Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

For more than two centuries, we have been brewing beverages that unite people for all life’s moments. From Coors Light, Miller Lite, Molson Canadian, Carling and Staropramen to Coors Banquet, Blue Moon Belgian White, Blue Moon LightSky, Vizzy, Coors Seltzer, Leinenkugel’s Summer Shandy, Creemore Springs, Hop Valley and more, we produce many beloved and iconic beer brands. While our Company's history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well. As a business, our ambition is to be the first choice for our people, our consumers and our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions.

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") in this Quarterly Report on Form 10-Q is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 ("Annual Report"), as well as our unaudited condensed consolidated financial statements and the accompanying notes included in this report. Due to the seasonality of our operating results, quarterly financial results are not an appropriate basis from which to project annual results.

Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC" or the "Company"), principally a holding company, and its operating and non-operating subsidiaries included within our reporting segments. Our reporting segments include Americas and EMEA&APAC. Our Americas segment operates in the U.S., Canada and various countries in the Caribbean, Latin and South America and our EMEA&APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, the Republic of Ireland, Romania, Serbia, the U.K., various other European countries, and certain countries within the Middle East, Africa and Asia Pacific.

Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior periods. Our primary operating currencies, other than the USD, include the CAD, the GBP, and our Central European operating currencies such as the EUR, CZK, HRK and RSD.

Operational Measures

We have certain operational measures, such as STWs and STRs, which we believe are important metrics. STW is a metric that we use in our business to reflect the sales from our operations to our direct customers, generally wholesalers. We believe the STW metric is important because it gives an indication of the amount of beer and adjacent products that we have produced and shipped to customers. STR is a metric that we use in our business to refer to sales closer to the end consumer than STWs, which generally means sales from wholesalers or our company to retailers, who in turn sell to consumers. We believe the STR metric is important because, unlike STWs, it provides the closest indication of the performance of our brands in relation to market and competitor sales trends.

Items Affecting Reported Results

Items Affecting Consolidated Results of Operations

Coronavirus Global Pandemic

We have been actively monitoring the impact of the coronavirus pandemic since it started at the end of the first quarter of 2020. Throughout the first quarter of 2021, certain governmental entities across Europe, particularly throughout the U.K. required that bars and restaurants close which negatively impacted the on-premise sales of our beverages. In addition, certain provinces of Canada, including the most populous provinces, endured lockdowns pursuant to which bars and restaurants were required to close. Moreover, in the United States, while re-openings started to occur, certain bars and restaurants continued to remain closed and others modified their hours or restricted capacity. Certain sporting events, festivals and other large public gatherings where our products are served were canceled throughout the Americas and EMEA&APAC or were heavily restricted, significantly decreasing attendance.

We observed improvements in the marketplace related to the coronavirus global pandemic as on-premise locations began to re-open, with varying degrees of restrictions, across the world beginning in the second quarter of 2021. A new variant of coronavirus, Omicron, created additional uncertainty and negatively impacted our on-premise business at the end of 2021. This uncertainty partially subsided in the first quarter of 2022 as we saw progressive improvements in the on-premise; however, our on-premise volumes in both the Americas and EMEA&APAC segments have not returned to pre-pandemic levels. During the first two months of 2022, certain provinces of Canada endured heavy restrictions which eased significantly towards the end of February 2022.

The extent to which our operations will continue to be impacted by the coronavirus pandemic will depend largely on future developments, which are highly uncertain and cannot be accurately predicted, including, but not limited to, the level of governmental or societal orders or restrictions on public gatherings and on-premise venues including any vaccine mandates or testing requirements, the severity and duration of the coronavirus pandemic by market including continued or prolonged outbreaks of variants, changes in consumer behavior, the rate of vaccination and the efficacy of vaccines against coronavirus and related variants. We continue to actively monitor the ongoing evolution of the coronavirus pandemic and resulting impacts to our business.

Cost Inflation

We continued to experience significant cost inflation, including higher transportation and input costs, which negatively impacted our results of operations during the three months ended March 31, 2022. We expect significant cost inflation to continue to have a negative impact on our results of operations for the remainder of 2022 and potentially beyond. In addition to the cost increases that commenced in the second half of 2021, the Russian invasion of Ukraine on February 24, 2022 has caused a negative impact on the global economy, driving further increases to, among other things, the cost of transportation, energy and supplies. Higher transportation costs are a result of increased fuel prices, a short supply of truck drivers worldwide and increased freight costs. In the Americas, we are taking steps to reduce the impact of driver shortages by shipping more beverages via rail. Besides impacting our outbound shipments, our suppliers are facing difficulty in timely delivering the materials we need, and we are also experiencing increased supply costs due to overall cost inflation. The volatility of aluminum prices, inclusive of Midwest Premium and tariffs, will continue to impact our results during 2022 as it significantly impacted our results during the three months ended March 31, 2021. To the extent these prices continue to fluctuate, our business and financial results could be materially adversely impacted. We continue to monitor these risks and rely on our risk management hedging program, pricing, our premiumization strategy and cost savings programs to help mitigate some of the inflationary pressures.

Cybersecurity Incident

During March 2021, we experienced a systems outage, that was caused by a cybersecurity incident. We engaged leading forensic information technology firms and legal counsel to assist our investigation into the incident and we restored our systems after working to get the systems back up as quickly as possible. Despite these actions, we experienced delays and disruptions to our business, including brewery operations, production and shipments. This incident caused us to not produce or ship as much as we otherwise would have in the first quarter of 2021.

Items Affecting Americas Segment Results of Operations

Keystone Litigation

During March 2022, we accrued a liability of $56 million within marketing, general, and administrative ("MG&A") expenses on the unaudited condensed consolidated statement of operations related to potential losses as a result of the ongoing Keystone litigation case. See Part I. - Item 1. Financial Statements, Note 12, "Commitments and Contingencies" for further information.

Impairment of an Asset Group

During the first quarter of 2022, we recognized an impairment loss of $28.6 million within special items, net in the unaudited condensed consolidated statements of operations, of which $12.1 million was attributable to the noncontrolling interest. See Part I.—Item 1. Financial Statements, Note 5, "Special Items" for further information.

Texas Storm

In February 2021, a winter ice storm severely impacted the southern U.S. In particular, local government authorities in Texas were forced to impose energy restrictions, causing the Fort Worth brewery to be offline which resulted in our inability to produce or ship product during the downtime.

Items Affecting EMEA&APAC Segment Results of Operations

India Sale

During the first quarter of 2022, we completed the sale of our non-operating India entity in our EMEA&APAC segment resulting in an insignificant loss on disposal recorded in special items, net in the unaudited condensed consolidated statements of operations. The disposal group had previously been classified as held for sale during the fourth quarter of 2021.

Russia-Ukraine Conflict

On February 24, 2022, Russia invaded Ukraine and the conflict remains ongoing. We had less than 0.2% of our 2021 annual net sales and no physical assets in Russia and Ukraine. While not material to our Company, the Russia-Ukraine conflict negatively impacted our results of operations for the three months ended March 31, 2022. We suspended all exports of any MCBC brands to Russia and also suspended the license to produce any of our brands in Russia. Production and sales of our brands in Ukraine under license arrangements are currently halted as a result of the dangerous environment in the country due to the conflict. In addition, the Russia-Ukraine conflict has caused a negative impact to the global economy which has impacted our Company, driving further increases to the cost of transportation, energy and supplies. See the enhanced risk factor related to this conflict at Part II.—Item 1A. "Risk Factors".

Consolidated Results of Operations

The following table highlights summarized components of our unaudited condensed consolidated statements of operations for the three months ended March 31, 2022 and March 31, 2021. See Part I.—Item 1. Financial Statements for additional details of our U.S. GAAP results.

			Three Months Ended
			March 31, 2022						March 31, 2021						% change
			(In millions, except percentages and per share data)
Net sales			$	2,214.6					$	1,898.4					16.7		%
Cost of goods sold			(1,286.8)						(1,167.4)						10.2		%
Gross profit			927.8						731.0						26.9		%
Marketing, general and administrative expenses			(675.7)						(542.9)						24.5		%
Special items, net			(27.6)						(10.9)						153.2		%
Equity income (loss)			(0.1)						—						N/M
Operating income (loss)			224.4						177.2						26.6		%
Total other income (expense), net			(50.7)						(50.9)						(0.4)		%
Income (loss) before income taxes			173.7						126.3						37.5		%
Income tax benefit (expense)			(36.4)						(44.3)						(17.8)		%
Net income (loss)			137.3						82.0						67.4		%
Net (income) loss attributable to noncontrolling interests			14.2						2.1						N/M
Net income (loss) attributable to MCBC			$	151.5					$	84.1					80.1		%
Net income (loss) attributable to MCBC per diluted share			$	0.70					$	0.39					79.5		%
Financial volume in hectoliters			17.037						16.217						5.1		%
Brand volume in hectoliters			16.531						16.248						1.7		%

N/M = Not meaningful

Foreign currency impacts on results

During the three months ended March 31, 2022, foreign currency movements unfavorably impacted our consolidated USD income before income taxes by $0.4 million (unfavorably impacting income before income taxes of unallocated by $2.4 million, partially offset by the favorable impact to our Americas segment by $1.0 million and our EMEA&APAC segment by $1.0 million). Included in this amount are both translational and transactional impacts of changes in foreign exchange rates. The impact of transactional foreign currency gains and losses is recorded within other income (expense) in our unaudited condensed consolidated statements of operations.

Volume

Worldwide brand volume (or "brand volume" when discussed by segment) reflects owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), royalty volume and our proportionate share of equity investment worldwide brand volume calculated consistently with MCBC owned volume. Financial volume represents owned brands sold to unrelated external customers within our geographical markets, net of returns and allowances as well as contract brewing, wholesale non-owned brand volume and company-owned distribution volume. Contract brewing and wholesale/factored volume is included within financial volume, but is removed from worldwide brand

volume, as this is non-owned volume for which we do not directly control performance. Factored volume in our EMEA&APAC segment is the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel, which is a common arrangement in the U.K. Royalty volume consists of our brands produced and sold by third parties under various license and contract-brewing agreements and because this is owned volume, it is included in worldwide brand volume. Our worldwide brand volume definition also includes an adjustment from STW volume to STR volume. We believe the brand volume metric is useful to investors and management because, unlike financial volume and STWs, it provides the closest indication of the performance of our brands in relation to market and competitor sales trends.

As part of the revitalization plan strategy to grow our above premium portfolio and expand beyond the beer aisle, we have de-prioritized and rationalized certain non-core economy stock-keeping units ("SKU"). This strategy is intended to drive sustainable net sales growth and earnings growth, despite potential volume declines as the portfolio mix shifts towards a higher composition of above premium products.

			Three Months Ended
			March 31, 2022						March 31, 2021						% change
			(In millions, except percentages)
Volume in hectoliters
Financial volume			17.037						16.217						5.1		%
Less: Contract brewing and wholesale/factored volume			(1.502)						(1.238)						21.3		%
Add: Royalty volume			0.920						0.926						(0.6)		%
Add: STW to STR adjustment			0.076						0.343						(77.8)		%
Total worldwide brand volume			16.531						16.248						1.7		%

Net Sales

The following table highlights the drivers of change in net sales for the three months ended March 31, 2022 versus March 31, 2021, by segment (in percentages):

			Financial Volume						Price and Sales Mix						Currency												Total
Consolidated			5.1		%				12.5		%				(0.9)		%										16.7		%
Americas			(0.8)		%				9.4		%				(0.1)		%										8.5		%
EMEA&APAC			29.4		%				62.9		%				(8.1)		%										84.2		%

Net sales per hectoliter on a brand volume basis in local currency increased 10.2% for the three months ended March 31, 2022, compared to prior year. The increase for the three months ended March 31, 2022, was primarily due to positive net pricing and favorable brand and channel mix resulting from portfolio premiumization and fewer on-premise channel restrictions. Net sales per hectoliter on a financial volume basis in local currency increased 11.9% for the three months ended March 31, 2022, compared to prior year.

Worldwide brand volumes increased 1.7% for the three months ended March 31, 2022, compared to prior year, and financial volumes increased 5.1% compared to prior year. The increase in financial volumes for the three months ended March 31, 2022 was primarily due to higher brand volumes in EMEA&APAC, higher factored volumes and the cycling of lower U.S. distributor inventory levels in the prior year attributed to the March 2021 cybersecurity incident and the February 2021 Fort Worth, Texas brewery shutdown due to a winter storm, partially offset by lower brand volumes in the Americas. The increase in brand volumes for the three months ended March 31, 2022 was primarily due to a 19.8% increase in brand volumes in EMEA&APAC including the cycling of significant on-premise closures that occurred during the first quarter of 2021, particularly in the U.K. This was partially offset by a 3.1% decrease in Americas brand volumes driven by a decline in the economy portfolio including the de-prioritization and rationalization of non-core SKUs, which more than offset growth in the above premium portfolio.

Cost of goods sold

Cost of goods sold per hectoliter in local currency increased 5.8% for the three months ended March 31, 2022, compared to prior year. The increase for the three months ended March 31, 2022 was primarily due to cost inflation mainly on input materials and transportation costs and the mix impacts of portfolio premiumization and higher factored volumes, partially offset by changes to our unrealized mark-to-market commodity positions and lower depreciation expense.

Marketing, general and administrative expenses

MG&A expenses increased 24.5% for the three months ended March 31, 2022, compared to prior year. The increase for the three months ended March 31, 2022 was primarily due to a $56 million accrued liability related to potential losses as a result of the ongoing Keystone litigation case as well as higher legal fees associated with the trial, higher marketing spend to support our core brands and new innovations, increased local sponsorship and events as the coronavirus pandemic related restrictions have continued to ease and the cycling of lower people related costs, including travel and entertainment costs.

Special items, net

See Part I.—Item 1. Financial Statements, Note 5, "Special Items" for detail of special items, net.

Total other income (expense), net

Total other income (expense), net improved 0.4% for the three months ended March 31, 2022 compared to prior year, primarily due to lower interest expense, partially offset by higher pension and OPEB non-service costs.

Income taxes benefit (expense), net

			Three Months Ended
			March 31, 2022						March 31, 2021
Effective tax rate			21		%				35		%

The decrease in our effective tax rate for the three months ended March 31, 2022 as compared to the prior year was primarily due to a decrease in net discrete tax expense. We recognized a $0.9 million discrete tax benefit in the three months ended March 31, 2022 compared to a $18.1 million net discrete tax expense in the prior year.

Our tax rate can be more or less volatile and may change with, among other things, the amount and source of income (loss) before income taxes, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled or when additional information becomes available. There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, may have an impact on our effective tax rate.

Refer to Part I.—Item 1. Financial Statements, Note 6, "Income Tax" for discussion regarding our effective tax rate.

Segment Results of Operations

Americas Segment

			Three Months Ended
			March 31, 2022						March 31, 2021						% change
			(In millions, except percentages)
Net sales(1)			$	1,836.2					$	1,692.0					8.5		%
Income (loss) before income taxes			$	87.1					$	144.2					(39.6)		%
Financial volume in hectoliters(2)			12.999						13.102						(0.8)		%
Brand volume in hectoliters			12.436						12.831						(3.1)		%

(1)Includes gross inter-segment sales and volumes which are eliminated in the consolidated totals.

(2)Excludes royalty volume of 0.601 million hectoliters and 0.567 million hectoliters for the three months ended March 31, 2022 and March 31, 2021, respectively.

Net sales and volume

Net sales per hectoliter on a brand volume basis in local currency increased 9.8% for the three months ended March 31, 2022 compared to prior year, primarily due to positive net pricing and favorable brand mix. Net sales per hectoliter on a financial volume basis in local currency increased 9.4% for the three months ended March 31, 2022 compared to prior year.

Brand volumes decreased 3.1% for the three months ended March 31, 2022 compared to prior year, primarily due to a 4.3% decline in the U.S. which was driven by a decline in the economy portfolio, including the de-prioritization and rationalization of non-core SKUs, partially offset by growth in the above premium portfolio driven by hard seltzers. Canada

brand volumes reflected softer industry performance in the first quarter of 2022 and declined 4.5% for the three months ended March 31, 2022 compared to the prior year while Latin America brand volumes grew 13.8%. Financial volumes decreased 0.8% for the three months ended March 31, 2022, compared to prior year primarily due to lower brand volumes, partially offset by the cycling of lower U.S. distributor inventory levels in the prior year attributed to the March 2021 cybersecurity incident and the February 2021 Fort Worth, Texas brewery shutdown due to a winter storm.

Income (loss) before income taxes

Income (loss) before income taxes decreased 39.6% for the three months ended March 31, 2022, compared to prior year, primarily due to a $56 million accrued liability related to potential losses as a result of the ongoing Keystone litigation case, higher marketing spend, cost inflation mainly on input materials and transportation costs, higher special items, net driven by a non-cash impairment charge taken on our Truss LP joint venture asset group and lower financial volumes, partially offset by positive net pricing, favorable sales mix and lower depreciation expense. The increased marketing spend includes higher spend behind innovation brands, Coors Light, and Miller Lite, as well as higher localized spend as the coronavirus pandemic related restrictions eased compared to the prior year.

EMEA&APAC Segment

			Three Months Ended
			March 31, 2022						March 31, 2021						% change
			(In millions, except percentages)
Net sales(1)			$	381.2					$	206.9					84.2		%
Income (loss) before income taxes			$	(32.2)					$	(89.4)					64.0		%
Financial volume in hectoliters(2)			4.039						3.122						29.4		%
Brand volume in hectoliters			4.095						3.417						19.8		%

(1)Includes gross inter-segment sales and volumes which are eliminated in the consolidated totals.

(2)Excludes royalty volume of 0.319 million hectoliters and 0.359 million hectoliters for the three months ended March 31, 2022 and March 31, 2021, respectively.

Net sales and volume

Net sales per hectoliter on a brand volume basis in local currency increased 30.1% for the three months ended March 31, 2022 compared to prior year primarily due to favorable sales mix as well as positive net pricing. Net sales per hectoliter on a financial volume basis in local currency increased 48.6% for the three months ended March 31, 2022, compared to prior year.

Brand volume increased 19.8% for the three months ended March 31, 2022, compared to prior year, primarily due to growth in our core brands and above premium portfolio including the cycling of significant on-premise closures that occurred during the first quarter of 2021, particularly in the U.K. Financial volumes increased 29.4% for the three months ended March 31, 2022, compared to prior year, primarily due to brand volume growth as well as higher factored volumes.

Income (loss) before income taxes

Income (loss) before income taxes improved 64.0% for the three months ended March 31, 2022, compared to prior year, primarily due to higher financial volumes, favorable sales mix and positive net pricing, partially offset by cost inflation mainly on input materials and transportation costs and higher MG&A spend. Higher MG&A spend was primarily due to increased marketing spend to support our brands and the cycling of lower spend in the prior year due to cost mitigation efforts.

Unallocated

			Three Months Ended
			March 31, 2022						March 31, 2021						% change
			(In millions, except percentages)
Cost of goods sold			$	170.8					$	121.5					40.6		%
Gross profit			170.8						121.5						40.6		%
Operating income (loss)			170.8						121.5						40.6		%
Total other income (expense), net			(52.0)						(50.0)						4.0		%
Income (loss) before income taxes			$	118.8					$	71.5					66.2		%

Cost of goods sold

The unrealized changes in fair value on our commodity derivatives, which are economic hedges, are recorded as cost of goods sold within unallocated and make up the entirety of the activity presented within cost of goods sold in the table above for the three months ended March 31, 2022 and March 31, 2021, respectively. As the exposure we are managing is realized, we reclassify the gain or loss on our commodity derivatives to the segment in which the underlying exposure resides, allowing our segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility. See Part I.—Item 1. Financial Statements, Note 11, "Derivative Instruments and Hedging Activities" for further information.

Total other income (expense), net

Total other income (expense), net increased 4.0% for the three months ended March 31, 2022 compared to prior year primarily due to higher pension and OPEB non-service costs, partially offset by lower interest expense. See Part I.—Item 1. Financial Statements, Note 8 "Debt" for further details on our debt instruments.

Liquidity and Capital Resources

Liquidity

Overview

Our primary sources of liquidity have included cash provided by operating activities and access to external capital. We continue to actively monitor the ongoing worldwide disruption caused by the coronavirus pandemic. In the event of a sustained market deterioration, whether due to the impacts of the coronavirus pandemic or other economic factors, declines in net sales, profit and operating cash flow may result in the need for additional liquidity, which could require us to evaluate available alternatives and take appropriate actions. We currently believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, capital expenditures and other obligations for the twelve months subsequent to the date of the issuance of this quarterly report, and our long-term liquidity requirements. We do not have any restrictions that prevent or limit our ability to declare or pay dividends.

There can be no assurance that we will be able to secure additional liquidity if our revolving credit facility is fully drawn, the capital markets become inaccessible or if our credit rating is adversely impacted, which may result in difficulties in accessing debt markets or increase our debt costs. Even if we have access to the capital markets, we may not be able to raise capital on acceptable terms or at all. If we are unable to maintain or access adequate liquidity, our ability to timely pay our obligations when due could be adversely affected.

While a significant portion of our cash flows from operating activities is generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD. As of March 31, 2022, approximately 86% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. The recent fluctuations in foreign currency exchange rates may have a material impact on these foreign cash balances. When the earnings are considered indefinitely reinvested outside of the U.S., we do not accrue taxes. To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries upon repatriation. We may utilize tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We periodically review and evaluate these plans and strategies, including externally committed and non-committed credit agreements accessible by the Company and each of its operating subsidiaries. We believe these financing arrangements, along with the cash generated from the operations of our U.S. business and other liquidity measures resulting from considerations of the ongoing coronavirus global pandemic, are sufficient to fund our current cash needs in the U.S.

Additionally, our cash balances in foreign countries are often subject to additional restrictions and covenants. We may therefore have difficulties repatriating cash held outside of the U.S., and such repatriation may be subject to tax. In some countries, repatriation of certain foreign balances is restricted by local laws and could have adverse tax consequences if we were to move the cash to another country. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. or other countries and may adversely affect our liquidity.

Cash Flows and Use of Cash

Our business generates positive operating cash flow each year, and our debt maturities are of a longer-term nature. However, our liquidity could be impacted significantly by the risk factors we described in Part I—Item 1A. "Risk Factors" in our Annual Report, Part II.—Item 1A. "Risk Factors" in this report and the items listed above.

Cash Flows from Operating Activities

Net cash used in operating activities of $119.3 million for the three months ended March 31, 2022 decreased $71.6 million compared to $190.9 million for the three months ended March 31, 2021. The decrease in net cash used in operating activities was primarily due to the favorable timing of working capital payments driven by increased MG&A spend and cost of goods sold inflation in the current year as well as lower payments for incentive compensation and higher net income, partially offset by the timing of receipts due to higher financial volumes.

Cash Flows from Investing Activities

Net cash used in investing activities of $226.2 million for the three months ended March 31, 2022 increased $141.6 million compared to $84.6 million for the three months ended March 31, 2021. The increase in net cash used in investing activities was primarily due to higher capital expenditures as a result of the timing of capital projects.

Cash Flows from Financing Activities

Net cash provided by financing activities of $72.5 million for the three months ended March 31, 2022 increased $27.5 million compared to $45.0 million for the three months ended March 31, 2021. The increase in net cash provided by financing activities was primarily due to higher borrowings under our commercial paper program in the current year, partially offset by higher dividends payments and lower net cash inflows from other financing activities. In addition, the increase in net cash provided by financing activities was offset by current year Class B common stock share repurchases.

Capital Resources, including Material Cash Requirements

Cash and Cash Equivalents

We had total cash and cash equivalents of $358.7 million as of March 31, 2022, compared to $637.4 million as of December 31, 2021 and $532.7 million as of March 31, 2021. The decrease in cash and cash equivalents from December 31, 2021 was primarily due to capital expenditures, net payments from operating activities and dividend payments, partially offset by net proceeds from the borrowings under our commercial paper program. The decrease in cash and cash equivalents from March 31, 2021 was primarily due to the repayment of our $1.0 billion 2.1% senior notes which matured in July 2021, capital expenditures and dividend payments, partially offset by net cash generated from operating activities and borrowings under our commercial paper program.

Borrowings

We repaid our $500 million 3.5% USD notes upon maturity on May 1, 2022 using a combination of commercial paper borrowings and cash on hand. Refer to Part I.—Item 1. Financial Statements, Note 8, "Debt" for details.

Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to continue to draw on our revolving credit facility if the need arises. As of March 31, 2022, we had $1.3 billion available to draw on our $1.5 billion revolving credit facility. The borrowing capacity is reduced by borrowings under our commercial paper program. As of March 31, 2022, we had total outstanding borrowings under our commercial paper program of approximately $160 million. Subsequent to March 31, 2022, we had additional commercial paper borrowings that resulted in commercial paper outstanding of approximately $500 million as of May 3, 2022. As such, we have approximately $1.0 billion available to draw on our total $1.5 billion revolving credit facility.

We intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper programs for liquidity as needed. We also have CAD, GBP and USD overdraft facilities across several banks should we need additional short-term liquidity.

Under the terms of each of our debt facilities, we must comply with certain restrictions. These include customary events of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets and restrictions on mergers, acquisitions and certain types of sale lease-back transactions.

The maximum net debt to EBITDA leverage ratio, as defined by the amended revolving credit facility agreement, was 4.00x as of March 31, 2022 and December 31, 2021. As of March 31, 2022 and December 31, 2021, we were in compliance with all of these restrictions, have met such financial ratios and have met all debt payment obligations. All of our outstanding senior notes as of March 31, 2022 rank pari-passu.

In October 2021, we further amended our existing revolving credit facility agreement to replace LIBOR with designated replacement rates for any future borrowings denominated in EUR or GBP to ensure continued, uninterrupted access to these markets should we need it.

See Part I.—Item 1. Financial Statements, Note 8, "Debt" for further discussion of our borrowings and available sources of borrowing, including lines of credit.

Guarantees

We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries. See Part I.—Item 1. Financial Statements, Note 12, "Commitments and Contingencies" for further discussion.

Material Cash Requirements from Contractual and Other Obligations

There were no material changes to our material cash requirements from contractual and other obligations outside the ordinary course of business or due to factors similar in nature to inflation, changing prices on operations or changes in the remaining terms of the contracts since December 31, 2021, as reported in Part II.— Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, "Material Cash Requirements from Contractual and Other Obligations" in our Annual Report.

Credit Rating

Our current long-term credit ratings are BBB-/Stable Outlook, Baa3/Stable Outlook and BBB(Low)/Stable Outlook with Standard & Poor's, Moody's and DBRS, respectively. Our short-term credit ratings are A-3, Prime-3 and R-2(low), respectively. A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.

Guarantor Information

SEC Registered Securities

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our Americas segment.

Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 3.5% senior notes due 2022 (subsequently repaid upon maturity on May 1, 2022) and 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016, MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024. The senior notes issued under the May 2012 Indenture and the July 2016 Indenture were registered under the Securities Act of 1933, as amended. These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed in Exhibit 22 of our Annual Report on Form 10-K (the "Subsidiary Guarantors", and together with the Parent Issuer, the "Obligor Group"). "Parent Issuer" in this section is specifically referring to MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture and the July 2016 Indenture. Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer. The guarantees are full and unconditional and joint and several.

None of our other outstanding debt was issued in a transaction that was registered with the SEC, and such other outstanding debt is issued or otherwise generally guaranteed on a senior unsecured basis by the Obligor Group or other consolidated subsidiaries of MCBC. These other guarantees are also full and unconditional and joint and several.

The senior notes and related guarantees rank pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group. The guarantees can be released upon the sale or transfer of a Subsidiary Guarantors' capital stock or substantially all of its assets, or if such Subsidiary Guarantor ceases to be a guarantor under our other outstanding debt.

See Part I.—Item 1. Financial Statements, Note 8, "Debt" for details of all debt issued and outstanding as of March 31, 2022.

The following summarized financial information relates to the Obligor Group as of March 31, 2022 on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. The balances and transactions with non-guarantor subsidiaries have been separately presented.

Summarized Financial Information of Obligor Group

			Three Months Ended
			March 31, 2022
			(in millions)
Net sales, out of which:			$	1,813.2
Intercompany sales to non-guarantor subsidiaries			$	8.0
Gross profit, out of which:			$	793.9
Intercompany net costs from non-guarantor subsidiaries			$	(97.3)
Net interest expense third parties			$	(61.6)
Intercompany net interest income from non-guarantor subsidiaries			$	29.2
Income before income taxes			$	248.3
Net income			$	189.1

			As of March 31, 2022						As of December 31, 2021
			(in millions)
Total current assets, out of which:			$	1,972.1					$	1,834.4
Intercompany receivables from non-guarantor subsidiaries			$	227.1					$	155.5
Total noncurrent assets, out of which:			$	25,486.2					$	25,349.4
Noncurrent intercompany notes receivable from non-guarantor subsidiaries			$	4,018.9					$	3,977.1
Total current liabilities, out of which:			$	2,717.8					$	2,725.8
Current portion of long-term debt and short-term borrowings			$	662.8					$	502.9
Intercompany payables due to non-guarantor subsidiaries			$	95.0					$	87.0
Total noncurrent liabilities, out of which:			$	13,778.5					$	13,714.9
Long-term debt			$	6,559.9					$	6,573.5
Noncurrent intercompany notes payable due to non-guarantor subsidiaries			$	4,386.5					$	4,352.9

Capital Expenditures

We incurred $178.8 million, and paid $243.8 million, for capital improvement projects worldwide in the three months ended March 31, 2022, excluding capital spending by equity method joint ventures, representing an increase of $131.2 million from the $47.6 million of capital expenditures incurred in the three months ended March 31, 2021. This increase was primarily due to the timing of capital expenditures. We continue to focus on where and how we employ our planned capital expenditures, with an emphasis on strengthening our focus on required returns on invested capital as we determine how to best allocate cash within the business.

Contingencies

We are party to various legal proceedings arising in the ordinary course of business, environmental litigation and indemnities associated with our sale of Kaiser to FEMSA. See Part I.—Item 1. Financial Statements, Note 12, "Commitments and Contingencies" for further discussion.

Off-Balance Sheet Arrangements

Refer to Part II.—Item 8 Financial Statements, Note 18, "Commitments and Contingencies" in our Annual Report for discussion of off-balance sheet arrangements. As of March 31, 2022, we did not have any other material off-balance sheet arrangements.

Critical Accounting Estimates

Our accounting policies and accounting estimates critical to our financial condition and results of operations are set forth in our Annual Report and did not change during the first quarter of 2022, except as noted below. See Part I.—Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for discussion of recently adopted accounting pronouncements. See also Part I.—Item 1. Financial Statements, Note 7, "Goodwill and Intangible Assets" for discussion of the results of our 2021 annual impairment testing analysis, the related risks to our indefinite-lived intangible brand assets and the goodwill amounts associated with our reporting units.

New Accounting Pronouncements Not Yet Adopted

See Part I.—Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for a description of any new accounting pronouncements that have or could have a significant impact on our financial statements.