Molson Coors (TAP) earnings overview for the 2nd quarter of their 2021 fiscal year
Category: Molson Coors (TAP)
Date: 2 August 2021 Stock price of Molson Coors (TAP): $49.62 Market Capital of Molson Coors: $10.8 billion We take a look at the 2nd quarter 2021 earnings report of Molson Coors, the 5th largest beer company in the world. They own brands such as Millers, Coors Light and BlueMoon. For the 2nd quarter the group reported revenue of $3.56 billion and net income of $388.6 million
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Gavin Hattersley, President and Chief Executive Officer - This quarter represents the best results we have had since implementing our revitalization plan nearly two years ago, and it delivered the most top-line growth of any quarter in over a decade. "
About Molson Coors
We are one of the world's largest brewers and have a diverse portfolio of owned and partner brands, including global priority brands Blue Moon, Coors Banquet, Coors Light, Miller Genuine Draft, Miller Lite, and Staropramen, regional champion brands Carling, Molson Canadian and other leading country-specific brands, as well as craft and specialty beers such as Creemore Springs, Cobra, Sharp's Doom Bar, Henry's Hard and Leinenkugel's. With centuries of brewing heritage, we craft high-quality, innovative beverages with the purpose of uniting people to celebrate all life’s moments. As a business, our ambition is to be the first choice for our people, our consumers and our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions. Molson and Coors were founded in 1786 and 1873, respectively. Our commitment to producing the highest quality beers is a key part of our heritage and remains so to this day. Our brands are designed to appeal to a wide range of consumer tastes, styles and price preferences. Our largest markets are the U.S., Canada and Europe. Coors was incorporated in June 1913 under the laws of the state of Colorado. In October 2003, Coors merged with and into Adolph Coors Company, a Delaware corporation. In February 2005, Adolph Coors Company merged with Molson Inc. ("the Merger"). Upon completion of the Merger, Adolph Coors Company changed its name to Molson Coors Brewing Company. In January 2020, we changed our name from Molson Coors Brewing Company to Molson Coors Beverage Company
Overview of Molson Coors 2nd quarter 2021 earnings report
- Q2 Delivers Best Quarterly Top-line Growth in More Than a Decade as Company Continues to Deliver on its Revitalization Plan and Premiumize its Portfolio
- Improves Financial Flexibility, Deleverages the Balance Sheet and Reinstates a Dividend
- Reaffirms 2021 Financial Guidance as Company Reinvests in the Business to Drive Long-term Revenue and Underlying EBITDA Growth
- Net sales revenue increased 17.4% reported and 13.7% in constant currency, primarily due to higher financial volumes [North America increased 1.9% and Europe increased 17.8%] and higher net sales per hectoliter.
- Net sales revenue per hectoliter increased 5.0%, on a brand volume basis, primarily due to positive mix in North America and Europe, driven by channel mix and historic improvement in brand mix in the U.S., positive brand mix in Europe, plus higher net pricing, partially offset by unfavorable geographic mix.
- U.S. GAAP net income attributable to MCBC of $388.6 million, $1.79 per share on a diluted basis. Non-GAAP diluted EPS of $1.58 per share increased 1.9%.
- Underlying (Non-GAAP) EBITDA of $697.8 million decreased 1.3% in constant currency.
Molson Coors (TAP) management commentary on 2nd quarter 2021 earnings
GOLDEN, Colo. & MONTREAL--(BUSINESS WIRE)-- Molson Coors Beverage Company (NYSE: TAP, TAP.A; TSX: TPX.A, TPX.B) today reported results for the 2021 second quarter
In the second quarter, we made significant progress against our revitalization plan that we laid out nearly two years ago. Above premium brand volumes reached a record-high portion of our U.S. portfolio compared to any prior quarter since the creation of the MillerCoors joint venture in 2008 and a record-high portion of our European portfolio, while we continued to invest in our capabilities, including the announcement of a new hard seltzer canning line in the U.K. and investments to quadruple our production of hard seltzer in Canada. We’re continuing to succeed in emerging markets and beyond beer, as our Latin America volume grew by triple digits versus prior year and non-alc brands like ZOA have already surpassed our expectations for the entire year. We’re also delivering on our commitment to invest in our communities and people, as we recently announced another $1.5 million investment in 33 organizations across North America dedicated to empowerment, equity and justice.
Gavin Hattersley, President and Chief Executive Officer Statement:
“This quarter represents the best results we have had since implementing our revitalization plan nearly two years ago, and it delivered the most top-line growth of any quarter in over a decade. We’ve reached the point where the investments, partnerships and product launches that were byproducts of the revitalization plan are now bearing results, and we plan to put our foot even more firmly on the gas pedal as we drive towards sustainable top- and bottom-line growth for this business.”
Tracey Joubert, Chief Financial Officer Statement:
“We are proud of our second quarter operating performance, which underscores our progress in premiumizing our product portfolio. Our work under the revitalization plan coupled with our improved financial flexibility has enabled us to invest in our business, continue to de-lever our balance sheet and to reinstate a dividend, while reaffirming our financial guidance for 2021.”
In the second quarter, we made significant progress against our revitalization plan that we laid out nearly two years ago. Above premium brand volumes reached a record-high portion of our U.S. portfolio compared to any prior quarter since the creation of the MillerCoors joint venture in 2008 and a record-high portion of our European portfolio, while we continued to invest in our capabilities, including the announcement of a new hard seltzer canning line in the U.K. and investments to quadruple our production of hard seltzer in Canada. We’re continuing to succeed in emerging markets and beyond beer, as our Latin America volume grew by triple digits versus prior year and non-alc brands like ZOA have already surpassed our expectations for the entire year. We’re also delivering on our commitment to invest in our communities and people, as we recently announced another $1.5 million investment in 33 organizations across North America dedicated to empowerment, equity and justice.
Gavin Hattersley, President and Chief Executive Officer Statement:
“This quarter represents the best results we have had since implementing our revitalization plan nearly two years ago, and it delivered the most top-line growth of any quarter in over a decade. We’ve reached the point where the investments, partnerships and product launches that were byproducts of the revitalization plan are now bearing results, and we plan to put our foot even more firmly on the gas pedal as we drive towards sustainable top- and bottom-line growth for this business.”
Tracey Joubert, Chief Financial Officer Statement:
“We are proud of our second quarter operating performance, which underscores our progress in premiumizing our product portfolio. Our work under the revitalization plan coupled with our improved financial flexibility has enabled us to invest in our business, continue to de-lever our balance sheet and to reinstate a dividend, while reaffirming our financial guidance for 2021.”
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2021 OUTLOOK
While uncertainty remains regarding the coronavirus pandemic, including the timing and strength of the recovery, we continue to expect the following results for the full year 2021, which we consider a year of investment:
On July 15, 2021,our board of directors declared a regular quarterly dividend on its Class A and Class B common shares of $0.34 per share, payable September 17, 2021, to shareholders of record on August 30, 2021. Similarly, the board of directors of Molson Coors Canada Inc., an indirect wholly owned subsidiary of the company, on July 15, 2021, declared a quarterly dividend of approximately CDN$0.42 per share (the Canadian dollar equivalent of the dividend declared on Molson Coors stock) payable on September 17, 2021, to its Class A and Class B exchangeable shareholders of record on August 30, 2021. The board believes the quarterly dividend amount declared is sustainable and gives room for future increases as business performance improves.
While uncertainty remains regarding the coronavirus pandemic, including the timing and strength of the recovery, we continue to expect the following results for the full year 2021, which we consider a year of investment:
- Net sales revenue: mid-single digit increase versus 2020 on a constant currency basis.
- Underlying EBITDA: approximately flat compared to 2020 on a constant currency basis.
- Deleverage: We intend to maintain our investment grade rating as demonstrated by our continued deleveraging actions. We expect to achieve a net debt to underlying EBITDA ratio of approximately 3.25x by the end of 2021 and below 3.0x by the end of 2022.
- Underlying depreciation and amortization: approximately $800 million.
- Consolidated net interest expense: approximately $270 million, plus or minus 5%.
- Underlying effective tax rate: in the range of 20% to 23% for 2021.
On July 15, 2021,our board of directors declared a regular quarterly dividend on its Class A and Class B common shares of $0.34 per share, payable September 17, 2021, to shareholders of record on August 30, 2021. Similarly, the board of directors of Molson Coors Canada Inc., an indirect wholly owned subsidiary of the company, on July 15, 2021, declared a quarterly dividend of approximately CDN$0.42 per share (the Canadian dollar equivalent of the dividend declared on Molson Coors stock) payable on September 17, 2021, to its Class A and Class B exchangeable shareholders of record on August 30, 2021. The board believes the quarterly dividend amount declared is sustainable and gives room for future increases as business performance improves.
Molson Coors (TAP) stock price chart for the last 5 years
The image below shows the stock price history of Molson Coors over the last 5 years. And its been a horrible time for Molson Coors stockholders. Over the last 5 years the stock of Molson Coors declined by -52%. Not the type of returns that any investor would want to see
The stock of Molson Coors is trading at closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Molson Coors stock is positive at this point in time,
The stock of Molson Coors is trading at closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Molson Coors stock is positive at this point in time,
Molson Coors (TAP) vs Boston Beer Company (SAM) stock comparison
The image below shows the stock price performance of Molson Coors (TAP) and Boston Beer Company (SAM) over the last 5 years. The fortunes of these two firms have been very different with the one showing significant growth over the last 5 years while the other has recorded massive declines. The summary below shows the stock performance of both over the last 5 years:
- Boston Beer Company (SAM): 270%
- Molson Coors (TAP): -52%
Molson Coors (TAP) latest stock valuation
So what do we value Molson Coors stock at after the release of their 2nd quarter 2021 earnings report? Based on Molson Coors' 2nd quarter 2021 earnings report our valuation models provides a target price (full value price) for Molson Coors at $56.10 a stock. We therefore believe that the stock of Molson Coors is undervalued.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $56.10 therefore we believe a good entry point into Molson Coors stock is at $50.50 or below. We expect the stock of Molson Coors to slowly make its way up to our target price (full value price) in coming weeks and months as we believe it is undervalued and that their cost savings program will filter through to higher earnings and better valuations in coming reporting quarters.
We usually suggest that long term and fundamental investors get in at least 10% below our target (full value) price which in this case is $56.10 therefore we believe a good entry point into Molson Coors stock is at $50.50 or below. We expect the stock of Molson Coors to slowly make its way up to our target price (full value price) in coming weeks and months as we believe it is undervalued and that their cost savings program will filter through to higher earnings and better valuations in coming reporting quarters.
Next earnings release of Molson Coors
It is expected that Molson Coors will publish their 3rd quarter 2021 earnings report in late October 2021