UPDATE: Molson Coors Brewing (TAP) Reports Q1 Miss on Revenues
Molson Coors Brewing (NYSE: TAP) reported Q1 EPS of $1.28, $0.50 better than the analyst estimate of $0.78. Revenue for the quarter came in at $2.33 billion versus the consensus estimate of $2.46 billion.
Quarterly Highlights (versus First Quarter 2017 Results)
- Net sales: $2.33 billion, decreased 4.8 percent, due to lower financial and royalty volumes, negative global mix, adoption of the new revenue recognition accounting standard (discussed in the Appendix below), and the approximate $50 million impact of cycling the indirect tax provision in Europe that was reversed a year ago. These factors were partially offset by positive global pricing and foreign currency movements. Net sales in constant currency declined 7.2 percent.
- Net sales per HL: $112.02 on a reported financial-volume basis, increased 0.1 percent. Net sales per HL on a brand-volume basis(1) in constant currency decreased 2.6 percent, driven by cycling the indirect tax provision reversal, adoption of the new revenuerecognition accounting standard and geographic sales mix, partially offset by positive global net pricing.
- Volume: Worldwide brand volume of 19.1 million hectoliters decreased 3.1 percent driven by U.S., Canada and International declines. Global priority brand volume decreased 5.6 percent. Financial volume of 20.8 million hectoliters decreased 4.9 percent, and was adversely impacted by reductions in brand volumes, wholesale inventories and contract brewing.
- U.S. GAAP net income attributable to MCBC increased 33.4 percent as a result of a $328 million cash payment received in January 2018 related to a purchase price adjustment to our acquisition of the Miller International business, along with positive global net pricing, cost savings, and lower interest expense, partially offset by unrealized mark-to-market losses on our commodity positions (versus gains a year ago), lower financial volume, the impact of cycling the indirect tax provision benefit, and higher input cost inflation.
- Underlying net income (non-GAAP) decreased 39.4 percent, driven by lower financial volume, the impact of cycling the indirect tax provision benefit, global mix, and higher input cost inflation, partially offset by positive net pricing, cost savings, and lower interest expense.
- The company looks at value creation from the MillerCoors transaction through the lens of the sum of three numbers. In the first quarter, these numbers were:
- Underlying net earnings of $104.3 million, plus…
- $53 million of transaction-related cash tax benefits and…
- $13 million of transaction-related after-tax book amortization.
- To calculate this measure on a per-share basis, the company had 216.6 million weighted average diluted shares outstanding in the first quarter.
- Underlying EBITDA: Decreased 18.5 percent on a reported basis and decreased 19.7 percent on a constant-currency basis, driven by lower financial volume, the impact of cycling the indirect tax provision benefit, global mix, and higher input cost inflation, partially offset by positive global net pricing and cost savings.
- U.S. GAAP cash from operations: Net cash from operating activities for the first quarter of 2018 was $315.2 million, which represents an improvement of $433.5 million from cash used of $118.3 million in the prior year results, driven by the $328 million cash payment received in January 2018 related to a purchase price adjustment for our acquisition of the Miller International business, as well as working capital improvements and lower cash paid for pension contributions and interest.
- Underlying free cash flow: cash use of $195.1 million, which excludes the January 2018 cash payment received related to our acquisition of the Miller International business. This result represents a reduction in cash used of $26.2 million from the prior year, driven by the same factors as the increase in cash from operations, partially offset by higher cash paid for capital expenditures.
- Debt: Total debt at the end of the first quarter was $11.118 billion, and cash and cash equivalents totaled $197.9 million, resulting in net debt of $10.920 billion.
For earnings history and earnings-related data on Molson Coors Brewing (TAP) click here.