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Molson Coors Beverage Company (TAP - Free Report) has posted third-quarter 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate but declined year over year. The results were largely affected by the challenging U.S. macroeconomic environment, the anticipated unfavorable shipment timing and the wind-down of a contract brewing agreement, causing a 17.9% year-over-year decline in U.S. financial volume. This was partly offset by the strong performance of the EMEA&APAC business and robust results in Canada within the Americas segment.
The company’s adjusted earnings of $1.80 per share fell 6.2% year over year but surpassed the Zacks Consensus Estimate of $1.65.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales declined 7.8% year over year on both reported and constant-currency basis to $3.04 billion but beat the Zacks Consensus Estimate of $3.14 billion. The decline was led by a lower financial volume, partly offset by an improved price and sales mix.
Shares of Molson Coors fell 1% in the pre-market trading session on Nov. 7, 2024, backed by year-over-year declines in sales and earnings per share (EPS) in third-quarter 2024 and a lowered sales view for 2024. The Zacks Rank #3 (Hold) company has gained 6.9% in the past three months against the industry’s 1.7% decline.
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Molson Coors’ Q3 Details
Financial volumes declined 12.3% year over year, mainly led by lower shipments, including reduced contract brewing volumes in the Americas. Brand volumes fell 4.4% on a 5.4% decline in the Americas and a 1.8% decrease in EMEA&APAC.
Net sales were positively influenced by the price and sales mix, which increased 4.5% year over year due to higher net pricing and a favorable sales mix in both segments despite reduced contract brewing volumes in the United States.
Gross profit declined 10.7% year over year to $1.2 billion and the gross margin contracted 130 basis points (bps) to 39.5% in the quarter.
Marketing, general and administrative (MG&A) expenses dropped 8.3% year over year to $684.7 million on a reported basis due to lesser incentive compensation expenses and reduced marketing investments than last year’s higher spending levels. Underlying MG&A fell 8.4% in constant currency.
Underlying earnings before taxes (EBT) declined 39.1% year over year to $331.4 million. On a constant-currency basis, underlying EBT fell 8.7% due to reduced financial volume, and cost inflation of materials and manufacturing expenses. Elevated pricing, lower MG&A expenses and a favorable sales mix partly offset these headwinds.
Molson Coors Beverage Company Price, Consensus and EPS Surprise
Americas: Net sales in the segment declined 11% year over year to $2.3 billion on a reported basis and 10.7% on a constant-currency basis. The decline was led by lower financial volume and unfavorable currency impacts, offset by a positive price and sales mix.
Financial volumes were down 15.6% year over year, resulting from the timing of U.S. shipments and reduced U.S. volumes amid a softening industry caused by the challenging macroeconomic environment.
Brand volumes in the Americas declined 5.4%, with a 6.2% drop in the United States, resulting from the cycling of last year’s double-digit growth in core power brands and lower above-premium volumes. This was partly offset by an extra trading day in the current quarter and favorable holiday timing. In Canada, brand volumes grew 3.9% due to the rise in the above-premium portfolio. Price and sales mix improved 4.9% on higher net pricing and favorable sales mix due to reduced contract brewing volumes.
Underlying EBT fell 14.7% on a constant-currency basis and slipped 15% to $419.8 million on a reported basis. The decline can be attributed to reduced financial volumes and cost inflation on materials and manufacturing expenses. This was partly negated by higher net pricing, a favorable sales mix, lower MG&A expenses and cost-saving initiatives.
EMEA&APAC: The segment’s net sales (on a reported basis) rose 5.1% year over year to $704.4 million and improved 3.8% on a constant-currency basis due to a favorable price and sales mix, and positive currency effects, partly offset by a decline in financial volumes. The price and sales mix improved 6.8% on higher net pricing and a favorable sales mix, fueled by premiumization and an advantageous channel mix.
Financial volumes dipped 3% year over year and brand volumes fell 1.8% due to reduced volume in Western Europe on weak market demand and heightened promotional activity from competitors.
The segment’s underlying EBT increased 41.8% year over year to $98 million on a reported basis and 40.5% on a constant-currency basis. The increase stemmed from higher net pricing and a favorable sales mix, partially offset by lower financial volumes and higher MG&A expenses.
Financial Updates for TAP
Molson Coors ended the third quarter with cash and cash equivalents of $1.02 billion. As of Sept. 30, 2024, the company had a total debt of $6.2 billion, resulting in a net debt of $5.22 billion.
Net cash provided by operating activities amounted to $1.4 billion in the first nine months of 2024. Moreover, the company generated an underlying free cash flow of $856 million as of Sept. 30, 2024.
In the nine months ending Sept. 30, 2024, TAP repurchased shares worth $437.4 million as part of the program approved on Sept. 29, 2023. Additionally, it paid out dividends of $279.4 million in the first nine months of 2024.
The company estimates a capital expenditure of $750 million (plus or minus 5%) for 2024. The underlying free cash flow is expected to be $1.2 billion, plus or minus 10%.
What to Expect From TAP in 2024?
Due to ongoing macroeconomic pressures on the U.S. beer industry and lower U.S. financial volumes during this year’s peak season, Molson Coors has revised its 2024 sales forecast to a 1% decline on a constant-currency basis from the previously mentioned low-single-digit growth. However, the company reaffirmed its 2024 underlying EBT outlook, citing an improved cost forecast for packaging materials, transportation and administrative expenses.
Molson Coors maintained its mid-single-digit growth target for underlying EPS. It now expects underlying EPS to reach the higher end of the target range, supported by an accelerated share repurchase program.
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%.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Ingredion (INGR - Free Report) , Vital Farms (VITL - Free Report) and Vita Coco Company (COCO - Free Report) .
Ingredion is a solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. It currently sports a Zacks Rank #1 (Strong Buy). INGR has a trailing four-quarter earnings surprise of 9.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate Ingredion’s current financial-year EPS indicates growth of 6.7% from the year-ago reported numbers. The consensus mark for INGR’s EPS has moved up 1% in the past 30 days.
Vital Farms offers a range of produced pasture-raised foods. It presently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate Vital Farms’ current financial-year sales and EPS indicates growth of 27% and 88.1%, respectively, from the year-ago reported numbers. The consensus mark for VITL’s EPS has been unchanged in the past 30 days.
Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank of 2. COCO has a trailing four-quarter earnings surprise of 17.6%, on average.
The Zacks Consensus Estimate for COCO’s current financial-year sales and earnings suggests growth of 3.5% and 29.7%, respectively, from the year-ago reported figures. The consensus mark for Vita Coco’s EPS has moved up 9.1% in the past seven days.
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Molson Coors Q3 Earnings & Sales Beat, Stock Dips on Soft View
Molson Coors Beverage Company (TAP - Free Report) has posted third-quarter 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate but declined year over year. The results were largely affected by the challenging U.S. macroeconomic environment, the anticipated unfavorable shipment timing and the wind-down of a contract brewing agreement, causing a 17.9% year-over-year decline in U.S. financial volume. This was partly offset by the strong performance of the EMEA&APAC business and robust results in Canada within the Americas segment.
The company’s adjusted earnings of $1.80 per share fell 6.2% year over year but surpassed the Zacks Consensus Estimate of $1.65.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Net sales declined 7.8% year over year on both reported and constant-currency basis to $3.04 billion but beat the Zacks Consensus Estimate of $3.14 billion. The decline was led by a lower financial volume, partly offset by an improved price and sales mix.
Shares of Molson Coors fell 1% in the pre-market trading session on Nov. 7, 2024, backed by year-over-year declines in sales and earnings per share (EPS) in third-quarter 2024 and a lowered sales view for 2024. The Zacks Rank #3 (Hold) company has gained 6.9% in the past three months against the industry’s 1.7% decline.
Image Source: Zacks Investment Research
Molson Coors’ Q3 Details
Financial volumes declined 12.3% year over year, mainly led by lower shipments, including reduced contract brewing volumes in the Americas. Brand volumes fell 4.4% on a 5.4% decline in the Americas and a 1.8% decrease in EMEA&APAC.
Net sales were positively influenced by the price and sales mix, which increased 4.5% year over year due to higher net pricing and a favorable sales mix in both segments despite reduced contract brewing volumes in the United States.
Gross profit declined 10.7% year over year to $1.2 billion and the gross margin contracted 130 basis points (bps) to 39.5% in the quarter.
Marketing, general and administrative (MG&A) expenses dropped 8.3% year over year to $684.7 million on a reported basis due to lesser incentive compensation expenses and reduced marketing investments than last year’s higher spending levels. Underlying MG&A fell 8.4% in constant currency.
Underlying earnings before taxes (EBT) declined 39.1% year over year to $331.4 million. On a constant-currency basis, underlying EBT fell 8.7% due to reduced financial volume, and cost inflation of materials and manufacturing expenses. Elevated pricing, lower MG&A expenses and a favorable sales mix partly offset these headwinds.
Molson Coors Beverage Company Price, Consensus and EPS Surprise
Molson Coors Beverage Company price-consensus-eps-surprise-chart | Molson Coors Beverage Company Quote
Peek Into TAP’s Segmental Information
Americas: Net sales in the segment declined 11% year over year to $2.3 billion on a reported basis and 10.7% on a constant-currency basis. The decline was led by lower financial volume and unfavorable currency impacts, offset by a positive price and sales mix.
Financial volumes were down 15.6% year over year, resulting from the timing of U.S. shipments and reduced U.S. volumes amid a softening industry caused by the challenging macroeconomic environment.
Brand volumes in the Americas declined 5.4%, with a 6.2% drop in the United States, resulting from the cycling of last year’s double-digit growth in core power brands and lower above-premium volumes. This was partly offset by an extra trading day in the current quarter and favorable holiday timing. In Canada, brand volumes grew 3.9% due to the rise in the above-premium portfolio. Price and sales mix improved 4.9% on higher net pricing and favorable sales mix due to reduced contract brewing volumes.
Underlying EBT fell 14.7% on a constant-currency basis and slipped 15% to $419.8 million on a reported basis. The decline can be attributed to reduced financial volumes and cost inflation on materials and manufacturing expenses. This was partly negated by higher net pricing, a favorable sales mix, lower MG&A expenses and cost-saving initiatives.
EMEA&APAC: The segment’s net sales (on a reported basis) rose 5.1% year over year to $704.4 million and improved 3.8% on a constant-currency basis due to a favorable price and sales mix, and positive currency effects, partly offset by a decline in financial volumes. The price and sales mix improved 6.8% on higher net pricing and a favorable sales mix, fueled by premiumization and an advantageous channel mix.
Financial volumes dipped 3% year over year and brand volumes fell 1.8% due to reduced volume in Western Europe on weak market demand and heightened promotional activity from competitors.
The segment’s underlying EBT increased 41.8% year over year to $98 million on a reported basis and 40.5% on a constant-currency basis. The increase stemmed from higher net pricing and a favorable sales mix, partially offset by lower financial volumes and higher MG&A expenses.
Financial Updates for TAP
Molson Coors ended the third quarter with cash and cash equivalents of $1.02 billion. As of Sept. 30, 2024, the company had a total debt of $6.2 billion, resulting in a net debt of $5.22 billion.
Net cash provided by operating activities amounted to $1.4 billion in the first nine months of 2024. Moreover, the company generated an underlying free cash flow of $856 million as of Sept. 30, 2024.
In the nine months ending Sept. 30, 2024, TAP repurchased shares worth $437.4 million as part of the program approved on Sept. 29, 2023. Additionally, it paid out dividends of $279.4 million in the first nine months of 2024.
The company estimates a capital expenditure of $750 million (plus or minus 5%) for 2024. The underlying free cash flow is expected to be $1.2 billion, plus or minus 10%.
What to Expect From TAP in 2024?
Due to ongoing macroeconomic pressures on the U.S. beer industry and lower U.S. financial volumes during this year’s peak season, Molson Coors has revised its 2024 sales forecast to a 1% decline on a constant-currency basis from the previously mentioned low-single-digit growth. However, the company reaffirmed its 2024 underlying EBT outlook, citing an improved cost forecast for packaging materials, transportation and administrative expenses.
Molson Coors maintained its mid-single-digit growth target for underlying EPS. It now expects underlying EPS to reach the higher end of the target range, supported by an accelerated share repurchase program.
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%.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Ingredion (INGR - Free Report) , Vital Farms (VITL - Free Report) and Vita Coco Company (COCO - Free Report) .
Ingredion is a solutions provider specializing in nature-based sweeteners, starches and nutrition ingredients. It currently sports a Zacks Rank #1 (Strong Buy). INGR has a trailing four-quarter earnings surprise of 9.5%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate Ingredion’s current financial-year EPS indicates growth of 6.7% from the year-ago reported numbers. The consensus mark for INGR’s EPS has moved up 1% in the past 30 days.
Vital Farms offers a range of produced pasture-raised foods. It presently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate Vital Farms’ current financial-year sales and EPS indicates growth of 27% and 88.1%, respectively, from the year-ago reported numbers. The consensus mark for VITL’s EPS has been unchanged in the past 30 days.
Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently has a Zacks Rank of 2. COCO has a trailing four-quarter earnings surprise of 17.6%, on average.
The Zacks Consensus Estimate for COCO’s current financial-year sales and earnings suggests growth of 3.5% and 29.7%, respectively, from the year-ago reported figures. The consensus mark for Vita Coco’s EPS has moved up 9.1% in the past seven days.