Core Insights - Molson Coors Brewing reported $3.2 billion in revenue for Q2 2025, a year-over-year decline of 1.6%, but exceeded the Zacks Consensus Estimate of $3.12 billion by 2.61% [1] - The company achieved an EPS of $2.05, up from $1.92 a year ago, surpassing the consensus EPS estimate of $1.83 by 12.02% [1] Financial Performance - Brand Volume - Consolidated: 20.61 million, slightly below the estimated 20.68 million [4] - Brand Volumes - Americas: 15.04 million, exceeding the average estimate of 14.78 million [4] - Brand Volumes - EMEA&APAC: 5.57 million, close to the average estimate of 5.6 million [4] - Net Sales - Americas: $2.5 billion, above the average estimate of $2.42 billion, representing a year-over-year decline of 2.8% [4] - Net Sales - Unallocated & Eliminations: -$7.9 million, worse than the average estimate of -$6.27 million, but showing a year-over-year improvement of 14.5% [4] - Net Sales - EMEA&APAC: $703.9 million, exceeding the estimated $686.59 million, with a year-over-year increase of 3% [4] Market Performance - Molson Coors shares returned -0.8% over the past month, underperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance in the near term [3]

Financial Data and Key Metrics Changes - The company is reducing its top and bottom line guidance for 2025, now expecting net sales revenue to decline by 3% to 4% on a constant currency basis, compared to a previous low single-digit decline [11] - Underlying pretax income is now expected to decline by 12% to 15% on a constant currency basis, a significant change from the previous low single-digit decline [12] - Underlying earnings per share are anticipated to decline by 7% to 10%, contrasting with earlier expectations of low single-digit growth [12] - The company reaffirms its underlying free cash flow guidance of $1,300 million plus or minus 10% [36] Business Line Data and Key Metrics Changes - Core power brands, including Coors Light, Miller Lite, and Coors Banquet, maintained a 15.2% volume share of the industry for the first half of the year, up from 13.4% three years ago [15] - Banquet has shown strong performance with over 15% distribution growth in the first half of the year [16] - The company is experiencing a shift to value-seeking behaviors in the U.S., focusing on pack size rather than brand loyalty [18] Market Data and Key Metrics Changes - The U.S. beer industry is down approximately 5% year-to-date, which is worse than previously expected [9] - The Midwest premium pricing has increased by over 180% since January, significantly impacting costs [10] - In Canada, the Molson family of brands gained volume share despite a challenging industry backdrop [17] Company Strategy and Development Direction - The company continues to focus on premiumization in both beer and beyond beer categories, despite current market pressures [18] - The strategy includes leveraging capabilities and partnerships to support profitable growth and maintaining the health of core brands [24] - The company is committed to executing its share repurchase program and has repurchased 9.4% of its outstanding shares [25] Management's Comments on Operating Environment and Future Outlook - Management views the current softness in industry performance as cyclical, driven by macroeconomic factors [13] - Consumer sentiment in the U.S. remains low, particularly affecting lower-income and Hispanic consumers [6][7] - Management believes that consumer confidence will eventually improve, although the timing is uncertain [42] Other Important Information - The company has raised its quarterly dividend each year since 2021 and continues to execute its share repurchase plan [25] - The integration of Fever Tree is progressing well, and it is expected to contribute positively to brand mix in the Americas [23] Q&A Session Questions and Answers Question: Can you unpack the updated guidance and the profit headwinds, specifically regarding aluminum and the Midwest premium? - Management indicated that the industry did not improve as expected, and the dramatic increase in the Midwest premium significantly impacted Q2 and future assumptions [39][40] Question: Have you seen any increases from the Midwest premium in Q2, or is that expected in the back half of the year? - Management confirmed that the Midwest premium increased unexpectedly, with an anticipated impact of $20 million to $35 million for the remainder of the year [58] Question: What is the company's confidence level regarding the cyclical nature of the current industry decline? - Management maintains that the current decline is cyclical and believes consumer confidence will eventually recover [42][56] Question: How is the company addressing the competitive environment and potential changes in marketing strategies? - Management is focusing on driving brand campaigns and leveraging partnerships to improve market share, particularly in the on-premise channel [96] Question: Can you provide insights on the volume deleverage impact for the second half of the year? - Management expects to reverse a volume deleverage of approximately 300,000 hectoliters in the second half, mainly in Q3 [103]

Financial Data and Key Metrics Changes - The company is reducing its top and bottom line guidance for 2025, now expecting net sales revenue to decline by 3% to 4% on a constant currency basis, compared to a previous low single-digit decline expectation [10][12] - Underlying pretax income is now expected to decline by 12% to 15% on a constant currency basis, a significant change from the previous low single-digit decline forecast [12] - Underlying earnings per share are anticipated to decline by 7% to 10%, contrasting with earlier expectations of low single-digit growth [12] Business Line Data and Key Metrics Changes - The U.S. beer industry is experiencing a decline of approximately 5% in the second quarter, which is worse than previously expected [8][10] - Core power brands, including Coors Light, Miller Lite, and Coors Banquet, have retained a 15.2% volume share of the industry for the first half of the year, up from 13.4% three years ago [15] - Banquet has shown strong performance, gaining over 15% distribution in the first half of the year and being a top five volume share growth brand [16] Market Data and Key Metrics Changes - Consumer sentiment in the U.S. remains low, particularly affecting lower-income and Hispanic consumers, leading to reduced consumption trends [5][6] - In Canada, the Molson family of brands has posted volume share gains despite a challenging industry backdrop [17] - The UK market remains highly competitive, with brands like Carling and Ajusco maintaining segment leadership despite regional softness [17] Company Strategy and Development Direction - The company is focusing on premiumization across its portfolio, with plans to develop both beer and beyond beer products [18][20] - The strategy includes leveraging capabilities and partnerships to support profitable growth, particularly in the U.S. market [14] - The company aims to maintain the health of its core power brands while navigating macroeconomic pressures [25] Management's Comments on Operating Environment and Future Outlook - Management views the current softness in industry performance as cyclical, driven by macroeconomic factors, and expects consumer confidence to eventually improve [13][44] - The company is committed to protecting and growing its underlying free cash flow while making prudent capital allocation decisions [37] - Management acknowledges the challenges posed by the Midwest premium pricing, which has increased significantly, impacting cost structures [9][12] Other Important Information - The company has executed a share repurchase program, repurchasing 9.4% of its outstanding shares since its announcement in October 2023 [27] - The company has raised its quarterly dividend each year since 2021, reflecting confidence in its financial health [27] Q&A Session Summary Question: Can you unpack the updated guidance and profit headwinds? - Management indicated that the industry did not improve as expected, with a significant increase in the Midwest premium impacting guidance negatively [40][41] Question: What is the impact of Midwest Premium increases? - The company expects an incremental impact of $20 million to $35 million from the Midwest premium for the balance of the year, with a full-year impact of $40 million to $55 million [55] Question: Are there signs of improvement in consumer confidence? - Management noted that overall consumer confidence has not improved, with value-conscious behaviors continuing among consumers [61][62] Question: How is the company addressing competitive pressures? - The company is focusing on marketing strategies for key brands and leveraging partnerships to enhance market presence [91] Question: What are the drivers of margin contraction? - Management highlighted that volume deleverage, higher COGS due to premiumization, and Midwest premium costs are significant factors affecting margins [75]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents Molson Coors Beverage Company's unaudited condensed consolidated financial statements for Q2 2025, covering operations, balance sheets, cash flows, and accounting notes [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Six-month net sales decreased to **$5.50 billion**, with net income attributable to Molson Coors falling to **$549.7 million** Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Financial Metric | 2025 (in millions) | 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net sales | $5,504.9 | $5,848.7 | -5.9% | | Gross profit | $2,132.8 | $2,293.4 | -7.0% | | Operating income | $769.9 | $913.9 | -15.8% | | Net income attributable to MCBC | $549.7 | $634.8 | -13.4% | | Diluted EPS | $2.71 | $2.99 | -9.4% | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$26.83 billion** as of June 30, 2025, with liabilities and equity also rising Balance Sheet Summary | Account | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | **Assets** | | | | Total Current Assets | $3,076.1 | $2,848.4 | | Goodwill | $5,592.0 | $5,582.3 | | Other Intangibles, net | $12,394.4 | $12,195.2 | | **Total Assets** | **$26,826.7** | **$26,064.3** | | **Liabilities & Equity** | | | | Total Current Liabilities | $3,240.6 | $3,045.2 | | Long-term Debt | $6,257.0 | $6,113.9 | | **Total Liabilities** | **$13,030.0** | **$12,611.6** | | **Total Equity** | **$13,636.3** | **$13,284.2** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to **$627.6 million**, resulting in a **$355.5 million** net decrease in cash Cash Flow Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash from operating activities | $627.6 | $894.6 | | Net cash used in investing activities | $(499.7) | $(381.4) | | Net cash from (used in) financing activities | $(506.2) | $285.6 | | **Net decrease (increase) in cash** | **$(355.5)** | **$778.4** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, Fevertree investment, share repurchases, goodwill impairment, debt, and segment performance - In Q1 2025, the company obtained exclusive rights to produce, market, and sell Fever-Tree products in the U.S. and made a minority investment of **$88.1 million** in Fevertree Drinks plc[45](index=45&type=chunk)[46](index=46&type=chunk) Share Repurchase Program (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Shares repurchased | 5,509,009 | 6,339,782 | | Aggregate cost (in millions) | $309.6 | $374.5 | - The fair value of the Americas reporting unit was in excess of its carrying value by less than **15%** as of the October 1, 2024, annual impairment test, indicating a heightened risk of future impairment[59](index=59&type=chunk) - On January 29, 2025, the company paid **$60.6 million** to resolve the trademark infringement lawsuit filed by Stone Brewing Company[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 performance, noting a **1.6% consolidated net sales decrease** driven by volume declines, while highlighting strong liquidity Consolidated Net Sales Change Drivers (Q2 2025 vs Q2 2024) | Driver | Percentage Change | | :--- | :--- | | Financial Volume | (7.0)% | | Price and Sales Mix | 4.4% | | Currency | 1.0% | | **Total Net Sales** | **(1.6)%** | - Global market conditions, including inflation and geopolitical events, are creating consumer and economic uncertainty, with heightened competition in the U.S. leading to reduced market share for some products[108](index=108&type=chunk) - Net cash from operating activities for the first six months of 2025 decreased to **$627.6 million** from **$894.6 million** in the prior year, primarily due to lower net income, unfavorable working capital movements (including a **$60.6 million** litigation payment), and higher interest paid[165](index=165&type=chunk) [Consolidated Results of Operations](index=30&type=section&id=Consolidated%20Results%20of%20Operations) Q2 2025 consolidated net sales decreased **1.6%** to **$3.20 billion** due to **7.0% volume decline** - Financial volumes decreased **7.0%** in Q2 2025, primarily due to lower shipments in both the Americas and EMEA&APAC segments[119](index=119&type=chunk) - Cost of goods sold per hectoliter rose **7.3%** in Q2 2025, driven by unfavorable mix from lower contract brewing volumes, cost inflation, and unfavorable mark-to-market changes on commodity derivatives[125](index=125&type=chunk) - MG&A expenses decreased **4.9%** in Q2 2025, mainly due to the timing of marketing investments and lower incentive compensation expense[128](index=128&type=chunk) [Segment Results of Operations](index=34&type=section&id=Segment%20Results%20of%20Operations) Americas Q2 2025 net sales declined **2.8%**, while EMEA&APAC net sales grew **3.0%** Americas Segment Net Sales Change Drivers (Q2 2025 vs Q2 2024) | Driver | Percentage Change | | :--- | :--- | | Financial Volume | (6.6)% | | Price and Sales Mix | 4.0% | | Currency | (0.2)% | | **Total Net Sales** | **(2.8)%** | EMEA&APAC Segment Net Sales Change Drivers (Q2 2025 vs Q2 2024) | Driver | Percentage Change | | :--- | :--- | | Financial Volume | (7.8)% | | Price and Sales Mix | 5.5% | | Currency | 5.3% | | **Total Net Sales** | **3.0%** | - Americas Q2 financial volume fell **6.6%** due to U.S. industry softness, lower market share, and a **~3%** impact from exiting contract brewing arrangements[141](index=141&type=chunk) - EMEA&APAC Q2 income before taxes declined **20.2%**, primarily due to lower volumes and higher U.K. waste management fees[154](index=154&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Strong liquidity maintained with **$613.8 million** cash and an undrawn **$2.0 billion** credit facility - Cash and cash equivalents totaled **$613.8 million** as of June 30, 2025, down from **$969.3 million** at year-end 2024[168](index=168&type=chunk) - On June 26, 2025, the company extended the maturity of its **$2.0 billion** multi-currency revolving credit facility to June 26, 2030, which was undrawn as of June 30, 2025[172](index=172&type=chunk) - The company is evaluating alternatives for its 2026 debt maturities, including potential refinancing[162](index=162&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risks from interest rates, foreign currency, and commodity prices are analyzed for potential fair value impacts Market Risk Sensitivity Analysis (Fair Value Impact of Adverse Change) | Risk Type | Adverse Change Scenario | Impact as of June 30, 2025 (in millions) | | :--- | :--- | :--- | | Interest Rate Risk | +1% interest rates | $(414.6) | | Foreign Exchange Risk | 10% adverse FX change | $(154.5) | | Commodity Price Risk | 10% adverse price change | $(40.6) | [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of June 30, 2025, with no material internal control changes - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of June 30, 2025[199](index=199&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[200](index=200&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 10 for litigation and environmental proceedings; no new material legal proceedings disclosed - For details on legal proceedings, the report refers to Note 10 in Part I, Item 1, which discusses the resolution of the Stone Brewing lawsuit and other contingencies[202](index=202&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors disclosed in the company's 2024 Annual Report[202](index=202&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Repurchased **4.47 million** shares for **$249.7 million** in Q2 2025; **$904.2 million** remains for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | April 2025 | 355,896 | $59.30 | | May 2025 | 3,717,501 | $55.42 | | June 2025 | 398,982 | $50.13 | | **Total** | **4,472,379** | **$55.26** | - As of June 30, 2025, approximately **$904.2 million** remained authorized for repurchase under the company's share repurchase program[204](index=204&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including management compensation, credit facility extension, and certifications - Exhibits filed include management compensation plans, an extension agreement for the company's credit facility, and required CEO/CFO certifications[208](index=208&type=chunk)

Financial Performance - Consolidated revenue increased by 70% to $403 million[13,41] - Adjusted EBITDA rose by 77% to $129 million[13,41] - AFFO increased significantly by 759% to $28 million[13,41] Segment Results - America segment revenue grew by 44% to $303 million, driven by digital revenue growth of 111% to $114 million[10,14,16,41] - Airports segment revenue increased substantially by 156% to $100 million, with digital revenue up by 315% to $64 million[10,17,19,41] Capital Structure and Liquidity - Debt was reduced by $226 million, reaching $5067 billion[24] - Cash interest payments increased by $30 million to $121 million[24] Guidance - The company reaffirmed its full-year consolidated revenue guidance, expecting a 4% to 6% increase, reaching between $1570 billion and $1600 billion[10,31] - Full-year Adjusted EBITDA guidance is set between $490 million and $505 million, representing a 3% to 6% increase[31] - Full-year AFFO guidance is projected between $75 million and $85 million, indicating a 28% to 45% increase[31]

Molson Coors Beverage Co. lowered its full-year guidance for the second quarter in a row, citing continued pressure from a weak consumer, falling US market share and rising costs tied to aluminum tariffs https://t.co/6ioLB9xR3q ...

[Molson Coors Q2 2025 Earnings Release](index=1&type=section&id=Molson%20Coors%20Beverage%20Company%20Reports%202025%20Second%20Quarter%20Results) [Financial Highlights & Executive Summary](index=1&type=section&id=2025%20SECOND%20QUARTER%20FINANCIAL%20HIGHLIGHTS) Molson Coors reported a 1.6% decrease in net sales for Q2 2025, citing macroeconomic pressures, industry softness, and weaker U.S. market share, yet Underlying (Non-GAAP) diluted EPS grew by 6.8% due to lower expenses and share repurchases, leading to a revised full-year 2025 guidance downwards for net sales and pre-tax income while reaffirming free cash flow forecast Q2 2025 Financial Highlights | Metric | Value | Change | | :--- | :--- | :--- | | Net Sales | $3,200.8 million | -1.6% | | U.S. GAAP Income Before Taxes | $554.9 million | -0.9% | | Underlying (Non-GAAP) Income Before Taxes | $531.5 million | -0.8% (Constant Currency) | | U.S. GAAP Diluted EPS | $2.13 | +4.9% | | Underlying (Non-GAAP) Diluted EPS | $2.05 | +6.8% | Updated Full-Year 2025 Guidance | Metric | Previous Guidance | Updated Guidance | | :--- | :--- | :--- | | Net Sales (Constant Currency) | Low single-digit decline | 3% to 4% decline | | Underlying Income Before Taxes (Constant Currency) | Low-single digit decline | 12% to 15% decline | | Underlying Diluted EPS | Low single-digit growth | 7% to 10% decline | | Underlying Free Cash Flow | $1.3 billion ± 10% | Unchanged | - CEO Gavin Hattersley attributed the weaker results to the macroeconomic environment, softer U.S. share performance, and the discontinuation of contract brewing arrangements, partially offset by strong pricing, favorable shipment timing, and lower MG&A expenses[4](index=4&type=chunk) - CFO Tracey Joubert highlighted the company's strong balance sheet and cash generation, which enabled the return of **$500 million** to shareholders in the first half of the year through dividends and share repurchases[6](index=6&type=chunk) [Consolidated Financial Performance](index=2&type=section&id=CONSOLIDATED%20PERFORMANCE%20-%20SECOND%20QUARTER%202025) For Q2 2025, consolidated net sales fell 1.6% to $3.2 billion, primarily due to a **7.0%** decline in financial volume, partially mitigated by a **4.4%** favorable impact from price and sales mix, with cost of goods sold (COGS) per hectoliter rising **7.3%** due to unfavorable mix, cost inflation, and volume deleverage Consolidated Performance vs. Q2 2024 | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $3,200.8 million | $3,252.3 million | (1.6)% | | Income Before Taxes (GAAP) | $554.9 million | $559.9 million | (0.9)% | | Financial Volume (M hL) | 20.870 | 22.430 | (7.0)% | | Brand Volume (M hL) | 20.612 | 21.715 | (5.1)% | Q2 2025 Net Sales Drivers | Driver | Impact on Net Sales | | :--- | :--- | | Financial Volume | (7.0)% | | Price and Sales Mix | 4.4% | | Currency | 1.0% | | **Total Consolidated Net Sales** | **(1.6)%** | - COGS per hectoliter increased by **7.3%** on a reported basis due to unfavorable mix (lower contract brewing), volume deleverage, cost inflation, and unfavorable mark-to-market adjustments on commodity derivatives[12](index=12&type=chunk) - Marketing, general & administrative (MG&A) expenses decreased **4.9%**, mainly due to the timing of marketing investments and lower incentive compensation[15](index=15&type=chunk) [Segment Performance](index=4&type=section&id=QUARTERLY%20SEGMENT%20HIGHLIGHTS%20(VERSUS%20SECOND%20QUARTER%202024%20RESULTS)) The Americas segment experienced a **2.8%** net sales decline due to lower volumes, particularly from the exit of contract brewing arrangements, though its income before taxes increased **10.5%**, while the EMEA&APAC segment saw a **3.0%** rise in net sales, driven by favorable currency and price/mix, but faced a **20.2%** drop in income before taxes due to a significant **7.8%** volume decrease and higher costs [Americas Segment](index=4&type=section&id=Americas%20Segment%20Overview) Americas segment net sales fell **2.8%** to **$2.5 billion** in Q2 2025, with a **6.6%** decline in financial volume impacted by lower U.S. brand volume and the cessation of contract brewing, yet U.S. GAAP income before income taxes rose **10.5%** to **$538.2 million** due to favorable mix, lower MG&A expenses, and cost savings Americas Segment Q2 2025 Results | Metric | Q2 2025 | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | | Net Sales | $2,504.8 million | (2.8)% | (2.6)% | | Income Before Taxes (GAAP) | $538.2 million | 10.5% | 10.4% | | Underlying Income Before Taxes | $514.2 million | 5.5% | 5.4% | - Financial volumes decreased by **6.6%**, with approximately **3%** of this decline attributed to the **exit of contract brewing arrangements** in the U.S. and Canada at the end of 2024[20](index=20&type=chunk) - U.S. brand volumes decreased **5.3%**, affected by the macroeconomic environment and lower market share performance[20](index=20&type=chunk) [EMEA&APAC Segment](index=5&type=section&id=EMEA%26APAC%20Segment%20Overview) The EMEA&APAC segment's net sales grew **3.0%** to **$703.9 million** in Q2 2025, largely due to a **5.3%** favorable currency impact and a **5.5%** improvement in price and sales mix, but these gains were offset by a sharp **7.8%** decline in financial and brand volumes, leading to a **20.2%** fall in U.S. GAAP income before income taxes to **$64.8 million** EMEA&APAC Segment Q2 2025 Results | Metric | Q2 2025 | % Change (Reported) | % Change (Constant Currency) | | :--- | :--- | :--- | :--- | | Net Sales | $703.9 million | 3.0% | (2.3)% | | Income Before Taxes (GAAP) | $64.8 million | (20.2)% | (26.8)% | | Underlying Income Before Taxes | $72.4 million | (10.6)% | (17.9)% | - Financial and brand volumes both decreased by **7.8%**, driven by soft market demand and a heightened competitive landscape across all regions[27](index=27&type=chunk) - The decline in income before taxes was primarily due to lower volumes and higher U.K. waste management fees resulting from new regulations[31](index=31&type=chunk) [Financial Position and Outlook](index=6&type=section&id=CASH%20FLOW%20AND%20LIQUIDITY%20HIGHLIGHTS) For the first half of 2025, cash from operations declined significantly year-over-year, leading to a higher net debt to underlying EBITDA ratio of **2.41x**, prompting the company to lower its 2025 guidance for sales and earnings while maintaining its free cash flow target, with a regular quarterly dividend declared and new U.S. tax legislation expected to provide a cash tax benefit [Cash Flow and Liquidity](index=6&type=section&id=Cash%20Flow%20and%20Liquidity) Net cash from operating activities for the first six months of 2025 was **$627.6 million**, a decrease of **$267.0 million** from the prior year, driven by lower net income and unfavorable working capital changes, including a **$60.6 million litigation payment**, resulting in total debt of **$6.32 billion** and a net debt to underlying EBITDA ratio of **2.41x** - The decrease in operating cash flow was primarily due to lower net income, unfavorable working capital movements (including a **$60.6 million litigation payment**), and higher interest paid[29](index=29&type=chunk) Debt Position as of June 30, 2025 | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Debt | $6,319.3 million | - | | Net Debt | $5,705.5 million | - | | Net Debt to Underlying EBITDA Ratio | 2.41x | 2.13x | - In the first six months of 2025, the company paid **$192.7 million in dividends** and repurchased **$306.8 million of its shares**[36](index=36&type=chunk) [2025 Outlook (Guidance)](index=7&type=section&id=2025%20OUTLOOK) Molson Coors adjusted its 2025 guidance downwards due to the global macroeconomic environment, its impact on consumer trends, and lower-than-expected U.S. market share, now projecting a net sales decline of **3% to 4%** and an underlying pre-tax income decline of **12% to 15%** on a constant currency basis, while reaffirming the underlying free cash flow guidance of **$1.3 billion**, plus or minus **10%** - Guidance was adjusted due to the impacts of the global macroeconomic environment, consumer trends, and lower-than-expected U.S. share performance[32](index=32&type=chunk) Key Full-Year 2025 Guidance Metrics | Metric | Guidance | | :--- | :--- | | Net Sales (Constant Currency) | 3% to 4% decline | | Underlying Income Before Taxes (Constant Currency) | 12% to 15% decline | | Underlying Diluted EPS | 7% to 10% decline | | Underlying Free Cash Flow | $1.3 billion ± 10% | | Capital Expenditures | $650 million ± 5% | [Subsequent Events](index=7&type=section&id=SUBSEQUENT%20EVENTS) After the quarter closed, on July 16, 2025, the Board of Directors declared a quarterly dividend of **$0.47 per share**, and the enactment of the One Big Beautiful Bill Act (OBBBA) in the U.S. on July 4, 2025, is expected to decrease the company's cash tax liability for the current year - A dividend of **$0.47 per share** was declared on July 16, 2025, payable on September 19, 2025[33](index=33&type=chunk) - The newly enacted OBBBA tax law is anticipated to reduce the company's current year cash tax liability, though the full impact is still under evaluation[34](index=34&type=chunk) [Appendix: Financial Statements & Reconciliations](index=12&type=section&id=APPENDIX) The appendix contains detailed unaudited financial statements for Q2 and the first six months of 2025, including Condensed Consolidated Statements of Operations, Balance Sheets, and Cash Flows, alongside extensive definitions and reconciliations of U.S. GAAP measures to non-GAAP metrics like Underlying Income, Underlying Free Cash Flow, Constant Currency results, and Underlying EBITDA, ensuring transparency in adjusted performance - The appendix includes detailed Condensed Consolidated Statements of Operations, Balance Sheets, and Statements of Cash Flows[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - It provides definitions for key non-GAAP measures, including Underlying Income, Underlying Free Cash Flow, and Constant Currency, which management uses for performance evaluation[54](index=54&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - Detailed reconciliation tables are provided to bridge the gap between reported U.S. GAAP figures and the non-GAAP metrics presented, both by line item and by business segment[60](index=60&type=chunk)[64](index=64&type=chunk)

Core Viewpoint - Molson Coors Beverage Company (TAP) is anticipated to report declines in both revenue and earnings for Q2 2025, with revenues expected at $3.1 billion, reflecting a 3.8% decrease year-over-year, and earnings per share (EPS) projected at $1.83, indicating a 4.7% drop from the previous year [1][10]. Financial Performance - The Zacks Consensus Estimate for TAP's revenues is $3.1 billion, down 3.8% from the prior year [1]. - The consensus estimate for earnings has decreased by one cent to $1.83 per share, representing a 4.7% decline year-over-year [1]. - In the last reported quarter, TAP experienced a negative earnings surprise of 37.5%, with an average trailing four-quarter earnings surprise of 0.2% [2]. Market Conditions - The company's Americas business is facing challenges due to tough macroeconomic conditions in the U.S., adversely affecting the U.S. beer industry and TAP's financial and brand volumes [4]. - Factors such as broader industry weakness, loss of contract brewing volume, and difficult year-over-year comparisons are expected to negatively impact Q2 performance [4]. - Macroeconomic headwinds, subdued consumer demand, and the exit from low-margin contract brewing arrangements are contributing to the company's struggles [5]. Strategic Initiatives - Despite the challenges, TAP's Acceleration Plan has supported market share gains through innovation and premiumization, with strategic investments in core brands likely cushioning performance [7]. - The company is focusing on revitalization by streamlining operations and reinvesting in brands, which has driven sustainable growth [7]. - TAP has enhanced its digital capabilities and expanded brewing and packaging operations in the U.K., driven by the success of its Madri brand [8]. Valuation Insights - TAP is trading at a forward 12-month price-to-earnings ratio of 7.94X, which is below its five-year high of 15.57X and the industry average of 13.72X, indicating an attractive investment opportunity [11]. - Over the past three months, TAP shares have declined by 16.1%, compared to a 13.6% decline in the industry [12].

Core Insights - Molson Coors Beverage Company (TAP) is focusing on premiumization as a key strategy for long-term growth, aiming to improve margins and attract consumers [1][4] - The company is shifting its portfolio towards higher-margin products like Peroni, Madrí, and Blue Moon, while also expanding into non-alcoholic and beyond-beer categories [1][3] - Despite these efforts, TAP is facing challenges from a tough macroeconomic environment, leading to a decline in consolidated net sales revenues by 10.4% and a 15.7% drop in U.S. financial volume in Q1 2025 [2][7] Premiumization Strategy - The premiumization strategy includes investments in brands like Fever-Tree and ZOA to cater to a wider range of consumers, particularly Gen Z [1] - New premium products such as Peroni and Madrí are showing positive early signs, with Peroni experiencing increased placements and Madrí becoming a top 10 global brand for Molson Coors [3][4] - The launch of Blue Moon Non-Alc and Blue Moon High ABV extensions aims to attract health-conscious consumers and diversify the product offering [3] Financial Performance - In Q1 2025, while net sales revenue per hectoliter increased by 4.8% in the Americas due to premium mix gains and pricing, it was insufficient to offset the overall volume declines [2][4] - TAP's shares have decreased by 8.9% over the past six months, underperforming the Zacks Beverages - Soft Drinks industry growth of 9.7% and the broader Consumer Staples industry's return of 6.8% [5][7] - The stock is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 8.27X, which is below the industry average of 15.45X, indicating it may be undervalued [8]

Core Viewpoint - Bank of America Securities analyst downgraded Molson Coors Beverage Company from Buy to Neutral, lowering the price forecast from $65 to $50 due to ongoing challenges in the U.S. beer market [1][2] Company Summary - The analyst had previously upgraded Molson Coors, anticipating a return to normal beer volume trends by 2025 and stabilization of market share, which would support margins and cash flow visibility [1] - However, the expected recovery has not occurred, with industry volumes continuing to fall below historical levels and Molson Coors losing market share [2] - The stock's valuation now reflects ongoing uncertainty in the market [2] Valuation Adjustments - The price forecast was revised based on an 8.3x fiscal year 2026 EPS forecast, down from a previous 9.9x, aligning it more closely with U.S. packaged food peers facing similar growth challenges [3] - Fiscal year 2025 and 2026 EPS estimates were cut from $6.02/$6.55 to $5.70/$6.02 due to a weaker-than-expected second quarter and cautious revenue outlook [6] Market Dynamics - The competitive landscape is likened to a "sheep, parasites, and wolves" analogy, where spirits are seen as wolves taking market share, energy drinks as parasites leveraging beer distribution, and beer companies like Molson Coors as sheep losing ground [4] - The analyst revised the 2025 industry volume forecast from a 1.0% decline to a sharper 4.0% drop, reflecting increased competitive pressure [5]