Course analysis project

Molson Coors Brewing Corporation

Business Analysis and Valuation

FIN700 – Fall 2019

Dr Mikhail Pevzner

University of Baltimore

Merrick School of Business

Table of Contents

1

Executive Summary……………………………………………………………………………….1

Business Analysis…………………………………………………………………………………2

Background………………………………………………………………………………………..2

Competitors………………………………………………………………………………..3

Opportunities and Challenges……………………………………………………………..4

Accounting Analysis………………………………………………………………………………6

Ratio Analysis……………………………………………………………………………………..8

Forecasting and Valuation……………………………………………………………………….12

Conclusion……………………………………………………………………………………….14

References………………………………………………………………………………………..16

Appendix……….………………………………………………………………………………...18

Executive Summary

Molson Coors Brewing Company (MCBC) is a publicly traded international brewing

organization which specializes in domestic lagers and light beers. The present analysis begins

with a background on MCBC, then looks at future potential for profitability and growth. An

accounting analysis, ratio analysis, and forecast is conducted to determine a present-day

valuation based on the business analysis. The analysis concludes that MCBC is making

corrective moves to position itself for success in a changing marketplace, however these moves

may only be realizable in the medium to long run and in the short run MCBC is likely to

continue to face slower than average growth compared to US economy as a whole.

Introduction

2

Molson Coors Brewing Company (NYSE: TAP; MCBC hereafter) is a multinational

brewing company which operates primarily in the United States and Canada selling beers, lagers,

spirits, and energy drinks. While the company was incorporated in the United States, it is traded

on exchanges in both the United States and Canada. MCBC is the fifth largest brewer in the

world by volume (Technavio, 2018).

Background

MCBC is the product of a 2005 merger with two brewing giants, Molson of Canada and

Coors of the US. Molson Brewery was formed in 1786 in Montreal by the Molson family –

Molson is the oldest brewery in North America. During the 20th century, Molson expanded

considerably after becoming a publicly traded company and moving into dispersed areas of

Canada subsequently growing to be the largest brewer in Canada. Molson’s flagship product is

its Molson Canadian lager which contains 5% alcohol by volume and was released in 1959. In

2011 Molson entered into a $375 million partnership with the National Hockey League for

guaranteed advertisement rights and special promotions. Today Molson continues to brew from

its first brewery located on the Saint Lawrence River in Montreal.

Coors Brewing Company was established in Golden Colorado in 1873 by a pair or

German immigrants, Adolph Coors and Jacob Schueler. For much Coors’ early years, they

marketed and sold their product solely in the American West giving them a mystique in states

which did not have established distribution networks. Later in the 1970s Coors sold their product

nationally. Coors is responsible for many notable innovations in the production of beer such as in

1959 when they became the first American brewer to use an all-aluminum design on their cans,

and to this today Coors operates the largest aluminum can producing plant in the world known as

the Rocky Mountain Metal Container in Golden, CO.

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MCBC currently has sales in four primary segments: the US, Europe, Canada, and

International in respective order of sales volume. Sales in 2018 for MCBC were $10.77 billion,

down 2.12% from the previous year (more on this in the financial statement analysis): most of

the revenue being derived from the sale of alcoholic beverages. In addition to alcoholic

beverages, MCBC also sells a variety of non-alcoholic beverages and energy drinks. Recently, as

cannabis has become legalized in Canada and in many states in the US, THC/CBD (the active

alkaloids found in cannabis) infused beverages have become a hot topic for many beverage

producers (MarketWatch, 2019). In the fall of 2019, MCBC announced that it is working through

a joint venture with Truss Beverage Co. to produce and market a CBD infused beverage product

for sale in Canada. The portfolio of products is expected to contain various flavors and dosages,

some containing only CBD (non-psychoactive) and some containing both CBD and THC (the

psychoactive compound in cannabis).

Competitors

As a multinational corporation, MCBC has unique competitors in each of its markets

across North America, Europe, and the rest of the world. In North America where most of their

revenue is derived, their primary competitors are alternative domestic lager producers Anheuser-

Busch Inc (NYSE: BUD), Constellation Brands, Inc. (NYSE: STZB), and Boston Beer Co Inc

(NYSE: SAM). Anheuser-Busch, with a market cap of over $150 billion, is the largest of these

competitors (MCBC has a market cap of just over $10 billion).

Because of the commoditization of domestic beer, product differentiation is difficult for

the flagship brands such as MCBC’s Coors Light, Miller Lite, or Anheuser-Busch’s Budweiser

or Bud Light. To differentiate, MCBC has many brands that appeal to a smaller, more niche

market such as their popular Belgium-style wheat ale called Blue Moon. This strategy is not

4

unique to MCBC in any way however, as Anheuser-Busch owns dozens of similar niche beers

such as Michelob Ultra, Stella Artois, and Landshark, to name but a few.

In recently years, MCBC has seen decreased sales in the US driven down primarily by

lower demand for their Premium Light segment (Doering, 2018). Much of this demand reduction

was attributed from American consumers favoring Mexican imports, higher quality craft beers,

and wine/spirits over the Premium Light. This lower demand for premium light beers was not

isolated in its impact to MCBC – rather this was an industry-wide phenomenon that impacted

many of MCBC’s competitors who also sold in this segment.

Opportunities and Challenges

As a major participant in a mostly mature market, growth for MCBC is limited. In

addition, according to some sources many Americans are making efforts to curb their alcohol

consumption. According to survey conducted by Nielsen, 66% of millennials say they are

making efforts to reduce their alcohol consumption for health, for weight loss, and for the cost

(Nielsen, 2019). To replace alcohol consumption, many consumers are moving to non-alcoholic

alternatives such as Kombucha, energy drinks, sparkling water, and value-added water. The

market for Kombucha for example has increased by approximately 20% year/year according to

Nielsen Retail Measurement (Nielsen, 2019).

These shifts in consumer behavior patterns have been showing up in MCBC’s financial

statements over the past couple years with total revenue dropping by 2.12% from 2017-2018.

The impact of this consumer shift is not isolated to MCBC – Anheuser-Busch Inc’s revenue also

dropped by 3.23% over the same period. If consumers are moving away from alcoholic

beverages in favor of non-alcoholic beverages and shifting to craft beers for the remaining

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alcohol demand, producers of domestic lager beers such as MCBC and Anheuser-Busch may

find difficulty in realizing revenue growth for these products.

The challenges faced by MCBC also produce their share of opportunities. To address this

shifting landscape, MCBC announced in October 2019 a “revitalization plan” that will mobilize

the company to take advantage of the growing market in non-alcoholic beverages (Furnari,

2019). Among these mobilization efforts, the company included a name change from ‘brewing’

to ‘beverage’ underscoring their interest in pursuing the non-alcoholic market. Shortly

afterwards, MCBC announced that it will be acquiring a minority interest in L.A. Libations, a

California based incubator that produces emerging non-alcoholic beverages. This equity

investment creates many opportunities for MCBC since this gives them an immediate stake in

the growing non-alcoholic market as well as access to new distribution, marketing, and branding

networks. By partnering with L.A. Libations, MCBC also has access to some of the innovative

minds in the non-alcoholic space, such as their CEO, Danny Stepper. Stepper previously worked

with Coca-Cola and has a strong track record of success in the non-alcoholic market. According

to the president of emerging growth of MCBC Pete Marino, this partnership with Stepper was

one of the driving factors behind the acquisition. By building strategic partnerships with

established success stories in the non-alcoholic space, MCBC positions itself to potentially

mitigate the impacts to the falling demand of the domestic lagers and to potentially outperform

its peers in the mid to long-term if continued growth is realized in the non-alcoholic segment.

In addition to opportunities in the non-alcoholic segment, opportunities also exist for

MCBC as federal cannabis legalization becomes more likely in the US (Furnari, 2019). To

address this growing opportunity, in 2018 MCBC announced that it would be partnering with

The Hydropothecary Corporation (NYSE: HEXO) in a joint venture to develop cannabis infused

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beverages. This type of partnership is not unique to MCBC however – in 2017 Constellation

Brands (NYSE: STZ) announced a partnership with Canopy Growth Corp, another large

cannabis player. By partnering with HEXO, MCBC helps to position itself to benefit from the

growing demand for cannabis infused beverages in Canada and in certain states such as

California where recreational cannabis use has been legalized.

By shifting its focus to other non-alcoholic segments and through strategic partnerships

such as those with L.A. Libations and HEXO, MCBC can help to offset some of the lost revenue

from lower domestic beer sales. The shift undertaken by MCBC may take time to be realized

however, and in the short-run revenue may continue to decline if lower demand for alcoholic

beverages continues. As Americans become more health-conscious, volumes previously seen by

beer sales may not realizable in the future – particularly when combined with the growing

preference for craft and microbrews. As the culture of microbreweries grows in many major

cities (Wood, 2019), this may continue to put downward pressure on the sales of domestic

brewers.

Accounting Analysis

When considering a company’s financial performance, it is important to consider the

accounting practices surrounding the reports since this provides the context for the numbers.

MCBC’s reporting is based on the key geographic regions in which they operate – these

segments are, in order of sales: United States, Canada, Europe, and International. Figure 2

illustrates sales by operating unit. The Corporate operating unit is not like the others and

primarily includes interest and SG&A expenses.

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In 2018, MCBC notes in their annual filing that they adopted a new way of accounting

for pensions and other postretirement benefit plans pursuant unto FASB’s August 2018

guidance. The new guidance is to take effect after Dec 2020, however early adoption is

permitted. MCBC decided to adopt this new guidance in the fourth quarter of 2018. This new

guidance requires the service cost component to be split out from the other compensation costs.

The service cost only can then be capitalized where applicable. This guidance adoption was a

classification adjustment for MCBC and did not impact the consolidated net income.

In addition, MCBC adopted the May 2014 FASB revenue recognition guidance in

January 1 of 2018. This new revenue recognition guidance pertained to how to recognize

revenue for customer contracts. This change resulted in reclassification of certain cash payments

to customers from SG&A leading to a small reduction in revenue: the impacts of this

reclassification can be viewed in Figure 3.

Inventories for MCBC are recorded at the lower of cost or net realizable value. To

determine the cost MCBC uses first-in first-out (FIFO). This method of valuing inventory is

standard in the brewing industry: for example, both Anheuser-Busch Inc and Constellation

Brands also use this method for valuing inventories. MCBC regularly assesses the shelf-life of

their inventory to reserve product when it becomes clear the product will not be sold in

compliance with MCBC’s freshness specifications.

MCBC tests goodwill for impairment at least annually, on an operating unit basis. For

example, impairment tests are made separately for operations in the US, Canada, and Europe.

This method of testing is similar to other industry participants; however, differences do exist. For

example, Anheuser-Busch Inc also tests goodwill for impairment annually, however they

8

conduct this test on the cash-generating unit level rather than at the operating segment – the cash-

generating unit is one level below the operating segment.

Considering the accounting methods used, it seems unlikely that a greater than average

risk exists for accounting fraud. The accounting methods, including recognition of revenue and

inventory valuation, are similar if not the same to those same methods used by similar

companies. In addition, from the outside looking in the environment does not seem to include

greater than normal incentives to commit accounting fraud since managerial growth expectations

appear tempered considering the shifting landscape and the need for adaptation, namely the

adaptation of a larger non-alcoholic product portfolio.

Ratio Analysis

The comparables (comps) used for the analysis of financial ratios were selected based on

product similarity, geographic operations, and availability of financial data. To compare, three

alcoholic beverage producers, all active traded on the NYSE, were selected: Anheuser-Busch Inc

(BUD), Constellation Brands, Inc. (STZ), and Diageo plc (DEO). Among these comps, BUD is

most similar to MCBC with on their portfolio of domestic and craft beers. STZ is second most

alike with a mixed portfolio of domestic brands like Corona and Modelo along with a broad

offering of spirits and liquors. Lastly, DEO is the least similar to MCBC since their product

portfolio consists of mostly spirits and liquors with only one notable beer brand: Guinness.

Operating profit margin for the group of companies varied greatly for each of the

observed years. Table 1 shows the spread between the MCBC (ticker: TAP) and the three comps

for years 2018-2015. In Year Ending 2016 MCBC had an abnormal operating profit margin as a

result of their large debt-financed acquisition of MillerCoors – this larger than normal operating

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profit margin did not continue in the following years and is not expected moving forward.

MCBC’s operating profit margin faired well against close competitor BUD, however both

companies’ margins were much lower than the liquor-based sales of STZ and DEO. This trend

would imply that while consumers may be moving away from particular beers, they may still be

maintaining full demand for mixed drinks. Another explanation for this is geography – most of

the business done by MCBC and BUD are in the US, whereas DEO is based in the UK and does

business all throughout the world. This explanation is also limited however as STZ is a US based

company and had very high operating profit margins.

Table 1 – Operating Profit Margin

Return on Assets (ROA) is discussed herein rather than Return on Equity (ROE) since a

company’s capital structure can greatly impact the interpretation of any ROE computation. ROA

was computed by dividing Net Income by total assets. Once again MCBC and BUD had much

lower ROAs when compared to the more liquor-heavy portfolios of STZ and DEO. Comparing

MCBC to BUD however we see that they both have similar ROAs with MCBC being slightly

higher overall. MCBC had a good year for ROA in 2016, and this once again can be largely

attributed to the performance from the MillerCoors acquisition. Moving forward, it is unlikely

any major deviations from historical ROAs will be realized in the short-term.

Table 2 – ROA

Ticker YE 2018 YE 2017 YE 2016 YE 2015

TAP 10.37% 12.85% 40.45% 10.08%

BUD 8.00% 14.16% 2.72% 18.97%

STZ 42.33% 30.57% 20.94% 16.11%

DEO 24.56% 24.85% 22.09% 21.40%

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An Asset Turnover ratio was computed by taking total revenue divided by average assets

during the year. Because an average of beginning and ending assets was used, there are three

computations for each company rather than two – Table 3 illustrates these computations.

Compared to BUD, MCBC had significantly higher asset turnover for the years in consideration.

Considering MCBC is a fraction of the size of BUD, this could explain some of this differential.

Additionally, MCBC had a lower ratio of PP&E to total assets (15% for MCBC compared to

20% for BUD). Asset turnover for STZ was similar to MCBC, and the asset turnover for DEO

was consistently higher: these results suggest that asset turnover for MCBC is steady and is

showing no evidence for a slowdown or concern.

Table 3 – Asset Turnover Ratio

To examine liquidity and short-term solvency, a current ratio was computed for MCBC

and each of the comps (Table 4). Both MCBC and BUD had current ratios of below 1 in the two

most recent years highlighting the difficulties seen by both these companies. A ratio of less than

1 indicates the company has more debt becoming collectable in the next 12 months than it has

short term reserves to pay those debts. Often this indicates financial and solvency troubles in the

YE 2018 YE 2017 YE 2016 YE 2015

TAP 3.71% 4.68% 6.73% 2.93%

BUD 1.88% 3.25% 0.48% 6.14%

STZ 11.75% 11.29% 8.25% 6.22%

DEO 10.10% 10.17% 9.23% 7.88%

YE 2018 YE 2017 YE 2016

TAP 0.36 0.37 0.23

BUD 0.23 0.22 0.23

STZ 0.33 0.39 0.41

DEO 0.42 0.42 0.42

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future. On the other hand, if MCBC can demonstrate opportunities for increased profitability in

the future they may be able to use these projected cash flows to borrow additional funds to be

prevent default.

Table 4 – Current Ratio

To look at the leverage utilized by each company, a debt-to-equity ratio was computed

(Figure 5). Despite MCBC and BUD’s similarities, it appears by looking at the D/E ratios that

the two companies differ greatly in their use of debt. In the most recent filing year, MCBC had

about half the outstanding debt compared to the same year for BUD – and this observation is

made after 2016 where MCBC more than doubled their use of leverage in the acquisition of

MillerCoors. MCBC also had lower debt levels relative to equity than both STZ and DEO. This

difference implies that MCBC may be positioned more defensively than the other comps and

may be more capable of withstanding the shaping landscape in the alcoholic beverage industry

than its competitors.

Table 5 – Debt-to-Equity Ratio

YE 2018 YE 2017 YE 2016 YE 2015

TAP 0.64 0.64 0.69 1.03

BUD 0.53 0.66 1.07 0.64

STZ 1.16 1.79 1.20 1.31

DEO 1.34 1.37 1.30 1.43

YE 2018 YE 2017 YE 2016 YE 2015

TAP 1.21 1.27 1.55 0.74

BUD 2.48 2.29 2.48 2.11

STZ 1.31 1.55 1.70 1.57

DEO 2.53 1.81 1.63 2.15

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Financial Forecast and Valuation

In forecasting MCBC’s revenues, the clear slowdown in the beer brewing industry needs

to be taken into consideration. After the 2016 acquisition of MillerCoors, MCBC’s total assets

jumped by 139% in the same year, however in 2017 and 2018 total assets grew at only 3.09%

and -.45% respectively, indicative of slowed growth. This trend is not unique to MCBC – BUD’s

total assets also shrank by -5% and -6% in 2017 and 2018 respectively. Additionally, revenue for

MCBC shrank by -2.12% in 2018 following the explosive growth of 125% in 2017 because of

the MillerCoors acquisition. With this backdrop in mind, a modest growth rate will be assumed

for the forecasting of revenues.

To determine the growth in revenues, historical revenue growth for MCBC was

considered together with historical growth rates in the Alcoholic Beverage Industry. Using

MCBC’s historical revenues is tricky, since in 2017 they grew by 125% due to a one-time

acquisition. The most recent year, revenues shrunk by 2.12%. Considering MCBC’s moves to

enter the non-alcoholic markets in addition to its entry into the cannabis infused beverage

markets, MCBC’s revenue will be assumed to grow at or above the annual growth rate for the

alcoholic beverage industry at large. According to Allied Market Research, the expected

compound annual growth rate for 2018-2025 for the alcoholic beverage industry is 2.0% (Allied

Market Research, 2019). To remain on the conservative side, this 2.0% growth rate will be used

to forecast revenues for MCBC.

To arrive at forecasts for expenses and balance sheet data, an average of historical ratios

was computed for MCBC. For example, the average SG&A/Revenues from 2015-2018 was .29,

so this number was held consistent and used to forecast SG&A expenses. Additionally, the

average ratio of AR/Sales was used to predict collections and year-end AR balances for the

13

forecast. This process was repeated to estimate the following: inventory, AR balance, AP

balance, capital expenditures, interest expense, and dividends. The product of this forecast is

shown in Table 6.

Table 6 – Forecasted Income Statement

Based on the assumed revenue growth rate of 2%, the Year 1 net income decreased from

$1,116,500 to $753,949 thousand, a drop of 32% from 2018 Net Income. This drop comes from

increased costs in COGS, SG&A, and interest expense. Considering the challenging environment

in the alcoholic beverage industry, this forecast is in line with the business analysis.

To determine a valuation for MCBC, a price-to-earnings multiple was used. Historically,

MCBC’s P/E ratio has been volatile with a minimum of 7.29 a maximum of 83.76, and a mean

of 19.74 in the past ten years (Wolfram Alpha, 2019). To determine the correct PE to use for

MCBC, an average was taken between the 10 year average PE of MCBC and the current industry

average PE ratio for the Beverages & Brewers industry as a whole in the US – according to

GuruFocus, the industry average PE for Beverages & Brewers is 17.44 (GuruFocus, 2019).

Combining these two numbers yields a composite estimate PE of 18.59. To estimate the

valuation, this PE estimate is multiplied against the Year 1 Net Income: this yields an estimated

valuation for Molson Coors of $14,015,916 thousand, or $14 billion dollars. This valuation is

higher than Molson Coors current market capitalization of $10.93 billion.

Molson Coors Brewing Company *$ in thousands

Income Statement (forecasted) Year 1 Year 2 Year 3 Year 4

Revenues 10,984,992.00$ 11,204,691.84$ 11,428,785.68$ 11,657,361.39$

Cost of Goods Sold 6,580,010.21$ 6,711,610.41$ 6,845,842.62$ 6,982,759.47$

Other Operating Expenses 3,185,647.68$ 3,249,360.63$ 3,314,347.85$ 3,380,634.80$

EBIT 1,219,334.11$ 1,243,720.79$ 1,268,595.21$ 1,293,967.11$

Net Interest Expense (Income) 264,967.99$ 271,372.41$ 277,967.63$ 284,759.35$

Income Before Taxes 954,366.12$ 972,348.38$ 990,627.58$ 1,009,207.77$

Tax Expense 200,416.89$ 204,193.16$ 208,031.79$ 211,933.63$

Net Income 753,949.24$ 768,155.22$ 782,595.78$ 797,274.14$

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Table 7 – Forecasted Balance Sheet

Conclusion

Based on the business analysis conducted herein, MCBC has many strengths to leverage

for increased profitability in the future but also has environmental challenges it must overcome

pertaining to the demand for domestic beers. In the past 3 years, the domestic beer industry has

seen a challenging climate where many Americans are choosing healthier alternatives to beer

such as flavored waters, kombucha, and sparkling waters. To turn these challenges into an

opportunity, MCBC has made moves to partner with firms that can help to give them a

competitive edge in this new environment. Working with companies such as L.A. Libations to

meet the demand of flavored waters, and companies such as The Hydropothecary Corporation to

pioneer the budding cannabis infused beverage industry in Canada, MCBC is on track to profit

from these changing consumer demands. These changes will take time however, and it is

difficult to accurately forecast the potential value of these new ventures, particularly when

politics and legislation play an essential role, such as the case for cannabis infused beverage

products. Overall, MCBC has demonstrated its commitment to driving innovation and its ability

to mobilize and have the flexibility to tackle a changing marketplace. These skills together will

undoubtedly lead to a bright future for MCBC, even if it takes several years to be realized.

Molson Coors Brewing Company

Balance Sheet (Forecasted) Year 0 (actuals) Year 1 Year 2 Year 3 Year 4

Cash 1,438,500.00$ 1,369,629.90$ 1,236,784.75$ 1,102,527.92$ 966,844.75$

Accounts Receivables 736,000.00$ 549,249.60$ 560,234.59$ 571,439.28$ 582,868.07$

Inventories 591,800.00$ 556,713.87$ 567,848.15$ 579,205.11$ 590,789.21$

Long-term assets 27,343,500.00$ 28,077,407.32$ 28,825,992.78$ 29,589,549.95$ 30,368,378.26$

Total Assets 30,109,800.00$ 30,553,000.69$ 31,190,860.26$ 31,842,722.26$ 32,508,880.30$

Accounts Payable 1,616,800.00$ 1,464,573.19$ 1,493,864.65$ 1,523,741.95$ 1,554,216.79$

Long-term debt 8,893,800.00$ 9,108,767.99$ 9,330,140.40$ 9,558,108.04$ 9,792,867.38$

Common Stock 11,906,300.00$ 11,906,300.00$ 11,906,300.00$ 11,906,300.00$ 11,906,300.00$

Retained Earnings 7,692,900.00$ 8,073,359.51$ 8,460,555.21$ 8,854,572.28$ 9,255,496.13$

Total liabilities and equity 30,109,800.00$ 30,553,000.69$ 31,190,860.26$ 31,842,722.26$ 32,508,880.30$

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References

Allied Market Research, 2019. Alcoholic Beverages Market by Type and Distribution Channel:

Global Opportunity Analysis and Industry Forecast, 2018 – 2025. Accessed in 2019 at

https://www.alliedmarketresearch.com/alcoholic-beverages-market

CSIMarket, 2019. Alcoholic Beverages Industry Revenue Growth Rates. Accessed in 2019 from

https://csimarket.com/Industry/industry_growth_rates.php?ind=501&hist=8.

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Doering, 2018. Molson Coors plans to 'aggressively address' flat North American sales.

Accessed in 2019 at https://www.fooddive.com/news/molson-coors-plans-to-

aggressively-address-flat-north-american-sales/529103/.

Furnari, 2019. Molson Coors Sees Future Growth Opportunities In Non-Alcoholic Beverages.

Accessed in 2019 at https://www.forbes.com/sites/chrisfurnari/2019/11/27/molson-coors-

sees-future-growth-opportunities-in-non-alcoholic-beverages/#6986befb64ac.

Furnari, 2019. Cannabis Decriminalization Bill Passes Historic House Judiciary Committee

Vote. Accessed in 2019 at https://thcnet.com/news/house-judiciary-committee-cannabis-

decriminalization-bill-more-act.

GuruFocus, 2019. Overview of Market Industries: Valuation and Profitability Accessed in 2019

at https://www.gurufocus.com/industry_overview.php?industry=Beverages-_-Alcoholic

MarketWatch, 2019. CBD-Infused Beverages Market Insights, Forecast to 2019 Analysis by

Application, Size, Production, Market Share, Consumption, Trends and Forecast 2025.

Accessed in 2019 at https://www.marketwatch.com/press-release/cbd-infused-beverages-

market-insights-forecast-to-2019-analysis-by-application-size-production-market-share-

consumption-trends-and-forecast-2025-2019-11-21?mod=mw_quote_news.

Milburn, T., & Guertin-Martín, F. A. (2019). Tapping into Environmental Harm in Brewing: An

Exploration of Pollution and Waste in Beer Production. Critical Criminology, 1-17.

Nielsen, 2019. Many Americans Are Looking For A Bar Experience Without The Buzz.

Accessed in 2019 at https://www.nielsen.com/us/en/insights/article/2019/many-

americans-are-looking-for-a-bar-experience-without-the-buzz/.

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Technavio, 2018. Top 10 Largest Beer Companies and Their Beer Brands in the Global Beer

Market 2019. Accessed in 2019 at https://blog.technavio.com/blog/top-companies-global-

beer-market.

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https://en.wikipedia.org/wiki/Coors_Brewing_Company.

Wolfram Alpha, 2019. Molson Coors PE Ratio. Accessed in 2019 at

https://www.wolframalpha.com/input/?i=TAP+p%2Fe

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Consumer Preference for Low Alcohol by Volume (ABV) Beer -

ResearchAndMarkets.com Accessed in 2019 at

https://www.businesswire.com/news/home/20190815005550/en/Global-Craft-Beer-

Market-Analysis-Forecasts-2017-2019

Appendix

Figure 1 – 5-Year Stock Return Comparison with S&P 500 and Peer Group

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*Peer Group consists of a market-cap-weighted index of the following companies: MCBC, ABI,

Carlsberg, Heineken, and Asahi.

Figure 2 – Sales by Operating Unit

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Figure 3 – Impacts from Revenue Recognition Modifications.

Figure 4 – Consolidated Balance Sheet info for MCBC and Comparables

20

Figure 5 – Consolidated Income Statement for MCBC and Comparables

Balance Sheet

TAP 12/31/2018 12/31/2017 12/31/2016 12/31/2015

Cash And Cash Equivalents 1,057,900 418,600 560,900 430,900

Net Receivables 736,000 728,300 654,400 407,900

Total Current Assets 2,766,300 2,189,700 2,169,600 1,258,800

Total Assets 30,109,800 30,246,900 29,341,500 12,276,300

Accounts Payable 1,616,800 1,568,600 1,297,600 1,184,400

Total Current Liabilities 4,300,900 3,399,300 3,157,500 1,217,200

Total Liabilities 16,374,000 16,811,900 17,719,800 5,213,200

Total stockholders' equity 13,507,400 13,226,100 11,418,700 7,043,000

Total liabilities and stockholders' equity 30,109,800 30,246,900 29,341,500 12,276,300

BUD 12/31/2018 12/31/2017 12/31/2016 12/31/2015

Cash 7,074,000 10,472,000 8,579,000 6,923,000

Net Receivables 4,412,000 4,752,000 4,562,000 3,241,000

Total Current Assets 18,281,000 23,960,000 43,061,000 18,294,000

Total Assets 232,103,000 246,126,000 258,381,000 134,635,000

Accounts Payable 15,512,000 15,240,000 14,071,000 11,616,000

Total Current Liabilities 34,459,000 36,211,000 40,116,000 28,456,000

Total Liabilities 160,199,000 165,906,000 176,956,000 88,916,000

Total Equity 64,486,000 72,585,000 71,339,000 42,137,000

Total liabilities and equity 232,103,000 246,126,000 258,381,000 134,635,000

STZ 12/31/2018 12/31/2017 12/31/2016 12/31/2015

Total Cash 93,600 90,300 177,400 83,100

Net Receivables 846,900 776,200 737,000 732,500

Current Assets 3,684,000 3,474,000 3,230,000 2,977,600

Total Assets 29,231,500 20,538,700 18,602,400 16,965,000

Accounts Payable 616,700 592,200 559,800 429,300

Total Current Liabilities 3,163,800 1,944,700 2,697,600 2,272,300

Total Liabilities 16,394,300 12,476,000 11,717,600 10,273,200

Total Equity 12,551,000 8,046,100 6,891,200 6,559,600

Total liabilities and equity 29,231,500 20,538,700 18,602,400 16,965,000

DEO 12/31/2018 12/31/2017 12/31/2016 12/31/2015

Total Cash 1,056,000 899,000 1,272,000 1,237,000

Net Receivables 2,173,000 2,152,000 2,130,000 2,154,000

Current Assets 9,373,000 8,691,000 8,652,000 8,852,000

Total Assets 31,296,000 29,715,000 28,848,000 28,491,000

Accounts Payable 1,694,000 1,514,000 1,365,000 916,000

Total Current Liabilities 7,003,000 6,360,000 6,660,000 6,187,000

Total Liabilities 21,140,000 18,002,000 16,820,000 18,311,000

Total Equity 8,361,000 9,948,000 10,313,000 8,530,000

Total liabilities and equity 31,296,000 29,715,000 28,848,000 28,491,000

21

Income Statement

TAP 12/31/2018 12/31/2017 12/31/2016 12/31/2015

Total Revenue 10,769,600 11,002,800 4,885,000 3,567,500

Cost of Revenue 6,584,800 6,217,200 3,003,100 2,163,500

Gross Profit 4,184,800 4,785,600 1,881,900 1,404,000

Selling General and Administrative 2,802,700 3,032,400 1,597,300 1,051,800

EBIT 1,382,100 1,753,200 284,600 352,200

Interest Expense 306,200 349,300 271,600 120,300

Total Other Income/Expenses Net 275,900 -28,200 3,058,500 170,500

Income Before Tax 1,359,800 1,381,700 3,035,300 410,700

Income Tax Expense 225,200 -53,200 1,050,700 51,800

Income from Continuing Operations 1,134,600 1,434,900 1,984,600 358,900

Net Income 1,116,500 1,414,200 1,975,900 359,500

BUD 12/31/2018 12/31/2017 12/31/2016 12/31/2015

Total Revenue 54,619,000 56,444,000 45,517,000 43,604,000

Cost of Revenue 20,359,000 21,386,000 17,803,000 17,137,000

Gross Profit 34,260,000 35,058,000 27,714,000 26,467,000

Selling General and Administrative 17,118,000 18,099,000 15,171,000 13,732,000

EBIT 17,402,000 17,591,000 13,168,000 13,686,000

Interest Expense 4,393,000 4,193,000 1,923,000

Total Other Income/Expenses Net -2,828,000 -1,670,000 -1,807,000 617,000

Income Before Tax 8,532,000 11,074,000 4,333,000 12,460,000

Income Tax Expense 2,839,000 1,920,000 1,613,000 2,594,000

Income from Continuing Operations 5,693,000 9,154,000 2,720,000 9,866,000

Net Income 4,370,000 7,995,000 1,240,000 8,272,000

STZ 2/28/2019 2/28/2018 2/28/2017 2/29/2016

Total Revenue 8,116,000 7,585,000 7,331,500 6,548,400

Cost of Revenue 4,035,700 3,767,800 3,802,100 3,606,100

Gross Profit 4,080,300 3,817,200 3,529,400 2,942,300

Selling General and Administrative 1,668,100 1,532,700 1,392,400 1,177,200

EBIT 2,412,200 2,284,500 2,137,000 1,765,100

Interest Expense 367,100 332,000 333,300 313,900

Total Other Income/Expenses Net 2,099,900 390,200 289,700 50,000

Income Before Tax 4,145,000 2,342,700 2,093,400 1,501,200

Income Tax Expense 685,900 11,900 554,200 440,600

Income from Continuing Operations 3,459,100 2,330,800 1,539,200 1,060,600

Net Income 3,435,900 2,318,900 1,535,100 1,054,900

DEO 6/29/2019 6/29/2018 6/29/2017 6/29/2016

Total Revenue 12,867,000 12,163,000 12,050,000 10,485,000

Cost of Revenue 4,866,000 4,634,000 4,680,000 4,251,000

Gross Profit 8,001,000 7,529,000 7,370,000 6,234,000

Selling General and Administrative 2,042,000 1,882,000 1,798,000 1,562,000

Total Operating Expenses 3,959,000 3,838,000 3,811,000 3,485,000

EBIT 4,042,000 3,691,000 3,559,000 2,749,000

Interest Expense 489,000 395,000 451,000 459,000

Total Other Income/Expenses Net - - 294,000 326,000

Income Before Tax 4,235,000 3,740,000 3,559,000 2,858,000

Income Tax Expense 898,000 596,000 732,000 496,000

Income from Continuing Operations 3,337,000 3,144,000 2,827,000 2,362,000

Net Income 3,160,000 3,022,000 2,662,000 2,244,000