Molson Coors (TAP) Q4 Earnings & Sales Beat on Brand Strength

Molson Coors Beverage Company TAP has posted fourth-quarter 2023 results, wherein the bottom and top lines surpassed their respective Zacks Consensus Estimate. The top line also improved year over year. The quarterly results have gained from brand strength and strong performances across the company's portfolio and both business units. However, the ongoing macroeconomic environment acted as a deterrent.

This currently Zacks Rank #3 (Hold) company has gained 4% in the past three months against the industry’s 0.8% decline.

Quarterly Details

The company’s adjusted earnings of $1.19 per share declined 8.5% year over year but surpassed the Zacks Consensus Estimate of $1.12.

Net sales grew 6.1% to $2,790.8 million and beat the Zacks Consensus Estimate of $2,775 million. On a constant-currency basis, net sales rose 5%, driven by a positive price and sales mix, increased financial volumes and the positive impacts of foreign currency.

Molson Coors Beverage Company Price, Consensus and EPS Surprise

Molson Coors Beverage Company Price, Consensus and EPS Surprise

Molson Coors Beverage Company price-consensus-eps-surprise-chart | Molson Coors Beverage Company Quote

Net sales per hectoliter increased 5.3% on a reported basis and 1.1% on a constant-currency basis, driven by a favorable sales and price mix.

Molson Coors’ worldwide brand volumes rose 4.3% to 19.8 million, driven by strength in America, partially offset by the sluggishness in EMEA and APAC. Financial volumes rose 0.8% year over year to 19.5 million hectoliters due to higher volumes in the Americas, partly offset by increased EMEA & APAC volumes.

The segment’s underlying EBT advanced 5.2% to $345.8 million on a reported basis. On a constant-currency basis, EBT jumped 2.1% year over year due to higher net pricing and rising financial volumes, somewhat offset by cost inflation related to materials and manufacturing expenses, as well as higher MG&A expenses.

Segmental Information

Molson Coors operates under the following geographical segments.

Americas: Net sales in the segment increased 4.7% year over year to $2,231.1 million on a reported basis and flat on a constant-currency basis, driven by a positive price and sales mix, as well as higher financial volume. Financial volumes rose 2.2% year over year, driven by an increase in U.S. brand volumes stemming from higher volumes in the core brands, partly offset by U.S. shipment timing and lower contract brewing volume.

Brand volume for the segment increased 6.7% year over year on an 8.5% rise in the United States, owing to growth in the core brands, with Coors Light, Miller Lite and Coors Banquet each rising double digits. Canada brand volumes grew 0.7% on higher--than-premium brands. Latin America volumes fell 5% year over year mainly due to tough economic conditions across major markets.

Net sales per hectoliter rose 2.5% year over year due to a favorable sales and price mix, and higher pricing. Underlying EBT improved 5% on a constant-currency basis to $363 million. The increase can be attributed to higher net pricing, rising financial volumes and lower logistics expenses, offset by cost inflation on materials and higher MG&A expenses.

EMEA & APAC: The segment’s net sales (on a reported basis) rose 12.6% year over year to $566.6 million and improved 6% on a constant-currency basis, driven by a favorable price and sales mix, as well as favorable currency, partly offset by a decline in financial volume. Net sales per hectoliter for the segment advanced 16% year over year, resulting from a favorable sales mix, as well as higher pricing.

The segment’s financial volumes fell 3%, while the brand volume decreased 2.2% due to lower consumption in the UK and declines in Central and Eastern Europe, stemming from inflationary pressures.

The segment’s underlying EBT decreased 52.7% to $15.3 million on a constant-currency basis, driven by cost inflation on materials and logistics expenses, higher MG&A coupled with lower financial volumes, partly offset by higher net pricing and a favorable sales mix.

Other Financial Updates

Molson Coors ended the fourth quarter with cash and cash equivalents of $868.9 million. As of Dec 31, 2023, the company had a total debt of $6,223.9 million, resulting in a net debt of $5,355 million.

During 2023, the company provided $2,079 million in cash by operating activities, resulting in an underlying free cash flow of $1,420 million. For 2023, capital expenditure is likely to be $750 million, plus or minus 5%.

In 2023, the company declared and paid out cash dividends of 41 cents per share, with the CAD equivalent totaling $2.19 per share. Also, TAP repurchased 3,454,694 shares for $211 million in the above-mentioned period. On Sep 29, 2023, management approved a share repurchase program worth up to $2 billion of its Class B common stock for a term of five years.

Outlook

Management issued guidance for 2024. Net sales are projected to grow in the low single digits year over year on a constant-currency basis. Underlying EBT is likely to grow mid-single digits year over year on a constant-currency basis. Underlying earnings per share are likely to rise mid-single digits compared with 2023.

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%, down from the previously communicated $225 million, plus or minus 5%. The underlying free cash flow is likely to be $1.2 billion, plus or minus.

Stocks to Consider

We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Church & Dwight Co. CHD, Colgate-Palmolive CL and Inter Parfums IPAR.

Church & Dwight, offering a broad range of household, personal care and specialty products, currently carries a Zacks Rank #2 (Buy). CHD has a trailing four-quarter earnings surprise of 10.1%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Church & Dwight’s current financial year’s sales and earnings suggests growth of 8.7% and 6.4%, respectively, from the year-ago numbers.

Colgate, a leading consumer goods company, currently carries a Zacks Rank of 2. CL has a trailing four-quarter earnings surprise of 4.2%, on average.

The Zacks Consensus Estimate for CL’s current financial-year sales and earnings suggests growth of 3.5% and 7.7%, respectively, from the year-ago reported figures.

Inter Parfums is engaged in the manufacturing, distribution and marketing of a wide range of fragrances and related products. It currently carries a Zacks Rank of 2.

The Zacks Consensus Estimate for IPAR’s current financial-year sales and earnings indicates advancements of 20.9% and 20.2%, respectively, from the year-ago figures. It has a trailing four-quarter earnings surprise of 45.7%, on average.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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