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

Overview

For more than two centuries, we have brewed beverages that unite people to celebrate all life’s moments. From our core power brands Coors Light, Miller Lite, Coors Banquet, Molson Canadian, Carling and Ožujsko to our above premium brands including Madri Excepcional, Staropramen, Blue Moon Belgian White and Leinenkugel’s Summer Shandy, to our economy and value brands like Miller High Life and Keystone Light, we produce many beloved and iconic beers. While our Company's history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well, including flavored beverages like Vizzy Hard Seltzer, spirits like Five Trail whiskey and non-alcoholic beverages. 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, 2023 ("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 necessarily indicative of the results that may be achieved for the full year or any other future period.

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 year 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, RON and RSD.

Items Affecting the Consolidated Results of Operations

Purchases of Annuity Contracts

During the three months ended September 30, 2024, we purchased annuity contracts for two of our Canadian pension plans. As a result, on September 30, 2024, we remeasured both pension plans and recorded the offset to AOCI in addition to recording a total settlement loss of $34.0 million. See Part I. — Item 1. Financial Statements, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" and Part I. — Item 1. Financial Statements, Note 11, "Accumulated Other Comprehensive Income (Loss)" for further information.

Cobra Beer Partnership, Ltd. Buyout

During the three months ended September 30, 2024, we adjusted our NCI by $34.5 million to our best estimate of the redemption value that existed at the time of the put option exercise in March 2024 by increasing our net income attributable to noncontrolling interests and decreasing our net income attributable to MCBC. In addition, the final determination of the redemption value was received in October 2024, and we recorded an adjustment of $45.8 million to interest expense in the EMEA&APAC segment with the offset to the mandatorily redeemable NCI that was recorded to accounts payable and other current liabilities in the unaudited condensed consolidated balance sheets. See further discussion of this transaction in Part I. — Item 1. Financial Statements, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies".

Items Affecting the Americas Segment Results of Operations

Wind Down or Sale of Certain U.S. Craft Businesses

During the three months ended September 30, 2024, we made the decision to wind down or sell certain of our U.S. craft businesses and related facilities and recorded employee-related and asset abandonment charges, including accelerated depreciation in excess of normal depreciation. We recognized a loss of $41.1 million related to the disposal of the sold businesses. We expect to continue to incur incremental restructuring charges during the fourth quarter of 2024 and the first quarter of 2025 through completion of wind down and closure of certain remaining U.S. craft facilities. Remaining charges are estimated to total approximately $95 million to $115 million, consisting primarily of accelerated depreciation charges. See Part I. — Item 1. Financial Statements, Note 12, "Other Operating Income (Expense), net" for further information.

Truss Sale

During the three months ended September 30, 2023, we sold our controlling interest in Truss and recognized a loss of $11.1 million. See Part I. — Item 1. Financial Statements, Note 12, "Other Operating Income (Expense), net" for further information.

Consolidated Results of Operations

The following table highlights summarized components of our unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2024 and September 30, 2023. See Part I.—Item 1. Financial Statements for additional details of our U.S. GAAP results.

			Three Months Ended																		Nine Months Ended
			September 30, 2024						September 30, 2023						% change						September 30, 2024						September 30, 2023						% change
			(In millions, except percentages and per share data)
Net sales			$	3,042.7					$	3,298.4					(7.8)		%				$	8,891.4					$	8,911.3					(0.2)		%
Cost of goods sold			(1,840.2)						(1,952.2)						(5.7)		%				(5,395.5)						(5,575.5)						(3.2)		%
Gross profit			1,202.5						1,346.2						(10.7)		%				3,495.9						3,335.8						4.8		%
Marketing, general and administrative expenses			(684.7)						(746.8)						(8.3)		%				(2,067.8)						(2,096.7)						(1.4)		%
Other operating income (expense), net			(65.8)						(12.7)						418.1		%				(59.4)						(13.0)						356.9		%
Equity income (loss)			(0.8)						5.5						N/M						(3.6)						12.8						N/M
Operating income (loss)			451.2						592.2						(23.8)		%				1,365.1						1,238.9						10.2		%
Total non-operating income (expense), net			(119.8)						(48.2)						148.5		%				(208.4)						(151.9)						37.2		%
Income (loss) before income taxes			331.4						544.0						(39.1)		%				1,156.7						1,087.0						6.4		%
Income tax benefit (expense)			(102.6)						(112.4)						(8.7)		%				(292.7)						(236.1)						24.0		%
Net income (loss)			228.8						431.6						(47.0)		%				864.0						850.9						1.5		%
Net (income) loss attributable to noncontrolling interests			(29.0)						(0.9)						N/M						(29.4)						(5.3)						N/M
Net income (loss) attributable to MCBC			$	199.8					$	430.7					(53.6)		%				$	834.6					$	845.6					(1.3)		%
Net income (loss) attributable to MCBC per diluted share			$	0.96					$	1.98					(51.5)		%				$	3.96					$	3.89					1.8		%
Financial volume in hectoliters			20.629						23.532						(12.3)		%				61.033						63.923						(4.5)		%

N/M = Not meaningful

Foreign currency impacts on results

During the three months ended September 30, 2024, foreign currency movements had the following impacts on our USD consolidated results:

• Net sales - Favorable impact of $1.2 million (favorable impact for EMEA&APAC of $8.6 million, partially offset by the unfavorable impact for Americas of $7.4 million).

• Cost of goods sold - Unfavorable impact of $1.1 million (unfavorable impact for EMEA&APAC of $5.7 million, partially offset by the favorable impact for Americas and Unallocated of $4.3 million and $0.3 million, respectively).

• MG&A - Unfavorable impact of $0.4 million (unfavorable impact for EMEA&APAC of $1.9 million, partially offset by the favorable impact for Americas of $1.5 million).

• Income (loss) before income taxes - Unfavorable impact of $0.1 million (unfavorable impact for Americas of $1.5 million, partially offset by the favorable impact of EMEA&APAC and Unallocated of $1.0 million and $0.4 million, respectively).

The impacts of foreign currency movements on our consolidated USD results described above for the three months ended September 30, 2024 were primarily due to the weakening of the USD compared to the GBP, partially offset by the strengthening of the USD compared to the CAD.

During the nine months ended September 30, 2024, foreign currency movements had the following impacts on our USD consolidated results:

• Net sales - Favorable impact of $1.6 million (favorable impact for EMEA&APAC of $15.1 million, partially offset by the unfavorable impact for Americas $13.5 million).

*•*Cost of goods sold - Unfavorable impact of $1.7 million (unfavorable impact for EMEA&APAC of $10.4 million, partially offset by the favorable impact for Americas and Unallocated of $8.3 million and $0.4 million, respectively).

*•*MG&A - Unfavorable impact of $0.7 million (unfavorable impact for EMEA&APAC of $3.8 million, partially offset by the favorable impact for Americas of $3.1 million).

*•*Income (loss) before income taxes - Unfavorable impact of $5.1 million (unfavorable impact for Americas and EMEA&APAC of $3.9 million and $2.8 million, respectively, partially offset by the favorable impact for Unallocated of $1.6 million).

The impacts of foreign currency movements on our consolidated USD results described above for the nine months ended September 30, 2024 were primarily due to the weakening of the USD compared to the GBP, partially offset by the strengthening of the USD compared to the CAD and CZK.

Included in these amounts are both translational and transactional impacts of changes in foreign exchange rates. We calculate the impact of foreign exchange by translating our current period local currency results at the average exchange rates used to translate the financial statements in the comparable prior year period during the respective period throughout the year and comparing that amount with the reported amount for the period. The impact of transactional foreign currency gains and losses, including the impact of undesignated foreign currency forwards, is recorded within other non-operating income (expense), net in our unaudited condensed consolidated statements of operations.

Volume

Financial volume represents owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), as well as contract brewing, wholesale/factored non-owned volume and company-owned distribution volume. This metric is presented on an STW basis to reflect the sales from our operations to our direct customers, generally distributors. We believe this metric is important and useful for investors and management because it gives an indication of the amount of beer and adjacent products that we have produced and shipped to customers. This metric excludes royalty volume, which consists of our brands produced and sold under various license and contract brewing agreements. 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.

Net Sales

The following table highlights the drivers of the change in net sales for the three months ended September 30, 2024 compared to September 30, 2023 (in percentages):

			Financial Volume						Price and Sales Mix						Currency												Total
Consolidated net sales			(12.3)		%				4.5		%				—		%										(7.8)		%

Net sales decreased 7.8% for the three months ended September 30, 2024, compared to prior year, driven by lower financial volumes, partially offset by favorable price and sales mix.

Financial volumes decreased 12.3% for the three months ended September 30, 2024, compared to prior year, primarily due to lower shipments, including lower contract brewing volumes in the Americas.

Price and sales mix favorably impacted net sales for the three months ended September 30, 2024 by 4.5%, primarily due to increased net pricing as well as favorable sales mix for both segments, including as a result of lower contract brewing volumes in the U.S.

The following table highlights the drivers of the change in net sales for the nine months ended September 30, 2024 compared to September 30, 2023 (in percentages):

			Financial Volume						Price and Sales Mix						Currency												Total
Consolidated net sales			(4.5)		%				4.3		%				—		%										(0.2)		%

Net sales decreased 0.2% for the nine months ended September 30, 2024, compared to prior year, driven by lower financial volumes, partially offset by favorable price and sales mix.

Financial volumes decreased 4.5% for the nine months ended September 30, 2024, compared to prior year, primarily due to lower shipments, including lower contract brewing volumes in the Americas.

Price and sales mix favorably impacted net sales for the nine months ended September 30, 2024 by 4.3%, primarily due to increased net pricing as well as favorable sales mix for both segments, including as a result of lower contract brewing volumes in the U.S.

A discussion of currency impacts on net sales is included in the "Foreign currency impacts on results" section above.

Cost of goods sold

We utilize cost of goods sold per hectoliter, as well as the year over year changes in this metric, as a key metric for analyzing our results. This metric is calculated as cost of goods sold per our unaudited condensed consolidated statements of operations divided by financial volume for the respective period. We believe this metric is important and useful for investors and management because it provides an indication of the trends of sales mix and other cost impacts on our cost of goods sold.

Cost of goods sold decreased 5.7% for the three months ended September 30, 2024, compared to prior year, primarily due to lower financial volumes, partially offset by higher cost of goods sold per hectoliter. Cost of goods sold per hectoliter increased 7.5% for the three months ended September 30, 2024, compared to prior year, primarily due to volume deleverage in the Americas segment, unfavorable mix driven by lower contract brewing volumes in the Americas segment, unfavorable changes in our unrealized mark-to-market commodity derivative positions of $34.4 million and cost inflation related to materials and manufacturing expenses, partially offset by cost savings initiatives.

Cost of goods sold decreased 3.2% for the nine months ended September 30, 2024, compared to prior year, primarily due to lower financial volumes, partially offset by higher cost of goods sold per hectoliter. Cost of goods sold per hectoliter increased 1.4% for the nine months ended September 30, 2024, compared to prior year, primarily due to cost inflation related to materials and manufacturing expenses, unfavorable mix driven by lower contract brewing volumes in the Americas segment and volume deleverage, partially offset by favorable changes in our unrealized commodity mark-to-market derivative positions of $109.7 million and cost savings initiatives.

A discussion of currency impacts on cost of goods sold is included in the "Foreign currency impacts on results" section above.

Marketing, general and administrative expenses

MG&A expenses decreased 8.3% for the three months ended September 30, 2024 compared to prior year, primarily due to lower marketing investment resulting from cycling higher spend levels in the prior year and lower incentive compensation expense.

MG&A expenses decreased 1.4% for the nine months ended September 30, 2024 compared to prior year, primarily due to lower incentive compensation expense, partially offset by increased marketing investment to support our brands and innovations.

A discussion of currency impacts on MG&A expenses is included in the "Foreign currency impacts on results" section above.

Other operating income (expense), net

During the three months ended September 30, 2024, we made the decision to wind down or sell certain of our U.S. craft businesses and related facilities and recorded employee-related and asset abandonment charges, including accelerated depreciation in excess of normal depreciation. We recognized a loss of $41.1 million related to the disposal of the sold businesses. See Part I.—Item 1. Financial Statements, Note 12, "Other Operating Income (Expense), net" for detail of our other operating income (expense), net.

Total non-operating income (expense), net

Total non-operating expense, net increased 148.5% for the three months ended September 30, 2024, compared to prior year, primarily due to higher interest expense driven by a $45.8 million adjustment to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout and a settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases.

Total non-operating expense, net increased 37.2% for the nine months ended September 30, 2024, compared to prior year, primarily due to higher interest expense driven by a $45.8 million adjustment to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout and a settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases in the third quarter of 2024, partially offset by higher interest income from higher cash balances and higher pension and OPEB non-service benefit.

Income tax benefit (expense)

			Three Months Ended												Nine Months Ended
			September 30, 2024						September 30, 2023						September 30, 2024						September 30, 2023
Effective tax rate			31		%				21		%				25		%				22		%

The higher effective tax rate for the three and nine months ended September 30, 2024, compared to the prior year, was partly due to the impact of a valuation allowance that was recorded on deferred tax assets in the third quarter of 2024 related to the divestment of certain of our U.S. craft businesses. The divestment resulted in the realization of a capital loss for U.S. tax purposes. We believe it is more likely than not that the deferred tax asset generated by the capital loss will not be recognized, and as a result, a $16.4 million valuation allowance was recorded for the year to date period. The higher effective tax rate was also due to the $45.8 million increase in the mandatorily redeemable NCI liability of CBPL to the final redemption value, which was recorded to interest expense in the third quarter of 2024 and is non-deductible for tax purposes. Finally, the higher effective tax rate for the three months ended September 30, 2024 was partly driven by a decrease in discrete tax benefit.

Our effective tax rate can be volatile and may change with, among other things, the amount and source of pretax income or loss, 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, could have an impact on our effective tax rate.

Refer to Part I.—Item 1. Financial Statements, Note 9, "Income Tax" for discussion regarding our effective tax rate.

Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $28.1 million and $24.1 million for the three and nine months ended September 30, 2024, respectively, compared to the prior year, primarily due to the recording of an out of period adjustment to increase the noncontrolling interest to the best estimate of the redemption value that existed at the time of the put option exercise in March 2024. See further discussion in Part I. — Item 1. Financial Statements, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies".

Segment Results of Operations

Americas Segment

			Three Months Ended																		Nine Months Ended
			September 30, 2024						September 30, 2023						% change						September 30, 2024						September 30, 2023						% change
			(In millions, except percentages)
Net sales(1)			$	2,345.0					$	2,633.4					(11.0)		%				$	7,066.3					$	7,194.1					(1.8)		%
Income (loss) before income taxes			$	353.8					$	483.5					(26.8)		%				$	1,161.5					$	1,204.2					(3.5)		%
Financial volume in hectoliters(1)(2)			14.695						17.414						(15.6)		%				45.001						47.718						(5.7)		%

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

(2)Excludes royalty volume of 0.626 million hectoliters and 1.795 million hectoliters for the three and nine months ended September 30, 2024, respectively, and excludes royalty volume of 0.692 million hectoliters and 1.955 million hectoliters for the three and nine months ended September 30, 2023, respectively.

Net sales

The following table highlights the drivers of the change in net sales for the three months ended September 30, 2024 compared to September 30, 2023 (in percentages):

			Financial Volume						Price and Sales Mix						Currency												Total
Americas net sales			(15.6)		%				4.9		%				(0.3)		%										(11.0)		%

Net sales decreased 11.0% for the three months ended September 30, 2024, compared to prior year, driven by lower financial volumes and unfavorable foreign currency impacts, partially offset by favorable price and sales mix.

Financial volumes decreased 15.6% for the three months ended September 30, 2024, compared to prior year, primarily due to the timing of U.S. shipments as well as lower U.S. volumes due to the macroeconomic environment resulting in industry softness. In addition, of the 15.6% decrease, 260bps relates to lower contract brewing volumes in the U.S. related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024.

Price and sales mix favorably impacted net sales for the three months ended September 30, 2024, compared to prior year, by 4.9% primarily due to increased net pricing and favorable sales mix as a result of lower contract brewing volumes.

The following table highlights the drivers of the change in net sales for the nine months ended September 30, 2024 compared to September 30, 2023 (in percentages):

			Financial Volume						Price and Sales Mix						Currency												Total
Americas net sales			(5.7)		%				4.1		%				(0.2)		%										(1.8)		%

Net sales decreased 1.8% for the nine months ended September 30, 2024, compared to prior year, driven by lower financial volumes and unfavorable foreign currency impacts, partially offset by favorable price and sales mix.

Financial volumes decreased 5.7% for the nine months ended September 30, 2024, compared to prior year, primarily due to a 300bps impact relating to lower contract brewing volumes related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024 and lower U.S. volumes due to the macroeconomic environment resulting in industry softness.

Price and sales mix favorably impacted net sales for the nine months ended September 30, 2024, compared to prior year, by 4.1% primarily due to increased net pricing and favorable sales mix as a result of lower contract brewing volumes.

A discussion of the foreign currency impacts on net sales is included in the "Foreign currency impacts on results" section above.

Income (loss) before income taxes

Income before income taxes declined 26.8% for the three months ended September 30, 2024 compared to prior year, primarily due to lower financial volumes, higher other operating expense as a result of the exit of our U.S. craft businesses and related restructuring costs and cost inflation related to materials and manufacturing expenses, partially offset by lower MG&A expense, increased net pricing, favorable sales mix and cost savings initiatives. Lower MG&A expense was primarily driven by lower marketing spend resulting from the cycling of higher spend levels in the prior year and lower incentive compensation expense.

Income before income taxes declined 3.5% for the nine months ended September 30, 2024 compared to prior year, primarily due to lower financial volumes, cost inflation related to materials and manufacturing expenses, higher other operating expense as a result of the exit of our U.S. craft businesses and related restructuring costs, partially offset by increased net pricing, lower MG&A expense, favorable sales mix and cost savings initiatives. Lower MG&A expense was primarily driven by lower incentive compensation expense.

A discussion of the foreign currency impacts on income (loss) before income taxes is included in the "Foreign currency impacts on results" section above.

EMEA&APAC Segment

			Three Months Ended																		Nine Months Ended
			September 30, 2024						September 30, 2023						% change						September 30, 2024						September 30, 2023						% change
			(In millions, except percentages)
Net sales(1)			$	704.4					$	670.4					5.1		%				$	1,842.4					$	1,729.5					6.5		%
Income (loss) before income taxes			$	51.6					$	67.5					(23.6)		%				$	121.8					$	106.3					14.6		%
Financial volume in hectoliters(1)(2)			5.938						6.120						(3.0)		%				16.039						16.209						(1.0)		%

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

(2)Excludes royalty volume of 0.356 million hectoliters and 0.899 million hectoliters for the three and nine months ended September 30, 2024, respectively, and excludes royalty volume of 0.291 million hectoliters and 0.697 million hectoliters for the three and nine months ended September 30, 2023, respectively.

The following table highlights the drivers of the change in net sales for the three months ended September 30, 2024 compared to September 30, 2023 (in percentages).

			Financial Volume						Price and Sales Mix						Currency												Total
EMEA&APAC net sales			(3.0)		%				6.8		%				1.3		%										5.1		%

Net sales increased 5.1% for the three months ended September 30, 2024, compared to prior year, driven by favorable price and sales mix as well as favorable foreign currency impacts, partially offset by lower financial volumes.

Financial volumes decreased 3.0% for the three months ended September 30, 2024, compared to prior year, primarily driven by lower volumes in Western Europe due to soft market demand and high promotional activity from the competition.

Price and sales mix favorably impacted net sales for the three months ended September 30, 2024, compared to prior year, by 6.8%, primarily due to increased net pricing and favorable sales mix driven by premiumization and favorable channel mix.

The following table highlights the drivers of the change in net sales for the nine months ended September 30, 2024 compared to September 30, 2023 (in percentages):

			Financial Volume						Price and Sales Mix						Currency												Total
EMEA&APAC net sales			(1.0)		%				6.7		%				0.8		%										6.5		%

Net sales increased 6.5% for the nine months ended September 30, 2024, compared to prior year, driven by favorable price and sales mix and favorable foreign currency impacts, partially offset by lower financial volumes.

Financial volumes decreased 1.0% for the nine months ended September 30, 2024, compared to prior year, primarily due to lower volumes in Western Europe due to soft market demand and high promotional activity from the competition, partially offset by Central and Eastern Europe volume growth driven by the favorable performance of our core power brands and our above premium brands and the easing inflationary pressures on the consumer.

Price and sales mix favorably impacted net sales for the nine months ended September 30, 2024, compared to prior year, by 6.7%, primarily due to increased net pricing and favorable sales mix driven by premiumization and favorable channel mix.

A discussion of the foreign currency impacts on net sales is included in the "Foreign currency impacts on results" section above.

Income (loss) before income taxes

Income before income taxes declined 23.6% for the three months ended September 30, 2024, compared to prior year, primarily due to higher interest expense as a result of the adjustment of $45.8 million to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout, lower financial volumes and higher MG&A expense, partially offset by increased net pricing and favorable sales mix.

Income before income taxes improved 14.6% for the nine months ended September 30, 2024, compared to prior year, primarily due to increased net pricing, favorable sales mix and cost savings initiatives, partially offset by higher interest expense as a result of the adjustment of $45.8 million to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout, higher MG&A expense and lower financial volumes. Higher MG&A was due to increased marketing to support our brands and innovations as well as cost inflation.

A discussion of the foreign currency impacts on income (loss) before income taxes is included in the "Foreign currency impacts on results" section above.

Unallocated Segment

We have certain activity that is not allocated to our segments, which has been reflected as "Unallocated" below. Specifically, Unallocated primarily includes certain financing-related activities such as interest expense and interest income, foreign exchange gains and losses on intercompany balances and realized and unrealized changes in fair value on instruments not designated in hedging relationships related to financing and other treasury-related activities. Unallocated activity also includes the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides. Only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated.

			Three Months Ended																		Nine Months Ended
			September 30, 2024						September 30, 2023						% change						September 30, 2024						September 30, 2023						% change
			(In millions, except percentages)
Cost of goods sold			$	(1.9)					$	35.3					N/M						$	26.9					$	(77.1)					N/M
Gross profit (loss)			(1.9)						35.3						N/M						26.9						(77.1)						N/M
Operating income (loss)			(1.9)						35.3						N/M						26.9						(77.1)						N/M
Total non-operating income (expense), net			(72.1)						(42.3)						70.4		%				(153.5)						(146.4)						4.8		%
Income (loss) before income taxes			$	(74.0)					$	(7.0)					957.1		%				$	(126.6)					$	(223.5)					(43.4)		%

N/M = Not meaningful

Cost of goods sold

The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for the three and nine months ended September 30, 2024 and September 30, 2023, 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 8, "Derivative Instruments and Hedging Activities" for further information.

Total non-operating income (expense), net

Total non-operating expense, net increased 70.4% for the three months ended September 30, 2024, compared to prior year, primarily due to a settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases.

Total non-operating expense, net increased 4.8% for the nine months ended September 30, 2024, respectively, compared to prior year, primarily due to a settlement loss of $34.0 million recorded in the third quarter of 2024 as a result of Canadian pension plan annuity purchases, partially offset by lower net interest expense as a result of higher interest income from higher cash balances and higher pension and OPEB non-service benefits.

Liquidity and Capital Resources

Liquidity

Overview

Our primary sources of liquidity include cash provided by operating activities and access to external capital. We continue to monitor world events which may create credit or economic challenges that could adversely impact our profit or operating cash flows and our ability to obtain additional liquidity. 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, anticipated dividend payments, 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.

While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD. As of September 30, 2024, approximately 58% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. Fluctuations in foreign currency exchange rates have had and may continue to have a material impact on these foreign cash balances. Cash balances in foreign countries are often subject to additional restrictions. We may, therefore, have difficulties timely repatriating cash held outside the U.S., and such repatriation may be subject to tax. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. and other countries and may adversely affect our liquidity. To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries as they are earned. 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 our Company and each of our operating subsidiaries. We believe these financing arrangements, along with cash flows from operating activities within the U.S., are sufficient to fund our current cash needs in the U.S.

Cash Flows and Use of Cash

Our business historically generates positive operating cash flows each year and our debt maturities are generally 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 provided by operating activities of $1,415.8 million for the nine months ended September 30, 2024 decreased $188.7 million compared to $1,604.5 million for the nine months ended September 30, 2023. The decrease in net cash provided by operating activities was primarily due to the unfavorable timing of working capital, partially offset by higher net income adjusted for non-cash addbacks and the timing of income taxes paid. The unfavorable timing of working capital was primarily driven by the timing of cash paid for our payables as well as higher payments for 2023 annual incentive compensation, partially offset by the timing of cash receipts.

Cash Flows from Investing Activities

Net cash used in investing activities of $530.3 million for the nine months ended September 30, 2024 decreased $138.2 million compared to $668.5 million for the nine months ended September 30, 2023. The decrease in net cash used in investing activities was primarily due to cash paid in the prior year for an acquisition, partially offset by higher capital expenditures as a result of the timing of capital projects.

Cash Flows from Financing Activities

Net cash used in financing activities of $744.8 million for the nine months ended September 30, 2024 increased $16.2 million compared to $728.6 million for the nine months ended September 30, 2023. The increase in net cash used in financing activities was primarily due to higher Class B common stock share repurchases and higher dividend payments, partially offset by lower net debt repayments.

Capital Resources, including Material Cash Requirements

Cash and Cash Equivalents

As of September 30, 2024, we had total cash and cash equivalents of $1,021.7 million, compared to $868.9 million as of December 31, 2023 and $801.7 million as of September 30, 2023. The increase in cash and cash equivalents from December 31, 2023 and September 30, 2023 was primarily due to the net cash provided by operating activities, as well as the issuance of new EUR 800 million 3.8% senior notes due 2032, partially offset by net debt repayments, including the repayment of our EUR 800 million 1.25% senior notes which matured in July 2024, capital expenditures, Class B common stock share repurchases and dividend payments.

Borrowings

We repaid our EUR 800 million 1.25% senior notes upon their maturity on July 15, 2024 using the cash proceeds from our EUR 800 million 3.8% senior notes issued on May 29, 2024 and cash on hand. Refer to Part I.—Item 1. Financial Statements, Note 7, "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 draw on our revolving credit facility if the need arises. On June 3, 2024, we amended our existing $2.0 billion multi-currency revolving credit facility to, among other things, extend the maturity date from June 26, 2028 to June 26, 2029. As of September 30, 2024, we had $2.0 billion available to draw on our amended and restated $2.0 billion multi-currency revolving credit facility. As of September 30, 2024, we had no borrowings drawn on this amended and restated multi-currency revolving credit facility and no commercial paper borrowings.

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 and restated multi-currency revolving credit facility agreement, was 4.00x as of September 30, 2024 and December 31, 2023. As of September 30, 2024 and December 31, 2023, we were in compliance with all of these restrictions and covenants, have met such financial ratios and have met all debt payment obligations. All of our outstanding senior notes as of September 30, 2024 rank pari-passu.

See Part I.—Item 1. Financial Statements, Note 7, "Debt" for further discussion of our borrowings and available sources of borrowings, 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 10, "Commitments and Contingencies" for further discussion.

Material Cash Requirements from Contractual and Other Obligations

There were no material changes, except for the cash payment required for the mandatory purchase of the remaining 49.9% ownership interest in Cobra U.K. of $89 million which was made on October 21, 2024, 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, 2023, 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, Baa1/Stable Outlook and BBB/Stable Outlook with Standard & Poor's, Moody's and DBRS, respectively. Our short-term credit ratings are A-2, Prime-2 and R-2, 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 in its capacity as the issuer of the senior notes under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture. "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 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024 (subsequently repaid upon maturity on July 15, 2024). Further, pursuant to the indenture dated May 29, 2024 ("May 2024 Indenture"), MCBC issued its outstanding 3.8% senior notes due 2032. The issuances of the senior notes under the May 2012 Indenture, the July 2016 Indenture and the May 2024 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 this Quarterly Report on Form 10-Q (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group"). 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.

As of September 30, 2024, 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 7, "Debt" for details of all debt issued and outstanding as of September 30, 2024.

The following summarized financial information relates to the Obligor Group as of September 30, 2024 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

			Nine Months Ended
			September 30, 2024
			(in millions)
Net sales, out of which:			$	6,937.7
Intercompany sales to non-guarantor subsidiaries			$	78.6
Gross profit, out of which:			$	2,779.3
Intercompany net costs from non-guarantor subsidiaries			$	(287.3)
Net interest expense, out of which:			$	(119.9)
Intercompany net interest income from non-guarantor subsidiaries			$	27.5
Income before income taxes			$	1,044.0
Net income			$	796.8

			As of September 30, 2024						As of December 31, 2023
			(in millions)
Total current assets, out of which:			$	2,084.6					$	1,814.3
Intercompany receivables from non-guarantor subsidiaries			$	207.2					$	255.7
Total noncurrent assets, out of which:			$	24,513.5					$	24,641.0
Noncurrent intercompany notes receivable from non-guarantor subsidiaries			$	4,130.2					$	4,178.6
Total current liabilities, out of which:			$	2,742.6					$	3,048.4
Current portion of long-term debt and short-term borrowings			$	5.4					$	885.6
Intercompany payables due to non-guarantor subsidiaries			$	777.9					$	117.7
Total noncurrent liabilities, out of which:			$	9,065.0					$	8,094.7
Long-term debt			$	6,148.7					$	5,257.6

Capital Expenditures

We incurred $424.2 million and paid $563.0 million, for capital improvement projects worldwide in the nine months ended September 30, 2024, excluding capital spending by equity method joint ventures, representing a decrease of $4.2 million from the $428.4 million of capital expenditures incurred in the nine months ended September 30, 2023. We continue to focus on where and how we employ our planned capital expenditures, with an emphasis on obtaining 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 10, "Commitments and Contingencies" for further discussion.

Off-Balance Sheet Arrangements

Refer to Part II.—Item 8. Financial Statements, Note 13, "Commitments and Contingencies" in our Annual Report for discussion of off-balance sheet arrangements. As of September 30, 2024, 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 nine months ended September 30, 2024. See Part I.—Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for discussion of any recently adopted accounting pronouncements. See also Part I.—Item 1. Financial Statements, Note 5, "Goodwill and Intangible Assets" for discussion of the results of our 2023 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.