 3: In the U.S., the margins are also good in the on-premise for us, mostly because we skew higher on the above premium portfolio than we do on economy, for example. I mean, brands like Blue Moon.
In the Euro is the margins are also good in the on premise for us, mostly because we skew higher on the above premium portfolio than we do on.
When the economy for example, I mean brands like Blue Moon grew.
Speaker 3: Peroni, Pulsner, or KEL in the US are all higher margin, higher revenue brands. When the on-premise is open, we benefit from that. And you know, Moodle Light and Kuisler are also disproportionately over indexed versus some of the lower margin brands in the on-premise. And you have the same impact in Canada and you have the same impact in Europe . So when the on-premise runs into
<unk> in the U S are all higher margin higher revenue.
Our brands are in the on premise has opened we benefit from the atom.
Coors light also disproportionately over index versus some of the lower margin brands in the in the on premise. When you have the same impact in Canada, and then you have the same impact.
And in Europe , so when the when the on premise runs into some challenges obviously that has a mixed.
Speaker 7: Obviously that makes negative for us.
Mix negative for us.
Speaker 7: everywhere, but particularly in Europe . As we head into this.
But particularly in.
In Europe .
We head into this.
Speaker 3: the sort of 2022, obviously we've got some pale winds behind us. I mean, the first quarter we had the well-published challenges of the Texas storms and the and the service security attack. And in Europe , as I recall in the first quarter last year, we were pretty much shut down in the on-premise for I think the whole first quarter, which obviously we don't have.
Is that sort of 2022, obviously, we've got some some some some tail winds behind us I mean, the first quarter, we had the well publicized challenges of the Texas storms.
In the cyber security attack.
In Europe we.
As I recall in the first quarter last year, we were pretty much shutdown in the on premise.
Before I think the whole first quarter.
Which obviously we don't have.
Speaker 7: What we did in a little bit in January , but certainly I think it was all.
What we did in a little bit in January but certainly.
I think as of.
Speaker 7: I believe this may last mind that they're pretty much opened up the UK completely, which will obviously be positive for us.
Although this Monday of last Monday.
That pretty much opened up the UK completely which will be which will obviously be positive for us.
So we did.
Yeah.
Speaker 3: we've got some positive tailwinds behind us from that perspective and they happen to be positive tailwinds from a channel point of view because we make more margin there and of course you've got the negative
We've got some positive tail winds behind us from that perspective, and that happened to be positive tailwind from a channel point of view because.
We make more margin there and then of course, we got the negative.
<unk>.
Speaker 3: and headwind of cycling the economy portfolio change, which we've got, I don't know, four or five months left of, starting on the first of January , but from a margin point of view, that's actually very positive for us. So hopefully that's helpful Chris. Yes, thanks, yeah.
Headwind of cycling the economy portfolio change with regards to I don't know 45 months left of.
Starting in the first two.
January but from a margin point of view, that's actually very positive for us. So hopefully that's helpful. Chris.
Yes, thanks, Kevin.
Thank you Chris.
Our next question goes to Lauren Grande.
Speaker 1: from Diving in Hime, Lauren, your line of open, you can go ahead.
From Guggenheim Lauren Your line is open you can go ahead.
Speaker 1: Thank you and thanks for squeezing me in two questions actually on the top line as a significant part of your assumption. So I would like to understand what are you expecting in terms of how the outside category grows for this year and the outside you are praying to achieve.
Thanks for squeezing me in.
Two question actually on the on the top line is a significant part of your assumptions. So I would like to understand what are you expecting in terms of offsets.
<unk> category growth for this year.
Operating to achieve.
Speaker 1: Thanks to Topo Chico and Vizi. And how should, what to expect for simply, I know it's not a heart in there, but a different one. And finally, if you can help me try to figure out how much Zoa contribute to the growth of your energy growth division. Thank you.
Two quick and easy.
How should we.
We expect first for simply.
Hopkins Airport. Thank you.
Antoine.
Finally, she cannot help me try to figure out how much <unk> contributed.
Contribute to the growth.
Your your.
Gross division thank you.
Speaker 3: Thanks Lauren, on simply look, I mean obviously we haven't even launched them into the market yet so all I can tell you is how the retail distributors and consumers are reacting to it and they reacted extraordinarily positively to Tito Pachico which is being amazingly well for us.
Thanks Laurent.
Simply look I mean, obviously, we haven't even launched it into the market. So all I can tell you is how are the retailers distributors and consumers are reacting to it.
They reacted extraordinarily positively two type of Chico's, which is doing amazingly well for us the reaction to simply has been even stronger than that.
Speaker 3: The reaction to simply has been even stronger than that. You know, the number of households that have simply...
The number of households that has simply in one in two households in America is a very well known brands.
Speaker 3: in them, one in two households in America, it's a very well-known brand. So if we just go by reaction that we've had for retailers, distributors and from consumers, we're gonna get more than half a year of shelf space in a...
If we just go by reaction.
That we've had for retailers distributors and from consumers, we're going to get.
It more than our fair share of shelf space.
Speaker 7: in the sort of, you know, more flavorful area, which is probably where we've lagged a little bit.
And the sort of above.
More flavorful area, which is probably where we've lagged a little bit.
This year, we are tapping into a into a new segment of flavor for us.
Speaker 7: this year we're tapping into a new segment of flavor for us and so you know we haven't done anything yet but the reaction has been particularly strong. If you look at emerging growth you know it's got three big components to it the solid base business right we've got our distribution business
And so.
We haven't done anything yet, but the reaction has been has been particularly strong if you look at emerging growth.
Three big components.
The solid base business right, we've got our distribution business our cross.
Speaker 3: across business in Tenton, Blake, and then our Latin American business.
Across the business and 10th and Blake and then our Latin American business in Latin America contributed as I said in our opening remarks really strongly but non elk, which comprises <unk> and luck alone.
Speaker 7: I'm Latin American contributor, as I said in our open remarks, really strongly, but none elk, which comprises the end and lack of lerm,
Speaker 3: To all intents and purposes, we're coming off a zero base of revenue coming into 2021. So, you know, a good chunk of the growth that we've experienced in emerging growth has come from line-out, which is...
For all intents and purposes, we're coming off a zero base of revenue coming into into 2021.
And a good chunk of the growth that we have.
Fenced in.
In emerging growth has come from non out which is which is the other end and luckily Laurence I'm not going to breakout.
Speaker 7: which is the end, end, luck, luck alarm, Laurence, I'm not gonna break out by brain what that is, but you can assume that...
Our brand what that is but you can assume that.
Speaker 3: You know, big contributors to that growth were Latin America and our non-alcohol businesses. I think those were the two biggest drivers of us being ahead of plan.
Contributors to that growth were Latin America and on non <unk>.
<unk> I think those are the two to.
Two biggest draw.
Drivers of us being ahead of plan.
Thanks, Lauren Andrei getting hot.
Speaker 1: Thanks, sir. And we're getting hot. And we're getting hot. So this or if you can.
And we're getting after that sorry, Ken.
Speaker 1: that I specifically went to our assumption to my father, category gurus.
Get us physically what's wrong assumption tamasha category growths on.
Speaker 3: I know what you're saying. Well, look at me from a heartseltsers. From a heartseltsers point of view, Lauren, I mean, obviously it was growing very strongly at this came off a lot, but you know, it still grew low teens in 2021. We've got the two.
What's your opinion now coming from a hard seltzer for my heartfelt his point of view learn I mean, obviously it was growing very strongly at the table for luck, but it still grew low teens in 2021, we've got the two fastest growing sales.
Speaker 3: fastest growing sales of any major beverage company. They differentiated, we've got a lot of momentum behind them and we think we can do really big things with those two brands.
Of any major beverage company that differentiated we've got a lot of momentum behind them and we think we can do really big things with the with those with those two brands.
Speaker 3: heading into 2022. I mean, we've got two of the top five cells for brands. So we think we're in opposition to take share and grow. It's a big segment, Lauren. I'm not gonna put a number as to what we assess that it's gonna grow, but frankly, it doesn't.
Heading into.
Into 2022, I mean, we've got two of the top five.
So for brands. So we think we're well positioned.
To take share and grow it is a big segment, Lauren I'm not going to put a number as to what we have.
So that's going to grow but frankly it doesn't.
Speaker 3: We can gain a lot of share in this space, whether the Seltzer category grows or doesn't grow because of the two brands and offerings that we have.
We can gain a lot of share in this space.
The seltzer category grows or doesn't grow because of the two brands and offerings that we have.
Thanks, Laura.
I appreciate it thanks.
Thank you Laurent.
Speaker 1: Our next question goes to Lauren Lieberman with Barclays. Lauren, your line is open, you can go ahead.
Our next question goes to Lauren Lieberman with Barclays. Lauren Your line is open.
Yeah.
Speaker 10: Great, thanks so much for the warning. I wanted to just hone in maybe a little bit on unexpected volume performance for 22.
Great. Thanks, so much good morning.
I wanted to just make it a little bit on unexpected volume performance for 2002.
<unk>.
Speaker 10: Just knowing, I guess, there are the comments on right to show on elasticity and really just not knowing. But if I back into the comments you've made on pricing, next still being positive, I would assume giving you both premium.
Just knowing I guess.
The comments on <unk>.
On elasticity and really just sort of knowing.
But if I back into kind of the comments you've made on pricing mix still being positive I would assume giving about premiums.
Speaker 10: Sounds like you're planning for volume to be flattish, I'm guessing, and specifically as far as SDRs and thinking about the category backdrop, the degree to which if that flattish volume thought process is right, that implies continued market share gain across the portfolio or if that's more of a kind of in-line performance as you're thinking about how things may well play out next year.
We have growth it sounds like you're planning for volume to be flattish I'm guessing.
And specifically it appears that STR and thinking about the category backdrop.
Greater which if that flattish volume thought processes right that implies continued market share gains across the portfolio or if that's more of a kind of in line performance. As you are thinking about how things may well play out next year. Thanks.
Speaker 7: Well, Lauren, look, I'm not going to give volume guidance. But what I can say to you is in the fourth quarter, obviously, the entirety of our loss was driven by the rationalisation of our economy portfolio. Above premium grew and our premium lights grew in some of our premium light brands. But, you know, our drive into above premium is reaping benefit. Honestly, we came within a whisker of being positive. Transcribed by https://otter.ai
Look I'm not going to give volume guidance, but what I can say to you is in the fourth quarter. Obviously, the entirety of our loss was driven by the rationalization of our economy portfolio above premium grew and our premium our premium <unk> grew in the Sun.
Premium light brands.
Driving to above premium is reaping benefits, yes, honestly, we came within a whisker of being positive.
If you hadn't had there.
<unk>.
Speaker 3: good trauma to me.
The curtailment in.
Speaker 7: in the on-premise. So, you know, I don't want to repeat myself from earlier comments, Lauren, but it's a very deliberate decision. We think it's the right decision. It allows focus for us, allows us to focus in on four economy
In the in the on premise.
I don't want to repeat myself from.
From earlier comments learn but we.
It's.
Very deliberate.
Decision, we think it's the right decision at the large focus for us.
Focusing on forward economy.
And as complexity from from a supply chain, which has really helped us to rebuild our inventory levels to levels that we haven't seen for a while and really improve the service to.
Speaker 7: complexity from our supply chain, which has really helped us to rebuild our inventory levels, to TG levels that we haven't seen for a while and really improved the service to our distributors on the brand that really matter, which is Muralat Kuhislah and are above premium and Portfolio.
Two our distributors on the brands that really matter, which is <unk> larger than our above premium.
Portfolios.
Speaker 7: you know absent another variant in 2022 we think we're well placed from an overall portfolio point of view.
No.
Absent another variant.
In 2022, we think we will place from a from an overall portfolio point of view.
Okay. Thanks, so much.
Thank you Lauren our next question goes to Bryan Spillane with Bank of America. Brian . Your line is open you can go ahead.
Speaker 1: Thank you, Lauren. Our next question goes to Brian Spalane with Bank of America. Brian , your line of vision, you can go ahead.
Speaker 11: All right, thank you. Good morning, Gavin. Good morning, Tracy. Just one question, and Tracy, you touched on this a little bit, I think in the prepared remarks. Just, can you give us an update on where we stand now in terms of the progress on the investments that you've made in the brewing, you know, in your brewing facilities? So, you know, there's, I think, a reference Montreal. There's...
Alright, Thanks, Eric Good morning, Gavin Good morning Tracy.
Just just one question and Tracey you touched on this a little bit I think in the prepared remarks, just can you give us an update on where we stand now in terms of the progress on the investments that you've made in.
In the brewing when Youre brewing facilities.
I think you've referenced Montreal theirs.
Speaker 11: an upgrade going on in golden, there's the shelter capacity, just kind of where we stand on those projects and maybe the contribution that we're getting from cost savings related to that. And then...
Upgrade going on in Golden Theres, the filter capacity, just kind of where we stand.
On those projects.
And maybe the contribution that we're getting from cost savings related to that and then.
Speaker 11: If you could just give us a perspective on what it implies for capital spending for 22 and then maybe just are we in the right range in this mid-500s as an ongoing catback?
If you could just give us a perspective on what it implies for capital spending for 2022 and then.
Maybe just start with you in the right range. So in this mid five hundreds as an ongoing capex.
Thank you always for you Tracy yes, okay. So any thoughts in and Kevin you just jump in here.
Speaker 2: That was for you, Tracey. Yeah, okay. So, let me start and get when you just jump in here. So, I mean, we...
Okay.
Speaker 2: If we just start with Canadian breweries, our new Montreal brewery, a set of the art brewery that we've been holding just that part of Montreal, that actually came online at the end of last year. We still have some arti projects around bringing the Canadian business onto our USEO fee system, so that's gonna continue.
If we just start with at Canadian <unk>, a new Montreal brewery.
State of the awkward.
<unk> just outside of Montreal that actually came online at the end of last year, and we still have some key projects around bringing the Canadian business on <unk>.
ERP systems.
That's going to continue.
At least into this year, maybe a little bit more in key in 2% to 80 part of next year.
Speaker 2: At this point, this year maybe a little bit more into the early part of next year.
Speaker 2: And then we've got the transformation and the modernisation of our Goldenbury. That's the multi-year project. So that's still ongoing.
And then we've got the transformation and the modernization of our Golden Boy, That's a multiyear project.
So.
Ongoing.
Speaker 2: The investment in our hard-to-counter capabilities, so we're putting in casualties in Canada and the UK. So that'll be this year and next year, the best big projects. And then also, after finishing upgrade projects.
The investment in our Tulsa capabilities, we're putting in capabilities and in Canada, and the U K. So.
So that will be this year and next.
Big project.
That's great.
Okay.
Speaker 2: that relate to sustainability of our packaging, etc. That's ongoing. So I think those are the three big projects. Now we haven't given specific tactics guidance.
Yes.
Related to sustainability of our packaging et cetera.
Ongoing so I think those are the three big projects now we haven't given specific capex guidance, but what we do expect these our capex.
Speaker 2: What we do expect is our tactics to return to more historical levels. So if you have a look at around 29-team types of things, you can expect that for this year.
Returning to more historical levels. Thank you have a look at.
Around 2019 times.
Of beans, you can expect that.
For this year.
Speaker 11: Okay, that's really helpful. And just, Tracy, if you could just just, I guess if you could just give us a sense of just how much incremental savings or productivity, efficiencies, just just like how much more we could expect incremental from here.
Okay. Thanks, that's really helpful and just Tracy if you could just just.
I guess, if you could just give us a sense of just how much incremental.
Savings or productivity efficiencies, just like how much more we could expect incremental from here.
Yes, I mean, I'll just refer you to our cost savings program.
Speaker 2: Yeah, I mean, I just prefer you to a cost savings program. So we, so right at the beginning of revitalisation, we spoke about $450 million of cost savings primarily related to the cost time. So that would include the Montreal Brewery, some of those types of expenses that we put in place.
Right at the beginning of revitalization.
We spoke about.
$415 million of cost savings primarily related to the answer that would include.
The Montreal brewery.
Some of those types of efficiencies that we've put in Kay and then the $150 million of the revitalization program.
Speaker 2: And then $150 million of the revitalization program was primarily around the GNA areas. So, you know, we've been...
And primarily around the G&A areas.
So we've been at.
Speaker 2: 490 million of that 600. So, you know, the balance will be delivered this year. And again, you know, the majority of that would be related to the COGS line. So...
$490 million of the 600 so.
The balance will be delivered this year.
And again, the majority of that would be related to the Cogs line. So.
Speaker 2: you know, the more efficient breweries and the lower cost breweries.
The more efficient breweries and the lower cost borrowing.
Speaker 2: I'm not sure that I can say much more than that other than, you know, it is included in that cost savings number. The only other thing I'd ask of that is that the only other thing I'd ask of that, Brian , is obviously we have been pretty clear, open about the fact that as we bring selfless into our own facilities, so the margin impact is very positive for us, right? And we started bringing busy in last year into Fort Worth, and we'll bring Pepper Chico in in 2022.
Not sure that we can say much more than that other than is included in that cost savings number clearly.
Got it.
The only other thing I'd add to that Brian is obviously, we have been pretty clear open about the fact today as we bring <unk> into our own facility. So the the the margin impact is very positive for a strike and we started bringing busy in last year into Fort worth will bring temperature.
In 2022.
Speaker 7: and in Canada we'll bring those in-house and we'll do the same in the UK and it's very positive from a margin point of view. And then obviously Tracy mentioned Montreal, that brewery there was a couple of hundred years old and we've replaced it with a state-of-the-art brewery and it has meaningful cost benefits for us.
And in Canada.
We will bring those in house and we will do the same.
In the U K and it's very positive from a from a margin point of view.
And then obviously Tracey mentioned Montreal brewery.
There was a couple of 100 years old.
We have a state of the odd brewery and it has it is meaningful.
Cost benefits for us.
Speaker 11: All right, it's going to be on special help. Yes, thank you. Thank you both.
Alright, Thanks, Brian that's really helpful. Yes. Thank you thanks both.
Okay.
Yes.
Speaker 1: Thank you, Brian . Our next question goes to Dara Mohsenian with Morgan Stanley . Dara, your line is open. You can go ahead.
Thank you Brian Our next question goes to Dara <unk> with Morgan Stanley . Your line is open you can go ahead.
Hi, This is actually Eric <unk> in for Dan.
Speaker 11: Hi, this is actually Eric Serota in for Dara. Good morning. First, our main question is I want to circle back on with shelf space, seemingly potentially a lot of shelf space up for grabs if the expected trimming in hard seltzer, marginal hard seltzer skews happens. Just.
Good morning.
First name.
Good question.
I wanted to circle back on with shelf space.
Seemingly potentially a lot of shelf space up for grabs.
The.
Expected trimming.
Hard seltzer marginal hard seltzer Skus happens.
Just youre.
Speaker 11: You're thinking about that in terms of opportunities for moulson cores, what you're looking at in terms of shelf space position. Who do you think other than Topo Chico's picking up that? And in the broader context of spare tabing, one of its best years, last year, in memory and RTDs, being particularly hot. What kind of risk do you see for some of the core blends in terms of shelf space and retailers that are able to hold the carousel spare.
Youre thinking about that in terms of opportunities for Molson Coors.
What you are looking at in terms of.
Shelf space position, who do you think.
Other than top of Chico's picking up that end.
In a broader context of spirit's, having one of its best years last year.
And memory and.
RTD is being.
Particularly hot what kind of risk do you see for.
Some of the core brands in terms of shelf space.
Retailers that are able to hold carrier spirit, Eric Yes, Youre right.
Speaker 7: Spring is where most of the comprehensive change from where reset point of view takes place. And that's when most of the large innovations are actually launched. And our team are selling our purpose drives, purchase category management strategy where we believe that all decisions start with occasions and therefore all segments matter. And
Spring is with most of the.
Comprehensive change from a reset point.
Point of view it takes place and Thats when.
Most of the large innovations are actually launched in.
Our team.
Selling a purpose drives purchase category management strategy, we believe that all decisions start with with occasion. So therefore all segments matter.
Yeah.
That is true to that as well.
Speaker 3: So, you know, our team is focusing on driving productivity on our core brands. So, you know, Coeuryslite, Coeurysl Bank with Miller Lite, Blue Moon, Belz and White, and Lightning Cougles, particularly some of Shandy. And at the same time, they're selling, you know, what I think is one of the most focused and exciting years with...
So.
Our team is focusing.
Driving productivity.
Activity on our core brands Coors light Coors banquet, Miller Lite Blue Moon, Belgian White, landline and Google's, particularly summer shandy and at the same time they are selling.
What I think is one of the most.
Focused and excited.
Yes.
<unk>.
Speaker 7: They said I'm listening to this?????? platform in Samus.
Interpret Chico murdered return simply sparked a blue Moon light Sky tropical we do not.
Yes.
It's really funny.
Focus.
Speaker 3: focused and exciting and you know with with that strong performance in our core which we're experiencing as well as the innovation we bring we're expecting to see expanded shelf space for our business in the spring and that's what we're striving towards.
And exciting.
With that strong performance in our coal, which we're experiencing as well as the innovation. We are bringing we are expecting to see expanded shelf space for our business.
In the spring and Thats what were striving towards.
Thanks, Eric.
Great. Thank you.
Yeah.
Speaker 1: That concludes our question and answer session. I will turn the conference back over to the management team for any closing remarks.
That concludes our question and answer session I will turn the conference back over to the management team for any closing remarks.
Thank you Greg.
Speaker 1: All right, so thank you very much everyone for joining us today. Thanks, Gavin and Tracy. Follow up on any any addition.
So thank you very much everyone for joining us today, thanks, Kevin and Tracy.
Follow up on any any additional.
Okay.
So with that thanks, Eric.
Everybody and have a great day.
Speaker 1: That concludes today's call. Thank you for your participation. You can now disconnect your life.
That concludes today's call. Thank you for your participation you may now disconnect your lines.
Yeah.
Okay.
Okay.
Speaker 12: The R plan nor.
[music].
Okay.