Molson Coors (TAP) Q4 2025 Earnings Transcript

Image source: The Motley Fool.

DATE

Wednesday, February 18, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Rahul Goyal
• Chief Financial Officer — Tracey I. Joubert

Takeaways

• Free Cash Flow -- Molson Coors Beverage Company (NYSE:TAP) reported delivering over $1.1 billion in free cash flow for 2025 and guided for a similar figure in 2026.
• New cost savings program -- The company announced a three-year cost savings initiative targeting up to $450 million in savings, commencing in 2026 and affecting multiple P&L lines across both business units.
• Share buyback program expansion -- The board approved an increase in share repurchase authorization from $2 billion to $4 billion, extending the program through December 2031 and including $1.4 billion already spent.
• Leverage ratio improvement -- Net debt was reduced to $5.4 billion and the leverage ratio to 2.3x at year-end 2025, down from $11.5 billion and 4.8x post-2016 MillerCoors acquisition.
• Dividend policy -- Management reiterated its intention to sustainably increase cash dividends, continuing a five-year track record of increases.
• Midwest premium and aluminum inflation -- CFO Joubert and CEO Goyal quantified a $125 million COGS headwind in 2026 due to increases in the Midwest premium and aluminum prices, with prior-year impact estimated at $40 million–$45 million.
• Portfolio transformation -- Revenue from Beyond Beer approached 10% for the year, with brands such as Topo Chico Hard and Simply Spiked Peach contributing to this segment.
• Brand share retention -- The company maintained roughly 70% of the share gains made in the U.S. during 2024 for its core brands into 2025.
• Premiumization progress -- Portfolio premiumization increased by approximately five percentage points, with the Blue Moon non-alc brand growing 25% and becoming a leading non-alc craft brand in the U.S.
• Capital expenditure guidance -- Annual CapEx expectations are now set at approximately $650 million, down from previous years’ $750 million, to support cost savings and technology investment.
• M&A strategy -- Management targets deals that add 1%-2% annually to the enterprise, valued at $200 million–$350 million each, and to be funded from operating cash flow.
• Market share focus -- Market share, mix (NSR), and margin improvement were cited as key internal performance metrics for 2026, with specific reference to the full-year contribution from the Fever-Tree brand.
• Local market execution -- Leadership emphasized a structural shift to push P&L accountability and pricing decisions closer to local markets, reorienting teams in both the U.S. and EMEA & APAC.
• Progress on prior buybacks -- 72% of the initial $2 billion share repurchase program was executed within nine quarters.

Need a quote from a Motley Fool analyst? Email pr@fool.com

Risks

• CEO Goyal stated, "2025 saw material industry declines," citing uncertainty and cyclical industry headwinds persisting into 2026.
• Management identified a $125 million incremental headwind to 2026 COGS from Midwest premium and aluminum inflation, noting immediate actions could not fully offset the impact.
• The portfolio remains underrepresented in U.S. premiumization, with Goyal referencing gaps relative to Canada and the UK.
• Industry-wide domestic beer volume declines, particularly acute since 2017, were explicitly acknowledged as an ongoing market challenge by CEO Goyal.

Summary

Management provided quantifiable guidance for 2026 and confirmed over $1.1 billion in free cash flow for both 2025 and the upcoming year. The company detailed a newly announced $450 million cost savings program, a doubling of its share buyback authorization to $4 billion lasting through 2031, and reduced net debt and leverage to levels not seen since the 2016 MillerCoors acquisition. Explicit mention was made of a $125 million COGS headwind from Midwest premium and aluminum price increases for 2026. Leadership emphasized accelerated portfolio moves in premiumization, expansion of the Beyond Beer segment, and renewed focus on local market execution for both pricing and P&L accountability.

• CFO Joubert said, "we have delivered over $1 in free cash flow for every dollar of underlying earnings, and we have amongst the highest free cash flow yield in all of CPG."
• CEO Goyal explained the investment strategy behind local market execution, stating, beer is very, very local, and we need to make sure we are putting the P&L accountability at the level close to the customer.
• Management clarified that CapEx is being rebased to $650 million annually, lowering from prior levels to support both cost savings and technology investment without a "significant step up" in overall spending.

Industry glossary

• Midwest premium: A benchmark surcharge on the price of aluminum in North America, impacting beverage packaging costs.
• NSR: Net Sales Revenue, measuring revenue after discounts and allowances, commonly referenced in beverage industry pricing and mix performance.
• Beyond Beer: Segment comprised of non-traditional, non-beer alcoholic beverages such as hard seltzers, flavored malt beverages, and ready-to-drink cocktails.
• EMEA & APAC: Combined operational region for Europe, Middle East, Africa, and Asia Pacific business segments.

Full Conference Call Transcript

Rahul Goyal: And good afternoon, everybody. Thanks for being here. You know, before I get started, our lawyers said I have to read every single word on this slide. I think they were doing the new guy joke on me, so the only thing I am going to say is our discussions today include forward-looking statements within the meaning of U.S. federal securities law, so please refer to the forward-looking statements disclosure in our presentation materials for more information. So I am excited. I am excited to be here to share an update about our business, I am excited about sharing our new plans and our new strategy going forward.

After 25 years in the company, I get the honor of defining the next chapter for Molson Coors Beverage Company, a company that has a 240-year-old legacy in this country. So those who have followed us and those who are new to our company, we are a top five global brewer. We are in about 80 countries. We have about 16,000 people, with one purpose: to unite people to celebrate all of life’s moments. But more importantly, we are in some of the most exciting and largest profit pools of the world. And we have made progress. We have made progress around our core brands in most of our markets.

We have kept shares that we gained in the United States in 2024. We have kept about 70% of that share that we gained in 2024 with our core brands. We have been on our journey for premiumization and portfolio transformation, and we have increased that about five percentage points. And we are in the early innings of our Beyond Beer beverage strategy, and we are approaching about 10% of our revenue based on Beyond Beer, and a lot more runway in front of us. And we have done that on the back of brands like Topo Chico Hard and Simply Spiked Peach. Along with that, we have strengthened our balance sheet.

Our debt is lower than what we started with, and our leverage ratio is in a much healthier place. And we have been consistent in terms of delivering cash back to our shareholders, whether it is through a consistent increase in our dividend or by executing about 70% of our buyback program in just nine quarters, which was a $2,000,000,000 program over five years. So we know we have delivered shareholder value. But we do know that the next chapter for creating shareholder value is going to be on the back of consistent, scalable, and repeatable top and bottom line growth, and that is what the new plan is.

Well, before I talk about the new plan, I want to address the 2026 guidance. It is no secret that our industry is facing significant headwinds. 2025 saw material industry declines, and that was cyclical deviations from what the historical trends were, and that uncertainty remains for us. So if you go deeper into the bottom line guidance we just shared, there are two factors that are impacting our business right now. One is cost inflation, due to the increases in the Midwest premium and aluminum price. And two is just lapping a one-time incentive from because we did not achieve anything in 2025. Now we are navigating this period of uncertainty and volatility with discipline.

We took immediate action in Q4 on focusing on cost. We are taking the right actions in pricing, making sure our brands by region are being competitive. And, frankly speaking, we are looking at everything around the Midwest premia. Along with that, we want to make sure we are investing in our business, investing in smart ways, getting our business back to growth. And this means investing in our brands, in our capabilities, and in technology. We will navigate this period of volatility being diligent, and taking the hard decisions. But we want to make sure we set our business up right for growth in the future. And so what does all this mean? Right?

So now this is what I will leave you with. We have a strong foundation. We have brands that have scale. We have a historical track record of creating cash generation. We are doing this set in 2026 just to navigate this moment of volatility and uncertainty to get our business back. And I am excited to talk about the next chapter of figuring out how to grow our business, both top and bottom line, going forward in the medium term. So it all starts with our new plan, Horizon 2030. Folks, this is not just a new plan on a page. It is a plan and a blueprint of how we get our business back to growth.

It is about rewiring our business in a world of constant change. It is about taking bold opportunities and reacting on that quickly, and it means spending more time in the market where our consumers are and where our customers operate. That is what is going to get us back to growth. And it starts with our portfolio. So let us talk about our portfolio. Now each segment has a role to play to make sure that we as a business can reach our full potential. But we are making different choices. We are investing differently. We are investing differently, and we are executing differently of our brands in the market.

And across these portfolio pillars, we feel we have the plans to grow share, revenue, and profits for our total business. And I want to take you a little deeper on that. But then look at the second part of our plan. And this is what we are doing to operate differently, and this is what I call rewiring our business differently. We are going to put commercial execution as close as possible to customers and consumers. We are going to modernize our capabilities to make sure we are driving efficiency and value. And then we are going to champion beer and beer occasions. Right? In this industry, where the category is under challenge, we are going to champion beer.

And we are going to evolve our culture to drive ownership amongst our people. Now all of this has to be supported by being disciplined on our cost savings and having a clear, dynamic approach to capital allocation. So we are going to go deeper into all of these key areas. Right? Let us start with our portfolio. This is what we do. This is our bedrock. It spans beer and Beyond Beer to reach consumers where they are. And it is based on the thesis that all segments matter. But within that, we are making clear choices. We have to strengthen our big brands, the core and value segments, while we transform our above premium and Beyond Beer strategy.

So let us talk about the core. And you probably know this. Loyal core beer drinkers represent the vast majority of all beer volume. But what you probably do not know is that this group has the strongest loyalty with premium lights. And we have the brands to compete there. And we have the opportunity to continue to strengthen our brands with this core consumer and gain more share ahead of the category. So how are we going to do this? It does mean investment in our brands and breakthrough marketing. And you probably saw some of this in the NFL and leading up to the Olympics with the Miller Lite campaign. It talks about real-life connections.

It talks about real-life occasions, and with the perfect spokesman, a pistol-for-walk-in, that spans generations. And you can expect us to come forward with more work like that for Coors Light. We are going to continue the journey on Coors Banquet, leaning into that brand as we grow that with volume and share, and with Molson Canadian, where we are gaining both volume and share in Canada. In this subcategory, we are also identifying new opportunities like the low-ABV trend. We are expanding Miller Extra Light, which is about a 2.8% ABV brand, in key markets and regions.

These brands have the scale, they have the trust of millions of our consumers, and they have the right to win with our core consumer and get a share of the category. Now let us talk about the part of the portfolio that we probably have not spoken about in a long time, which is the value segment. We are elevating that because in a K-shaped economy today, the value consumer is feeling the pressure, and they are looking for options within their budget. And, frankly speaking, we have the scale. Just for context, if you just think about our value segment, we are the fifth largest beer company in the country. So this galaxy matters.

This is not about just being defensive. This is about how do we use that and make sure we are leaning in with consumers that are looking for this option. But we are going to increase the focus in value in a very selective way. We are going to have selective investment, in selective markets, and with very pointed innovation. We are going to expand brands like Miller High Life Light across a few more states. We have some new innovation coming with Keystone, Keystone Apple in the summer, which is again very directed to this subsegment. Our value portfolio has a strong reach.

We have deep consumer loyalty, and this is the way to win for us but even for our distributors. Now as we think about value, premiumization is not going anywhere, and we have the opportunity to get some more runway there. If you look at our business, we are pretty strong in premiumization in Canada and in the UK. But in the U.S., we are underrepresented, and therefore we just have a new opportunity to keep leaning into that.

Things like Peroni, and you probably saw that in the Olympics, again leaning into the brand with on-premise brand ambassadors, all the work we already have done in Madrid in the UK, and continue to grow in the UK, but also expand that brand across Europe and Canada. And while Blue Moon Belgian White is still a work in progress, the Blue Moon non-alc brand is growing 25%, and it is now probably the number two non-alc craft brand in the country. Now the other side of premiumization is Beyond Beer. You know, I talked about being in the most exciting profit pools, and this is where the consumer needs are evolving.

And we are going to continue on our total beverage journey to make sure that our brands meet the consumers and meet them in more moments. And we are proud of the progress we have made. And if you think about the Beyond Beer segment, you have first this flavor. And this category has been volatile. And there, we need to be agile. Right? We had some great success initially, but then we have to figure out a way to pivot, and we did with Topo Chico. We pivoted from being a hard seltzer brand now to a full-flavor beverage with higher ABV innovation and different packaging for more occasions. And we have changed the trajectory of this brand.

We have sequential dollars and share trend performance improvement in all quarters of 2025. And with Fever-Tree, we are just getting started. We just finished the transition last year, we are getting it into our network, and we have an excited distributor network. We have an excited retail network, and we have an excited team to get really behind it. There are few brands where you can get the whole trifecta working, and we believe we have the option to do that with Fever-Tree. And in this space, we have the other opportunity of deploying M&A dollars in a very disciplined way to make sure we are augmenting and filling gaps in our portfolio.

And I know Tracey is going to talk a little bit more about that in the future. So, hopefully, it gives you a sense of the clear choices we are making in our portfolio. But let us talk about how we are going to make this happen. And this is where, folks, we are executing a big change within the organization because how we execute, how we make sure we rewire our business, is super important in this business, in this category. And it starts by putting our customer and consumer at the heart of everything we do. You know, folks talk about beer being a global business. You talk about beer being a national business.

But, actually, beer is very, very local, and we need to make sure we are putting the P&L accountability at the level close to the customer. That is where pricing decisions, promotions, assortment, investment, that is where those decisions are being made, and that is what we need to unlock for our teams. We have to unlock clear accountability that drives outcomes. We have to make sure we are taking decisions with precision where we can change tactics, move spend across the actions that are working for our total portfolio in particular markets. And we need to do it with speed, where decisions are done in days, not weeks, not months, and definitely not quarters.

And this is not just an academic principle. This is how we want to make sure our planning process and our execution model changes. We already started that journey in Q4 and going into 2026 with our distributors. You know, the next part of our plan is we talk about capabilities. You know? And I talked about us being in the largest profit pools. But we also have the largest platforms in these profit pools where basically we execute across the entire market. And so we will keep investing in our capabilities, investing in capabilities that drive efficiency and value to the bottom line.

This is in the area of sales and marketing, where we are going to put capabilities in AI and analytics to make sure our sales teams are forward-looking and not looking in the back. And when I talk about AI, this is not about using it in marketing just to create new brands and assets. We are obviously going to do that and drive efficiency, but how do we literally use it to make investment decisions? And then the third element of our capabilities is our investment in our ERP and our technology to augment and automate areas in our supply chain to drive value and to optimize business processes.

And as we think about our internal business, we have to keep a lens externally, and that involves championing beer. You know, we talked about the category declining, etcetera, and one of the things I have talked to our distributor network about is none of us should accept declining categories. You know, that should not be okay. We must find a way to get this category healthy again, and we need to do it together as an industry. This is not about us. You know, we have the humility to realize that one company cannot change it, but we need to lean in to make sure we can build beer’s relevance back.

We need to make sure we can bring people back into the occasions where beer fits. And so we have to lean into this, and we are going to do our part. Right? We are going to do our part in marketing on how we talk about Miller Lite. You saw that. But also a new campaign we had just over the holidays, which was “Just bring the beer.” This campaign is designed to put beer back on the shopping list. It is to put it in the center of social moments, driving category relevance. Right? Again, this is not a new-use idea.

When we think about our sales team, we have about 22% market share in the country and are category captains for 60% of our retailers. So how do we really lead with the category-first focus? And then the fourth pillar is around building a culture of ownership. We have 16,000 people that are passionate about our business, passionate about our brands. But we need to change how we operate in this moment, and that is where I am asking them to lean into two of our key values: being bold and decisive, and taking accountability. This is designed to empower our teams to move with urgency, to move with pace, and drive ownership within the business.

And this matches the complexity we have from an outside-world respect. So hopefully you see that, and then you see how do you know we are going to make progress? Like, what are the key metrics? We should be seeing market share improvements in our key markets. We have to continue the acceleration of our portfolio transformation across all our portfolio. And the investment we are making in our capabilities and cost savings need to show margin improvement. And while we are doing this, we are going to be disciplined about returning cash to shareholders. We are setting 2026 with clarity and transparency, but we are rewiring our business and our operating model for execution.

We are investing in brands and our capabilities, but we are being very deliberate on how we do that. And we are going to fund our growth with discipline. And there are two key elements of the plan that I am going to have Tracey come over and talk about, which is making sure we are disciplined about cost savings and having a clear and dynamic approach to capital allocation. So with that, Tracey,

Tracey I. Joubert: Thank you, Rahul. Hello, everyone. Good to be back here. Look, as Rahul highlighted, we have a compelling strategy. We are really focused on discrete actions that support our medium-term growth algorithm. So I want to give a little bit more color on our financial discipline and the capital allocation priorities that Rahul mentioned, and I will highlight how they support our ability to execute against our strategy. So our ability to drive strategy starts with a strong cash generation. We feel that we have compelling cash conversion, and we continue to be a very cash-generative business.

Now we delivered over $1,100,000,000 in 2025, and, as we announced earlier with our release earlier this evening, we expect to deliver a similar amount in 2026. Now we plan to build on this very strong base through profitable growth and also a new cost savings program. So over the past five years, we have delivered over $1 in free cash flow for every dollar of underlying earnings, and we have amongst the highest free cash flow yield in all of CPG. Our solid cash generation has significantly strengthened our balance sheet. Now moving forward, it should enable us to invest in ways that we believe will drive value for our shareholders.

So let me take you through a few of the details around our new cost savings program, which we believe supports both our medium-term algorithm and also strong cash generation. So to help fuel our strategy, we are announcing a three-year cost savings program targeting up to $450,000,000, with savings beginning in 2026. The program anticipates savings across both our business units, and it will also come through multiple lines in our P&L. Now in cost of goods sold, we have a very strong pipeline of plans and projects. This is enabled by procurement, the investments that we make in capital and productivity and efficiency improvements that are going to get delivered through our world-class supply chain program.

Now in Americas, in G&A, we have already unlocked meaningful savings by implementing our new structure at the end of 2025, and, as you heard from Rahul, we expect to deliver further savings in G&A enabled by technology and new capabilities that we will be investing in. In EMEA & APAC, we have plans that are designed to expand operating margin and also improve profitability in that business unit, and this will be done through implementing new technologies, evaluating supply chain opportunities, and also portfolio optimization. Now these savings are intended to be used to mitigate the impact of inflation and also allow the right levels of investment to fuel our business for growth.

So let us talk about how we are thinking about deploying our capital to execute that strategy. Now our first priority is to invest in our business to drive long-term sustainable growth through capital projects and new capabilities, investing behind our brands, and using our financial flexibility to fund M&A. From a capital standpoint, we are rebasing our medium-term CapEx expectations, and we now expect to spend approximately $650,000,000 a year. Now this level should allow us to continue to invest in margin-enhancing cost savings projects and also make investments in technology to drive efficiencies and increase our capabilities.

And we target double-digit returns on our cost savings program, and we have delivered against that goal over the last few years with programs including our variety packaging capabilities we built in Fort Worth, adding seltzer capability in Canada, and also the domestic production of Peroni in the U.S. And to grow our business, our aim is to look to invest in M&A to drive meaningful portfolio transformation. Now we would target deals that would add around 1% to 2% annually to the enterprise but that are also bottom-line accretive. To contextualize, these could be in the range of about $200,000,000 to $350,000,000 and are expected to be funded from cash from operations.

Now these targets must be scalable, they must fill white spaces, and they also must be in areas where we believe we have the right to win. Second, we remain committed to maintaining a leverage ratio below 2.5x. At the time of the 2016 MillerCoors acquisition, our net debt was $11,500,000,000, and our leverage ratio was 4.8x. By the end of the year in 2025, our net debt was $5,400,000,000, and our leverage ratio was 2.3x, so reducing both by more than half. And we have continued to hold the highest credit rating that we have had since 2016. And that brings me to our third capital allocation priority.

Molson Coors Beverage Company has a long track record of paying cash dividends to shareholders, and it remains our intention to sustainably increase our dividend, just as we have done for the last five years. We also feel that we have made tremendous progress against our $2,000,000,000 share buyback program, which is over five years. We announced that back in October 2024, and, as Rahul said, through just nine months, we have executed 72% of that authorization, tracking to complete the $2,000,000,000 well ahead of schedule. Now given what we view as a compelling valuation for our stock, our Board has approved an increase to the amount and extended the duration of our existing share repurchase program.

So this increases the initial authorization from up to $2,000,000,000 to an aggregate authorization of up to $4,000,000,000, and that is inclusive of the approximately $1,400,000,000 that we have already spent up until 2025, and that plan will now run through December 2031. Now we believe that this should not only help to drive earnings power, but it also demonstrates our confidence in our business, our confidence in our strategy, and our confidence in our medium-term growth algorithm. So with that, we look forward to taking your questions, and we will come back up, and we will ask Greg to maybe just manage the questions for us. We did—I hear there they come. I can repeat the question, Bob?

On gross margins? Certainly aware of Midwest premiums, the inflation, but just how and why is that going to be such a drag on your business in 2026? You know, kind of talk through that on the gross margin level, and then maybe help frame for us with the plan you laid out, the, you know, marketing spend that you are expecting. Yep. So let—

Rahul Goyal: I will take it, Tracey, you can add. So if you look at the Midwest premium and aluminum pricing, right, I mean, I think we shared an estimate last year of what we think the exposure is, and if you look at this year, if that was in the somewhere in the range of $40,000,000 to $45,000,000 range, we have an incremental headwind of about $125,000,000 this year, in 2026. And this is—you know, when Midwest premium goes 300%, there are not immediate actions you can take to action that. Right? Obviously, we took all the actions we could in terms of cost savings, you know, in the Americas.

So the Midwest premium is the biggest part of our COGS inflation. If you look at our 2025 results and look at COGS inflation, you know, we have initiatives and we have the programs to make sure that we are managing through it. We are trying to manage a $125,000,000 increase, so you are going to see that in the way it shows up in gross margin in through the Midwest. One-time incentive comp is just a lapping issue, so that is more of the G&A. And then the marketing and capabilities investment, I would say the simplest way to think about it is we know we can get this business back to our medium-term growth algorithm, right?

The mid-single digit. And we just want to make sure we are building our brands and supporting our brands in a pretty competitive context of the category being what the category is. So I think that is how I would break it down, Bonnie, is the Midwest premium being the big part in COGS, and then the other two pieces are this. Anything else?

Tracey I. Joubert: Yeah. Thank you for—thank you.

Kevin Michael Grundy: Kevin Grundy with Jefferies. Rahul, maybe with the longer-term guidance, I suspect we will probably be surprised about the decision to maintain it, just given the challenges in the alcohol industry, where we have seen domestic beer volumes decline, not just the past two years, three years, five years, I mean, we are going back to 2017, and they have been down low single digits. And, in certain cases, your portfolio has been even more challenged than that, and 2025 is even more dire. So I think, you know, maybe a little bit more on that. Like, what gives you confidence?

You are doing in terms of execution, things are going to get better because the data points just seem to be melting against industry in terms of younger consumers moving away. You know, and it is going to take the industry collectively. But even more than that, it is probably moving into new areas. Lastly, with your answer, because I think it is topical, I have seen a number of food companies from PepsiCo to General Mills, Kraft Heinz invest in price as part of the solution to stimulate volumes in the industry. With volumes challenged, does that come into your thinking at all as part of the solution to stimulate volumes?

Rahul Goyal: Yep. So let me try to address the two or three parts of the question. Right? So first is how do we get our business back to top-line growth? If you look at our share losses even in the recent past or over the last few years, you know, we have done a decent job on making sure core share is there. We have lost a little bit, but not in a big way. Our challenge has been in some of our other parts of our portfolio. Right?

That is why you see us elevating the value segment, because if you look at the majority of our share losses, a big part of our share losses is the value and flavor and some of those pieces. So we need to make sure that our portfolio—and when we talk about strengthening core and the value—it just means making sure we can keep ground on our share. Right? So make sure we are keeping share and gaining share in that space. What the category does, we will see what the category does. But that is about share. Then it does become a question of mix.

Can we transform the portfolio fast enough to make sure that we can handle the potential declines in the core piece? Your question—so the three pieces that we think about as we think about driving our top-line revenue is obviously volume, but it is price and mix. I think those are the two levers that give us confidence that we can get this business back. Your question on pricing, you know, we definitely look at pricing by band and by region, but we also want to make sure we are competitive, and that is why you see us leaning in the value segment. Right?

We have a portfolio which meets the consumer needs at the right price points, at the right budget levels they have. Usually, people do not leave their brands in core. They are usually looking for different price packs. They are looking for different channels. So if you look at what is happening in our business, you have singles doing really well, and you have big packs doing really well. So with our core brands, we need to make sure we are leading in that space. But the value piece is where we need to make sure we can get some support on the volume.

So I think between price, mix, and the transformation on Beyond Beer, that is where we have confidence we can get our business back to low single-digit growth. So I think this is—it is a low base in that regard. And in terms of your pricing decision, it is making sure we can use all levers of our portfolio to really get the volume play. Great. Thank you.

Eric Adam Serotta: Eric Serotta from Morgan Stanley. You mentioned that the cost savings, $450,000,000, would offset inflation and allow for reinvestment. But will you expand upon the reinvestment side a little bit? Can you give us any context for what kind of quantum you are expecting in terms of reinvestment for 2026 and the midterm? Whether it is marketing, technology, other things that capabilities—how to think about that. And then one for Tracey. In terms of the midterm algo, mid-single digit pre-tax and then high single digit on EPS, you know you are going to be spending more or investing more on M&A. That is going to be funded from cash from operations. The cash has to come from somewhere.

Will there be less of a contribution from buybacks than you had historically, or are you leveraging? Thanks.

Rahul Goyal: Thank you. I will let you do the buyback one, Tracey, but let me make sure I address the two questions you have. First is on the cost savings and then the investment profile. Right? So if you look at our cost savings, there are three broad buckets. It is obviously the work we need to do in the Americas, and we took all those hard decisions in Q4. So making sure we can take the actions in optimizing our teams, how we execute, making sure we have the right resources and pressure on the front end of the organization versus internally. On supply chain, we are going to keep looking at opportunities on optimizing and driving savings. Right?

So other than the one-time issues that we have with Midwest premium, our teams do a great job to make sure we match and drive savings for any cost or inflation. And then EMEA & APAC is where the opportunity lies. So that business has done a good job in terms of growth, but we have the opportunity to improve our margins there. So that is where we tried to unpack all the areas of our business to make sure we can lean on the savings side. If you think about our investment, you know, the way I would leave this is we are not looking to step up investment in a significant way.

We want to make sure that our brands are competitive. We want to make sure we are putting the right pressure against our brands across all these segments. You know, when I talk about elevating the value segment, this is not about big investment in the value segment. This is about pointed investment in brands, in particular geographies. We do have investments in our capabilities around systems and infrastructure, and, again, both to drive value and efficiency to the bottom line. So we judge that and carefully make sure we are investing in the right places.

But, you know, we talk about ERP implementation, but all of that investment needs to drive some outcome, and that is what I mean when I talk about efficiency and value. Right? So there is not, I would say, a significant step up in terms of investment that we are looking for. We feel our brands are well supported, and some of it is to manage the challenges we have and the headwinds we have. But that is the cost savings and then making sure we invest it right. And, Tracey, do you want to take the—

Tracey I. Joubert: Yeah. So I think—look—we are really proud of the work that we have done on our balance sheet. You know, going from a leverage ratio of 4.8x to 2.5x, it has given us a lot of optionality. So, you know, we have done things like reducing our medium-term CapEx spend. If you recall, in previous years that was in the range of $750,000,000 plus or minus. We have reduced that to $650,000,000. We also believe that we have opportunities in working capital, and so we will continue to focus on that.

And then as we grow the top line and expand our margins through some of the efficiencies and the capabilities that we are building, that is obviously going to contribute to the bottom line. But we are a very cash-generative business. You know, we have delivered on our free cash flow. And, you know, with our new share repurchase program, it does extend out to 2031, and we will make the right decisions around how much and when to buy shares. But, you know, as you said, we have done a really good job with that. I mean, we are already 72% of the way in our previous share buyback program.

So, you know, it gives us confidence that we are able to, with our strong balance sheet, do all of those things. Number one, invest in the business to drive long-term sustainable growth. We are going to be very disciplined around the investment, for example, the capital. And with that, we are able to sustainably increase the dividend and continue the buyback program.

Robert Edward Ottenstein: Thank you very much. Robert Ottenstein, and I was wondering if you could talk a little bit about the fundamental change that you are making in terms of how the organization is run with the accountability of local pricing decisions, more local. So it is certainly—number one, where did the idea or where did the change come from? And, two, could you talk a little bit about execution of that? How exactly does that get executed? How do you deal with national accounts? How do you keep coordinated and not kind of trip over yourself in certain areas? How local is local? I mean, you know, rough idea—just, you know, how does this get from there?

Rahul Goyal: Yeah. No. I think, Robert, that is a great question. Again, this is something that is important. You know, when I got on the road, we made some changes in our leadership team. It was to drive to this outcome. Right? I mean, I think one of the previous questions is—we know the category is challenged. We know the shape of our portfolio. So we have to figure out a way to execute with the portfolio we have and use the investments we have. Right? I mean, I talk about this all the time. We have to make sure our marketing dollars and our people dollars are going after the right things in the market.

So your question of how we are going to make it work. Right? We took all those actions. We have the leaders of Sales and Marketing and our Canada business around the table now. We are making sure that, you know, we reoriented our regions in the United States. And this is, by the way, applicable even to our EMEA & APAC business. We are making sure that we look at our investments as a collective pool and make sure we are getting the right ROI against that by geography. You know, what is the right level, Robert? I think that is a little bit more—we will share that a little bit later.

But in terms of how the brands show up—your question about how do you coordinate—how the brands show up is obviously going to be in one way. Right? You are not going to have five Coors Light or four Coors Light. You are going to have one Coors Light. You are going to have one Miller Lite. But how those brands are executed in those geographies matters differently. Right? And this is what I say is beer is very local. And it is true, by the way, for brands like Coors Light and Miller Lite, and obviously for the value segment. So the question is how do we rewire our business to really drive that?

So we implemented the changes in Q4. We are in the process of executing it. We reoriented our planning with our distributors. So this is more of our distributor-facing organization. And we, frankly, are leaning into that starting already in January. And this has resulted in different conversations with our distributors on how we bring funds and how they bring funds on early betting in that particular geography. So it is the concept of being local. It is about reorganizing our teams. And then, frankly, we did the hard stuff in Q4 to really put that within our organization. The only other part I would add is we are also changing the incentive plan. Right?

Incentive plans of how we measure our people. When I talk about P&L accountability closest to the market, that does not mean anything if folks are not measured both on the top and the bottom line as close to the market as possible. Alright. Cool. Great.

Christopher Michael Carey: Hey, guys. Chris Carey, Wells Fargo. Just—I guess this serves as an earnings call, so I am going to be a bit tactical about this and then strategic. But, Tracey, is there any phasing considerations that you want to put out there for the guidance this year? Midwest premium—yes. Brand volume—basically, like, whatever that is. And connected to this, some of this is going to have to ultimately get to, like, an exit rate for the business. We are talking about medium-term top-line growth, bottom-line growth, and a way you are going to be measured again. Perhaps that you exit 2026—you know, I do not really know how all that will go. Right?

But at what point do we start, you know, anchoring you for, you know, some of these medium-term objectives that you have laid out today? And what are the metrics that we should be looking at over the course of 2026? Like, improving market share—should we be seeing it turning positive? What do you think that we should be looking at in order to gain, you know, that perspective? So just the phasing thing on this year and then how do we measure you?

Tracey I. Joubert: So let me start. So in terms of phasing, you know, we expect the quarters to look very similar to, you know, this last year. So STW—the shape, you know, quarter by quarter—very similar. You know, we have the same number of days. April sort of fell into the same quarter as last year. There might be a little bit of loading for July, but really very similar. 2025 was different because we had the contract brewing arrangement that was coming out, and so it was a lot more volatile with that. In terms of the Midwest premium, if you look back, the Midwest premium really rapidly went up in the second half of last year.

So, you know, the first half was still a little bit muted, although, you know, from February it did sort of go up. But the big rise was really the second half of the year. So we will be lapping that only in the second half. Other than that, I mean, the pricing—when we take pricing, that is all very similar. The way that we are investing in our brands—generally, we tend to invest dollars more in the summer selling season where it matters. So you will probably see similar phasing around that as well.

Rahul Goyal: Yeah. And, you know, your question about what metrics and how do you see we are making progress. I would call out, you know, market share is obviously a key one. Right? I mean, we know where we are in the category. We know the shape of our portfolio, but we are targeting share improvements. The other thing I would call out in the portfolio transformation journey is mix. Right? We are more and more about NSR. I think the question was—so while, you know, pricing lever—we will lean on that where we can, but mix has to be an important aspect because that is where the portfolio transformation happens.

You know, we are excited about the Fever-Tree business coming into our portfolio full year 2026. I think Fever-Tree is our biggest per-hectoliter brand we have now. Right? So I would say those two are the key ones. And, obviously, the cost savings and our investment all is around margins. Right? So those three, I would say, are the key metrics we are going to keep talking about and making sure we can show progress, along with the buyback. I know the questions about, you know, cash and buyback are fair, but, you know, we are committed to making sure we continue that buyback journey while we are making sure we set and get our business back to growth.

I think Bonnie is giving us a sign. There is one more question.

Operator: We are running out of time, so I think we are going to have to stop there. Please join me in thanking Molson Coors Beverage Company again for the upcoming reception. Outside, down the stairs, they will be around to hopefully answer any more of your questions. And as a reminder, please do not forget to take all of your belongings because this room will be locked. Thank you.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.