Earnings call transcript: Molson Coors Q2 2025 beats estimates but lowers 2025 guidance

Molson Coors Beverage Company (TAP) reported stronger-than-expected earnings for the second quarter of 2025, with earnings per share (EPS) of $2.05 surpassing the forecast of $1.85 by 10.81%. Revenue also exceeded expectations, reaching $3.2 billion against the projected $3.1 billion, a surprise of 3.23%. Despite these positive results, the company’s stock fell 1.38% in pre-market trading, reflecting investor concerns over reduced guidance for the remainder of the year. According to InvestingPro data, the company maintains strong profitability with a healthy 39% gross profit margin and an 11% free cash flow yield.

Key Takeaways

• Molson Coors reported a significant earnings beat for Q2 2025.
• Revenue and EPS exceeded analyst expectations.
• The company revised its 2025 guidance downward, expecting declines in sales and income.
• Stock declined in pre-market trading despite strong quarterly results.
• The U.S. beer industry continues to face challenges, impacting overall market sentiment.

Company Performance

Molson Coors demonstrated strong performance in Q2 2025, outpacing analyst expectations for both earnings and revenue. The company’s strategic focus on premiumization and successful product launches, such as Madri and Blue Moon Non-Alc, contributed to its robust financial results. InvestingPro analysis reveals the company has maintained dividend payments for 51 consecutive years and currently offers a 3.87% dividend yield. While Molson Coors faces challenges from a declining U.S. beer market and macroeconomic pressures affecting consumer spending, its financial health score remains "GOOD" according to InvestingPro metrics.

Financial Highlights

• Revenue: $3.2 billion, exceeding the forecast of $3.1 billion.
• Earnings per share: $2.05, surpassing the forecast of $1.85.
• Revenue surprise: 3.23%.
• EPS surprise: 10.81%.

Earnings vs. Forecast

Molson Coors delivered a strong earnings performance for Q2 2025, with an EPS of $2.05 compared to the forecast of $1.85, resulting in a 10.81% surprise. Revenue also exceeded expectations, coming in at $3.2 billion against a forecast of $3.1 billion, a 3.23% surprise. This marks a significant improvement compared to previous quarters, highlighting the company’s ability to navigate challenging market conditions.

Market Reaction

Despite the positive earnings surprise, Molson Coors’ stock fell 1.38% in pre-market trading, settling at $47.94. This decline suggests mixed investor sentiment, likely influenced by the company’s revised guidance for 2025. The stock trades near its 52-week low of $46.94, with InvestingPro analysis indicating the stock is currently undervalued. Trading at a P/E ratio of 10.12, the company appears attractively priced compared to industry peers. For detailed valuation analysis and more insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Outlook & Guidance

Molson Coors revised its 2025 guidance downward, expecting net sales revenue to decline by 3-4% on a constant currency basis and underlying pretax income to fall by 12-15%. The company reaffirmed its underlying free cash flow guidance of $1.3 billion, plus or minus 10%. Looking forward, Molson Coors plans to focus on premiumization and beyond-beer strategies to drive growth. InvestingPro data shows seven analysts have revised their earnings estimates downward for the upcoming period, though the company maintains strong fundamentals with a return on equity of 8% and robust cash flow generation.

Executive Commentary

CEO Gavin Hattersley emphasized the cyclical nature of current market challenges, stating, "We continue to view the incremental softness in the industry performance this year as cyclical." CFO Tracy highlighted the company’s commitment to cash flow, saying, "We are committed to protecting and growing our underlying free cash flow."

Risks and Challenges

• Declining U.S. beer industry, with a 5% decrease impacting sales.
• Reduced consumer confidence and value-seeking behaviors.
• Macroeconomic pressures, including inflation and cost increases.
• Competitive pressures in key markets, such as the UK.
• Potential supply chain disruptions affecting production and distribution.

Q&A

During the earnings call, analysts raised questions about the challenging macro environment and its impact on Molson Coors’ performance. The company addressed concerns about premium aluminum cost increases and potential adjustments to its brewery footprint. Executives expressed confidence in overcoming current market challenges through strategic initiatives and ongoing investments in their brand portfolio.

Full transcript - Molson Coors Brewing Co Class B (TAP) Q2 2025:

Operator: Good morning, and welcome to the Molson Coors Beverage Company Second Quarter Fiscal Year twenty twenty five Earnings Conference Call. With that, I’ll hand it over to Tracey Mangini, Vice President, Investor Relations.

Tracey Mangini, Vice President, Investor Relations, Molson Coors: Thank you, operator, and hello, everyone. Our discussion today includes forward looking statements within the meaning of U. S. Federal securities laws. For more information, please refer to the forward looking statements disclosure in our earnings release.

In addition, the definitions of or reconciliations for any non U. S. GAAP measures are included in our earnings release. Given our quarterly performance, including financial and operational metrics and drivers is detailed in our earnings release and earnings slides, which were made available earlier today on the IR section of our website. We will focus our prepared remarks on what we believe is top of mind for you, and that is the industry, how we’re responding, capital allocation and our financial outlook.

And please note that given the current environment, we are providing a more detailed than typical review of our 2025 guidance drivers. We will then take your questions. And as always, we ask that you limit yourself to one question and then if needed, return to the queue. With that, I’ll pass it over to you, Gavin.

Gavin Hattersley, CEO, Molson Coors: Thank you, Tracy. Hello, everybody, and thank you for joining the call. During the second quarter, we continued to execute against our strategic plans to support our long term growth objectives and to return cash to shareholders while navigating a challenging and volatile macro environment. As a result of the uncertainty around the effects of geopolitical events and global trade and immigration policies, consumer sentiment in The U. S.

Has remained at relatively low historical levels. This has continued to pressure consumption trends. These macro impacts in The U. S. Have had a disproportionate effect on the lower income and Hispanic consumer.

And within beer, these consumer segments have driven a reduction in the number of buyers as well as spend with a shift to singles in the second quarter. In addition, while less impactful, certain regions of The U. S. Experienced some severe weather conditions during the quarter, which had a notable impact on the important Memorial Day weekend. These factors have resulted in a much softer U.

S. Beer industry so far this year than we had previously expected. Recall our guidance issued on May 8 that assumed The U. S. Industry would improve for the balance of the year from down approximately 5% in the first quarter to levels closer to that of the last several years, which averaged down around 3%.

But in the second quarter, the industry continued to be down around 5%. Further, the Midwest premium pricing, which is a component of our aluminum cost, has been indirectly impacted by recent U. S. Tariff announcements, causing another substantial and unexpected spike in the second quarter. For perspective, and as you can clearly see on Slide 19 of our earnings deck, in July, the Midwest premium jumped to $0.68 per pound, an increase of over 180% since January.

As a result of these macro drivers and to a lesser degree, lower than expected share performance, we are reducing our top and bottom line guidance for 2025. We now expect net sales revenue to decline 3% to 4% on a constant currency basis as compared to a low single digit decline previously. The range assumes U. S. Industry volume will decline between 46% for the second half of the year.

We now expect underlying pretax income to decline 12% to 15% on a constant currency basis as compared to a low single digit decline previously. The range includes for the second half of the year, incremental costs specific to the Midwest premium of twenty million to $35,000,000 which assumes a respective price per pound of $0.60 to $0.75 This is partly offset by lower expected incentive compensation given the change in outlook. As a result, we now expect underlying earnings per share to decline seven percent to 10% as compared to low single digit growth. However, we are reaffirming our underlying free cash flow guidance of $1,300,000,000 plus or minus 10% as we expect higher cash tax benefits and favorable working capital to offset the guidance decline for underlying pretax income. Now Tracy will speak to our guidance in more detail in a moment.

But first, I want to stress that we continue to view the incremental softness in the industry performance this year as cyclical, driven by the macroeconomic environment. And this belief, in our view, is clearly demonstrated by the execution of our share repurchase program well ahead of our original expectations. While U. S. Consumer basket sizes are smaller in the current environment, the percent of alcohol in those baskets has remained the same.

And legal drinking age consumers continue to engage with beer at similar levels across all generations and compared to historical levels, it’s the occasions that are less. Recognizing this, our strategy was built to develop a portfolio that appeals to a wide range of preferences and captures more occasions. So as we navigate these macro pressures, we are continuing to execute the strategy and prudently invest behind our business. To build on the strength of our core power brands, to premiumize our business in both beer and beyond beer and to develop and leverage our capabilities and partnerships to support profitable growth. In The U.

S, our core power brands, Coors Light, Miller Lite and Coors Banquet have retained the unprecedented shelf space gains achieved in 2024. Collectively, they commanded a 15.2% volume share of the industry for the first half of the year. Recall that three years ago, these brands collectively commanded 13.4 of The U. S. Industry.

And what’s clear in the scanner data and as shown on Slide 20 is that these brands have held most of their share gains from the last two years through the second quarter. Banquet, in particular, has been a strong performer. After sixteen consecutive quarters of share growth, it was a top five volume share growth brand in the quarter. And given it’s only about half the buying assets of Coors Light, we believe there is significant distribution runway ahead. In fact, Banquet gained over 15% distribution in the first half of this year, growing across every channel and on top of over 15% growth in the same period last year.

In Canada, despite a challenging industry backdrop, the Molson family of brands with its deep Canadian roots posted another quarter of volume share gains. While Coors Light, which is proudly locally produced, held its number one light beer position in the industry. In EMEA and APAC, the industry in The UK has remained highly competitive. And in the Central And Eastern Europe region, it continues to experience softness related to escalating global, local political and economic tensions. But our brands like Carling in The UK and Ajusco in Croatia remain segment leaders in their respective markets, which we intend to continue to support with targeted commercial trends.

Turning to premiumization. As we have said for several quarters now, in The U. S, there has been a shift to value seeking behaviors, but it has been focused on pack size rather than on brands. And despite the pressure on the consumer, the industry continues to premiumize, albeit currently at a slower pace. So we remain committed to our premiumization plans, which are focused on both beer and Beyond Beer.

Over the last few years, we have talked a lot about our premiumization successes outside The U. S. In EMEA and APAC, it’s been fueled by a hugely successful innovation in the three, which we believe still has significant runway, both in its initial market of The UK and through recent geographic and brand extensions. In fact, in the latest twelve weeks as of June 14, Badri had overtaken Pironi to become the number two brand in the world lager segment and number four beer overall in terms of value across total trade in The UK. In Canada, premiumization has been led by the ongoing strength of Miller Lite and our flavor portfolio.

But in The U. S, our largest market, we under index and above premium, which makes it a big opportunity. Our Perennial plans that began in the second quarter are starting to show positive results with the brand growing volume double digits in the last thirteen weeks through July 27, supported by continued growth in chain and on premise placements. And while smaller for now, we are encouraged by our innovations. Blue Moon Non Al continues its rapid growth, and we are seeing growing placements for our new higher ABB brands, Blue Moon Extra, Simply Bold and Topo Chico Max Margarita.

These higher ABB brands not only support our push to expand in C stores, but are particularly timely given current value seeking behaviors. And while these innovations are helpful to their respective brand families, we recognize the challenges of their big flagship brands and are focused on stabilizing them. For example, with Blue Moon, we have completed the pack size conversion to 12 from 15 packs. This was a near term volume headwind, but it’s very positive for margin. In the on premise, which is a big channel for Blue Moon, we saw dollar share trend improvement during the second quarter.

And in the third quarter, we have been ramping up a new national advertising campaign with comedian, Colin Jost. And then there is Non Alm. Fever Tree is now our highest NSR for Hickley the brand aside from full strength spirits. While we began to consolidate Fever into our financials in February, we only completed the distribution network transition in June. And the incoming distributors are very excited about the opportunity to significantly expand Fever Tree’s presence across both existing and new channels and buying outlets.

It’s early days, but the brand has already contributed meaningfully as the key driver of positive brand mix in The Americas. And while Fever Tree is already the world’s leading supplier of premium carbonated mixes with the number one tonic and the number one ginger beer value in The U. S, we believe we can accelerate its growth in The U. S. Over time by leveraging the scale and strength of our distribution network combined with our marketing capabilities.

Now before I pass it to Tracy, I’ll sum it up to say, it’s been a difficult start to the year, but we view beer as resilient. And amid a challenging macro backdrop, we are focusing on what we can control to position our portfolio and our business for long term success. That means keeping our core power brands healthy, continuing to premiumize in EMEA and APAC and Canada and successfully executing our plans in The U. S. Leveraging our deep capabilities across our organization to support premiumization and focused innovation, supply chain efficiencies and commercial effectiveness and utilizing our enhanced financial flexibility to prudently invest in our business and return cash to shareholders.

And with that, I will pass it to Tracey.

Tracy, CFO, Molson Coors: Thank you, Gavin. We are very pleased with the health of our balance sheet and our strong cash generation. And this is particularly important during a challenging macro environment as it allows us to continue to invest behind our brands to help ensure their long term health, to continue to make capital investments that support our growth initiatives and cost saving plans and to not only pay what we view as a competitive dividend but also execute a meaningful share repurchase program as we continue to believe our stock is a compelling investment. In fact, we have raised the quarterly dividend each year since 2021 and we have actively executed our current share repurchase plan since it was announced in October 2023. We have repurchased 9.4% of our past B shares outstanding.

It’s an up to five year $2,000,000,000 plan and we have utilized almost 55% in under two years. For perspective, if we had executed it on a straight line basis, we would have only utilized 55% of the plan so far. With that, let’s discuss our financial outlook. First, the impact of the global macro environment are multifaceted and difficult to predict. And while we have included in our guidance our best estimate of some of these factors, external drivers may significantly impact our actual results either up or down.

As it relates to tariffs, as we have previously said, while we are a global business, our products are generally made in the markets in which they are sold and with locally sourced ingredients. So we don’t expect material direct impact from the loan tariffs on our input costs. That said, tariffs do have indirect impact like the recent spike in the Midwest premium pricing. While our extensive hedging program can help to mitigate some of the impact due to the bar rails of our program we are never fully hedged. Further given its opaque pricing and at times limited liquidity hedging the Midwest premium can be difficult and expensive and for these reasons the Midwest premium is one of the commodities for which we currently have the least amount of hedge coverage.

With that, let’s discuss the drivers of the guidance Gavin outlined. Our top line guidance range now assumes The U. S. Industry is down 4% to 6% for the second half of the year. Our price mix assumptions are unchanged.

We expect an annual net price increase of 1% to 2% in North America in line with the average historical range. We expect mix benefits from cycling contract brewing from 2024 as well as from premiumization. We expect to grow above premium net brand revenue in EMEA and APAC and Canada as well as make progress on our U. S. Above premium initiatives.

Cedar Tree and the consolidation of Zoho are incremental to the top line but we are also divestiture of the smaller regional craft breweries in the 2024 and more significantly 2024 Pepst and Le Bats contract brewing volume as these contracts terminated at the end of last year. We expect the related Americas contract brewing headwind to be 1,900,000 hectoliters in 2025. In the first half, we cycled over 1,100,000 hectoliters and we will cycle over 450,000 hectoliters in the third quarter. Also last year we had higher than typical first half inventory build related to the fourth wave strike which ended in mid May. As a result, STWs outpaced STRs by 1,100,000 hectoliters in the first half of last year.

This year STWs outpaced STRs by 800,000 hectoliters in the first half. So year on year we had an approximate 300,000 hectoliter shipment timing headwind in the first half that we expect to reverse in the second half and mainly in the third quarter. Note that we did have some shipment trends catch up to STRs in the second quarter which had an approximate 150 basis points positive impact on U. S. Financial volume in the quarter.

We had previously not expected to build higher than last year given the cycling of the Fort Worth strike. However, we were able to ship further ahead of STRs than expected due to the softer than anticipated industry demand. For a detailed review of these U. S. Shipment trends please refer to Slide 21.

Moving down the P and L, we expect mix benefits from lower contract brewing and increased premiumization as well as productivity improvements and cost savings to now be more than offset by higher volume deleverage given the industry volume trends as well as higher Midwest premium costs. For the full year, this would result in Midwest premium costs exceeding the prior year by $40,000,000 to $55,000,000 We now expect MG and A to be down slightly for the year as we now anticipate lower incentive compensation due to the adjusted outlook for this year. Also and to a lesser degree the Fever Tree one time transition and integration fees were less than expected totaling approximately $30,000,000 in the first half of the year. Again, these fees will be recovered through net sales over the next three years beginning in June. As for marketing, our plans are unchanged.

We intend to continue to put the right commercial pressure behind our key brands and innovation, including our core power brands, Pironi, the Blue Moon family, Madri and our non alk portfolio. While marketing investment was down in the second quarter cycling up spend in the prior year period, we expect it to be up in the third quarter due to the timing of our commercial plans and lower spend in the same period last year. As a result, we expect marketing investments in the peak summer months to be consistent with prior year period levels. We are also slightly adjusting our net interest expense outlook. We now expect $225,000,000 plus or minus 5% as compared to $215,000,000 plus or minus 5% previously.

This is driven by lower cash balances including the impact of higher share repurchases as well as foreign currency impact. And lastly, we are reaffirming our underlying free cash flow guidance of $1,300,000,000 plus or minus 10%. In closing, with a strong global brand portfolio, healthy balance sheet and strong cash generation, we are confident in our ability to navigate these challenging times while supporting the long term health of our business and brands. We are committed to protecting and growing our underlying free cash flow while making prudent capital allocation decisions that support our growth initiatives and allow us to return even more cash to shareholders. With that, we will take your questions.

Operator?

Operator: Thank you. We will now begin the question and answer session. Our first question today comes from Peter Grom with UBS. Please go ahead, Peter.

Peter Grom, Analyst, UBS: Thanks, operator, and good morning, everyone. I

Gavin Hattersley, CEO, Molson Coors: wanted to touch just on

Peter Grom, Analyst, UBS: the updated guidance. Can you maybe just unpack the moving pieces a bit more? Clearly, the top line a bit pressured here, which we can see in the data. But can you maybe just unpack the profit headwinds and specifically aluminum and kind of the Midwest premium? And I guess as we look out to the back half the year, how does the kind of updated guidance impact the second half performance?

And I guess related, still early, but are

Filippo Foloni, Analyst, Citi: there any implications that we should consider today as we look out to fiscal twenty twenty six? Thanks.

Gavin Hattersley, CEO, Molson Coors: Thanks, Peter, good morning. Appreciate the question. Look, from an updated guidance point of view, I would put it on three things, right, that we did not anticipate the last time we spoke. One is the industry did not get better as we were expecting it We had expected it to navigate back to where it’s been for the last few years of around down 3%, and it didn’t. And certainly, confidence and the macro environment whilst we continue to believe very strongly that it is cyclical, we’re not seeing any signs of that changing in the balance of the year, and it certainly didn’t in the second quarter.

So that was probably the biggest driver. Obviously, did not expect the dramatic increase in the Midwest premium of 180%. And we’ve talked a lot about that, and Tracy can get into more detail on the difficulty of hedging and forecasting that. So that obviously played a pretty significant negative role in our Q2 and balance of the year assumptions. And frankly, our share performance did not meet our expectations.

So the first two I would characterize are somewhat out of our control, and the third one is within our control. And our share performance wasn’t what we had expected. It stayed relatively the same as it did in Q1, and we had expected an improvement. And our estimate of our share performance was a little better than what you might see in Surcana and so on because our on premise performance is better. And so we estimate we lost about 50 bps of share in the second quarter.

And we’ve made the same assumption for the balance of the year. Now obviously, we’re working very hard to change that. But from a guidance point of view, we’ve assumed a little change in our share performance. From a sort of second half and I don’t think that sort of covers the second half. But from a longer term point of view, Peter, we still believe, as we said in our remarks, and I think the environment supports that, is that the current industry decline is cyclical.

Consumer confidence will turn. I don’t know when, but it will turn. And the Midwest premium will revert back to the mean from these extreme moves that we’ve seen, both of which have had a pretty negative impact on our business this year. We’ve got a very strong balance sheet. We delivered really strong cash flow, as you would have as you heard from Tracy, our updated guidance did not change that.

We continue to be very pleased with how we’ve retained the majority of our market share on our core brands. Coors Banquet is on fire. Our non alk strategy is coming together with the acquisition of Fever Tree, and all of that is incremental in the second half. And we’ll still have incrementality obviously next year as well. It provides a nice halo effect to Zoha.

Pironi, our plants kicked in, in the second quarter and brands doing very, very well. Canada is holding its own from a market share point of view. And Molson Canadian is doing well, but a lot’s doing well, Coors Original is doing well as we head into next year. And when you look at EMEA and APAC, our premiumization strategy is doing very nicely led by Madri and frankly others. If you look towards the balance of the year, this year, contract brewing headwinds become less and less as we head towards the end of the year.

And in the fourth quarter, I don’t think we’ve got any real headwinds from a PAP’s point of view to speak of. We obviously still have first go headwind. And then next year, that all goes away, right? So we will have no headwinds from contract brewing. Tracy spoke about the shipments in the back half of the year.

And whilst we did get some of that into the second quarter, which we weren’t anticipating given the performance of retail sales, we do get the rest of it primarily in the third quarter. And in Mariner and APAC, we’re expecting to perform better from a top line point of view as we head into the back half of the year given the environment. So Tracy, did I forget anything?

Tracy, CFO, Molson Coors: No, think you covered it all. Thanks, Peter.

Operator: Thank you. Next question comes from Chris Carey with Wells Fargo. Chris, please go ahead.

Chris Carey, Analyst, Wells Fargo: Hi, good morning.

Gavin Hattersley, CEO, Molson Coors: Good morning.

Chris Carey, Analyst, Wells Fargo: I wanted to follow-up on a couple of areas there. One is just a clarification. Tracy, the impact from Midwest premium increases that you’re expecting for the year, have you seen any of those increases into Q2? Or is that all in the back half of the year? I just say that in the context of The Americas inflation in the quarter was fairly poultry.

So I just wanted to confirm that piece and how we think about the aluminum inflation perhaps more on a twelve to eighteen month timeframe. And then just following up on the overall category, I think there are certainly a number of reasons why we may view what’s going on cyclically. A lot of categories in consumer are dealing with sluggish trends. The question I would have though is volumes in the beer category have been soft going back to twenty twenty two. Obviously, the category leader dealt with a pretty substantial headwind.

But nevertheless, I wanted to just test that confidence level around this being cyclical versus perhaps changing in consumption and habits and how you reconcile or get comfortable with that concept if it’s kind of a category that’s been a bit softer over the past few years? So thanks on those. Appreciate it.

Gavin Hattersley, CEO, Molson Coors: Thanks, Chris. Trace, if you wouldn’t mind taking the Midwest Premium one, I’ll talk a little bit more about the category our belief in it. Look, think from a consumer confidence point of view and the impact that had on consumers in a number of different ways, Chris, took place towards the January and early February, right? And I mean it’s clear that consumer confidence took a hit at that time and frankly hasn’t recovered. So we continue to believe that over time that will change.

Mean, it could be sooner rather than later or it could be in the same time period next year. The items that have been impacting the overall alcohol category, I’ve often heard GLP-1s talk about, I mean, don’t have a lot of data that suggests that that’s having any meaningful impact on either the alcohol category or our category at this point. The other item that gets talked about is D9. And I think the impact of D9 does vary by market. And some markets, it’s not sold.

And in others, it carries strong restrictions. And so that’s certainly an area that we continue to monitor the impact of that. I think consumer confidence has had a disproportionate impact, as I said, across some consumers differently to others. And again, we believe that, that is cyclical. Tracey, do you want to add anything on Midwest premium?

Tracy, CFO, Molson Coors: Yes. Hi, Chris. So look, I mean, no one expected the Midwest premium to increase 180% from the beginning of the year. So for us, even though we are somewhat hedged because it is such a difficult, it’s not transparent, it’s expensive to hedge, is a commodity that we the least amount hedged. But as it as it equates to the balance of the year, mean, we we expecting an incremental 20 to $55,000,000 of Midwest impact for the balance of the year.

So, you know, that’s around 60 to 75¢ a pound. Our full year impact is between 40 and $55,000,000. And, again, that’s just the Midwest premium. You know, from a from a, rate of a commodity point of view, our hedging program is very extensive, we expect very little impact from tariffs. But these indirect impacts, specifically the Midwest premium, is just a problem because it is so difficult to hedge and it just doesn’t follow normal market dynamics.

Gavin Hattersley, CEO, Molson Coors: And then just to tie a bow on the industry, Chris, I mean, our acceleration plan strategy is designed to address some of the areas where we believe that there is an opportunity, right? So our beyond beer strategy from both a non alk beer point of view and also from a non alk point of view is obviously a fairly close tie in between Fever Tree from a mixer point of view and alcohol. And so that’s an area that we’re leaning into and feeling really good about the initial progress that we’ve made on Fever Tree. So our innovation strategy and our brand portfolio strategy is designed to address consumers’ changed consumption habits differing occasions.

Operator: Thank you. Our next question comes from Andrea Teixeira with JPMorgan. Please go ahead.

Andrea Teixeira, Analyst, JPMorgan: Thank you, operator, and good morning, everyone. Kevin, I appreciate your comments on the consumer confidence potentially improving. Now I’m curious to see if you’re seeing any green shoots because all we hear from your peers and retailers is that obviously with inflation hitting harder in the second half with tariffs, we could see things getting worse before they can get better. So can you comment on the exit rate for consumption in North America and Europe? I know from your slides and I appreciate the details there, you’re still running STWs against STRs at a higher level.

So I was hoping to see if you can help us with the cadence as we incorporate your new guide.

Gavin Hattersley, CEO, Molson Coors: Actually, do you want to talk about shipments perhaps, and I’ll just talk about how we’re seeing the consumer health by market. In The U. S, Andre, candidly, have not seen an improvement in overall consumer confidence or behavior. So we have not seen that yet. And we are continuing to see value conscious consumers engaging in some channel and pack shifting as we’ve seen previously, certainly buying more singles and large packs and less of those mid packs.

But that certainly has continued. I mean, we obviously serve a very broad set consumer demographics across many income levels with our portfolio, and we think we’ve got a portfolio that meets everybody’s needs. So no, we haven’t seen much change. The environment is impacting all consumers in one way or another. We do see the Hispanic consumer is disproportionately impacted by the overall macro environment.

If you look north of the border in Canada, I mean, has eased over time, but consumers out there also remain cautious about spending and ongoing concerns around housing and food costs. While interest rates have stabilized, I think there is a more global concern around trade tensions and tariff related impacts. So whilst Canada beer industry volumes have or trends have been somewhat similar to The U. S, they’ve performed slightly, slightly better. In The UK, the consumer confidence index remains negative.

We did see a little bit of an improvement in May. I think it’s just a more broader optimistic view of the overall economy in The UK. But overall sentiment, I think, I would say, remains cautious. And then in Central And Eastern Europe, certainly that consumer is probably being impacted more than most given the significant political and socioeconomic issues that are impacting the Central And Eastern European markets. So that’s sort of a run through of our markets and how we’re seeing consumer confidence.

Tracy, the shipments?

Tracy, CFO, Molson Coors: Yes. So in terms of the first half of the year, our shipments did outpace our sales to retail by about 800,000 hectoliters in the first half. Five years is about 1,100,000 hectoliters. So there’s about 300,000 hectoliters to reverse in the second half of the year. Most of that will be in Q3.

And as always, we plan to ship to consumption, so we expect that to converge, but as I say, in Q3.

Gavin Hattersley, CEO, Molson Coors: Thanks, Andrea.

Operator: Thank you. Our next question comes from Bonnie Herzog with Goldman Sachs. Please go ahead, Bonnie.

Bonnie Herzog, Analyst, Goldman Sachs: Thank you. Good morning, everyone. Just had a quick question pricing and then the promotional environment. I guess given the pressures on the category and consumers, how are you thinking about pricing for the remainder of the year? Also, what about the promotional environment?

Are you seeing signs of levels increasing recently? And how do you expect that to play out? Thank you.

Gavin Hattersley, CEO, Molson Coors: Thanks, Bonnie, and good morning. Look, mean, it’s quite common to see heightened competition with strong promotional activity during the summer, And you see that easing up in the shoulder months, and we’ve seen that in prior years, we’re seeing that again. Again, we just take a strategic approach to how we evaluate the competitive environment. From an overall pricing point of view, the historical average, as we’ve said before, ranges in that 1% to 2% range. And we expect that to fall within that range again this year.

Whilst we have seen the impact of the economy, consumer confidence, having consumers searching for value. Any trading seems to be coming in channel and pack shifting, not necessarily in segment trade down. Thanks, Bonnie.

Operator: Thank you. Our next question comes from Filippo Foloni with Citi. Please go ahead.

Filippo Foloni, Analyst, Citi: Hi, good afternoon, everyone. I wanted to follow-up on the margin question on the Midwest premium for the second half. If I take the, call it, 20,000,000, 35,000,000 incremental Midwest premium cost, it’s still a relatively small headwind to margin. So maybe, Tracy, can you talk about like the other drivers of the big margin contraction that is embedded in your guidance in terms of volume deleverage, SG and A for the back half of the year? And then just a follow-up on top line.

Gavin, you mentioned the on premise is performing better than what we see in tracked channel data. So can you give us a perspective of how July played out relative to your expectation, including the on premise business? We see still soft trends, especially around fourth of July in truck channels, but I’m curious the total company and total industry trends, including on premise. Thank you.

Gavin Hattersley, CEO, Molson Coors: Thanks, Filipe. I’m trying to if you’ll handle the margin one. I’ll quickly deal with July and the on premise. Look, from a July point of view, as we say every time on these calls, we’ve only got a few weeks of the following quarter in the books. So let’s see what happens for the balance of the quarter from an overall industry and our performance point of view.

From an on premise point of view, I know we’ve talked a lot about Blue Moon over the last couple of years, and we are starting to see improvement in the on premise. Belgian Watts STR trends improved six points in Q2 versus Q1, which is very encouraging given that brands are built and expand from the on premise out. So we’re pleased with that. Peroni is obviously playing a role in that as we implement the plans we’ve talked about for a while now, which kicked off in Q2. So that’s been a positive catalyst for us as well.

And then Coors Banquet just remains on fire as it gains distribution both in the on premise and the off premise. So I would say that those are the three brands that are having the most positive impact for us in the on premise. Tracy, do you want to get into Yes. Margin a little bit

Tracy, CFO, Molson Coors: Then Filipe, look, from a margin point of view, we don’t specifically give gross margin guidance. But just to note, our underlying gross margin percentage has improved in each of the last two years. But a couple of things as we look at 2025. So we’ve spoken about the top line. In terms of the COGS, we do have the deleverage headwind driven by the contract brewing, which we’ve discussed.

And we also have higher premiumization, which drives higher COGS across our business units. We have spoken about the Midway’s premium. And although we do have productivity productivity improvements improvements and and cost savings, these are more than offset by the deleverage and premiumization as well as the Midwest premium.

Gavin Hattersley, CEO, Molson Coors: Thanks, Tracy.

Operator: Thank you. Our next question comes from Rob Ottenstein with Evercore ISI. Rob, please go ahead.

Rob Ottenstein, Analyst, Evercore ISI: Great. Thank you very much. So Gavin, a pretty pessimistic view on second half volumes for the industry, and I’m assuming that July was pretty bad. And this is in the face of, I think, easier comps, given how bad the weather was last year. So I guess what I’d love you to help us think through, assuming that does play out the way you’re guiding to, what are the impacts on the industry and how can the industry address that?

So are you starting to see pressure, for instance, on shelf space, not for you specifically, but for the beer industry as a whole as retailers start to look at the fall shelf set changes and into next year and how you may be combating that? Any impact on not just yours, but industry brewery footprint, the potential for some sort of consolidation of volumes? And maybe doing a reverse, doing more contract brewing instead of letting contracts go, actually maybe bring more in to keep brewery utilization going given the high fixed costs of breweries and dependence on volume. So just love to get your thoughts on industry action, your reaction to these unprecedented volume declines? Thank you.

Gavin Hattersley, CEO, Molson Coors: Thanks, Rob. Yes, a lot of questions in there, so let me try and tackle them off. So from a comps point of view, no, July had easier comps, but the rest of the year did not, if you remember correctly. So yes, there was poor weather and the industry was pretty tough in July, so the comps are a little softer in July. Going forward, they’re not.

They’re actually the industry improved quite nicely heading into the balance of the year from about August onwards. So the comps don’t get easier from an industry point of view. They get tougher. And obviously, we built that into our thinking as we put the guide out there. From a shelf space point of view, look, our point of view, we obviously had a significant uptick in 2024 in both the spring and in the 2023.

We held on to those gains. And so we finished 2024 significantly higher than we did in 2023. And again, in the spring of this year, we held on to those shelf gains. And Banquet, again, was a particularly strong beneficiary of that. We gained strong double digits.

We’re not expecting to see significant activity for the 2025 based on what we’re seeing and what we’re hearing. And frankly, we would know if it was different by this time. Where retailers have made shelf changes to accommodate other brands, they’ve made in the flavor space and the craft space primarily, I would say. They haven’t made it in the traditional beer space. From a brewery footprint point of view, obviously our capacity utilization varies by season.

So in the summer, we’re fully utilized and in the shoulder periods, not necessarily. I would tell you that removing PEPs from our system is very, very helpful. It has allowed us to remove a lot of complexity. It’s allowed us to free up capacity in the summer. It certainly helped our decision to onshore Pironi, which we have now completed, and it’s completely on shored.

Obviously, we see a big opportunity for Pironi, and we’re starting to see that benefit coming through in the second quarter, I’ve often said, and look forward to seeing in the future that Pironi can. There’s no reason why it can’t be as big as its other European competitors. And we certainly gained meaningful share versus our European competitors in the second quarter now that our plans have kicked in. It has it allowed us to tidy up our footprint by closing a couple of smaller breweries. So we were able to tidy that up.

And it certainly allowed us to bring Yingling and our Yingling relationship into our business and produce in a couple of breweries. And this will allow us to expand further with Yingling when the time is right. So as it relates to the brewery footprint, we’re pleased with our brewery footprint. And yes, I think that covers all of Rob’s points, Tracy. Thanks, Rob.

Operator: Thank you. Our next question comes from Eric Serrata with Morgan Stanley. Please go ahead, Eric.

Tracey Mangini, Vice President, Investor Relations, Molson Coors0: Great. Good afternoon good morning, everyone. Wanted to first ask you, Gavin, in terms of recent market share trends. Clearly, the off premise trends at least have weakened vis a vis your largest competitor. I know you called out better on prem trends.

But are there any changes to your marketing or go to market strategies that you’re implementing or contemplating in light of what seems like a resurgent competitor, at least for two of their main brands? And then for Tracy, a couple of housekeeping items. Could you help quantify how much the incentive comp reversal was? Was that all in the second quarter? And then in terms of the free cash flow, much of sort of how much of the bridge between the earnings reduction and their free cash flow reiteration is the cash tax and working capital?

And all else equal, would the working capital benefits reverse next year? Or are these sustainable? I know there’s a lot there, but thank you.

Gavin Hattersley, CEO, Molson Coors: Thanks, Eric. Yes, a lot there. Let me see if I can answer that. Look, I think from an overall share point of view, I think I’d start by saying that our total Molson Coors share trends in The U. S.

Now I’m talking specifically in The U. S. Has improved each quarter since the third quarter last year. Q3, were down about 100 basis points. Q4, we were down about 70 basis Q1 was down about 60 basis Q2 was about the same.

And if you peel back the envelope as to where we are losing that, it’s in flavors and seltzers is the biggest part of that decline. And so we are seeing some improvements in Topo Chico. It’s not enough to offset the declines that we’re seeing on Simply and Vizzy. From an economy portfolio point of view, that’s roughly about another third of the decline. And obviously, our two focus brands in there, Miller High Life and Keystone Light, are showing better trends than the number of total brands that we still have in that segment.

And then core, right? We talk and I have talked a lot about our core share retention because it’s factually correct. We have retained 180 points of the share that we gained in 2022, and it is meaningful. Banquet continues to be the star of the show there. It’s up another 20 basis points in Q2, and it remains one of the fastest growing major beer brands in The U.

S. In fact, it grew in all 50 states plus Washington, D. C. In the first half of the year. So we are very pleased with Coors Banquets performance.

What are we doing about the rest? Well, as we head into Q3, we’re focused on driving our Miller Lite fiftieth anniversary campaign. We’re going to execute strongly behind our NFL Alliance presence. We have a relationship with a number of NFL teams, so you’ll see us in all channels. You will see incremental media pressure, particularly in our Great Lakes geography.

We’re going to be executing against our Coors Light college programming with our ESPN Game Day partnership. We’re going to continue to put the accelerator down on Quiz Banquet’s momentum with the Start Your Legacy program. From an above premium point of view, I’ve talked a lot about Pironi and Madrid. From a Blue Moon point of view, we are working very hard to change the trajectory of that brand. And we are, as I said earlier, seeing green shoots starting to show up in the on premise, and we’re seeing good performance behind our innovation, particularly Blue Moon non alk.

But from a higher ABV point of view, obviously, strategy behind Blue Moon and Simply and Topo Chico and the convenience stores is something we’re putting effort behind starting in the second quarter. A big important brand for us. It’s a top priority for us in above premium, and we remain very committed to turning it around. Think that was all. David, anything you want to tell you?

Tracy, CFO, Molson Coors: Yes. So Eric, from an incentive compensation, look, we accrued for incentive comp throughout the year. And then based on our adjusted outlook for our guidance, we have reversed a large portion of what we had accrued in the first half of the year. In terms of the free cash flow, look, the cash tax benefits that we’ve got as well as the working capital largely offset the profit shortfall. And then if you recall, when we had our Q1, we did cut our capital spend by about $100,000,000 So that gives us the free cash flow of around 1,300,000,000.0 plus or minus 10% as we have guided

Gavin Hattersley, CEO, Molson Coors: to. Thanks, Tracy.

Operator: Thank you. Our next question comes from Peter Galbo with Bank of America. Please go ahead, Peter.

Tracey Mangini, Vice President, Investor Relations, Molson Coors0: Hey, good morning, Gavin and Tracy. Thanks for all the detail in the deck. Very helpful. Tracy, I just wanted to go back maybe to Filippo’s question, particularly around the volume deleverage piece. I think it was about a 300 basis point impact in the first half.

And I know that you kind of gave some high level commentary on what it would be for the year. But was just hoping to unpack that a bit more as we think about the second half and the year specifically, how we should think about the volume deleverage impact? Thanks very much.

Tracy, CFO, Molson Coors: Yes. So in terms of our outlook for the year, what we have said is that STWs outpaced the STRs by about 800,000 hectoliters in the first half of the year. We always plan to shift to consumption. And so they will it’s gonna be about 300,000 or so that we will reverse in the second half of the year, mainly in q three. Because last year, for the first half, we did ship more than we than the retail by about 1,100,000 hectoliters.

So the difference between that is about 300,000 hectoliters, which we expect to reverse. And then yes. Because we we plan on shipping to consumption, we expect most of that to to converge by the end of the year, but mainly in q three.

Gavin Hattersley, CEO, Molson Coors: Thanks, Tracy.

Operator: Thank you. Our next question comes from Bill Kirk with ROTH Capital Partners. Please go ahead, Bill.

Tracey Mangini, Vice President, Investor Relations, Molson Coors1: Good morning, everyone. So my question, since pre COVID, since 02/2019, you have more market share than you did. Your earnings per share much better than they were, but the stock price doesn’t really reflect those improvements. I So guess the question is if you aren’t getting credit for market share gains and profit growth in your current categories, does something need to strategically change? And and then when underlying COGS per hectoliter are are up mid single digit or more, why only take a 1% to 2% price increase?

Gavin Hattersley, CEO, Molson Coors: Thanks, Bo. Look, from your for the first part of your question, I mean, and we’ve said this before as well, is we believe that our business is a very attractive investment at these levels, and we continue to demonstrate our belief by buying back significantly ahead of the authorized program. From an overall category point of view, I’m very pleased with our acquisition of The U. S. Business of Fever Tree and the integration is going well.

And our volumes are exceeding our expectations from a business case point of view. Our distributors are excited about it and it really does give us a nice footprint from a non ALK point of view and we believe a halo effect to our other non ALK activities. Was also thinking Pricing. Oh, pricing, yes. Mean, look, Bill, we obviously look at pricing from every single market is different, every state is different, every brand is different.

And we obviously take any number of factors into account, not only input costs, but also consumers’ behavior and receptivity to price increases and so on. So we’ve got a very robust revenue management program and we will continue to do what we think is best for our brands in every single market.

Operator: Thank you. Our next question comes from Robert Moskow with TD Cowen. Please go ahead, Robert.

Tracey Mangini, Vice President, Investor Relations, Molson Coors2: Hi, thanks for the question. In the past couple of years the productivity gains at Molson Coors have been substantial and helped offset a lot of the negative impact from volume deleverage. But now it looks like the volume deleverage is accelerating and you’ve had to call down your guidance. Tracy and Gavin, at what point do you have to take another look at your asset footprint both in terms of manufacturing and distribution? And with volume declining at this pace, will you have to take another look at that and maybe make more reductions?

Thanks.

Gavin Hattersley, CEO, Molson Coors: Thanks, Robert. I mean, look, I mean, a capacity point of view, we’re pleased with our brewery footprint. We have obviously really strong utilization from a capacity point of view in the summer months. We’ve removed contract brewing from our system completely, which is why we have that headwind and have had the headwind all year that obviously starts to tail off as we head into the back half of this year. But there’s not much more I can say than what I said earlier, Robert.

Removing tests from our system has proven to be very helpful. It’s allowed us to take a lot of complexity out of our system. It’s allowed us to change things from a shift configuration point of view, from a line point of view, from a temporary labor point of view. It’s overall, from a very footprint point of view, very positive for us. And it’s allowed us to bring Pironi in, which, as I said, is growing very nicely, and we hope to have that brand as a big brand in the future.

And it’s allowed us to support our Yingling partnership, where we’ve had a very successful launch in Illinois this year. So we’re pleased with our brewery footprint, I guess, is the summary. Thanks, Robert.

Operator: Thank you. Our next question comes from Michael Lavery with Piper Sandler. Please go ahead, Michael.

Tracey Mangini, Vice President, Investor Relations, Molson Coors3: Good morning. Thank you. I just wanted to come back the guidance update and the EPS bridge. Midwest Premium has gotten a lot of attention, but as you’ve called out the math, it’s maybe one to two points of the 10 or 13 cut point cut to EPS growth outlook. And you’ve got some stepped up buybacks as well.

What are the missing pieces, I guess? And if you’ve said what’s new is Midwest premium, the category trends and then your share expectations, is it just all of that and the operating deleverage that we’ve covered a bit? Or is there other inflation we should have our eye on as well? You know, you Or mentioned the interest expense change. That’s also quite modest.

So I mean, you know, help us maybe figure out if there’s any other moving parts here or if just the top line flow through is that significant.

Tracy, CFO, Molson Coors: Hi, Michael. Yeah. So look, I mean, there is some marketing timing. You know, we we do expect to spend, you know, similar levels of of marketing in our peak summer selling season as as last year, you know, so that’s one thing. But the other thing is, remember, our EPS is not on in constant currency.

So, you know, we do have foreign exchange impacts to it. And as the dollar weakens, that will certainly be a tailwind. And then the other thing that goes into it is tax. Now we have kept our effective tax rate guidance at the same levels as what we had previously. But those could be two items that do impact our EPS.

But yes, just probably to call out that you know, although marketing was down in in q two, we do expect it to be up in q three because of some of the timing of our commercial plans and and also cycling lower spending in prior year. Thanks, Tracy.

Operator: Thank you. Our next question comes from Lauren Lieberman with Barclays. Please go ahead.

Tracey Mangini, Vice President, Investor Relations, Molson Coors4: Great. Thanks. Good morning. So I know you talked about the softer U. S.

Share performance in the release. And I was just curious to kind of talk a little bit more about that given the competitive premium light space these days. Like are there any specific regions in The U. S. Where you’re seeing underperformance?

And I know you said the guidance for the second half assumes these share trends kind of are consistent. You just commented on marketing, but I was curious about plans to defend share in the second half and beyond. Like is there a point where you’d consider addressing pricing? Is it a matter of more marketing? Or is the view more like don’t overspend into a soft market backdrop?

Thanks.

Gavin Hattersley, CEO, Molson Coors: Yes. Thanks, Lauren. Look, I mean, we’re obviously very thoughtful about how we spend our marketing and we turn it over quite carefully. But certainly, we’re seeing really pleasing momentum in a number of our brands. Without wishing to repeat myself too much, right, I mean, we’re seeing strong momentum behind Banquet, Peroni, and we’ve got our non ALK portfolio coming in.

We’ve achieved, we’re spending more money behind it. Madrid in our other markets has performed very well. So notwithstanding the current overall macro environment, which we, as I said, believe is cyclical, we’re going to continue to invest behind our brands so that when the tide turns, they’re in the best position that they can be. I talked a little earlier on about some of the areas that we’re focusing in on our core brands, not only Banquet but also Motherlot and Quiz Light, and we’re going to continue to support those. But you can be assured that we turn over every marketing and sales dollar carefully for effectiveness before we spend it.

Operator: Thank you. Our next question comes from Carlos Laboy with HSBC. Please go ahead.

Filippo Foloni, Analyst, Citi: Yes. Good morning, everyone. Can can you come back, please, to cash flow offsets that you mentioned earlier? You mentioned tax benefit. There was another one.

If you could expand on both of those, please, it would be helpful.

Tracy, CFO, Molson Coors: Yes. So we for our free cash flow, you know, we’ve received some cash tax benefits this year as well as some working capital improvements. So that has enabled us to keep our free cash flow guidance at the $1,300,000,000 plus or minus 10%. Those are the two items that we mentioned in particular.

Gavin Hattersley, CEO, Molson Coors: The biggest driver there obviously is the benefit coming out capital, right, capital deductibility from one big beautiful bull point of view.

Tracy, CFO, Molson Coors: Yes.

Operator: Our next question comes from Nadine Sawatz with Bernstein. Please go ahead.

Tracey Mangini, Vice President, Investor Relations, Molson Coors5: Yes. Hi, everybody. Thank you for taking my question. I know we’ve talked a lot about The U. S.

So I’d actually like to turn attention to EMEA and APAC. Your financial volumes were down close to 8%. And I know you called out weakness in a number of the markets. But could you provide perhaps some additional color by region? How is The UK business doing versus your other markets?

And then how do you view this segment performing over the remainder of this year specifically? Thank you.

Gavin Hattersley, CEO, Molson Coors: Thanks, Nadine. Look, mean, the market in The UK continues to decline. It declines in both channels. We have seen a little bit of a category improvement year to date, starting to see some trend improvement in our shared trajectory. That has been aided by the benefit of the Easter shift, right, which moved out of Q1 and into Q2.

And I know you live in The UK, so that you will know that the weather has been particularly good in The UK. We are expecting those figures to show a somewhat greater decline once we’ve got June data in because I think we’re lapping a big football tournament from last year. So there is that going on. Competition in the marketplace, it remains intense, frankly. And despite the increase that we’ve seen in promotional frequency in the off premise with our largest brand, it does remain challenged given the actions of some of our competitors, which we have chosen not to follow.

I mean we’re seeing some of our competitors in that space price consistently 20% lower than carling on shelves. So that certainly challenged us from a main brand point of view. Our Madrid volume growth, it continues. It’s up again mid single digits in Q2, and we’re going to continue to put the right level of commercial support behind those brands. If you look across the water into our Central and Eastern European business, look, there’s no doubt that the overall beer industry remains sluggish in this market.

It’s driven by another decline in consumer confidence that began at the 2024 after we’ve seen some improvement. And those factors that are driving that are well understood and well known from a global political point of view and local, social and economic tensions that exist there. We have seen a higher promotional activity across most of the markets. We have had some challenging customer negotiations as well, which on our result. And so all of those factors impacted our volume performance in the first half of the year.

We continue to remain optimistic about the growth potential for our Central and Eastern European businesses. We’re putting investments behind our national power brands. And we’re supporting the recent launches that we have in the above premium space with we launched Madri in Bulgaria last year, and we launched it in Romania this year. And both of those doing very nicely. We launched Coors in Hungary, which is doing well.

And our innovation in the beyond beer space for example, Aspel’s PIP and Wild cider in Serbia and Bulgaria and Montenegro and Croatia is also doing well, although early days. So a real success story for us is our premiumization our EMEA and APAC business. And you can actually see that in the mix benefits, which we got in EMEA and APAC in the second quarter. I think that generated almost four ninety basis points of positive mix for us. Nadine, that’s kind of a quick high level run through our European business.

Operator: Thank you. Our next question comes from Gerald Pascarelli with Needham. Please go ahead.

Peter Grom, Analyst, UBS: Great. Thank you. I had a question

Tracey Mangini, Vice President, Investor Relations, Molson Coors6: on capital allocation. Just given these volume declines, if industry volumes and then your own volumes remain lower for longer, As you think about this business long term, do you believe larger scale M and A or more aggressive bolt on M and A may be necessary to just expedite your portfolio towards more attractive subsectors in beverages, whether it be more nonalcoholic exposure or exposure to above premium brands, etcetera? Just looking for any color or thoughts around how M and A or evolving M and A just fits into your capital allocation strategy. Thank you.

Gavin Hattersley, CEO, Molson Coors: Thanks, Gerald. Look, from an M and A point of view, I think we’ve been very clear about how the string of pearls approach has worked for us. In the early days when we still had somewhat of a challenged balance sheet with a higher leverage ratio, PROs were relatively small. As we’ve put ourselves in a really strong position from a balance sheet point of view, I’m very proud of the work that the team has done to get the balance sheet where it is after the last four or five years. That has allowed us to look at slightly bigger pearls.

Certainly, the one we did this year with Fever Tree is very strongly supportive of our overall strategy and is a much bigger pearl than we perhaps would have considered five years ago. When you add everything up from a working capital point of view and a distribution point of view and our investment in Fever Tree, that number was well north of $100,000,000 we remain committed to our string of pearls approach. Obviously beyond that, I’m not going to comment on any M and A, but very pleased with the progress that we’ve made with Fever Tree so far.

Operator: Thank you. Our next question comes from Kevin Grundy with BNP Paribas. Please go ahead,

Tracey Mangini, Vice President, Investor Relations, Molson Coors7: Great. Thanks. Good morning, everyone. I was hoping maybe get an update on the CEO search process, given Gavin’s plans to retire by year end. Gavin, of course, you will be missed.

But any update there, just in terms of where that process stands? Any comments on internal versus external candidates, attributes that the Board is looking for? And perhaps maybe how that’s evolved a bit, given the demands of the current environment? So any comments that you can offer to folks, I think, would be appreciated. Thank you very much.

Gavin Hattersley, CEO, Molson Coors: Thanks, Kevin. Appreciate the kind words. Look, I mean, the process is well underway. The Board’s made significant progress. Obviously, it’s navigating the process very thoughtfully, given my planned retirement by the end of the year.

In terms of capabilities, the Board is paying a lot of attention to both relevant business leadership experience along with a cultural fit. Obviously, I’m very proud of the culture we’ve built here at Molson Cruise. It’s very special. As we’ve said previously, it’s very common for companies of our size to look at both internal and external candidates for a CEO position, that’s what our Board is doing at the moment. They remain supportive of our current long term strategy.

Obviously, I would expect any new CEO to put their own stamp on the company. So that’s the update, Kevin.

Operator: Thank you. Those are all the questions we have today. And so I’ll hand the call back over to Gavin for closing remarks.

Gavin Hattersley, CEO, Molson Coors: Thank you, operator. Appreciate that. Appreciate all the questions. I’d like to close by thanking our Molson Coors team and our partners for their continued support behind our business and our brands. I continue to be very proud of the dedication and commitment of our over 16,000 employees, our incredible partners and our best in class distributor network.

I’m confident that together we can navigate this challenging environment and certainly emerge stronger with this team behind us. So thanks for your time today.

Operator: Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.

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