Molson Coors Beverage Reports Q2 2026 Results: Full Earnings Call Transcript

Molson Coors Beverage (NYSE: TAP ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

8% drop in underlying pre-tax income, influenced by external headwinds and cost pressures. The company remains committed to its Horizon 2030 strategy, focusing on brand relevance, core brand initiatives, and expanding its Beyond Beer segment with notable successes in brands like Peroni, Monaco, and Fever Tree. Despite industry challenges, the company reaffirms its fiscal 2026 guidance, emphasizing strategic investments, cost-saving measures, and operational efficiencies, particularly in EMEA and APAC regions. Molson Coors continues to optimize its balance sheet, having refinanced a portion of its debt and maintained a net debt to EBITDA ratio close to its target.

It also focuses on dividend payouts and share repurchases. Management highlighted the importance of responding to market dynamics, leveraging its diversified portfolio, and executing well in core, value, and above-premium segments to navigate category volatility. Full Transcript OPERATOR Good morning, and welcome to the Molson Coors Beverage second quarter fiscal year 2026 earnings conference call. Now I'll turn over to Bhavnavarini, Vice President of Investor Relations.

Bhavnavarini, Vice President of Investor Relations Thank you, operator. I'm pleased to introduce myself as Molson Coors' new Vice President of Investor Relations. Our earnings release and presentation materials are available on the Investor Relations section of our website. S.

federal securities laws. Please refer to our earnings release and our most recent SEC filings for important information regarding these statements, including risk factors as well as definitions of and reconciliations to any non-GAAP measures. Actual results may differ materially from our expectations, and we undertake no obligation to update forward-looking statements except as required by applicable law. Today we'll focus our prepared remarks on our performance and outlook before opening the line for Q&A to allow as many participants as possible to ask a question.

We ask that you limit yourself to one question and then rejoin the queue if needed. Any technical questions can be addressed with our Investor Relations team following the call. S. dollars.

With the exception of earnings per share, all financial metrics are in constant currency when referencing percentage changes from the prior year period. S. unless otherwise indicated, our remarks today will also reference underlying pre-tax income which equates to underlying income before income taxes, and underlying earnings per share which equates to underlying diluted earnings per share as defined in our earnings release. With that, I will hand it over to Raul.

Rahul Goyal, President and Chief Executive Officer Thank you, Bob. Welcome to Molson Coors Beverage and hello to everyone on the call today. We're joining you from Golden, Colorado, the home of Coors. Now, since the launch of our Horizon 2030 strategy in Q1, I've been visiting with employees, distributors and customers across our footprint to discuss our strategy, our early progress and any gaps that require quick action.

Before I begin, let me take a moment to thank our dedicated employees here in Golden and across the globe for their commitment behind our Horizon 2030 strategy. Now let's start with the category. While the US beer industry began the year on relative solid footing, the unanticipated energy and inflation shock associated with the conflict in Ukraine demonstrated how quickly global consumer sentiment and behavior can shift in the second quarter. Prices at the gas pump peaked in May, hitting certain US regions especially hard.

At the same time, geopolitical uncertainty weighed on consumer confidence and spending behavior in EMEA and APAC. These external factors contributed to our volume performance across our markets in the second quarter. In addition, in EMEA and APAC, heightened promotional activity as well as channel mix further pressured bottom line results. Of course, in Q2 the industry came together to champion the World Cup as a premier occasion for socialization and celebrating with beer.

That said, high industry anticipation increased competitive pressure everywhere. We also saw pockets of intense promotional activity in the UK and across Europe. As such, a share of the early World Cup opportunity, which only included the last three weeks of Q2, varied by geography and segment. Now, how we respond to these and other external pressures remains firmly within our control.

I'm confident that our diversified portfolio of well-loved brands, strong cash generation and disciplined balance sheet provides resilience and flexibility. These advantages enable us to address dynamic external conditions while focusing on the long-term strategic priorities that will grow our business. Based on this, we are reaffirming our fiscal 2026 guidance. So let's discuss our portfolio, starting with our core brands.

Horizon 2030 aims to reinforce the relevance of these brands as the first choice for consumer occasions. We're not just sitting back and relying on existing scale and brand awareness to drive volumes. Enhancing our core brand share performance in today's competitive environment requires continued focus and execution. However, we have more work to do here and we continue to assess how Coors Light and Miller Lite can amplify their authentic identities to drive greater impact with both core beer and new consumers.

In the US this work takes time and we are pursuing new campaigns, partnerships and ways to deploy our media investments with an occasion-based approach. In Canada, Coors Light largely performed in line with the industry and held its spot as Canada's number one light beer. In the UK, Carling experienced heightened competition in the quarter and we've acted quickly with several actions designed to strengthen its position in the market. In EMEA and APAC, Produce company maintained its leading position in Croatia following its sponsorship of the Croatian Men's National Team in the World Cup.

Meanwhile, Coors Banquet grew share and brand volume in Q3. We attribute the brand's ongoing success to its clear identity and consistent marketing. This includes our campaign for America's 250th, called Icons of the American West, which helped contribute to growth across all US regions in Q2, and it includes our latest partnership with the Yellowstone spinoff Dutton Ranch which has also become very popular. Turning to our value brand, our share trends improved driven by the successful launch of Keystone Light Apple.

We also saw share trends improve for Miller High Life. We've chosen to support growth in our value brands by deploying modest but targeted levels of investment. Keystone Light Apple is a great example of how we quickly responded to emerging flavor trends. We deployed an AI-generated social media campaign that generated buzz and resonated with the consumer seeking flavor at an enticing price point.

Demand far outpaced our limited run production, so we're bringing it back in the fall. We also decided to bring back fan favorite Keystone Ice, a high-ABV beer in the value segment. In Above Premium beer we saw mixed performance across our brands and geographies. In the US we were pleased to see Peroni grow brand volumes by double digits supported by targeted marketing investments earlier in the year, but the broader Blue Moon franchise remains under pressure in Q2.

0 in the quarter, underscoring our relevance in the small but growing Non-Alc beer category. While heightened promotional activity impacted Madri in the second quarter, Above Premium brand volumes showed segment growth in EMEA and APAC driven by Staropramen, Villa and Blue Moon. In Canada, Miller Lite also continued its momentum as an above premium offering. We continue to gain scale in Beyond Beer, which is an important part of our journey as a beverage company.

NSR growth for Monaco, Topo Chico Hard Seltzer and Fever Tree was partially offset by other brands in the segment like Simply Spiked. In Canada, Coors Slushie continued to show momentum in the RTD seltzer segment, while in EMEA and APAC, Hydra continued to benefit from growing interest in functional beverages. Both Fever Tree and Monaco are well on track to each contribute 1 to 2% to NSR, solid proof points of Horizon 2030's focus on both premiumization and portfolio transformation. We have now lapped the first full year of our partnership with Fever Tree and we are encouraged to see momentum continue to build.

Following a national campaign that celebrated the ease of mixology at home, Fever Tree delivered its highest quarter of sales in the US since our partnership began. Our first full quarter of ownership of Atomic Brands also produced encouraging results. The integration of Monaco Cocktails has been going well with its overall top and bottom line contributions tracking slightly ahead of our acquisition expectations. While still early days, this progress underscores the importance of bringing RTD spirits into our portfolio.

We see Monaco as a clear example of how we can use material as a force multiplier in our transformation journey. This acquisition filled white spaces in our portfolio with a fast growing beverage segment. It also added an already scaled business providing both growth and profitability on day one. Currently, the majority of Monaco sales fall within five states and most of that is in convenience.

This is a strong example of our localized portfolio approach in action and we see plenty of runway to expand into new geographies and channels. As discussed in Q1, the launch of Horizon 2030 also incorporated changes to our operating model, including quick actions and resource allocation at the local level. For example, in preparation for the World Cup, we invested incremental resources into host markets to drive memorable on-premise experiences. Our partnership with venues in key entertainment districts across Dallas, Philadelphia and Kansas City resulted in strong consumer engagement with our core and above premium brands.

In addition, after reports that the Scottish football fans caused beer shortages in Boston, our Restock the Scots campaign swiftly responded by sending a Miller Lite barge to greet them in Miami. These examples show how we're leaning into and learning from targeted efforts that drive incremental results outside of national media spend. In total, while we're encouraged by our ability to make progress from a top line perspective, we need to stay responsive to the inflationary cost pressures and commodity price volatility that impacted our bottom line.

In the near term, our robust cost savings program and other efficiency initiatives mitigate uncertainty within the global macroeconomic backdrop. We made progress in our previously announced three-year, $450 million project cost savings actions by identifying areas where we believe we can drive greater efficiency. For example, we committed to various restructuring actions in EMEA and APAC, including the closure of a small brewery in the UK alongside other operational changes designed to modernize, simplify and unlock efficiencies within the region.

We've also allocated a portion of our previously announced $650 million in global CapEx to modernize and expand our supply chain capabilities. Upgrades are already underway at our can plant, Rocky Mountain Metal Company. We're investing in new bulk receiving facilities as well as new and upgraded canning lines. Importantly, we believe investments like these that help to strengthen our supply chain will create efficiencies during a time when aluminum sourcing is top of mind.

Finally, on capital allocation, we designed our approach to reinvest in our business and reward shareholders as we progress towards Horizon 2030. Together, we are a highly cash generator business and we intend to deploy that cash on prudent growth initiatives both organic and inorganic. We continue to believe that Molson Coors shares currently trade at a compelling value with an attractive dividend yield and we have ample capacity left on our share repurchase authorization. We're halfway into our first year of the Horizon 2030 strategy and one thing I'd emphasize is that no single event will suddenly change our trajectory.

This process is about building portfolio strength brick by brick. We already have two of the strongest beer franchises in the industry with Miller and Coors. These brands have scale, generate cash and harbor deep consumer loyalty. Our job is to keep them relevant and competitive.

That means showing up with strong investment during key beer occasions while working diligently and creatively to find new, unexpected moments these brands can truly own. At the same time, we're scaling our next layer of expected growth. We're celebrating success in our core with Banquet, in Above Premium with Peroni, in value with High Life and in Beyond Beer with Topo Chico, Monaco and Fever Tree. None of these opportunities individually change our future.

We know that. However, in aggregate, we expect these wins to compound over time. To that end, we're making early progress. With that, I'll turn it over to Tracey to discuss our financial performance and outlook.

Tracey Joubert, Global Chief Financial Officer Thank you, Rahul. In the second quarter, our results reflected the challenging category and cost environment we anticipated, while also demonstrating the flexibility of our business model and the actions we are taking to manage through volatility. 9%. On an underlying basis, the quarter was shaped by a combination of external headwinds, timing impacts and controllable actions.

While some drivers were impacted by phasing considerations, the broader picture was largely consistent with our expectations. The industry remains precious, our share performance is not yet where we want it to be and cost inflation remains significant. At the same time, pricing mix, cost savings, portfolio actions and disciplined capital allocation continue to support our plan. So let's get into the details.

S. S. 3% in line with our expectations of a 6 to 9% reduction. 4%, primarily driven by ongoing soft market demand and a heightened competitive landscape.

The Midwest Premium remained elevated, adding approximately $40 million of year-on-year cost increase to second quarter cost of goods sold. Additionally, the elevation of fuel prices and freight market tightening increased cost inflation. 2%, largely due to cycling lower employee incentive costs in the prior year and additional investments in technology and capabilities. Taken together, these factors help explain the pressure on the quarter, but they do not change our priorities.

We are focused on improving commercial execution where we have the greatest opportunity to influence share, protecting price realization and using our cost savings program to help offset inflationary pressure. Turning to the balance sheet, we believe this remains an area of strength and flexibility for the company. In the quarter, we successfully executed a series of public and private placement offerings that allowed us to refinance and retire a portion of our debt. 53 times at the end of the quarter, bringing us close to meeting our stated goal of under two and a half times by year end.

As Rahul mentioned earlier, we remain committed to a balanced capital allocation framework with a relative emphasis on reinvestment, M&A, returning cash to shareholders and debt reduction varying quarter to quarter based on available opportunities and strategic priorities. This quarter we chose to deploy capital in support of financial flexibility and M&A with the Atomic Brands acquisitions, uses of cash that we believe strengthen the portfolio over the long run while preserving flexibility.

To continue investing behind our core priorities, we also paid $90 million in dividends and repurchased 1 million shares for $42 million, making further progress on our share repurchase authorization. 3% of our Class B shares outstanding since the plan was announced in October 2023. 35 billion of our share repurchase authorization remaining. With that, let's discuss our outlook.

As Rahul mentioned, we are reaffirming our 2026 guidance. We are doing so with a clear understanding of both the risks and levers available to us in the second half.