____________________________________
Higher Net Income (U.S. GAAP) Driven by One-Time Purchase Price
Settlement Gain
Lower Net Sales and Underlying Net Income (Non-GAAP) Driven
Primarily By Weak U.S. Industry Conditions, Quarterly Timing of
Wholesale Inventories, and Cycling Europe Indirect Tax Provision Benefit
Management Remains Committed to Delivering Full-Year Business
Plans, Free Cash Flow and Cost Savings Targets, As Well As Medium-Term
EBITDA Margin Targets
Worldwide Brand Volume Decreased 3.1%; Global Priority Brand
Volume Decreased 5.6%
EPS (U.S. GAAP) of $1.28 Increased 33.3%, and Underlying EPS
(Non-GAAP) of $0.48 Decreased 40.0%
____________________________________
DENVER & MONTREAL--(BUSINESS WIRE)--
Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) today reported
results for the 2018 first quarter. Molson Coors president and chief
executive officer Mark Hunter said:
"In the first quarter, which is seasonally the smallest profit quarter
of the year for us, our Canadian, European and International businesses
maintained their underlying progress from 2017. The U.S. beer industry
had a softer-than-anticipated start to the year, which impacted both
top- and bottom-line performance and which, when coupled with the U.S.
distributor inventory destocking and the anticipated cycling of the
indirect tax provision benefit in Europe last year, led to an underlying
EBITDA reduction of 18.5 percent for our company in the first quarter.
We do not see these results as indicative of our full-year performance
versus our plan, and we remain committed to delivering our 2018
guidance."
Mark continued, "Looking more closely at Q1, there are three specific
negative performance drivers, one of which is already behind us and
another which we expect to fully reverse by year end:
-
The first relates to cycling the reversal of the indirect tax
provision benefit in Europe, which negatively impacted net sales and
pretax income by approximately $50 million -- and is now behind us.
-
The second relates to a reduction in U.S. sales to wholesalers (STWs),
which declined by 6.7 percent as we under-shipped versus last year.
U.S. distributor inventory levels were lower than planned, compounded
by the roll out of our new ordering system at the Golden brewery,
which has taken longer to ramp up than expected. Compared to last
year, we under-shipped by approximately 450,000 hectoliters, which
represents approximately $30 million of gross profit, and we expect
this to reverse on a full-year basis, with the negative first quarter
profit impact reversing primarily in the second half of this year.
-
The third performance driver relates to overall industry softness with
our U.S. brand volume down by 3.8 percent, as poor weather dampened
overall industry demand. Our market share trends, however, remained
consistent with 2017.
"Across Molson Coors, our teams are focused on our first priority, which
is to drive margin expansion, bottom-line growth and strong free cash
flow to enable deleverage. Our second priority remains to deliver an
improved top line through our First Choice commercial excellence
approach, which provides the most sustainable source of profit growth
over the medium to long term. Capital allocation within our business
continues to be guided by our Profit after Capital Charge, or PACC
approach, as we seek to deliver Total Shareholder Returns. Our regional
business plans are clear and consistent with these priorities, and we
remain committed to delivering our full-year 2018 plans."
|
|
|
|
|
Consolidated Performance - First Quarter 2018
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
($ in millions, except per share data) (Unaudited)
|
|
March 31, 2018
|
|
March 31, 2017
|
|
Reported
% Increase
(Decrease)
|
|
Foreign
Exchange
Impact
($)
|
|
Constant
Currency
% Increase
(Decrease)
|
|
Net Sales
|
|
$
|
2,331.5
|
|
|
$
|
2,448.7
|
|
|
(4.8)
|
%
|
|
$
|
58.1
|
|
|
(7.2)
|
%
|
|
U.S. GAAP Net income (loss)(1)
|
|
$
|
278.1
|
|
|
$
|
208.5
|
|
|
33.4
|
%
|
|
|
|
|
|
Per diluted share
|
|
$
|
1.28
|
|
|
$
|
0.96
|
|
|
33.3
|
%
|
|
|
|
|
|
Underlying (Non-GAAP) Net income (loss)(2)
|
|
$
|
104.3
|
|
|
$
|
172.2
|
|
|
(39.4)
|
%
|
|
|
|
|
|
Per diluted share
|
|
$
|
0.48
|
|
|
$
|
0.80
|
|
|
(40.0)
|
%
|
|
|
|
|
|
Underlying EBITDA (Non-GAAP)(2)
|
|
$
|
426.0
|
|
|
$
|
522.8
|
|
|
(18.5)
|
%
|
|
$
|
6.1
|
|
|
(19.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Net income (loss) attributable to MCBC.
|
|
|
|
(2)
|
|
See Appendix for definitions and reconciliations of non-GAAP
financial measures.
|
|
|
|
Quarterly Highlights (versus First Quarter 2017 Results)
|
-
Net sales: $2.33 billion, decreased 4.8 percent, due to lower
financial and royalty volumes, negative global mix, adoption of the
new revenue recognition accounting standard (discussed in the Appendix
below), and the approximate $50 million impact of cycling the indirect
tax provision in Europe that was reversed a year ago. These factors
were partially offset by positive global pricing and foreign currency
movements. Net sales in constant currency declined 7.2 percent.
-
Net sales per HL: $112.02 on a reported financial-volume basis,
increased 0.1 percent. Net sales per HL on a brand-volume basis(1)
in constant currency decreased 2.6 percent, driven by cycling the
indirect tax provision reversal, adoption of the new revenue
recognition accounting standard and geographic sales mix, partially
offset by positive global net pricing.
-
Volume: Worldwide brand volume of 19.1 million hectoliters
decreased 3.1 percent driven by U.S., Canada and International
declines. Global priority brand volume decreased 5.6 percent.
Financial volume of 20.8 million hectoliters decreased 4.9 percent,
and was adversely impacted by reductions in brand volumes, wholesale
inventories and contract brewing.
-
U.S. GAAP net income attributable to MCBC increased 33.4
percent as a result of a $328 million cash payment received in January
2018 related to a purchase price adjustment to our acquisition of the
Miller International business, along with positive global net pricing,
cost savings, and lower interest expense, partially offset by
unrealized mark-to-market losses on our commodity positions (versus
gains a year ago), lower financial volume, the impact of cycling the
indirect tax provision benefit, and higher input cost inflation.
-
Underlying net income (non-GAAP) decreased 39.4 percent, driven
by lower financial volume, the impact of cycling the indirect tax
provision benefit, global mix, and higher input cost inflation,
partially offset by positive net pricing, cost savings, and lower
interest expense.
-
The company looks at value creation from the MillerCoors transaction
through the lens of the sum of three numbers. In the first quarter,
these numbers were:
-
Underlying net earnings of $104.3 million, plus…
-
$53 million of transaction-related cash tax benefits and…
-
$13 million of transaction-related after-tax book amortization.
-
To calculate this measure on a per-share basis, the company had
216.6 million weighted average diluted shares outstanding in the
first quarter.
-
Underlying EBITDA: Decreased 18.5 percent on a reported basis
and decreased 19.7 percent on a constant-currency basis, driven by
lower financial volume, the impact of cycling the indirect tax
provision benefit, global mix, and higher input cost inflation,
partially offset by positive global net pricing and cost savings.
-
U.S. GAAP cash from operations: Net cash from operating
activities for the first quarter of 2018 was $315.2 million,
which represents an improvement of $433.5 million from cash used of
$118.3 million in the prior year results, driven by the $328 million
cash payment received in January 2018 related to a purchase price
adjustment for our acquisition of the Miller International business,
as well as working capital improvements and lower cash paid for
pension contributions and interest.
-
Underlying free cash flow: cash use of $195.1 million, which
excludes the January 2018 cash payment received related to our
acquisition of the Miller International business. This result
represents a reduction in cash used of $26.2 million from the prior
year, driven by the same factors as the increase in cash from
operations, partially offset by higher cash paid for capital
expenditures.
-
Debt: Total debt at the end of the first quarter was $11.118
billion, and cash and cash equivalents totaled $197.9 million,
resulting in net debt of $10.920 billion.
(1) Brand Volume Basis NSR/HL:
Effective in the first quarter of 2018, we have revised our net sales
revenue (NSR) per HL performance discussions to be on a brand volume
basis, with all per-hectoliter calculations including owned and actively
managed brands, along with royalty volume, in the denominator, as well
as the financial impact of these sales in the numerator, unless
otherwise indicated. See appendix for definitions.
|
|
|
|
|
Business Review- First Quarter 2018
|
|
|
|
Net Sales
|
|
|
|
($ in millions) (Unaudited)
|
|
Three Months Ended
|
|
|
|
March 31, 2018
|
|
March 31, 2017
|
|
Reported
%
Increase
(Decrease)
|
|
Foreign
Exchange
Impact
($)
|
|
Constant
Currency %
Increase
(Decrease)
|
|
United States
|
|
$
|
1,647.8
|
|
|
$
|
1,749.9
|
|
|
(5.8
|
)%
|
|
$
|
—
|
|
|
(5.8
|
)%
|
|
Canada
|
|
283.8
|
|
|
291.1
|
|
|
(2.5
|
)%
|
|
12.3
|
|
|
(6.7
|
)%
|
|
Europe
|
|
374.3
|
|
|
381.6
|
|
|
(1.9
|
)%
|
|
45.6
|
|
|
(13.9
|
)%
|
|
International
|
|
57.5
|
|
|
61.8
|
|
|
(7.0
|
)%
|
|
0.3
|
|
|
(7.4
|
)%
|
|
Corporate
|
|
0.2
|
|
|
0.3
|
|
|
(33.3
|
)%
|
|
—
|
|
|
(33.3
|
)%
|
|
Eliminations(1)
|
|
(32.1
|
)
|
|
(36.0
|
)
|
|
(10.8
|
)%
|
|
(0.1
|
)
|
|
(11.1
|
)%
|
|
Consolidated
|
|
$
|
2,331.5
|
|
|
$
|
2,448.7
|
|
|
(4.8
|
)%
|
|
$
|
58.1
|
|
|
(7.2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Reflects intercompany sales that are eliminated in consolidated
totals.
|
|
|
|
|
|
Pretax Income (U.S. GAAP)
|
|
|
|
|
|
($ in millions) (Unaudited)
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31, 2018
|
|
March 31, 2017
|
|
Reported
%
Increase
(Decrease)
|
|
Foreign
Exchange
Impact
($)
|
|
Constant
Currency %
Increase
(Decrease)
|
|
United States
|
|
|
|
$
|
261.7
|
|
|
$
|
316.6
|
|
|
(17.3)
|
%
|
|
$
|
(0.3
|
)
|
|
(17.2)
|
%
|
|
Canada
|
|
|
|
9.1
|
|
|
20.9
|
|
|
(56.5)
|
%
|
|
(0.3
|
)
|
|
(55.0)
|
%
|
|
Europe
|
|
|
|
(29.9
|
)
|
|
27.0
|
|
|
N/M
|
|
(4.6
|
)
|
|
N/M
|
|
International
|
|
|
|
3.7
|
|
|
1.5
|
|
|
146.7
|
%
|
|
—
|
|
|
146.7
|
%
|
|
Corporate
|
|
|
|
112.8
|
|
|
(85.1
|
)
|
|
N/M
|
|
0.7
|
|
|
N/M
|
|
Consolidated
|
|
|
|
$
|
357.4
|
|
|
$
|
280.9
|
|
|
27.2
|
%
|
|
$
|
(4.5
|
)
|
|
28.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/M = Not meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying EBITDA (Non-GAAP)(1)
|
|
|
|
($ in millions) (Unaudited)
|
|
Three Months Ended
|
|
|
|
March 31, 2018
|
|
March 31, 2017
|
|
Reported
%
Increase
(Decrease)
|
|
Foreign
Exchange
Impact
($)
|
|
Constant
Currency %
Increase
(Decrease)
|
|
United States
|
|
$
|
388.9
|
|
|
$
|
442.9
|
|
|
(12.2)
|
%
|
|
$
|
(0.3
|
)
|
|
(12.1)
|
%
|
|
Canada
|
|
44.7
|
|
|
43.6
|
|
|
2.5
|
%
|
|
1.3
|
|
|
(0.5)
|
%
|
|
Europe
|
|
24.5
|
|
|
70.4
|
|
|
(65.2)
|
%
|
|
2.3
|
|
|
(68.5)
|
%
|
|
International
|
|
7.1
|
|
|
5.0
|
|
|
42.0
|
%
|
|
—
|
|
|
42.0
|
%
|
|
Corporate
|
|
(39.2
|
)
|
|
(39.1
|
)
|
|
(0.3)
|
%
|
|
2.8
|
|
|
(7.4)
|
%
|
|
Consolidated
|
|
$
|
426.0
|
|
|
$
|
522.8
|
|
|
(18.5)
|
%
|
|
$
|
6.1
|
|
|
(19.7)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
See Appendix for definitions and reconciliations of non-GAAP
financial measures.
|
|
|
|
|
United States Business
-
Volume: U.S. brand volume declined 3.8 percent for the quarter,
driven by lower volume in the Premium Light segment.
Sales-to-wholesalers volume (STWs), excluding contract brewing volume,
decreased 6.7 percent, primarily due to weak U.S. industry conditions
and quarterly timing of wholesale inventories, including STW delays in
parts of the country related to the launch of our new ordering system
at the Golden brewery that took longer to ramp up than anticipated.
-
Revenue: Net sales per hectoliter (brand volume basis), which
excludes contract brewing and company-owned-distributor sales, grew
1.1 percent. Excluding the $4.7 million impact of new
revenue-recognition accounting guidance, net sales per hectoliter
(brand volume basis) grew 1.4 percent primarily as a result of higher
net pricing, partially offset by negative sales mix.
-
Cost of goods sold (COGS) per hectoliter increased 3.5 percent,
driven by volume deleverage, as well as aluminum inflation and higher
freight and fuel costs, partially offset by cost savings.
-
Marketing, general and administrative (MG&A) expense
decreased 3.1 percent due to spending optimization and efficiencies.
-
On a U.S. GAAP basis, U.S. pretax income decreased 17.3 percent
to $261.7 million, primarily due to lower underlying EBITDA
performance and higher depreciation expense.
-
U.S. underlying EBITDA decreased 12.2 percent to $388.9
million, driven by lower STW volumes, in part due to wholesale
inventory timing, as well as negative sales mix, volume deleverage and
COGS inflation, partially offset by higher net pricing, cost savings
and lower MG&A expenses.
Canada Business
-
Volume: Canada brand volume decreased 3.3 percent in the first
quarter, partially as a result of weak industry performance in western
Canada, as well as high inventory levels in Quebec at the start of the
year as we concluded union contract negotiations.
-
Canada financial volume decreased 4.8 percent primarily due to brand
volume declines, as well as lower contract brewing volume.
-
Revenue: Net sales per hectoliter (brand-volume basis)
decreased 2.9 percent in local currency, driven by our adoption of the
new revenue-recognition accounting standard, which reduced net sales
by approximately $11 million in the quarter. Excluding the effect of
the new accounting standard, NSR per HL (brand volume basis) would
have increased 1.1 percent due to positive brand mix.
-
COGS per hectoliter increased 3.9 percent in local currency due
to higher distribution costs, mix shift and volume deleverage,
partially offset by a reduction in brewery costs.
-
MG&A expense decreased 19.1 percent in local currency,
driven by the approximate $12 million impact of the new
revenue-recognition standard, as well as lower brand amortization
expense and year-over-year differences in the phasing of brand
investments.
-
On a U.S. GAAP basis, Canada reported pretax income of
$9.1 million, a 56.5 percent decrease from the prior year, primarily
due to cycling an $8.1 million purchase-price adjustment gain in the
first quarter of 2017 related to the historical sale of Molson Inc.’s
ownership interest in the Montreal Canadiens, along with lower brand
volume and net pricing and higher accelerated depreciation of brewing
assets driven by the pending closures of our existing Montreal and
Vancouver breweries.
-
Canada underlying EBITDA increased 2.5 percent to $44.7 million
in the quarter, driven by positive sales mix and foreign currency
movements, partially offset by lower brand volume and net pricing.
Europe Business
-
Volume: Europe gained market share in the first quarter due to
a slight increase in brand volume versus a year ago, driven by growth
from our above-premium brands. Europe financial volume, which includes
contract brewing and factored brands but excludes royalty volume,
increased 1.0 percent.
-
Revenue: Europe net sales per hectoliter (brand-volume basis)
decreased 18.3 percent in local currency, primarily due to cycling the
benefit of an indirect tax provision release of approximately $50
million in 2017, as well as adopting recently revised excise-tax
guidelines in one of our European markets and increasing investments
in our First Choice Agenda this year. These factors were partially
offset by positive sales mix.
-
COGS per hectoliter increased 2.9 percent in local currency,
driven primarily by mix shift to higher-cost brands and geographies,
input inflation and logistics costs.
-
MG&A expense decreased 10.4 percent in local currency,
driven by cycling an $11 million bad-debt provision in 2017, partially
offset by the addition of Aspall brand investments and related
overhead costs this year.
-
On a U.S. GAAP basis, Europe reported a pretax loss of
$29.9 million, compared to income of $27.0 million a year earlier due
to cycling the 2017 indirect tax provision benefit, adopting the
recently revised excise-tax guidelines, and increased investment in
our First Choice Agenda this year, partially offset by cycling the
2017 bad-debt provision.
-
Europe underlying EBITDA decreased 65.2 percent to $24.5
million, due to the same factors as U.S. GAAP results.
International Business
-
Volume: International brand volume decreased by 7.1 percent in
the first quarter, driven by the loss of the Modelo contract in Japan,
as well as lower volume in Mexico related to higher pricing, partially
offset by organic growth in many of our focus markets.
-
Revenue: Net sales per hectoliter (brand-volume basis) declined
0.5 percent in constant currency, driven by unfavorable sales mix,
partially offset by positive net pricing.
-
COGS per hectoliter decreased 1.6 percent, due to sales mix
changes.
-
MG&A expense decreased 28.1 percent, driven by lower
marketing investments and receipt of a $2 million settlement related
to our Colombia business.
-
On a U.S. GAAP basis, International segment reported pretax
income of $3.7 million versus income of $1.5 million a year
ago, driven by lower MG&A costs, including the $2 million Colombia
settlement, along with higher net pricing. This was partially offset
by the loss of the Modelo brands in Japan.
-
International underlying EBITDA was $7.1 million in the first
quarter, up from $5.0 million a year ago, driven by the same
factors as pretax income.
Corporate
-
On a U.S. GAAP basis, the company reported Corporate pretax income
of $112.8 million in the first quarter compared to a loss of $85.1
million in the prior year, primarily due to receipt of a $328 million
cash purchase price adjustment related to our acquisition of the
Miller International business, partially offset by unrealized
mark-to-market losses on commodity swaps in the first quarter,
compared to mark-to-market gains a year ago.
-
Corporate underlying EBITDA was a loss of $39.2 million for the
first quarter versus a $39.1 million loss in the prior year, driven
primarily by the timing of corporate general and administrative costs,
largely offset by pension benefit and favorable foreign currency.
|
|
|
|
|
Worldwide Brand and Financial Volume(1)
|
|
|
|
|
|
|
|
(In millions of hectoliters) (Unaudited)
|
|
Three Months Ended
|
|
|
|
March 31, 2018
|
|
|
% Change
|
|
|
March 31, 2017
|
|
Financial Volume(1)
|
|
20.813
|
|
|
|
(4.9
|
)%
|
|
|
21.878
|
|
|
Contract brewing, wholesaler and non-beer volume
|
|
(1.902
|
)
|
|
|
(4.3
|
)%
|
|
|
(1.988
|
)
|
|
Royalty volume
|
|
0.716
|
|
|
|
(10.3
|
)%
|
|
|
0.798
|
|
|
Sales-To-Wholesaler to Sales-To-Retail adjustment
|
|
(0.526
|
)
|
|
|
(46.4
|
)%
|
|
|
(0.982
|
)
|
|
Total Worldwide Brand Volume(1)
|
|
19.101
|
|
|
|
(3.1
|
)%
|
|
|
19.706
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
See Appendix for definitions and additional discussion regarding
Financial and Worldwide Brand Volume
|
.
|
|
|
|
|
|
|
|
Other Results
|
|
|
|
|
|
Effective Income Tax Rates
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
March 31, 2018
|
|
|
|
March 31, 2017
|
|
U.S. GAAP effective tax rate
|
|
|
|
21
|
%
|
|
|
|
23
|
%
|
|
Underlying effective tax rate
|
|
|
|
21
|
%
|
|
|
|
23
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
The effective tax rate and the underlying effective tax rate both
decreased 2 percentage points from a year ago, primarily due to
the reduction of the U.S. federal statutory corporate income tax rate
to 21 percent as a result of U.S. tax reform, partially offset by the
impact of discrete items year over year.
Special and Other Non-Core Items
The following special and other non-core items have been excluded
from underlying results. See the Appendix for reconciliations of
non-GAAP financial measures.
-
During the first quarter, MCBC recognized a net special benefit of
$314.8 million, driven primarily by a $328 million cash payment
received in January 2018 related to resolving a purchase price
adjustment to our October 2016 acquisition of the Miller International
business, partially offset by accelerated depreciation and
restructuring costs.
-
Additionally, we recorded other non-core net charges of $95.0
million, driven primarily by unrealized mark-to-market losses on
commodity hedges, as well as integration-related expenses.
The following targets for full year 2018 are unchanged from previous
disclosures, unless otherwise indicated:
-
Underlying free cash flow: $1.5 billion, plus or minus
10 percent, which excludes the $328 million cash payment received in
January 2018 related to resolving a purchase price adjustment to our
October 2016 acquisition of the Miller International business.
-
Transaction-related cash tax benefits: approximately $200
million (included in free cash flow).
-
Transaction-related after-tax book amortization: approximately
$55 million.
-
Cash pension contributions: approximately $10 million.
-
Capital spending: approximately $670 million, plus or minus 10
percent.
-
Cost savings: approximately $210 million in 2018, and $600
million for 2017 to 2019.
-
Cost of goods sold per hectoliter:
-
MillerCoors: low-single-digit increase.
-
Canada: low-single-digit increase (local currency).
-
Europe: low-single-digit increase (local currency).
-
International business: low-single-digit decrease. - Updated
(formerly mid-single-digit decrease)
-
Underlying Corporate MG&A expense: approximately $180
million, plus or minus 10 percent.
-
Underlying depreciation and amortization: approximately
$850 million, versus $792 million in 2017, primarily due to planned
information systems implementations in the U.S.
-
Pension benefit: approximately $60 million.
-
Corporate net interest expense: approximately $330 million,
plus or minus 10 percent.
-
Underlying effective tax rate in the range of 18 to 22 percent
for 2018, following the enactment of U.S. tax reform. Subject to
additional definitive guidance from the U.S. government regarding the
implementation of the recently passed tax reform legislation, the
company's preliminary view of its long-term effective tax rate (after
2018) is in the range of 20 to 24 percent.
-
In addition, our 2018 results are also being impacted by the adoption
of the new revenue recognition standard, as well as guidance changing
the presentation of pension and other postretirement benefit (OPEB)
costs.
-
The new revenue recognition accounting standard became
effective for us at the beginning of 2018, and we have elected the
modified retrospective adoption method. Therefore, prior period
results have not been restated, but results under the old standard
will continue to be disclosed throughout 2018 for comparability,
as required by the standard. Along with some timing changes
between quarters, this adoption changes the presentation of our
results, including an expected reduction of net sales revenue and
marketing, general and administrative expenses of approximately
$70 million to $90 million during full year 2018, primarily within
our Canada segment, with no significant impact to net income. See
Appendix for detailed impacts on 2018 results from our adoption of
the new revenue recognition standard.
-
Under the new pension guidance, we are reporting the
service cost component of net periodic pension and OPEB costs or
income in our business segment operating results. Beginning in
2018, however, all other components of net periodic pension and
OPEB cost or income are being reported in Corporate outside of
operating income. Prior period results for each of our segments
and Consolidated have been restated retrospectively for this
change, as required by the guidance, with no impact to
consolidated net income. This accounting change primarily impacts
the reported results of our Europe segment. See Appendix section
below, "Adoption of Pension and Other Postretirement
Benefit Accounting Pronouncement Applied Retrospectively,"
for details regarding impacts of this change to 2017 results.
-
The impacts of these accounting changes are discussed in further
detail within footnote 2 of our 2017 Form 10-K and our first
quarter 2018 Form 10-Q.
Unless otherwise indicated in this release, all $ amounts are in U.S.
Dollars, and all quarterly comparative results are for the Company’s
first quarter ended March 31, 2018, compared to the first quarter ended
March 31, 2017. Prior year results have been adjusted to reflect the
retrospective adoption of new pension accounting, as described above.
Effective in the first quarter of 2018, we have revised our net sales
revenue (NSR) per HL performance discussions to be on a brand volume
basis, such that all per-hectoliter calculations now include owned and
actively managed brand volume, along with royalty volume, in the
denominator, as well as the financial impact of these sales in the
numerator, unless otherwise indicated. Some numbers may not sum due to
rounding.
As used in this release, the term “Acquisition” refers to the Company’s
acquisition from Anheuser-Busch InBev SA/NV on October 11, 2016, of
SABMiller plc’s 58 percent economic interest and 50 percent voting
interest in MillerCoors LLC and all trademarks, contracts and other
assets primarily related to the Miller International business outside of
the U.S. and Puerto Rico.
|
|
|
2018 First Quarter Conference Call
|
Molson Coors Brewing Company will conduct an earnings conference call
with financial analysts and investors at 11:00 a.m. Eastern Time today
to discuss the Company’s 2018 first quarter results. The live webcast
will be accessible via the Company’s website, www.molsoncoors.com.
An online replay of the webcast will be available until 11:59 p.m.
Eastern Time on May 1, 2019. The Company will post this release and
related financial statements on its website today.
Molson Coors has defined brewing greatness for more than two centuries.
As one of the largest global brewers, Molson Coors works to deliver
extraordinary brands that delight the world’s beer drinkers. From Coors
Light, Coors Banquet, Miller Lite, Molson Canadian, Carling, Staropramen
and Sharp’s Doom Bar to Leinenkugel’s Summer Shandy, Blue Moon Belgian
White, Hop Valley, Creemore Springs and Crispin Cider, Molson Coors
offers a beer for every beer lover.
Molson Coors operates through Molson Coors Canada, MillerCoors in the
U.S., Molson Coors Europe and Molson Coors International. The company is
not only committed to brewing extraordinary beers, but also running a
business focused on respect for its employees, communities and drinkers,
which means corporate responsibility and accountability right from the
start. It has been listed on the Dow Jones Sustainability Index for the
past seven years. To learn more about Molson Coors Brewing Company,
visit molsoncoors.com,
ourbeerprint.com
or on Twitter through @MolsonCoors.
|
|
|
About Molson Coors Canada Inc.
|
Molson Coors Canada Inc. (MCCI) is a subsidiary of Molson Coors Brewing
Company. MCCI Class A and Class B exchangeable shares offer
substantially the same economic and voting rights as the respective
classes of common shares of MCBC, as described in MCBC’s annual proxy
statement and Form 10-K filings with the U.S. Securities and Exchange
Commission. The trustee holder of the special Class A voting stock and
the special Class B voting stock has the right to cast a number of votes
equal to the number of then outstanding Class A exchangeable shares and
Class B exchangeable shares, respectively.
|
|
|
Forward-Looking Statements
|
This press release includes “forward-looking statements” within the
meaning of the U.S. federal securities laws. Generally, the words
“believe,” “expect,” “intend,” “anticipate,” “project,” “will,”
“outlook,” and similar expressions identify forward-looking statements,
which generally are not historic in nature. Although the Company
believes that the assumptions upon which its forward-looking statements
are based are reasonable, it can give no assurance that these
assumptions will prove to be correct. Important factors that could cause
actual results to differ materially from the Company’s historical
experience, and present projections and expectations are disclosed in
the Company’s filings with the Securities and Exchange Commission
(“SEC”). These factors include, among others, our ability to
successfully integrate the Acquisition of MillerCoors; our ability to
achieve expected tax benefits, accretion and cost savings and synergies;
impact of increased competition resulting from further consolidation of
brewers, competitive pricing and product pressures; health of the beer
industry and our brands in our markets; economic conditions in our
markets; additional impairment charges; our ability to maintain
manufacturer/distribution agreements; changes in our supply chain
system; availability or increase in the cost of packaging materials;
success of our joint ventures; risks relating to operations in
developing and emerging markets; changes in legal and regulatory
requirements, including the regulation of distribution systems;
fluctuations in foreign currency exchange rates; increase in the cost of
commodities used in the business; the impact of climate change and the
availability and quality of water; loss or closure of a major brewery or
other key facility; our ability to implement our strategic initiatives,
including executing and realizing cost savings; our ability to
successfully integrate newly acquired businesses; pension plan and other
post-retirement benefit costs; failure to comply with debt covenants or
deterioration in our credit rating; our ability to maintain good labor
relations; our ability to maintain brand image, reputation and product
quality; and other risks discussed in our filings with the SEC,
including our most recent Annual Report on Form 10-K and our Quarterly
Reports on Form 10-Q. All forward-looking statements in this
press release are expressly qualified by such cautionary statements and
by reference to the underlying assumptions. You should not place undue
reliance on forward-looking statements, which speak only as of the date
they are made. We do not undertake to update forward-looking
statements, whether as a result of new information, future events or
otherwise.
|
|
|
APPENDIX
|
|
Consolidated Financial Performance
|
|
|
|
|
|
|
|
|
|
|
|
Molson Coors Brewing Company
|
|
Three Months Ended March 31, 2018
|
|
% Change
|
|
(In millions, except per share data)(Unaudited)
|
|
U.S. GAAP
|
|
Non-GAAP
Adjustments(1)
|
|
Non-GAAP
Underlying(1)
|
|
U.S. GAAP
|
|
Non-GAAP
Underlying
|
|
Net sales
|
|
$
|
2,331.5
|
|
|
$
|
—
|
|
|
$
|
2,331.5
|
|
|
(4.8)
|
%
|
|
(4.8)
|
%
|
|
Net Sales per HL change
|
|
|
|
|
|
|
|
0.1
|
%
|
|
0.1
|
%
|
|
Cost of goods sold
|
|
$
|
(1,535.7
|
)
|
|
$
|
86.1
|
|
|
$
|
(1,449.6
|
)
|
|
11.9
|
%
|
|
1.0
|
%
|
|
Cost of goods sold per HL change
|
|
|
|
|
|
|
|
17.6
|
%
|
|
6.2
|
%
|
|
Gross profit
|
|
$
|
795.8
|
|
|
$
|
86.1
|
|
|
$
|
881.9
|
|
|
(26.1)
|
%
|
|
(13.0)
|
%
|
|
Marketing, general and administrative expenses
|
|
$
|
(681.1
|
)
|
|
$
|
8.8
|
|
|
$
|
(672.3
|
)
|
|
(3.4)
|
%
|
|
(2.1)
|
%
|
|
Special items, net
|
|
$
|
314.8
|
|
|
$
|
(314.8
|
)
|
|
$
|
—
|
|
|
N/M
|
|
—
|
%
|
|
Operating income (loss)
|
|
$
|
429.5
|
|
|
$
|
(219.9
|
)
|
|
$
|
209.6
|
|
|
17.9
|
%
|
|
(35.9)
|
%
|
|
Interest income (expense), net
|
|
$
|
(83.2
|
)
|
|
$
|
—
|
|
|
$
|
(83.2
|
)
|
|
(13.9)
|
%
|
|
(13.9)
|
%
|
|
Other pension and postretirement benefits (costs), net
|
|
$
|
10.0
|
|
|
$
|
0.1
|
|
|
$
|
10.1
|
|
|
(24.8)
|
%
|
|
(2.9)
|
%
|
|
Other income (expense), net
|
|
$
|
1.1
|
|
|
$
|
—
|
|
|
$
|
1.1
|
|
|
N/M
|
|
N/M
|
|
Income (loss) before income taxes
|
|
$
|
357.4
|
|
|
$
|
(219.8
|
)
|
|
$
|
137.6
|
|
|
27.2
|
%
|
|
(40.8)
|
%
|
|
Income tax benefit (expense)
|
|
$
|
(74.9
|
)
|
|
$
|
46.0
|
|
|
$
|
(28.9
|
)
|
|
13.7
|
%
|
|
(46.3)
|
%
|
|
Net income (loss)(2)
|
|
$
|
278.1
|
|
|
$
|
(173.8
|
)
|
|
$
|
104.3
|
|
|
33.4
|
%
|
|
(39.4)
|
%
|
|
Per diluted share
|
|
$
|
1.28
|
|
|
$
|
(0.80
|
)
|
|
$
|
0.48
|
|
|
33.3
|
%
|
|
(40.0)
|
%
|
|
Underlying EBITDA(3)
|
|
|
|
|
|
$
|
426.0
|
|
|
|
|
(18.5)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N/M = Not meaningful
|
|
|
|
(1)
|
|
Refer to the table "Condensed Consolidated Statements of Operations"
for detailed descriptions and reconciliation of non-GAAP adjustments
and results.
|
|
|
|
|
|
(2)
|
|
Net income (loss) attributable to MCBC.
|
|
|
|
|
|
(3)
|
|
EBITDA is earnings before interest, taxes, depreciation and
amortization, a non-GAAP financial measure.
|
|
|
|
Adoption of Revenue Recognition Guidance
|
The new revenue recognition standard became effective for us at the
beginning of 2018. We have adopted the new standard using the modified
retrospective approach, and, therefore, prior period results have not
been restated. However, results under the old standard will continue to
be disclosed throughout 2018 for comparability, as required by the
standard. The following table highlights the impact of this new guidance
on summarized components of our unaudited condensed consolidated
statement of operations for the three months ended March 31, 2018, when
comparing our current period results of operations under the new
guidance, versus our results of operations if historical guidance had
continued to be applied.
|
|
|
|
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
U.S.
|
|
|
Canada
|
|
|
Europe
|
|
|
International
|
|
|
Consolidated
|
|
|
|
(In millions)
|
|
Impact to Unaudited Condensed Consolidated Statements of
Operations - Favorable/(Unfavorable):
|
|
Net sales
|
|
$
|
(4.7
|
)
|
|
|
$
|
(11.0
|
)
|
|
|
$
|
(0.6
|
)
|
|
|
$
|
0.2
|
|
|
$
|
(16.1
|
)
|
|
Cost of goods sold
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Gross profit
|
|
$
|
(4.7
|
)
|
|
|
$
|
(11.0
|
)
|
|
|
$
|
(0.6
|
)
|
|
|
$
|
0.2
|
|
|
$
|
(16.1
|
)
|
|
Marketing, general and administrative expenses
|
|
$
|
0.7
|
|
|
|
$
|
11.6
|
|
|
|
$
|
0.8
|
|
|
|
$
|
—
|
|
|
$
|
13.1
|
|
|
Operating income (loss)
|
|
$
|
(4.0
|
)
|
|
|
$
|
0.6
|
|
|
|
$
|
0.2
|
|
|
|
$
|
0.2
|
|
|
$
|
(3.0
|
)
|
|
Interest income (expense), net
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
(0.8
|
)
|
|
|
$
|
—
|
|
|
$
|
(0.8
|
)
|
|
Income (loss) before income taxes
|
|
$
|
(4.0
|
)
|
|
|
$
|
0.6
|
|
|
|
$
|
(0.6
|
)
|
|
|
$
|
0.2
|
|
|
$
|
(3.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These impacts are driven primarily by the reclassification of certain
cash payments to customers from marketing, general and administrative
expenses to a reduction of revenue, as well as a change in the timing of
recognition of certain promotional discounts and cash payments to
customers. For further discussion regarding the impacts of the adoption
of this new guidance, refer to footnote 2 within our first quarter 2018
Form 10-Q.
|
|
|
Adoption of Pension and Other Postretirement Benefit Accounting
Pronouncement
|
During the first quarter of 2018, we adopted the FASB's new guidance
related to classification of pension and other postretirement benefit
costs. Specifically, the new guidance requires us only to report the
service cost component in the same line item as other compensation costs
arising from services rendered by the pertinent employees during the
period; while the other components of net benefit cost are now presented
in the statements of operations separately from the service cost
component and outside of operating income. We have also determined that
only service cost will be reported within each operating segment, and
all other components will be reported within the Corporate segment.
These changes to the results of each quarter and full year 2017 are
reflected in the table below. See the Company's first quarter 2018 10-Q
filing for additional detail.
|
|
|
|
|
($ in millions) (Unaudited)
|
|
As Adjusted for Pension Accounting Change
|
|
|
|
Three Months Ended
|
|
Year Ended
|
|
|
|
March 31,
2017
|
|
June 30,
2017
|
|
September 30,
2017
|
|
December 31,
2017
|
|
December 31,
2017
|
|
United States:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
(1,025.1
|
)
|
|
$
|
(1,180.3
|
)
|
|
$
|
(1,080.1
|
)
|
|
$
|
(1,038.7
|
)
|
|
$
|
(4,324.2
|
)
|
|
Marketing, general and administrative expenses
|
|
$
|
(405.7
|
)
|
|
$
|
(458.8
|
)
|
|
$
|
(458.2
|
)
|
|
$
|
(460.0
|
)
|
|
$
|
(1,782.7
|
)
|
|
Special items, net
|
|
$
|
(2.5
|
)
|
|
$
|
(12.6
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(15.3
|
)
|
|
Operating income (loss)
|
|
$
|
316.6
|
|
|
$
|
487.2
|
|
|
$
|
353.8
|
|
|
$
|
225.9
|
|
|
$
|
1,383.5
|
|
|
Other pension and postretirement benefits (costs), net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S. GAAP Pretax income
|
|
$
|
316.6
|
|
|
$
|
486.5
|
|
|
$
|
367.1
|
|
|
$
|
224.0
|
|
|
$
|
1,394.2
|
|
|
Underlying (Non-GAAP) Pretax income(1)
|
|
$
|
323.6
|
|
|
$
|
499.9
|
|
|
$
|
368.7
|
|
|
$
|
224.8
|
|
|
$
|
1,417.0
|
|
|
Canada:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
(181.1
|
)
|
|
$
|
(233.4
|
)
|
|
$
|
(222.1
|
)
|
|
$
|
(210.4
|
)
|
|
$
|
(847.0
|
)
|
|
Marketing, general and administrative expenses
|
|
$
|
(96.1
|
)
|
|
$
|
(104.7
|
)
|
|
$
|
(103.0
|
)
|
|
$
|
(93.7
|
)
|
|
$
|
(397.5
|
)
|
|
Special items, net
|
|
$
|
(1.2
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
(5.9
|
)
|
|
$
|
(6.3
|
)
|
|
$
|
(14.4
|
)
|
|
Operating income (loss)
|
|
$
|
12.7
|
|
|
$
|
68.5
|
|
|
$
|
75.4
|
|
|
$
|
42.5
|
|
|
$
|
199.1
|
|
|
Other pension and postretirement benefits (costs), net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S. GAAP Pretax income
|
|
$
|
20.9
|
|
|
$
|
69.7
|
|
|
$
|
77.2
|
|
|
$
|
42.4
|
|
|
$
|
210.2
|
|
|
Underlying (Non-GAAP) Pretax income(1)
|
|
$
|
14.0
|
|
|
$
|
73.5
|
|
|
$
|
83.6
|
|
|
$
|
49.3
|
|
|
$
|
220.4
|
|
|
Europe:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
(226.1
|
)
|
|
$
|
(315.8
|
)
|
|
$
|
(330.8
|
)
|
|
$
|
(301.7
|
)
|
|
$
|
(1,174.4
|
)
|
|
Marketing, general and administrative expenses
|
|
$
|
(126.8
|
)
|
|
$
|
(138.0
|
)
|
|
$
|
(138.9
|
)
|
|
$
|
(126.6
|
)
|
|
$
|
(530.3
|
)
|
|
Special items, net
|
|
$
|
(2.6
|
)
|
|
$
|
(2.6
|
)
|
|
$
|
2.8
|
|
|
$
|
(2.6
|
)
|
|
$
|
(5.0
|
)
|
|
Operating income (loss)
|
|
$
|
26.1
|
|
|
$
|
68.3
|
|
|
$
|
94.3
|
|
|
$
|
42.3
|
|
|
$
|
231.0
|
|
|
Other pension and postretirement benefits (costs), net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
U.S. GAAP Pretax income
|
|
$
|
27.0
|
|
|
$
|
69.9
|
|
|
$
|
94.9
|
|
|
$
|
43.1
|
|
|
$
|
234.9
|
|
|
Underlying (Non-GAAP) Pretax income(1)
|
|
$
|
29.8
|
|
|
$
|
72.6
|
|
|
$
|
92.2
|
|
|
$
|
45.9
|
|
|
$
|
240.5
|
|
|
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
63.0
|
|
|
$
|
(23.5
|
)
|
|
$
|
45.2
|
|
|
$
|
38.2
|
|
|
$
|
122.9
|
|
|
Marketing, general and administrative expenses
|
|
$
|
(55.7
|
)
|
|
$
|
(56.2
|
)
|
|
$
|
(56.7
|
)
|
|
$
|
(71.2
|
)
|
|
$
|
(239.8
|
)
|
|
Special items, net
|
|
$
|
(0.1
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
Operating income (loss)
|
|
$
|
7.5
|
|
|
$
|
(79.4
|
)
|
|
$
|
(11.2
|
)
|
|
$
|
(33.0
|
)
|
|
$
|
(116.1
|
)
|
|
Other pension and postretirement benefits (costs), net
|
|
$
|
13.3
|
|
|
$
|
9.4
|
|
|
$
|
9.6
|
|
|
$
|
15.1
|
|
|
$
|
47.4
|
|
|
U.S. GAAP Pretax income
|
|
$
|
(85.1
|
)
|
|
$
|
(158.2
|
)
|
|
$
|
(92.7
|
)
|
|
$
|
(100.4
|
)
|
|
$
|
(436.4
|
)
|
|
Underlying (Non-GAAP) Pretax income(1)
|
|
$
|
(137.6
|
)
|
|
$
|
(123.6
|
)
|
|
$
|
(126.3
|
)
|
|
$
|
(123.3
|
)
|
|
$
|
(510.8
|
)
|
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
$
|
(1,372.3
|
)
|
|
$
|
(1,755.5
|
)
|
|
$
|
(1,589.1
|
)
|
|
$
|
(1,519.8
|
)
|
|
$
|
(6,236.7
|
)
|
|
Marketing, general and administrative expenses
|
|
$
|
(705.3
|
)
|
|
$
|
(782.4
|
)
|
|
$
|
(783.8
|
)
|
|
$
|
(780.5
|
)
|
|
$
|
(3,052.0
|
)
|
|
Special items, net
|
|
$
|
(6.7
|
)
|
|
$
|
(16.5
|
)
|
|
$
|
(4.1
|
)
|
|
$
|
(9.1
|
)
|
|
$
|
(36.4
|
)
|
|
Operating income (loss)
|
|
$
|
364.4
|
|
|
$
|
536.9
|
|
|
$
|
506.2
|
|
|
$
|
270.2
|
|
|
$
|
1,677.7
|
|
|
Other pension and postretirement benefits (costs), net
|
|
$
|
13.3
|
|
|
$
|
9.4
|
|
|
$
|
9.6
|
|
|
$
|
15.1
|
|
|
$
|
47.4
|
|
|
U.S. GAAP Pretax income
|
|
$
|
280.9
|
|
|
$
|
460.2
|
|
|
$
|
440.5
|
|
|
$
|
201.6
|
|
|
$
|
1,383.2
|
|
|
Underlying (Non-GAAP) Pretax income(1)
|
|
$
|
232.5
|
|
|
$
|
519.0
|
|
|
$
|
414.8
|
|
|
$
|
194.7
|
|
|
$
|
1,361.0
|
|
|
(1)
|
|
|
Included herein the Appendix are the definitions and reconciliations
of non-GAAP financial measures.
|
|
|
|
Worldwide Brand and Financial Volumes
|
Worldwide brand volume reflects only owned brands sold to unrelated
external customers within our geographic markets (net of returns and
allowances), royalty volume and our proportionate share of equity
investment worldwide brand volume calculated consistently with MCBC
owned volume. Contract brewing and wholesaler volume is included within
financial volume, but is removed from worldwide brand volume, as this is
non-owned volume for which we do not directly control performance. Our
worldwide brand volume definition also includes an adjustment from
Sales-to-Wholesaler (STW) volume to Sales-to-Retailer (STR) volume. We
believe the brand volume metric is important because, unlike financial
volume and STWs, it provides the closest indication of the performance
of our brands in relation to market and competitor sales trends.
Effective in the first quarter of 2018, we have revised our net sales
revenue (NSR) per HL performance discussions to be on a brand volume
basis, such that all per-hectoliter calculations now include owned and
actively managed brand volume, along with royalty volume, in the
denominator, as well as the financial impact of these sales in the
numerator, unless otherwise indicated.
In addition to financial measures presented on the basis of accounting
principles generally accepted in the U.S. ("U.S. GAAP"), we also present
"underlying pretax and net income," "underlying income per diluted
share," "underlying effective tax rate," and "underlying free cash
flow," which are non-GAAP measures and should be viewed as supplements
to (not substitutes for) our results of operations presented under
U.S. GAAP. We also present underlying earnings before interest, taxes,
depreciation, and amortization ("underlying EBITDA") as a non-GAAP
measure, as well as underlying EBITDA margin, which is calculated by
dividing underlying EBITDA by U.S. GAAP net sales. Our management uses
underlying income, underlying income per diluted share, underlying
EBITDA (and margin), and underlying effective tax rate as measures of
operating performance, as well as underlying free cash flow in the
measure of cash generated from core operations, to assist in comparing
performance from period to period on a consistent basis; as a measure
for planning and forecasting overall expectations and for evaluating
actual results against such expectations; in communications with the
board of directors, stockholders, analysts and investors concerning our
financial performance; as useful comparisons to the performance of our
competitors; and as metrics of certain management incentive compensation
calculations. We believe that underlying income, underlying income per
diluted share, underlying EBITDA (and margin), and underlying effective
tax rate performance are used by, and are useful to, investors and other
users of our financial statements in evaluating our operating
performance, as well as underlying free cash flow in evaluating our
generation of cash from core operations, because they provide an
additional tool to evaluate our performance without regard to special
and non-core items, which can vary substantially from company to company
depending upon accounting methods and book value of assets and capital
structure. In addition to the reasons discussed above, we consider
underlying free cash flow an important measure of our ability to
generate cash, grow our business and enhance shareholder value, driven
by core operations and after adjusting for non-core items. For
discussion and analysis of our liquidity, see the consolidated
statements of cash flows and the Liquidity and Capital Resources section
of our Management’s Discussion and Analysis of Financial Condition and
Results of Operations in our latest Form 10-K and 10-Q filings with the
SEC.
We have provided reconciliations of all historical non-GAAP measures to
their nearest U.S. GAAP measure and have consistently applied the
adjustments within our reconciliations in arriving at each non-GAAP
measure. These adjustments consist of special items from our U.S. GAAP
financial statements as well as other non-core items, such as
acquisition and integration related costs, unrealized mark-to-market
gains and losses, and gains and losses on sales of non-operating assets,
included in our U.S. GAAP results that warrant adjustment to arrive at
non-GAAP results. We consider these items to be necessary adjustments
for purposes of evaluating our ongoing business performance and are
often considered non-recurring. Such adjustments are subjective and
involve significant management judgment.
Our guidance for underlying Corporate MG&A, underlying depreciation and
amortization, underlying free cash flow, underlying effective tax rate,
and underlying Corporate net interest expense are also non-GAAP
financial measures that exclude or otherwise have been adjusted for
special items from our U.S. GAAP financial statements as well as other
non-core items, such as acquisition and integration related costs,
unrealized mark-to-market gains and losses, and gains and losses on
sales of non-operating assets, included in our U.S. GAAP results that
warrant adjustment to arrive at non-GAAP results. We consider these
items to be necessary adjustments for purposes of evaluating our ongoing
business performance and are often considered non-recurring. Such
adjustments are subjective and involve significant management judgment.
We are unable to reconcile the above described guidance measures to
their nearest U.S. GAAP measures without unreasonable efforts because we
are unable to predict with a reasonable degree of certainty the actual
impact of the special and other non-core items. By their very nature,
special and other non-core items are difficult to anticipate with
precision because they are generally associated with unexpected and
unplanned events that impact our company and its financial results.
Therefore, we are unable to provide a reconciliation of these measures.
|
|
|
Reconciliations to Nearest U.S. GAAP Measures
|
|
Underlying EBITDA
|
|
|
|
($ in millions) (Unaudited)
|
|
Three Months Ended
|
|
|
|
March 31, 2018
|
|
% change
|
|
March 31, 2017
|
|
U.S. GAAP: Net income (loss) attributable to MCBC
|
|
$
|
278.1
|
|
|
33.4
|
%
|
|
$
|
208.5
|
|
|
Add: Net income (loss) attributable to noncontrolling
interests
|
|
4.4
|
|
|
(32.3)
|
%
|
|
6.5
|
|
|
U.S. GAAP: Net income (loss)
|
|
282.5
|
|
|
31.4
|
%
|
|
215.0
|
|
|
Add: Interest expense (income), net
|
|
83.2
|
|
|
(13.9)
|
%
|
|
96.6
|
|
|
Add: Income tax expense (benefit)
|
|
74.9
|
|
|
13.7
|
%
|
|
65.9
|
|
|
Add: Depreciation and amortization
|
|
213.7
|
|
|
8.4
|
%
|
|
197.1
|
|
|
Adjustments included in underlying income(1)
|
|
(219.8
|
)
|
|
354.1
|
%
|
|
(48.4
|
)
|
|
Adjustments to arrive at underlying EBITDA(2)
|
|
(8.5
|
)
|
|
150.0
|
%
|
|
(3.4
|
)
|
|
Non-GAAP: Underlying EBITDA
|
|
$
|
426.0
|
|
|
(18.5)
|
%
|
|
$
|
522.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes adjustments to non-GAAP underlying income within the table
above related to special and non-core items.
|
|
|
|
(2)
|
|
Represents adjustments to remove amounts related to interest,
depreciation and amortization included in the adjustments to
non-GAAP underlying income above, as these items are added back as
adjustments to net income attributable to MCBC.
|
|
|
|
|
|
Underlying Free Cash Flow
|
|
|
|
|
(In millions) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
U.S. GAAP:
|
|
|
Net Cash Provided by (Used In) Operating Activities
|
|
|
$
|
315.2
|
|
|
|
$
|
(118.3
|
)
|
|
Less:
|
|
|
Additions to properties(1)
|
|
|
(208.3
|
)
|
|
|
(180.0
|
)
|
|
Add/Less:
|
|
|
Cash impact of special items(2)
|
|
|
(324.8
|
)
|
|
|
33.0
|
|
|
Add:
|
|
|
Non-core costs related to acquisition of businesses(3)
|
|
|
22.8
|
|
|
|
44.0
|
|
|
Non-GAAP:
|
|
|
Underlying Free Cash Flow
|
|
|
$
|
(195.1
|
)
|
|
|
$
|
(221.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Included in net cash used in investing activities.
|
|
|
|
(2)
|
|
Included in net cash provided by (used in) operating activities and
for the three months ended March 31, 2018, primarily reflects the
settlement payment received from ABI, and for the three months ended
March 31, 2017, primarily reflects costs paid for brewery closures
and restructuring activities.
|
|
|
|
(3)
|
|
Included in net cash provided by operating activities and reflects
costs paid associated with the Acquisition of 58% of MillerCoors,
LLC, and the Miller global brand portfolio.
|
|
|
|
Statements of Operations -- Molson Coors Brewing Company and
Subsidiaries
|
|
Condensed Consolidated Statements of
Operations
|
|
|
|
|
(In millions, except per share data) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
Financial volume in hectoliters
|
|
|
20.813
|
|
|
|
21.878
|
|
|
Sales
|
|
|
$
|
2,868.0
|
|
|
|
$
|
2,913.8
|
|
|
Excise taxes
|
|
|
(536.5
|
)
|
|
|
(465.1
|
)
|
|
Net sales
|
|
|
2,331.5
|
|
|
|
2,448.7
|
|
|
Cost of goods sold
|
|
|
(1,535.7
|
)
|
|
|
(1,372.3
|
)
|
|
Gross profit
|
|
|
795.8
|
|
|
|
1,076.4
|
|
|
Marketing, general and administrative expenses
|
|
|
(681.1
|
)
|
|
|
(705.3
|
)
|
|
Special items, net
|
|
|
314.8
|
|
|
|
(6.7
|
)
|
|
Operating income (loss)
|
|
|
429.5
|
|
|
|
364.4
|
|
|
Interest income (expense), net
|
|
|
(83.2
|
)
|
|
|
(96.6
|
)
|
|
Other pension and postretirement benefits (costs), net
|
|
|
10.0
|
|
|
|
13.3
|
|
|
Other income (expense), net
|
|
|
1.1
|
|
|
|
(0.2
|
)
|
|
Income (loss) before income taxes
|
|
|
357.4
|
|
|
|
280.9
|
|
|
Income tax benefit (expense)
|
|
|
(74.9
|
)
|
|
|
(65.9
|
)
|
|
Net income (loss)
|
|
|
282.5
|
|
|
|
215.0
|
|
|
Net (income) loss attributable to noncontrolling interests
|
|
|
(4.4
|
)
|
|
|
(6.5
|
)
|
|
Net income (loss) attributable to MCBC
|
|
|
$
|
278.1
|
|
|
|
$
|
208.5
|
|
|
|
|
|
|
|
|
|
|
Basic net income (loss) attributable to MCBC per share:
|
|
|
$
|
1.29
|
|
|
|
$
|
0.97
|
|
|
Diluted net income (loss) attributable to MCBC per share:
|
|
|
$
|
1.28
|
|
|
|
$
|
0.96
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares - basic
|
|
|
215.8
|
|
|
|
215.0
|
|
|
Weighted average shares - diluted
|
|
|
216.6
|
|
|
|
216.5
|
|
|
|
|
|
|
|
|
|
|
Dividends per share
|
|
|
$
|
0.41
|
|
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Molson Coors Brewing Company and Subsidiaries
U.S.
Results of Operations
|
|
|
|
|
|
|
|
|
|
(In millions) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
Financial volume in hectoliters(1)
|
|
|
14.718
|
|
|
|
15.772
|
|
|
Sales(1)
|
|
|
$
|
1,861.7
|
|
|
|
$
|
1,991.4
|
|
|
Excise taxes
|
|
|
(213.9
|
)
|
|
|
(241.5
|
)
|
|
Net sales(1)
|
|
|
1,647.8
|
|
|
|
1,749.9
|
|
|
Cost of goods sold(1)
|
|
|
(990.1
|
)
|
|
|
(1,025.1
|
)
|
|
Gross profit
|
|
|
657.7
|
|
|
|
724.8
|
|
|
Marketing, general and administrative expenses
|
|
|
(393.1
|
)
|
|
|
(405.7
|
)
|
|
Special items, net(2)
|
|
|
(1.5
|
)
|
|
|
(2.5
|
)
|
|
Operating income
|
|
|
263.1
|
|
|
|
316.6
|
|
|
Interest income (expense), net
|
|
|
(1.2
|
)
|
|
|
—
|
|
|
Other income (expense), net
|
|
|
(0.2
|
)
|
|
|
—
|
|
|
Income (loss) before income taxes
|
|
|
$
|
261.7
|
|
|
|
$
|
316.6
|
|
|
Add/(less):
|
|
|
|
|
|
|
|
Special items, net(2)
|
|
|
1.5
|
|
|
|
2.5
|
|
|
Acquisition and integration related costs(3)
|
|
|
1.1
|
|
|
|
4.5
|
|
|
Non-GAAP: Underlying pretax income (loss)
|
|
|
$
|
264.3
|
|
|
|
$
|
323.6
|
|
|
Add: Interest expense (income), net
|
|
|
1.2
|
|
|
|
—
|
|
|
Add: Depreciation and amortization
|
|
|
124.8
|
|
|
|
119.3
|
|
|
Adjustments to arrive at underlying EBITDA(4)
|
|
|
(1.4
|
)
|
|
|
—
|
|
|
Non-GAAP: Underlying EBITDA
|
|
|
$
|
388.9
|
|
|
|
$
|
442.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
Includes gross inter-segment sales, purchases, and volumes, which
are eliminated in the consolidated totals.
|
|
|
|
|
|
|
(2)
|
|
|
See Part I—Item 1. Financial Statements, Note 6, "Special Items" of
the Form 10-Q for detailed discussion of special items. Special
items for the three months ended March 31, 2018, includes
accelerated depreciation in excess of normal depreciation of $1.4
million. These accelerated depreciation charges are included in our
adjustments to arrive at underlying EBITDA.
|
|
|
|
|
|
|
(3)
|
|
|
For the three months ended March 31, 2018, and March 31, 2017, $1.1
million and $0.5 million, respectively, of integration costs were
incurred in cost of goods sold. For the three months ended March 31,
2017, integration costs of $4.0 million were incurred in marketing,
general & administrative expenses.
|
|
|
|
|
|
|
(4)
|
|
|
Represents adjustments to remove amounts related to interest,
depreciation and amortization included in the adjustments to
non-GAAP underlying income above, as these items are added back as
adjustments to net income attributable to MCBC.
|
|
|
|
|
|
|
Molson Coors Brewing Company and Subsidiaries
Canada
Results of Operations
|
|
|
|
|
|
|
(In millions) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
Financial volume in hectoliters(1)
|
|
|
1.707
|
|
|
|
1.793
|
|
|
Sales(1)
|
|
|
$
|
374.9
|
|
|
|
$
|
377.4
|
|
|
Excise taxes
|
|
|
(91.1
|
)
|
|
|
(86.3
|
)
|
|
Net sales(1)
|
|
|
283.8
|
|
|
|
291.1
|
|
|
Cost of goods sold(1)
|
|
|
(187.4
|
)
|
|
|
(181.1
|
)
|
|
Gross profit
|
|
|
96.4
|
|
|
|
110.0
|
|
|
Marketing, general and administrative expenses
|
|
|
(81.0
|
)
|
|
|
(96.1
|
)
|
|
Special items, net(2)
|
|
|
(5.6
|
)
|
|
|
(1.2
|
)
|
|
Operating income (loss)
|
|
|
9.8
|
|
|
|
12.7
|
|
|
Other income (expense), net
|
|
|
(0.7
|
)
|
|
|
8.2
|
|
|
Income (loss) before income taxes
|
|
|
$
|
9.1
|
|
|
|
$
|
20.9
|
|
|
Add/(less):
|
|
|
|
|
|
|
|
Special items, net(2)
|
|
|
5.6
|
|
|
|
1.2
|
|
|
Acquisition and integration related costs(3)
|
|
|
0.1
|
|
|
|
—
|
|
|
Other non-core items(4)
|
|
|
—
|
|
|
|
(8.1
|
)
|
|
Non-GAAP: Underlying pretax income (loss)
|
|
|
$
|
14.8
|
|
|
|
$
|
14.0
|
|
|
Add: Depreciation and amortization
|
|
|
36.0
|
|
|
|
30.8
|
|
|
Adjustments to arrive at underlying EBITDA(5)
|
|
|
(6.1
|
)
|
|
|
(1.2
|
)
|
|
Non-GAAP: Underlying EBITDA
|
|
|
$
|
44.7
|
|
|
|
$
|
43.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes gross inter-segment sales, purchases, and volumes, which
are eliminated in the consolidated totals.
|
|
|
|
(2)
|
|
See Part I—Item 1. Financial Statements, Note 6, "Special Items" of
the Form 10-Q for detailed discussion of special items. Special
items for the three months ended March 31, 2018, and March 31, 2017,
includes accelerated depreciation in excess of normal depreciation
of $1.0 million and $1.2 million, respectively, related to the
planned closure of the Vancouver brewery. Also incurred in the three
months ended March 31, 2018, are accelerated depreciation charges in
excess of normal depreciation of $5.1 million related to the planned
closure of our existing Montreal brewery. These accelerated
depreciation charges in excess of normal depreciation are included
in our adjustments to arrive at underlying EBITDA.
|
|
|
|
(3)
|
|
For the three months ended March 31, 2018, $0.1 million of
integration related costs were incurred in cost of goods sold.
|
|
|
|
(4)
|
|
For the three months ended March 31, 2017, a gain of $8.1 million
was recorded in other income (expense), net resulting from a
purchase price adjustment related to the historical sale of Molson
Inc.’s ownership interest in the Montreal Canadiens.
|
|
|
|
(5)
|
|
Represents adjustments to remove amounts related to interest,
depreciation and amortization included in the adjustments to
non-GAAP underlying income above, as these items are added back as
adjustments to net income attributable to MCBC.
|
|
|
|
|
|
Molson Coors Brewing Company and Subsidiaries
Europe
Results of Operations
|
|
|
|
|
|
|
(In millions) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
Financial volume in hectoliters(1)(2)
|
|
|
4.404
|
|
|
|
4.359
|
|
|
Sales(2)
|
|
|
$
|
598.5
|
|
|
|
$
|
514.4
|
|
|
Excise taxes
|
|
|
(224.2
|
)
|
|
|
(132.8
|
)
|
|
Net sales(2)
|
|
|
374.3
|
|
|
|
381.6
|
|
|
Cost of goods sold
|
|
|
(267.7
|
)
|
|
|
(226.1
|
)
|
|
Gross profit
|
|
|
106.6
|
|
|
|
155.5
|
|
|
Marketing, general and administrative expenses
|
|
|
(130.4
|
)
|
|
|
(126.8
|
)
|
|
Special items, net(3)
|
|
|
(5.1
|
)
|
|
|
(2.6
|
)
|
|
Operating income (loss)
|
|
|
(28.9
|
)
|
|
|
26.1
|
|
|
Interest income (expense), net
|
|
|
(0.7
|
)
|
|
|
1.0
|
|
|
Other income (expense), net
|
|
|
(0.3
|
)
|
|
|
(0.1
|
)
|
|
Income (loss) before income taxes
|
|
|
$
|
(29.9
|
)
|
|
|
$
|
27.0
|
|
|
Add/(less):
|
|
|
|
|
|
|
|
Special items, net(3)
|
|
|
5.1
|
|
|
|
2.6
|
|
|
Acquisition and integration related costs(4)
|
|
|
0.2
|
|
|
|
0.2
|
|
|
Non-GAAP: Underlying pretax income (loss)
|
|
|
$
|
(24.6
|
)
|
|
|
$
|
29.8
|
|
|
Add: Interest expense (income), net
|
|
|
0.7
|
|
|
|
(1.0
|
)
|
|
Add: Depreciation and amortization
|
|
|
49.4
|
|
|
|
43.8
|
|
|
Adjustments to arrive at underlying EBITDA(5)
|
|
|
(1.0
|
)
|
|
|
(2.2
|
)
|
|
Non-GAAP: Underlying EBITDA
|
|
|
$
|
24.5
|
|
|
|
$
|
70.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes royalty volume of 0.306 million hectoliters for the three
months ended March 31, 2018, and excludes royalty volume of 0.325
million hectoliters for the three months ended March 31, 2017,
respectively.
|
|
|
|
(2)
|
|
Includes gross inter-segment sales and volumes, which are eliminated
in the consolidated totals.
|
|
|
|
(3)
|
|
See Part I—Item 1. Financial Statements, Note 6, "Special Items" of
the Form 10-Q for detailed discussion of special items. Special
items for the three months ended March 31, 2018, and March 31, 2017,
includes accelerated depreciation in excess of normal depreciation
of $1.0 million and $2.2 million, respectively, related to the
closure of our Burton South brewery in the U.K., which was completed
in the first quarter of 2018. These accelerated depreciation charges
in excess of normal depreciation are included in our adjustments to
arrive at underlying EBITDA.
|
|
|
|
(4)
|
|
For both the three months ended March 31, 2018, and March 31, 2017,
$0.2 million of acquisition and integration related costs were
incurred in cost of goods sold.
|
|
|
|
(5)
|
|
Represents adjustments to remove amounts related to interest,
depreciation and amortization included in the adjustments to
non-GAAP underlying income above, as these items are added back as
adjustments to net income attributable to MCBC.
|
|
|
|
|
|
Molson Coors Brewing Company and Subsidiaries
International
Results of Operations
|
|
|
|
|
|
|
(In millions) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
Financial volume in hectoliters(1)
|
|
|
0.520
|
|
|
|
0.528
|
|
|
Sales
|
|
|
$
|
64.8
|
|
|
|
$
|
66.3
|
|
|
Excise taxes
|
|
|
(7.3
|
)
|
|
|
(4.5
|
)
|
|
Net sales
|
|
|
57.5
|
|
|
|
61.8
|
|
|
Cost of goods sold(2)
|
|
|
(37.8
|
)
|
|
|
(39.0
|
)
|
|
Gross profit
|
|
|
19.7
|
|
|
|
22.8
|
|
|
Marketing, general and administrative expenses
|
|
|
(15.1
|
)
|
|
|
(21.0
|
)
|
|
Special items, net(3)
|
|
|
(1.0
|
)
|
|
|
(0.3
|
)
|
|
Operating income (loss)
|
|
|
3.6
|
|
|
|
1.5
|
|
|
Other income (expense), net
|
|
|
0.1
|
|
|
|
—
|
|
|
Income (loss) before income taxes
|
|
|
$
|
3.7
|
|
|
|
$
|
1.5
|
|
|
Add/(less):
|
|
|
|
|
|
|
|
Special items, net(3)
|
|
|
1.0
|
|
|
|
0.3
|
|
|
Acquisition and integration related costs(4)
|
|
|
—
|
|
|
|
0.9
|
|
|
Non-GAAP: Underlying pretax income (loss)
|
|
|
$
|
4.7
|
|
|
|
$
|
2.7
|
|
|
Add: Depreciation and amortization
|
|
|
2.4
|
|
|
|
2.3
|
|
|
Non-GAAP: Underlying EBITDA
|
|
|
$
|
7.1
|
|
|
|
$
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Excludes royalty volume of 0.410 million hectoliters for the three
months ended March 31, 2018, and excludes royalty volume of 0.473
million hectoliters for the three months ended March 31, 2017.
|
|
|
|
(2)
|
|
Includes gross inter-segment purchases, which are eliminated in the
consolidated totals.
|
|
|
|
(3)
|
|
See Part I—Item 1. Financial Statements, Note 6, "Special Items" of
the Form 10-Q for detailed discussion of special items.
|
|
|
|
(4)
|
|
For the three months ended March 31, 2017, integration costs of $0.9
million were incurred in marketing, general & administrative
expenses.
|
|
|
|
|
|
Molson Coors Brewing Company and Subsidiaries
Corporate
Results of Operations
|
|
|
|
|
|
|
(In millions) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
Financial volume in hectoliters
|
|
|
—
|
|
|
|
—
|
|
|
Sales
|
|
|
$
|
0.2
|
|
|
|
$
|
0.3
|
|
|
Excise taxes
|
|
|
—
|
|
|
|
—
|
|
|
Net sales
|
|
|
0.2
|
|
|
|
0.3
|
|
|
Cost of goods sold
|
|
|
(84.8
|
)
|
|
|
63.0
|
|
|
Gross profit
|
|
|
(84.6
|
)
|
|
|
63.3
|
|
|
Marketing, general and administrative expenses
|
|
|
(61.5
|
)
|
|
|
(55.7
|
)
|
|
Special items, net(1)
|
|
|
328.0
|
|
|
|
(0.1
|
)
|
|
Operating income (loss)
|
|
|
181.9
|
|
|
|
7.5
|
|
|
Interest expense, net
|
|
|
(81.3
|
)
|
|
|
(97.6
|
)
|
|
Other pension and postretirement benefits (costs), net
|
|
|
10.0
|
|
|
|
13.3
|
|
|
Other income (expense), net
|
|
|
2.2
|
|
|
|
(8.3
|
)
|
|
Income (loss) before income taxes
|
|
|
$
|
112.8
|
|
|
|
$
|
(85.1
|
)
|
|
Add/(less):
|
|
|
|
|
|
|
|
Special items, net(1)
|
|
|
(328.0
|
)
|
|
|
0.1
|
|
|
Acquisition and integration related costs(2)
|
|
|
8.8
|
|
|
|
13.4
|
|
|
Unrealized mark-to-market (gains) and losses(3)
|
|
|
84.7
|
|
|
|
(63.1
|
)
|
|
Non-core other pension and postretirement benefits (costs), net(4)
|
|
|
0.1
|
|
|
|
(2.9
|
)
|
|
Non-GAAP: Underlying pretax income (loss)
|
|
|
$
|
(121.6
|
)
|
|
|
$
|
(137.6
|
)
|
|
Add: Interest expense (income), net
|
|
|
81.3
|
|
|
|
97.6
|
|
|
Add: Depreciation and amortization
|
|
|
1.1
|
|
|
|
0.9
|
|
|
Non-GAAP: Underlying EBITDA
|
|
|
$
|
(39.2
|
)
|
|
|
$
|
(39.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
See Part I—Item 1. Financial Statements, Note 6, "Special Items" of
the Form 10-Q for detailed discussion of special items.
|
|
|
|
(2)
|
|
In connection with the acquisition, for the three months ended March
31, 2018, and March 31, 2017, we have recorded $8.8 million and
$13.4 million, respectively, of integration costs within marketing,
general & administrative expenses.
|
|
|
|
(3)
|
|
The unrealized changes in fair value on our commodity swaps, which
are economic hedges, are recorded as cost of goods sold within our
Corporate business activities. As the exposure we are managing is
realized, we reclassify the gain or loss to the segment in which the
underlying exposure resides, allowing our segments to realize the
economic effects of the derivative without the resulting unrealized
mark-to-market volatility.
|
|
|
|
(4)
|
|
For the three months ended March 31, 2017, includes the
retrospective impact of the FASB's new guidance and moving the
non-service cost component of net periodic pension and other
postretirement benefits to the Corporate segment. See Part I—Item 1.
Financial Statements, Note 2, "New Accounting Pronouncements" of the
Form 10-Q for detailed discussion.
|
|
|
|
|
|
Balance Sheet
|
|
|
|
Condensed Consolidated Balance Sheets
|
|
|
|
(In millions, except par value) (Unaudited)
|
|
As of
|
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
|
Assets
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
197.9
|
|
|
|
$
|
418.6
|
|
|
Accounts receivable, net
|
|
779.3
|
|
|
|
733.8
|
|
|
Other receivables, net
|
|
168.0
|
|
|
|
168.2
|
|
|
Inventories, net
|
|
665.6
|
|
|
|
591.5
|
|
|
Other current assets, net
|
|
326.2
|
|
|
|
277.6
|
|
|
Total current assets
|
|
2,137.0
|
|
|
|
2,189.7
|
|
|
Properties, net
|
|
4,680.8
|
|
|
|
4,673.7
|
|
|
Goodwill
|
|
8,442.7
|
|
|
|
8,405.5
|
|
|
Other intangibles, net
|
|
14,237.6
|
|
|
|
14,296.5
|
|
|
Other assets
|
|
686.4
|
|
|
|
681.5
|
|
|
Total assets
|
|
$
|
30,184.5
|
|
|
|
$
|
30,246.9
|
|
|
Liabilities and equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable and other current liabilities
|
|
$
|
2,537.1
|
|
|
|
$
|
2,684.5
|
|
|
Current portion of long-term debt and short-term borrowings
|
|
1,591.3
|
|
|
|
714.8
|
|
|
Total current liabilities
|
|
4,128.4
|
|
|
|
3,399.3
|
|
|
Long-term debt
|
|
9,527.0
|
|
|
|
10,598.7
|
|
|
Pension and postretirement benefits
|
|
838.0
|
|
|
|
848.5
|
|
|
Deferred tax liabilities
|
|
1,688.7
|
|
|
|
1,648.6
|
|
|
Other liabilities
|
|
338.9
|
|
|
|
316.8
|
|
|
Total liabilities
|
|
16,521.0
|
|
|
|
16,811.9
|
|
|
Molson Coors Brewing Company stockholders' equity
|
|
|
|
|
|
|
Capital stock:
|
|
|
|
|
|
|
Preferred stock, $0.01 par value (authorized: 25.0 shares; none
issued)
|
|
—
|
|
|
|
—
|
|
|
Class A common stock, $0.01 par value per share (authorized: 500.0
shares; issued and
outstanding: 2.6 shares and 2.6 shares,
respectively)
|
|
—
|
|
|
|
—
|
|
|
Class B common stock, $0.01 par value per share (authorized: 500.0
shares; issued: 205.1
shares and 204.7 shares, respectively)
|
|
2.0
|
|
|
|
2.0
|
|
|
Class A exchangeable shares, no par value (issued and outstanding:
2.9
shares and 2.9 shares, respectively)
|
|
107.7
|
|
|
|
107.7
|
|
|
Class B exchangeable shares, no par value (issued and outstanding:
14.7 shares and 14.7
shares, respectively)
|
|
553.2
|
|
|
|
553.2
|
|
|
Paid-in capital
|
|
6,697.4
|
|
|
|
6,688.5
|
|
|
Retained earnings
|
|
7,367.9
|
|
|
|
7,206.1
|
|
|
Accumulated other comprehensive income (loss)
|
|
(810.9
|
)
|
|
|
(860.0
|
)
|
|
Class B common stock held in treasury at cost (9.5 shares and 9.5
shares, respectively)
|
|
(471.4
|
)
|
|
|
(471.4
|
)
|
|
Total Molson Coors Brewing Company stockholders' equity
|
|
13,445.9
|
|
|
|
13,226.1
|
|
|
Noncontrolling interests
|
|
217.6
|
|
|
|
208.9
|
|
|
Total equity
|
|
13,663.5
|
|
|
|
13,435.0
|
|
|
Total liabilities and equity
|
|
$
|
30,184.5
|
|
|
|
$
|
30,246.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow Statement
|
|
|
|
|
Condensed Consolidated Statements of Cash
Flows
|
|
|
|
|
($ in millions) (Unaudited)
|
|
|
Three Months Ended
|
|
|
|
|
March 31, 2018
|
|
|
March 31, 2017
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests
|
|
|
$
|
282.5
|
|
|
|
$
|
215.0
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
213.7
|
|
|
|
197.1
|
|
|
Amortization of debt issuance costs and discounts
|
|
|
4.1
|
|
|
|
6.5
|
|
|
Share-based compensation
|
|
|
14.8
|
|
|
|
15.5
|
|
|
(Gain) loss on sale or impairment of properties and other assets, net
|
|
|
0.7
|
|
|
|
(4.4
|
)
|
|
Unrealized (gain) loss on foreign currency fluctuations and
derivative instruments, net
|
|
|
83.5
|
|
|
|
(62.4
|
)
|
|
Income tax (benefit) expense
|
|
|
74.9
|
|
|
|
65.9
|
|
|
Income tax (paid) received
|
|
|
(8.9
|
)
|
|
|
(10.9
|
)
|
|
Interest expense, excluding interest amortization
|
|
|
79.3
|
|
|
|
91.7
|
|
|
Interest paid
|
|
|
(115.2
|
)
|
|
|
(120.7
|
)
|
|
Pension expense (benefit)
|
|
|
(14.9
|
)
|
|
|
(16.3
|
)
|
|
Pension contributions paid
|
|
|
(2.5
|
)
|
|
|
(36.0
|
)
|
|
Change in current assets and liabilities and other
|
|
|
(296.8
|
)
|
|
|
(459.3
|
)
|
|
Net cash provided by (used in) operating activities
|
|
|
315.2
|
|
|
|
(118.3
|
)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
Additions to properties
|
|
|
(208.3
|
)
|
|
|
(180.0
|
)
|
|
Proceeds from sales of properties and other assets
|
|
|
1.6
|
|
|
|
42.0
|
|
|
Other
|
|
|
(45.4
|
)
|
|
|
5.9
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(252.1
|
)
|
|
|
(132.1
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
Exercise of stock options under equity compensation plans
|
|
|
6.1
|
|
|
|
0.3
|
|
|
Dividends paid
|
|
|
(88.5
|
)
|
|
|
(88.3
|
)
|
|
Debt issuance costs
|
|
|
—
|
|
|
|
(3.7
|
)
|
|
Payments on debt and borrowings
|
|
|
(0.8
|
)
|
|
|
(1,501.1
|
)
|
|
Proceeds on debt and borrowings
|
|
|
—
|
|
|
|
1,536.0
|
|
|
Net proceeds from (payments on) revolving credit facilities and
commercial paper
|
|
|
(248.7
|
)
|
|
|
131.0
|
|
|
Change in overdraft balances and other
|
|
|
42.0
|
|
|
|
6.1
|
|
|
Net cash provided by (used in) financing activities
|
|
|
(289.9
|
)
|
|
|
80.3
|
|
|
Cash and cash equivalents:
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(226.8
|
)
|
|
|
(170.1
|
)
|
|
Effect of foreign exchange rate changes on cash and cash equivalents
|
|
|
6.1
|
|
|
|
4.2
|
|
|
Balance at beginning of year
|
|
|
418.6
|
|
|
|
560.9
|
|
|
Balance at end of period
|
|
|
$
|
197.9
|
|
|
|
$
|
395.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations to Nearest U.S. GAAP Measures by Line Item
|
|
|
|
|
|
|
First Quarter 2018
|
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) (Unaudited)
|
|
|
Net sales
|
|
Cost of goods
sold(1)
|
|
Gross profit
|
|
Marketing,
general and
administrative
expenses(2)
|
|
Special items,
net(3)
|
|
Operating
income (loss)
|
|
Reported (U.S. GAAP)
|
|
|
$
|
2,331.5
|
|
$
|
(1,535.7
|
)
|
|
$
|
795.8
|
|
$
|
(681.1
|
)
|
|
$
|
314.8
|
|
|
$
|
429.5
|
|
|
Adjustments to arrive at underlying:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee-related charges
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
3.9
|
|
|
3.9
|
|
|
Impairments or asset abandonment charges
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
9.3
|
|
|
9.3
|
|
|
Termination fees and other (gains) losses
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(328.0
|
)
|
|
(328.0
|
)
|
|
Non-Core items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration related costs
|
|
|
—
|
|
1.4
|
|
|
1.4
|
|
8.8
|
|
|
—
|
|
|
10.2
|
|
|
Unrealized mark-to-market (gains) losses
|
|
|
—
|
|
84.7
|
|
|
84.7
|
|
—
|
|
|
—
|
|
|
84.7
|
|
|
Tax effects on special and non-GAAP items
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Underlying (Non-GAAP)
|
|
|
$
|
2,331.5
|
|
$
|
(1,449.6
|
)
|
|
$
|
881.9
|
|
$
|
(672.3
|
)
|
|
$
|
—
|
|
|
$
|
209.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter 2018
|
|
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In millions, except per share data)
(Unaudited)
|
|
Interest
income
(expense),
net
|
|
Other pension
and
postretirement
benefits
(costs),
net(4)
|
|
Other
income
(expense),
net
|
|
Income
(loss)
before
income
taxes
|
|
Income
tax
benefit
(expense)
|
|
Net income
(loss)
attributable
to
MCBC
|
|
Net income
(loss)
attributable to
MCBC
per
diluted share
|
|
Reported (U.S. GAAP)
|
|
$
|
(83.2
|
)
|
|
$
|
10.0
|
|
|
$
|
1.1
|
|
|
$
|
357.4
|
|
|
$
|
(74.9
|
)
|
|
$
|
278.1
|
|
|
$
|
1.28
|
|
|
Adjustments to arrive at underlying:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Special items, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employee-related charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.9
|
|
|
—
|
|
|
3.9
|
|
|
0.02
|
|
|
Impairments or asset abandonment charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.3
|
|
|
—
|
|
|
9.3
|
|
|
0.04
|
|
|
Termination fees and other (gains) losses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(328.0
|
)
|
|
—
|
|
|
(328.0
|
)
|
|
(1.51
|
)
|
|
Non-Core items
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Integration related costs
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.2
|
|
|
—
|
|
|
10.2
|
|
|
0.05
|
|
|
Unrealized mark-to-market (gains) losses
|
|
—
|
|
|
—
|
|
|
—
|
|
|
84.7
|
|
|
—
|
|
|
84.7
|
|
|
0.39
|
|
|
Non-core other pension and postretirement
benefits (costs),
net
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
Tax effects on special and non-GAAP items
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46.0
|
|
|
46.0
|
|
|
0.21
|
|
|
Underlying (Non-GAAP)
|
|
$
|
(83.2
|
)
|
|
$
|
10.1
|
|
|
$
|
1.1
|
|
|
$
|
137.6
|
|
|
$
|
(28.9
|
)
|
|
$
|
104.3
|
|
|
$
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Adjustments relate to the following segments: U.S. segment $1.1
million, Canada segment $0.1 million, Europe segment $0.2 million,
Corporate segment $84.7 million.
|
|
|
|
(2)
|
|
Adjustments relate to the following segment: Corporate segment $8.8
million.
|
|
|
|
(3)
|
|
Adjustments relate to the following segments: U.S. segment $1.5
million, Canada segment $5.6 million, Europe segment $5.1 million,
International segment $1.0 million, Corporate segment $(328.0)
million.
|
|
|
|
(4)
|
|
Adjustments relate to the following segment: Corporate segment $0.1
million.
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20180502005219/en/
Source: Molson Coors