Q4 2023 Molson Coors Beverage Co Earnings Call

Operator: Time's off, everybody. All silent.

Most island, good day and welcome to the Molson Coors beverage company fourth quarter and fiscal year 2023 earnings Conference call. You can find related slides on the Investor Relations page of the Molson Coors website with that I'll hand, the types of Traci Mangini director Investor Relations.

Operator: Good day and welcome to the Molson Coors beverage company fourth quarter and fiscal year 2023 earnings. Find related slides on the Investor Relations page of the Molson Coors. And with that, I'll hand it over to Tracey Mangini, Director and Vest. Thank you, operator. And hello, everyone. Following our prepared remarks today, we look forward to taking your questions. In an effort to address as many questions as possible, we ask that you limit yourself to one question. If you have technical questions about the quarter, please raise them with the IR department in the days and weeks that follow. Now, today's discussion includes forward-looking statements. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward-looking statements.

Traci Mangini: Thank you operator, and Hello, everyone. Following prepared remarks today, we look forward to taking your questions in an effort to address as many questions as possible. We ask that you limit yourself to one question. If you have technical questions on the quarter. Please pick them up with the IR Department in the days and weeks that follow.

Traci Mangini: Today's discussion includes forward looking statements actual results or trends could differ materially from our forecast.

Traci Mangini: For more information please refer to the risk factors discussed in our most recent filings with the SEC, we assume no obligation to update forward looking statements GAAP reconciliations for any U S or non U S. GAAP measures are included in our news release.

Operator: Gap reconciliations for any U.S. or non-U.S. gap measures are included in our news release. Unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period in U.S. dollars and in constant currency when discussing percentage changes from the prior year period. Also, U.S. share data references are sourced from Cercana unless otherwise indicated. Further, in our remarks today, we will reference underlying pre-tax income, which equates to underlying income before income taxes on the condensed consolidated statements of opportunity. With that, over to you again. Thank you, Tracey, and thank you, everybody, for joining us today. Before we get started, I want to mention that Tracey Joubert, our Chief Financial Officer, is unable to attend today.

Traci Mangini: Unless otherwise indicated all financial results. The company discusses are versus the comparable prior year period in U S dollars and in constant currency when discussing percentage changes from the prior year period.

Traci Mangini: Also U S share data references are sourced from sarcoma unless otherwise indicated.

Traci Mangini: Further in our remarks today, we will reference underlying pre tax income, which equates to underlying income before income taxes on the condensed consolidated statements of operations.

Traci Mangini: With that over to you Gavin.

Gavin: Thank you Tracy and thank you everybody for joining us today.

Gavin: Before we get started I want to mention that Tracey Joubert, Chief Financial Officer is unable to attend today, we moved our earnings date earlier. This year. So it doesn't conflict with Cagny and Tracey had a very long standing family commitment at this time.

Gavin: Before we get started I want to mention that Tracey Joubert, Chief Financial Officer is unable to attend today, we moved our earnings date earlier. This year. So it doesn't conflict with Cagny and Tracey had a very long standing family commitment at this time.

Gavin D. K. Hattersley: We moved our earnings date earlier this year so it didn't conflict with Cagney, and Tracey had a very long-standing family commitment at this time. So Greg Tierney, our Vice President of FP&A Commercial Finance and Investor Relations, will be filling in on her behalf for this earnings call, and you'll see Tracey next week at Cagney. You know, at the start of last year, no wind.

Gavin: So Greg Tierney, Vice President of commercial finance and Investor Relations will be filling in on her behalf for this earnings call and Youll see Tracy next week at Cagny.

Gavin: At the start of last year.

Gavin D. K. Hattersley: Absolutely nobody could have predicted what would happen in the beer industry. We have just grown the top and bottom lines of this business, and we are committed to doing it again in 2023. Since then, we've increased our expectations for the full year, not once, but twice. We've continued to raise the stakes, and I'm proud to say that once again, we have delivered what we said we would. In 2023, our global net revenue grew more than 9%, and we grew our bottom line by nearly 37%. These are our highest reported dollar results on record ever, on top of the already impressive results in 2022. We've proven that Molson Coors is the kind of business that can turn itself around, deliver on its commitments, and continue to grow, no matter the volatility of the external environment. Every year for the past three years, our industry has faced challenges. We've gotten good at managing them, even when they're massive enough to permanently alter the beer industry. And every year for the past three years, we have navigated successfully through these challenges.

Gavin: Absolutely nobody could have predicted what would happen in the beer industry.

We are just growing the top and bottom line of this business and we are committed to doing it again in 2023.

Gavin: Since then we increased our expectations for the full year not once but twice.

Gavin: We've continued to raise the stakes and I'm proud to say that once again, we have delivered what we said we would.

Gavin: In 2023, a global net revenue grew more than 9% and we grew our bottom line by nearly 37%.

Gavin: These are our highest reported dollar results on record.

Gavin: Uh huh.

Gavin: On top of the already impressive results in 2022.

Gavin: We've proven that Molson Coors is the kind of business that can turn itself around deliver against its commitments and continued to grow no matter the volatility of the external environment.

Gavin: Every year for the past three years, our industry has faced challenges.

Gavin: We've gotten good at managing them, even when their massive enough to permanently alter the beer industry.

Gavin: And every year for the past three years, we have navigated successfully through the challenges we have delivered against our vision and we have grown.

Gavin D. K. Hattersley: We have delivered against our vision, and we have grown. But growth is not a strong enough word to describe what we have achieved in 2023. We've set a new baseline for our business, and you don't need to look any further than our bottom line. In fact, our 2023 underlying pre-tax income was higher than we thought it would be and, frankly, higher than anyone I am aware of said it would be in 2028. So Molson Coors has delivered six years of profit growth, six years of growth in just one year. That, folks, is a new baseline. We are ready for this moment.

Gavin: But growth is not a strong enough word to describe what we achieved in 2023.

Gavin: We've set a new baseline for our business and you don't need to look any further than our bottom line.

Gavin: In fact, our 2023 underlying pre tax income was higher than we thought it would be and frankly higher than anyone I am aware of <unk> would be in 2028.

Gavin: So most employers delivered six years of profit growth six years of growth in just one year.

Gavin: <unk> is a new baseline.

Gavin: We are ready for this moment, so let's get into why we are confident.

Gavin D. K. Hattersley: So let's get into why we are confident. In 2023, our top five brands around the world drove over 2 million more hectoliters than they did the prior year. This is like adding the entirety of Blue Moon's global volume to our portfolio. In the US, our core brands are growing distribution and space at retail. And as I will discuss in a minute, we expect to gain significantly more space in the spring.

Gavin: In 2023, our top five brands around the world drove over 2 million more <unk> than they did the prior year.

Gavin: This is like adding the entirety of Blue Moon's global volume to our portfolio.

Gavin: In the U S. Our core brands are growing distribution and space at retail and as I will discuss in a minute, we expect to gain significantly more space in the spring.

Gavin D. K. Hattersley: Last year, our brands in the U.S. also grew more share of the on-premise than any other brewery. This includes our core brands, and it also includes growth for Blue Moon. And as of the latest 12-week TGA Nielsen read, we are going three times more share in the on-premise than Constellation, three times more. To put this performance into perspective, Coors Light and Miller Light each grew more dollars in the on-premise than Constellation did as a total brewer. I'll let that sink in for a second.

Last year, our brands in the U S. Also grew more share of the on premise than any other brewer.

Gavin: This includes our core brands and it also includes growth for Blue Moon.

Gavin: And as of the latest 12 week CGI Nielsen reads, we are growing three times more share in the on premise than constellation.

Gavin: Three times more.

Gavin: To put this performance into perspective, Coors light and Miller Lite each grew more dollars in the on premise and constellation did as a total brewer.

Speaker Change: I will let that sink in for a second.

Gavin D. K. Hattersley: Because of this momentum, we added an incremental $1 billion in distributor revenue to our network in 2023, and our distributors are just as motivated to grow again this year. Perhaps most importantly, the consumers who've come to our portfolio over the past 12 months have stuck with us. And they are more loyal than we have historically seen. So we brought new consumers into our portfolio, we've retained our loyal base, and our plans for 2024 are designed specifically to bring in even more new consumers, and there's no better place to start than with our core brand. Let me start with the U.S.

Speaker Change: Because of this momentum we added an incremental $1 billion in distributor revenue to our network in 2023.

Speaker Change: And our distributors are just as motivated to grow again this year.

Speaker Change: Perhaps most importantly, the consumers have come to our portfolio over the past 12 months have stuck with us and they are more loyal than we have historically seen.

Speaker Change: So we brought new consumers into our portfolio, we have retained our loyal base and our plans for 2024 are designed specifically to bring in even more new consumers and there is no better place to start than with our core brands.

Speaker Change: Let me start with the U S.

Gavin D. K. Hattersley: In the fourth quarter, Coors Light, Coors Banquet, and Miller Light all saw group brand volume increase by double digits. Miller Light left an especially strong end to 2022 and still grew a half point of industry dollar share in the fourth quarter, and Coors Light Group dollar share by nearly a full share point in the quarter. You've also heard us talk more about Coors Banquet, and for good reason.

In the fourth quarter Coors light Coors banquet, and Miller Lite, All group brand volume by double digits.

Speaker Change: Not a lot left in a specialty strong into 2022 and still grew a half point of industry dollar share in the fourth quarter.

Speaker Change: And Coors light grew dollar share by nearly a full share point in the quarter.

Speaker Change: You've also heard us talk more about Coors banquet and for good reason.

Gavin D. K. Hattersley: Brand volume grew by nearly 20% for the full year in 2023, and it has grown industry share for 11 straight quarters. We have a lot of runway on Banquet, especially with younger legal-age consumers.

Speaker Change: Brand volume grew by nearly 20% for the full year in 2023 and.

Speaker Change: And it is growing industry shoe for 11 straight quarters.

Speaker Change: We have a lot of runway on banquet, especially with younger legal age consumers.

Gavin D. K. Hattersley: We gained more distribution in 2023 and grew on-premise draft lines for Banquet by nearly 50% in the fourth quarter alone. So you can expect to see us putting a lot of focus behind Banquet this year, along with Coors Light and Meadowlark. Coors Light and Miller Lite have grown significantly at retail, gaining more dollar share of displays in 2023 than any other beer brand. And that trend has continued in 2024, with Coors Light, Coors Banquet, and Miller Lite growing dollar share of displays by nearly 20% in the four weeks leading up to the Super Bowl. This is an incredibly important point, and the reason why is quite simple.

Speaker Change: We gained more distribution in 2023 and grew on premise draft lines for banquet by nearly 50% in the fourth quarter alone.

Speaker Change: So you can expect to see us putting a lot of focus behind the banquet this year, along with Coors light.

Speaker Change: In Maryland.

Speaker Change: Coors largest melilot have grown significantly at retail gaining more dollar share of displays in 2023 than any other beer brand in.

Speaker Change: And that trend has continued in 2024.

Speaker Change: With Coors light Coors banquet, and Miller Lite growing dollar share of displays by nearly 20% in the full weeks, leading up to the Super Bowl.

Speaker Change: This is an incredibly important point and the reason why it's quite simple.

Gavin D. K. Hattersley: Store shelves and coolers have a finite amount of space, so floor displays represent incremental space and high visibility. This added space also means more days of inventory at retail for our brands. And from a consumer perspective, it means our brands are placed in areas of the store where they're more likely to sell quickly. Now, we can't talk about our presence at retail without mentioning Spring Research. You'll recall that Coors Light and Miller Light gained about 6-7% more space during the summer and fall adjustments, which is a huge increase for brands this large.

Speaker Change: Store shelves in coolers have a finite amount of space, so floor displays represent incremental space and high visibility.

Speaker Change: This added space also means more days of inventory at retail for our brands and from a consumer perspective. It means our brands are placed in areas of the store, where they're more likely to sell quickly.

Speaker Change: Now we can't talk about our presence at retail without mentioning spring resets.

Speaker Change: Youll recall that Coors light and Miller Lite gained about 6% to 7% more space during the summer and fall adjustments, which is a huge increase for brands the sludge.

Gavin D. K. Hattersley: We're now starting to get a clearer picture of what we can expect again as spring resets take shape. And based on the conversations we're having with top retailers, we expect to gain significantly more distribution and space for our brands in 2024 on top of the gains we made last year. In fact, one of our larger chain retailers has already confirmed an increase in space that is well above the four levels for our core brands this year. It's important to note, though, that this won't happen all at once. Unlike the unprecedented resets we saw last summer in Fall, Spring resets are phased between Spring and Summer.

Speaker Change: We're now starting to get a clearer picture of what we can expect again as spring resets takes shape and.

Speaker Change: Based on the conversations we're having with top retailers, we expect to gain significantly more distribution and space for our brands in 2024 on top of the gains we made last year.

Speaker Change: In fact, one of our larger chain retailers has already confirmed added space that is well above the four levels for our core brands this year.

Speaker Change: It's important to note that this won't happen all at once unlikely unprecedented resets, we saw last summer and fall spring receipts are phased between the spring and summer.

Gavin D. K. Hattersley: The impact will likely show up over time, roughly between March and July of 2024. Leading up to those months and throughout, our core brands in the U.S. will have large, integrated campaigns running across TV, digital, retail, and live events. You've already started to see this with Coors Light and the Super Bowl, which got a great reaction from consumers and supported our success in the marketplace. In the four weeks leading up to the Super Bowl, we added an incremental 160,000 display units of Coors Light at retail. During this time, Coors Light velocity grew by nearly 14%. So not only are we selling much more beer, but it's also selling much faster. As far as what's next, Coors Light's Choose Chill campaign will run throughout the year, with strong media pressure and amplification from celebrity fans like Grammy award-winning country music star Laini Wilson.

Speaker Change: So the impact will likely show up over time roughly between March and July of 2024.

Speaker Change: Eating up to those months and throughout our core brands in the U S will have large integrated campaigns running of course television digital retail and lobby veins.

Speaker Change: You've already started to see this with Coors light in the Super Bowl, which got a great reaction from consumers and supported our success in the marketplace.

Speaker Change: In the four weeks, leading up to the Super Bowl, we added an incremental 160000 display units of Coors light at retail.

Speaker Change: During this time, Tom Coors light velocities grew by nearly 14%.

Speaker Change: So not only are we selling much mobile social selling much faster.

Speaker Change: As far as what's mixed Coors Light's choose chill campaign will run throughout the year with strong media pressure and amplification from celebrity fans, a Grammy Award winning country Music Star Lady Wilson.

Gavin D. K. Hattersley: And in March, we plan to launch a campaign of comparable size for Miller Light. I can't say much about that right now, but it's some of the best work I've seen on Miller Lodge in a long time, and that's a very high bar, so we're excited about it. The growth of our core brands is not limited to the US. In our other global markets, we continue to see strong performance and have plans to continue the momentum in 2024. In Ontario, Coors Light and Molson Canadian are now the number one and number two beers in the total market, and both brands grew their share of the industry in Canada for the full year.

Speaker Change: And in March we plan to launch a campaign of comparable size for Miller Lite.

Speaker Change: I can't say much about that right now, but if some of the best work Ive seen on Miller Lite in a long time and Thats a very high bar. So we're excited about it.

Speaker Change: The growth of our core brands is not limited to the U S and our other global markets. We continued to see strong performance and have plans to continue the momentum in 2024.

Speaker Change: In Ontario, Coors light and Molson Canadian and now the number one and number two bids in the total market and both brands grew share of the industry in Canada for the full year.

Gavin D. K. Hattersley: Miller Light, which sells at an above-premium price point in Canada, continues to grow at a rapid pace, with fourth quarter volumes accelerating, up nearly 60%. In Croatia, Ajusco achieved its highest share levels in recorded history and now holds more than a 50% share of SIGMA. In the UK, Carling grew value share versus its competitive set in the fourth quarter, and we are very excited that Carling is now the first official beer partner of the Men's and Women's FA Cup, which will provide significant visibility and relevance for the brand in 2024. So our core brands have carried their 2023 momentum into this year, and the higher end of our portfolio has a lot of runway in 2024 as well. In the fourth quarter, our EMEA and APAC business achieved a record high 52% of our net brand revenue at an above premium price point.

Speaker Change: Meadowlark, which sells at and above premium price points in Canada continues to grow at a rapid pace with fourth quarter volumes accelerating up nearly 60%.

Speaker Change: In Croatia achieved its highest levels in recorded history.

Speaker Change: And that holds more than a 50% share of segment.

Speaker Change: In the UK, calling grew value share versus its competitive set in the fourth quarter and we are very excited that calling is now the first official beer partner of the mens and womens if a cup, which will provide significant visibility and relevance for the brand in 2024.

Speaker Change: So our co brands are carried at 2023 momentum into this year and the higher end of our portfolio has a lot of runway in 2024 as well.

Speaker Change: In the fourth quarter, our EMEA and APAC business achieved a record high of 52% of our net brand revenue at and above premium price point.

Gavin D. K. Hattersley: In the UK, Madrid Exceptional continued its growth streak. In the fourth quarter, Madrid was the fastest growing major beer brand in the UK, both by volume and value sales. Madrid's volumes grew by 80% for the full year, easily surpassing 1 million hectoliters. Growth like this does not come easy in the beer space, especially in less than three years for a new to the world brand that launched during a pandemic. We have something special with Madrid.

Speaker Change: In the U K three exception our continued its growth streak in the fourth quarter of <unk> was the fastest growing major beer brand in the UK, both volume and value sales.

Speaker Change: Increased volumes grew by 80% for the full year easily surpassing 1 million hectoliter.

Speaker Change: Gross like this does not come easy in the beer space, especially in less than three years for a new to the world brand at launch during a pandemic.

We have some especially with Missouri. So it should not be a surprise that we have ambitions to scale this brand and expand its global footprint.

Gavin D. K. Hattersley: So it should not be a surprise that we have ambitions to scale this brand and expand its global footprint. Last month, we announced that we're launching in Canada, and the product is rolling out onto shelves starting this week. We plan to grow this brand thoughtfully in markets where the opportunity and desire are clear. We're starting with Canada and select European markets this year. So that is our focus right now, and we'll consider future expansion when the time is right. In terms of our flavor portfolio, Simply Spiked continues to be a growth engine for our business and the industry. This brand more than doubled its volume in the US in 2023 and simply spiked peach became the number one innovation by volume and dollar sales in the grocery channel. Simply Spiked is also gaining ground in Canada, where it launched nationally less than a year ago.

Speaker Change: Last month, we announced that we're launching in Canada and product is rolling out onto shelves starting this week.

Speaker Change: We plan to grow this brand thoughtfully in markets, where the opportunity and desire are clear.

Speaker Change: We're starting with Canada in select European markets this year.

Speaker Change: So that is our focus right now and will consider future expansion when the time is right.

Speaker Change: In terms of our flavor portfolio simply spiked continues to be a growth engine for our business and the industry.

Speaker Change: This brand more than doubled its volume in the U S. In 2023 and simply spot piece was the number one innovation both volume and dollar sales in the grocery channel.

Speaker Change: <unk> is also gaining ground in Canada, we had launched nationally less than a year ago.

Gavin D. K. Hattersley: Already, it has nearly a 4% share of a segment in a matter of months, and along with brands like Coors Seltzer and Vizzy, it has driven Molson Coors to become the only major brewery growing its share of flavor in Canada. We plan to continue our growth in flavor this year, but our approach will be focused and deliberate. We're launching Simply Spiked Limeade in the U.S. this month, and in March, our new-to-the-world innovation Happy Thursday will hit shelves and e-commerce platforms across the U.S. We've gotten great responses from retailers for both of these launches, and we plan to support them with strong marketing and sampling activations in every region of the country this spring and summer.

Speaker Change: Already it has nearly a 4% share of the segment in a matter of months along with brands like Coors Seltzer and busy it is driven molson Coors to become the only major brewer growing share of flavor in Canada.

Speaker Change: We plan to continue our growth in flavor this year, but our approach will be focused and deliberate.

Speaker Change: We're launching simply spiked laminate in the U S. This month and in March our new to the World Innovation Happy Thursday will hit shelves in e-commerce platforms across the U S.

Speaker Change: We've gotten great responses from retailers for both of these launches and we plan to support them with strong marketing and sampling Activations in every region of the country This spring and summer.

Gavin D. K. Hattersley: So we are very confident we can build on our tremendous results from 2023, and we are very confident in the momentum of our brands and our plans for 2024. So you can be confident that we're going to deliver what we say we will deliver just as we have for the past few years.

Speaker Change: So we are very confident we can go off a tremendous results from 2023, and we are very confident in the momentum of our brands and our plans for 2024.

Speaker Change: So you can be confident that we're going to deliver what we say we will deliver just as we have for the past few years.

Gavin D. K. Hattersley: We are confident because we've weathered every recent challenge imaginable, challenges in our industry and challenges in the macro environment. And from that perspective, we continue to see signs of improvement. Contrary to conventional wisdom, U.S. beer industry volume trends improved during 2023 and particularly in the fourth quarter, which was consistent with strong improvements in consumer spending. In fact, the overall beer category gained dollar share of total alcohol beverage in 2023.

Speaker Change: We are confident because we've weathered every recent challenge imaginable chat.

Speaker Change: <unk> in our industry and challenges in the macro environment.

Speaker Change: And from that perspective, we continued to see signs of improvement.

Contrary to conventional wisdom U S beer industry volume trends improved during 2023, and particularly in the fourth quarter, which was consistent with strong improvements in consumer spending.

Speaker Change: In fact, the overall beer category gained dollar share of total alcohol beverage in 2023.

Gavin D. K. Hattersley: Our brands led the industry volume improvement during 2023, and we are focused on our position as the leader of this industry. So we plan to grow Molson Coors' top line again in 2024. Are we cautious about the year ahead? Of course.

Speaker Change: Our brands led the industry volume improvement during 2023, and we are focused on our position as the leader of this industry.

Speaker Change: We plan to grow Molson Coors topline again in 2024.

Speaker Change: We'll be cautious about the year ahead of costs.

Gavin D. K. Hattersley: While inflation has come down, there are still plenty of reasons to be wary about the macro environment. But our strong results give us confidence in our ability to deliver in 2024. I know a number of you remain skeptical of our ability to grow this year. He was skeptical in 2022 and also in 2023.

Speaker Change: While inflation has come down there are still plenty of reasons to be wary about the macro environment.

Speaker Change: But our strong results give us confidence in our ability to deliver in 2024.

Speaker Change: Another a number of you remain skeptical of our ability to grow this year.

Speaker Change: He was sceptical in 2022 and also in 2023 with.

Gavin D. K. Hattersley: But the numbers don't lie. We delivered what we said we would. So for 2024, here's what I will say. We are committed to growth. And for the long term, we have shared our growth algorithm, and we intend to deliver on it, just as we have delivered on what we have said we would over the past four years. And with that, I'll turn it over to Greg to share some details on our financials and our strategy. Greg?

Speaker Change: But the numbers don't lie we delivered what we said we would.

Speaker Change: So for 2024, yes, what I will say, we are committed to growth.

Speaker Change: For the long term, we have shared our growth algorithm and we intend to deliver on it just as we have delivered on what we have said we would over the past four years.

Speaker Change: And with that I'll turn it over to Greg to share some details on our financials and our guidance.

Okay.

Greg Tierney: Thank you, Gavin. 2023 was an incredible year for our company. Our net sales revenue grew an impressive 9.3% with strong growth from both. Top line performance was driven by favorable global net pricing, America's volume growth, and positive sales. Our above premium portfolio comprised 27% of total net brand revenue for the year, and that was with tremendous strength in our core power brand.

Thank you Kevin.

Greg Tierney: 2023 was an incredible year for our company or.

Greg Tierney: Our net sales revenue grew an impressive nine 3% with strong growth from both business units.

Greg Tierney: Top line performance was driven by favorable global net pricing.

Greg Tierney: <unk> volume growth and positive sales mix.

Greg Tierney: Our above premium portfolio comprised 27% of total net brand revenue for the year and that was with a tremendous strength in our core power brands.

Greg Tierney: In fact, our above-premium brands grew net brand revenue by 6% for the year, behind successful innovations like Simply Spiked and continued growth in Madrid. Financial volume increased 1.8%, while brand volume grew 2.2%. Our supply chain team did an outstanding job meeting the high consumer demand in the US, leading to financial volume growth of 3.5% and brand volume growth of 5.3% in the year. And we delivered strong margin expansion, as cost savings and volume leverage significantly offset inflationary pressures and higher M-G-N-A. As a result, underlying pre-tax income grew 36.9%, also driven by both business units, and exceeded our expectations. Underlying free cash flow climbed to $1.4 billion, also exceeding our expectations.

Greg Tierney: In fact, our above premium brand net rent in our above premium brands grew net brand revenue by 6% for the year.

Greg Tierney: Behind successful innovation like simply Spike.

And continued growth in Missouri.

Greg Tierney: Financial volume increased one 8% while brand volume grew two 2%.

Greg Tierney: Our supply chain team did an outstanding job in meeting the high consumer demand in the U S leading to financial volume growth of three 5% in brand volume growth of five 3% in the year.

Greg Tierney: And we delivered strong margin expansion cost savings and volume leverage significantly offset inflationary pressures and higher and G&A spend.

Greg Tierney: As a result underlying pretax income grew 36, 9%.

Greg Tierney: Driven by both business units and exceeded our expectations.

Greg Tierney: Underlying free cash flow climbed to $1 4 billion.

Greg Tierney: Also exceeding our expectations.

Greg Tierney: This enabled us to continue to strategically invest in our business, further strengthen our balance sheet, raise our dividend by 8%, and repurchase approximately 150 million shares under our new share repurchase program that we announced in October. So, as Gavin discussed, we've entered 2024 with a strong foundation. This gives us confidence for continued growth in 2024, which aligns with our long-term growth algorithm for net sales revenue and underlying pre-tax income. But before we get into our outlook, let's discuss the fourth quarter. Both business units contributed a solid top line growth of 5%.

Greg Tierney: This enabled us to continue to strategically invest in our business further strengthen our balance sheet raise our dividend, 8% and repurchased approximately 150 million shares under our new share repurchase program that we announced in October.

Greg Tierney: Okay.

So as Gavin discussed we've entered 2024 with a strong foundation. This gives us confidence for continued growth in 2024, which aligns with our long term growth algorithm for net sales revenue and underlying pre tax income.

Speaker Change: But before we get into our outlook, let's discuss the fourth quarter.

Both business units contributed solid top line growth of 5%.

Greg Tierney: Underlying pre-tax income increased 2.1% as we continue to invest strongly behind our brand, which is particularly impactful to the bottom line in a typically lower profit quarter. Now looking closer at the top line, favorable net pricing and sales mix drove net sales per hectoliter growth of 4.2%. Favorable sales mix was due to lower contract brewing volume related to the winding down of the PAPS agreement ahead of its termination at the end of 2020. Consolidated financial volume increased 0.8% as growth in America's was offset by declines in the me and a; America's shipments increased 2.2% with U.S. domestic shipments up 4.3% driven by the strength of our core premium brand. However, as expected, lower contract brewing volume related to the PEPs agreement was a headwind of approximately two percent to America's shipment volume.

Speaker Change: Underlying pre tax income increased two 1% as we continue to invest strongly.

Speaker Change: Behind our brands.

Which is particularly impactful to the bottom line in a typically lower profit quarter.

Speaker Change: Now looking closer at the topline.

Speaker Change: Favorable net pricing and sales mix drove net sales per hectoliter growth of four 2% favor.

Speaker Change: Favorable sales mix was due to lower contract brewing volume related to the wind down of the <unk> agreement ahead of its termination at the end of 2024.

Speaker Change: Consolidated financial volume increased <unk>, 8% as growth in Americas was offset by declines in EMEA and APAC.

Speaker Change: America's shipments increased two 2% with U S domestic shipments up four 3% driven by the strength of our core premium brands.

Speaker Change: As expected lower contract brewing volume related to the past agreement with a headwind of approximately 2% to America shipment volume.

Greg Tierney: And also, recall that in the third quarter of 2023, due to our strong U.S. brewery performance, we moved ahead of expectation, so we entered the fourth quarter with a healthy U.S. inventory. This allowed us to give our employees some well-deserved time off during the holiday and to conduct routine system maintenance, while positioning us to build inventory in the first quarter ahead of Me and APEC. While financial volume declined 3% on lower brands, Consolidated brand volume growth was 4.3%. As expected, growth accelerated versus the third quarter and underscored the continued strong momentum of our core brand. Now, looking by market, America's brand volume increased 6.7%. That was led by the U.S., where brand volumes were up 8.5%. Coors Light, Miller Lite, and Coors Banquet perform strongly, each up double digits.

Speaker Change: And also recall that in the third quarter of 2023 due to our strong U S brewery performance, we shipped ahead of expectations.

Speaker Change: So we entered the fourth quarter with healthy U S inventory levels.

Speaker Change: This allowed us to give our employees some well deserved time off during the holidays and to conduct routine system maintenance well positioning us to build inventory in the first quarter ahead of peak season.

EMEA and APAC financial volume declined 3% on lower brand volumes.

Speaker Change: Consolidated brand volume growth was four 3% as expected growth accelerated versus the third quarter and underscore the continued strong momentum of our core brands.

Speaker Change: Now looking by market America's brand volume increased six 7% and that was led by the U S where brand volumes were up eight 5%.

Speaker Change: Coors Light Miller Lite, and Coors banquet performed strongly each up double digits.

Greg Tierney: In Canada, brand volume increased 0.7%, benefiting from growth in our above-premium portfolio. While industry softness weighed on brand volume, we continued to grow share in Canada for the quarter, adding nearly two share points for the quarter. That was the strongest growth of any major brewer in the country. In Latin America, while mix improved, brand volume was down 5%.

Speaker Change: And Canada brand volume increased <unk>, 7% benefiting from growth in our above premium portfolio.

Speaker Change: While industry softness weighed on brand volume, we continued to grow share in Canada for the quarter, adding nearly two share points for the quarter.

Speaker Change: That was a strongest growth of any major brewers brewer in the country.

Speaker Change: And in Latin America, while mix improved brand volume was down 5% and this was largely due to challenging economic conditions in some of our key markets in the region.

Greg Tierney: This was largely due to challenging economic conditions in some of our key markets in the, and in the me and APAC brands volume declined 2.2%. This was due to industry softness in the UK off-premise, partially offset by the strength of our above premium portfolio, and inflation continued to pressure Central and Eastern European countries. Now turning to cost, the underlying cost of goods sold per hectoliter was up 1.4%, with notable differences by Mark.

Speaker Change: And in EMEA and APAC volume brand volume declined two 2%. This was due to industry softness in the UK off premise, which partially offset the strength of our above premium portfolio.

Speaker Change: And inflation continued to pressure central and eastern European performance.

Speaker Change: Now turning to costs.

Speaker Change: Underlying cost of goods sold per hectoliter was up one 4% with notable differences by market.

Greg Tierney: As expected, inflation was a headwind in the quarter, partially offset by cost savings and a 30-basis point benefit from Volume 11. In the Americas, underlying cost of goods sold per hectoliter decreased 0.7% as cost savings, volume leverage, and lower logistics costs more than offset the impact of direct materials. In the Me and A pack, we continue to see persistent inflationary pressure with underlying cost of goods sold per hectoliter up 8.8% These increases were driven by direct materials and logistics costs, as well as Unfavorable Mix from Premiumization. Underlying marketing, general, and administrative expenses increased 17.4. We invested strongly behind our brands, increasing marketing spend over $50 million in the quarter. Our focus was on retaining our existing drinkers and attracting new ones, including using addressable channels or places where we can use data to more precisely target and continuing our push behind live streaming. General administrative expenses were also higher as variable compensation expense reflected the strong operating performance for the company. Underlying free cash flow was $1.4 billion, up 66.5% for the year.

Speaker Change: As expected inflation was a headwind in the quarter, partially offset by cost savings and a 30 basis point benefit from volume leverage.

In the Americas underlying cost of goods sold per hectoliter decreased 0.7% as cost savings volume leverage lower logistics costs more than offset the impact of direct materials inflation.

Speaker Change: In EMEA APAC, we continue to see persistent inflationary pressure with underlying cost of goods sold per hectoliter up eight 8%.

Speaker Change: These increases were driven by direct materials materials, and logistics costs as well as unfavorable mix from premium innovation.

Speaker Change: Underlying marketing general and administrative expenses increased 17, 4%.

Speaker Change: We invested strongly behind our brands, increasing marketing spend over $50 million in the quarter.

Speaker Change: Our focus was on retaining our existing drinkers and attracting new ones.

<unk> using addressable channels or places, where we can use data to more precisely target them and.

Speaker Change: And continuing our push behind live sports.

Speaker Change: General and administrative expenses were also higher as variable compensation expense reflected the strong operating performance for the year.

Underlying free cash flow was $1 4 billion up 66, 5% for the year.

Greg Tierney: This exceeded our expectations, in part due to the timing of working capital movements at the end of the year. In utilizing our strong free cash flow and given our greatly improved financial flexibility, we continue to deploy capital in ways that we believe will drive the greatest shareholder value, and we continue to invest in the business, putting to work approximately $690 million in capital projects like the Golden Brewery Modernization and investing in capabilities to drive efficiencies, cost savings, and sustainability. And we supported our strategic growth initiatives under our String of Pearls approach, bolt-on acquisitions like Blue Run Spirits and upping our investment in ZOA, which continues to de-lever our balance. Cash repayment of $500 million in Canadian debt upon its maturity in July, coupled with higher cash balances, we ended the year with net debt of $5.4 billion, down over $600 million for the year.

Speaker Change: This exceeded our expectations in part due to the timing of working capital movements at the end of the year.

Speaker Change: And utilizing our strong free cash flow and given our greatly improved financial flexibility, we continue to deploy capital in ways that we believe will drive the greatest shareholder value.

Speaker Change: We continued to invest in the business putting to work approximately $690 million in capital projects like the Golden brewery modernization and investing in capabilities to drive efficiencies cost savings and sustainability.

Speaker Change: And we supported our strategic growth initiatives under our string of pearls approach with bolt on acquisitions like Blue run spirit and upping our investment in <unk>.

Speaker Change: We continue to Delever, our balance sheet with a cash repayment of $500 million and Canadian debt.

Speaker Change: Upon its maturity in July coupled with higher cash balances. We ended the year with net debt of $5 4 billion.

Down over $600 million for the year.

Greg Tierney: Given this and our strong underlying EBITDA, net debt to underlying EBITDA was 2.2 times at year end, aligned with our long-term goal of under two and a half. Underscoring our enhanced financial strength, we're pleased to have earned credit rating upgrades from our ratings agencies in the fourth quarter. In October, S&P Global upgraded Molson Coors to BBB, and in November, Moody's upgraded us to BAA2. We continue to return cash to shareholders. 2023.

Speaker Change: Given this and our strong underlying EBITDA net debt to underlying EBITDA was two two times at year end.

Speaker Change: Aligned with our long term goal of under two five times.

Speaker Change: Underscoring our enhanced financial strength, we're pleased to have earned credit rating upgrades from our ratings agencies in the fourth quarter in.

Speaker Change: In October S&P global upgraded Molson Coors, the Triple B and in November Moody's upgraded us to <unk>.

Speaker Change: We continue to return cash to shareholders.

Speaker Change: In 2023.

Greg Tierney: We've paid quarterly cash dividends totaling $1.64 per share, up 8% from 2022. And today, as part of our intention to sustainably increase the dividend, we announced our quarterly dividend of 44 cents per share to be paid on March 15th, 2025. And this represents an increase of 7%. Now lastly, as announced on our strategy day on October 3rd, our board authorized a new share repurchase program of up to $2 billion over the next five years. Under our sustained and opportunistic approach, we were active in the market during a two-month open window during the period, repurchasing approximately 2.5 million shares for a total cost of approximately $150 million.

Speaker Change: We paid quarterly cash dividends totaling $1 64 per share and up 8% from 2022.

Speaker Change: To date as part of our intention to sustainably increase the dividend, we announced our quarterly dividend of <unk> 44 per share to be paid on March 15th 2024.

Speaker Change: This represents an increase of 7%.

Speaker Change: Now lastly, as announced in our strategy Dan October <unk>, our board authorized a new share repurchase program of up to $2 billion over the next five years under.

Speaker Change: Under our sustained an opportunistic approach we were active in the market during a two month open window in the period repurchasing approximately two 5 million shares.

Speaker Change: For a total cost of approximately $150 million.

Greg Tierney: This equates to a repurchase of over 1% of our outstanding shares in roughly two months. Now let's turn to our outlook. For 2024, we are issuing guidance of low single-digit net sales revenue growth on a constant currency basis, mid single-digit underlying pretax income growth on a constant current mid-single-digit underlying earnings per share growth, underlying free cash flow of $1.2 billion plus or minus 10%, and underlying depreciation and amortization of $700 million plus or minus $500 million. Net interest expense of $210 million, plus or minus 5%. An underlying effective tax rate in the range of 23 to 25% and Capital Expenditures Incurred of $750 million, plus or minus $5,000.

Speaker Change: This equates to a repurchase of over 1% of our outstanding shares in roughly two months.

Speaker Change: Now, let's turn to our outlook.

For 2024, we are issuing guidance of low single digit net sales revenue growth on a constant currency basis.

Speaker Change: Mid single digit underlying pretax income growth on a constant currency basis.

Speaker Change: Mid single digit underlying earnings per share growth.

Speaker Change: Underlying free cash flow of $1 2 billion plus or minus 10%.

Speaker Change: Underlying depreciation and amortization of $700 million plus or minus 5%.

Speaker Change: Net interest expense of $210 million, plus or minus 5%.

Speaker Change: An underlying effective tax rate in the range of <unk>, 23% to 25%.

Capital expenditures incurred a $750 million plus.

Speaker Change: Plus or minus 5%.

Greg Tierney: Now, let me walk through some of the underlying assumptions. We expect annual net pricing to revert to historical levels. In the US and Canada, that's been approximately one to two percent; well, in Europe, it is typically priced closer in line with inflation. We also expect mixed benefits from premiumization as we advance toward our medium-term goal of reaching approximately one-third of our total global net brand revenue from above-premium portfolios. Financial volume is expected to be impacted by the PAPS contract brewing arrangement, which terminates at the end of this year. It's expected to be a headwind of approximately 3%. 2 million hectoliters to America's financial volume, with the wind down continuing throughout the year. Additionally

Speaker Change: Now, let me walk through some of the underlying assumptions.

Speaker Change: We expect annual net pricing to revert to historical levels in the U S and Canada, that's been approximately 1% to 2%.

Speaker Change: Well in Europe.

Speaker Change: Typically priced closer in line with inflation.

Speaker Change: We also expect mixed benefits from premium position as we advance toward our medium term goal of reaching approximately one third of our total global net brand revenue from above premium portfolio.

Financial volume is expected to be impacted by the pabst contract brewing arrangement, which terminates at the end of this year.

Speaker Change: We expect it to be a headwind of approximately 3%.

Speaker Change: Or 2 million hectoliter to Americas financial volume with the wind down continuing throughout the year.

Speaker Change: Additionally.

Greg Tierney: We anticipate financial volume performance to be strongest in the first quarter, as we build inventories coming into peak season in the U.S. Gross profit is expected to increase, driven by mix and cost savings. While inflationary pressure is expected to moderate from 2023, we expect that the underlying cost of goods sold per hectoliter will increase due to a combination of continued inflation, including material conversion costs, higher costs related to premiumization, and lower volume leverage as compared to 2020. Also, while spot prices are currently lower than they have been over the past two years, recall that we have a longer-term hedging program. As a result, we expect to experience a headwind in 2024 from certain commodity hedges put in place in 2022 and 2023. However, we do not anticipate significant changes in total MGNA.

We anticipate financial volume performance to be strongest in the first quarter as we build inventories coming into the peak season.

Speaker Change: In the U S.

Speaker Change: Gross profit is expected to increase driven by mix and cost savings.

Speaker Change: While inflationary pressure is expected to moderate from 2023, we expect that underlying cost of goods sold per hectoliter will increase due to a combination of continued inflation, including material conversion costs.

Speaker Change: Higher costs related to premium position and.

Speaker Change: Lower volume leverage as compared to 2023.

Also while spot prices are currently lower than they have been over the past two years recall that we have a longer term hedging program and as a result, we expect to experience a headwind in 2024 from certain commodity hedges put in place in 2022 and 2023.

Speaker Change: We do not anticipate significant changes in total M G&A.

Greg Tierney: We plan to put the right commercial pressure behind our brands and key innovations. We'll do this through strong media plans at both the local and national level, through live sports, including another Super Bowl commercial, and through robust retail programming that drives consumer engagement. G&A is expected to face an easier comparison, given the increase in incentive compensation in 2023 related to the significant outperformance versus our initial plan. However, underlying earnings per share growth is the one metric that is below our long-term growth. This is largely due to a higher forecasted underlying effective tax. Underlying free cash flow guidance is impacted by working capital timing that benefits 2023, as well as slightly higher capital expenditure. So, in summary, we're very proud of our performance in 2020. We will enter 2024 with strong brands. Exciting Innovation Pipeline, and Compelling Programming Strong and Supportive Distributor Partners

Speaker Change: And plan to put the right commercial pressure behind our brands and key innovations.

Speaker Change: I'll do this through strong media plans at both the local and national level through live sports, including another Super Bowl commercial.

Speaker Change: And through robust retail programming that drives consumer engagement.

Speaker Change: G&A is expected to face an easier comparison, given the increase in incentive compensation in 2023 related to the significant outperformance versus our initial plan.

Speaker Change: Underlying earnings per share growth is the one metric that is below our long term growth algorithm.

Speaker Change: This is largely due to a higher forecasted underlying effective tax rate.

Speaker Change: Underlying free cash flow guidance is impacted by working capital timing that benefited 2023, as well as slightly higher capital expenditures.

Speaker Change: So in summary.

We're very proud of our performance in 2023.

Speaker Change: We enter 2024 with strong brands and exciting innovation pipeline compelling programming.

Speaker Change: Strong and supportive distributor partners.

Operator: More retailer shelf space and tap handling, and the financial flexibility to balance growth and reinvestment. This gives us confidence in our ability to deliver our long-term growth algorithm in 2024 and in the years to come. With that, we look forward to answering your questions. Operator, As a reminder, if you would like to ask a question today, please press star followed by 1 on your telephone keypad now and tell us your question. Please ensure that you are unmuted.

Speaker Change: Retailer shelf space and tap handles.

Speaker Change: And the financial flexibility to balance growth and reinvestment.

Speaker Change: This gives us confidence in our ability to deliver our long term growth algorithm in 2024 and in the years to come.

Speaker Change: With that we look forward to answering your questions.

Speaker Change: Operator.

Speaker Change: As a reminder, if you would like to ask a question today. Please press star followed by one on your telephone keypad announcements to Q4.

Speaker Change: Your parents ask a question please ensure you're on mute locally.

Andrea Teixeira: This last question comes from Andrea Teixeira from JPMorgan. Your line is now open, please go ahead. Good morning, and thanks, Gavin and Greg. Just on the assumptions for your guide, right, so are you expecting, it seems from the phasing that you spoke about, Greg, regarding the first quarter where the volumes are, you're looking at volumes being stronger. Are you assuming market share continues to build from where you left off in the fourth quarter? And from a volume perspective, of course, perhaps this is, and I appreciate the color on the impact through the year, but on an underlying basis in the U.S., how much are you expecting volumes to behave in 2024? Thank you.

Speaker Change: Our first question comes from Andrea Teixeira from Jpmorgan. Your line is now open. Please go ahead.

Andrea Teixeira: Good morning, and thanks, Scott and Greg.

Andrea Teixeira: <unk>.

On the assumptions for you guys right. So are you expecting it seems from the phasing that useful.

Regarding first quarter, where the volumes are you looking at volumes being stronger.

Andrea Teixeira: Are you assuming market share continues to build from where you left off in the fourth quarter and some volume perspective of course, perhaps.

Speaker Change: And I appreciate the color on the impact through for the year, but on an underlying basis in the U S. How much are you expecting finance should behave in 2024. Thank you.

Gavin D. K. Hattersley: Thanks, Andrea. There are a couple of things I would say in response to your question. Firstly, you know, we believe the changes in the US beer industry are permanent, and we're off to a very fast start in Q1. The momentum that we saw in Q4 has continued into Q1. For example, in the US, Molson Coors is leading all brewers in year-to-date dollar share growth by growing 1.5 points. We're ahead of conservation share growth. However, ABI continues to decline more than any other major brew in the U.S., losing about four and a half points a year to date.

Thanks, Andrea couple.

Speaker Change: Couple of things I would say.

Speaker Change: Upon CEO Christian Firstly, we believe that the changes in the U S beer industry are permanent.

And we're off to a very fast start in Q1, the momentum that we saw in the.

Speaker Change: In Q4 has continued into into Q1 in the U S. Most.

Speaker Change: Molson Coors is leading all brewers and year to date dollar share growth, but growing one five points. We are ahead of conservation share growth.

Speaker Change: Abi continues to decline more than any other major brewery in the U S. Using about four five points year to date.

Gavin D. K. Hattersley: From an industry point of view, we would expect the U.S. industry to fall back to the sort of flat to down one level, and we would expect to gain share as we continue into this year. And as you rightly point out, there are lots of drivers and multiple levels to support our top line growth algorithm. And obviously, that includes pricing, which we've said will be in a sort of historical one to two percent range. It is market by market. We would expect to get pricing in Canada and EMEA APEC as well.

Speaker Change: From an industry point of view, we would expect the U S industry to fall back to the sort of flat to down one.

Level, and we would expect to gain to gain share as we as we continue into into this year.

Speaker Change: And as you rightly pointed out lots of drivers on multiple levels.

Speaker Change: Live is to support our.

Speaker Change: Our top line growth algorithm, and obviously that includes pricing, which we've said it will be in the sort of historical 1% to 2% range.

Speaker Change: It is market by market, we would expect to get pricing in Canada, and EMEA APAC as well.

Gavin D. K. Hattersley: It includes positive mix from our continued premiumization of our portfolio. And, of course, you rightly point out the headwind of of PEPs. When you put all those factors together, that gets to our guidance for this year of low single digits. Thanks, Andrea. The next question comes from Bonnie Herzog from Goldman Sachs. Bonnie, your line is open, please go ahead.

Speaker Change: It includes positive mix from our continued premium amortization of our portfolio and of course, you Rocky point off the headwind of of past when you put all those factors together and that gets to.

Speaker Change: Guidance for this year of low single digits.

Speaker Change: Thanks, Andrew.

The next question comes from Bonnie Herzog from Goldman Sachs. Bonnie Your line is open. Please go ahead.

Bonnie Herzog: All right. Thank you. Good morning.

Bonnie Herzog: Alright, Thank you good morning.

Operator: I had a question on your underlying EPS growth guidance. First, you know, curious why you're now introducing EPS guidance and then hoping you could bridge your mid-single-digit pre-tax income growth guidance with, you know, just the mid-single-digit EPS growth guidance. I guess I'm wondering why, you know, there's no leverage on the bottom line. And then, in the context of that, how should we think about share repurchases this year? Thanks. Thanks, Bonnie.

Bonnie Herzog: I had a question on your underlying EPS growth guidance first.

Bonnie Herzog: Why youre now in Q2, EPS guidance and then <unk>.

Bonnie Herzog: You could bridge your mid single digit pretax income growth guidance with just the mid single digit EPS growth guidance.

Bonnie Herzog: I'm wondering why.

Bonnie Herzog: There's no leverage on the bottom line and then in the context of that how should we think about share repurchases. This year.

Speaker Change: Thanks Bonnie.

Gavin D. K. Hattersley: Look, we introduced the long-term growth algorithm with EPS at our Investor Day in the fourth quarter of last year. So we wanted to make sure that our guidance that we gave now for 2024 covered those three elements of our guidance that we launched at Investor Day, and EPS was obviously one of those. And of course, that was the long-term guidance that we gave at Investor Day. And as Greg said, the reason why we're slightly less from an EPS point of view than our long-term algorithm is our tax rate, which goes up a couple of percentage points, given the mix of where we make our profitability and tax rates around the world. So that's the main driver.

Speaker Change: We introduced the the long term growth algorithm with EPS at <unk>.

Speaker Change: Investor day in the fourth quarter of last year. So we wanted to make sure that our guidance that we gave now for 2020 full.

Speaker Change: Covered those three elements of our <unk>.

Speaker Change: Guidance that we that we launched at the at your Investor Day in EPS was obviously one of those.

Speaker Change: The reason of course that was long term.

Speaker Change: <unk> that we gave at Investor day, and as Greg said the reason why we are.

Speaker Change: We're slightly less from an EPS point of view.

Speaker Change: Our long term algorithm is our is our tax rate, which which goes up a couple of percentage points.

Speaker Change: Given the mix of where we make our profitability and tax rates around the around the world. So that's the that's the main driver.

Gavin D. K. Hattersley: I don't know if there's anything else, but unless there's anything else... Share repurchases. Share repurchases. That's right.

Speaker Change: Was there anything else did I Miss anything else.

Speaker Change: Share repurchases share repurchases, that's right Luke.

Gavin D. K. Hattersley: Look, we've got an approach, Bonnie, for our share purchase reprogram, which is both sustained and opportunistic. So, you know, we've got a sustained ongoing repurchase, and we've got an opportunistic repurchase. The program's $2 billion. It sort of roughly equates to $400 million each year, over the five-year period. You know, take our cash holdings into account, our capital allocation policy, and do things right from a shareholder point of view as we execute that share program. What's next? Peter Grom from UBS. Peter, your line is open, please... Yeah, good morning, guys. This is actually Bryan Adams on behalf of Peter.

Luke: We've got an approach Bunny.

Speaker Change: For our share purchase reprogram, which is both sustained and opportunistic so we've got a sustained.

Speaker Change: Ongoing repurchase and we've got an opportunity to repurchase the programs 2 billion.

Speaker Change: Roughly equates to $400 million over.

Speaker Change: Over each year over the over the.

Speaker Change: Five year period, and we will.

Speaker Change: Take our cash holdings into account our capital allocation policy in and do a few things rod from a shareholder point of view as we as we execute that share program.

Speaker Change: The next question comes from Peter Grom from UBS Pizza. Your line is open. Please go ahead.

Speaker Change: Yes. Good morning, guys. This is actually Bryan Adams on for Peter Thanks for taking the question. So just kind of rounding out the conversation on the topline I wanted to take a look at the EMEA and APAC business.

Bryan Adams: Thanks for taking the question. So just kind of rounding out the conversation on the top line, I wanted to take a look at the EMEA and APEC business, specifically the volumes. I know you guys mentioned weak consumption in the UK, as well as some sustained pressure in Central and Eastern Europe, as the primary driver. And obviously, that's been a troubled area over the last several quarters here. But I'd just curious to hear your view as to where things stand in these markets versus kind of where they've been over the last 12 months. Like, has there been any sequential improvement such that you'd anticipate a return to volume growth in the near term? Or should we expect premiumization to be the primary driver in 24? Thanks.

Bryan Adams: Typically on the volumes I know you guys mentioned, a weak consumption in the U K as well as some sustained pressure in central and Eastern Europe is the primary driver and obviously that's been a troubled area over the last several quarters here, but just curious to hear your view as to where things stand in these markets versus kind of where they've been over the last 12.

Bryan Adams: Has there been any sequential improvement.

Bryan Adams: You didn't envision a return to volume growth in the near term or should we should we expect the premium amortization to be the primary driver in 'twenty four.

Bryan Adams: Yes.

Gavin D. K. Hattersley: Thanks, Bryan. Look, EMEA APAC had a tremendous year last year. We grew both the top and bottom lines by double digits, and I don't think we've done that for a while. In terms of the various markets in which we operate, Central and Eastern Europe, we've been very clear about that over the last six or so quarters, that the consumer is more challenged in that market. We are seeing signs of lowering inflation and a lower impact on that consumer.

Speaker Change: Thanks, Brian look EMEA APAC last year had a tremendous year, we grew top and bottom line double digits and I don't think we have done that for 400, while in terms of the various markets in which we operate central and eastern Europe, we've been very clear about that over the last six or so quarters that the consumers more challenged in that market we are seeing.

Speaker Change: Signs of lowering inflation.

Speaker Change: Lower impact for that consumer and Rx.

Gavin D. K. Hattersley: And so our expectation is that that is going to continue to improve as we head into 2024. In the UK, you are right, we had two slower quarters from an overall industry point of view for Q3 and Q4. Q3 was largely weather-driven.

Speaker Change: Our expectation is that that is going to continue to improve as we as we head into into 2024 in the UK. You are right. We've had two slower quarters from an overall industry point of view for Q3, and Q4 Q3 was largely weather driven Q.

Gavin D. K. Hattersley: Q4 was largely off-premise driven. And, you know, there was a fairly substantial excise increase of around 10% in the off-premise sector in the UK. And, of course, that probably had somewhat of a negative effect in the fourth quarter. But the UK consumer has remained remarkably resilient.

Speaker Change: Q4 was largely off premise driven.

There was a fairly substantial excise increase in the off premise of around 10%.

Speaker Change: In the U K and of course that probably had somewhat of a negative effect in the fourth in the fourth quarter.

Speaker Change: But the UK consumer has remained remarkably resilient and.

Gavin D. K. Hattersley: And, you know, our expectation is that it will continue. And, you know, you point to our premiumization. Yes, we had such a tremendous success with the launch of Madrid in the UK. You know, who would have thought you could launch a brand at the beginning of a pandemic in the on premises, and three years later, it would have the share that it has in the on and off premises and be well north of a million hectoliters already. And what's even more surprising is the low awareness that exists with that brand.

Speaker Change: Our expectation is that will continue.

Speaker Change: You're pointing to a premium amortization, yes, I mean, you had such a tremendous success with the launch of <unk> in the U K.

Speaker Change: Who would have thought you could launch a brand at the beginning of the pandemic in the on premise and three years later it would have the the share that it has in the on and off premise and be well north of 1 million hectoliter is already and what's even more surprising is actually the low awareness that exists with that brand. So there's a lot of runway for us to drive.

Gavin D. K. Hattersley: So there's a lot of runway for us to drive Madrid, not only in the UK, but we're also launching it in Bulgaria and we're launching it in Canada as we head into this year. Thanks, Bryan. The next question comes from Rob Ottenstein from Evercall. Rob, your line is open, please go ahead. Great. Thank you very much.

Speaker Change: <unk> not only in the in the UK, but we're also launching it in Bulgaria, and we're launching it in Canada.

As we head into this year.

Speaker Change: Thanks, Brian The next question comes.

Speaker Change: The next question comes from Robert <unk> from Evercore. Your line is open. Please go ahead.

Robert: Great. Thank you very much.

Robert: Gavin.

Robert Ottenstein: Gavin, your team on the supply chain side and the brewery side really did a fantastic job last year, given the abrupt and unyielding change in the business dynamics, and you know just you know they did a great job. Under those circumstances though and given the extent of the change, I'm assuming that you didn't or it would have been very difficult to kind of optimize the system, both in terms of the breweries and the logistics. You've had a little bit more time now, I would think to do that, so kind of looking in on 2024. You know, have you been able to get on locks there, make the system more efficient given the dramatic changes in the volumes? Obviously, the PBR is going to have an impact, but this is going to be a higher-margin product that you're going to put in there, so there's a chance to re-optimize there. And then in that context, I'm a little bit surprised that the COGs per hectoliter are still going to go up given, you know, what will still be very strong volumes and declining aluminum costs. So maybe you can kind of put that all together and give us some context. Thank you. Thanks, Rob. Look, I'll start.

Robert: Your team on the supply chain side, and the brewery side really did a fantastic job last year.

Given the.

Robert: Dropped and yielding change and the business dynamics.

Robert: And just did a great job under those circumstances, though and given the extent of the change.

Robert: Im assuming that you didn't or would have been very difficult to kind of optimize the system. Both in terms of the breweries in the logistics.

Robert: <unk> had a little bit more time now.

I think to do that so kind of looking in on 2024.

<unk>.

Robert: Have you been able to get unlocks there make the system more.

Efficient given the dramatic changes in the volumes obviously, the PBR is going to have an impact but this is going to be a higher margin product that you are going in there. So there is a chance to re optimize there and then in that context.

Robert: I'm, a little bit surprised that the.

Robert: Cogs.

Robert: Per hectoliter are going to going to still go up.

Robert: Given what will still be very strong volumes and declining.

Robert: Aluminum costs. So maybe if you can kind of put that all together and give us some context. Thank you.

Speaker Change: Thanks, Rob look I'll start and Greg can add some color on Cogs as well, but first things first I think our supply chain team has done an amazing job over the last three years reacting to almost every imaginable.

Gavin D. K. Hattersley: Greg can add some color on COGS as well. But first, thanks. Yes, I think our supply chain team has done an amazing job over the last three years reacting to almost every imaginable crisis, and they got battle hardened and did a tremendous job of reacting to this. You know, this permanent industry shift that took place in April. Yes, we have had opportunities to optimize, and we continue to optimize the sourcing of our beers between breweries. And we continue to do that, and will continue to do that on an ongoing basis. In terms of.

Robert: Crisis.

Robert: And they've got battled hardened and did a tremendous job of reacting to this.

Greg Tierney: Thats permanent industry shift that took place in April yes, we added opportunities to optimize we continue to optimize the sourcing of.

Greg Tierney: All of our peers between breweries and we continue to do that and we'll continue to do that.

Greg Tierney: On a on an ongoing basis.

Greg Tierney: In terms of.

Gavin D. K. Hattersley: Obviously, perhaps coming out, you rightly point to the fact that that will give us an opportunity to optimize even further; it reduces a lot of what takes a lot of complexity out of our business and allows us to do longer runs of our own higher-margin brands. As far as COGS is concerned, look, there's a lot of factors that go into COGS, you know, not just operating leverage. One would obviously be, you know, as we drive towards our above premium goal, you know, above premium products come at a higher cost to make. So those certainly negatively impact overall COGS. Greg, why don't you just give some color on COGS?

Greg Tierney: Obviously, perhaps coming out directly point to the fact that that will give us an opportunity to optimize even further it reduces a lot of it takes a lot of complexity out of our business allows us to do longer runs of our own higher margin brands as far as Cogs is concerned look there's a lot of factors that go into Cogs.

Not just operating leverage.

Greg Tierney: One would obviously be.

Greg Tierney: As we as we.

Greg Tierney: Drive towards our above premium goal.

Greg Tierney: Premium products come at a higher cost to make so those those certainly negatively impact overall Cogs, Greg why don't you just give some color on on Cogs, Kevin. Thank you. So I think you hit on that.

Greg Tierney: Yeah, Gavin, thank you. So I think, you hit on that, a large headwind, right, as we talk about premiumization and move toward that one-third goal, that's going to be a headwind to the cost of goods. It's beneficial for our business, obviously overall, but will be a headwind to the cost of goods. We do see material cost inflation; material conversion costs are going to be a headwind for us this year. And obviously, as I said in the prepared remarks, even though spot prices have come down, we still do have, with our longer-term hedging program, some hedges that are going to be headwinds for us that were layered on in 2022 and 2023. So those are the big drivers.

Greg Tierney: Large headwind right as we as we talk about our premium position and move towards that one third goal that's going to be a headwind to cost of goods is beneficial for our business, obviously overall, but will be a headwind to cost of goods. We do see material cost inflation material conversion costs are going to be a headwind for us this year.

Greg Tierney: And obviously as I said in the prepared remarks, even though spot prices have come down we feel we still do have with our longer term hedging program. Some hedges that are going to be headwinds for us.

Greg Tierney: That were layered on in 2022 and 2023. So those are the big drivers, thanks, Greg and Rob that'll just sort of reps up into our guidance of a full four underlying profit, which is which is.

Greg Tierney: Thanks, Craig. And Rob, that all just sort of wraps up into our guidance for underlying profit, which is mid single digits in line with our long-term algorithm. Thanks, Rob. Filippo Falorni from City.

Greg Tierney: Mid single digits in line with our long term algorithm.

Rob: Thanks, Rob.

The next question comes from Philippe <unk> from Citi. Your line is open. Please go ahead.

Filippo Falorni: Filippo, your line is open, please... Hey, good morning, everyone. So I wanted to go back to the guidelines. I want to clarify, clearly, you mentioned Q1 is going to have a very strong volume performance. But Gavin, are you assuming also, particularly in the US, volume growth for the balance of the year, particularly, you know, obviously, you're going to cycle much tougher comps in the balance of the year. And even assuming, you know, you're going to have permanent changes, that would imply further share gains. So just any color on the volume performance in the US post Q1 will be helpful. Yeah, thanks.

Philippe: Hey, good morning, everyone.

Philippe: So I wanted to go back to the guidance I want to clarify clearly you mentioned Q1 is going to have a very strong volume performance, but Gavin are you assuming all saw particularly in the U S volume growth in the balance of the year.

Philippe: Obviously, youre going to cycle, a much tougher comps in the balance of the and even assuming.

Philippe: Youre going to have permanent changes that would imply further share gains. So just any color on the volume performance in the U S. Post Q1 will be it will be helpful.

Philippe: Yes.

Speaker Change: Yes, Thanks look I mean, maybe just a comment around the overall industry Rod as I said.

Gavin D. K. Hattersley: Look, I mean, maybe just a comment on the overall industry, right? As I said, despite the headlines, you might read the overall beer category grew its dollar share of total alcohol beverage in 2023. I think that's important context when you consider consumer habits, which essentially underpins your question as well. We've got a lot of levers from a top-line point of view.

Speaker Change: Despite the headlines <unk> read the overall beer category grew dollar share of total alcohol beverage in 2023.

Speaker Change: I think thats important context, when you consider consumer habits.

Which essentially underpins your Christian as well.

Speaker Change: We've got a lot of levers from a top line.

Speaker Change: Point of view, we've got pricing.

Gavin D. K. Hattersley: We've got pricing, we've got positive mix from premiumization, you know, and notwithstanding the comps which are coming in the second quarter, it is our expectation and goal that we will continue to take market share. Thanks for the interview. Nadine Jolana-Sowerton, please go ahead.

Speaker Change: Positive mix from premium amortization.

Speaker Change: And notwithstanding.

Speaker Change: <unk>.

Speaker Change: Pumps, which are coming in.

Speaker Change: In the second quarter. It is it is our expectation and goal that we will continue to take.

Speaker Change: To take market share.

Speaker Change: Yeah.

Speaker Change: The next question comes.

Bernstein: From Bernstein.

Your line is now open. Please go ahead.

Nadine Jolana-Sowerton: Yeah, hi, thank you, everybody. I have two questions for you. One, just on the quarter, what exactly surprised you to the upside in Q4 for constant currency underlying income before tax to come to that 2% increase versus, I believe, the previous guidance was for a decline? And then my second question, a little bit more long term. You called out, I think, in your prepared remarks, the belief that you have the chair shifts that we've been seeing in the US are permanent. Could you give us a bit more color as to your conviction that you will be maintaining all of that share into 2024? I asked this, especially in light of President Trump's favorable social media posts for Bud Light, which I know is probably on the mind of many people on this call. So any data points or surveys that you could point to would be very helpful. Thank you. Thanks, Nadine.

Bernstein: Yes, hi, Thank you everybody two questions from me one just on the quarter.

Bernstein: Please surprise to the upside in Q4 for constant currency underlying income before tax to come to that 2% increase versus I believe the previous guidance was for a decline and then my second question a little bit more long term you called out I think in your prepared remarks. The belief that you have the share shifts that we've been seeing in the U S.

Bernstein: Our permanent could you give us a bit more color as to your conviction on will you be maintaining all of that share into 2024.

Bernstein: This, especially in light of President Trump's favorable social media posts for Bud light, which I know is probably on the minds of many people on this call. So any data points or surveys that you could point to would be very helpful. Thank you.

Speaker Change: Thanks Nadine.

Gavin D. K. Hattersley: Look, on your first question, not much surprised us in the fourth quarter. If I had to point to one thing, maybe the industry performed a little better in our US market than we had originally expected it to. And so that drove up our underlying profit to slightly exceed our guidance. I mean, it wasn't a lot, right?

Speaker Change: Look on your on your first question not much surprised us in the fourth quarter.

Speaker Change: If I had to point to one thing maybe the industry performed a little better than our U S market.

Speaker Change: We had originally expected it to and so that drove up our underlying profit to slightly exceed our guidance I mean, it wasn't a lot right I mean, it was we would we would.

Gavin D. K. Hattersley: I mean, we were just under 37%, which, you know, in the great scheme of things, isn't a lot of money when you compare it to our overall underlying profit. So, more or less, things were as we expected. EMEA and APAC actually did a little better than we expected. Canada did a little, tiny little bit worse, and the U.S. did better.

Speaker Change: Under 37.

Speaker Change: The same twitch.

Speaker Change: In the greater scheme of things is not a lot of dollars.

Speaker Change: When you compare it to our overall underlying profit so.

Speaker Change: More or less things as.

Speaker Change: As we expected EMEA APAC actually did a little a little better than we expected Canada is a little tiny little bit worse in the U S.

Speaker Change: Did better but overall there is nothing really I can point out that was a was a big half for us.

Gavin D. K. Hattersley: But overall, there's nothing really I can point out that was a big aha for us. In terms of your other questions, what gives me confidence that we can sustain the share gains that we've got in the U.S.? Look, I mean, the gains we've seen in our core brands have been consistent for over nine months. We're growing in every region, every channel, and with every major customer in the United States. And at this point, we believe that the shifts in the U.S. beer industry are permanent.

Speaker Change: In terms of your other question as to what.

Speaker Change: What gives me confidence that we can sustain the share gains that we've got in the U S look.

Speaker Change: The gains we have seen in our core brands have been consistent for over nine months with growing in every region every channel and with every major customer in the United States.

Speaker Change: In it.

Speaker Change: At this point, we believe that the shifts in the U S. Beer industry are permanent we're off to a fast start in Q1 as I said momentum is continuing.

Gavin D. K. Hattersley: We're off to a fast start in Q1, and as I said, the momentum is continuing. We're leading all brewers in year-to-date dollar share growth. Our data shows that the majority of consumers who switch to our brands post-April have stayed with us throughout 2023, and they're much more loyal to our brands than historically so. So yeah, I mean, I would expect one of our competitors would almost certainly claim that anything better than minus 30% is a big win. But the reality is, there's no reason to believe that these buyers are suddenly going to revert back in April.

We're leading all Brewers and year to date dollar shave.

Gross our data shows that the majority of consumers who switched to our brands post April have stayed with us throughout 2023, and then much more loyal to our brands and historically so.

Speaker Change: Yes, I mean, I would expect one of our competitors will almost certainly claim that interesting better than modest 30% is a big win but the reality is there's no reason to believe that these buyers are suddenly going to revert in April.

Gavin D. K. Hattersley: We do expect strong continued growth in Q1. We expect it to continue to follow the patterns we saw last year. We saw signs of this with our momentum in Q4. For example, Coors Light's volume growth in Q4 was higher than it was in Q2. So we've got multiple sales tailwinds from a sales perspective. And let me just run a couple of those for you, Nadine, given the high interest in this particular area. We expect even more space at retail starting in Q2, when we'll start to see the benefit from spring resets. The majority of major retailers do full resets in the spring, both nationally and from a regional point of view.

Speaker Change: We do expect strong continued growth in Q1, we expect it to continue to follow the pattern. We saw last year we.

Speaker Change: We saw signs of this with dominant maintain Q4.

For example, large volume growth in Q4 was higher than it was in Q2.

So we've got multiple sales.

Tailwind from a from it from a sales perspective, and maybe just run a couple of those for you Nadine given.

Speaker Change: The high interest in this in this particular area.

Speaker Change: We expect even more space at retail starting in Q2, when we will start to see the.

Speaker Change: The benefit from from spring resets.

Speaker Change: The majority of major retailers do full receipts in the screen, both nationally and from a regional point of view and we expect to be the biggest beneficiary of these of these voice guidance, we've already seen as I've said in my opening remarks.

Gavin D. K. Hattersley: And we expect to be the biggest beneficiary of these space gains. We've already seen, as I said in my opening remarks, several of our chain retailers that allocated space for our core brands well ahead of the six to 7% gains that we saw in the summer and fall of 2023. And that's including some larger retailers.

Speaker Change: Several of our chain retailers.

That puts space for our core brands well ahead of the 6% to 7% guidance that we saw in summer.

Speaker Change: In fall of 2023, and that's including some larger retailers, we expect to have much better and stronger display activity in the first half of this year, we are already seeing that with the Super Bowl and the Lady.

Gavin D. K. Hattersley: We expect to have much better and stronger display activity in the first half of this year. We're already seeing that with the Super Bowl. In the latest four weeks of our Super Bowl retail program, Molson Coors has gained more dollar and volume share of displays than any other U.S. brewer and our brands here. I don't know, about a 25% lift in sales when they're on display.

Speaker Change: Just four weeks of a.

Speaker Change: Super Bowl retail program, Molson Coors getting more dollar and volume share of displays than any other U S Brewer and.

Speaker Change: And our Brinci it.

Speaker Change: I don't know about a 25% lift in sales when they're when they're on display so.

Gavin D. K. Hattersley: So, you know, last year, we were a clear winner on displays, and we expect that to be the case as we start cycling in April. And then, you know, the final point, because I've gone on a little here, maybe, is on the premises. It's not letting up.

Speaker Change: Last year, we were a clear winner on displays and we we expect that to be the cases as we start cycling in in April and then.

Speaker Change: The final point, because I've gone on a little here maybe is in the on premise, it's not letting up.

Gavin D. K. Hattersley: We were by far the largest share gainer in the channel last year. We grew three times more share as the next major brewer, which in this instance was Constellation. You know, just to put that into perspective, Coors Light and Miller Light each grew more in dollars on-premise than Constellation did as a total brewer, and that's as of the latest 12-week, C.J. Nielsen-Reeds.

Speaker Change: We're by far the largest share gainer in the channel last year. We grew three three times more shares as the next major brewer.

Speaker Change: For instance, with constellation.

Speaker Change: Just to put that into perspective, Chris not admitted at each grew more in dollars than the on premise and constellation as a total brewer.

Speaker Change: As of the latest 12 week <unk>.

Gavin D. K. Hattersley: Now, let me stop there. I could go on into the marketing campaigns that we've got for Choose Till and for Miller Lite, but there are so many reasons to believe, Nadine, and we have strong confidence in the guidance that we've given. Next question comes from Bill Kirk at Ross MKM. Bill, your line is open, please go ahead.

Speaker Change: C J Nielsen.

Speaker Change: <unk>.

Speaker Change: Now, let me stop there I could go on into the marketing campaigns that we've got for two solar and familiar a lot, but there are so many reasons to believe in iodine and we have <unk>.

Speaker Change: Strong confidence in the guidance in which we have given.

Speaker Change: Yeah.

Speaker Change: The next question comes from Bill Cook. It Roxanne can fill your line is open. Please go ahead.

William Kirk: Thank you. I'm going to try the Cox per hectoliter guidance again, but maybe regionally, and I ask because I think America's COX per hectoliter was down year over year in four... So is it fair to expect that to continue regionally and in the Americas, but just in Europe, the COX per hectare leader is up enough year-over-year for the total company COX per hectare leader to be up? Well, look, you're right.

Bill Cook: Thank you I'm going to try the Cogs per hectoliter guidance again, but maybe regionally and I ask because.

I think Americas Cogs per hectoliter was down year over year in <unk>.

Bill Cook: Is it fair to expect that to continue regionally and in the Americas, but Jeff in Europe. The Cogs per hectoliter is up enough year over year for the total company Cogs per hectoliter to be up in 2024.

Jeff: Well look you are right I mean, we do have regional differences in our cost of goods sold all driven by.

Gavin D. K. Hattersley: I mean, we do have regional differences in our cost of goods sold, all driven by, you know, all the factors that go into cost of goods sold, from cost savings programs to, you know, premiumization. Obviously, the US is coming off a smaller base from a premiumization point of view than EMEA and APAC. So, you know, the US will be more impacted negatively by growth in the above premium than, for example, EMEA, and APAC, because inflation is slightly higher in Europe at a macro level. But, as Greg rightly pointed out, our hedging program is designed specifically, and it's been this way for, you know, more than 10 years, to eliminate the highs and lows of our input costs. So, you know, you're probably looking for more detail than we're willing to give you.

Jeff: All the factors that go into cost of goods sold from cost savings programs too.

Jeff: Premium amortization, obviously the U S is coming off a smaller base from our premium amortization point of view than EMEA APAC is.

Jeff: The U S will be more impacted negatively by it.

Jeff: Our growth in the in the above premium for example, EMEA and APAC would be inflation is slightly higher than in Europe at a macro level.

Jeff: But as Greg rightly pointed out our hedging program is designed specifically it's been this way for.

Jeff: More than 10 years to eliminate.

Jeff: The highs and lows of of our input input costs.

Speaker Change: You're probably looking for more detailed than we're willing to.

Speaker Change: To give you.

Gavin D. K. Hattersley: But there are so many things that go into the COGS bill, and it all ladders up into our guidance of mid single digits for underlying pre-tax. Next question is from Chris Carey at Wales Fargo. Chris, your line is open, please go. Hi, thank you for the question.

Speaker Change: There are so many things that go into into Cogs and that all led us up into our guidance.

Speaker Change: Of mid single digits for four underlying pre tax.

Speaker Change: The next question is from Chris Carey of Wells Fargo. Your line is open. Please go ahead.

Chris Carey: Hi, Thank you for the question.

Chris Carey: Kevin can you can you just comment on the.

Chris Carey: Gavin, can you just comment on the portfolio outside of Miller Coors and how you feel about the shelf for this year? And then separately, just from a cash perspective, obviously, there's a lot of debates about growth, specifically on the top line. Can you just maybe let us know how you would be thinking about deploying the balance sheet?

Chris Carey: The portfolio outside of Millercoors, and how you feel about shelf.

Chris Carey: For this year.

And then separately just from a cash perspective, obviously, there's a lot of debates about.

Kevin: Growth specifically on the top line can you just maybe let US know how you would be thinking about the balance sheet should.

Gavin D. K. Hattersley: Should the fundamental picture become a little bit less as you expect as the year progresses? Another way, if volumes come in a little bit short, would you lean in on some of your buyback initiatives, front load those a bit more than you might otherwise do on the multi-year plan? So any perspective on cash use would also be helpful in addition to that, you know, just how the businesses are setting up for this year from a shelf perspective on the non-Miller, non-Coors. Thanks, everyone.

Kevin: Sure.

Kevin: The fundamental picture become a little bit less as you expect as the year progresses said another way if volumes come in a little bit short would you lean in on.

Kevin: Some of your buyback initiatives frontload those a bit more than you might have otherwise done on the multiyear plan. So any perspective on cash use would also be helpful. In addition to those.

Kevin: Just how.

The businesses are setting up for this year from a shell perspective on the non Miller noncore business. Thanks, so much.

Gavin D. K. Hattersley: Yeah, from a portfolio outside of the US. Chris, Canada, you know, we do continue to see softness in the beer industry, but while the industry is down in, frankly, all regions, we've had strong share growth in Canada, and it's being driven by the strength of our core brands and the expansion that we've made into flavor. So, you know, since last March, Coors Light has been the number one light beer brand in the industry, Molson brand, a family's growing share of the industry, and our flavor portfolio is looking really positive when you compare it against the rest of our competitors. We're growing the business; we're the only major brewery growing share in flavor in Canada. So, you know, whilst a little bit more cautious about the overall macro environment in Our Latam business, 2023 was a tough year, right? There were large macroeconomic challenges in some of our bigger markets in which we operate. We are seeing signs of improvement from that perspective. You know, Miller High Life is performing really well in Mexico.

Speaker Change: Yes from a from a.

Speaker Change: Yes.

From an overall portfolio outside of the U S.

Speaker Change: Chris Canada.

We do continue to see softness in the in.

Speaker Change: In the beer industry.

Speaker Change: But while the industry is down and frankly all regions we've.

Speaker Change: We've had strong growth share growth.

Speaker Change: In Canada, and it's being driven by the strength of our core brands and the expansion that we've made into into flavors. So.

Speaker Change: Since last March Coors light speed in the number one light beer brand in the industry Molson brand family is growing share of industry and our flavor portfolio is looking looking really positive when compared against the against the rest of our of our competitors.

Speaker Change: We're growing the business with the only major brewer growing share in flavor and in Canada.

I lost a little bit more cautious about the overall macro environment in Canada, our portfolio is strong and getting and getting stronger frankly as we go forward.

Speaker Change: Our Latam business.

Speaker Change: 2023, it was a tough year right there were large macroeconomic challenges in some of our bigger.

Speaker Change: Markets.

Speaker Change: In which we operate and we are seeing signs of improvement from from that perspective.

Speaker Change: <unk> is performing really well in in Mexico, Brazil remains a big opportunity for us and overall overall, we do see some level of.

Gavin D. K. Hattersley: Brazil remains a big opportunity for us, and overall, we do see some level of improvement from a macroeconomic environment in Latin America. And then finally, I covered off on Central and Eastern Europe, where we are seeing some signs of slowing down inflation and consumers benefiting from that. And in the UK, we remain cautious as we watch the impact of some of the excise tax changes in the fourth quarter. But overall, our portfolio in the UK is strong, you know, from a calling point of view, from a Coors family point of view, and from Madrid, and, you know, some of our brands, which we talk less about, you know, Croatia, Asjusco has reached its highest market share since we kept records. Madrid's expanding outside of the UK.

Speaker Change: Of of improvement from a macroeconomic environment in Latin America, and then finally I covered off on central Eastern Europe, where we are seeing some signs of slowing inflation.

Speaker Change: And consumer benefiting from that in the UK, we remain cautious as we as we watched the impact of some of the excess tax impacts.

Speaker Change: In the fourth quarter, but overall our portfolio.

Speaker Change: In the UK is strong.

Speaker Change: From a quality point of view from a cause family point of view and from a from a from the three.

Speaker Change: Some of our brands, which we talk less about.

Speaker Change: Croatia is used goes reached its highest market share.

Speaker Change: Since since we kept records.

Speaker Change: Madrid is expanding outside of the UK. So overall from a portfolio point of view, we are feeling really good about it.

Gavin D. K. Hattersley: So overall, from a portfolio point of view, we're feeling really good about it. Cash, capital allocation, Greg, do you want to take that one? Yeah, sure, Gavin.

Speaker Change: Cash capital allocation, Greg do you want do you want to take that one yes sure Kevin.

Greg Tierney: So, you know, Chris, I think Gavin answered the question a little bit earlier on around the buyback, right? But our capital allocation priorities have not changed, right? They remain always to invest first in our business.

Greg Tierney: Chris I think Gavin answered the question a little bit earlier on around buyback rate, but our capital allocation priorities have not changed right. They remain always to invest first in our business.

Greg Tierney: We've done a fantastic job on leverage. That continues to be a focus. We talked about bringing our leverage ratio down to 2.2 times from below or within our longer term goal of under two and a half.

Chris Carey: We've done a fantastic job on leverage that continues to be a focus we talked about bringing our leverage ratio down to two two times.

Chris Carey: Down from below or within our longer term goal of under two and a half and then the third capital allocation prioritization.

Greg Tierney: And then the third capital allocation prioritization that we've spoken a lot about is returning cash to shareholders. We've raised our dividend again, another 7% this year after raising it the previous year and the year before. And obviously, we've made very good progress on our share buyback. That's the $2 billion five-year share buyback program that Gavin spoke about earlier. So the capital allocation priorities remain the same.

Chris Carey: We've spoken a lot about is returning cash to shareholders.

Chris Carey: We've raised our dividend again, another 7% this year after raising it.

Chris Carey: The prior year and the year before.

Obviously, we've got we've made very good progress on our share buyback, that's the $2 billion five year share buyback program that.

But gavin spoke about earlier, so the capital allocation priorities remain the same.

Greg Tierney: Thanks, Greg. The question is from Steve Powers at Deutsche Bank. Steve, your line is open.

Gavin: Thanks, Greg.

Gavin: The next question is from Steve powers with Deutsche Bank, Steve. Your line is open. Please go ahead.

Steve Powers: All right. Hey, thanks. On the buyback, I'm sorry if I missed it, but I don't know if there was a specific level of repurchases that were envisioned in the 24 guidance. That would be helpful to know.

Steve Powers: Hey, thanks.

Steve Powers: On the buyback I'm, sorry, if I missed it but I don't know if there was a specific level of repurchases that were envisioned.

Steve Powers: Envisioned in the 'twenty four guidance that would that would be helpful to know.

Gavin D. K. Hattersley: I'm also just curious about the drivers of the higher interest expense relative to the run rate we saw exiting 23, just anything that you're contemplating on that in terms of refinancing or the like. And then my real question is, just maybe you could talk a little bit. I didn't hear anything about Blue Moon, and I know that there are plans around that brand. 4A as a non-alcoholic, an updated marketing commercialization plan, just any update on those endeavors relative to what we heard at Investor Day. Thank you. Yeah, sure, Steve, thanks for the questions. I'll take your first pick.

Steve Powers: Also just curious on the drivers of the higher interest expense relative to the run rate. We saw exiting 'twenty three just anything that you are.

Steve Powers: Contemplating.

Steve Powers: That's in terms of refinancing or the like and then my real question is.

Steve Powers: Maybe you could talk a little bit I didn't hear anything about bloom.

Steve Powers: Blue Moon, and I know that there are plans around that brand.

Steve Powers: Oriental non alcoholic and updated marketing commercialization plans.

Steve Powers: Any update on.

Steve Powers: On those endeavors relative to what we heard it at Investor day. Thank you.

Speaker Change: Yes sure Steve Thanks for the questions I'll take your first.

Gavin D. K. Hattersley: First one, from a share buyback point of view, look, the way we're running this program is on a sustained and opportunistic basis. So, you know, we obviously do have forecasts of what we will do for 2024 in our guidance assumptions. We're not going to get into that level of detail. I don't think legally I'm allowed to do that.

First one.

Speaker Change: From a share buyback point of view why are we running this program is on a on a sustained on an opportunistic basis.

Speaker Change: We obviously do have.

Speaker Change: Our forecast of what we will do for 2024.

Speaker Change: Our guidance assumptions, we're not going to get into into that level of detail that I am legally allowed to do that but you can assume that we've got a 2 billion share buyback program.

Gavin D. K. Hattersley: But you can assume that, you know, we've got a two billion share buyback program and, you know, that implies roughly four hundred million dollars a year. And we will execute that, you know, on a sustained and opportunistic basis as we as we go forward. As far as Blue Moon is concerned, yes, I mean, we had a challenging year with Blue Moon in 2023. It hasn't been immune from the challenges that exist in the craft beer market as a whole. On the positive side, we are seeing some signs of improvement in the on-premise, where Blue Moon is actually growing share now based on the last four-week Nielsen CGA data. And obviously, we're not satisfied with the brand's performance.

Speaker Change: That implies roughly $400 million in a in a year and we will execute that.

Speaker Change: And our sustained an opportunistic basis as we as we.

Speaker Change: As we go forward as far as Blue Moon is concerned.

Yes, I mean, we had a challenging year with with Blue Moon in 2023, if it hasnt been immune from the challenges that exist in the in the craft beer market as a whole on the positive side, we are seeing some signs of improvements in the in the on premise. We have blue Moon is actually growing share and are based on the on the last full week Nielsen.

Speaker Change: CGI data.

Speaker Change: And obviously, we're not satisfied with the brand's performance, we've got big plans to turn it around in 2020 for Steve We've got redesign packaging that hits shelves in March and it's going to you're not the whole Blue Moon family, which was not the case before we each of the premium brands almost felt like a different brand and of itself and that that's going to be.

Gavin D. K. Hattersley: We've got big plans to turn it around in 2024, Steve. We have redesigned packaging that hits shelves in March. And it's going to unite the whole Blue Moon family, which was not the case before. Each of the Blue Moon brands almost felt like a different brand in and of itself.

Gavin D. K. Hattersley: And that's going to be rectified, the right word, in the new packaging, which we're launching in March. We've got a new campaign, which is also going to be launched in March. We've got strong media pressure with TV, digital, and retail. And then, to round it out from a Blue Moon point of view, we've got two innovations that we believe are going to bring more drinkers to the brand in 2024 and provide a halo effect on Blue Moon itself. And one is the repositioned Blue Moon Light, which is already the number one light craft beer. It previously went under the name Blue Moon Light Sky.

Speaker Change: It is rectified the right word.

Speaker Change: In the new packaging, which we're launching in March and we've got a new campaign, which is also going to launch in March we've got strong media pressure with.

Speaker Change: With TV and digital and retail and then to round it out.

Speaker Change: From a from a blue Moon point of view, we've got two innovations, which we believe are going to bring more.

Speaker Change: More drink as to the brand in 2020 full provide a halo effect to Blue Moon itself and one is the reposition blue Moon light, which is already the number one craft beer. It's previously was went under the knife Blue Moon light Sky and the others Blue Moon <unk>. It's obviously very early days for <unk>, but it's already jump.

Gavin D. K. Hattersley: And the other is Blue Moon Non-Alc. It's obviously very early days for Blue Moon Non-Alc, but it's already jumped to the number three craft in a franchise by volume in the last four weeks, which is how long it's been in the market. So the feedback from both retailers and consumers has been overwhelmingly positive.

Speaker Change: The number three crops in a franchise by volume in the last four weeks, which is how long it's been in the market. So.

Speaker Change: The feedback from both retailers and consumers has been overwhelmingly positive. So overall, we have high hopes for overall Blue Moon family of brands in 2024, Greg I might have missed a part of Steve's question that I didn't think it was the interest expense interest accounting.

Gavin D. K. Hattersley: So overall, we have high hopes for our overall Blue Moon family of brands in 2024. Greg, I might've missed a part of Steve's question. I think it was the interest expense. Interest expense, yeah. Yeah, and I can help.

Greg Tierney: You can handle that. Okay, very good. So Steve, on interest expense, our guide for 2024 is very in line with what total interest expense was in 2023. I think if you think about just where our cash positions have been this year, certainly, we had much heavier cash positions.

And that can happen you can handle that okay very good Steve on interest expense are our guide for 2024 is very in line with what what total interest expense was in 2023 I think if you think about just where we're where our cash positions have been this year certainly we had much heavier cash positions we earned a fair.

Greg Tierney: We earned a fair amount of interest income on those cash positions throughout 2023. But as we look at it overall year to year, the expectation is very consistent from 23 to 24. Thanks, Greg. The next question comes from Eric Serotta from Morgan Stanley. Eric, your line is open. Please go ahead.

Speaker Change: The amount of interest income on those cash positions throughout 2023, right, but as we look at overall year to year. The expectation is is very consistent from 'twenty three 'twenty four.

Steve Powers: Thanks, Greg.

Steve Powers: The next question comes from Eric Alright, So from Morgan Stanley Eric Your line is open. Please go ahead.

Eric Adam Serotta: Thanks. Gavin, just hoping you could expand upon your comment earlier that you saw the overall beer category in the U.S. reverting back to a kind of flat to down one in terms of volume. What do you think the drivers of that will be since 2023 was quite a bit below that? And were you referring to that as what's embedded in your 2024 guidance, or is that more of a long-term expectation? Thanks, Eric.

Thanks Gal.

Gavin just hoping you could expand upon your comment earlier that you saw the overall beer category in the U S.

Eric: Reverting back to Pat.

Eric: Flat to down one.

Eric: In terms of volume standpoint.

Eric: What do you think the drivers of that will be since 2023 was quite a bit below that.

Eric: And.

Eric: Were you referring to that.

Eric: In your 2024 guidance or is that more of a.

Eric: Term expectation.

Speaker Change: Thanks, Eric.

Gavin D. K. Hattersley: Look, I mean, I'll say again, you know, despite the headlines, you might read the overall beer category grew its dollar share of total alcohol beverage in 2023. And you know, that's unlike wine and full strength spirits, which declined. If you go back and look at what happened in 2023, though, in the first quarter, that was a tough quarter for the industry, and it was largely driven by, you know, really, really bad weather on the West Coast, primarily.

Speaker Change: And I'll say again, despite the headlines you might read the overall big category grew dollar share of total alcohol beverage in 2023 thats. Unlike one in full spring spirits, which declined.

Speaker Change: They didn't look what happened in 2023 in the first quarter. It was it was a tough quarter for the industry and it was largely driven by.

Speaker Change: Really really bad weather on the on the waste on the West Coast primarily.

Gavin D. K. Hattersley: After that, the US beer industry volume trends improved during 2023, as we move through the year and, you know, particularly in Q4. So, you know, our expectation, as you said, is the category is going to return to its more historical levels of flat to slightly up on a value basis, and it'll probably fall slightly on a volume basis.

Speaker Change: After that the U S beer industry volume trends improved during 2023 is as we move through the year.

Speaker Change: Particularly in Q4 so.

Speaker Change: Our expectation as you said as the category is going to return to more historical levels of flat to slightly up on a value basis.

Speaker Change: And it will probably fall slightly.

On a on a volume basis and our expectation is that we will continue to grow share in that environment and thats whats embedded in our.

Gavin D. K. Hattersley: And our expectation is that we will continue to grow share in that environment. And that's what's embedded in our, you know, guidance for 2024. Next question comes from Kaumil Gajrawala from Jefferies. Kaumil, you're lined out.

Speaker Change: Our guidance for 2024.

Speaker Change: Yes.

Speaker Change: The next question comes from <unk> <unk> from Jefferies.

Kaumil Gajrawala: If I could maybe just follow up on Eric's question on the category, you know, shipments are down 11 million barrels, which puts them at 1990-something levels. And while the pricing is there, I guess one of the debates about beer is the relative pricing that's been taken over a period of time versus spirits. So I'm curious how you feel about the category, its pricing position versus other beverage alcohols. Yeah, thanks, Kaumil.

Speaker Change: Your line is open. Please go ahead.

Speaker Change: If I could maybe just follow up on Erik's question on the category.

Speaker Change: Shipments were down 11 million barrels, which constitute 1990 something levels and while the pricing is there I guess one of the debates about beer as the relative pricing thats been taken over a period of time versus spirits and so I'm curious how you feel about the categories.

Speaker Change: So pricing position versus the other beverage alcohol categories. Thanks.

Speaker Change: Yes, Thanks, Kevin look I mean, obviously from a from an overall.

Gavin D. K. Hattersley: Look, I mean, obviously, from an overall industry point of view, beer has taken higher prices over the years than our other competitors in the alcohol space, wine, and actually not as much in wine, but more in spirits. Our view is that prices for this year will fall into that 1% to 2% range. I think we've been fairly consistent about our expectations from that perspective for quite some time. The US beer industry did sequentially improve, as I said, in 2023. And sometimes there is a difference between timing of shipments and brand sales to retailers, which can impact that sometimes. This question is from Robert Mosco from TD Cowan. Robert, your line is open. Please go ahead.

Speaker Change: Industry point of view, there has taken higher pricing over over the years then.

Speaker Change: Our other competitors in the in the alcohol space one.

Speaker Change: We're actually not as much in one, but more and more and in spirits.

Speaker Change: Our view is that.

Speaker Change: Pricing for this year will fall into that 1% to 2% range I think we've been fairly consistent about our expectation from that perspective.

Speaker Change: For for quite some quite some time.

Speaker Change: U S beer industry did sequentially improve as I said.

Speaker Change: In 2023.

Speaker Change: And.

Speaker Change: Sometimes there is a difference between timing of shipments.

Speaker Change: Shipments in and.

Speaker Change: In brand sales sales to.

Speaker Change: Two retailers, which which can impact that.

Speaker Change: That's sometimes.

Speaker Change: The next question is from Robert Moskow from TD Cowen. Your line is open. Please go ahead.

Robert Moskow: Hi, Thank you.

Robert Mosco: Thank you. I'm sure you've been asked about cannabis many times in many different ways, but there is a potential catalyst for change here with the next presidential election and the possibility of broader legalization. So I was wondering, you know, how do you evaluate the risk for that, especially since younger consumers seem to shift more and more towards cannabis as a preference rather than beer? Secondly, have you ever looked at the difference in growth rates by state and whether, you know, like Colorado as an example, the growth of cannabis has cannibalized beer more so in those states than in the non-legal, Thanks, Robert. You know, from a cannabis point of view, I think it's fair to say that the cannabis beverage market hasn't grown anywhere near what the industry's initial expectations were.

Sure you've been asked about candidates many times in many different ways.

Robert Moskow: But there is a potential catalyst here with the next presidential election, and the possibility of broader legalization.

Robert Moskow: So I was wondering how do you evaluate the risk to that especially since younger consumers.

Robert Moskow: Seem to shift more and more towards cannabis as a preference rather than beer and then secondly have you ever looked at.

Robert Moskow: Difference in growth rates by state and weather.

Robert Moskow: Colorado is an example weather.

Robert Moskow: The growth of cannabis has cannibalized beer more so in those states and in the non legal ones.

Speaker Change: Thanks Robert.

Speaker Change: From a Canada point of view I think it's fair to say that the cannabis beverage market hasnt grown.

Speaker Change: Good luck with the industry's initial expectations were.

Robert Mosco: And, and you know, that led to us getting out of our I really meant more smoking. Not drinking, I meant smoking cannabis. Yeah, well, we operate in the beverage market, and it certainly hasn't performed as one would expect from cannabis beverages. As far as your question as to whether it's impacted, we have not seen, in the more developed cannabis markets like Canada, much of an impact on beverage alcohol.

Speaker Change: That led to us getting out of.

Speaker Change: Really more smoking.

Not not beverage I meant.

Speaker Change: And smoking candidates.

Speaker Change: Yes, well, we operate in the beverage market.

Speaker Change: It Hasnt.

Speaker Change: It Hasnt performed as one would one would expect.

For cannabis beverages to operate as far as your question as to whether it's impacted we have not seen in the more developed cannabis markets like Canada much of an impact on.

Speaker Change: On beverage alcohol.

Gavin D. K. Hattersley: We have done work on a state-by-state basis. I would say to you that Colorado is one of our best-performing states over the last few years, and that, I think, was one of the early leaders from a cannabis point of view. So, you know, I think, overall, we have not seen cannabis negatively impact our alcohol and beverage consumption in any meaningful way.

Speaker Change: We have done work on a state by state basis, I would say to you that Colorado is one of our best performing states either over the last.

Speaker Change: A few years.

Speaker Change: I think it was one of the early leaders from a from a Canada point of view so.

I think overarching we have not seen it.

Speaker Change: Kind of as negatively impact our alcohol beverage construct consumption in any meaningful way.

Brett Cooper: My final question today comes from Brett Cooper from Consumer Edge Research. Brett, your line is open, please. Thank you. In the US, I think third-party data has shown weakness in industry draft volume. So understanding that you were able to capitalize on the disruption in 23 and into 24 to benefit your performance. The thing long term, how do you address industry draft weakness in the US? And are there lessons that you can pull from the UK to the US?

Speaker Change: Okay.

Speaker Change: Final question today comes from Brett Cooper from consumer Edge Research. Your line is open. Please go ahead.

Brett Cooper: Thank you.

Brett Cooper: I think third party data showed weakness in industry draft volume. So understanding that you were able to capitalize on the disruption in 'twenty three and into 'twenty four to benefit your performance.

Brett Cooper: The thinking long term, how do you dress industry graph weakness in U S and are there learnings that you can pull in the UK to the U S and I guess just from your perspective, how important is it for drop to get back to at least initial performance or better for.

And I guess just from your perspective, how important is it for draft to get back to at least industry performance or better for the health of the industry? Thanks. Yeah, thanks, Brett. And look, I think the biggest driver of negative draft performance is actually Kraft.

Speaker Change: For the health of the industry. Thanks.

Speaker Change: Yeah. Thanks, Brett look I think the biggest driver of negative draft performance is actually Kraft.

And, and, and the number of Kraft brands which might be being discontinued in the in the on the premises. You know, we are back to, very close to pre-COVID levels from an on-premise point of view in most of our major markets, some slightly ahead, some slightly behind, but we're kind of back to where we were. And as I said, we were by far the biggest share gainer in the channel last year. We grew three times faster than the next major brewer. It's not just premium lights that are growing share; brands like Blue Moon and Coors Banquet and Miller Highlife are growing share as well.

Speaker Change: And.

And the number of CRO.

Speaker Change: <unk> brands, which might be being discontinued in the in the in the in the on premise.

Speaker Change: We are back to.

Very close to pre COVID-19 levels from a from an on premise point of view and most of most of our major markets.

Speaker Change: Some slightly ahead, some slightly behind but we're kind of back to where we were we were in.

Speaker Change: As I said.

Speaker Change: We were by far the biggest share gainer in the in the channel last year, we grew three times faster than the next major major brewer.

Speaker Change: It's not just premium lots of the growing share.

Speaker Change: Brands like Blue Moon, and <unk> banquet Miller high life are growing share as well so.

Our portfolio is strong and healthy in the on-premise, and I think some of the weakness you're seeing is coming from the proliferation of craft brands. Thanks, babes. Back to Tracey if there are any questions. Thanks, Adam. If you have any additional questions, please follow up with investor relations. And we look forward to seeing many of you at Cagney next week and taking your calls at the airport. With that, thank everyone for participating on today's call. Thank you very much for your attendance. Eamon out, www.microsoft.com.au. Thanks for watching!

Speaker Change: Our portfolio is strong and healthy in the on premise and I think some of the weakness youre seeing is coming from the proliferation of craft brands.

Speaker Change: This concludes our Q&A session. So how cool back to Tracy for any closing remarks.

Thanks, Adam if you have any additional questions. Please follow up with Investor Relations team.

Tracy: We look forward to seeing many of you at Cagny next week and as well as taking you.

Calls as the year progresses with that thanks, everyone for participating on today's call.

Speaker Change: This concludes today's call. Thank you very much for your attendance you may now disconnect your lines.

Speaker Change: [music].