Molson Coors Beverage Company

Good day and welcome to the Molson Coors Beverage Company first quarter fiscal year 2021 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 Tracy Joubert, Chief Financial Officer. With that, I'll hand it over to Greg Tierney, Vice President of FP&A and Investor Relations.

Thank you, Operator, and hello, everyone. The following prepared remarks from Gavin and Tracy will 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 reenter the queue to follow up. If you have technical questions on the quarter, please pick them up with the IR team in the days and the weeks that follow. And today's discussion includes forward-looking statements. 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. And also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars. So with that, over to you, Gavin.

Thank you, Greg, and thank you all for joining us today. Let me start by stating the obvious. The first quarter was not the quarter we expected to have. That reality was driven by three events, cybersecurity incident that caused the global system outage, a freak winter storm in Texas that forced utility companies to shut off power to major businesses, including our Fort Worth brewery, and government pandemic restrictions that shut down the entire on-premise channel in the UK and severely restricted much of the on-premise in Canada. To say that all of these events happening in a single quarter is unprecedented would be an understatement. But while we can't control the weather, across the business we executed well on what was in our control. That's true of how we responded to each event. Our team quickly implemented contingency plans to boost production and get our core brand back to a stable inventory before Memorial Day. Right now we are shipping over 1 million barrels a week in the United States for the first time in nearly a year. But most importantly, it's true of how we are executing on our revitalization plans. During the first quarter, Coors Light and Miller Light outperformed the combination of Bud Light and Nickelode Ultra in U.S. industry share performance versus the prior year, according to IRR. Our U.S. above premium portfolio grew brand volumes versus the prior year and continued to gain industry share, according to IRR, and we took substantial steps towards our hard sell for ambition. Our Trust Joint Ventures non-alcoholic cannabis beverages are holding strong as the number one dollar share spot in the entire Canadian cannabis beverage market. As expected, the availability of our 12-ounce standard cans returned to normal levels. And we continued working to protect the environment through two significant initiatives in the United Kingdom. So let's look deeper at each area. That starts with our core, where we continue to see improving brand volume trends for Coors Light and Miller Light in North America over the past quarter, dovetailing off strong performance in 2020. But the performance is even more impressive when you look at our biggest brand and our biggest family of brands. Coors Light finished the quarter with its strongest category share performance since Q1 of 2017. And Coors Banquet posted its best quarterly volume performance in over four years in the United States. We're building on that strong performance in the Coors family of brands with the launch of Coors Pure in March, our first USDA-certified organic beer brand. And we had a strong Q1 in Panama, with over a 50% increase in brand volumes, with Coors Light's explosive triple-digit growth leading the way. Now, when it comes to our plans to aggressively grow our above premium portfolio, as you know, we have big ambitions for hard seltzers this year, and the first quarter was a big one. And as we sit here today, our share of the U.S. hard seltzer segment is over 50% higher than it was at the beginning of the year. In a single week, Topo Chico Hot Salsa jumped to a 3.2 share of the U.S. Hot Salsa category, despite only launching in 16 markets, and it achieved a 20 share in Texas. Now, I know it's early days, but that is a stunning fact that speaks to the opportunity with this brand. And it's not alone in our portfolio. Lizzie was our top 10 U.S. industry growth brand in Q1. We are building on that with the brand's second variety pack, which launched in March, and the new Vizzy Lemonade, which launched several weeks later. They are both performing well. And in fact, Vizzy Lemonade is the second fastest-turning hard lemonade seltzer in the market. We made significant headway with our hard seltzers in Canada and in Europe as well. After just over a month in market, Vizzy and Coors Seltzer are top five hard seltzer brands for some of the leading Canadian retailers. In the UK, our new three-fold hard seltzer brand is launched, while our new brand Whey in Central and Eastern Europe is launching in the coming weeks. In above premium beers, Blue Moon Light Sky, the number one new item in U.S. beer last year, is currently the number one share gainer in U.S. craft beer in 2021. And Hock Valley has made its official national debut in the U.S. and Canada. It's our first national IPA in the US, and we believe it will be another driver of growth for our above-premium portfolio. When it comes to our plans to expand beyond beer, last year we made a lot of news as we took on a number of partnerships to build a competitive portfolio. This year, it's all about executing on those plans. Zoho gives us a strong entry into the $16 billion US energy and performance space and is positioned to take a meaningful share of the category within a matter of months. It's just now beginning to hit shelves, but by Memorial Day, we expect Zoho will have over 80,000 points of distribution, and by the end of summer, that number is expected to climb to nearly 150,000. Bacalan gives us the number one above premium player in the RTD coffee space, and I'm excited to report that we are ahead of plan on all of our distribution targets. Plus Canada, a Canadian cannabis joint venture with Hexo, is holding strong as the number one dollar share position with six of the top ten cannabis beverage SKUs in Canada. And our Trust USA joint venture is building on that through their first lineup of hemp-derived CBD beverages in Colorado. And we have now entered the fast-growing RTD cocktail space through an exclusive equity and distribution agreement with Superbird and above premium tequila-based Paloma. This entire lineup represents tremendous growth for our business and is helping us drive our emerging growth division towards a $1 billion revenue business by 2023. Last but certainly not least is how we are investing in our capabilities, our people, and our communities. We have long been recognized as a leader for our environmental efforts. Several weeks ago, we became the first major UK brewer to operate entirely by renewable energies. Soon, every one of the 1 billion pints of beer we produce annually in the UK will be made with 100% renewable energy. And we didn't stop there. We're removing plastic rings from all of our major cracks across the UK. In the US this month, we announced our investment in True Colors, a North Carolina-based brewery that was founded on the premise that aligning rival gang members under the same roof with a common goal can both mitigate street violence and create economic opportunity. We're excited to share our knowledge on brewing, brand positioning, and supplier relationships. And we are excited to be part of a business that is driving positive change and creating economic opportunity. Now, I can assure you the events of this quarter are not lost on any of us. But as the quarter came to a close, there is land on the horizon. The on-trend gradually began to open back up in the UK. Our industry standard can inventory normalize, and our weekly shipments in the U.S. top one million barrels for the first time in nearly a year. We are making progress on the things that are within our control, and we are delivering against our revitalization plan. And that is what gives me the confidence to reaffirm our guidance for the full year. That is what gives me confidence in the current expectation that the board will be in a position to reinstate a dividend in the second half of this year. That is what gives me confidence that we'll achieve long-term top-line growth. And that is what tells me the future of Molson Coors is bright. Tracy?