Molson Coors(TAP) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (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 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 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 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 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][46] 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] - On January 29, 2025, the company paid $60.6 million to resolve the trademark infringement lawsuit filed by Stone Brewing Company[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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] - 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] Consolidated Results of Operations 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] - 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] - MG&A expenses decreased 4.9% in Q2 2025, mainly due to the timing of marketing investments and lower incentive compensation expense[128] Segment Results of Operations 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] - EMEA&APAC Q2 income before taxes declined 20.2%, primarily due to lower volumes and higher U.K. waste management fees[154] Liquidity and Capital Resources 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] - 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] - The company is evaluating alternatives for its 2026 debt maturities, including potential refinancing[162] Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 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] - 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] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 6. Exhibits 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]