Molson Coors Beverage Company

Good day, and welcome to the Molson Coors Beverage Company fourth quarter and fiscal year 2020 earnings conference call. You can find related slides on the investor relations page of the Molson Coors website. Our speakers for today's call are Gavin Hattersley, President and Chief Executive Officer, and Tracy Joubert, Chief Financial Officer. Please note that this event is being recorded. With that, I'd like to turn the call over to Greg Tierney, Vice President of FP&A, and investor relations. Mr. Cheney, please go ahead.

Thank you, operator, and hello, everyone. Following prepared remarks from Gavin and Tracy, we'll take your questions. Please limit yourself to one question, and if you have more than one question, please ask your most pressing question first and then re-enter the queue to follow up. If you have technical questions on the quarter, please pick them up with our IR team in the days and the weeks that follow. Today's discussions include forward-looking statements, and actual results or trends could differ materially from our forecasts. 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. Gap reconciliations for any non-U.S. gap measures are included in our news release or otherwise available on our website. Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars. And with that, over to you, Gavin.

Thank you, Greg, and thank you all for joining us today. 2020 was an incredibly challenging year for everyone, Molson Coors included. But in many respects, I consider us lucky. The revitalization plan we put in place in October of 2019 positioned our company well to weather the storms of 2020. Our business was leaner and more nimble, which put us in a better position to conserve resources as the circumstances dictated and to deploy them effectively as the circumstances allowed. And the results bear that out. When you consider what we set out to do under our revitalization plan, we accomplished an incredible amount in 2020, and that has given us a tremendous springboard for 2021. Our two largest brands, Coors Light and Miller Light, our iconic core, grew 6.1% and 8.6% in the US off-premise respectively. Our above premium brands in the US reached a record high percentage of the portfolio in the second half of 2020. Beyond beer, our first foray into non-alcoholic cannabis beverages through the Trust Joint Venture has netted the number one dollar share spot in the entire Canadian cannabis beverage market. We increased our production capacity for our fast-growing seltzers by approximately 400%, and we approximately doubled our annual investments in our hometown communities. That is the story of Molson Coors in 2020. Now, you may be wondering why I have such confidence, especially if you only look at our consolidated top-line results in the fourth quarter. But that number alone does not tell the full story. And if you only look at that piece of data, you'll miss it. Our top-line results in the fourth quarter were overwhelmingly due to losses resulting from government restrictions in the European on-premise channel. To put it more bluntly, Europe alone accounts for 92% of our fourth quarter top-line declines. But those results are not reflective of the performance we've seen across the rest of the business. And the story is very different in our largest market. And how different? In the fourth quarter, Molson Coors grew net sales revenue in the United States. We grew the top line in the United States. Our plan is working. So let's look deeper at our results in 2020 and what we have in store for 2021. Our first pillar under the revitalization plan was to build on the strength of our iconic core. In the U.S., our largest beers, Coors Light and Miller Light, delivered 6.1% and 8.6% prospective growth in the off-premise. They again grew share in the premium light beer segment, and they finished 2020 with stronger brand health. We're pleased but not satisfied with those results. So in 2021, we're going to put even more marketing behind these two iconic brands, And we're thinking big, as you may have noticed around the big game last weekend. And again, I want to point something out here. We are demonstrating our ability to grow in shelters and expand beyond beer while strengthening our core brands. We are demonstrating we can do both. The revitalization plan was specifically designed to free up resources so we can meaningfully invest behind our core, our growth and above premium, and our expansion beyond beer. In the second half of 2020, about premium products hit a record higher portion of our U.S. portfolio relative to any prior year comparable period. We doubled our share of Celsius in the U.S., moving towards our double-digit share goal by the end of this year. Busy has been a top-ten growth brand for nearly six straight months. Busy's incredible growth has been accomplished with basically just one pack. But in a few weeks, we plan to add more firepower to that brand with a second variety pack. And a few weeks later, we plan to launch Vizzy Lemonade, a lineup we believe is tailor-made for Vizzy given its unique antioxidant vitamin C attributes. And we are excited about the opportunity for Coors Seltzer, which launched at the end of September. We are seeing promising signs, including repeat rates that are stronger than Bud Light Seltzer and Corona Seltzer at the same point during their launch. In 2021, we have strong plans to accelerate marketing support behind Coors Seltzer, as well as its commitment to help save America's rivers. And that's just the beginning. We are about to launch Topo Chico hard seltzer, which is getting a lot of attention from retailers and distributors alike. Topo Chico mineral water is beloved in the biggest markets throughout the United States, especially in Texas, a high-potential market. Quickly on its heels, we plan to bring Topo Chico ranch water to market. And again, we see this brand is best positioned to take advantage of the ranch water craze that has been inspired by Topo Chico mineral water enthusiasts mixing up ranch water at home. And still to come is Proofpoint, our first spirited seltzer. When all four seltzers are in market later this spring, we believe we will boast the strongest, most differentiated seltzer lineup in the United States. And while we started behind others in the United States, in Canada and Europe, we are early entrants in the hard seltzer category. In the next couple of weeks, we are taking both Vizzy and Coors Seltzer into Canada. In Europe, building on an existing brand partnership already in markets, the launch of our own threefold brand seltzer is planned for March, and we will be leading the development of the category across Central and Eastern Europe with an own brand in the second quarter. In above premium beers, we have high expectations for Blue Moon Light Sky, which ended 2020 as the number one new beer in the United States for Nielsen. We've expanded its production capacity by approximately 400%. We're putting more marketing muscle behind it, and we believe this is a brand that's going to continue to rise for quite some time. Our regional craft portfolio in the United States grew 17% for Nielsen in 2020, outpacing the craft segment once again. And next month, we will be taking Hop Valley National in the U.S. and Canada. It's our first national IPA. We believe it will be another driver of growth for our above-premium portfolio. And do not forget about Yingling. This fall, the newly formed joint venture plans to bring Yingling to one of America's biggest beer-drinking states, Texas. The reception has already been incredible, and there is significant upside potential with Yingling as the joint venture begins its westward expansion At the beginning of last year, we changed our name to the Molson Coors Beverage Company, and it wasn't just words. By the end of the year, our non-alcoholic strategy came into focus. We're piloting our own brands with our partner, Ella Libations. We've taken equity investments in other opportunities, including two with legendary non-alcoholic innovator, Lance Collins. We've signed distribution agreements to enter the fast-growing spaces like RTD Coffee with La Cologne and Energy Drinks with Zoa. through our new energy drink partnership with the leadership team led by Dwayne The Rock Johnson. Zoho is getting very positive reaction from retailers and distributors. The Rock isn't just putting his name on this. He's personally making calls to retailers. We're bringing that to market this spring. We think Zoho could be a game changer in the energy drink space. Trust Canada, our Canadian cannabis joint venture with HEXA, launched their beverage portfolio in August And by December, they jumped to the number one dollar share position with four of the top five cannabis beverage SKUs in Canada. And TrustUSA is building on that through their first lineup of hemp-derived CBD beverages in Colorado, which entered the market in December. We are learning a lot about the exciting category following the launch. This entire lineup is a tremendous growth opportunity for our business. It will be a driving force behind our goal to build our emerging growth division into a $1 billion revenue business by 2023. And as a reminder, that ambition does not include our hard sales. And we recently announced our first entry into the fast-growing RTD cocktail space through an exclusive equity and distribution agreement with Superbird and above premium tequila-based Paloma. Last year, we also made major investments to help our business grow the top line. We invested in our e-commerce capabilities all around the globe with more staff and more robust digital capabilities. And it paid off last year with 230% growth in e-commerce in the U.S. alone. We expanded our self-production capacity by approximately 400%. And we also expanded our light sky production capacity by approximately 400%. We completed a sleep can production line capable of manufacturing approximately 750 million sleep cans annually. And on the topic of cans, I'm really pleased to say that our packaging material supply has vastly improved, with glass bottles, paperboard, and tall cans with all returning to normal material availability. In fact, our Coors Light can inventory is higher than it was at this point last year. And our industry standard can supply is improving. We have sourced cans from four continents and worked closely with our suppliers to keep up with the very high rate of consumer demand, and we expect to return to normal material availability by the end of this quarter. We will continue investing in our capabilities throughout the year as we work to grow our ability to produce high margin above premium products. Last, but certainly not least, is how we are supporting our people and our communities. This one is particularly important to me. When I took over as CEO, I made it clear that I want Molson Coors to have a people-first culture, and that approach guided our decision-making throughout the last year. The work in this space is never done, but we are making important progress. Last summer, we set a goal of increasing the representation among people of color in the United States by 25% by the end of 2023 across the country, among salaried employees and in leadership positions, each where market availability shows we have room for improvement. We have made progress towards that goal and we expect to continue to do so. We also increased our support for organizations dedicated to equality, empowerment, racial justice and community building and provided nearly 3 million meals to families in our hometown communities struggling with food insecurity. But we must do more. So today I'm proud to announce that not only will we recommit to matching last year's investments in our communities, we have also committed to spend a total of $1 billion with diverse suppliers over the next three years. This is a commitment that benefits all of us. A wider base of talented suppliers with different backgrounds and life experiences will be a benefit to our company. And the diverse suppliers who earn our business will be able to turn in, in turn, hire more talented employees into their businesses. Last summer, we said that Molson Coors' response to addressing racial injustice would not just be a moment in time. Passing things, set aside, and forgotten as other priorities took over. That would be unacceptable. Our commitment to investing in our communities and striving for equal opportunity for all people will not fail. Even with the unforeseeable challenges of last year, we built on the strength of our iconic core. The second half of 2020, we achieved a record high portion of our US portfolio in above premium products. We expanded beyond the bureau. We invested in our capabilities. We supported our people and our communities. and we are not about to stop now. When I took over this role, I told you that we would plan and invest to grow our top line. We're going to follow through on that, and we're on the pathway there. Folks, this is our revitalization plan in action. I know there have been questions about whether or not we can execute all of this, but no one has to wonder any longer. We're doing it right now, today. And now, alternative to Tracy, you can provide you with more detail on our financial performance and our outlook for 2021. Sharon?