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Molson Coors Brewing Company Barclays Back-to-School Consumer Conference September 4, 2013
Gavin Hattersley Chief Financial Officer
Molson Coors Brewing Company
2
Forward-Looking Statement Forward-Looking Statements: This presentation may include estimates or projections that constitute “forward-looking statements” within the meaning of the U.S. federal securities laws. Generally, the words “believe,” “expect,” “intend,” “anticipate,” “project,” “will,” and similar expressions identify forward-looking statements, which generally are not historic in nature. 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, pension plan costs; availability or increase in the cost of packaging materials; our ability to maintain manufacturer/distribution agreements; impact of competitive pricing and product pressures; our ability to implement our strategic initiatives, including executing and realizing cost savings; changes in legal and regulatory requirements, including the regulation of distribution systems; increase in the cost of commodities used in the business; our ability to maintain brand image, reputation and product quality; our ability to maintain good labor relations; changes in our supply chain system; additional impairment charges; the impact of climate change and the availability and quality of water; the ability of MillerCoors to integrate operations and technologies; lack of full-control over the operations of MillerCoors; the ability of MillerCoors to maintain good relationships with its distributors; and other risks discussed in our filings with the SEC, including our Annual Report on Form 10-K for the year-ended December 31, 2012, which are available from the SEC. All forward-looking statements in this presentation 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.
Reconciliations to Nearest U.S. GAAP Measures: The following presentation includes certain "non-GAAP financial measures" as defined in Regulation G under the Securities Exchange Act of 1934. A schedule is posted on the Company's website at MolsonCooors.com (in the “Investor Relations" section) which reconciles our results as reported under Generally Accepted Accounting Principles and the non-GAAP financial measures included in the following presentation.
3
Agenda
• Molson Coors global overview • Historical performance context
− Steady, growing pretax profit, even in difficult times − Strong, stable EBITDA − Substantial cash generation and cash return to shareholders − Growing total shareholder returns
• Growth strategy • Driving total shareholder returns
− Brand-led profit growth − Cash generation − Cash and capital allocation
4
US (MILLERCOORS) 29% Share
Coors Light Miller Lite Blue Moon
LATIN AMERICA & CARIBBEAN
Mexico, Caribbean, Panama, Costa Rica, Paraguay
Coors Light
SPAIN Carling
UKRAINE Staropramen
Carling
CANADA 39% Share
Molson Canadian
Coors Light
WESTERN EUROPE Staropramen
EUROPE Carling Coors Light Staropramen Bergenbier Jelen
Kamenitza Ozujsko Niksicko Borsodi
RUSSIA Carling
Staropramen
INDIA Cobra
Iceberg CHINA
Coors Light Carling
JAPAN Zima
Corona Blue Moon
= CORE MARKETS = GLOBAL MARKETS
Molson Coors: Core Market Strengths + Emerging Global Presence
5
(1) Does not include underlying operating losses for Corporate and MCI. Totals may not sum due to rounding. Non-GAAP underlying income is calculated by excluding special and other non-core items from the nearest U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website.
Volume, Net Sales and Profitability by Geography
46.6%
21.1% 14.0%
14.4% 4.3%
2012 Pro Forma Worldwide Beer Volume
45.8%
11.0%
4.9% 38.4%
2012 Pro Forma Underlying Operating Income1
43.4%
10.8%
16.8% 27.1% 2.1%
MillerCoors (42%) Central Europe UK Canada MCI
2012 Pro Forma Net Sales
6
Net Income Variability Masks…
$361
$492
$379
$720 $708 $676
$443
$185
$314
$0
$100
$200
$300
$400
$500
$600
$700
$800
2006 2007 2008 2009 2010 2011 2012 1H 12 1H 13
Net Income Attributable to MCBC ($millions)
U.S. GAAP net income attributable to MCBC 7
…Underlying Earnings Growth in Tough Times…
$441 $541
$646 $642 $719
$794 $821 $865
$406 $383
$0
$200
$400
$600
$800
2005 2006 2007 2008 2009 2010 2011 2012 1H 12 1H 13
($millions)
MCBC Underlying Pretax Income
Non-GAAP underlying income is calculated by excluding special and other non-core items from the nearest U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website.
Pretax income growth over the past 7 years totaled 96%
8
… And Steady, Strong, Growing EBITDA
$1,106 $1,100 $1,091 $1,127 $1,212 $1,267
$1,398
$630 $690
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
2006 2007 2008 2009 2010 2011 2012 1H 12 1H 13
($millions)
* Non-GAAP underlying EBITDA (Earnings before interest, taxes, depreciation and amortization) is calculated excluding special and other non-core items from U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website. Includes 42% of MillerCoors.
Underlying EBITDA per share: +13% in 2012, to nearly $8/share
Underlying EBITDA*
9
Growing Cash Returns Via Dividends
$0.64 $0.64 $0.76
$0.92
$1.08 $1.24 $1.28
$0
$50
$100
$150
$200
$250
2006 2007 2008 2009 2010 2011 2012
Dividends Paid (Annual Per Share)
($millions)
7 ½ year total: $1.3 billion, plus $321 million share repurchases in 2011
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Molson Coors Growth Strategy
Maximizing Growth and Profit
in Developed Markets
Accelerating Growth in
Developing Markets
M&A
Strong Cost Management Discipline
11
Hungary #3 Market Position
Czech Republic
Bulgaria
Romania
Serbia Croatia
Hungary
Montenegro
Slovakia (2)
Bosnia (2)
Brewery
Romania #3 Market Position
Serbia #1 Market Position
Czech Republic #2 Market Position
Montenegro #1 Market Position
Bulgaria #1 Market Position
Croatia #1 Market Position
Source: Rank based on market volume data from Nielsen (1) Bosnia-Herzegovina and Slovakia markets served by breweries in adjacent countries
Bosnia-Herzegovina (1) #1 Market Position
Slovakia (1)
#3 Market Position
Central Europe Acquisition: Growth, Value
12
MCI: Growing Volumes & Reducing Investment
1Non-GAAP underlying pretax income (loss) is calculated by excluding special and other non-core items from the nearest U.S. GAAP earnings. See reconciliation to nearest U.S. GAAP measures on our website. HL includes financial and royalty volume.
(000s HL)
0
500
1,000
1,500
2,000
2009 2010 2011 2012
MCI Total Volume
($35)
($30)
($25)
($20)
($15)
($10)
($5)
$0
2009 2010 2011 2012 2013 2014 2015 2016
MCI Underlying Pretax Income(Loss)/HL1
13
Driving TSR with PACC Model • Core brand investments
• Innovation
• Cost reductions
• Revenue and mix management
• Capital expenditure efficiencies
• Working Capital improvements
• Disciplined cash use
• Return-driven criteria
• Short-term priority: deleverage
Brand-Led Profit
Growth
Cash Generation
Cash and Capital
Allocation
Profit After
Capital Charge
TSR
14
Molson Coors Growth Enablers – 2013 and Beyond
Investing Behind
Core Brands
Delivering Value Added
Innovation
Driving Share in Above Premium
Drive Cost Savings &
Commercial Excellence
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
15
Delivering Value Added Innovation
$100 Million* of Gross Profit from Innovation
Adding News & Excitement Behind Core Brands
Delivering New Options for Changing Preferences
*Past 3 years (2010-2012)
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
17
Investing Behind Our Core Brands
Coors Light - Owns Rocky Mountain Cold Refreshment Globally
US
Canada
UK
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
19
“Made from Canada” – Molson Canadian
Absolute Volume & Market Share – Molson Canadian
(000 HL)
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
20
“Brilliantly British Refreshment” - Carling Regaining Momentum
Absolute Volume & Market Share – Carling UK
0.0%
5.0%
10.0%
15.0%
20.0%
Total Trade On-Trade Off-Trade
1H 2012 1H 2013
Carling % Share of Beer
(000 HL)
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
21
“The Spirit of Prague” - Staropramen
Absolute Volume & Market Share– Staropramen
(000 HL)
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
22
A Commitment to Great Taste & Innovation - Miller Lite
Absolute Volume & Market Share – Miller Lite
(000 HL)
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
23
Driving Share in Above Premium
America’s Largest Craft Brewer - Tenth and Blake
®
11
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
25
Canada Expands Above Premium Portfolio
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
26
Building AP Portfolio in Europe -Led by UK
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
27
Driving TSR with PACC Model • Core brand investments
• Innovation
• Cost reductions
• Revenue and mix management
• Capital expenditure efficiencies
• Working Capital improvements
• Disciplined cash use
• Return-driven criteria
• Short-term priority: deleverage
Brand-Led Profit
Growth
Cash Generation
Cash and Capital
Allocation
Profit After
Capital Charge
TSR
28
>$1 Billion of Cost Reductions Fuel Top-Line and Profit
Nearly $1.1 billion of cost savings delivered in past 8 years
($millions) Cumulative Annualized Cost Savings
$0
$200
$400
$600
$800
$1,000
$1,200
2005 2006 2007 2008 2009 2010 2011 2012 Molson Coors 42% of MillerCoors
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
29
Ongoing Cost Efficiencies Will Fuel Growth Investments
• Long-term sustainability − Savings of $40-$60 million/year for at least the next 5 years* − Includes Central Europe deal synergies
• Driven through: efficiency and effectiveness − Restructuring U.K., International − Reduced overhead expenses, primarily Canada − Global procurement − Global Standardization, including I/T
* Excludes any additional MillerCoors cost savings.
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
Substantial % of savings reinvested for profitable growth
30
Capital Efficiency Drives Cash and Value
• Capital Spending − 2013 outlook: $450-$500 million*
• Business transformation in US • Information systems in Europe • Innovation in Canada, US and Europe • Higher than maintenance capital
− Maintain spend levels until at least 2015 • Working capital improvements
− Accounts payable − Accounts receivable − Inventories
*Including 42% of MillerCoors
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
31
Working Capital and Asset Intensity: $300 Million Target
56 58 60 62 64 66 68 70
2009 2010 2011 2012
Days Sales Outstanding
0 10 20 30 40 50 60 70
2009 2010 2011 2012
Days Payables Outstanding
30
32
34
36
38
40
2009 2010 2011 2012
Days Inventories Outstanding
0 10 20 30 40 50 60 70
2009 2010 2011 2012
Cash Conversion Cycle
Note: Cash Conversion Cycle=DSO+DIO-DPO
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
32
Profit, Capital Efficiency/Structure Drive FCF
$426
$315
$508
$681
$887
$618
$865
$700
$0
$200
$400
$600
$800
$1,000
2006 2007 2008 2009 2010 2011 2012 2013F
MCBC Underlying Free Cash Flow
Underlying free cash flow is defined as operating cash flow, less capital spending, plus or minus investing cash from/to MillerCoors and plus or minus the cash impact of special and other non-core items. See reconciliation to nearest U.S. GAAP measures on our website.
($millions)
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
33
Business Drives Substantial FCF Per Share
$2.46
$1.74
$2.74
$3.66
$4.73
$3.32
$4.76
$1.85 $1.99
$0
$1
$2
$3
$4
$5
2006 2007 2008 2009 2010 2011 2012 1H 12 1H 13
MCBC Underlying Free Cash Flow/Share ($millions)
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
Underlying free cash flow is defined as operating cash flow, less capital spending, plus or minus investing cash from/to MillerCoors and plus or minus the cash impact of special and other non-core items. See reconciliation to nearest U.S. GAAP measures on our website.
34
2.8x 3.0x 3.0x
3.6x
2.8x 2.9x
4.4x
2.9x
1.8x 1.6x 1.4x
0.8x 0.6x 0.7x
2.8x
0x
1x
2x
3x
4x
5x
2006 2007 2008 2009 2010 2011 2012 Pro Forma
2015 Goal
S&P Adjusted Debt / EBITDA Net debt to EBITDA
<2x
Short-Term Cash Use Priority: Deleverage
Debt/EBITDA
1 Total debt less cash, divided by the sum of underlying pretax income, plus interest and depreciation & amortization expense (incl. 42% of MillerCoors). See reconciliations to nearest US GAAP measures on our website.
2 2012 pro forma S&P leverage calculation based on internal estimates, currently not published by S&P.
1
2
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
35
Key Value Driver: Disciplined Cash Use
• Cash use priorities − Strengthened balance sheet by reducing liabilities − Returning cash to shareholders − Brand-led growth opportunities
• Short-medium term focus: Balance sheet, especially debt − Returning debt ratios to pre-Central Europe levels − Constant dividend for time being − Share buy-back program not being considered at this time
• Consistent return-driven criteria − Short-term earnings accretion − ROIC/WACC within 3-5 years
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
36
Strong Base, Driving Total Shareholder Return
Brand-Led Profit
Growth Cash
Generation Cash and Capital
Allocation
• Molson Coors global overview • Historical performance context
− Steady, growing pretax profit, even in difficult times − Strong, stable EBITDA − Substantial cash generation and cash return to
shareholders − Growing total shareholder returns
• Growth strategy Brand-Led
Profit Growth
Cash Generation
Cash and Capital
Allocation
Profit After
Capital Charge
TSR
37
Q & A
Molson Coors Brewing Company Barclays Back-to-School Consumer Conference September 4, 2013