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Molson Coors' US biz took a clear backward step in 2024 following outsized gains in 2023. And co took its foot off the gas a bit on US mktg spend after its big increase in 2d half of 2023. But volume & rev growth in Canada and topline growth in EMEA & APAC region along with improving COGS and MG&A across the board helped MC achieve its 3d consecutive year of income growth while revs dipped just 0.6% to $11.63 bil, co reported yesterday. MC execs remain optimistic that its US biz can improve thru core brand share and shelf space retention, continued Coors Banquet growth, and enhanced premiumization and beyond beer efforts in 2025 and beyond, among other initiatives. Globally, co expects total biz to return to both top- and bottom-line growth in 2025 with revs expected up low singles and underlying income up mid singles. Yr-end results were broadly above analysts' expectations and TAP stock jumped 9.5% to $58.55 yesterday at mkt close, up 2% early today. US STRs -4.2% in '24 Ex-Extra Selling Days vs +5.3% in '23; High Share Retention; Soft Start to 2025 MC US shipments to wholesalers (STWs) declined 6.6% in 2024 vs 2023, around half the drop from Pabst contract volume, while sales to retailers (STRs) declined 3.4%, co reported. Excluding 2 extra selling days for the year, US STRs slipped 4.2%. Compared to MC STRs up 5.3% in 2023 vs 2022, co lost the vast majority of that gain in 2024. But key metric for MC is share retention. As US beer volume declined thruout this 2-yr period, MC retained over 85% of its 2023 all-channel volume share gain in 2024, still up nearly 2 pts vs 2022, INSIGHTS estimates. In scans, core brands' volume share collectively retained over 80% of share vs Q4 2023, an increase vs Q2 and Q3, co highlighted. Big double-digit shelf space gains in spring 2024 were retained thruout the year and even grew a bit in fall 2024, Gavin reminded, still expecting to retain shelf space this upcoming spring 2025 reset too. That's "certainly been a big contributor to why we've held on to so much of the share gains" across Coors Light, Miller Lite and Coors Banquet, he acknowledged.But MC's shedding more share to start 2025, facing particularly tuff Q1 comps as US depletions grew 5.8% in Q1 2024 vs 2023. In first mo of 2025 scans, MC volume dipped 4.6%, per NIQ data, -0.6 share. Coors Light, Miller Lite and Keystone Light all down mid single digits; Miller High Life and Blue Moon family down low singles; and Simply Spiked, Topo Chico and Vizzy dropped double digits, more than offsetting 17.5% gain from Coors Banquet.Mktg Spend Down in 2024 After $100 Mil Incremental Spend in 2d Half of 2023; Incremental Increases Comin' in 2025 MC's marketing, general and admin spend decreased by 2.2% to $2.7 bil globally including a 5% decrease in Q4, co reported. Vast majority of MG&A spend, and all of the decrease, was from core Americas region (primarily US), where spend decreased 4.4% to $2.1 bil. Decrease was due to "lower incentive compensation expense" and "cycling higher investment levels" from the prior year, report noted. Indeed, MC spent an incremental $100 mil in mktg spend during the 2d half of 2023, Gavin shared during the call. Co chose not to match that in 2024 even as plenty of industry observers (including MC distrib network) called for co to keep ramping up mktg investments following its massive wins in 2023. But MC spent the last couple yrs driving more "efficiencies" around marketing ROI, Gavin and Tracey stressed. There are incremental MG&A expenses comin' in 2025 on Fever-Tree integration and other innovation. And co expects to "redeploy" savings from craft divestitures and Peroni production shift to support marketing, among other investments.Above Premium Dipped to 27% of Global Mix in 2024; Growth in International Mkts vs US Drag; NA Boost MC's aspiration for 1/3 of its sales mix to come from above premium brands took a backward step in 2024. Above premium accounted for 27% of its sales in 2024, execs shared on co's earnings call. That's 1 pt lower than 2023, suggesting that above premium sales declined mid-single-digits to ~$3.1 bil vs yr ago. Yet over half of revs generated from above premium brands in EMEA and APAC with brands like Madri driving growth in UK. Just 22% of mix is above premium in its Americas region, but lower in US and growing in Canada with Miller Lite priced higher there and flavor portfolio on the rise. Not the case in US, which was the main drag for above premium as flavored alc bev portfolio flipped from growth in previous yrs to decline in 2024, while Blue Moon and Leinenkugel's declines continued and co sold off craft brewers.In early 2025 scans, MC above premium brands are less than 13% of MC beer $$ mix (and ~8.5% of volume) as double digit declines in its flavor portfolio are wiping out improvements from Blue Moon, Leinenkugel's and Peroni. MC's flavor portfolio is down to 6% of MC's mix while Blue Moon & Leinie collectively at 4%, imports/global above premium brands at 2% and NA beer at 0.5%. But NA bevs provide a new leg for above premium growth with Fever-Tree, ZOA and Naked Life included in MC financial reports for 2025, co shared. Fever-Tree revs already were ~$120 mil in US in 2024 and MC expects to grow the brand considerably thru expanded mkt access. In fact, Fever-Tree immediately became MC's highest rev-per-bbl brand. ZOA grew in both dollar and unit share in US foodstores for last 4 wks of 2024, and "taking this increased stake allows us to lead the entirety of the brand&#39;s marketing, retail and direct-to-consumer sales development," Gavin noted. "In the US, there is work to do." But co's "moving in the right direction" in beer and beyond beer.Shedding 1.6 Mil Bbls of Contract Volume from Pabst in US and Labatt in Canada; Shipments Seesaw There's almost always something muckin' up comps for financial reports of top brewers these days. In MC's case, 2025 will hafta account for the loss of 1.6 mil bbls of contract brewing volume including 1 mil bbls of Pabst volume outta US facilities and ~600K bbls of Labatt USA volume previously brewed outta Canadian facilities (moving to Rochester). Pabst contract volumes wound down sequentially over the course of 2024 so headwinds are "more pronounced in the first half," Tracey noted, including ~300K bbls in Q1. On a smaller scale, its facing hit from ~2.5 mil cases/yr of craft brewer volume sold to Tilray in deal that closed in Sep 2024. But operationally, MC margins expected to improve considerably by removing low-margin contract biz. And craft funds are expected to get redeployed to Blue Moon and Leinie, among other areas. Then too, MC shipped over 900K bbls ahead of depletions thru the 1st half of 2024, and hadda make up for it bigtime in Q3. So MC's year is set up to seesaw considerably from 1st half to 2d half this year.Financial Flexibility with 2.1X Net Debt; "We're Good at Partnerships" Net debt to underlying EBITDA ratio was just 2.1X to end the year and "we have no debt coming due in 2025," co highlighted. This provides "significant financial flexibility" to deploy via more bolt-on acquisitions (like Fever-Tree) or return more cash to shareholders as co already returned 40% of its $2 bil share repurchase plan in just 5 qtrs. "We're good at partnerships," Gavin touted when asked why co's not more aggressive on M&A. "I think that's one of our core strengths," and it "fits perfectly into our string of pearls approach," he went on. Those pearls are "getting a little bigger," and so "investment in Fever-Tree is a little bit bigger." With Fever-Tree, 100% of the performance is included in MC's P&L, "but at the same time, we wanted to take some advantage of the value which we believe is going to be created" for Fever-Tree. And as 2d largest shareholder in the company, "we're comfortable with that position," Gavin concluded.

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MC US STRs -3.4% in 2024 Yet Global Income Grew 5%; Mktg $$, Above Premium Mix Dipped; Flavor Flipped; Growth Expectations

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