Molson Coors Reports 2019 First Quarter Results

Net Sales Revenue of $2.3 billion, Decreased 1.2%, Increased 0.6%
in Constant Currency

Lower U.S. GAAP Net Income Driven by One-Time $328 Million
Purchase Price Settlement Gain in 2018 Underlying EBITDA Decreased 0.9%,
Increased 0.2% in Constant Currency

EPS (U.S. GAAP) of $0.70 Decreased 45.3%, and Underlying EPS
(Non-GAAP) of $0.52 Increased 8.3%

Management Reaffirms Increased Dividend Expectations Remains
Committed to Free Cash Flow and Cost Savings Targets, as well as Further
Deleveraging in 2019

___________________________________

DENVER & MONTREAL–(BUSINESS WIRE)–Molson Coors Brewing Company (NYSE: TAP; TSX: TPX) today reported
results for the 2019 first quarter. Molson Coors president and chief
executive officer Mark Hunter said:

“Our first quarter was solid, delivering on our commitment to improving
top-line performance while also protecting the bottom line. Even with
industry volume pressure in North America and the shift of Easter from
Q1 to Q2, revenue was up on a constant currency basis, driven by strong
and disciplined net sales revenue per hectoliter growth across our
business, ongoing portfolio premiumization, and improving share trends
in our largest market.”

Mark continued, “While only the first and smallest of our quarters, I am
encouraged by the meaningful growth of net sales revenue in the U.S.,
led by the increasingly strong performance of Miller Lite which held
total beer industry share and an improved performance of Coors Light in
our largest and most profitable market, as well as strong U.S. retailer
placements for our upweighted innovation program. We also saw continuing
strong net sales revenue growth in Europe, our second largest business
unit. Across Molson Coors I am pleased with the continuing acceleration
of our portfolio premiumization efforts alongside our intensified
innovation program, and the growth in our underlying EBITDA, which,
despite higher inflation, grew on a constant currency basis.”

Consolidated Performance – First Quarter 2019


	Three Months Ended
($ in millions, except per share data) (Unaudited)	March 31, 2019		March 31, 2018		Reported % Increase (Decrease)		Foreign Exchange Impact ($)			Constant Currency % Increase (Decrease)⁽²⁾
Net Sales	$	2,303.3	$	2,331.5	(1.2	)%	$	(42.1	)	0.6	%
U.S. GAAP Net income (loss)⁽¹⁾	$	151.4	$	278.1	(45.6	)%
Per diluted share	$	0.70	$	1.28	(45.3	)%
Underlying (Non-GAAP) Net income (loss)⁽²⁾	$	112.7	$	104.3	8.1	%
Per diluted share	$	0.52	$	0.48	8.3	%
Underlying EBITDA (Non-GAAP)⁽²⁾	$	422.3	$	426.0	(0.9	)%	$	(4.7	)	0.2	%

(1)			Net income (loss) attributable to MCBC.
(2)			See Appendix for definitions and reconciliations of non-GAAP financial measures

Quarterly Highlights (versus First Quarter 2018 Results)

Net sales: $2.3 billion, decreased by 1.2% driven by volume
declines and unfavorable foreign currency movements, partially offset
by higher net pricing in all segments and favorable sales mix in
Europe. Net sales increased 0.6% in constant currency driven by higher
net pricing in all segments, partially offset by volume declines.
Volume: Worldwide brand volume of 18.2 million hectoliters
decreased 4.7% and financial volume of 20.1 million hectoliters
decreased 3.4% due to lower volume in all segments, partially as a
result of industry and share declines particularly in the U.S. and
Canada compared to prior year.
Net sales per hectoliter: $114.59 on a reported
financial-volume basis, increased 2.3% and net sales per hectoliter
on a brand volume basis increased by 3.7% in constant currency,
primarily driven by favorable net pricing in all segments and
favorable sales mix in Europe.
Cost of goods sold (COGS) per hectoliter: on a reported basis,
increased 4.7% primarily driven by cost inflation and transportation
costs, increased packaging costs associated with our U.S. bottle
furnace rebuild, and volume deleverage, partially offset by unrealized
mark-to-market gains compared to losses on our commodity positions in
the prior year, cost savings and foreign currency movements. Underlying
COGS per hectoliter increased 5.3% in constant currency primarily
driven by the same factors as U.S. GAAP results with the exception of
the changes in unrealized mark-to-market positions.
U.S. GAAP net income attributable to MCBC: decreased 45.6%,
primarily driven by the $328 million cash payment received in January
2018 related to a purchase price adjustment for our acquisition of the
Miller International business, lower financial volume and higher
inflation, partially offset by unrealized mark-to-market gains
compared to losses on our commodity positions in the prior year,
positive net pricing in all segments, general and administrative spend
reductions and cost savings, as well lower net interest expense.
Underlying net income: increased 8.1%, driven by positive net
pricing in all segments, general and administrative spend reductions
and cost savings, as well as lower net interest expense, partially
offset by lower volume and cost inflation in all segments.
Underlying EBITDA: decreased 0.9% on a reported basis and
increased 0.2% on a constant-currency basis, driven by the same
factors as underlying net income with the exception of net interest
expense.
U.S. GAAP cash from operations: net cash used in operating
activities for the first quarter of 2019 was $98.5 million,
compared to net cash provided by operating activities of $315.2
million in the prior year. This decrease was primarily driven by the
$328 million cash payment received in January 2018 related to a
purchase price adjustment for our acquisition of the Miller
International business, as well as unfavorable timing of working
capital, partially offset by lower interest paid in the first quarter
of 2019.
Underlying free cash flow: cash use of $270.1 million for the
first quarter of 2019, which represents an increase in cash used of
$75.0 million from the prior year, primarily due to unfavorable timing
of working capital, partially offset by lower cash paid for interest
and capital expenditures.
Debt: Total debt at the end of the first quarter 2019 was
$10.126 billion, and cash and cash equivalents totaled $234.4 million,
resulting in net debt of $9.892 billion.

Business Review – First Quarter 2019

Net Sales


($ in millions) (Unaudited)	Three Months Ended
	March 31, 2019			March 31, 2018			Reported % Increase (Decrease)		Foreign Exchange Impact ($)			Constant Currency % Increase (Decrease)⁽¹⁾
United States	$	1,659.2		$	1,647.8		0.7	%	$	—		0.7	%
Canada	261.0			283.8			(8.0	)%	(13.1		)	(3.4	)%
Europe	362.9			374.3			(3.0	)%	(27.9		)	4.4	%
International	47.9			57.5			(16.7	)%	(1.3		)	(14.4	)%
Corporate	0.2			0.2			—	%	—			—	%
Eliminations⁽²⁾	(27.9		)	(32.1		)	13.1	%	0.2			12.5	%
Consolidated	$	2,303.3		$	2,331.5		(1.2	)%	$	(42.1	)	0.6	%

(1)			See Appendix for definitions and reconciliations of non-GAAP financial measures.
(2)			Reflects intercompany sales that are eliminated in consolidated totals.

Pretax Income (U.S. GAAP)


($ in millions) (Unaudited)	Three Months Ended
	March 31, 2019			March 31, 2018			Reported % Increase (Decrease)		Foreign Exchange Impact ($)			Constant Currency % Increase (Decrease)⁽¹⁾
United States	$	269.4		$	261.7		2.9	%	$	(0.2	)	3.0	%
Canada	21.8			9.1			139.6	%	0.2			137.4	%
Europe	(27.5		)	(29.9		)	8.0	%	0.8			5.4	%
International	(0.3		)	3.7			N/M		(0.7		)	N/M
Corporate	(82.1		)	112.8			N/M		0.4			N/M
Consolidated	$	181.3		$	357.4		(49.3	)%	$	0.5		(49.4	)%

N/M = Not meaningful
(1)			See Appendix for definitions and reconciliations of non-GAAP financial measures.

Underlying EBITDA (Non-GAAP)⁽¹⁾


($ in millions) (Unaudited)	Three Months Ended
	March 31, 2019			March 31, 2018			Reported % Increase (Decrease)		Foreign Exchange Impact ($)			Constant Currency % Increase (Decrease)⁽¹⁾
United States	$	402.0		$	388.9		3.4	%	$	(0.2	)	3.4	%
Canada	33.8			44.7			(24.4	)%	(0.9		)	(22.4	)%
Europe	21.9			24.5			(10.6	)%	(3.1		)	2.0	%
International	2.7			7.1			(62.0	)%	(0.8		)	(50.7	)%
Corporate	(38.1		)	(39.2		)	2.8	%	0.3			2.0	%
Consolidated	$	422.3		$	426.0		(0.9	)%	$	(4.7	)	0.2	%

(1)			See Appendix for definitions and reconciliations of non-GAAP financial measures.

Quarterly Segment Highlights (versus First Quarter 2018
Results)

United States Business

Volume: U.S. brand volume decreased 3.8% on a
trading-day-adjusted basis for the quarter, driven by lower volume,
partially reflective of industry declines. Sales-to-wholesalers (STWs)
volume, excluding contract brewing, decreased 2.7% driven by lower
brand volume, partially offset by quarterly timing of wholesaler
inventories as we expect brand volume and STW trends to largely
converge on a full year basis.
Revenue: Net sales per hectoliter (brand volume basis) grew
3.7% driven by higher net pricing.
COGS per hectoliter increased 5.9%, driven by higher
commodity and transportation costs, increased packaging costs
associated with our bottle furnace rebuild, as well as volume
deleverage, partially offset by cost savings.
Marketing, general and administrative (MG&A) expense
decreased 4.5% due to lower employee-related expenses including
incremental cost reductions related to the restructuring initiated in
the third quarter of 2018, as well as quarterly timing of innovation
spend, partially offset by higher marketing investment behind our
premium light brands.
On a U.S. GAAP basis, the U.S. reported pretax income of
$269.4 million, an increase of 2.9%, driven by higher net pricing
and lower MG&A expenses, partially offset by cost inflation and lower
volumes.
U.S. underlying EBITDA increased 3.4% driven by the same
factors as U.S. GAAP results.

Canada Business

Volume: Canada brand volume decreased 6.0% and financial volume
decreased 4.9% in the first quarter, primarily due to industry
declines.
Revenue: Net sales per hectoliter (brand volume basis)
increased 1.9% in constant currency, driven by positive net pricing,
partially offset by unfavorable sales mix.
COGS per hectoliter increased 6.3% in constant currency
primarily driven by volume deleverage, increased distribution costs
and cost inflation, partially offset by cost savings.
MG&A expense decreased 1.1% in constant currency primarily
driven by timing of employee-related expenses, partially offset by
higher investments to support the rebranding of our Molson
brands and Truss related start-up costs.
On a U.S. GAAP basis, Canada reported pretax income of
$21.8 million, an increase of 139.6% from the prior year, driven
primarily by an unrealized mark-to-market gain of approximately $23
million recognized on the HEXO warrants received in connection with
the formation of the Truss joint venture and timing of general and
administrative expenses, partially offset by gross margin impacts of
volume declines and cost inflation.
Canada underlying EBITDA decreased 22.4% in constant currency
in the quarter, primarily due to gross margin impacts of volume
declines and cost inflation, partially offset by timing of general and
administrative expenses.

Europe Business

Volume: Europe brand volume and financial volume each decreased
2.3% in the first quarter, as a result of planned declines in our
low-margin value brands as we have increased our focus on our national
champion and premium portfolios.
Revenue: Europe net sales per hectoliter (brand volume basis)
increased 8.2% in constant currency, driven by positive net pricing
and favorable sales mix.
COGS per hectoliter increased 3.7% in constant currency,
primarily due to commodity inflation.
MG&A expense increased 9.5% in constant currency, primarily
due to higher brand investments to support our national champion
brands and premiumization initiatives.
On a U.S. GAAP basis, Europe reported a pretax loss of
$27.5 million, an improvement of 8.0% from the prior year, driven by
favorable margin impacts, partially offset by increased marketing
investments.
Europe underlying EBITDA increased 2.0% in constant currency to
$21.9 million, driven by the same factors as U.S. GAAP results.

International Business

Volume: International brand volume decreased 6.7%, driven by
balancing higher pricing with lower volume in Mexico and cycling a
strong post-hurricane result in Puerto Rico during the first quarter
of 2018, partially offset by growth in several of our focus markets.
Revenue: Net sales per hectoliter (brand volume basis)
decreased 8.1% in constant currency, driven by the shift to local
production in Mexico and unfavorable geographic mix, partially offset
by positive net pricing.
COGS per hectoliter increased 2.0% in constant currency, driven
by unfavorable geographic mix and inflation.
MG&A expense increased 11.9% in constant currency, driven
by cycling the $2.0 million of settlement proceeds related to our
Colombia business in the first quarter of 2018, partially offset by
lower marketing investments in the current year.
On a U.S. GAAP basis, International reported a pretax loss
of $0.3 million compared to income of $3.7 million in the prior
year, driven by lower volumes in Puerto Rico, cycling the $2.0 million
of settlement proceeds related to our Colombia business in the first
quarter of 2018, unfavorable foreign currency movements and cost
inflation, partially offset by shifting to a more profitable business
model in Mexico and lower marketing expenses.
International underlying EBITDA was $2.7 million driven by the
same factors as U.S. GAAP results.

Corporate

On a U.S. GAAP basis, Corporate reported a pretax loss of
$82.1 million in the first quarter compared to income of $112.8
million in the prior year, primarily due to the receipt of a $328
million cash purchase price adjustment related to our acquisition of
the Miller International business in the first quarter of 2018,
partially offset by unrealized mark-to-market gains compared to losses
on commodity positions in the prior year, lower general and
administrative costs and lower interest expense.
Corporate underlying EBITDA was a loss of $38.1 million for the
first quarter, an improvement compared to the prior year, driven
primarily by lower general and administrative expenses.

Worldwide Brand and Financial Volume⁽¹⁾


(In millions of hectoliters) (Unaudited)	Three Months Ended
	March 31, 2019		March 31, 2018		% Change
Financial Volume⁽¹⁾	20.101		20.813		(3.4	)%
Contract brewing, wholesaler and non-beer volume	(1.806	)	(1.902	)	(5.0	)%
Royalty volume	0.737		0.716		2.9	%
Sales-To-Wholesaler to Sales-To-Retail adjustment	(0.837	)	(0.526	)	59.1	%
Total Worldwide Brand Volume⁽¹⁾	18.195		19.101		(4.7	)%

(1)			See Appendix for definitions and additional discussion regarding Financial and Worldwide Brand Volume.

Other Results

Effective Income Tax Rates


	Three Months Ended
	March 31, 2019		March 31, 2018
U.S. GAAP effective tax rate	18	%	21	%
Underlying effective tax rate	24	%	21	%

The decrease in our effective tax rate was primarily driven by
a net discrete tax benefit recognized in the first quarter of 2019,
compared to net discrete tax expense recognized in the first quarter
of 2018.
The increase in our underlying effective tax rate was primarily
driven by an increase in net underlying discrete tax expense
recognized in the first quarter of 2019.

Special and Other Non-Core Items

The following special and other non-core items have been excluded
from underlying results. See the Appendix for reconciliations of
non-GAAP financial measures.

During the first quarter of 2019, MCBC recognized a net special
charge of $13.0 million, primarily driven by accelerated
depreciation related to brewery closures.
Additionally during the first quarter of 2019, we recorded other
non-core net benefits of $49.4 million primarily driven by
unrealized mark-to-market gains on commodity hedges and our HEXO
warrants, as well as the offsetting impact of integration-related
expenses.

2019 Outlook

We currently expect to achieve the following guidance for full year 2019:

Underlying free cash flow: $1.4 billion, plus or minus
10%.
Capital spending: approximately $700 million, plus or minus 10%.
Cost savings: approximately $700 million for the 2017 to
2019 program.
Consolidated underlying COGS per hectoliter: mid-single digit
increase on a constant currency basis.
Underlying corporate MG&A expense: approximately $180
million, plus or minus 10%.
Underlying depreciation and amortization: approximately
$850 million, versus $827 million in 2018, primarily due to planned
information systems implementations in the U.S.
Consolidated net interest expense: approximately $300 million,
plus or minus 5%.
International: strong double digit percentage increase to
underlying EBITDA in constant currency.
Underlying effective tax rate in the range of 18% to 22% for
2019, which remains subject to additional definitive guidance from the
U.S. government regarding the implementation of the 2017 tax reform
legislation. Our preliminary expectation for our long-term effective
tax rate (after 2019) is in the range of 20% to 24%.
Deleverage & Dividend: We remain committed to maintaining
our investment grade debt rating and we intend to continue to
deleverage further in 2019 in accordance with our plans. Our board’s
intention remains to reinstitute a dividend payout-ratio in the range
of 20% to 25% of annual trailing underlying EBITDA for the second half
of 2019 and ongoing thereafter.

Notes

Unless otherwise indicated in this release, all $ amounts are in U.S.
Dollars, and all quarterly comparative results are for the Company’s
first quarter ended March 31, 2019, compared to the first quarter ended
March 31, 2018. Some numbers may not sum due to rounding.

2019 First Quarter Conference Call

Molson Coors Brewing Company will conduct an earnings conference call
with financial analysts and investors at 11:00 a.m. Eastern Time today
to discuss the Company’s 2019 first quarter results. The live webcast
will be accessible via our website, www.molsoncoors.com.
An online replay of the webcast will be available until 11:59 p.m.
Eastern Time on July 30, 2019. The Company will post this release and
related financial statements on its website today.

We will also host an online, real-time webcast of our Annual Meeting of
Stockholders on Wednesday, May 22, 2019 at 11:00 a.m. Eastern Time. The
meeting will take place at the Molson Coors Montreal Brewery. The live
webcast will be accessible on the Investor Relations page of our
website. An online replay of the webcast will be available until 11:59
p.m. Eastern Time on August 31, 2019.

Overview of Molson Coors

Molson Coors has defined brewing greatness for more than two centuries.
As one of the largest global brewers, Molson Coors works to deliver
extraordinary brands that delight the world’s beer drinkers. From Coors
Light, Coors Banquet, Miller Lite, Molson Canadian, Carling, Staropramen
and Sharp’s Doom Bar to Leinenkugel’s Summer Shandy, Blue Moon Belgian
White, Hop Valley, Creemore Springs and Crispin Cider, Molson Coors
offers a beer for every beer lover.

Molson Coors operates through Molson Coors Canada, MillerCoors in the
U.S., Molson Coors Europe and Molson Coors International. The company is
not only committed to brewing extraordinary beers, but also running a
business focused on respect for its employees, communities and drinkers,
which means corporate responsibility and accountability right from the
start. It has been listed on the Dow Jones Sustainability North America
Index for the past eight years. To learn more about Molson Coors Brewing
Company, visit molsoncoors.com,
ourbeerprint.com
or on Twitter through @MolsonCoors.

About Molson Coors Canada Inc.

Molson Coors Canada Inc. (MCCI) is a subsidiary of Molson Coors Brewing
Company. MCCI Class A and Class B exchangeable shares offer
substantially the same economic and voting rights as the respective
classes of common shares of MCBC, as described in MCBC’s annual proxy
statement and Form 10-K filings with the U.S. Securities and Exchange
Commission. The trustee holder of the special Class A voting stock and
the special Class B voting stock has the right to cast a number of votes
equal to the number of then outstanding Class A exchangeable shares and
Class B exchangeable shares, respectively.

Forward-Looking Statements

This press release includes “forward-looking statements” within the
meaning of the U.S. federal securities laws. Generally, the words
“believe,” “expect,” “intend,” “anticipate,” “project,” “will,”
“outlook,” and similar expressions identify forward-looking statements,
which generally are not historic in nature. Statements that refer to
projections of our future financial performance, our anticipated growth
and trends in our businesses, and other characterizations of future
events or circumstances are forward-looking statements, and include, but
are not limited to, statements under the heading “2019 Outlook,”
expectations regarding future dividends, timing and amounts of debt and
leverage levels and cash flow expectations. Although the Company
believes that the assumptions upon which its forward-looking statements
are based are reasonable, it can give no assurance that these
assumptions will prove to be correct. Important factors that could cause
actual results to differ materially from the Company’s historical
experience, and present projections and expectations are disclosed in
the Company’s filings with the Securities and Exchange Commission
(“SEC”). These factors include, among others, the impact of increased
competition resulting from further consolidation of brewers, competitive
pricing and product pressures; health of the beer industry and our
brands in our markets; economic conditions in our markets; additional
impairment charges; our ability to maintain manufacturer/distribution
agreements; changes in our supply chain system; availability or increase
in the cost of packaging materials; success of our joint ventures; risks
relating to operations in developing and emerging markets; changes in
legal and regulatory requirements, including the regulation of
distribution systems; fluctuations in foreign currency exchange rates;
increase in the cost of commodities used in the business; the impact of
climate change and the availability and quality of water; loss or
closure of a major brewery or other key facility; our ability to
implement our strategic initiatives, including executing and realizing
cost savings; our ability to successfully integrate newly acquired
businesses; our ability to achieve expected tax benefits, accretion and
cost savings relating to our acquisition of MillerCoors; pension plan
and other post-retirement benefit costs; failure to comply with debt
covenants or deterioration in our credit rating; our ability to maintain
good labor relations; our ability to maintain brand image, reputation
and product quality; and other risks discussed in our filings with the
SEC, including our most recent Annual Report on Form 10-K and our
Quarterly Reports on Form 10-Q. All forward-looking statements in
this press release are expressly qualified by such cautionary statements
and by reference to the underlying assumptions. You should not place
undue reliance on forward-looking statements, which speak only as of the
date they are made. We do not undertake to update forward-looking
statements, whether as a result of new information, future events or
otherwise.

APPENDIX

Consolidated Financial Performance


Molson Coors Brewing Company	Three Months Ended March 31, 2019									% Change
(In millions, except per share data)(Unaudited)	U.S. GAAP			Non-GAAP Adjustments⁽¹⁾			Non-GAAP Underlying⁽¹⁾			U.S. GAAP		Non-GAAP Underlying
Net sales	$	2,303.3		$	—		$	2,303.3		(1.2	)%	(1.2	)%
Net Sales per HL change										2.3	%	2.3	%
Cost of goods sold	$	(1,413.0	)	$	(32.4	)	$	(1,445.4	)	(8.0	)%	(0.3	)%
Cost of goods sold per HL change										(4.7	)%	3.2	%
Gross profit	$	890.3		$	(32.4	)	$	857.9		11.9	%	(2.7	)%
Marketing, general and administrative expenses	$	(655.2	)	$	7.4		$	(647.8	)	(3.8	)%	(3.6	)%
Special items, net	$	(13.0	)	$	13.0		$	—		N/M		—	%
Operating income (loss)	$	222.1		$	(12.0	)	$	210.1		(48.3	)%	0.2	%
Interest income (expense), net	$	(73.3	)	$	—		$	(73.3	)	(11.9	)%	(11.9	)%
Other pension and postretirement benefits (costs), net	$	8.6		$	—		$	8.6		(14.0	)%	(14.9	)%
Other income (expense), net	$	23.9		$	(24.4	)	$	(0.5	)	N/M		N/M
Income (loss) before income taxes	$	181.3		$	(36.4	)	$	144.9		(49.3	)%	5.3	%
Income tax benefit (expense)	$	(32.2	)	$	(2.3	)	$	(34.5	)	(57.0	)%	19.4	%
Net income (loss)⁽²⁾	$	151.4		$	(38.7	)	$	112.7		(45.6	)%	8.1	%
Per diluted share	$	0.70		$	(0.18	)	$	0.52		(45.3	)%	8.3	%
Underlying EBITDA⁽³⁾							$	422.3				(0.9	)%

Contacts

News Media
Eric Gunning, (303)
927-2448

Investor Relations
Mark
Swartzberg, (303) 927-2334

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