Yahoo Finance Molson Coors (TAP) Q1 Earnings & Sales Beat, Stock Rise
Shares of Molson Coors Beverage Company TAP jumped more than 3% following the first-quarter 2023 results, wherein the bottom and top lines surpassed the Zacks Consensus Estimate and improved year over year. Results have gained from strength in core brands, as well as the above premium portfolio and contributions from its Revitalization Plan.
The Zacks Rank #3 (Hold) stock has gained 11.6% in the past three months compared with the industry’s growth of 3.8%.
Quarterly Details
The company’s adjusted earnings of 54 cents per share surged 86.2% year over year and surpassed the Zacks Consensus Estimate of 26 cents and our estimate of 22 cents.
Image Source: Zacks Investment Research
Net sales grew 5.9% to $2,346.3 million and beat the Zacks Consensus Estimate of $2,230 million and our estimate of $2,217 million. On a constant-currency basis, net sales rose 8.2%, driven by favorable price and sales mix, which was offset by a slight decline in financial volume.
Net sales per hectoliter increased 6.1% on a reported basis and 8.4% on a constant currency basis, driven by strong net pricing, and a favorable sales mix stemming from premiumization.
Molson Coors’ worldwide brand volumes fell 2.1% to 16.2 million due to sluggishness in America, as well as in EMEA&APAC. Financial volumes declined 0.2% to 17 million hectoliters due to lower volumes in the Americas, partly offset by increased EMEA&APAC volumes.
Underlying (non-GAAP) earnings before income taxes (EBT) advanced 89% year over year to $157.8 million. On a constant-currency basis, EBT surged 82.8% owing to higher net pricing and a positive sales mix, somewhat offset by cost inflation related to materials, conversion and energy costs.
Segmental Information
Molson Coors operates under the following geographical segments.
Americas: Net sales in the segment increased 5.6% to $1,939 million on a reported basis and rose 6.5% on a constant-currency basis, driven by price and sales mix, offset by a decline in financial volume. Financial volumes dipped 0.5% year over year due to industry softness, lower Latin America financial volumes and weak contract volumes, offset by higher U.S. domestic shipments.
Brand volume for the segment dropped 1.5% on a 1.2% decline in the United States, owing to softer industry performance and lower economy portfolio volumes. Canada brand volumes rose 4.9% due to growth in core brands and partly due to cycling softer on-premise performance in the prior year. Meanwhile, Latin America declined 12.4% due to industry softness in some of the major markets.
Net sales per hectoliter rose 6.1% due to a favorable sales mix and higher net pricing, offset by currency woes. Underlying EBT improved 37.7% on a constant-currency basis to $233.9 million. The increase can be attributed to higher pricing and a favorable sales mix, offset by cost inflation on materials, conversion and energy costs.
EMEA&APAC: The segment’s net sales (on a reported basis) grew 7.6% to $410.1 million and improved 16.1% on a constant-currency basis, driven by favorable price and sales mix, and an increase in financial volume.
Net sales per hectoliter for the segment advanced 6.7%, resulting from a favorable sales mix, as well as higher pricing offset by currency headwinds.
The segment’s financial volumes rose 0.8% due to growth in the above-premium volumes in the U.K. and higher factored volumes offset by inflationary pressures.
Brand volume decreased 3.9% due to volume declines resulting from the Russia-Ukraine conflict and inflationary pressures, somewhat offset by growth in Western Europe.
The segment’s underlying EBT increased 30% to a loss of $21.8 million on a reported basis and improved 28% on a constant-currency basis, driven by higher net pricing to customers, favorable sales mix and higher financial volumes, which offset cost inflation, particularly in materials, transportation and energy costs, as well as higher MG&A spend.
Other Financial Updates
Molson Coors ended the first quarter with cash and cash equivalents of $328.2 million. At the end of first-quarter 2023, the company had a total debt of $6,590.4 million, resulting in net debt of $6,262.2 million.
As of Mar 31, 2022, the company provided $3.4 million in cash by operating activities, resulting in an underlying free cash flow of $173.7 million. For 2023, capital expenditure is likely to be $700 million, plus or minus 5%
In the quarter under review, the company declared and paid out cash dividends of 41 cents per share, with the CAD equivalent totaling 0.55 per share. As of Mar 31, 2022, TAP repurchased 275,000 shares for $14,6 million.
Molson Coors Beverage Company Price, Consensus and EPS Surprise
Molson Coors Beverage Company price-consensus-eps-surprise-chart | Molson Coors Beverage Company Quote
Outlook
Management has retained the 2023 view. Net sales are projected to grow year over year in the low-single digits on a constant-currency basis. Underlying EBT is likely to grow year over year in the low-single digits on a constant-currency basis.
Underlying depreciation and amortization are projected to be $690 million, plus or minus 5%. The company expects an underlying effective tax rate of 21-23%. Consolidated net interest expenses are anticipated to be $240 million, plus or minus 5%. Underlying free cash flow is likely to be $1 billion, plus or minus 10%.
Consumer Staple Stocks Worth a Look
Some better-ranked stocks are Inter Parfums IPAR, General Mills GIS and KimberlyClark KMB
IPAR has an expected long-term earnings growth rate of 15% and a trailing four-quarter earnings surprise of 36.2%, on average. Inter Parfums currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Inter Parfums’ current financial year’s sales and earnings suggests growth of 10.5% and 0.8%, respectively, from the year-ago reported numbers.
General Mills is a major designer, marketer and distributor of premium lifestyle products. The company currently carries a Zacks Rank of 2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current financial year’s sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the year-ago reported numbers.
KimberlyClark is engaged in the manufacture and marketing of a wide range of consumer products around the world. It currently has a Zacks Rank of 2. KMB has a trailing four-quarter earnings surprise of 1.4%, on average.
The Zacks Consensus Estimate for KimberlyClark’s current financial year’s sales and earnings suggests growth of 2% and 5.2%, respectively, from the year-ago reported numbers.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
General Mills, Inc. (GIS) : Free Stock Analysis Report
Kimberly-Clark Corporation (KMB) : Free Stock Analysis Report
Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
Inter Parfums, Inc. (IPAR) : Free Stock Analysis Report
