Domestic Net Revenue Per Hectoliter Grew 1.6
Percent in the Quarter; STR Volume Down 4.0%
Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) today
reported that MillerCoors third quarter underlying net income, a
non-GAAP measure, increased 9.6 percent to $377.5 million versus
the same period in the prior year. This increase was driven
primarily by higher net pricing, positive sales mix and lower cost
of goods sold. MillerCoors sales-to-retail volume (STRs) decreased
4.0% in the third quarter and sales-to-wholesalers volume (STWs)
was down 0.6%.
“Now that we are officially part of the Molson Coors Brewing
Company, we are more focused than ever on getting to growth,” said
Gavin Hattersley, MillerCoors chief executive officer. “Joining
forces with Molson Coors adds to the momentum we gained this
quarter, as underlying net income grew and our premium light beers
continued to gain segment share. While STR volumes were down this
quarter, reflecting industry trends, we remain steadfast in our
drive to achieve flat volume in 2018 and growth in 2019.”
Third Quarter Highlights
Unless otherwise indicated, all amounts are in U.S. dollars and
calculated in accordance with generally accepted accounting
principles in the U.S. (U.S. GAAP). All market share references are
per A.C. Nielsen. Percentages are versus the prior year comparable
period and include MillerCoors operations in the U.S. and Puerto
Rico.
- U.S. GAAP net income was $369.2
million, up 16.7 percent.
- Underlying net income, a non-GAAP
measure, increased 9.6 percent to $377.5 million.
- Total net sales increased 0.4 percent
to $2.008 billion.
- Domestic net revenue per hectoliter,
excluding contract brewing and company-owned distributor sales,
increased 1.6 percent.
- Total cost of goods sold (COGS) per
hectoliter decreased 0.9 percent.
- Domestic sales-to-retail volume (STRs)
decreased 4.0 percent.
- Domestic sales-to-wholesalers volume
(STWs) decreased 0.6 percent.
Brand Highlights for the Third Quarter
Miller Lite gained share of the Premium Light segment for the
eighth consecutive quarter, but STRs were down mid-single digits.
The brand recently brought back the limited release Steinie bottle,
building on the success of the same seasonal release last year. The
Steinie, available through the holiday season, will be supported
through robust media support and a variety of on- and off-premise
tools. The brand also launched new ads comparing the beer to its
chief competitor, with all the commercials emphasizing that Miller
Lite has “more taste, less calories and half the carbs.”
Coors Light gained share of the Premium Light segment for the
sixth consecutive quarter, but STRs were down low-single digits.
The brand was recognized with a bronze medal at the Great American
Beer Festival last month. Coors Light recently announced a number
of retail promotions around college football, from celebrity
ambassadors to pregame concerts, now through the National
Championship in January.
Total MillerCoors Above Premium STRs finished down mid-single
digits, despite success from Henry’s Hard Soda, which continues as
the number-one Hard Soda franchise according to Nielsen. The Redd’s
family declined high-single digits, as low-single-digit growth of
the Wicked brands was more than offset by declines across the
balance of the Redd’s portfolio.
The MillerCoors Tenth & Blake portfolio finished the quarter
down high-single digits. The Blue Moon Brewing Company STRs
declined high-single digits, led by declines in Blue Moon
seasonals. The Jacob Leinenkugel Brewing Company STRs were down
mid-teens, partially caused by Summer Shandy demand outselling
production a month earlier than planned.
MillerCoors recently announced that, due to the current scale of
Blue Moon and Leinenkugel’s and the capacity needed to fuel their
growth, both brand families will be moved out of Tenth and Blake
and into the MillerCoors commercial organization.
The belief is that the shift of Blue Moon and Leinenkugel’s to
the MillerCoors organization will not only allow a deeper focus on
and commitment to these two strategic brand families, but it will
also enable Tenth and Blake to focus on the development and
integration of our new craft partners into the MillerCoors system.
With Tenth and Blake’s acquisitions of Saint Archer Brewery,
Terrapin Beer Company, Hop Valley Brewing and Revolver Brewing, our
portfolio of craft brands has grown within the past 11 months.
Nearly a year after partnering with Tenth and Blake, Saint Archer
Brewing in San Diego achieved its highest-ever STR volume in the
quarter. Saint Archer is currently working to expand its presence
at retail, having recently launched in Las Vegas and Arizona, and
is considering additional markets for expansion. Revolver, which
joined Tenth and Blake just months ago, took home a gold medal at
the Great American Beer Festival for its Anodyne Wheat Wine.
In the Premium Regular segment, Coors Banquet gained segment
share and grew STR volume low-single digits for the quarter and
remains on target for a 10th consecutive year of growth. According
to Nielsen, Coors Banquet remains the only national Premium Regular
brand that is growing, and was recognized for the third consecutive
year at the Great American Beer Festival by taking home a silver
medal. The growth from Banquet partially offset a low-double-digit
decline for Miller Genuine Draft, resulting in the Premium Regular
segment finishing down mid-single digits.
The MillerCoors Below Premium portfolio decreased mid-single
digits, driven by a low-single-digit decline of Miller High Life, a
mid-single-digit decline in Keystone and a high-single-digit
decline in Milwaukee’s Best. While Icehouse grew low-single digits
for the fourth consecutive quarter, the Steel Reserve franchise was
down low-single digits, with the Steel Alloy Series up low-single
digits. Milwaukee’s Best recently updated its packaging, which is
in market now, while Keystone Light will follow suit with refreshed
packaging of its own.
Financial Highlights for the Third Quarter
Domestic net revenue per hectoliter grew 1.6 percent for the
quarter as a result of favorable net pricing and positive sales
mix.
Total company net revenue per hectoliter, including contract
brewing and company-owned distributor sales, increased 1.5 percent.
Third-party contract brewing volumes were down 5.0 percent.
Total COGS per hectoliter decreased 0.9 percent, driven by
supply chain cost savings and lower commodity pricing, partially
offset by lower fixed-cost absorption due to lower volumes.
Marketing, general and administrative costs were unchanged for
the quarter.
MillerCoors achieved $19 million of cost savings in the quarter,
primarily related to brewery efficiencies and procurement
savings.
Depreciation and amortization expenses for MillerCoors were
$118.5 million. These results include $34.3 million of accelerated
depreciation expenses that are included in special items related to
the September closure of the Eden, North Carolina brewery.
Additions to tangible and intangible assets, which do not include
intangible asset additions related to the craft acquisitions,
totaled $84.1 million in the quarter.
MillerCoors recognized net special charges of $8.3 million,
primarily related to the closure of the Eden Brewery.
Overview of MillerCoors
Through its diverse collection of storied breweries, MillerCoors
brings American beer drinkers an unmatched selection of the highest
quality beers, flavored malt beverages and ciders, steeped in
centuries of brewing heritage. Miller Brewing Company and Coors
Brewing Company brew national favorites such as Miller Lite, Miller
High Life, Coors Light and Coors Banquet. MillerCoors also proudly
offers beers such as Leinenkugel’s Summer Shandy from
sixth-generation Jacob Leinenkugel Brewing Company, and Blue Moon
Belgian White from modern craft pioneer Blue Moon Brewing Company,
founded in 1995. Beyond beer, MillerCoors operates Crispin Cider
Company, an artisanal maker of pear and apple ciders using
fresh-pressed American juice, and offers pioneering brands such as
the Redd’s franchise, Smith & Forge Hard Cider and Henry’s Hard
Sodas. Tenth and Blake Beer Company, our craft and import division,
is the home to craft brewers Hop Valley Brewing, Revolver Brewing,
Saint Archer Brewing Company and the Terrapin Beer Company. Tenth
and Blake also imports world-renowned beers such as Italy’s Peroni
Nastro Azzurro, the Czech Republic’s Pilsner Urquell and the
Netherlands’ Grolsch. MillerCoors, the U.S. business unit of the
Molson Coors Brewing Company, has an uncompromising dedication to
quality, a keen focus on innovation and a deep commitment to
sustainability. Learn more at MillerCoors.com, at
facebook.com/MillerCoors or on Twitter at @MillerCoors.
Overview of Molson Coors
Molson Coors Brewing Company is a leading international brewer
delivering extraordinary brands that delight the world's beer
drinkers. It brews, markets and sells a portfolio of leading brands
such as Coors Light, Miller Lite, Molson Canadian, Carling,
Staropramen and Blue Moon across The Americas, Europe and Asia. It
operates in Canada through Molson Coors Canada; in the US through
MillerCoors; across Europe through Molson Coors Europe; and outside
these core markets through Molson Coors International. The company
was listed on the Dow Jones Sustainability World Index for the past
five years and named global Beverage Sector Leader in 2012 and
2013. For the past two years, the company was the only alcohol
producer recognized on the Index for world class sustainability
performance. For more information on Molson Coors Brewing Company
visit the company's website, http://molsoncoors.com or
http://ourbeerprint.com
Forward-Looking Statements
This press release includes estimates or projections that
constitute “forward-looking statements” within the meaning of the
U.S. federal securities laws. Generally, the words “believe,”
"expect,” "intend,” "anticipate,” “project,” “will,” and similar
expressions identify forward-looking statements, which generally
are not historic in nature. Although the Company believes that the
assumptions upon which its forward-looking statements are based are
reasonable, it can give no assurance that these assumptions will
prove to be correct. Important factors that could cause actual
results to differ materially from the Company’s historical
experience, and present projections and expectations are disclosed
in the Company’s filings with the Securities and Exchange
Commission (“SEC”). These factors include, among others, our
ability to successfully integrate the acquisition of MillerCoors;
our ability to achieve expected tax benefits, accretion, synergies
and other cost savings; impact of increased competition resulting
from further consolidation of brewers, competitive pricing and
product pressures; health of the beer industry and our brands in
our markets; economic conditions in our markets; additional
impairment charges; our ability to maintain
manufacturer/distribution agreements; changes in our supply chain
system; availability or increase in the cost of packaging
materials; success of our joint ventures; risks relating to
operations in developing and emerging markets; changes in legal and
regulatory requirements, including the regulation of distribution
systems; fluctuations in foreign currency exchange rates; increase
in the cost of commodities used in the business; the impact of
climate change and the availability and quality of water; loss or
closure of a major brewery or other key facility; our ability to
implement our strategic initiatives, including executing and
realizing cost savings; our ability to successfully integrate newly
acquired businesses; pension plan costs; failure to comply with
debt covenants or deterioration in our credit rating; our ability
to maintain good labor relations; our ability to maintain brand
image, reputation and product quality; lack of full-control over
the operations of MillerCoors and other risks discussed in our
filings with the SEC, including our most recent Annual Report on
Form 10-K. All forward-looking statements in this press release are
expressly qualified by such cautionary statements and by reference
to the underlying assumptions. You should not place undue reliance
on forward-looking statements, which speak only as of the date they
are made. We do not undertake to update forward-looking statements,
whether as a result of new information, future events or
otherwise.
Three Months Ended Nine
Months Ended (In millions of $US)
Sept 30,2016
Sept 30,2015
Sept 30,2016
Sept 30,2015
U.S.
GAAP: Net Income Attributable to MillerCoors
$ 369.2 $ 316.5 $ 1,134.0 $ 1,108.3 Plus: Special Items¹ 8.3 28.0
84.6 28.0
Tax effect of the adjustments to arrive at
underlying net income2
- (0.1) (0.2) (0.1)
Non-GAAP
Underlying Net Income
$ 377.5 $ 344.4
$
1,218.4
$ 1,136.2 Percent change versus prior year MillerCoors
non-GAAP underlying net income 9.6% 7.2%
1 Current and prior year Special items
primarily relate to net costs incurred due to the closure of the
Eden Brewery.
2 The tax effect of the adjustments to
arrive at underlying net income attributable to MillerCoors, a
non-GAAP measure is calculated based on the estimated tax rate
applicable to the item(s) being adjusted in the period in which
they arose.
MILLERCOORS LLC
RESULTS OF OPERATIONS (VOLUMES IN THOUSANDS, DOLLARS IN
MILLIONS $US) (UNAUDITED) U.S. GAAP
Three Months
Ended Nine Months Ended
Sept 30,2016
Sept 30,2015
Sept 30,2016
Sept 30,2015
Total STW volume in Hectoliters 18,265 18,470
53,721 54,573 Sales $ 2,292.5 $ 2,286.8 $
6,788.1 $ 6,826.9 Excise taxes (284.8) (286.8)
(837.6) (849.6) Net sales 2,007.7 2,000.0 5,950.5 5,977.3
Cost of goods sold (1,150.8) (1,173.9)
(3,358.3) (3,490.6)
Gross profit
856.9 826.1 2,592.2 2,486.7
Marketing, general and administrative
expenses
(475.2) (475.1) (1,362.0) (1,333.0) Special items, net (8.3)
(28.0) (84.6) (28.0) Operating income 373.4
323.0 1,145.6 1,125.7
Interest income (expense), net
(0.5) (0.3) (1.4) (1.0)
Other income (expense), net
1.1 0.2 3.7 4.6
Income before income taxes and
non-controlling interests
374.0 322.9 1,147.9 1,129.3 Income taxes (1.3) (1.1)
(3.3) (3.8) Net income 372.7 321.8 1,144.6 1,125.5
Net income attributable to non-controlling
interests
(3.5) (5.3) (10.6) (17.2)
Net income attributable to MillerCoors
LLC
$ 369.2 $ 316.5 $ 1,134.0 $ 1,108.3
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version on businesswire.com: http://www.businesswire.com/news/home/20161101005212/en/
MillerCoorsDave Dunnewald, 303-927-2443Media Relations,
Molson CoorsorColin Wheeler, 303 927 2334Investor Relations, Molson
Coors
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