Molson Coors Beverage Company (NYSE:TAP) Q3 2023 Earnings Call Transcript

Molson Coors Beverage Company (NYSE:TAP) Q3 2023 Earnings Call Transcript November 2, 2023

Molson Coors Beverage Company beats earnings expectations. Reported EPS is $1.92, expectations were $1.53.

Operator: Good day, and welcome to the Molson Coors Beverage Company Third Quarter Fiscal Year 2023 Earnings Conference Call. You can find related slides on the Investor Relations page of the Molson Coors website. Our speakers today are Gavin Hattersley, President and Chief Executive Officer; and Tracey Joubert, Chief Financial Officer. And with that, I'll hand it over to Greg Tierney, Vice President of FP&A, Commercial Finance and Investor Relations.

Greg Tierney: All right. Thank you, Brita, and hello, everyone. Following prepared remarks today from Gavin and Tracey, we will take your questions. In an effort to address as many questions as possible, we ask you to -- we ask that you limit yourself to one question. If you have technical questions on the quarter, please pick them up with our IR team in the days and weeks that follow. Today's discussion includes forward-looking statements. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward-looking statements. GAAP reconciliations for any non-U.S. GAAP measures are included in our news release.

A wide-angled shot of a brewery showing the large machinery used for producing malt beverages.

Unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period in U.S. dollars and in constant currency when discussing percentage changes from the prior year period. Also, U.S. share data references are sourced from Circana. Further, in our remarks today, we will reference underlying pretax income, which equates to underlying income before income taxes on the condensed consolidated statement of operations. And with that, I'll hand it over to Tracey.

Tracey Joubert: Thank you, Greg, and hello, everyone, and thank you for joining us. We will be doing things a little bit differently this quarter. I will open and address our results, our guidance and importantly, our fourth quarter expectations at the start of the call, and then Gavin will close. In the third quarter, we delivered another set of strong results. Our net sales revenue grew an impressive 11%, driven by double-digit growth in both our business units. Our continued focus on efficiencies and cost savings, combined with volume leverage, significantly offset inflationary pressures resulting in meaningful margin expansion. This led to 43.5% growth in underlying pretax income with both business units up strongly. And with free cash flow nearly doubling for the first 9 months of the year, we continue to prudently execute our capital deployment plan, investing in our business, reducing net debt and returning cash to shareholders.

This performance underscores the strong momentum in our business, which is a function of the foundation we have built to sustainably grow both the top and bottom line. And this is exactly what we have done both in 2022 and year-to-date in 2023, all while navigating a challenging and dynamic global macroeconomic environment. And while these macro conditions remain, the fundamental strength of our business, coupled with the actions we are taking to sustain the momentum we have achieved, gives us confidence for another year of growth in 2023 and beyond. For 2023, we are reaffirming our high single-digit top line growth guidance, but narrowing our expectations to the high end of that range. And we are raising our underlying pretax growth guidance to 32% to 36% as compared to 23% to 26% previously.

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