Molson Coors(US:TAP)2020-07-30 20:44Financial Data and Key Metrics Changes - Net sales revenue decreased by 14.3% in constant currency, primarily due to brand volume declines, especially in the on-premise channel, which remained largely closed during the quarter [31][32] - Underlying EBITDA increased by 2.2% on a constant currency basis, driven by cost savings and a favorable resolution of a property tax appeal [36] - Underlying free cash flow for the six months ended June 30, 2020, was $796.4 million, an increase of $235.7 million compared to the prior year [37] Business Line Data and Key Metrics Changes - Coors Light achieved its highest segment share ever in the United States, while Blue Moon LightSky became the top-selling beer of 2020 according to Nielsen [15] - Vizzy, launched in April, became the number three seltzer in several markets, outperforming Bud Light seltzer in repeat purchase rates [16] - Brand volume decreased by 11.6% worldwide, with financial volume down by 12.5%, reflecting unfavorable shipment timing in the U.S. and lower contract brewing volume [34] Market Data and Key Metrics Changes - In North America, net sales revenue decreased by 7.9% in constant currency, driven by brand volume declines and unfavorable shipment timing [39] - In Europe, net sales decreased by 42.4% in constant currency, heavily impacted by the closure of on-premise locations [43] - Latin America experienced brand volume declines, with net sales per hectoliter on a brand volume basis decreasing [41] Company Strategy and Development Direction - The company is focused on navigating short-term challenges while positioning for long-term success, including investments in hard seltzer production capacity [23][27] - A new action plan was developed to increase diversity and inclusivity within the company, alongside a commitment to sustainability goals [10][12] - The company aims to maintain its investment-grade rating while taking steps to protect its balance sheet during the pandemic [55][58] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer demand has shifted significantly, with a surge in demand for cans and a global can shortage affecting supply [19][20] - The company does not expect to reinstate guidance due to ongoing uncertainty from the pandemic, but will provide visibility on trends [30][50] - Management expressed confidence in the strength of their iconic brands and the potential for growth in the above-premium segment [27][60] Other Important Information - The company suspended its dividend for the remainder of the 2020 fiscal year to strengthen its cash position [17][58] - The company completed the acquisition of Atwater Brewing, expanding its footprint in the craft beverage market [25] Q&A Session Summary Question: Can you provide an update on the hard seltzer strategy and market share potential for Vizzy? - Management confirmed a clear strategy for hard seltzers, focusing on Vizzy and Coors Seltzer, with positive early signs for Vizzy's market reception [66][68] Question: What is the current state of the on-premise recovery in the UK and Europe? - Management indicated that on-premise locations in Central Europe have reopened at reduced capacity, while the UK began reopening on July 4 [75][76] Question: Are there signs of consumers trading down to more affordable brands due to recession? - Management stated that there has not been significant evidence of consumers trading down yet, with continued support for premium brands [77][78] Question: Can you provide insights on COGS per hectoliter and future expectations? - Management noted a 0.4% increase in underlying COGS per hectoliter, driven by volume deleverage, but highlighted strong cost savings initiatives [82][84] Question: What are the supply constraints currently faced? - Management acknowledged unprecedented demand for 12-ounce cans and ongoing supply constraints, but noted improvements are beginning to occur [109][110]