Tax Incentives 500 Peer Response
Tax Incentives 500 Peer Response
please respond to the two peers listed below:
Listen to (or read the transcript of) your organization’s or any publicly traded company’s most recent quarterly earnings call and respond to the following questions:
TIP: To find an earnings call or transcript, go to the “Investor Relations” section of the company’s website. There you will find links to financial reports and recordings of recent calls.
- Identify the company you selected.
- Have you ever listened to an earnings call?
- What topics were included? Which were most helpful or insightful? Were there topics you wished were included or expanded upon?
- Was there a discussion of profit or EPS by Company Management? Explain what this implies, what is the driving force, and what actions you would recommend?
- Were the analysts’ questions aggressive and challenging or supportive and respectful? How well did management respond to the questions?
- What additional insights were you able to gain in regards to the company’s financial health, forward guidance, and strategic financial decisions?
- Was there any information or perspective shared that a competitor could benefit from?
- If you were an employee of this company, how could you leverage this resource to benefit you or your company?
RE: James Bergin
Hi Class and Professor Miller,
Have you heard the joke about the guy that has gone to buy his two-week supply of alcohol for the third time this week? I suspect this is true for quite a few people during Covid-19. Well, I decided to see if there has been any improvement in earnings at one of the largest Breweries in Canada, as a result, the Molson Coors Beverage Company.
Identify the company you selected.
Molson Coors Beverage Company, Q2 2020, July 13, 2020. I listened to the Call and read the transcript.
The speakers were Gavin Hattersley, President, and Chief Executive Officer, and Tracey Joubert, Chief Financial Officer.
Have you ever listened to an earnings call?
Yes, I have listened to a few, and have participated in one as COO of a small hedge fund while working in NY. It is very different from a publicly-traded company’s earnings call, but the questions are just as targeted and challenging.
What topics were included?
- Systemic Racism, and Molson’s action plan.
- Corona Virus Impact, supply chain issues
- Expansion into Hard Seltzers.
- Short Term Funding Activity to solidify Cash Position.
- Moody’s affirmation of Credit Rating.
- Changes in Consumer Demand
- Acquisition of Atwater Brewing (funny, I had a drink at their facility last fall)
- New Ad Partnership with MLB
- Financial: Net Sales down 14.3%, EBITDA increased 2.2%, Free Cash Flow for six months $796.4 million (up $235.7 million YOY), $500 Mio of Tax deferrals from Government Support programs.
- The US and Europe’s Financial Insights
- Constraints from 12 Oz cans supply disruption.
- Debt Activity, repayment of $1 bio left on credit facility.
- Suspension of Quarterly Dividend, improving their cash flow.
- Reduction of $200 Mio in Capital Expenditure.
- Which were most helpful or insightful?
There were four things insightful:
- That Molson’s led with the topic of Racism.
- Corona Virus Impact and the supply chain disruption of 12 Oz Cans
- The Significant increase in Free Cash Flow for the first 6 months of 2020( $235.7 Mio), and the strengthening of the overall cash position from the suspension of dividends and tax incentives.
- $500 Mio Tax payment deferrals from Government Support Programs.
Were there topics you wished were included or expanded upon?
I was surprised that there was no discussion of Net Income or EPS in the prepared remarks and, It maybe not a surprise, but then again, they were unwilling to give forward guidance. I also sense they wanted to ensure the investor in concentrating on their liquidity and cash flow during the time of uncertainty. As I learned in last week, DQ Free Cash Flow is the primary line item investors are looking for as a signal of a healthy company (1).
Was there a discussion of profit or EPS by Company Management? Explain what this implies, what is the driving force, and what actions you would recommend?
There was no discussion on EPS, and I was surprised as you could tell above. It made me look into why some companies do not and found a couple of interesting articles. It might be because of the possible inaccuracy of any forward guidance due to Covid-19?
Were the analysts’ questions aggressive and challenging or supportive and respectful?
Yes, the questions were all presented cordially. The Q&A was well over half of the call. I sense no aggressive behavior on behalf of the analysts on the call. Despite the long list of topics discussed, I felt they were lob ball type questions.
- US and Europe’s business activity and sourcing Issues
- Coors Lite and Vizzy (Hard Seltzer) Brands Strategy.
- UK Size of recovery and bottom-line impact.
- US Lite Beer Segment
- COGS per Hectoliter and favorable tax settlement
- Strategic Asset from a balance sheet perspective.
- Performance in the US in April and May, and rightsizing the marketing spend.
- Margin under pressure.
- Overall Supply constraints, 12 OZ cans, etc.
- Investment Strategy in the current economic Environment.
- Debt to EBITDA Ratio, 3.4 times. An improvement.
- Marketing Spend.
How well did management respond to the questions?
Management did quite well to answer all the questions. Much like the analysts were respectful of the management team, the management team kept an even keel and were as transparent as possible, despite holding on to giving any forward guidance when asked about it.
What additional insights were you able to gain in regards to the company’s financial health, forward guidance, and strategic financial decisions?
The fact that they were refraining from giving any forward guidance had me curious as to why. Almost to the point, it felt that they did not trust the investor space to interpret the information correctly.
Was there any information or perspective shared that a competitor could benefit from?
Yes, their expansion in the hard seltzer space was quite transparent and optimistic, and their impact from the lack of 12 Oz can supply something their competitor could use.
If you were an employee of this company, how could you leverage this resource to benefit you or your company?
The first thing that came to my mind was if I were in marketing at Molsons, I would want to see how I could get involved in the Vizzy campaigns. There seems to be an aggressive push into the Hard Seltzer space, and there is good momentum. It might be more exciting than trying to re-ignite the old and decaying beer market.
- Berman, Knight & Case. 2008. Why Cash Matters. HBR
- Molson Coors Company, Q2 2020 Earnings Call. July 13, 2020. https://event.on24.com/view/presentation/flash/ended.html?eventid=215984
- Molson Coors Company. [email protected] 2020 Earnings call. Transcript. Retrieved July 30, 2020, https://s21.q4cdn.com/334828327/files/doc_financials/2020/q2/CORRECTED-TRANSCRIPT-Molson-Coors-Beverage-Co(TAP-US)-Q2-2020-Earnings-Call-30-July-2020-1100-AM-ET.pdf
Peer# 2 RE: Johanna Snow
please respond to the two peers listed below:Listen to (or read the transcript of) your organization’s or any publicly traded company’s most recent quarterly earnings call and respond to the