Molson Coors Reports 2018 Second Quarter Results
Aug. 01, 2018
DENVER & MONTREAL--(BUSINESS WIRE)--Aug 1, 2018--Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) today reported results for the 2018 second quarter. Molson Coors president and chief executive officer Mark Hunter said:
"We were pleased with the sequential improvements in the second quarter for top and bottom line results. Our full year underlying cost savings and free cash flow guidance has not changed, despite ongoing industry demand challenges in the U.S. and Canada and inflationary pressures. While we are aggressively addressing our volume performance in North America, performance in our Europe and International businesses was strong in the quarter.
Mark continued, "More specifically for the quarter, our underlying EPS growth of 10.6 percent reflected positive global net pricing, cost savings delivery, lower marketing spend, and a lower tax rate, while we continued to strengthen our balance sheet with lower net debt. Our results also include the unfavorable timing effect of the revenue recognition accounting standard, which reduced underlying EPS by 5 cents for the quarter. This timing difference is largely expected to flip back as a benefit in the fourth quarter. Across the organization, our teams exercised flexibility in the P&L with lower MG&A spend across all business units.
"Our teams are leaning in to deliver on our commitments for the full year by finding opportunities to earn more, use less and invest wisely. Guidance for free cash flow of $1.5 billion plus or minus 10 percent this year is based on continuing to drive our First Choice commercial excellence initiatives, as well as our disciplined approach to cost savings, flexibility with discretionary spending and our continued focus on driving working capital efficiencies."
Net sales: $3.1 billion, decreased by 0.2 percent, due to lower financial volume and the adoption of the new revenue recognition accounting standard (discussed in the Appendix below). These factors were largely offset by positive global pricing and favorable foreign currency movements. Net sales in constant currency declined 1.9 percent. Net sales per HL: $111.20 on a reported financial-volume basis, increased 1.9 percent. Net sales per HL on a brand volume basis(1) in constant currency decreased by 0.3 percent, driven by the adoption of the new revenue recognition accounting standard, partially offset by positive global net pricing as well as favorable mix in Europe and International. Volume: Worldwide brand volume of 25.7 million hectoliters decreased 2.4 percent driven by declines in the U.S. and Canada partially offset by growth in Europe and International. Financial volume of 27.7 million hectoliters decreased 2.1 percent, and was adversely impacted by reductions in brand volumes and contract brewing. Global priority brand volume decreased 4.0 percent. U.S. GAAP net income attributable to MCBC increased 28.6 percent, driven by unrealized mark-to-market gains on our commodity positions (versus losses a year ago), cost savings, lower income tax expense, lower interest expense and positive net pricing, partially offset by lower financial volume, higher input cost inflation and the adoption of the new revenue recognition accounting standard. Underlying net income increased 10.6 percent, driven by cost savings, lower income tax expense, lower interest expense and positive net pricing, partially offset by lower financial volume, higher cost inflation and the adoption of the new revenue recognition accounting standard. Underlying EBITDA: Decreased 2.6 percent on a reported basis and decreased 3.8 percent on a constant-currency basis, driven by lower financial volume, higher input cost inflation and the impacts of the adoption of the new revenue recognition accounting standard, partially offset by positive global net pricing, cost savings and lower marketing spend. U.S. GAAP cash from operations: Net cash provided by operating activities for the first half of 2018 was approximately $1.3 billion, which represents an improvement of $479.3 million, driven by the $328 million cash payment received in January 2018 related to the receipt of a purchase price adjustment for our acquisition of the Miller International business, as well as working capital improvements and lower cash paid for pension contributions and interest. Underlying free cash flow: cash received of $659.8 million, which represents an increase of $73.1 million from the prior year, driven by working capital improvements and lower cash paid for pension contributions and interest. Debt: Total debt at the end of the second quarter of 2018 was $10.9 billion, and cash and cash equivalents totaled $792.9 million, resulting in net debt of $10.1 billion.
(1)Brand Volume Basis NSR/HL: Effective in the first quarter of 2018, we have revised our net sales revenue (NSR) per HL performance discussions to be on a brand volume basis, with all per-hectoliter calculations including owned and actively managed brands, along with royalty volume, in the denominator, as well as the financial impact of these sales in the numerator, unless otherwise indicated. See Appendix for definitions.
Pretax Income (U.S. GAAP)
N/M = Not meaningful
Underlying EBITDA (Non-GAAP) (1)
N/M = Not meaningful
United States Business
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