Molson Coors Beverage Company

11/04/2025 | Press release | Distributed by Public on 11/04/2025 07:59

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
For more than two centuries, we have brewed beverages that unite people to celebrate all life's moments. From our core power brands Coors Light, Miller Lite, Coors Banquet, Molson Canadian, Carlingand Ožujskoto our above premium brands including Madrí Excepcional, Staropramen, Blue Moon Belgian Whiteand Leinenkugel's Summer Shandy, to our economy and value brands like Miller High Lifeand Keystone Light, we produce many beloved and iconic beers. While our Company's history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well, including flavored beverages like Vizzy Hard Seltzer, spirits like Five Trailwhiskey and non-alcoholic beverages. We also have partner brands, such as Simply Spiked, ZOA Energy, Fever-Tree, among others, through license, distribution, partnership and joint venture agreements. 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") in this Quarterly Report on Form 10-Q is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 ("Annual Report"), as well as our unaudited condensed consolidated financial statements and the accompanying notes included in this report. Due to the seasonality of our operating results, quarterly financial results are not necessarily indicative of the results that may be achieved for the full year or any other future period.
Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC" or the "Company"), principally a holding company, and its operating and non-operating subsidiaries included within its reporting segments. Our reporting segments include Americas and EMEA&APAC. Our Americas segment operates in the U.S., Canada and various countries in Latin America and our EMEA&APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries and certain countries within the Middle East, Africa and Asia Pacific.
Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior year periods. Our primary operating currencies, other than the USD, include the CAD, the GBP and our Central European operating currencies, such as the EUR, CZK, RON and RSD.
Global Market Conditions and Competitive Trends
Our industry is experiencing and, we expect will continue to experience, increased consumer and economic uncertainty due to volatility in the global macroeconomic environment including global trade policies and other geopolitical events with potential resulting impacts on economic growth, consumer confidence, inflation and currencies. In addition, the associated impacts of the macroeconomic environment on the beer industry in the U.S. have resulted in heightened competitive activity and associated reduction in market share of our products in certain segments. The magnitude of the resulting impacts on our business are dependent on the evolution of the global macroeconomic environment and the competitive landscape, including whether share losses are sustained. The economic and competitive pressures, including the impact of tariffs, on our Company and our consumers' consumption behavior and preferences have and may continue to negatively impact our results of operations during this volatile period. For example, tariff announcements in the U.S. in the second quarter of 2025 have indirectly caused the price of the premium on aluminum in the U.S., known as the Midwest Premium, to spike which has had a negative impact and is expected to continue to have a negative impact on our results of operations. While our hedging program can help mitigate some of the volatility, the opaque pricing and limited liquidity of the Midwest Premium can make hedging this exposure costly. Therefore, the Midwest Premium is one of the commodities for which we currently have the least amount of hedged coverage. In addition to impacting the prices of raw materials, a constant or periodic change in the Midwest Premium may decrease our profit margins or impact our end consumers as we may pass on the increased costs to our consumers. We plan to continue to evaluate and implement strategies which are designed to help mitigate the impact on our business, consolidated results of operations and financial condition while continuing to support our long-term strategic growth and capital allocation priorities.
Chief Executive Officer Succession
On April 12, 2025, Gavin D.K. Hattersley, President and Chief Executive Officer ("CEO") of the Company and a member of the Board informed the Company and the Board that he intends to retire from the Company and as a member of the Board, in each case, by December 31, 2025.
On September 19, 2025, the Board appointed Rahul Goyal as the Company's President and CEO and member of the Board effective, in each case, as of October 1, 2025, following the retirement of Gavin D.K. Hattersley from those same positions immediately prior to such appointments. Gavin D.K. Hattersley will remain employed by the Company in an advisory role to assist in the transition until December 31, 2025, or an earlier date as determined by Gavin D.K. Hattersley or the Company.
Americas Restructuring Plan
On October 20, 2025, the Company announced an Americas restructuring plan designed to create a leaner, more agile Americas segment while advancing its ability to reinvest in the business and position the Company for future growth. The restructuring plan involves the planned elimination of approximately 400 salaried positions across the Americas segment by the end of December 2025. In connection with the Americas restructuring plan, the Company currently expects to incur certain restructuring charges, in the range of $35 million to $50 million, which are expected to be future cash expenditures to be made over the next 12 months. Substantially all of the charges are expected to be related to severance payments and post-employment benefits to be incurred in the fourth quarter of 2025.
Items Affecting the Consolidated Results of Operations
Purchases of Annuity Contracts
On September 26, 2024, we purchased annuity contracts for two of our Canadian pension plans. As a result, on September 30, 2024, we remeasured both pension plans and recorded a total settlement loss of $34.0 million to other pension and postretirement benefit (costs), net in the unaudited condensed consolidated statements of operations during the third quarter of 2024. See Part I. - Item 1. Financial Statements, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies"for further information.
Cobra Beer Partnership, Ltd. Buyout
During March 2024, our partner in CBPL exercised a put option under our partnership agreement which required us to acquire the remaining 49.9% ownership interest. We adjusted our NCI by $34.5 million to our best estimate of the redemption value that existed at the time of the put option exercise by increasing our net income attributable to noncontrolling interests and decreasing our net income attributable to MCBC. In addition, we received the final determination of the redemption value in October 2024 and as the transaction was considered mandatorily redeemable, we recorded an adjustment of $45.8 million to interest expense in the EMEA&APAC segment during the three months ended September 30, 2024.
Items Affecting the Americas Segment Results of Operations
Goodwill Impairment
During the third quarter of 2025, we recorded a partial goodwill impairment charge of $3,645.7 million to goodwill impairment in the unaudited condensed consolidated statements of operations related to our Americas reporting unit. See Part I.-Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets"for further information.
Intangible Asset Impairment
During the third quarter of 2025, we recorded a full impairment charge of $75.3 million related to our Blue Run Spirits definite-lived intangible asset within other operating income (expense), net in the unaudited condensed consolidated statements of operations. See Part I.-Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets"for further information.
Fevertree Transactions
During the first quarter of 2025, we obtained exclusive rights via a license agreement to produce, market and sell Fever-Tree products in the U.S. In connection with this agreement, we acquired the shares of the Fevertree USA, Inc. entity, with the immaterial acquisition accounted for as a business combination and consideration allocated primarily to working capital balances. The acquisition is aligned with our strategy to expand beyond the beer aisle as Fever-Tree is the world's leading supplier of premium carbonated mixers.
Wind Down or Sale of Certain U.S. Craft Businesses
During the third quarter of 2024, we decided to wind down or sell certain of our U.S. craft businesses and related facilities and recorded employee-related and asset abandonment charges, including accelerated depreciation in excess of normal depreciation. We recognized a loss of $41.1 million related to the disposal of the sold businesses. See Part I. - Item 1. Financial Statements, Note 12, "Other Operating Income (Expense), net" for further information.
Items Affecting the EMEA&APAC Segment Results of Operations
Intangible Asset Impairment
During the third quarter of 2025, we recorded a partial impairment charge of $198.6 million related to our Staropramen family of brands indefinite-lived intangible asset within other operating income (expense), net in the unaudited condensed consolidated statements of operations. See Part I.-Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets"for further information.
Consolidated Results of Operations
The following table highlights summarized components of our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2025 and September 30, 2024. See Part I.-Item 1. Financial Statementsfor additional details of our U.S. GAAP results.
Three Months Ended Nine Months Ended
September 30, 2025 September 30, 2024 % change September 30, 2025 September 30, 2024 % change
(In millions, except percentages and per share data)
Net sales $ 2,973.5 $ 3,042.7 (2.3) % $ 8,478.4 $ 8,891.4 (4.6) %
Cost of goods sold (1,800.0) (1,840.2) (2.2) % (5,172.1) (5,395.5) (4.1) %
Gross profit 1,173.5 1,202.5 (2.4) % 3,306.3 3,495.9 (5.4) %
Marketing, general and administrative expenses (686.7) (684.7) 0.3 % (2,033.0) (2,067.8) (1.7) %
Goodwill impairment (3,645.7) - N/M (3,645.7) - N/M
Other operating income (expense), net (275.2) (65.8) 318.2 % (300.3) (59.4) 405.6 %
Equity income (loss) 3.0 (0.8) N/M 11.5 (3.6) N/M
Operating income (loss) (3,431.1) 451.2 N/M (2,661.2) 1,365.1 N/M
Total non-operating income (expense), net (64.4) (119.8) (46.2) % (123.1) (208.4) (40.9) %
Income (loss) before income taxes (3,495.5) 331.4 N/M (2,784.3) 1,156.7 N/M
Income tax benefit (expense) 558.6 (102.6) N/M 394.8 (292.7) N/M
Net income (loss) (2,936.9) 228.8 N/M (2,389.5) 864.0 N/M
Net (income) loss attributable to noncontrolling interests 9.3 (29.0) N/M 11.6 (29.4) N/M
Net income (loss) attributable to MCBC $ (2,927.6) $ 199.8 N/M $ (2,377.9) $ 834.6 N/M
Net income (loss) attributable to MCBC per diluted share $ (14.79) $ 0.96 N/M $ (11.87) $ 3.96 N/M
Financial volume in hectoliters 19.385 20.629 (6.0) % 55.664 61.033 (8.8) %
N/M = Not meaningful
Foreign Currency Impacts on Results
For the three months ended September 30, 2025, foreign currency movements had the following impacts on our USD consolidated results:
•Net sales - Favorable impact of $30.5 million (Favorable impact for EMEA&APAC of $33.5 million, partially offset by the unfavorable impact for Americas of $3.0 million).
•Cost of goods sold- Unfavorable impact of $19.4 million (Unfavorable impact for EMEA&APAC of $21.2 million, partially offset by the favorable impact for Americas and Unallocated of $1.7 million and $0.1 million, respectively).
•MG&A- Unfavorable impact of $6.7 million (Unfavorable impact for EMEA&APAC of $7.7 million, partially offset by the favorable impact for Americas of $1.0 million).
•Other operating income (expense), net- Unfavorable impact of $14.7 million (Unfavorable impact for EMEA&APAC of $14.7 million).
•Income (loss) before income taxes- Unfavorable impact of $9.0 million (Unfavorable impact for EMEA&APAC and Americas of $8.7 million and $0.5 million, respectively, partially offset by the favorable impact for Unallocated of $0.2 million).
The impacts of foreign currency movements on our consolidated USD results described above for the three months ended September 30, 2025, were primarily due to the weakening of the USD compared to the GBP, CZK and EUR, partially offset by the strengthening of the USD compared to the CAD.
For the nine months ended September 30, 2025, foreign currency movements had the following impacts on our USD consolidated results:
•Net sales- Favorable impact of $42.2 million (Favorable impact for EMEA&APAC of $64.6 million, partially offset by the unfavorable impact for Americas of $22.4 million).
•Cost of goods sold- Unfavorable impact of $26.6 million (Unfavorable impact for EMEA&APAC and Unallocated of $40.7 million and $0.1 million, respectively, partially offset by the favorable impact for Americas of $14.2 million).
•MG&A- Unfavorable impact of $5.3 million (Unfavorable impact for EMEA&APAC of $13.4 million, partially offset by the favorable impact of Americas of $8.1 million).
•Other operating income (expense), net- Unfavorable impact of $15.2 million (Unfavorable impact for EMEA&APAC of $15.2 million).
•Income (loss) before income taxes- Unfavorable impact of $4.9 million (Unfavorable impact for Unallocated, EMEA&APAC and Americas of $3.4 million, $1.3 million and $0.2 million, respectively).
The impacts of foreign currency movements on our consolidated USD results described above for the nine months ended September 30, 2025, were primarily due to the weakening of the USD compared to the GBP, CZK and EUR, partially offset by the strengthening of the USD compared to the CAD.
Included in these amounts are both translational and transactional impacts of changes in foreign exchange rates. We calculate the impact of foreign exchange by translating our current period local currency results at the average exchange rates used to translate the financial statements in the comparable prior year period during the respective period throughout the year and comparing that amount with the reported amount for the period. The impact of transactional foreign currency gains and losses is recorded within other non-operating income (expense), net in our unaudited condensed consolidated statements of operations.
Volume
Financial volume represents owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), as well as contract brewing, factored non-owned volume and company-owned distribution volume. This metric is presented on a sales-to-wholesalers basis to reflect the sales from our operations to our direct customers, generally distributors. We believe this metric is important and useful for investors and management because it gives an indication of the amount of beer and adjacent products that we have produced and shipped to customers. This metric excludes royalty volume, which consists of our brands produced and sold under various license and contract brewing agreements. Factored volume in our EMEA&APAC segment represents the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel, which is a common arrangement in the U.K.
Net sales
We utilize net sales per hectoliter, as well as the year over year changes in this metric, as a key metric for analyzing our results. This metric is calculated as net sales per our unaudited condensed consolidated statements of operations divided by financial volume for the respective period. We believe this metric is important and useful for investors and management because it provides an indication of the trends of sales mix and other impacts on our net sales.
The following table highlights the drivers of the change in net sales for the three months ended September 30, 2025, compared to September 30, 2024 (in percentages):
Financial Volume Price and Sales Mix Currency Total
Consolidated net sales (6.0) % 2.7 % 1.0 % (2.3) %
Net sales decreased 2.3% for the three months ended September 30, 2025, compared to prior year, driven by lower financial volume, partially offset by favorable price and sales mix and favorable foreign currency impacts.
Financial volume decreased 6.0% for the three months ended September 30, 2025, compared to prior year, primarily due to lower shipments in both the Americas and EMEA&APAC segments described in further detail in the "Segment Results of Operations" section below.
Price and sales mix favorably impacted net sales by 2.7% for the three months ended September 30, 2025, primarily due to favorable sales mix and increased net pricing. Net sales per hectoliter increased 4.0% on a reported basis.
The following table highlights the drivers of the change in net sales for the nine months ended September 30, 2025, compared to September 30, 2024 (in percentages):
Financial Volume Price and Sales Mix Currency Total
Consolidated net sales (8.8) % 3.7 % 0.5 % (4.6) %
Net sales decreased 4.6% for the nine months ended September 30, 2025, compared to prior year, driven by lower financial volume, partially offset by favorable price and sales mix and favorable foreign currency impacts.
Financial volume decreased 8.8% for the nine months ended September 30, 2025, compared to prior year, primarily due to lower shipments in both the Americas and EMEA&APAC segments as described in further detail in the "Segment Results of Operations" section below.
Price and sales mix favorably impacted net sales by 3.7% for the nine months ended September 30, 2025, primarily due to favorable sales mix and increased net pricing in both segments. Americas favorable sales mix was primarily driven by lower contract brewing volume and positive brand mix. Net sales per hectoliter increased 4.6% on a reported basis.
Discussions of currency impacts on net sales for the three and nine months ended September 30, 2025, are included in the "Foreign currency impacts on results" section above.
Cost of goods sold
We utilize cost of goods sold per hectoliter, as well as the year over year changes in this metric, as a key metric for analyzing our results. This metric is calculated as cost of goods sold per our unaudited condensed consolidated statements of operations divided by financial volume for the respective period. We believe this metric is important and useful for investors and management because it provides an indication of the trends of mix and other cost impacts on our cost of goods sold.
Cost of goods sold decreased 2.2% for the three months ended September 30, 2025, compared to prior year, primarily due to lower financial volume, partially offset by higher cost of goods sold per hectoliter and the unfavorable foreign currency impact of $19.4 million. Cost of goods sold per hectoliter increased 4.1% for the three months ended September 30, 2025, compared to prior year, primarily due to cost inflation related to materials and manufacturing expenses, unfavorable mix driven by lower contract brewing volume in the Americas segment and premiumization as well as volume deleverage, partially offset by cost savings initiatives and favorable changes in our unrealized mark-to-market commodity derivative positions.
Cost of goods sold decreased 4.1% for the nine months ended September 30, 2025, compared to prior year, primarily due to lower financial volume, partially offset by higher cost of goods sold per hectoliter and the unfavorable foreign currency impact of $26.6 million. Cost of goods sold per hectoliter increased 5.1% for the nine months ended September 30, 2025, compared to prior year, primarily due to volume deleverage, unfavorable mix driven by lower contract brewing volume in the Americas segment and premiumization as well as cost inflation related to materials and manufacturing expenses, partially offset by cost savings initiatives.
Discussions of currency impacts on cost of goods sold for the three and nine months ended September 30, 2025, are included in the "Foreign currency impacts on results" section above.
Marketing, general and administrative expenses
MG&A expenses increased 0.3% for the three months ended September 30, 2025, compared to prior year, primarily due to the timing of marketing investment and the unfavorable foreign currency impact of $6.7 million, partially offset by lower general and administrative expenses as a result of lower incentive compensation expense.
MG&A expenses decreased 1.7% for the nine months ended September 30, 2025, compared to prior year, primarily due to lower marketing investment resulting from the cycling of higher spend levels in the prior year and lower general and administrative expenses. Lower general and administrative expenses were primarily driven by lower incentive compensation expense, partially offset by approximately $30 million of integration and transition fees from the Fevertree USA, Inc. acquisition which will be recoverable through net sales over the next 3 years which started in the second quarter of 2025.
Discussions of currency impacts on MG&A expenses for the three and nine months ended September 30, 2025, are included in the "Foreign currency impacts on results" section above.
Goodwill impairment
During the third quarter of 2025, we identified a triggering event that indicated it was more likely than not that the carrying value of the Americas reporting unit exceeded its fair value resulting in a $3,645.7 million partial goodwill impairment charge. See Part I.-Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets"for additional information regarding the recorded impairment.
Other operating income (expense), net
Other operating expense, net increased $209.4 million and $240.9 million for the three and nine months ended September 30, 2025, respectively, compared to prior year, primarily due to intangible asset impairments of $273.9 million, partially offset by the cycling of a prior year loss on the decision to wind down or sell certain of our U.S. craft businesses.
Total non-operating income (expense), net
Total non-operating expense, net improved 46.2% for the three months ended September 30, 2025, compared to prior year, primarily due to the cycling of a prior year $45.8 million adjustment recorded to interest expense to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout and the cycling of a prior year settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases, partially offset by an unfavorable $11.9 million unrealized fair value adjustment of the investment in Fevertree Drinks plc, lower interest income and lower pension and OPEB non-service benefit.
Total non-operating expense, net improved 40.9% for the nine months ended September 30, 2025, compared to prior year, primarily due to the cycling of a prior year $45.8 million adjustment recorded to interest expense to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout, a favorable $39.3 million unrealized fair value adjustment of the investment in Fevertree Drinks plc in the current year and the cycling of a prior year settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases, partially offset by lower interest income, higher interest expense as a result of the issuance of EUR 800 million 3.8% senior notes in the second quarter of 2024 and lower pension and OPEB non-service benefit.
Income tax benefit (expense)
Three Months Ended Nine Months Ended
September 30, 2025 September 30, 2024 September 30, 2025 September 30, 2024
Effective tax rate 16 % 31 % 14 % 25 %
The lower effective tax rate for the three and nine months ended September 30, 2025, compared to the prior year, was primarily due to the impact of the $3,645.7 million partial goodwill impairment, which a portion of the goodwill was not deductible for tax purposes. The decrease was also due to the cycling of a $16.4 million valuation allowance which was recorded on deferred tax assets in the third quarter of 2024 as a result of the divestment of certain of our U.S. craft businesses and generated a capital loss for U.S. tax purposes, as well as the cycling of a $45.8 million increase in the mandatorily redeemable NCI liability of CBPL to the final redemption value, which was recorded to interest expense in the third quarter of 2024 and was non-deductible for tax purposes.
Our effective tax rate can be volatile and may change with, among other things, the amount and source of pretax income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled or when additional information becomes available. There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, could have an impact on our effective tax rate.
On July 4, 2025, the OBBBA was enacted into law in the U.S. The OBBBA includes various provisions which permanently extend certain expiring provisions from the Tax Cuts and Jobs Act of 2017, many of which have different effective dates. Changes in the OBBBA include the accelerated tax recovery for certain capital investments and research and development expenditures, and changes to the business interest expense limitation. Additionally, the OBBBA includes changes to the taxation of foreign income for U.S.-domiciled businesses. While the OBBBA did not materially affect our effective tax rate for the three or nine months ended September 30, 2025, it did reduce our cash tax payments by approximately $60 million through the third quarter of 2025 and is expected to lower our total cash tax payments by approximately $80 million for the full year. We are continuing to assess the potential impact of OBBBA changes that become effective after 2025 on our condensed consolidated financial statements.
Refer to Part I.-Item 1. Financial Statements, Note 9, "Income Tax"for discussion regarding our effective tax rate.
Segment Results of Operations
Americas Segment
Three Months Ended Nine Months Ended
September 30, 2025 September 30, 2024 % change September 30, 2025 September 30, 2024 % change
(In millions, except percentages)
Net sales(1)
$ 2,260.0 $ 2,345.0 (3.6) % $ 6,646.6 $ 7,066.3 (5.9) %
Income (loss) before income taxes $ (3,345.4) $ 353.8 N/M $ (2,597.9) $ 1,161.5 N/M
Financial volume in hectoliters(1)(2)
13.738 14.695 (6.5) % 40.787 45.001 (9.4) %
N/M = Not meaningful
(1)Includes gross inter-segment sales and volume which are eliminated in the consolidated totals.
(2)Excludes royalty volume of 0.701 million hectoliters and 2.067 million hectoliters for the three and nine months ended September 30, 2025, respectively, and excludes royalty volume of 0.626 million hectoliters and 1.795 million hectoliters for the three and nine months ended September 30, 2024, respectively.
Net sales
The following table highlights the drivers of the change in net sales for the three months ended September 30, 2025, compared to September 30, 2024 (in percentages):
Financial Volume Price and Sales Mix Currency Total
Americas net sales (6.5) % 3.0 % (0.1) % (3.6) %
Net sales decreased 3.6% for the three months ended September 30, 2025, compared to prior year, driven by lower financial volume, partially offset by favorable price and sales mix.
Financial volume decreased 6.5% for the three months ended September 30, 2025, compared to prior year, primarily due to lower U.S. volume impacted by the macroeconomic environment resulting in industry softness as well as lower share performance and an approximate 3% impact from lower contract brewing volume resulting from the exit of a contract brewing arrangement in the U.S. as well as a contract brewing arrangement in Canada at the end of 2024, partially offset by favorable U.S. shipment timing.
Price and sales mix favorably impacted net sales by 3.0% for the three months ended September 30, 2025, compared to prior year, primarily due to favorable sales mix as a result of lower contract brewing volume and positive brand mix as well as increased net pricing. Net sales per hectoliter increased 3.1% on a reported basis.
The following table highlights the drivers of the change in net sales for the nine months ended September 30, 2025, compared to September 30, 2024 (in percentages):
Financial Volume Price and Sales Mix Currency Total
Americas net sales (9.4) % 3.8 % (0.3) % (5.9) %
Net sales decreased 5.9% for the nine months ended September 30, 2025, compared to prior year, driven by lower financial volume and unfavorable foreign currency impacts, partially offset by favorable price and sales mix.
Financial volume decreased 9.4% for the nine months ended September 30, 2025, compared to prior year, primarily due to lower U.S. volume impacted by the macroeconomic environment resulting in industry softness as well as lower share performance and an approximate 3.5% impact from lower contract brewing volume resulting from the exit of a contract brewing arrangement in the U.S. as well as a contract brewing arrangement in Canada at the end of 2024.
Price and sales mix favorably impacted net sales by 3.8% for the nine months ended September 30, 2025, compared to prior year, primarily due to favorable sales mix as a result of lower contract brewing volume and positive brand mix as well as increased net pricing. Net sales per hectoliter increased 3.8% on a reported basis.
Discussions of currency impacts on net sales for the three and nine months ended September 30, 2025, are included in the "Foreign currency impacts on results" section above.
Income (loss) before income taxes
Loss before income taxes of $3,345.4 million declined $3,699.2 million for the three months ended September 30, 2025, compared to income before income taxes in the prior year, primarily due to a $3,645.7 million partial goodwill impairment charge, a $75.3 million full impairment charge to our definite-lived intangible asset related to the Blue Run Spiritsasset group, lower financial volume and cost inflation related to materials and manufacturing expenses, partially offset by the cycling of the prior year decision to wind down or sell certain of our U.S. craft businesses and related restructuring costs, favorable mix, increased net pricing and cost savings initiatives.
Loss before income taxes of $2,597.9 million declined $3,759.4 million for the nine months ended September 30, 2025, compared to income before income taxes in the prior year, primarily due to a $3,645.7 million partial goodwill impairment charge, lower financial volume, cost inflation related to materials and manufacturing expenses as well as a $75.3 million full impairment charge to our definite-lived intangible asset related to the Blue Run Spiritsasset group, partially offset by favorable mix, increased net pricing, cycling of the prior year decision to wind down or sell certain of our U.S. craft businesses and related restructuring costs, cost savings initiatives, favorable unrealized fair value adjustment of the investment in Fevertree Drinks plc and timing of marketing investment.
Discussions of currency impacts on income (loss) before income taxes for the three and nine months ended September 30, 2025, are included in the "Foreign currency impacts on results" section above.
EMEA&APAC Segment
Three Months Ended Nine Months Ended
September 30, 2025 September 30, 2024 % change September 30, 2025 September 30, 2024 % change
(In millions, except percentages)
Net sales(1)
$ 721.0 $ 704.4 2.4 % $ 1,852.2 $ 1,842.4 0.5 %
Income (loss) before income taxes $ (110.4) $ 51.6 N/M $ (64.8) $ 121.8 N/M
Financial volume in hectoliters(1)(2)
5.649 5.938 (4.9) % 14.882 16.039 (7.2) %
N/M = Not meaningful
(1)Includes gross inter-segment sales and volume which are eliminated in the consolidated totals.
(2)Excludes royalty volume of 0.347 million hectoliters and 0.903 million hectoliters for the three and nine months ended September 30, 2025, respectively, and excludes royalty volume of 0.356 million hectoliters and 0.899 million hectoliters for the three and nine months ended September 30, 2024, respectively.
Net sales
The following table highlights the drivers of the change in net sales for the three months ended September 30, 2025, compared to September 30, 2024 (in percentages):
Financial Volume Price and Sales Mix Currency Total
EMEA&APAC net sales (4.9) % 2.5 % 4.8 % 2.4 %
Net sales increased 2.4% for the three months ended September 30, 2025, compared to prior year, driven by favorable foreign currency impacts as well as price and sales mix, partially offset by lower financial volume.
Financial volume decreased 4.9% for the three months ended September 30, 2025, compared to prior year, primarily due to lower volume across all regions driven by soft market demand and a heightened competitive landscape.
Price and sales mix favorably impacted net sales by 2.5% for the three months ended September 30, 2025, compared to prior year, primarily due to premiumization, geographic mix and higher factored brand volume. Net sales per hectoliter increased 7.6% on a reported basis.
The following table highlights the drivers of the change in net sales for the nine months ended September 30, 2025, compared to September 30, 2024 (in percentages):
Financial Volume Price and Sales Mix Currency Total
EMEA&APAC net sales (7.2) % 4.2 % 3.5 % 0.5 %
Net sales increased 0.5% for the nine months ended September 30, 2025, compared to prior year, driven by favorable price and sales mix and favorable foreign currency impacts, partially offset by lower financial volume.
Financial volume decreased 7.2% for the nine months ended September 30, 2025, compared to prior year, primarily due to lower volume across all regions driven by soft market demand and a heightened competitive landscape.
Price and sales mix favorably impacted net sales by 4.2% for the nine months ended September 30, 2025, compared to prior year, primarily due to geographic mix, premiumization and higher factored brand volume, as well as increased net pricing. Net sales per hectoliter increased 8.3% on a reported basis.
Discussions of currency impacts on net sales for the three and nine months ended September 30, 2025, are included in the "Foreign currency impacts on results" section above.
Income (loss) before income taxes
Loss before income taxes of $110.4 million declined $162.0 million for the three months ended September 30, 2025, compared to income in the prior year, primarily due to the partial impairment charge of $198.6 million to the indefinite-lived intangible asset related to the Staropramenfamily of brands, lower financial volume and unfavorable foreign currency impacts partially offset by the cycling of a prior year $45.8 million adjustment recorded to interest expense to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout and lower MG&A expense driven by lower incentive compensation and cost savings.
Loss before income taxes of $64.8 million declined $186.6 million for the nine months ended September 30, 2025, compared to income in the prior year, primarily due to the partial impairment charge of $198.6 million to the indefinite-lived intangible asset related to the Staropramenfamily of brands, lower financial volume and higher U.K. waste management fees as a result of the change in the extended producer responsibility regulations, partially offset by the cycling of a prior year $45.8 million adjustment recorded to interest expense to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout, increased net pricing and lower MG&A expense driven by lower incentive compensation and cost savings.
Discussions of currency impacts on income (loss) before income taxes for the three and nine months ended September 30, 2025, are included in the "Foreign currency impacts on results" section above.
Unallocated Segment
We have certain activity that is not allocated to our segments, which has been reflected as Unallocated below. Specifically, Unallocated primarily includes certain financing-related activities such as interest expense and interest income as well as foreign exchange gains and losses on intercompany balances. Unallocated activity also includes the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides. Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment meanwhile all other components remain in Unallocated.
Three Months Ended Nine Months Ended
September 30, 2025 September 30, 2024 % change September 30, 2025 September 30, 2024 % change
(In millions, except percentages)
Cost of goods sold $ 11.3 $ (1.9) N/M $ 37.0 $ 26.9 37.5 %
Gross profit (loss) 11.3 (1.9) N/M 37.0 26.9 37.5 %
Operating income (loss) 11.3 (1.9) N/M 37.0 26.9 37.5 %
Total non-operating income (expense), net (51.0) (72.1) (29.3) % (158.6) (153.5) 3.3 %
Income (loss) before income taxes $ (39.7) $ (74.0) (46.4) % $ (121.6) $ (126.6) (3.9) %
N/M = Not meaningful
Cost of goods sold
The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for the three and nine months ended September 30, 2025 and September 30, 2024. As the exposure we are managing is realized, we reclassify the gain or loss on our commodity derivatives to the segment in which the underlying exposure resides, allowing our segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility. See Part I.-Item 1. Financial Statements, Note 8, "Derivative Instruments and Hedging Activities"for further information.
Total non-operating income (expense), net
Total non-operating expense, net improved 29.3% for the three months ended September 30, 2025, compared to prior year, primarily due to cycling of a prior year settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases, partially offset by lower interest income and lower pension and OPEB non-service benefit.
Total non-operating expense, net declined 3.3% for the nine months ended September 30, 2025, compared to prior year, primarily due to lower interest income, higher interest expense as a result of the issuance of EUR 800 million 3.8% senior notes in the second quarter of 2024, lower pension and OPEB non-service benefit as well as unfavorable foreign currency transactional impacts, partially offset by the cycling of a prior year settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases.
Liquidity and Capital Resources
Liquidity
Overview
Our primary sources of liquidity include cash provided by operating activities and access to external capital. We continue to monitor world events which may create credit or economic challenges that could adversely impact our net income (loss) or operating cash flows and our ability to obtain additional liquidity. We believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, anticipated dividend payments, capital expenditures and other obligations for the twelve months subsequent to the date of the issuance of this quarterly report and our long-term liquidity requirements. We have upcoming debt maturities in 2026, as illustrated in the debt maturity schedule in the cash and cash equivalents section below. We are currently evaluating various alternatives with respect to these maturities, including the potential refinancing of all or a portion of the outstanding debt which may involve utilizing our amended and restated $2.0 billion multi-currency revolving credit facility. No final decisions have been made at this time, and the timing, structure and terms of any such transactions will depend on capital market conditions and other factors. We do not have any restrictions that prevent or limit our ability to declare or pay dividends.
While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD. As of September 30, 2025, approximately 58% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. Fluctuations in foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances. Cash balances in foreign countries are often subject to additional restrictions. We may, therefore, have difficulties repatriating cash held outside the U.S. on a timely basis and such repatriation may be subject to tax. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. and other countries and may adversely affect our liquidity. To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries as they are earned. We may utilize tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We periodically review and evaluate these plans and strategies, including externally committed and non-committed credit agreements accessible by our Company and each of our operating subsidiaries. We believe these financing arrangements, along with cash flows from operating activities within the U.S., are sufficient to fund our current cash needs in the U.S.
Cash Flows and Use of Cash
Our business historically generates positive operating cash flows each year and our debt maturities are generally of a longer-term nature. However, our liquidity could be impacted significantly by the risk factors we described in Part I-Item 1A. "Risk Factors" in our Annual Report, Part II.-Item 1A. "Risk Factors"in this report and the items listed above.
Cash Flows from Operating Activities
Net cash provided by operating activities of $1,243.7 million for the nine months ended September 30, 2025, decreased $172.1 million compared to $1,415.8 million for the nine months ended September 30, 2024. The decrease in net cash provided by operating activities was primarily due to lower net income adjusted for non-cash items, a $60.6 million payment as final resolution of the Keystone litigation case and higher interest paid, partially offset by lower payments for prior year annual incentive compensation and lower income taxes paid primarily due to the passage of the OBBBA in the U.S.
Cash Flows from Investing Activities
Net cash used in investing activities of $635.1 million for the nine months ended September 30, 2025, increased $104.8 million compared to $530.3 million for the nine months ended September 30, 2024. The increase in cash used in investing activities was primarily due to our investment in Fevertree Drinks plc of $88.1 million, the acquisition of Fevertree USA, Inc. and the sale of the U.S. craft businesses, partially offset by lower capital expenditures as a result of the timing of capital projects.
Cash Flows from Financing Activities
Net cash used in financing activities was $646.6 million for the nine months ended September 30, 2025, decreased $98.2 million compared to $744.8 million for the nine months ended September 30, 2024. The decrease in cash used in financing activities was primarily due to lower Class B common stock share repurchases.
Capital Resources, including Material Cash Requirements
Cash and Cash Equivalents
As of September 30, 2025, we had total cash and cash equivalents of $950.2 million, compared to $969.3 million as of December 31, 2024 and $1,021.7 million as of September 30, 2024. The decrease in cash and cash equivalents from December 31, 2024 was primarily due to capital expenditures, Class B common stock share repurchases, dividends paid, as well as our investment in Fevertree Drinks plc and the acquisition of Fevertree USA Inc., partially offset by net cash provided by operating activities. The decrease in cash and cash equivalents from September 30, 2024, was primarily due to capital expenditures, Class B common stock share repurchases, dividends paid, a payment to acquire the noncontrolling interest in CBPL, as well as the investment in Fevertree Drinks plc and the acquisition of Fevertree USA Inc., partially offset by net cash provided by operating activities.
Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to draw on our revolving credit facility if the need arises. On June 26, 2025, we amended our existing $2.0 billion multi-currency revolving credit facility to extend the maturity date from June 26, 2029 to June 26, 2030. As of September 30, 2025, we had $2.0 billion available to draw on our amended and restated $2.0 billion multi-currency revolving credit facility. As of September 30, 2025, we had no borrowings drawn on this amended and restated multi-currency revolving credit facility and no commercial paper borrowings.
We intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper programs for liquidity as needed. We also have CAD, GBP and USD overdraft facilities across several banks should we need additional short-term liquidity.
Under the terms of each of our debt facilities, we must comply with certain restrictions. These include customary events of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets and restrictions on mergers, acquisitions and certain types of sale lease-back transactions.
The maximum net debt to EBITDA leverage ratio, as defined by the amended and restated multi-currency revolving credit facility agreement, was 4.00x as of September 30, 2025 and December 31, 2024. As of September 30, 2025 and December 31, 2024, we were in compliance with all of these restrictions and covenants, have met such financial ratios and have met all debt payment obligations. All of our outstanding senior notes as of September 30, 2025, rank pari-passu.
See Part I.-Item 1. Financial Statements, Note 7, "Debt"for further discussion of our borrowings and available sources of borrowings, including lines of credit.
Guarantees
We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries. See Part I.-Item 1. Financial Statements, Note 3, "Investments"and Part I.-Item 1. Financial Statements, Note 10, "Commitments and Contingencies"for further discussion.
Material Cash Requirements from Contractual and Other Obligations
There were no material changes to our material cash requirements from contractual and other obligations outside the ordinary course of business or due to factors similar in nature to inflation, changing prices on operations or changes in the remaining terms of the contracts since December 31, 2024, as reported in Part II.- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, "Material Cash Requirements from Contractual and Other Obligations" in our Annual Report.
Credit Rating
Our current long-term credit ratings are BBB/Stable Outlook, Baa1/Stable Outlook and BBB/Stable Outlook with Standard & Poor's, Moody's and DBRS, respectively. Our short-term credit ratings are A-2, Prime-2 and R-2, respectively. A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.
Guarantor Information
SEC Registered Securities
For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our Americas segment.
Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026 and 4.2% senior notes due 2046. Further, pursuant to the indenture dated May 29, 2024 ("May 2024 Indenture"), MCBC issued its outstanding 3.8% senior notes due 2032. The issuances of the senior notes issued under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture were registered under the Securities Act of 1933, as amended. These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed in Exhibit 22 of this Quarterly Report on Form 10-Q (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group"). Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer. The guarantees are full and unconditional and joint and several.
None of our other outstanding debt was issued in a transaction that was registered with the SEC, and such other outstanding debt was issued or otherwise generally guaranteed on a senior unsecured basis by the Obligor Group or other consolidated subsidiaries of MCBC. These other guarantees are also full and unconditional and joint and several.
As of September 30, 2025, the senior notes and related guarantees ranked pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group. The guarantees can be released upon the sale or transfer of a Subsidiary Guarantors' capital stock or substantially all of its assets, or if such Subsidiary Guarantor ceases to be a guarantor under our other outstanding debt.
See Part I.-Item 1. Financial Statements, Note 7, "Debt"for details of all debt issued and outstanding as of September 30, 2025.
The following summarized financial information relates to the Obligor Group as of September 30, 2025, on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. The balances and transactions with non-guarantor subsidiaries have been separately presented.
Summarized Financial Information of Obligor Group
Nine Months Ended
September 30, 2025
(In millions)
Net sales, out of which: $ 6,465.7
Intercompany sales to non-guarantor subsidiaries $ 99.5
Gross profit, out of which: $ 2,556.7
Intercompany net costs from non-guarantor subsidiaries $ (266.4)
Net interest expense, out of which: $ (166.0)
Intercompany net interest income from non-guarantor subsidiaries $ 3.0
Loss before income taxes $ (2,473.9)
Net loss $ (2,152.3)
As of September 30, 2025 As of December 31, 2024
(In millions)
Total current assets, out of which: $ 2,042.9 $ 1,859.8
Intercompany receivables from non-guarantor subsidiaries $ 203.3 $ 191.6
Total noncurrent assets, out of which: $ 20,147.0 $ 23,958.2
Noncurrent intercompany notes receivable from non-guarantor subsidiaries $ 3,424.6 $ 3,833.8
Total current liabilities, out of which: $ 4,969.6 $ 2,673.9
Current portion of long-term debt and short-term borrowings $ 2,366.9 $ 7.6
Intercompany payables due to non-guarantor subsidiaries $ 834.1 $ 715.6
Total noncurrent liabilities, out of which: $ 6,265.6 $ 8,950.8
Long-term debt $ 3,833.8 $ 6,063.6
Noncurrent intercompany notes payable due to non-guarantor subsidiaries $ 29.0 $ 13.2
Capital Expenditures
We incurred $404.5 million and paid $533.7 million, for capital improvement projects worldwide for the nine months ended September 30, 2025, excluding capital spending by equity method joint ventures, representing a decrease of $19.7 million from the $424.2 million of capital expenditures incurred in the nine months ended September 30, 2024. We continue to prioritize our planned capital expenditures with a focus on optimizing returns on invested capital.
Contingencies
We are party to various legal proceedings arising in the ordinary course of business, environmental litigation and indemnities associated with our sale of Kaiser to FEMSA. See Part I.-Item 1. Financial Statements, Note 10, "Commitments and Contingencies"for further discussion.
Off-Balance Sheet Arrangements
Refer to Part II.-Item 8. Financial Statements, Note 13, "Commitments and Contingencies" in our Annual Report for discussion of off-balance sheet arrangements. As of September 30, 2025, we did not have any other material off-balance sheet arrangements.
Critical Accounting Estimates
Our accounting policies and accounting estimates critical to our financial condition and results of operations are set forth in our Annual Report and did not change during the nine months ended September 30, 2025. SeePart I.-Item 1. Financial Statements, Note 2, "New Accounting Pronouncements"for discussion of any recently adopted accounting pronouncements. See also Part I.-Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets"for additional discussion of the critical accounting estimates associated with the valuation of our Americas reporting unit goodwill, our indefinite-lived intangible assets and our definite-lived intangible assets.
New Accounting Pronouncements Not Yet Adopted
See Part I.-Item 1. Financial Statements, Note 2, "New Accounting Pronouncements"for a description of any new accounting pronouncements that have or could have a significant impact on our financial statements.
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