News

Molson Coors Beverage Company TAP has posted impressive first-quarter 2024 results, wherein both bottom and top lines surpassed the Zacks Consensus Estimate. Also, both metrics improved year over year. The quarterly results have gained from brand strength and favorable shipment timing in the United States.

The quarterly performance highlights significant progress against the Acceleration Plan. The strength of core power brands leads to double-digit brand volume growth for Coors Light and Coors Banquet, and high-single-digit brand volume growth for Miller Lite in the United States, and double-digit brand volume growth for Ozujsko in Croatia. The above premium portfolio, encompassing both beer and beyond beer, benefits from continued growth from successful innovations like Madri in the U.K. and Simply Spiked in the United States and Canada.

The Zacks Rank #3 (Hold) company has gained 3.3% in the past six months against the industry’s 2.3% decline.

Molson Coors Beverage Company Price, Consensus and EPS Surprise

Quarterly Details

The company’s adjusted earnings of 95 cents per share increased 75.9% year over year and surpassed the Zacks Consensus Estimate of 71 cents.

Net sales grew 10.7% year over year to $2,596.4 million and beat the Zacks Consensus Estimate of $2,499 million. On a constant-currency basis, net sales rose 10.1%, driven by a positive price and sales mix, increased financial volumes, and the positive impacts of foreign currency.

Financial volumes rose 5.7% year over year, mainly driven by gains in the Americas segment. Brand volumes saw a 4.4% uplift, fueled by a 5.3% rise in the Americas and a 1.9% increase in EMEA&APAC.

Net sales were positively influenced by the price and sales mix, which contributed to a 4.4% increase, predominantly due to higher net pricing and a favorable sales mix, which stemmed from reduced contract brewing volume in the Americas segment.

Gross profit increased 25% year over year to $963.5 million. We note that the gross margin expanded 430 basis points (bps) to 37.1% in the quarter under review.

Marketing, general and administrative (MG&A) expenses rose 6.4% year over year to $654.6 million on a reported basis, primarily driven by heightened marketing investments to bolster its brands and innovations, along with the adverse effects of foreign currency fluctuations. The underlying MG&A also saw a 6.4% increase when adjusted for constant currency.

The underlying earnings before taxes (EBT) advanced 64% year over year to $258.8 million on a reported basis. On a constant-currency basis, underlying EBT jumped 68.8%, primarily attributed to higher financial volume, increased net pricing and a favorable sales mix. These gains were partially offset by cost inflation and manufacturing expenses, along with increased MG&A expenses.

Image Source: Zacks Investment Research

Segmental Information

Molson Coors operates under the following geographical segments.

Americas: Net sales in the segment increased 10.6% year over year to $2,145.4 million on both reported and constant-currency basis, driven by a positive price and sales mix, as well as higher financial volume. Financial volumes rose 7.5% year over year, driven by an increase in U.S. brand volumes stemming from higher volumes in the core brands, partly offset by lower contract brewing volume.

Brand volumes grew 5.3% year over year, with the United States seeing a 5.8% increase, primarily attributed to the expansion of core brands. Both Coors Light and Coors Banquet saw double-digit growth, whereas Miller Lite increased in the high-single digits. Canadian brand volumes rose 3.6%, fueled by growth in above-premium brands.

Net sales received a boost of 3.1% from the price and sales mix mainly due to increased net pricing and a favorable shift in sales mix, driven by reduced contract brewing volume in the United States. Underlying EBT improved 37.8% on a constant-currency basis to $321.1 million. The increase can be attributed to higher net pricing, rising financial volumes, a favorable sales mix and cost-saving initiatives, offset by cost inflation on materials and higher MG&A expenses.

EMEA&APAC: The segment’s net sales (on a reported basis) rose 10.9% year over year to $454.7 million and improved 8% on a constant-currency basis, driven by a favorable price and sales mix, and favorable currency, partly offset by a decline in financial volumes.

Financial volumes decreased 0.2% year over year due to lower volumes in Western Europe, impacted by challenges in the U.K. off-premise channel, partially offset by increased volumes in Central and Eastern Europe as inflation pressures ease for this market. Brand volumes increased 1.9% primarily due to increased volumes in Central and Eastern Europe as a result of easing inflationary pressures on consumers, partially offset by lower volumes in Western Europe.

The price and sales mix favorably impacted net sales by 8.2% primarily due to premiumization and increased net pricing to customers. The segment’s underlying EBT increased 28.4% year over year to $17.3 million on a constant-currency basis, driven by higher net pricing to customers and a favorable sales mix, partially offset by higher MG&A expenses.

Other Financial Updates

Molson Coors ended the first quarter with cash and cash equivalents of $458.4 million. As of Mar 31, 2023, the company had a total debt of $ 6.22 billion, resulting in a net debt of $5.76 billion.

Net cash provided by operating activities amounted to $25.4 million for the three months ending on Mar 31, 2024. The company's 2024 capital expenditure is estimated to be $750 million.

In the three months ending on Mar 31, 2024, the company repurchased 1,760,115 shares as part of the program approved on Sep 29, 2023.

Outlook

Management has issued a guidance for 2024. Net sales are projected to grow year over year in the low-single digits on a constant-currency basis. Underlying EBT is likely to grow in the mid-single digits on a constant-currency basis. Underlying earnings per share are likely to rise in the mid-single digits from that reported in 2023.

Underlying depreciation and amortization are projected to be $700 million, plus or minus 5%. The company expects an underlying effective tax rate of 23-25% for 2024. Consolidated net interest expenses are anticipated to be $210 million, plus or minus 5%. The underlying free cash flow is likely to be $1.2 billion, plus or minus 10%.

Stocks to Consider

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely PepsiCo, Inc. PEP, Colgate-Palmolive CL and Celsius Holdings, Inc. CELH.

PepsiCo is one of the leading global food and beverage companies. It currently carries a Zacks Rank #2 (Buy). PEP has a trailing four-quarter earnings surprise of 5.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for PepsiCo’s current financial year’s sales and earnings suggests growth of 3.4% and 7.1%, respectively, from the year-ago reported numbers.

Colgate, a leading consumer goods company, currently carries a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.4%, on average.

The Zacks Consensus Estimate for CL’s current financial-year sales and earnings suggests growth of 3.3% and 8.4%, respectively, from the year-ago reported figures.

Celsius Holdings specializes in commercializing healthier, nutritional functional foods, beverages and dietary supplements. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings indicates advancements of 41.6% each from the year-ago reported figures. It has a trailing four-quarter earnings surprise of 67.4%, on average.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

It’s an American AI company that’s riding low right now, but it has rounded up clients like BMW, GE, Dell Computer, and Bosch. It has prospects for not just doubling but quadrupling in the year to come. Of course, all our picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.

Free: See Our Top Stock And 4 Runners Up

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.