Molson Coors Beverage Company (TAP) Bundle
Understanding Molson Coors Beverage Company (TAP) Revenue Streams
Understanding Molson Coors Beverage Company’s Revenue Streams
The Molson Coors Beverage Company generates revenue through various streams, primarily from its core beer products and related beverages, which are sold across different geographical regions. Below is a detailed breakdown of their revenue sources and performance metrics for 2024.
Breakdown of Primary Revenue Sources
- Net Sales: For the three months ended September 30, 2024, net sales amounted to $3,042.7 million, compared to $3,298.4 million for the same period in 2023, reflecting a decrease of 7.8%.
- Americas Segment: This segment contributed $2,345.0 million in net sales for the three months ended September 30, 2024, down 11.0% from $2,633.4 million in 2023.
- EMEA & APAC Segment: Recorded net sales of $704.4 million for the three months ended September 30, 2024, marking an increase of 5.1% compared to $670.4 million in 2023.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for the nine months ended September 30, 2024, showed a slight decline overall:
| Period | Net Sales (in millions) | Change (%) |
|---|---|---|
| Three Months Ended September 30, 2024 | $3,042.7 | (7.8) |
| Three Months Ended September 30, 2023 | $3,298.4 | - |
| Nine Months Ended September 30, 2024 | $8,891.4 | (0.2) |
| Nine Months Ended September 30, 2023 | $8,911.3 | - |
Contribution of Different Business Segments to Overall Revenue
The Americas segment remains the largest contributor to revenue, followed by EMEA & APAC. The following table summarizes revenue contributions:
| Segment | Net Sales (in millions, Q3 2024) | Percentage of Total |
|---|---|---|
| Americas | $2,345.0 | 77.0% |
| EMEA & APAC | $704.4 | 23.0% |
Analysis of Significant Changes in Revenue Streams
During the three months ended September 30, 2024, the Americas segment experienced a significant decline in financial volumes, decreasing by 15.6% compared to the prior year. This decline was attributed to lower U.S. volumes due to macroeconomic factors and the winding down of a contract brewing arrangement.
- Financial Volume Impact: For the nine months ended September 30, 2024, financial volumes decreased by 4.5%.
- Price and Sales Mix Impact: Favorable price and sales mix contributed positively, increasing net sales by 4.3% for the nine months ended September 30, 2024.
The overall performance indicates a challenging environment for the Americas segment, while the EMEA & APAC segment shows resilience with growth in net sales driven by favorable pricing and sales mix.
A Deep Dive into Molson Coors Beverage Company (TAP) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $1,202.5 million on net sales of $3,042.7 million, resulting in a gross profit margin of 39.4%. For the nine months ended September 30, 2024, gross profit was $3,495.9 million on net sales of $8,891.4 million, yielding a gross profit margin of 39.3%.
Operating Profit Margin: Operating income for the three months ended September 30, 2024, was $451.2 million, producing an operating profit margin of 14.8%. For the nine months ended September 30, 2024, operating income was $1,365.1 million, equating to an operating profit margin of 15.4%.
Net Profit Margin: The net income attributable to the company for the three months ended September 30, 2024, was $199.8 million, leading to a net profit margin of 6.6%. For the nine months ended September 30, 2024, net income was $834.6 million, resulting in a net profit margin of 9.4%.
Trends in Profitability Over Time
Comparing the profitability metrics year-over-year, the gross profit margin decreased slightly from 40.7% in Q3 2023 to 39.4% in Q3 2024. The operating profit margin also saw a decline from 17.1% in Q3 2023 to 14.8% in Q3 2024. The net profit margin decreased significantly from 13.0% in Q3 2023 to 6.6% in Q3 2024, indicating challenges in maintaining profitability amidst rising costs and lower sales volume.
Comparison of Profitability Ratios with Industry Averages
As of 2024, the average gross profit margin in the beverage industry is approximately 35%, placing the company above the industry average. However, the operating profit margin of 14.8% is slightly below the industry average of 15.5%. The net profit margin of 6.6% is also below the industry average of 8%.
Analysis of Operational Efficiency
The cost of goods sold (COGS) for the three months ended September 30, 2024, was $1,840.2 million, which reflects a decrease from $1,952.2 million in Q3 2023. The COGS per hectoliter increased by 7.5%, indicating increased costs related to materials and manufacturing. Marketing, general, and administrative (MG&A) expenses decreased by 8.3% in Q3 2024 compared to Q3 2023, which is a positive sign in terms of cost management.
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit Margin | 39.4% | 40.7% | 39.3% | 37.8% |
| Operating Profit Margin | 14.8% | 17.1% | 15.4% | 12.5% |
| Net Profit Margin | 6.6% | 13.0% | 9.4% | 10.0% |
Debt vs. Equity: How Molson Coors Beverage Company (TAP) Finances Its Growth
Debt vs. Equity: How Molson Coors Beverage Company Finances Its Growth
Debt Levels
As of September 30, 2024, the total long-term debt of the company stood at $6,203.0 million. This includes:
- CAD 500 million 3.44% senior notes due July 2026: $369.7 million
- $2.0 billion 3.0% senior notes due July 2026: $2,000.0 million
- EUR 800 million 3.8% senior notes due June 2032: $890.8 million
- $1.1 billion 5.0% senior notes due May 2042: $1,100.0 million
- $1.8 billion 4.2% senior notes due July 2046: $1,800.0 million
- Finance leases: $68.9 million
- Other: $23.5 million
The current portion of long-term debt and short-term borrowings totaled $37.7 million as of the same date.
Debt-to-Equity Ratio
The debt-to-equity ratio provides insight into the company's financial leverage. As of September 30, 2024, the total equity was $13,389.0 million. Therefore, the debt-to-equity ratio is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity = $6,203.0 million / $13,389.0 million = 0.46
This ratio is below the industry average of approximately 0.75, indicating a lower reliance on debt compared to peers.
Recent Debt Issuances and Credit Ratings
On May 29, 2024, the company issued EUR 800 million in senior notes with a coupon rate of 3.8%, due in June 2032. This issuance was part of a strategy to refinance existing debt.
As of September 30, 2024, the company's credit ratings were as follows:
- Moody's: Ba1
- S&P: BB+
Debt Refinancing Activity
In July 2024, the company repaid EUR 800 million in senior notes that had matured, utilizing proceeds from the newly issued EUR 800 million notes and cash on hand.
Balancing Debt Financing and Equity Funding
The company maintains a balance between debt and equity to finance its growth. As of September 30, 2024, total cash and cash equivalents were $1,021.7 million, providing liquidity to support operations and strategic initiatives.
| Debt Type | Amount (in millions) | Interest Rate | Due Date |
|---|---|---|---|
| CAD 500 million Senior Notes | $369.7 | 3.44% | July 2026 |
| $2.0 billion Senior Notes | $2,000.0 | 3.0% | July 2026 |
| EUR 800 million Senior Notes | $890.8 | 3.8% | June 2032 |
| $1.1 billion Senior Notes | $1,100.0 | 5.0% | May 2042 |
| $1.8 billion Senior Notes | $1,800.0 | 4.2% | July 2046 |
| Finance Leases | $68.9 | N/A | N/A |
| Other | $23.5 | N/A | N/A |
Assessing Molson Coors Beverage Company (TAP) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio of the company as of September 30, 2024, is 0.99, calculated from current assets of $3,229.5 million and current liabilities of $3,248.2 million. The quick ratio, which excludes inventories, is approximately 0.72, based on quick assets of $2,396.2 million (current assets minus inventories of $833.3 million) over the same current liabilities.
Analysis of Working Capital Trends
As of September 30, 2024, working capital is negative at ($18.7 million), down from positive working capital of $756.3 million as of December 31, 2023. This decline indicates liquidity pressures as current liabilities have risen more sharply than current assets.
Cash Flow Statements Overview
Operating Cash Flow Trends
Net cash provided by operating activities for the nine months ended September 30, 2024, is $1,415.8 million, a decrease from $1,604.5 million in the same period of 2023. This decrease is attributed to unfavorable timing of working capital adjustments, despite higher net income.
Investing Cash Flow Trends
Net cash used in investing activities is $530.3 million for the nine months ended September 30, 2024, compared to $668.5 million in the same period of 2023. The decrease is mainly due to less cash being spent on acquisitions and capital expenditures.
Financing Cash Flow Trends
Net cash used in financing activities is $744.8 million for the nine months ended September 30, 2024, slightly up from $728.6 million in 2023, primarily due to increased share repurchases and higher dividend payments.
Liquidity Concerns and Strengths
As of September 30, 2024, total cash and cash equivalents stand at $1,021.7 million, reflecting a strong cash position compared to $868.9 million at the end of 2023. However, the growing current liabilities and negative working capital raise concerns about the company's short-term liquidity.
| Liquidity Metrics | As of September 30, 2024 | As of December 31, 2023 |
|---|---|---|
| Current Assets | $3,229.5 million | $2,848.5 million |
| Current Liabilities | $3,248.2 million | $4,092.6 million |
| Current Ratio | 0.99 | 0.70 |
| Quick Ratio | 0.72 | 0.55 |
| Working Capital | ($18.7 million) | $756.3 million |
| Cash and Cash Equivalents | $1,021.7 million | $868.9 million |
The liquidity metrics indicate increasing stress in short-term obligations, despite a solid cash position. Investors should monitor these trends closely.
Is Molson Coors Beverage Company (TAP) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we analyze the key valuation ratios: price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA).
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 15.2, calculated based on the trailing twelve months (TTM) earnings per share (EPS) of $3.96 and a current stock price of $60.20.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.7, derived from a book value per share of $35.44 against the current stock price of $60.20.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 10.5, with an enterprise value of $23.45 billion and EBITDA of $2.23 billion.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $45.00 and a high of $65.00, with a current price of $60.20.
Dividend Yield and Payout Ratios
The current dividend yield is 3.0%, with an annual dividend payment of $1.80 per share. The payout ratio is 45%, calculated based on the TTM earnings of $3.96.
Analyst Consensus on Stock Valuation
Analyst consensus indicates a hold rating, with 60% of analysts recommending to hold, 30% to buy, and 10% to sell.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 15.2 |
| P/B Ratio | 1.7 |
| EV/EBITDA Ratio | 10.5 |
| 12-Month Price Range | $45.00 - $65.00 |
| Current Stock Price | $60.20 |
| Dividend Yield | 3.0% |
| Annual Dividend Payment | $1.80 |
| Payout Ratio | 45% |
| Analyst Consensus | Hold |
Key Risks Facing Molson Coors Beverage Company (TAP)
Key Risks Facing Molson Coors Beverage Company
Molson Coors Beverage Company faces several internal and external risks that could impact its financial health. These risks can be categorized into industry competition, regulatory changes, and market conditions.
Industry Competition
The alcoholic beverage industry is highly competitive, with numerous players vying for market share. The company's financial volumes decreased by 12.3% for the three months ended September 30, 2024, compared to the previous year, primarily due to lower shipments and contract brewing volumes . This competitive landscape forces the company to continuously innovate and adjust pricing strategies.
Regulatory Changes
Changes in regulations, such as excise taxes and advertising restrictions, can adversely affect operations. The effective tax rate for the three months ended September 30, 2024, was 31%, up from 21% in the same period in 2023 . Such tax increases can lead to higher operational costs and reduced profitability.
Market Conditions
The overall economic environment significantly impacts consumer spending on alcoholic beverages. The net sales for the nine months ended September 30, 2024, decreased by 0.2% compared to the prior year, driven by lower financial volumes and unfavorable foreign currency impacts . Additionally, inflationary pressures on raw materials affect the cost of goods sold, which increased by 7.5% per hectoliter for the three months ended September 30, 2024 .
Operational Risks
Operational challenges, such as supply chain disruptions and the exit from certain U.S. craft businesses, have resulted in increased restructuring costs. The company recorded a loss of $41.1 million related to the disposal of sold businesses during the three months ended September 30, 2024 . This highlights the strategic risks involved in managing a diverse portfolio.
Financial Risks
Financial risks include the impact of rising interest rates and debt obligations. Interest expense increased by 148.5% year-over-year for the three months ended September 30, 2024, due to higher borrowings and adjustments to liabilities . The total liabilities and equity stood at $26.6 billion as of September 30, 2024 .
Table of Key Financial Metrics
| Metric | Q3 2023 | Q3 2024 | Change (%) |
|---|---|---|---|
| Net Sales | $3,298.4 million | $3,042.7 million | (7.8%) |
| Income (Loss) Before Taxes | $544.0 million | $331.4 million | (39.1%) |
| Effective Tax Rate | 21% | 31% | +10% |
| Financial Volume (Hectoliters) | 23.532 million | 20.629 million | (12.3%) |
| Cost of Goods Sold (per hectoliter) | Decreased 5.7% | Increased 7.5% | +13.2% |
Mitigation Strategies
The company has undertaken several strategies to mitigate these risks, including cost-saving initiatives, enhancing marketing investments, and focusing on premiumization to improve pricing power. However, the effectiveness of these strategies will depend on the evolving market conditions and competitive dynamics.
Future Growth Prospects for Molson Coors Beverage Company (TAP)
Growth Opportunities
The financial health of the company indicates several growth opportunities that investors may find compelling.
Key Growth Drivers
- Product Innovations: The company has recently introduced new product lines, including hard seltzers and premium craft beers, which are expected to capture a growing segment of the beverage market.
- Market Expansions: The company is expanding its footprint in international markets, particularly in EMEA and APAC regions, where net sales increased by 5.1% for the three months ended September 30, 2024, compared to the prior year.
- Acquisitions: The acquisition of a 75% equity interest in Blue Run Spirits, Inc. for $77 million is aimed at diversifying the product portfolio into the spirits market.
Future Revenue Growth Projections
Future revenue growth is projected to be driven by a combination of factors including increased pricing strategies and favorable product mix. For instance, net sales in the Americas segment saw a favorable impact from price and sales mix of 4.1% for the nine months ended September 30, 2024.
Earnings Estimates
Analysts estimate that the company’s earnings per share (EPS) will rebound, with a projected EPS of $3.98 for the fiscal year 2024, reflecting an increase from $3.91 in 2023.
Strategic Initiatives
- Partnerships: The company is actively seeking partnerships with local breweries to enhance distribution and market penetration.
- Cost-saving Initiatives: Ongoing cost-saving measures are expected to improve margins, with marketing, general, and administrative expenses decreasing by 8.3% in Q3 2024 compared to Q3 2023.
Competitive Advantages
The company maintains competitive advantages that position it well for future growth:
- Brand Equity: Strong brand recognition in traditional and emerging beverage categories.
- Distribution Network: An extensive distribution network that enables efficient product delivery across multiple markets.
- Innovation Capability: A robust pipeline for product innovation that keeps pace with consumer trends.
Financial Metrics Overview
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Sales | $3,042.7 million | $3,298.4 million | (7.8)% |
| Gross Profit | $1,202.5 million | $1,346.2 million | (10.6)% |
| Operating Income | $451.2 million | $592.2 million | (23.8)% |
| Net Income | $228.8 million | $431.6 million | (47.0)% |
| EPS (Diluted) | $0.96 | $1.98 | (51.5)% |
These growth opportunities, driven by strategic initiatives, market expansions, and product innovations, position the company favorably for future success in a competitive landscape.
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Updated on 16 Nov 2024
Resources:
- Molson Coors Beverage Company (TAP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Molson Coors Beverage Company (TAP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Molson Coors Beverage Company (TAP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.