Beer company Molson Coors (NYSE:TAP) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 10.7% year on year to $2.60 billion. It made a non-GAAP profit of $0.95 per share, improving from its profit of $0.54 per share in the same quarter last year.
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Molson Coors (TAP) Q1 CY2024 Highlights:
- Revenue: $2.60 billion vs analyst estimates of $2.50 billion (3.7% beat)
- EPS (non-GAAP): $0.95 vs analyst estimates of $0.75 (27.3% beat)
- Maintained previously-provided full year guidance for a low single-digit net sales increase and a mid single-digit EPS (non-GAAP) increase compared to 2023
- Gross Margin (GAAP): 37.1%, up from 32.8% in the same quarter last year
- Free Cash Flow was -$189.3 million, down from $300.7 million in the previous quarter
- Sales Volumes were up 5.7% year on year
- Market Capitalization: $13.48 billion
Beverages and AlcoholThese companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the explosion of alcoholic craft beer drinks or the steady decline of non-alcoholic sugary sodas. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.
Sales GrowthMolson Coors is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.
As you can see below, the company's annualized revenue growth rate of 8.2% over the last three years was decent for a consumer staples business.
This quarter, Molson Coors reported robust year-on-year revenue growth of 10.7%, and its $2.60 billion in revenue exceeded Wall Street's estimates by 3.7%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.
Volume Growth Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Molson Coors's quarterly sales volumes have, on average, stayed about the same over the last two years. This stability is normal because the quantity demanded for consumer staples products typically doesn't see much volatility.
In Molson Coors's Q1 2024, sales volumes jumped 5.7% year on year. This result was a well-appreciated turnaround from the 0.2% year-on-year decline it posted 12 months ago, showing the company is heading in the right direction.
Key Takeaways from Molson Coors's Q1 Results We enjoyed seeing Molson Coors exceed analysts' revenue, operating margin, and EPS expectations this quarter. That the company maintained its previously-provided full year guidance shows that it is staying on track and that the macro environment in which it operates hasn't changed too drastically since roughly three months ago. Zooming out, we think this was a great quarter that shareholders will appreciate. The stock is up 1.9% after reporting and currently trades at $64.75 per share.
