Molson Coors(TAP) - 2025 Q2 - Quarterly Results

Molson Coors Q2 2025 Earnings Release Financial Highlights & Executive Summary 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] - 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] Consolidated Financial Performance 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] - Marketing, general & administrative (MG&A) expenses decreased 4.9%, mainly due to the timing of marketing investments and lower incentive compensation[15] Segment Performance 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 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] - U.S. brand volumes decreased 5.3%, affected by the macroeconomic environment and lower market share performance[20] EMEA&APAC Segment 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] - The decline in income before taxes was primarily due to lower volumes and higher U.K. waste management fees resulting from new regulations[31] Financial Position and Outlook 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 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] 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] 2025 Outlook (Guidance) 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] 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 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] - 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] Appendix: Financial Statements & Reconciliations 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][45][46] - 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][55][57] - 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][64]