Q1 2024 Molson Coors Beverage Co Earnings Call

Operator: Good day, and welcome to the Molson Coors beverage company first quarter earnings conference call. You can find related slides on the investor relations page of the Molson Coors website. I'll hand it over to Greg Tierney, Vice President of FT&A Commercial Finance and Investor Relations.

Good day and welcome to the Molson Coors beverage company first quarter earnings Conference call you can find related slides on the Investor Relations page of the Molson Coors website with that I'll hand, it over to Greg Kenny Vice President of F. T in a commercial finance and Investor Relations.

Greg Tierney: All right, 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.

Greg Tierney: Alright, Thank you operator, and Hello, everyone.

Greg Tierney: 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.

Greg Tierney: If you have technical questions about the quarter, please raise them with our IR team in the days and weeks that follow. Because 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 except as required by applicable law. Gap reconciliations for any non-U.S. gap measures are included in our earnings release.

Greg Tierney: If you have technical questions on the quarter, please pick them up with our IR team in the days and weeks that follow.

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

Greg Tierney: For more information please refer to the risk factors discussed in our most recent filings with the SEC.

Greg Tierney: We assume no obligation to update forward looking statements, except as required by applicable law.

Greg Tierney: GAAP reconciliations for any non U S. GAAP measures are included in our earnings release.

Greg Tierney: 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. Also, U.S. shared 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 as defined in our earnings release. So with that, over to you, Gavin. Thanks, Greg.

Greg Tierney: 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.

Speaker Change: Also U S share data references are sourced from sarcoma unless otherwise indicated.

Gavin: Further in our remarks today, we will reference underlying pre tax income, which equates to underlying income before income taxes as defined in our earnings release.

Greg Tierney: So with that over to you Kevin Thanks, Greg and thank you all for joining us this morning.

Gavin D. K. Hattersley: Thanks, Greg, and thank you all for joining us this morning. In the first quarter, Molson Coors once again delivered against our commitments, growing the top and bottom lines while making strong progress on our acceleration plan. We grew net sales revenue by over 10%, and we grew underlying pre-tax income by nearly 69%.

Gavin D. K. Hattersley: In the first quarter Molson Coors once again delivered against our commitments growing the top and bottom line, while making strong progress on our acceleration plan.

Gavin D. K. Hattersley: We grew net sales revenue by over 10%.

Gavin D. K. Hattersley: Underlying pre tax income by nearly 69% and we drove significant margin improvement in the first quarter.

Gavin D. K. Hattersley: And we drove significant margin improvement in the first quarter. This morning, we reaffirmed our full-year guidance, which Tracey will discuss in more detail shortly. To sum it up, we remain confident in our ability to grow the top and bottom line for a third consecutive year but cautious about current trends in the industry. This category has been challenged so far this year.

Gavin D. K. Hattersley: This morning, we reaffirmed our full year guidance, which Tracey will discuss in more detail shortly.

Gavin D. K. Hattersley: To sum it up we remain confident in our ability to grow the top and bottom line for a third consecutive year, but cautious about current trends in the industry.

Gavin D. K. Hattersley: The U S beer category has been challenged so far this year.

Gavin D. K. Hattersley: While we did see some improvement in March, there was also volatility in the industry and mismatched weeks, such as Easter. So we're keeping a close eye on April's trends and taking those into account for the balance of 2024. In spite of this volatility, we remain confident in our ability to achieve top and bottom line growth in 2024. We also remain confident in our ability to achieve our long-term growth strategy. In the first quarter, we grew brand volume and net sales per hectoliter in both business units, and our share gains in the US were consistent with the gains we saw in the second half of 2023. Having said that, we aren't the only ones who are confident in our business.

Gavin D. K. Hattersley: While we did see some improvement in March there was also volatility in the industry and mismatched weeks such as Easter.

Gavin D. K. Hattersley: So we're keeping a close eye on april's trends and taking those into account for the balance of 2024.

Gavin D. K. Hattersley: Despite this volatility we remain confident in our ability to achieve top and bottom line growth in 2024.

Gavin D. K. Hattersley: We also remain confident in our ability to achieve our long term growth algorithm.

Gavin D. K. Hattersley: In the first quarter, we grew brand volume and net sales per hectoliter in both business units and our share gains in the U S with consistent with the guidance we saw in the second half of 2023.

Gavin D. K. Hattersley: Having said that we are the only ones who are confident in our business retailers are also confident having allocated around 13% more space for Coors light and Miller Lite in the U S. During spring resets, which supports our confidence that these shifts are structural.

Gavin D. K. Hattersley: Retailers are also confident, having allocated around 13% more space for Coors Light and Middle Light in the U.S. during Spring Reset, which supports our confidence that these share shifts are structural. Our distributors are also confident, which is why we expect our core brands to grow distribution this year. And across the globe, we have strong commercial platforms that are designed to serve our brands in 2024 and the years to come. With that, let's get into how business performed in the first quarter.

Gavin D. K. Hattersley: Our distributors are also confident which is why we expect our coal branch to grow distribution this year and across the globe. We have strong commercial platforms that are designed to serve our brands in 2024 and the years to come.

Gavin D. K. Hattersley: With that let's get into hub business performed in the first quarter.

Gavin D. K. Hattersley: And I'll start with the first priority of our acceleration plan, growing the revenue of our core brands. Collectively, our core brands start up in 2024 strong, including double-digit brand volume growth for Coors Light and Coors Banquet in the US. High single-digit brand volume growth for Mililite in the U.S. and double-digit brand volume growth for Ajusco in Croatia. In the past four months, we've launched new long-term campaigns across our core brands, starting with Coors Light during the Super Bowl. Shortly thereafter, in the U.S., Quiz Light became the top dollar share gainer year-to-date in the on-premise market, per Nielsen.

Gavin D. K. Hattersley: I'll start with the first priority of our acceleration plan growing the revenue of our core brands.

Gavin D. K. Hattersley: Collectively our core brands started 2024 strong, including double digit brand volume growth for Coors light and Coors banquet in the U S.

Gavin D. K. Hattersley: High single digit brand volume growth for Miller Lite in the U S and double digit brand volume growth for <unk> in Croatia.

Gavin D. K. Hattersley: In the past four months, we have launched new long term campaigns across our core brands, starting with Coors light during Super Bowl.

Gavin D. K. Hattersley: Shortly thereafter in the U S who has liked became the top dollar share gain a year to date in the on premise per Nielsen.

Gavin D. K. Hattersley: Miller Lite is a close second, and their combined success has fueled 12 consecutive four-week periods of industry-leading on-premise growth for Molson Coors, four times more growth than the next largest competitor. In Canada, Coors Light is seeing similar success and grew nearly a full share point of the industry year to date. As I hinted earlier, Coors Light's momentum is anchored by our new campaign, Choose Chill. This is an evolution of Coors Light's Made to Chill campaign, which helped turn the brand around. Pertuse Chill is more active for consumers and more connected to the refreshment and lifestyle Coors Light represents.

Gavin D. K. Hattersley: Miller Lite is a close second and they combined success is fueled 12 consecutive four week periods of industry, leading on premise growth for Molson Coors.

Gavin D. K. Hattersley: Four times more growth than the next largest competitor.

Gavin D. K. Hattersley: In Canada Coors light is seeing similar success and grew nearly a full share point of the industry year to date.

Gavin D. K. Hattersley: As I hinted earlier Coors Light's momentum is anchored by a new campaign choose tool. This is an evolution of Coors light made to chill campaign, which helped turn the brand around.

Gavin D. K. Hattersley: But choose chili's more active for consumers and more connected to the refreshment and lifestyle Coors light represents.

Gavin D. K. Hattersley: You'll continue to see Choose Chill as we launch a new music program this summer and expand Quizlight's presence in soccer and football. We believe work like this has driven Coors to become a trusted and desirable brand for consumers, which is true for Coors Banquet as well. After growing brand volume by nearly 20% in 2023 in the US, Bank would grow volume by 23% in the first quarter and gained nearly a quarter point of industry dollar share.

Gavin D. K. Hattersley: When Youll continue to see Q2, as we launched our new music program. This summer and expand Coors, Light's prisons and soccer and football.

Gavin D. K. Hattersley: We believe work like this has driven coors to become a trusted and desirable brand for consumers, which is true for Coors banquet as well.

Gavin D. K. Hattersley: After growing brand volume by nearly 20% in 2023 in the U S banquet grew volume by 23% in the first quarter.

Gavin D. K. Hattersley: And gained gilead quota point of industry dollar shape.

Gavin D. K. Hattersley: I've already spoken about spring resets, but while we're talking about banquet, I want to share the significant distribution growth we've seen for this brand and expect to continue seeing moving forward. In 2024, Banquet is expected to grow distribution by nearly 20%, driven by surging demand in parts of the U.S. where it has historically under-indexed, like the Southeast and Great Lakes. This is what happens when consumer demand fuels distributor and retailer confidence

Gavin D. K. Hattersley: I've already spoken about spring resets, but while we're talking about banquet I wanted to share the significant distribution growth. We've seen for this brand and expect to continue seeing moving forward.

Gavin D. K. Hattersley: In 2020 full banquet is expected to grow distribution by nearly 20% driven by surging demand in parts of the U S where banquet has historically under indexed like the southeast and Great Lakes.

Gavin D. K. Hattersley: This is what happens when consumer demand fuels distributor and retailer confidence.

Gavin D. K. Hattersley: This year we plan to keep driving banquet with more television, media pressure, TV advertising for the first time in several years, and several large programs with current and new partners across television, music, and apparel. Turning to Miller Lite, which grew its U.S. brand volume by high single digits in the first quarter on top of strong comps from the prior year. In March, Miller Lite launched its new All-Stars program, reinvigorating the debate about whether Miller Lite tastes great, is less filling, or both.

Gavin D. K. Hattersley: This year, we plan to keep driving banquet with more television media pressure television advertising for the first time in several years.

Gavin D. K. Hattersley: And several large programs with current and new partners across TV music and apparel.

Gavin D. K. Hattersley: Turning to Miller Lite, which grew its U S brand volume by high single digits in the first quarter on top of strong comps from the prior year.

Gavin D. K. Hattersley: In March mineralized launches, new all stars program reinvigorating the debate about whether millilux taste great.

Gavin D. K. Hattersley: Filling or both.

Gavin D. K. Hattersley: This campaign brought on a new roster of long-term celebrity partners like J.J. Watt, Reggie Miller, Big Puppy, Hoya Posada, and Mia Hamm. The early response has been very strong, and we have more planned for the Olympics, Major League Baseball, and football. Now, in Canada, middle light sales are above the premium price point.

Gavin D. K. Hattersley: This campaign brought on a new roster of long term celebrity partners like J J Watt.

Gavin D. K. Hattersley: <unk> Miller Big Puppy, Jorge Posada and Mia Hamm.

Gavin D. K. Hattersley: The early response has been very strong and we have more planned for the Olympics Major League baseball and football.

Gavin D. K. Hattersley: No in Canada, <unk> sales is in above premium price points and year to date through February is the fastest growing above premium beer nationally growing its brand volume by over 40%.

Gavin D. K. Hattersley: And year-to-date through February, it's the fastest growing above-premium beer nationally, growing its brand volume by over 40%. Speaking of Canada, the Molson trademark also outperformed the industry and gained volume share. In March, we announced a multi-year partnership with the Professional Women's Hockey League, which was very positively received by fans and retailers alike. Similar to other women's sports, viewership for the PWHL has surged this year, with broadcasts and in-person attendance both at record highs. We're excited to continue this partnership, and Molson will also have a strong presence at the Olympics this summer as the official beer sponsor of Team Canada.

Gavin D. K. Hattersley: Speaking of Canada. The Molson trademark also outperformed the industry and gain volume share in March we announced a multiyear partnership with the professional Womens Hockey League, which was very positively received by fans and retailers alike.

Gavin D. K. Hattersley: Similar to other women sports viewership for the PW HL is surge this year with broadcast and in person attendance both at record highs.

Gavin D. K. Hattersley: We're excited to continue this partnership and Molson will also have a strong presence at the Olympics. This summer as the official beer sponsor of team in Canada.

Gavin D. K. Hattersley: Moving on to the UK, Carling's partnership with the FA Cup began coming to life across TV, digital, and retail in the first quarter. And we believe this is the perfect sponsorship instead of calling it a day for sustained success. According to our data, curling is more associated with professional soccer than any other beer in the market.

Gavin D. K. Hattersley: Moving onto the UK colleagues partnership with the F. A cup began coming to life across TV digital and retail in the first quarter.

Gavin D. K. Hattersley: And we believe this is the perfect sponsorship the Sip, calling up for sustained success.

Gavin D. K. Hattersley: According to our data calling is more associated with professional soccer and any other peer in the market.

Gavin D. K. Hattersley: At a 35% association, it's nearly double the next competitor. Rounding out our core is Azushka, which has continued its strong momentum in Croatia and now has a 54% value share of the core segment. Jusco is much loved locally but also by the many tourists who visit Croatia each year, and we've just launched a new equity campaign nationally to continue growing the brand. So, our core brands have collectively continued to perform strongly in 2024, and we believe we have the right commercial plans to keep them growing for years to come.

Gavin D. K. Hattersley: At a 35% Association.

Gavin D. K. Hattersley: It is nearly double the next competitor.

Gavin D. K. Hattersley: Rounding out our core <unk>, which has continued its strong momentum in Croatia, and now has a 54% value share of the core segment.

Gavin D. K. Hattersley: I will just go as much loved locally, but also about the many travelers who visit Croatia each year and we've just launched a new equity campaign nationally to continue growing the brand.

Gavin D. K. Hattersley: So our core brands have collectively continued to perform strongly in 2024, and we believe we have the right commercial plans to keep them growing for years to come.

Gavin D. K. Hattersley: Turning to our high-end brands, it's clear we have lots of runway in every part of our portfolio. In the first quarter, Madrid exceptional continued its substantial growth. In the UK, the brand grew value sales of the on trade by nearly 50% and value sales of the off trade by over 40%. Madrid is currently the number three world bear in the UK total trade, and we have been consistently closing the gap to number two. Keep the pressure on.

Gavin D. K. Hattersley: Now turning to our high end brands, it's clear we have lots of runway every part of our portfolio in.

Gavin D. K. Hattersley: In the first quarter with really exceptional continued its substantial growth.

Gavin D. K. Hattersley: In the UK the brand grew value sales of the on trade by nearly 50% in value sales of the off trade by over 40%.

Gavin D. K. Hattersley: <unk> is currently the number three will be in the U K total trade and we have been consistently closing the gap to number two to.

Gavin D. K. Hattersley: To keep the pressure on we launched a new campaign in April that brings the soul of Madrid to the UK and focuses on growing miseries awareness.

Gavin D. K. Hattersley: We launched a new campaign in April that brings the soul of Madrid to the UK and focuses on growing Madrid's awareness. While Madrid continues to grow off a strong base in the UK, you'll recall we also brought the brands to Canada in late February, and while it's still early days, Madrid has already made it into about 6,000 accounts across the country, and we believe the brand is performing very well so far.

Gavin D. K. Hattersley: While <unk> continues to grow with a strong base in the U K Youll recall, we also both the brands to candidate in late February and while it's still early days.

Gavin D. K. Hattersley: <unk> already made into about 6000 accounts across the country. We believe the brand is performing very well so far.

Gavin D. K. Hattersley: Beyond <unk> success, there are other parts of our high end portfolio that we're actively working to improve specifically blue Moon.

Gavin D. K. Hattersley: Between February and March we launched new Blue Moon packaging in the U S. A new name for Blue Moon light in a large scale campaign called made brighter.

Gavin D. K. Hattersley: Beyond Madrid's success, there are other parts of our hiring portfolio that we're actively working to improve, specifically Blue Moon. Between February and March, we launched new Blue Moon packaging in the U.S., a new name for Blue Moon Light, and a large-scale campaign called Made Brighter. So, our full-scale revamp has taken shape.

Gavin D. K. Hattersley: So our full scale revamp is taking shape and while it's too early to know the full effect. We are seeing early signs of positive traction.

Gavin D. K. Hattersley: We're also seeing great performance for Blue Moon, non milk, which is now the top selling new non out there of 2024.

Gavin D. K. Hattersley: We have been about 30 non alpha launches in the U S. This year as well as increase in competition.

Gavin D. K. Hattersley: And while it's too early to know the full effect, we are seeing early signs of positive traction. We're also seeing great performance for Blue Moon Non-ALK, which is now the top selling new non-ALK beer of 2024. There have been about 30 non-ALK beer launches in the U.S. this year, as well as an increase in competition.

Gavin D. K. Hattersley: So there is a truly strong sign as the brand continues to gain distribution and shape.

Gavin D. K. Hattersley: While we certainly have more to do on Blue Moon, we are committed to driving the turnaround and we are happy with the progress thus far.

Gavin D. K. Hattersley: Speaking of progress it was a fast start to the year for simply sparked which grew U S brand volume by nearly 35% in the quarter.

Gavin D. K. Hattersley: So this is a truly strong sign as the brand continues to gain distribution and share. While we certainly have more to do on Blue Moon, we are committed to driving the turnaround, and we are happy with the progress thus far. Speaking of progress, it was a fast start to the year for Simply Spiked, which grew U.S. brand volume by nearly 35% in the quarter. Simply Spiked Limeade hits shelves in February, and while we are still growing distribution, our Variety Pack already holds the number one new item spot for the flavored alternative segment since its launch.

Gavin D. K. Hattersley: Simply spiked Limeade hit shelves in February and where we are still growing distribution of variety pack already holds the number one new item spot for the flavored alternative segment since its launch.

Gavin D. K. Hattersley: Simply sponsored a major media presence during March madness, along with Coors Light Miller Lite will continue to focus on sports as a primary patient point system despite consumers throughout the year.

Gavin D. K. Hattersley: And while it's still early days for our new brand Happy Thursday, which just launched in April we've seen a very positive response from consumers so far.

Gavin D. K. Hattersley: And we look forward to building the brand as we approach the peak summer selling season.

Gavin D. K. Hattersley: So as you can see we are delivering on our long term commitment to grow the revenue of our copilot brands with strong overall performance across the world. We are delivering with the strength of high end brands like simply specced in Missouri exceptional and we are beginning to see positive traction on other key areas of our high end portfolio such as Blue Moon.

Gavin D. K. Hattersley: Simply Spiked had a major media presence during March Madness along with Coors Light and Miller Light and will continue to focus on sports as a primary passion point for Simply Spiked consumers throughout the year. And while it's still early days for our new brand, Happy Thursday, which just launched in April, we've seen a very positive response from consumers so far.

Gavin D. K. Hattersley: And finally, we are delivering on our commitment to enhance our capabilities with the large investment in our Golden brewery nearing completion, and a $100 million investment plan for our UK operations over the next five years, which we believe will ensure world class production of our brands today and in the future.

Gavin D. K. Hattersley: And we look forward to building the brand as we approach the peak summer selling season. As you can see, we are delivering on our long-term commitment to grow the revenue of our core power brands with strong overall performance across the world. We are delivering with the strength of high-end brands like Simply Spiked and Madrid Excepcional, and we are beginning to see positive traction on other key areas of our high-end portfolio, such as Blue Moon.

Gavin D. K. Hattersley: We are committed to our overall long term strategy, we have delivered against it over the last three years and we plan to continue delivering against it year over year.

Gavin D. K. Hattersley: With that I'll turn it over to Tracy to share some details on our financials and drivers of our guidance.

Speaker Change: Thank you Kevin we are proud to report another strong quarter.

Gavin D. K. Hattersley: And finally, we are delivering on our commitment to enhance our capability, with a large investment in our Golden Brewery nearing completion and a $100 million investment plan for our UK operations over the next five years, which we believe will ensure world-class production of our brands today and in the future. We are committed to our overall long-term strategy; we have delivered against it over the last three years, and we plan to continue delivering against it year over year. And with that, I'll turn it over to Tracey to share some details on our finances and the drivers of our guide.

Gavin D. K. Hattersley: Net sales revenue grew an impressive 10.

Tracey: <unk> Huang with bank, a strong Americas volume and favorable pricing across both business units.

Tracey: This top line strength, coupled with volume leverage and ongoing cost saving drive meaningful margin expansion, while we continue to invest strongly behind that brand.

Tracey: As a result underlying pre tax income increased 68, 8%.

Tracey: Now many of the details can be found in our earnings release. So I'll focus my prepared remarks on some of the key metrics and drivers of our performance and our outlook for the year.

Tracey I. Joubert: Mr. Gavin, we are proud to report another strong quarter. Net sales revenue grew an impressive 10.1% on Strong America's volume and favorable net pricing across both business units. This top line strength, coupled with volume leverage and ongoing cost savings, drove meaningful margin expansion while we continue to invest strongly behind our brand. As a result, underlying pre-tax income grew 68.8%.

Tracey I. Joubert: At double digit top line growth was driven by both volume and price mix.

Speaker Change: As planned.

Tracey I. Joubert: Global net cost increases in the quarter.

Tracey I. Joubert: We also had favorable mix, which was driven by lower contract brewing volumes.

Tracey I. Joubert: This led to a four 2% increase in net sales per hectoliter driven by both business units.

Tracey I. Joubert: Financial volume increased five 7% driven by the Americas.

Tracey I. Joubert: Now, many of the details can be found in our earnings release and slides, so I'll focus my prepared remarks on some of the key metrics and drivers of our quarterly performance and our outlook for the year. Our double-digit top line growth was driven by both volume and price mix. As planned, we executed global net pricing increases in the quarter. We also had favorable mix, which was driven by lower PEPs contract brewing volume.

Tracey I. Joubert: In the UAE financial volume increased seven 6%, despite an approximate 3% or nearly 350000 hectoliter and maybe headwind related to the exit of low margin contract brewing volume.

Tracey I. Joubert: Our U S domestic shipments benefited not only from continued strong demand, but also shipment timing.

Tracey I. Joubert: We typically build inventories in the first quarter hit a peak season, but this year, we both more than usual in the debate.

Tracey I. Joubert: This led to a 4.2% increase in net sales per hectoliter driven by both business units. Financial volume grew 5.7%, driven by the Americas. In the U.S., financial volume increased 7.6 percent, despite an approximate 3 percent, or nearly 350,000 hectoliters, America's headwind related to the exit of low-margin capped contract brewing volume. Have U.S. domestic shipments benefited not only from continued strong demand but also shipment timing? We typically build inventories in the first quarter ahead of peak season, but this year we built more than usual in the U.S. This was due to elevated consumer demand and measures taken under our Contingency Plan related to the Fort Worth Brewery strike that commenced in mid-February.

Tracey I. Joubert: This was due to elevated consumer demand and measures taken under our contingency plan related to the 40th brewery strike that commenced in mid February.

Tracey I. Joubert: For context, this year, our first quarter shipments to distributors exceeded brand volume.

Tracey I. Joubert: 750000 hectoliter, while in the prior year first quarter shipments exceeded brand volumes by roughly 100000 hits deleted.

Tracey I. Joubert: This Jewish shipment timing was a driver in the financial volume growth exceeding brand volume guide.

Tracey I. Joubert: Consolidated brand volume growth was four 4% with growth in both business units.

Tracey I. Joubert: And maybe Chris growth was led by the UE, which was up five 8%.

Tracey I. Joubert: The growth was driven by continued strength of our core brands with Coors light and banquet each at double digits and Melilot up high single digits.

Tracey I. Joubert: For context, this year, our first quarter shipments to distributors exceeded brand volume by over 750,000 hectoliters, while in the prior year, first quarter shipments exceeded brand volumes by roughly 100,000 hectoliters. This U.S. shipment timing was a driver in financial volume growth exceeding brand volume growth. Consolidated brand volume growth was 4.4%, with growth in both business units. America's growth was led by the US, which was up 5.8%.

Tracey I. Joubert: In addition, our key innovations like Synthes stocked all said please.

Tracey I. Joubert: Canada also contributed to brand volume growth.

Tracey I. Joubert: While the Canadian industry has improved since the fourth quarter it remains challenged.

Tracey I. Joubert: We continued to take meaningful volume sheet, increasing brand volume by three 6% driven by.

Tracey I. Joubert: Premium portfolio.

Tracey I. Joubert: The growth was driven by a continued strength of our core brands, with Coors Light and Banquet each up double digits, and Miller Lights up high single digits. In addition, key innovations like Simply Sparked also grew. Canada also contributed to brand volume growth. However, while the Canadian industry has improved since the fourth quarter, it remains challenged.

Tracey I. Joubert: In EMEA and APAC brand volume increased one 9% driven by.

Tracey I. Joubert: In central and eastern Europe as inflation pressures ease.

Tracey I. Joubert: We offset by challenges in the UK with platelets.

Tracey I. Joubert: Okay.

Tracey I. Joubert: Turning to cost underlying cost of goods sold per hectoliter was up a modest <unk> 9%.

Tracey I. Joubert: Still, we continue to take meaningful volume share, increasing brand volume by 3.6% driven by our above-premium portfolio. In EMEA and AIPAC, brand volume increased 1.9%, driven by growth in Central and Eastern Europe as inflation pressures eased, partly offset by challenges in the UK off-premise. Turning to costs, underlying cost of goods sold for Hexleader was up a modest 0.9%.

Tracey I. Joubert: Inflation, while moderating continued to be a headwind, but was largely offset by 110 basis point benefit from volume leverage.

Tracey I. Joubert: The volume leverage was driven by the Americas business.

Tracey I. Joubert: Along with lower logistics costs more than offset the impact of direct materials and manufacturing inflation, which resulted in americas' underlying cost of goods for the hip davita being essentially flat.

Tracey I. Joubert: In EMEA and APAC underlying cost of goods sold per hectoliter increased three 3%, which was a significant improvement from last year the.

Tracey I. Joubert: Inflation, while moderating, continued to be a headwind but was largely offset by a 110 basis point benefit from volume leverage. Volume leverage was driven by America's business. This, along with lower logistics costs, more than offset the impacts of direct materials and manufacturing inflation, which resulted in America's underlying cost of goods sold per hectoliter being essentially flat.

Tracey I. Joubert: The increase was due to higher direct materials and logistics costs.

Tracey I. Joubert: Well as premium amortization of our portfolio.

Tracey I. Joubert: We continue to and based upon me behind our brands globally, increasing marketing spend for our core power brands in particular.

Tracey I. Joubert: This included showing up in a big way in lab coats at the Super Bowl March Madness, and the API.

Tracey I. Joubert: In EMEA and APAC, the underlying cost of goods sold per hectoliter increased 3.3%, which was a significant improvement from last year. The increase was due to higher direct materials and logistics costs, as well as premiumization of our portfolio. We continue to invest strongly behind our brands globally, increasing marketing spend for our core power brands in particular. This included showing up in a big way in live sports at the Super Bowl, March Madness, and the FA Cup, as well as supporting the launch of the new Blue Moon campaign.

Tracey I. Joubert: As well as supporting the launch of the new Blue Moon campaign.

Tracey I. Joubert: Okay.

Tracey I. Joubert: Turning to capital allocation, we deployed $144 million in capital projects, which support ongoing productivity and cost savings programs as well as our sustainability initiatives.

Tracey I. Joubert: Golden Brewery Modernisation project, which is nearing completion is a great example of this.

Tracey I. Joubert: And we continue to return cash to shareholders.

Tracey I. Joubert: Raised our quarterly dividend again by 7% and we're active in executing our $2 billion share repurchase program that was announced last October.

Tracey I. Joubert: Turning to capital allocation, we deployed $144 million in capital projects, which support ongoing productivity and cost savings programs, as well as our sustainability initiative. Our Golden Brewery Modernization Project, which is nearing completion, is a great example of that, and we continue to return cash to shareholders. We raised our quarterly dividend again by 7%, and we're active in executing our $2 billion share repurchase program that was announced last October. Utilizing our sustained and opportunistic approach, we repurchased 1.8 million shares for a total cost of approximately $110 million during the quarter. Since the inception of the plan in the fourth quarter of 2023, we have already repurchased 4.3 million shares for a total cost of approximately $260 million. Now, let's discuss our

Tracey I. Joubert: Utilizing a sustained and opportunistic approach, we repurchased one 8 million shares for a total cost of it.

Tracey I. Joubert: We're going to be a $110 million in the quarter.

Tracey I. Joubert: Since the inception of the plan in the fourth quarter of 2023, we have already repurchased four 3 million shares for a total cost of approximately $260 million.

Tracey I. Joubert: Now, let's discuss our outlook.

Tracey I. Joubert: We are reiterating our 2024 guidance given that we are early in the year and in particular, our caution around the U S and Canada peer industries, which we have shown.

Tracey I. Joubert: We kept shown accelerated softening in early April we believe that this isn't it prudent approach to take.

Tracey I. Joubert: Now while the detailed list of matrix is in our earnings release and slides I'll highlight the primary one.

Tracey I. Joubert: We continue to expect low single digit net sales revenue growth on a constant currency basis.

Tracey I. Joubert: We are reiterating our 2024 guidance; given that we are early in the year and, in particular, our caution around the US and Canada beer industries, which we have shown accelerated softening in early April, we believe that this is a prudent approach to take. Now, while the detailed list of metrics is in our earnings release and slides, I'll highlight the primary one. We continue to expect low single-digit net sales revenue growth on a constant currency basis, mid-single-digit underlying pre-tax income growth on a constant currency basis, mid-single-digit underlying earnings per share growth, and underlying free cash flow of $1.2 billion plus or minus 10%. Now let's talk about our garden's assumption.

Tracey I. Joubert: Mid single digit underlying pretax income growth on a constant currency basis.

Tracey I. Joubert: Mid single digit underlying earnings per share growth and underlying free cash flow of $1 2 billion plus or minus 10%.

Tracey I. Joubert: Now, let's talk about our guidance assumptions.

Tracey I. Joubert: Our goal is typically to ship to consumption for the year and this is true for 2024.

Tracey I. Joubert: So given the strong U S domestic shipment volumes in the third quarter, resulting in a significant gap between shipments and Depletions as a quantified we expect U S brand volumes to exceed shipment volumes during the balance of the year.

Tracey I. Joubert: The termination of the contract brewing agreement at the end of this year is expected to be a $1 6 million hectoliter headwind to Americas financial volumes over the remaining three quarters of the year.

Tracey I. Joubert: Our goal is typically to shift to consumption for the year, and this is true for 2024. So given the strong U.S. domestic shipment volumes in the first quarter, resulting in a significant gap between shipments and depletions, as I quantified, we expect U.S. brand volumes to exceed shipment volumes during the balance of the year. The termination of the PAPS contract brewing agreement at the end of this year is expected to be a 1.6 million hectoliter headwind to America's financial volume over the remaining three quarters of the year.

Tracey I. Joubert: We expect positive product mix and we continue to expect pricing in the U S and Canada to be between one and 2% in line with historical averages and for pricing in EMEA and APAC to trend in line with inflation.

Tracey I. Joubert: We also expect premium amortization supported by our expanding above premium portfolio.

Tracey I. Joubert: Key brands like <unk> with a strong momentum in the UK along with its recent expansion into Canada in Bulgaria, as well as by anticipated improvements in the Blue Moon brand family.

Tracey I. Joubert: We expect positive prospects, and we continue to expect pricing in the US and Canada to be between 1% and 2% in line with historical averages, and for pricing in EMEA and APAC to trend in line with inflation. We also expect premiumization to be supported by our expanding above-premium portfolio, which includes brands like Madrid, with strong momentum in the UK, along with its recent expansion into Canada and Bulgaria, as well as anticipated improvements in the Blue Moon brand family.

Tracey I. Joubert: It also includes flavor as we enter the summer with three winning flavors with simply spot as well as our new innovation happy Tuesday.

Tracey I. Joubert: We believe these brands should keep us moving towards our medium term goal of reaching approximately one third of our global niche brand revenue from above premium portfolio.

Tracey I. Joubert: On the cost side, we expect underlying cost of goods sold per hectoliter to increase due to continued, albeit moderating inflation pressure, including material conversion costs.

Tracey I. Joubert: Related to premium amortization, and lower volume leverage impact as compared to 2023 and the first quarter of 2024.

Tracey I. Joubert: It also includes flavor, as we enter the summer with three winning flavors for Simply Spiced, as well as our new innovation, Happy Thursday. We believe these brands should keep us moving toward our medium-term goal of reaching approximately one-third of our global net brand revenue from our above-premium portfolio. On the cost side, we expect underlying costs of this toll per hectoliter to increase due to continued, albeit moderating, inflationary pressure, including material conversion costs.

Tracey I. Joubert: We continue to expect in G&A for the year to be roughly in line with 2023.

Tracey I. Joubert: This entails strongly supporting our core power brands and key innovations globally.

Tracey I. Joubert: This is especially true around peak season, as we lean into media at both local and national levels and with robust retail programming that drive consumer engagement.

Tracey I. Joubert: In summary, our strong momentum in 2023 has continued into 2024.

Tracey I. Joubert: This shows that our strategy is working with strong brand support of distributor partners and the financial flexibility to balance growth and reinvestment with confidence in our ability to deliver our guidance in 2024 and on a long term growth algorithm in the years to come.

Tracey I. Joubert: Related to premiumization and lower volume leverage impact as compared to 2023 and the first quarter of 2024. However, we continue to expect MGNA's performance for the year to be roughly in line with 2023. This entails strongly supporting our core power brands and key innovations globally. This is especially true around peak season, as we lean into media at both the local and national levels, and with robust retail programming that drives consumer engagement. In summary, our strong momentum from 2023 has continued into 2024.

Speaker Change: And with that we look forward to answering your questions operator.

Tracey I. Joubert: Okay.

Speaker Change: Thank you we will now open up for Q&A, if you'd like to ask a question on todays call. Please press star followed by one on your telephone keypad to withdraw your question. Please press star followed by <unk>.

Tracey I. Joubert: Our first question today comes from Bonnie Herzog from Goldman Sachs. Your line is now open. Please proceed.

Speaker Change: Alright. Thank you good morning, everyone.

Tracey I. Joubert: This shows that our strategy is working with strong brands, supportive distributor partners, and the financial flexibility to balance growth and reinvestment with confidence in our ability to deliver our guidance in 2024 and on our long-term growth algorithm in the years to come. And with that, we look forward to answering your questions.

Speaker Change: I guess I have a question on your quarter and then guidance.

Speaker Change: I guess first where your Q1 results better than you expected or more in line with your expectations and maybe I'm asking specifically on the shipments given some of the items you called out.

Tracey I. Joubert: And then you did reaffirm your guidance for the year out of Prudence, given the softer industry data we're seeing in early April.

Operator: Thank you. We will now open up for Q&A. If you would like to ask a question on today's call, please press star followed by one on your telephone keypad. To withdraw your question, please press star followed by two. Our first question today comes from Bonnie Herzog from Goldman Sachs. Your line is now open, please proceed.

Bonnie Herzog: Could you, maybe just give us a little bit more color on what youre seeing and if some of your concern.

Bonnie Herzog: Is that the weakness could be more structural in nature, I guess I'm just trying to understand how this impacts your positioning, especially given all the shelf space you've gained recently thank you.

Bonnie Herzog: Thanks, Tony and good morning.

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

Bonnie Herzog: Look I would say for the first quarter shipments certainly were higher than what we were expecting.

Gavin D. K. Hattersley: I guess I have a question on your quarter and then guidance. First, were your Q1 results better than you expected or more in line with your expectations? And maybe I'm asking specifically about the shipments, given some of the items you called out. And then, you know, you did reaffirm your guidance for the year out of prudence, given, you know, the softer industry data we're seeing in early April. So could you maybe, you know, just give us a little bit more color on what you're seeing?

Gavin D. K. Hattersley: We were obviously planning to ship higher than in our brand.

Gavin D. K. Hattersley: Our volumes, but.

Gavin D. K. Hattersley: Our supply chain team did a tremendous job actually exceeding our expectations each and every week.

Gavin D. K. Hattersley: As you know.

Gavin D. K. Hattersley: We have struck down.

Gavin D. K. Hattersley: Fort worth and we have a contingency plan in the contingency plan is working better than we had.

Gavin D. K. Hattersley: Originally expected. So short answer is yes, Q1 was better than we would expect obviously that over shipment to come back.

Gavin D. K. Hattersley: Over the next nine months, because we always try and ship.

Gavin D. K. Hattersley: And if some of your concern, you know, is that the weakness could be more structural in nature? I guess I'm just trying to understand, you know, how that. Transcript by Rev.com Page of Thanks, Bonnie, and good

Gavin D. K. Hattersley: Pretty much to consumption over the year.

Gavin D. K. Hattersley: Given the strong.

Gavin D. K. Hattersley: How strong summer always is for us from a shipment point of view, we would expect more of that to come back in the back half of the year than we would in the in the front half of the year.

Gavin D. K. Hattersley: Thanks, Bonnie, and good morning. Look, I would say for the first quarter, our shipments certainly were higher than we were expecting. You know, we were obviously planning to ship higher than our brand of volumes. But, you know, our supply chain team did a tremendous job actually exceeding our expectations each and every week. You know, as you know, we have a strike down in Fort Worth, and we have a contingency plan. And the contingency plan is working better than we had originally expected. So the short answer is yes, Q1 was better.

Gavin D. K. Hattersley: From an overall.

Gavin D. K. Hattersley: Industry.

Gavin D. K. Hattersley: Point of view.

Gavin D. K. Hattersley: We didn't start off that well from an industry point of view and that was mostly attributable we believe to broader weather conditions across the country.

Gavin D. K. Hattersley: March did come back quite nicely, although it has slowed down but it came back.

Gavin D. K. Hattersley: Third to January and February and then.

Gavin D. K. Hattersley: April has been pretty choppy from an industry point of view the first two weeks were not good.

Gavin D. K. Hattersley: Obviously, there were some dislocations there.

Gavin D. K. Hattersley: Timing issues like like Easter, which which moved into into Q1, but it's been it's been pretty noisy in the third week actually was it was a little bit actually quite a lot better than the first two weeks of April.

Gavin D. K. Hattersley: And we would expect, obviously, that overshipment to come back over the next nine months because we always try and ship pretty much to consumption over the year. Given how, you know, how strong summer always is for us from a shipment point of view, we would expect more of that to come back in the back half of the year than we would in the front half of the year. From an overall, you know, industry point of view, the year didn't start off that well from an industry point of view, and that was mostly attributable, we believe, to broader weather conditions across the country.

Gavin D. K. Hattersley: A lot of volatility at the moment, a lot of holiday mismatches and that drove us to be just a little bit more cautious about the outlook for the industry.

Gavin D. K. Hattersley: As I've said in the past the industry.

Gavin D. K. Hattersley: We will largely land on house summit goes because it's obviously a really big.

Gavin D. K. Hattersley: Selling.

Gavin D. K. Hattersley: Part of the year in and so it will have a much better idea of where the industry is going to land for the full year as we as we start to head into summer. So it just provides a little bit of context.

Gavin D. K. Hattersley: Our next question comes from Andrea Teixeira from Jpmorgan. Your line is now open. Please go ahead.

Gavin D. K. Hattersley: March did come back quite nicely, although it was still down, but it came back compared to January and February. And then, you know, April's been pretty choppy from an industry point of view. The first two weeks were not good. You know, obviously, there were some dislocations there and timing issues like Easter, which moved into Q1, but it's been pretty noisy. Now, the third week actually was a little better, actually quite a lot better than the first two weeks of April.

Gavin D. K. Hattersley: Yes.

Speaker Change: Thank you operator, and good morning, everyone.

Gavin D. K. Hattersley: Okay.

Gavin D. K. Hattersley: Given what you said now.

Gavin D. K. Hattersley: April.

Speaker Change: I mean, a couple of questions. There if you can help us with to Str's in April and where do you think the softness coming from is that from the carrier.

Speaker Change: Ross, Okay income levels will mostly low income consumer and on that if youre seeing anything to call out in the economy segment.

Gavin D. K. Hattersley: And as we look at to your point a lot of Choppiness in the category.

Gavin D. K. Hattersley: So, you know, a lot of volatility at the moment, a lot of holiday mismatches, and that drove us to be just a little bit more cautious about the outlook for the industry. And as I've said in the past, the industry will largely depend on how summer goes, because it's obviously a really big selling part of the year. And so we'll have a much better idea of where the industry is going to land for the full year as we start to head into summer. So, you know, it just provides a little bit of context, Bonnie.

Gavin D. K. Hattersley: As we look at the tracked channel data and as you lap what are you going to lap now the benefits from what happened to your competitor how can we judge your shelf gains which are substantial of course, you called out in the last earnings call and.

Bonnie Herzog: And I'm, assuming you can elaborate a little bit more on that so how can we judge your share gains and how sustainable you Scott in your prepared remarks that in Q a lot of that is sustainable. So if you can elaborate on that first one day category STR and Dan on your shelf space gains. Thank you.

Operator: Our next question comes from Andrea Teixeira from JP Morgan. Your line is now open, please go ahead.

Andrea Teixeira: Thanks Andrea.

Andrea Teixeira: Thank you, operator. And good morning, everyone. So I was hoping, Gavin, what you said now about April. I mean, there are a couple of questions there.

Andrea Teixeira: There are a lot of questions in that.

Andrea Teixeira: That question, So let me try and let me try and cover it off.

Andrea Teixeira: Let me start with April right.

Andrea Teixeira: Obviously I understand the desire to monitor the industry on a on a week by week basis, as we lap the upheaval, which we which we saw in 2023.

Gavin D. K. Hattersley: If you can help us with the STRs in April, and where do you think the softness is coming from? Is that from the carrier across all income levels, or mostly low-income consumers? And on that, if you're seeing anything to call out in the economy segment? And as we look at your point, a lot of sharpness in the category, as we look at the track channel data, and as you lap what you're going to lap now, the benefit from what happened to your competitor, how can we judge your shelf gains, which are substantial?

Gavin D. K. Hattersley: But we did highlight months ago that Q2 comps are going to have a lot of noise and it was going to be hard to credibly measure what was what was happening on a on a weekly basis and if we if we stand back and look and look at the big picture items the decline of both <unk>.

Gavin D. K. Hattersley: And the explosive growth that we saw in our brands was steady with staggered over several weeks it didn't it didn't just happen overnight.

Gavin D. K. Hattersley: Of course, you pointed that out in the last earnings call, and I'm assuming you can elaborate a little bit more on that. So how can we judge your share gains and how sustainable you said in your prepared remarks that you feel a lot of that is sustainable? So could you elaborate on that, first on the category SCRs and then on your shelf space gains. Thank you.

Gavin D. K. Hattersley: So that was last year and obviously the industry took pricing this spring, which didn't happen in the spring of 2023.

Gavin D. K. Hattersley: As I said in response to Bonnie's question that there was an Easter mismatch since since the holiday was in the second quarter of last year and in the first quarter of this year.

Gavin D. K. Hattersley: And as you say the shelf resets.

Gavin D. K. Hattersley: Thanks, Andrea. Yeah, a lot of questions in that, in that question. So let me try and let me try and cover it all off.

Gavin D. K. Hattersley: Which all going to give our core brands.

Gavin D. K. Hattersley: Substantially more space in stores.

Gavin D. K. Hattersley: Across America, 13% for Formula Lodge in Coors light and.

Gavin D. K. Hattersley: And let me start with April, right? I mean, obviously, I understand the desire to monitor the industry on a week by week basis as we leave the upheaval which we saw in 2023. But we did highlight months ago that Q2 comms were going to have a lot of noise, and it was going to be hard to credibly measure what was happening on a weekly basis.

Speaker Change: And almost 20% for Coors banquet, which is not a small brand for us.

Gavin D. K. Hattersley: And the vast majority of stores Havent completed the shelf resets the shelf adjustments yet so.

Gavin D. K. Hattersley: We know for effect that it has a lot of upside to.

Gavin D. K. Hattersley: To come from that.

Gavin D. K. Hattersley: I don't believe any of us have seen such a dramatic shift in shelf space before so I don't have already formula to offer you from a from a volume perspective, but what I do know.

Gavin D. K. Hattersley: And if we stand back and look at the big picture, right, I mean, the decline by the light, and the explosive growth that we saw in our brands was staggered over several weeks. It didn't just happen overnight. So that was last year. And obviously, the industry took pricing seriously this spring, which didn't happen in the spring of 2023. As I said, in response to Bonnie's question, there was an Easter mismatch since the holiday was in the second quarter of last year and in the first quarter of this year.

Gavin D. K. Hattersley: What I do believe.

Gavin D. K. Hattersley: Is that more space equals more volume, it's not a <unk>.

Gavin D. K. Hattersley: <unk> seem to be getting all this extra space.

Gavin D. K. Hattersley: It's hard to see how.

Gavin D. K. Hattersley: 13% extra shelf space, and 20% extra and Coors banquet.

Gavin D. K. Hattersley: That doesn't translate into into into a positive.

Gavin D. K. Hattersley: Outcome from an overall industry point of view I think the answer there is a little more challenging.

Gavin D. K. Hattersley: We.

Gavin D. K. Hattersley: And there are, as you say, the shelf resets, which are going to give our core brands substantially more space in stores across America, 13% for Formula Light and Coors Light and almost 20% for Coors Brankwood, which is not a small brand for us. And, you know, the vast majority of stores haven't completed their shelf resets or their shelf adjustments yet. So, you know, we know for a fact that there's a lot of upside to come from that. I don't believe any of us have seen such a dramatic shift in shelf space before. So I don't have a ready formula to offer you from a volume perspective.

Gavin D. K. Hattersley: We haven't seen.

Gavin D. K. Hattersley: Any data that suggests that.

Gavin D. K. Hattersley: <unk> one is for example, which I know is often cited as an issue that has quieted down.

Gavin D. K. Hattersley: We don't have data to suggest that that's having a meaningful impact on on the alcohol space I do think that we're living in very volatile times I do think that inflation has proven to be a little more sticky than folks expected in interest rates.

Gavin D. K. Hattersley: Sure.

Gavin D. K. Hattersley: Higher and staying full for longer I do see cautious behavior from consumers.

Gavin D. K. Hattersley: When you lump all of these things together that does as Tracey said in her remarks lead to us being a little bit more cautious and prudent as to as to how we see the industry.

Gavin D. K. Hattersley: But what I do know, and what I believe is that more space equals more volume. It's not a bad thing to be getting all this extra space. It's hard to see how 13% extra shelf space and 20% extra on Coors Banquet doesn't translate into a positive outcome. But from an overall industry point of view, I think the answer there is a little more challenging. We haven't seen any data that suggests that, you know, GLP-1, for example, which I know is often cited as an issue, although that has quietened down, we don't have data to suggest that it's having a meaningful impact on the alcohol space.

Gavin D. K. Hattersley: Going forward, but at the same time, we are confident in our ability to drive.

Gavin D. K. Hattersley: Our guidance this year for I think the third year in a row.

Gavin D. K. Hattersley: We are confident in our long term algorithm.

Speaker Change: So I hope that helps and then I hope I covered off on all your questions in that one question.

Gavin D. K. Hattersley: Okay.

Gavin D. K. Hattersley: Our next question comes from Bill Kirk from Roth.

Speaker Change: Your line is now open. Please proceed.

Speaker Change: Okay. Thank you everyone.

Gavin D. K. Hattersley: So after <unk> with the underlying income B guidance now seems to imply underlying income down low single digits for the rest of the year and I guess the question is why would why would that be price mix is ahead of Cogs per hectoliter inflation.

Gavin D. K. Hattersley: I do think that we're living in very volatile times. I think inflation is proving to be a little more sticky than people expected, and interest rates are higher and will stay for longer. So I do see cautious behavior from consumers. And when you lump all of these things together, that does, as Traci said in her remarks, lead to us being a little bit more cautious and prudent as to how we see the industry going forward.

Gavin D. K. Hattersley: M&A is flat.

Gavin D. K. Hattersley: G&A is flat and you have the shelf space gains why why within next nine.

Gavin D. K. Hattersley: Nine months be down year over year for underlying underlying income.

Speaker Change: Well, thanks, Paul and good morning to you look I think I would draw your attention to the comment I just made around around shipments right. If you. If you look at what happened in Q1, we were about 750000 Hector leaders.

Gavin D. K. Hattersley: But at the same time, we are confident in our ability to drive to our guidance this year for the third year in a row, and we're confident in our long-term strategy. So I hope that helps, Andrea, and I hope I covered off all your questions in that one question. Our next question comes from Bill Kirk from Ross MKM. Your line is now open; please proceed. Hey, thank you, everyone. So after 1Q with the underlying income of B, the guidance

William Kirk: <unk> shipped higher than than brand volume. If you look at what we did last year. It was a 100000 hectoliter is higher than brand volume.

William Kirk: So we have 650000 hectoliter is above consumption, which we would expect to come back in the in the next nine months, mostly as I've stated in the in the second half of the year.

William Kirk: This was a little better than we had originally expected as is.

Operator: Our next question comes from Bill Kirk from Ross MKM. Your line is now open; please proceed.

William Kirk: Responded to bonnie's question because our.

William Kirk: Our supply chain is doing a tremendous job keeping up with with supply in our contingency plan is where we are outperforming our contingency plan every single week.

William Kirk: Well, thanks, Paul. And good morning to you.

Gavin D. K. Hattersley: Look, I think I would draw your attention to the comment I just made about shipments, right? If you if you look at what happened in Q1, we were about 750,000 hectoliters shipped higher than brand volume. If you look at what we did last year, it was 100,000 hectoliters higher than brand volume. And so we have 650,000 hectoliters above consumption, which we would expect to come back in the in the next nine months, mostly, as I said, in the second half of the year.

Gavin D. K. Hattersley: We did very deliberately increase our shipments in Q1, so that we could meet the extra momentum that we expect and that we could meet the extra demand that the shelf resets will will give us, but I would draw your attention to that as being the primary driver as we as we head into the into the last nine months of the year.

Gavin D. K. Hattersley: Okay.

Gavin D. K. Hattersley: Our next question comes from Peter Grom from UBS. Your line is now open. Please go ahead.

Speaker Change: Thanks, operator, and good morning, everyone.

Gavin D. K. Hattersley: I don't want to kind of.

Speaker Change: Peter Dead horse here, but Kevin you and the team had been pretty confident in your ability to hold share as we lap. These gains we can all look at the data and I don't want to overemphasize that because we are starting to see of course lines of Miller Lite lose share now it doesn't seem to be at the expense of your largest competitor, but just maybe following up on Andrea's question are you kind of assuming that.

Gavin D. K. Hattersley: This was a little better than we had originally expected, as I responded to Bonnie's question, because our supply chain is doing a tremendous job keeping up with supply, and our contingency plan is, well, we're outperforming our contingency plan every single week. We did very deliberately increase our shipments in Q1 so that we could meet the extra momentum that we expect and that we could meet the extra demands that the shelf resets will give us. But I would draw your attention to that as being the primary driver, Bill, as we head into the last nine months of the year.

Gavin D. K. Hattersley: What we're seeing in the last couple of weeks here is really noisy as this as the shelf resets happen you're going to see kind of an improved making sure sequentially and then just following up on that I think you mentioned that.

Bill: A large percentage of the shelf resets are still to come is there any way you can help us understand what percentage of that is or how much has happened already.

Operator: Our next question comes from Peter Grom from UBS. Your line is now open, please go ahead.

Gavin D. K. Hattersley: Yes.

Peter K. Grom: Thanks Peter.

Peter K. Grom: Yes look I mean, obviously from an April point of view and the Choppiness I'll refer you to my response to <unk>.

Peter K. Grom: Thanks, Operator. Good morning, everyone.

Peter K. Grom: Maybe it was Andrew's question, Bonnie is I'm not sure but.

Gavin D. K. Hattersley: I don't want to kind of beat a dead horse here, but Gavin, you and the team have been pretty good in your ability to hold shares as we play these games. And we can all look at the data, and I don't want to overemphasize it, but we are starting to see both Coors Light and Miller Light lose share. Now, it doesn't seem to be at the expense of your largest competitor, but just maybe, following up on Andrea's question, are you kind of assuming that what we've seen in the last couple of weeks here is really just noise?

Peter K. Grom: We're confident we can let the results that.

Gavin D. K. Hattersley: That we had from from last year, we believe that we've created a new foundation on which on which to grow.

Gavin D. K. Hattersley: She has held for more than a year now.

Gavin D. K. Hattersley: <unk>.

Gavin D. K. Hattersley: First quarter share gains consistent with the gains that we experienced in the second half of 2023.

Gavin D. K. Hattersley: <unk> brands in the U S now hold.

Gavin D. K. Hattersley: Around 15, six volume share of the industry Thats up over two share points.

Gavin D. K. Hattersley: From the from the beginning of 2023 and as I said earlier, we expect to see Choppiness in Q2.

Gavin D. K. Hattersley: And as these shelf resets happen, you're going to see kind of an improvement in share sequentially. And then, just following up on that, I think you mentioned that a large percentage of the shelf resets are still to come. Is there any way you can help us understand what percentage of that is or how much has happened already? Thanks.

Gavin D. K. Hattersley: 2023 games.

Gavin D. K. Hattersley: We are at their highest so I would be careful about drawing conclusions from week to week Shay data.

Speaker Change: This this month.

Gavin D. K. Hattersley: As I said our share gains in Q1 are consistent with where we were in the second half of last year and then in April despite starting to cycle. Some of the big gains we had last year.

Gavin D. K. Hattersley: Thanks, Peter. Yeah, look, I mean, obviously, from an April point of view, in the choppiness, I'll refer you to my response to Maybe it was Andrea's question or Bonnie's, I'm not sure. But, you know, we're confident we can match the results that we had from last year; we believe that we've created a new foundation on which to grow. Our shares have held for more than a year now. And, you know, our first quarter share gains are consistent with the gains that we experienced in the second half of 2023. Our core brands in the US now hold around 15.6 volume share of the industry.

Gavin D. K. Hattersley: Rolling 52 week volume share, which is around 23 $23 one I think.

Gavin D. K. Hattersley: Three weeks in is exactly the same as it was at the at the end of it.

Gavin D. K. Hattersley: At the end of Q1 from a shelf resets point of view.

Gavin D. K. Hattersley: We other draw or validate about 50000 planet grants.

Gavin D. K. Hattersley: In a year end and so we've got a really good understanding of whats of what's going to happen from a from a shelf reset point of view and we feel confident in the numbers that we've given the 13% extra for Coors light and Miller launch an almost 20% extra.

Gavin D. K. Hattersley: That's up over two share points from the beginning of 2023. As I said earlier, we expect to see choppiness in Q2, when the 2023 gains were at their highest. So I would be careful about drawing conclusions from week-to-week share data this month. You know, as I said, our share gains in Q1 are consistent with where we were in the second half of last year. And in April, you know, despite starting to cycle some of the big gains we had last year, our rolling 52-week volume share, which is around 23.1, I think, three weeks in, is exactly the same as it was at the end of Q1.

Gavin D. K. Hattersley: For Coors banquet.

Gavin D. K. Hattersley: As to timing as I said, the vast majority of our of our retailers.

Gavin D. K. Hattersley: We have not completed the this shelf resets. This takes place from April can go all the way through to July actually so.

Gavin D. K. Hattersley: We'll expect to see the benefits of that as we as we hit Q2 Peter.

Gavin D. K. Hattersley: Our next question comes from Steve Powers from Deutsche Bank. Your line is now open. Please go ahead.

Speaker Change: Hey, good morning.

Speaker Change: Hi, Kevin.

Speaker Change: I just wanted to.

Gavin D. K. Hattersley: I mean, you've talked about this a little bit, but just I want to contrast, your comments today again.

Gavin D. K. Hattersley: From a shelf reset point of view, you know, we either draw or validate about 50,000 planograms a year. And so we've got a really good understanding of what's going to happen from a shelf reset point of view. And we feel confident in the numbers that we've given. It's 13% extra for Coors Light and Miller Light and almost 20% extra for Coors Banquet. As to timing, as I said, the vast majority of our retailers have not completed their shelf resets. This takes place from, you know, April can go all the way through to July, actually. So, you know, we'll expect to see the benefits of that as we head through Q2, Peter.

Gavin D. K. Hattersley: Comments at Cagny, when you sounded a lot more upbeat about.

Gavin D. K. Hattersley: Underlying trends across the industry and the prospects of gear at the time today.

Gavin D. K. Hattersley: It's much more cautionary just a few months later.

Gavin D. K. Hattersley: Despite I think very reasonable guidance to us to not overly focused on a few weeks ago choppy data so.

Gavin D. K. Hattersley: Sure.

Gavin D. K. Hattersley: Is this just tactical prudence.

Speaker Change: Are you seeing things that are making you.

Speaker Change: Kind of rethink some of the optimism at least I heard you express it at Cagny. Thank you.

Peter: Thanks, Steve look from an overall industry point of view I mean, we are more cautious right I mean, the first two weeks of April were pretty grim.

Gavin D. K. Hattersley: From an industry point of view and did bounce back a little bit in the third week, but was still down.

Operator: Our next question comes from Steve Powers from Deutsche Bank. Your line is now open, please go ahead.

Stephen Robert Powers: Yes, I would say from an overall industry point of view, we are more cautious.

Stephen Robert Powers: Hey, good morning. Thanks.

Gavin D. K. Hattersley: Hi Gavin. Um, you know, I just wanted to, I mean, we talked about this a little bit, but just I want to contrast your comments today again. Comments at Cagney, when you sounded just a lot more upbeat about, you know, underlying trends across the industry and the prospects for beer, the tone today seems just much more cautionary, just a few months later, despite, I think, very reasonable guidance to us to not overly focus on a few weeks of choppy data. So, you know, is that just tactical prudence, or are you seeing things that are Thank you. Thank you.

Stephen Robert Powers: Since since Cagny as more data has come in and particularly the first the first couple of weeks of April now Steve.

Gavin: Steve I think it's important that we do put.

Gavin D. K. Hattersley: Sure.

Gavin D. K. Hattersley: That cautious note they given given what we've just seen over the last three weeks.

Gavin D. K. Hattersley: We won't know exactly what's going to happen with the U S beer industry until I think we are.

Gavin D. K. Hattersley: With through summer and we see what transpires in.

Gavin D. K. Hattersley: In summer.

Gavin D. K. Hattersley: No real guidance point of view, we are confident that we can deliver our guidance that we've issued this year and thats and Thats why we reiterated despite the caution that we have.

Gavin D. K. Hattersley: In the overall industry trends that we're that we're seeing at the moment.

Gavin D. K. Hattersley: Our next question comes from Bryan Spillane from Bank of America. Your line is now open. Please go ahead.

Gavin D. K. Hattersley: Thanks, Steve. Look, from an overall industry point of view, I mean, we are more cautious, right? I mean, the first two weeks of April were pretty grim from an industry point of view and did bounce back a little bit in the third week, but we're still down. So, yes, I would say from an overall industry point of view, we are more cautious since CAGNY as more data has come in and, you know, particularly the first The first couple of weeks of April now, you know, Steve, I think it's important that we do put, you know, that that cautious note out there, given given what we've just seen over the last few weeks, but, you know, we won't know exactly what's going to happen with the US fair industry until I think we're, we're through summer and we see what transpires in in in summer.

Speaker Change: Excuse me thanks, operator, good morning, Kevin Tracey.

Steve: I'd like to get your perspective on two things if I can Gavin one is just if you could give us a sense of.

Gavin D. K. Hattersley: On versus off premise.

Gavin D. K. Hattersley: Performance, both I guess in the Americas and in Europe.

Gavin D. K. Hattersley: Actually specifically UK just trying to understand.

Gavin D. K. Hattersley: If theres any distinction in the softness we saw in the U S. Whether it's more concentrated on on or off trade and then just the.

Gavin D. K. Hattersley: The second is.

Gavin D. K. Hattersley: Is just simply.

Gavin D. K. Hattersley: As your.

Gavin D. K. Hattersley: Looking at the.

Gavin D. K. Hattersley: The Americas throughout the U S and the.

Gavin D. K. Hattersley: From a noble guidance point of view, we are confident that we can deliver our guidance that we've issued this year. And that's, and that's why we've reiterated it despite the caution that we have in the overall industry trends that we're seeing at the moment.

Gavin D. K. Hattersley: Off premise.

Gavin D. K. Hattersley: Is there anything we can read into just how volumes are performing around.

Gavin D. K. Hattersley: I guess like merchandising events, I guess I'm trying to understand our consumer stocking up win.

Operator: Our next question comes from Bryan Spillane from Bank of America. Your line is now open, please go ahead.

Bryan Spillane: There's promotions is there less stock up behavior.

Bryan Spillane: Hey, excuse me. Thanks, operator. Good morning, Gavin, and Tracey.

Bryan Spillane: Trying to understand if there's anything we can glean in terms of the.

Gavin D. K. Hattersley: I'd like to get your perspective on two things, if I can, Gavin. One is just, if you could give us a sense of on versus off-premise performance, both, I guess, in the Americas and in Europe, actually, specifically UK, just trying to understand If there's any distinction, you know, in the softness we saw in the US, whether it's more concentrated on, on or off trade, and then just the second is just simply, You know, as you're looking at the Americas or at the US and the off premise Is there anything we can read into just how volumes are performing around, I guess, like merchandising events?

Bryan Spillane: Consumption behavior.

Gavin: Thanks, Brian.

Gavin: Let's look at the UK I think that was the thrust of your earlier first part of your question in the in the UK.

Gavin D. K. Hattersley: The consumer is we've been studying for quite some time now has been quite resilient.

Gavin D. K. Hattersley: Particularly in the face of the of the severe.

Gavin: Inflation that we saw there from an on premise point of view continues to perform well right and from our perspective, we continue to hold.

Gavin D. K. Hattersley: Volume share we are seeing a decline from from our perspective and more broadly rod as there was obviously a fairly large excise tax increase in the off premise specifically to try and close the gap between the off premise.

Gavin D. K. Hattersley: I guess I'm trying to understand, are consumers stocking up when there's promotions? Is there less stock-up behavior? You know, just trying to understand if there's anything we can glean in terms of the kind of, you know, consumption behavior.

Gavin: On premise in the U K from a tax point of view.

Speaker Change: But we are also seeing.

Gavin D. K. Hattersley: Significantly more competitive promotional activities in the off premise in the UK, which we have not followed.

Gavin D. K. Hattersley: Thanks, Brian. And, you know, let's look at the UK. I think that was the thrust of your earlier first part of your question in the UK. You know, the consumer, as we've been saying for quite some time now, has been quite resilient, particularly in the face of the severe inflation that we saw there, from an on premises point of view, continues to perform well, right? And from our perspective, we continue to hold volume share where we are seeing a decline from our perspective, and more broadly, right, there was obviously a fairly large excise tax increase in the off premise specifically to try and close the gap between the off premise and the on premise in the UK from a tax point of view.

Gavin D. K. Hattersley: And so that's impacting our share in the in the off premise in the U K.

Gavin D. K. Hattersley: Negatively on the flipside in central Eastern Europe, we were pretty cautious about that market last year, given the the impacts of inflation.

Gavin D. K. Hattersley: The overall economy.

Gavin D. K. Hattersley: And so on consumers' disposable.

Gavin D. K. Hattersley: Income and thankfully, we are starting to see that trend reverse in this year as consumers confidence.

Gavin D. K. Hattersley: Confidence has improved the disposable income gap has improved because inflation has come down energy prices are.

Gavin D. K. Hattersley: Or a little lower and we're starting to see that flow through in our volumes in central and eastern Europe, So positive from that perspective.

Gavin D. K. Hattersley: As as we've seen.

Gavin D. K. Hattersley: But we are also seeing, you know, significantly more competitive promotional activities in the off premise in the UK, which we have not followed. And so that's impacting our share of the off premise in the UK negatively. On the flip side, in Central Eastern Europe, you know, we were pretty cautious about that market last year, given the impacts of inflation and the overall economy, energy prices, and so on, on consumers' disposable income.

Gavin D. K. Hattersley: Sometimes the on premise in the in the.

Gavin D. K. Hattersley: In the U S still continues to outperform the off premise in the.

Gavin D. K. Hattersley: In our U S markets.

Gavin D. K. Hattersley: And then from a consumer behavior point of view, we're not seeing trade down to.

Gavin D. K. Hattersley: EBIT between price segments, we are seeing I think I made this point last time around brand we are seeing some consumer behavior.

Gavin D. K. Hattersley: Changing.

Gavin D. K. Hattersley: At the two extremes of pack sizes, so more focus on singles and small packs and on the other end of that spectrum more focus on large pack.

Gavin D. K. Hattersley: And, you know, thankfully, we're starting to see that trend reverse this year as consumers' confidence has improved, the disposable income gap has improved because inflation has come down, and energy prices are a little lower. And we're starting to see that flow through in our volumes in Central Eastern Europe. So, positive from that perspective.

Gavin D. K. Hattersley: Consumption with a little bit of a squeeze taking place on that sort of mid to mid tier pack sizes.

Gavin D. K. Hattersley: <unk>.

Gavin D. K. Hattersley: 24 packs I don't have any data that would suggest that consumers' consumption and purchasing behavior has changed.

Gavin D. K. Hattersley: You know, as we've seen for some time now, on-premise in the U.S. still continues to outperform off-premise in our U.S. markets. And then from a consumer behavior point of view, we're not seeing trade-down between price segments. We are seeing, I think I made this point last time around, Brian, we are seeing some consumer behavior changing at the two extremes of our pack sizes. So, you know, more focus on singles and small packs, and on the other end of that spectrum, more focus on large pack consumption with a little bit of a squeeze taking place on that sort of mid-tier pack size of, you know, 12 packs and 24 packs. I don't have any data that would suggest that consumers' consumption and purchasing behavior has changed more meaningfully than that, Brian. We're not seeing that.

Gavin D. K. Hattersley: More meaningfully than that Brian.

Gavin D. K. Hattersley: We're not seeing that.

Gavin D. K. Hattersley: Thanks.

Gavin D. K. Hattersley: Our next question comes from Chris Carey from Wells Fargo Securities. Your line is now open. Please proceed.

Speaker Change: Hi, Good morning, just one follow up and then a question on cash flow just from a.

Gavin D. K. Hattersley: From a regional consideration in the U S have you seen any.

Gavin D. K. Hattersley: Different trends.

Gavin D. K. Hattersley: The region that might lead you to believe that what you are seeing in April is perhaps maybe just weather related versus anything else and then regarding cash.

Speaker Change: Do you have.

Gavin D. K. Hattersley: This plan.

Speaker Change: Obviously, the stock's under pressure to use a bit more cash through the year with the buyback program that you have in being active in the market in Q1, So just perhaps give us any context on how you would be looking at.

Operator: Our next question comes from Chris Carey from Wells Fargo Securities. Your line is now open, please proceed.

Gavin D. K. Hattersley: Leveraging here with your cash flow profile this year.

Operator: Thanks.

Christopher Michael Carey: Thanks, Chris maybe I'll start with the.

Christopher Michael Carey: I guess capital allocation question.

Christopher Michael Carey: Hi, good morning. Just one follow-up and then a question on cash flow. Just from a, you know, from a regional consideration in the US, have you seen any different trends by region that might lead you to believe that what you're seeing in April is perhaps maybe just weather-related versus anything else? And then regarding cash, do you have a plan if... stocks are under pressure to use a bit more cash through the year with the buyback program that you have? Unknown Executive, Michelle Jacques, Molson Coors

Christopher Michael Carey: So look as with all capital allocation decisions. We've got models that we run that's allocation decisions through to make sure that.

Michelle E. St. Jacques: We are providing.

Christopher Michael Carey: Providing the most value.

Michelle E. St. Jacques: In terms of the share repurchase program I mean, we've got a sustained an opportunistic approach and it is over five years.

Michelle E. St. Jacques: So again, that's just one part of our capital allocation strategy and we will.

Speaker Change: We'll use the model to make the box on.

Christopher Michael Carey: Allocation decisions.

Tracey I. Joubert: Thanks Chris. Maybe I'll start with the, I guess, capital allocation question. So look, as with all capital allocation decisions, you know, we've got models that we run our allocation decisions through to make sure that, you know, we are providing the most value. So in terms of, you know, the share repurchase program, I mean, we've got a sustained and opportunistic approach. And it has been over five years. So again, that's just one part of our capital allocation strategy. And, and, you know, we'll use the model to make the right allocation decisions during a given period. Thanks, Tracey.

Christopher Michael Carey: During a given period.

Michelle E. St. Jacques: Thanks, Tracy and the other part of your question Kristen.

Tracey I. Joubert: Firstly I wouldn't attribute.

Tracey I. Joubert: First few weeks of April.

Tracey I. Joubert: Overall industry performance to where they are I don't think that we're seeing that at all I mean, where there has not really been.

Tracey I. Joubert: Much of an issue.

Tracey I. Joubert: So I wouldn't put it on that its more around.

Tracey I. Joubert: Consumer behavior, and our beliefs around consumer confidence is as I alluded to a little earlier in terms of regional.

Tracey I. Joubert: Splits no I don't think we have got any data that would suggest there's anything dramatic happening in any particular region from from an industry point of view.

Gavin D. K. Hattersley: Thanks, Traci. And the other part of your question, Chris, firstly, I wouldn't attribute the first few weeks of April's overall industry performance to weather. I don't think that we're seeing that at all. I mean, weather has not really been much of an issue. So I wouldn't put it like that. It's more around consumer behavior, and I believe that it is around consumer confidence, as I alluded to a little earlier. In terms of regional splits, no, I don't think we've got any data that would suggest there's anything dramatic happening in any particular region from an industry point of view.

Gavin D. K. Hattersley: Okay.

Gavin D. K. Hattersley: Our next question comes from Lauren Lieberman from Barclays. Your line is now open. Please go ahead.

Gavin D. K. Hattersley: Yes.

Speaker Change: Thanks, so much.

Speaker Change: Good morning.

Speaker Change: Two quick questions. The first one is just any spoken about shipments being ahead in just the contingency plan coming through stronger than you thought was sort of feasible.

Gavin D. K. Hattersley: Shipments ahead of expectations in Q1. So it was the first question and the second was just.

Gavin D. K. Hattersley: For all of the shelf space gains that you are coming in you said kind of manifest in market April through June July I think you said.

Operator: This question comes from Lauren Lieberman from Barclays. Your line is now open, please go ahead.

Lauren Rae Lieberman: Should we think about that if at all impacting shipment timing or is that just kind of.

Lauren Rae Lieberman: Part of this.

Operator: The FTW dynamic being ahead of Depletions, and we don't really need to think about it from a modeling standpoint.

Lauren Rae Lieberman: Thanks so much. Good morning. I had two quick questions. The first was just, I know you've spoken about shipments being ahead and just the contingency plan coming through stronger than you thought was sort of feasible, but were shipments ahead of expectations in Q1? So, that was the first question. And the second was just, for all the shelf space gains that you know are coming, and you said they will kind of manifest in the market April through July, I think you said, how should we think about that, if at all, impacting shipment timing? Or is that just kind of, you know, part of this, the STW dynamic being ahead of depletions, and we don't really need to think about it from a modeling standpoint? Thanks.

Speaker Change: Thanks, Lauren, yes shipments were better than we expected in the first quarter, we very deliberately took our shipments up in the first quarter for two reasons, one which was obviously pre planned and one we put into action in early February so.

Lauren Rae Lieberman: Obviously, we wanted to make sure that we are distributors had sufficient inventory to meet the demands, which we knew are going to come from a from a shelf reset point of view and to continue fueling the momentum behind our.

Lauren Rae Lieberman: Our brands and so that was planned.

Lauren Rae Lieberman: And then we did obviously increase inventory because of the strike, which we're experiencing in Fort worth part, we werent expecting is that.

Gavin D. K. Hattersley: Thanks, Lauren. Yes, our shipments were better than we expected in the first quarter. We very deliberately took our shipments up in the first quarter for two reasons, one which was obviously pre-planned and one we put into action in early February. So, you know, obviously, we wanted to make sure that our distributors had sufficient inventory to meet the demands, which we knew were going to come from a shelf reset point of view and to continue fueling the momentum behind our brands.

Gavin D. K. Hattersley: Our supply chain team.

Gavin D. K. Hattersley: On a consistent week over week basis, I think green week non routine of the strike of over delivered our expectations from a from a supply point of view so that was not expected.

Gavin D. K. Hattersley: And so where it's left doses that we have.

Gavin D. K. Hattersley: Our inventories in a very healthy place for us to meet the demands of the shelf resets, which are taking place as we speak.

Gavin D. K. Hattersley: And so that was planned, and then we did obviously increase inventory because of the strike which we're experiencing in Fort Worth. The part we weren't expecting is that, you know, our supply chain team, on a consistent week over week basis, I think we're in week nine or 10 of the strike, has over delivered on our expectations from a supply point of view. So that was not expected. And so where it's left us is that we have, you know, our inventories in a very healthy place for us to meet the demands of shelf research, which is taking place as we speak, to meet the demands of a base of volume which is substantially higher today than it was more than a year ago, behind the momentum of our brands, and then also to continue to meet the demands of our distributors and our retailers as we move through the strike in Fort Worth Thanks.

Gavin D. K. Hattersley: To meet the demands of our base of volume, which is substantially higher today than it was more than a year ago.

Gavin D. K. Hattersley: The momentum of our brands and then also to continue.

Gavin D. K. Hattersley: To meet the demands of our distributors and our retailers.

Gavin D. K. Hattersley: As we move through the through the striking in Fort worth.

Speaker Change: That answers your question Lauren.

Gavin D. K. Hattersley: Our next question comes from Eric <unk> from Morgan Stanley. Your line is now open. Please proceed.

Speaker Change: Yes, good morning, Thanks for taking the call.

Speaker Change: Want to talk a bit about reinvestment I know you gave you made the comment.

Gavin D. K. Hattersley: Since late last year that the.

Gavin D. K. Hattersley: Plan was we were happy with your overall level of.

Gavin D. K. Hattersley: Marketing and other spend and do you expect to keep that relatively flat Im just wondering kind of philosophically or hypothetically and in <unk>.

Operator: Our next question comes from Eric Serotta from Morgan Stanley. Your line is now open, please proceed.

Eric Adam Serotta: <unk>, where the industry is getting softer at least has become.

Eric Adam Serotta: Yeah, good morning. Thanks for taking the call.

Eric Adam Serotta: We're getting more cautious on.

Gavin D. K. Hattersley: So I want to talk a bit about reinvestment. I know you gave, you made the comment, I think, since late last year that the plan was to, you were happy with your overall level of marketing and other spend, and you expected to keep that relatively flat. I'm just wondering, kind of philosophically or hypothetically, in an environment where the industry is getting softer, or at least, you know, has become soft, where you're getting more cautious on industry volumes, are you more inclined, on the margins, to spend back a little bit more for the balance of the year to kind of cement the share gains from last year? Or are you more inclined to pull back and, you know, sort of keep spending similar Or, you know, is it just really no change at all? Thanks for that.

Eric Adam Serotta: On industry volumes are you more inclined on the margin again.

Gavin D. K. Hattersley: <unk> to.

Gavin D. K. Hattersley: To spend back a little bit more for the balance year.

Gavin D. K. Hattersley: To kind of cement the share gains from last year or are you more inclined.

Gavin D. K. Hattersley: Pulled back and sort of keep spending similar on a per case basis or is this.

Gavin D. K. Hattersley: Just really no change at all.

Speaker Change: Thanks for that question, Eric I mean, I'd point to a couple of things. One is we are very confident in our plans that we have behind.

Gavin D. K. Hattersley: Not only.

Gavin D. K. Hattersley: Our big core brands, but also our new innovations and our above premium portfolio not only in the U S. But also in Canada and also across across the pond. So.

Gavin D. K. Hattersley: Thanks for that question, Eric. I mean, I'd point out a couple of things.

Gavin D. K. Hattersley: One is we are very confident in our plans that we have behind, not only our big core brands, but also our new innovations and our above-premium portfolio, not only in the US, but also in Canada and also across the pond. So, you know, we're executing against the plan that we had, and we're spending the money behind our brands to maintain the structural shift that we've seen.

Gavin D. K. Hattersley: We're executing against the plan that we had and we're spending the money behind our brands to to maintain the structural shift that we've that we've seen and we like our plans.

Gavin D. K. Hattersley: We think they are working we think a clear plan to still in meta lots. All stars programs have been have been very well received.

Gavin D. K. Hattersley: By the consumers.

Gavin D. K. Hattersley: And in the UK and our recent launch up into Canada has been extremely well received by the by the consumers and retailers and distributors.

Gavin D. K. Hattersley: And we like our plans. We think they're working. We think our Coors plan, Choose Chill, and Molar Lights, All Stars programs have been very well received by consumers. Madrid in the UK, and our recent launch up into Canada has been extremely well received by consumers and retailers and distributors alike. And so, you know, our intent is to fuel the fire that that we have.

Gavin D. K. Hattersley: And so you know.

Gavin D. K. Hattersley: Our intent is to is to fuel the fire.

Gavin D. K. Hattersley: That we have and that's our plan I would also remind you though that we do have lots of tools, which didn't exist 10 years ago, and which we used to consistently monitor whats working and whats not working.

Gavin D. K. Hattersley: It does help that more than half of our marketing media spend is now in digital which allows our marketing team to identify what's working and what's not what's what's driving value and what's not and we are.

Gavin D. K. Hattersley: And that's our plan. But I would also remind you, though, that we do have lots of tools which didn't exist 10 years ago and which we use to consistently monitor what's working and what's not working. It does help that more than half of our marketing media spend is now in digital, which allows our marketing team to identify what's working and what's not, what's driving value and what's not, and we are, you know, almost sort of able to change that if we believe that is necessary. So I guess the short answer is, we believe in our acceleration plan, we believe in the health of our brands, and we are fueling those brands.

Gavin D. K. Hattersley: Almost a flick of a switch able to change that if we if we believe that as that is necessary. So I guess the short answer is we believe an acceleration plan. We believe in the health of our brands and we are fueling those brands.

Speaker Change: Thanks, Eric.

Gavin D. K. Hattersley: Our next question comes from Robert Moskow from TD Cowen. Your line is now open. Please go ahead.

Speaker Change: Hi, Thanks for the question.

Speaker Change: Kevin I wanted to know if you could update your outlook for U S. Beer category volume on the last call. I think you said flat to down 1% I guess youre, probably closer to that negative one right now.

Operator: Our next question comes from Robert Moskow from TD Cohen. Your line is now open, please go ahead.

Robert Moskow: Hi, thanks for the question. Gavin, I wanted to know if you could update your outlook for US beer category volume on the last call. I think you said flat to down 1%. I guess you're probably closer to the negative one right now. And secondly, you said that the retailers are very excited about your marketing plans, and you've gotten more shelf space. Do you have any color on how excited they are? Transcripts provided by Transcription Outsourcing, LLC. Is that accurate or not?

Robert Moskow: And then secondly.

Robert Moskow: You said that the retailers are very excited about your marketing plans and you've gotten more shelf space.

Robert Moskow: Do you have any color on how excited they are about the beer category.

Robert Moskow: Giving this category more merchandising space this year or is that relatively unchanged.

Robert Moskow: Also saw a wholesaler index, saying that that April purchasing intent was actually pretty pretty strong.

Robert Moskow: So have you seen that data point is is that.

Robert Moskow: That accurate or not.

Gavin D. K. Hattersley: Thanks, Robert. I think that the answer to that is that the retailers are confident and excited about our plans, and they're confident and excited about our velocities, and have accordingly allocated us unprecedented amounts of extra space. That's the first point. I don't believe that when all is said and done, we will see a large expansion in the space that has been allocated to beer as a category. I think you'll see changes within that.

Speaker Change: Thanks Robert.

Gavin D. K. Hattersley: I think that the answer to that is that the retailers are.

Gavin D. K. Hattersley: Confident and excited about our plans and are confident and excited about our velocities and have accordingly allocated us unprecedented amounts of extra space. That's the first point I don't believe when all is said and done that we will see.

Gavin D. K. Hattersley: A large expansion in the space that has that has been allocated to beer as a category I think youll see changes within that certainly kraft and flavor, most specifically celsis will get less space.

Gavin D. K. Hattersley: Certainly, craft and flavor, more specifically seltzers, will get less space. And then there's obviously the big structural shift in the premium light space moving from our biggest competitor to ourselves. But overarchingly, I don't see much change one way or another from an overall beer category point of view. In terms of updating our outlook on the industry, I think we're just more cautious, and we need more data than just a few weeks in April before we reach conclusions.

Gavin D. K. Hattersley: And then there is obviously the big structural shift in the premium light space moving from.

Gavin D. K. Hattersley: Our biggest competitor to ourselves, but overarching they don't see.

Gavin D. K. Hattersley: A much change one way or another from a.

Gavin D. K. Hattersley: From an overall category.

Gavin D. K. Hattersley: Point of view.

Gavin D. K. Hattersley: In terms of updating.

Gavin D. K. Hattersley: Our outlook on the industry I think we're just more cautious and we need more data in just a few weeks in April before we before we reach conclusion and as I've said earlier. It is it is easier to do that once we're through the biggest selling season, which will have the biggest impact on where the industry lens.

Gavin D. K. Hattersley: And as I said earlier, it is easier to do that once we're through the biggest selling season, which will have the biggest impact on where the industry lands for the full year. So hopefully that helps. Thanks, Robert.

Speaker Change: For the for the full year, so hopefully that helps thanks Robert.

Operator: Our next question comes from Nadine Sarwat from Bernstein. Your line is now open; please proceed.

Gavin D. K. Hattersley: Okay.

Speaker Change: Our next question comes from Nadine floor wax from Bernstein. Your line is now open. Please proceed.

Nadine Sarwat: Yes, hi, two questions for me. The first is: it takes more than a couple of weeks in April to determine that sort of medium-term volume outlook for the beer industry. So it sort of sounds like you believe, on the whole, a lot of these weaknesses are transitory. Would that be a correct interpretation? Or do you think that there are more structural headwinds at play?

Nadine Sarwat: Yes, hi, two questions for me.

Nadine Sarwat: To fully understand your point on <unk>.

Nadine Sarwat: More than a couple of weeks in April to determine that sort of medium term volume outlook for the dairy industry.

Nadine Sarwat: It sort of sounds like you believe on the whole the lot of B.

Nadine Sarwat: Consumers are transitory would that be a correct interpretation would you think that narrow more structural headwinds at play I know you've called out <unk> not seen anything from <unk>, but I think investors are calling out a lot of potential concerns and some potential. So is there anything else that.

Gavin D. K. Hattersley: I know you called out not seeing anything from GLP-1, but, you know, I think investors are calling out a lot of potential concerns, you know, emphasis on potential. So is there anything else that you're keeping an eye on? And then, on the second question, Blue Moon, I know you spoke about all the initiatives that you guys are rolling out and still have in store. Could you elaborate on what your long-term ambition is for the brand, whether that be in terms of size or key target consumers or brand occasions? Thank you. Thanks, Nadine.

Speaker Change: You are keeping an eye on and then the second question.

Gavin D. K. Hattersley: I know you spoke about all the initiatives that you guys are rolling out and still have each store could you elaborate on what your long term ambition is for the brand whether that be in terms of size or key target consumers where brand occasions. Thank you.

Gavin D. K. Hattersley: Thanks, Nadine. Look, I think from an overall industry point of view and drawing conclusions in the first three weeks of April is not something that we're going to do, right? There's a lot of choppiness that's taking place in April. I think I covered that off in an earlier question around, you know, the timing of Easter, the massive dislocation which we saw take place over several weeks in April from the Bud Light situation, the Easter mismatch pricing, and so on. So, you know, I think it's too soon to say whether the structural or industry caution that we've expressed is transitory or not.

Gavin D. K. Hattersley: Thanks, Nadine look I think from an overall industry point of view and drawing conclusions in the first three weeks of April.

Gavin D. K. Hattersley: <unk> is not something that we're going to do right. There's a lot of choppiness. That's taking place in April I think I covered that off on an earlier question around the timing of Easter.

Gavin D. K. Hattersley: <unk>.

Gavin D. K. Hattersley: This location, which we saw take place over several weeks in April from.

Gavin D. K. Hattersley: The Bud light switch.

Gavin D. K. Hattersley: Curation, the eastern mismatch pricing.

Gavin D. K. Hattersley: And so on so I think I think it's too soon to say whether these structural for the industry caution there too we've expressed as transitory or not.

Gavin D. K. Hattersley: From a Blue Moon point of view, yeah, you know, Blue Moon Belgian White is number one in craft, and Blue Moon Light is actually number one in light craft beer. And as we all know, the craft segment has had fairly significant challenges over the last couple of years. And because we're the biggest brand in that space, we're not immune to that. Having said that, we do know that we've got more work to do around Blue Moon. And to that end, we've launched a new campaign. We changed the packaging of all of the Blue Moon families so that they now appear in retail as a family as opposed to different brands.

Gavin D. K. Hattersley: From a blue Moon.

Gavin D. K. Hattersley: A view.

Gavin D. K. Hattersley: Blue Moon, Belgian white as the number one in Crofton and Blue Moon light is actually the number one in lot craft beer.

Gavin D. K. Hattersley: And as we all know the cross segment has had fairly significant challenges over the last couple of years and because we're the biggest brand in that space, we're not immune to that.

Gavin D. K. Hattersley: Having said that we do.

Gavin D. K. Hattersley: Now that we've got more work to do around around Blue Moon, and and to that end, we've launched a new campaign, we've changed the packaging of all of the Blue Moon families that now appears in retail.

Gavin D. K. Hattersley: Family as opposed to.

Gavin D. K. Hattersley: We've repositioned Blue Moon light, and we've made a really interesting foray into the non-ALK space with Blue Moon non-ALK, which is in its early days yet, but it's certainly performing quite well and providing a nice halo for the overall Blue Moon family. So, Nadine, we are committed to reinvigorating this brand, notwithstanding the challenges in the overall craft space. It's been around for a long time. It's a great brand. It's got wonderful iconography, and we think we can change the momentum of this brand, and that's our plan. And whilst it's obviously early days, because that plan has only been in place for a month or so, the early signs are positive.

Gavin D. K. Hattersley: Different different brands.

Gavin D. K. Hattersley: We've repositioned Blue Moon light and we've made.

Gavin D. K. Hattersley: Really interesting foray into non ILEC space with with Blue Moon, Nanak, which early days, yet, but it is certainly performing.

Gavin D. K. Hattersley: Performing quite well and providing a nice.

Gavin D. K. Hattersley: Halo for the for the overall Blue Moon families. So.

Gavin D. K. Hattersley: We are committed to reinvigorating.

Gavin D. K. Hattersley: This brand notwithstanding the challenges in the in the overall craft space, it's been around for a long time.

Gavin D. K. Hattersley: Great brand, it's got wonderful iconography, and we think we can we can change the momentum of this brand and Thats our plan and while it's obviously early days because that plan has only been in place for.

Gavin D. K. Hattersley: A month or so.

Gavin D. K. Hattersley: Early signs are positive.

Operator: Our next question comes from Michael of Lake Loverie on Piper Thamla. Your line is now open, please go ahead.

Gavin D. K. Hattersley: Our next question comes from Michael Li luxury from Piper Sandler. Your line is now open. Please go ahead.

Michael of Lake Loverie: Thank you. Good morning.

Michael of Lake Loverie: Yeah.

Michael: Thank you good morning.

Michael: Well I just wanted to.

Gavin D. K. Hattersley: I just wanted to come back to the strike impact. You called out the pull forward in the volume and touched on some of the operating leverage lift. Are there other puts and takes we should keep in mind, just modeling going forward? Would it be correct or fair enough maybe to say that any disruption costs seem to be roughly offset by... Just not having the workers on the payroll that are striking, or how do we just think about what the impact is for the rest of the year or, well, obviously, as long as this keeps going, but near-term, say, you know, second quarter?

Michael: Come back to.

Gavin D. K. Hattersley: The strike impact you called out the pull forward in the volume and touch on some of the the operating leverage lift or.

Gavin D. K. Hattersley: There are other puts and takes we should keep in mind just modeling going forward.

Gavin D. K. Hattersley: Would it be correct fair enough, maybe to say that some of the disruption costs seem to be roughly offset by.

Gavin D. K. Hattersley: Not having the workers on the payroll that are striking or how do we just think about what the impact is in the rest of the year as orders for a while obviously as long as this keeps going but near term how are you going to second quarter.

Gavin D. K. Hattersley: Thanks, Mike. Look, Tracey can take the cost side of that particular question from the overall inventory levels. Our inventory levels are very healthy. You know, we are, as I said, maintaining supply to our distributors. Our plan is ahead of where we would expect it to be on a week to week basis. So, you know, from that point of view, I don't expect any, any, any impact. Trace, from a cost point of view? Yeah, and Michael, as of now, the cost.

Gavin D. K. Hattersley: Thanks, Mike look Tracey can take the cost side of that particular question from a from an overall inventory levels our inventory levels are very healthy.

Gavin D. K. Hattersley: We.

Tracey: As I said maintaining.

Gavin D. K. Hattersley: Supplied to our to our distributors. Our plan is ahead of where we would expected it to be on a week to week basis. So from that point of view I don't expect any.

Tracey: Any any.

Tracey: Any impact.

Tracey I. Joubert: Yeah, and Michael, as of now, the cost related to the contingency plan has not been material, and we don't expect it to be material, so we do not expect it to be material for the balance of the year based on our current project. Our next question comes from Brett Cooper from Consumer Edge Research.

Tracey: From a cost point of view, yes, and.

Brett Cooper: As of now the costs related to the contingency plan has not been material and we don't expect it to be material. So we do not expect it to be material for the balance of the year based on our current projections.

Brett Cooper: Thanks Tracy.

Tracey I. Joubert: Our next question comes from Brett Cooper from consumer Edge Research. Your line is now open. Please go ahead.

Operator: Your line is now open; please go ahead. Thanks. Good morning, Gavin. There's been a lot talked about with respect to soft gear.

Operator: Okay.

Brett Cooper: Thanks, Good morning, Kevin and Theres been a lot talked about with respect to the soft gear industry.

Brett Cooper: One thing I would love to get your perspective on it.

Brett Cooper: You step back and not asking about first quarter or April.

Brett Cooper: Our next question comes from Brett Cooper from Consumer Edge Research. Your line is now open, please go ahead.

Brett Cooper: Over the last 12 months or whatever.

Brett Cooper: There has been a narrowing in the gap in performance between spirits and beer in the U S and I would love to hear your perspective on if the beer industry has gotten it right with respect to some of the newest flavors to be more competitive for sure through and the overall call for in the overall alcohol.

Gavin D. K. Hattersley: Thanks, Brett. Look, I think the work that we've done as a category is having more of a positive impact than a transitory one. So, I would suggest that the work that we've done around flavors, non-alcoholic beers, you know, the moderate impact of beer, all of these things are positive for the overall beer industry. And I don't believe that those are transitory. You know, our move into flavors more broadly, as opposed to seltzers specifically, has been very positive for us as we've driven into the consumer trend of wanting flavor and moving around within flavor more actively than perhaps has happened in the past, whether it's moving from, you know, brands in the seltzer space to brands in the flavor space, which has really benefited us simply. And then obviously, our foray into, you know, Happy Thursday opens up a very new and exciting opportunity for us.

Speaker Change: Or if you think that this system what transitory.

Gavin D. K. Hattersley: Thanks, Brett look I think the work that we've done as a category.

Gavin D. K. Hattersley: Is having.

Gavin D. K. Hattersley: More of a positive impact and then the transitory one so.

Gavin D. K. Hattersley: I would suggest that the the work that we've done around flavors.

Gavin D. K. Hattersley: Non alcohol beers.

Gavin D. K. Hattersley: The.

Gavin D. K. Hattersley: Moderate impact of the of all of these things are positive for the overall beer industry and I don't believe that those are.

Gavin D. K. Hattersley: Transitory.

Gavin D. K. Hattersley: <unk>.

Gavin D. K. Hattersley: Moving to into flavors more broadly as opposed to Celsis, specifically has been very positive for us as we've as we've driven into the consumer trend of wanting flavor and moving around within flavor.

Gavin D. K. Hattersley: More actively than than perhaps as happened in the past whether that's moving from.

Gavin D. K. Hattersley: Our brands in the Seltzer space to brands and the flavor space, which has really benefited simply and then obviously.

Gavin D. K. Hattersley: Our foray into into.

Gavin D. K. Hattersley: Happy Thursday opens up a very new and exciting opportunity for us and I think you see this more broadly across the beer industry. So.

Gavin D. K. Hattersley: And I think you see this more broadly across the beer industry. So I don't see those changes as transitory. I see that as more permanent.

Gavin D. K. Hattersley: I don't see those as transitory I see that as more permanent.

Speaker Change: Thanks, Brett.

Gavin D. K. Hattersley: Yes.

Operator: Our next question comes from Gerald Pascarelli from Wedbush Securities. Your line is now open. Please go ahead.

Gavin D. K. Hattersley: Our next question comes from Gerald Pascarelli from Wedbush Securities. Your line is now open. Please go ahead.

Gerald John Pascarelli: Great, thanks very much. Gavin, I had a follow-up on your above-premium strategy and specifically within SPHERES. You acquired Blue Run last year, obviously, a very premium but very small brand. So given your goal of driving an increased contribution to above premium and understanding that a big part of that will, in fact, come from Beyond Beer, we'd just love to get your thoughts on whether you feel incremental M&A would be necessary to hit your targets, and if increasing your exposure to spirits or American whiskey fits into that strategy. Thank you.

Gerald John Pascarelli: Great. Thanks, very much Gavin I had a follow up on your above premium strategy and specifically within spirits.

Gerald John Pascarelli: You acquired Blue run last year, obviously, a very premium, but very small brand. So given your goal of driving an increased contribution to above premium and understanding that a big part of that will in fact come from beyond beer.

Gerald John Pascarelli: To get your thoughts on whether you feel incremental M&A would be necessary to hit your targets and its increasing your exposure to spirits for American whiskey fits into that strategy. Thank you.

Gavin D. K. Hattersley: Yeah, thanks, Gerald. Look, I think our move beyond beer is much broader than spirits, right? And actually, I would say the bigger move that we've made is into both flavor with brands like Simply and Happy Thursday, coupled with our move into the non-alc space, and specifically with ZOA, so the sort of non-alc, non-beer space with ZOA. I certainly believe that we need to have more than just ZOA in the non-alc space.

Gerald: Yeah. Thanks, Joe look I think.

Gavin D. K. Hattersley: Moving to beyond beer is much broader than spirits, rod and actually the I would say the bigger moves that we've made is into into both.

Gavin D. K. Hattersley: Flavor with brands like like simply and happy Thursday.

Gavin D. K. Hattersley: Coupled with our move into into the non Alex space and specifically with the with the <unk>. So the sort of non <unk> non beer space, which as.

Gavin D. K. Hattersley: Certainly.

Gavin D. K. Hattersley: Believes that we that we need to.

Gavin D. K. Hattersley: <unk>.

Gavin D. K. Hattersley: Have have more than just <unk> in the non <unk> space.

Gavin D. K. Hattersley: And certainly that can come from internal development, as opposed to acquisition. I think from a spirits point of view, you know, we did launch our own spirits brands, and we did, as you say, buy a stake in Blue Run. You know, we've been at this for a couple of years, and our competitors have been at this for hundreds of years. So, you know, I'm pleased with our progress, and we've got more work to do to understand this space and be more effective in it.

Gavin D. K. Hattersley: Certainly that can come from internal development as opposed to buy I think from a spirits point of view.

Gavin D. K. Hattersley: We did launch.

Gavin D. K. Hattersley: Our own spirits.

Gavin D. K. Hattersley: Our own spirits.

Gavin D. K. Hattersley: Brands and we did as you say by mistaken in Blue run.

Gavin D. K. Hattersley: Been at this for a couple of years and our competitors have been at this for hundreds of years. So I am pleased with our progress and we've got more work to do to understand the space and be more effective.

Operator: That concludes the Q&A portion of today's call. I will now hand back over to Greg Tierney for any closing remarks.

Gavin D. K. Hattersley: And more effective in it.

Operator: Okay.

Greg Tierney: Thanks, Joe concludes the Q&A portion of today's call I will now hand back over to Greg <unk> for any closing remarks.

Greg Tierney: Thank you, Operator. Greg? All right, thank you.

Greg Tierney: Thank you operator, Greg.

Greg Tierney: All right. Thank you, Operator. If you do, we really appreciate you joining us today. If you have any additional questions, please follow up with me and Tracey and the IR team. And with that, we thank everybody for participating in today's call. Have a great day.

Greg Tierney: Thank you operator.

Greg Tierney: If you do.

Greg Tierney: Joining us today, if you do have any additional questions. Please follow up with me and Tracy and the IR team and with that we thank everybody for participating in today's call have a great day.

Operator: That concludes today's call. You may now disconnect your line.

Operator: That concludes today's call you may now disconnect your lines.

Operator: Uh huh.

Operator: [music].

Operator: Yes.