Good day, and welcome to the Molson Coors Beverage Company First Quarter Fiscal Year 2021 Earnings Conference Call. You can find related slides on the Investor Relations page of the Molson Coors website. Our speakers today are Gavin Hattersley, President and Chief Executive Officer; and Tracey Joubert, Chief Financial Officer.

Thank you, operator, and hello everyone. Following prepared remarks from Gavin and Tracey, we will take your questions. Please limit yourself to one question and if you have more than one question, please ask your most pressing question first and then reenter the queue to follow-up. If you have technical questions on the quarter, please pick them up with the IR team in the days, in the weeks that follow. And today's discussion includes forward-looking statements, actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward-looking statements. GAAP reconciliations for any non-U.S. GAAP measures are included in our news release or otherwise available on our website. And also, unless otherwise indicated, all financial results the Company discusses are versus the comparable prior year period and in U.S. dollars. So with that, over to you Gavin.

Thank you, Greg, and thank you all for joining us today. Let me start by stating the obvious. The first quarter was not the quarter we expected to have; that reality was driven by three events: a cybersecurity incident that caused the global system outage, a freak winter storm in Texas that forced utility companies to shut off power to major businesses, including our Fort Worth Brewery, and government pandemic restrictions that shut down the entire on-premise channel in the UK and severely restricted much of the on-premise in Canada. To say that all of these events happened in a single quarter is unprecedented, to say the least. So while we can't control the weather, across the business, we executed well on what was in our control. This is true in how we responded to each event. Our team quickly implemented contingency plans to boost production and get our core brands back to a stable inventory before Memorial Day. Right now, we are shipping over 1 million barrels a week in the United States for the first time in nearly a year. But most importantly, it's true of how we are executing on our revitalization plan. During the first quarter, Coors Light and Miller Lite outperformed the combination of Bud Light and Michelob Ultra in U.S. industry share performance versus the prior year, according to IRR. Our U.S. above premium portfolio grew brand volumes versus the prior year and continued to gain industry share according to IRR, and we took substantial steps toward our hard seltzer ambition.

Thank you, Gavin, and hello everyone. Despite the challenges Gavin mentioned, we are proud of our operational agility and resilience as we have managed through these challenges while still continuing to execute our revitalization plan. Now let me take you through our quarterly results and provide an update on our outlook. Consolidated net sales revenue decreased 11.1% in constant currency, principally due to lower financial volumes, which declined 12%, while brand volumes declined 9.1%. We delivered net pricing growth in North America and Europe, as well as positive brand mix in the U.S., as we continue to premiumize our portfolio. However, this was more than offset by the on-premise restrictions due to the coronavirus pandemic and a corresponding negative channel mix, as well as the unfavorable shipment timing in the U.S. related to the cybersecurity incident and the Texas winter storms. Net sales per hectoliter on a brand volume basis increased 1.8% in constant currency as the net pricing growth more than offset the negative mix effects in Canada and Europe. Underlying COGS per hectoliter increased 5.6% on a constant currency basis, driven by cost inflation and volume deleverage, partially offset by cost savings. Driving cost inflation was higher transportation costs due to the continued tightening of the freight market in North America, as well as higher can sourcing costs as we continue to source additional aluminum cans from all over the world to address the significant off-premise demand for our core brands.

We will now begin the question-and-answer session. Our first question comes from Vivien Azer with Cowen. Please go ahead.

Hi. Thank you very much. Gavin, you called out the reopenings in the UK. It sounds like Ireland made some announcements in addition this morning about outdoor. That's certainly encouraging given how much exposure you have to the UK market. As we look at the comps, the shape of the year is clearly going to be lumpy. But in order to kind of probably get that business into growth considering the year-over-year compares on a full-year basis for COVID, do you need full indoor reopenings or do you think just outdoor, if outdoor can hold that enough to get you guys to positive volumes for the year? Thanks.

Good morning, Vivien, and thank you. Yes, look, as you rightly say the UK did open on April 12, for outdoor dining at pubs and restaurants. We've seen about 30% to 40% of the establishments reopen, and our volume in those establishments in the UK is up double digits in the first few weeks of April. I think the next step is on May 17, when indoors opens completely and then we have June 22, when they will be fully open. So far just a few weeks into the business, it's actually been pretty positive, Vivien. Thanks. Sadie?

Yes. The next question is from Bill Kirk with MKM Partners.

Hey. Thanks for taking the question. I have a follow-up on Topo Chico Hard Seltzer. It seems that after the sell-in, the shelves have been a little slow to replenish. So I guess the question is, are you or your contract partners having any difficulty keeping up with demand? And if so, how does that impact your decision on how geographically broad to offer the product?

Thanks, Bill. Good morning. Yes, you're right. We had a spectacular launch of Topo Chico, and we got to almost a 20 share in Texas, and we've got pretty close to a 7 share of the overall seltzer market in its first week of performance. As you rightly point out, we've had very strong reorders of Topo Chico. We're working with Coke to increase our supply of Topo Chico, and I think it will be a little constrained as we meet the huge unexpected demand for that brand. But as the weeks progress, I think you'll see progressively those shelf spaces being full. I think it was the right decision for us to go to the limited number of markets that we did and we won't be expanding there, and so we're quite comfortable that we can meet the substantial demand that we've had in its existing markets.

Thanks, Gavin.

The next question comes from Laurent Grandet with Guggenheim. Please go ahead.

Yes. So a quick one to start with about the Topo Chico phenomenon. Just a follow-up from this one, I'm not sure I understand how Coke can help here. Is it because you don't have enough flavoring and nutrients kind of the concentrate or is Coke helping you in terms of signing capacity to manufacture it. I thought it was all manufacturers from the contract manufacturers. So help me understand here the role Coke is playing in fulfilling the capacity? And my second question is more for Tracey; what makes you believe that the Board would be willing to increase the dividend in the second half, and what other KPIs are they now looking for and that we should pay attention to?

Thanks, Laurent. Look, it was always our intention with Topo Chico that we would take over the relationship and supply chain, which Coca-Cola had established ahead of us entering into our agreement with Coca-Cola. So we work closely with Coca-Cola and the third-party contractors. I think we've said in the past that it's our intent to keep that relationship at least until the end of the year. We certainly have enough seltzer capacity in our Fort Worth Brewery given the 400% increase that we made toward the end of last year. So that's the role Coke played, the original relationship was between Coke and the third-party, and we just work closely with Coke and the third-party.

Yes. Hi, Laurent. So just in terms of our confidence around our guidance. So we did reaffirm the guidance as we said. The actions that we took in 2020 greatly improved our financial flexibility, which better enabled us to execute against our capital allocation priorities, including investing behind our brands and our business to grow the topline and to grow our topline to pay down our debt; as we said, we have paid down $1.1 billion since March of 2020. The next lever is to return cash to our shareholders, and as we see consistent with our Q4 2020 earnings coming, we currently anticipate that our Board will be in a position to reinstate the dividend in the second half of the year, and we are having those discussions with them as to when and how we will reinstate that dividend.

Thanks, Laurent.

Thank you.

The next question comes from Andrea Teixeira with JPMorgan. Please go ahead.

Thank you. So I just wanted to follow-up on, first on the MG&A, the ability to control, and you had an impressive reduction and the leverage to pull for the end of the year to keep your FX-neutral EBITDA flat. So wonder how long and how many leverages you can pull in order to fund the additional marketing spend, and you nevertheless have continued the reduction in this is going to be everything else, I'm assuming T&E and all the other synergies that you have been pulling. So if you can help us kind of bridge that gap. I guess, that question is for Tracey. And then also on a follow-up for the dividend, is that the way we should be thinking is that as you go into the second quarter, and you basically go for this plan, you're waiting, the Board is waiting to see if you don't need to revise anything by the second quarter now that you reinstate the dividend. Is that the way we should be thinking here?

I'll tell you what, Andrea. I'll take the marketing side of your equation, and Tracey, if you can handle the G&A and the dividend side of Andrea's question.

Thanks, Gavin.

Our revitalization plan, one of its core tenets was that we were going to spend more money behind our core brands, behind our above premium brands, and also to extend beyond the beer with above-premium. In the first quarter, we actually did increase our spend behind our innovations, and we also increased the spend behind media on our core brands. In fact, we didn't make any adjustments to our marketing plan in Q1 as a result of the cybersecurity incident or the Texas storm. We spent what we were planning to spend, particularly behind our core brands and our innovations. We didn't plan to spend a lot of money in Europe, because of the on-premise closures, and we certainly didn't spend any money, as Tracey said in her opening remarks, on live sports or live concerts in the USA or Canada because they weren't happening. We do expect a substantial increase in marketing, particularly in Q2 returning pretty close to the 2019 levels as we fuel the tremendous momentum that we've got behind brands like Vizzy, Topo Chico, and our core brands, Miller Lite and Coors Light, and obviously as Europe starts to reopen, we'll be increasing our marketing spend in Europe in Q2 and beyond as well.

Yes. So Andrea, from a G&A point of view, obviously, there are odd things like T&E that we're just not spending behind with the restrictions in travel and other targeted cost savings; for example, in the UK, the on-premise was locked down for the entire quarter, and there were obviously savings related to that as well from the G&A point of view. I also want to remind you that we do have the cost savings program that we announced last year, $600 million over three years. In 2020, we achieved $270 million of that $600 million, and we expect to achieve in roughly equal portions the balance in 2021 and 2022. There are cost savings, which we are continuing to track very well against. That will provide some relief and enable us to carry on with our revitalization plan and invest behind our brands to grow the topline. As it relates to the Board, we are having conversations with the Board. We are assessing exactly when and how and we will be recommending to the Board to reinstate the dividend. So I can't say much more than that, but more to come.

Thank you. I will pass it on.

The next question is from Chris Carey with Wells Fargo Securities. Please go ahead.

Hi, everyone. I guess I'm just trying to understand a little bit how this year is going to play out, just given what you have kind of mentioned which I think basically is shipments will exceed depletions but not until the back half of the year. So that's really where the inventory replenishment starts in Q2, more in line with consumption and maybe not getting back all the volume that you lost during the incidents in Q1 in the quarter – in Q2 that is. And then you have expectations for marketing spending, to use MG&A as a proxy in Q2 being up year-over-year and sort of in line with 2019 levels or a little bit below, I think that's what I heard. And I guess if I'm putting all that together, I mean you could see something like the MG&A of 500 basis points in North America, for example, and EBITDA implied up kind of double-digits in the back half of the year to get to flat EBITDA, and I know I'm putting a lot of numbers out there, but the general concept here is that Q2 is a slow recovery. You have significantly accelerated spend. What happens if the recovery is a little bit slower? Do you pull back on that? And then just confirming this dynamic that it seems like to get to a flat EBITDA, it's really about just delivery in the back half of the year. Apologies for more of a financial question, but if that kind of makes sense, I appreciate any perspective on that? Thanks.

Thanks, Chris. Okay, there is a lot in that question, right? So I mean, obviously, we're not going to give quarterly guidance, the numbers. The guidance that Tracey has given you for the full year, and we will let that stand on their own. From a recovery point of view, we pretty quickly put a plan in place prioritizing our core brands of Coors Light, Miller Lite, Coors Banquet, Blue Moon, Miller High Life, Keystone Light, and Leinenkugel's Summer Shandy. So that's our primary focus at the moment. We have discontinued or de-prioritized slower moving brands and packs. Most of that is in the economy space but also some cider. Now, the plan is designed to ensure that we recover our core brands and to be in a much better place by Memorial Day and ultimately for Europe. The seltzers in the innovation supply, frankly, it wasn't affected by the cybersecurity incident at all. Can supplies returned back to normal, using 12-ounce bottles in pint kegs at full capacity. So I guess to try and get a little bit closer to your question, obviously with us really only focusing on the core brands that will imply that the slower moving and some of the de-prioritized brands will only really be picked up in the second half of the year from a volume perspective. From a marketing spend perspective, we've got a lot of momentum behind some really exciting innovations which have landed well, and we'll be fueling those, and Coors Light and Miller Lite's performance, as I said in my opening remarks, is strong, and campaigns are working, and we'll be putting the necessary firepower behind those two brands. Do you want to add anything, Trace?

No, I think you covered it. That was good.

Thanks, Chris.

Thanks for the perspective. Thank you.

The next question is from Steve Powers with Deutsche Bank. Please go ahead.

Yes, thank you. And I guess, can we maybe hone in on the impacts of the February storms and the cybersecurity event in a bit more detail. And just how you size those impacts in the first quarter. In the final analysis, what amount of those impacts represent effectively lost sales versus volume you expect to recoup over the balance of the year as you just described in your response to Chris's question? Just to understand that dynamic in a bit more detail would be great. And maybe as part of that, if you could just characterize how thin U.S. channel inventories were exiting March relative to consumer demand run rates, and just – what we're really trying to figure out is what the catch-up is now that I presume you're shipping to full capacity as we sit here at the end of April? Thank you.

Thanks, Steve. Let me see. So towards the end of March, we did file an 8-K which laid out what we thought were going to be the impacts of the cybersecurity attack. If memory serves me correctly, we said 1.8 million to 2 million hectoliters and a shift of EBITDA of about $120 million to $140 million. Now, I would tell you that the recovery plan our supply chain teams just did a tremendous job in the sort of back end of March. So I would say, by the end of March, we were a couple of hundred thousand barrels ahead of where we were expecting to be. You can assume that the impact was a little bit less than what we said in our 8-K. As we sit here today, I think it's April 29, we continue to meet the recovery plan, and in fact exceeded a little bit. Our breweries are well on track with that recovery plan. We have seen sequential improvement in our core brands inventory, but we're not where we want to be just yet. We expect to be much closer to where we want to be with those brands by Memorial Day, and then fully recovered on core brands towards the back-end of the second quarter, and then we can focus on those brands that we have paused beyond that. I think that's as far as I may go on the impacts, Steve.

Okay, fair enough. Was there – just maybe just on the February storms, was there a material net impact there or is that more of a delay intra-quarter in that the real kind of carryover effect was the cybersecurity event?

Texas is good; the Texas brewery was closed for almost 11 days. The government had shut the power down on us, and it obviously has knock on impacts, because there are some of our input material suppliers in Texas as well. So it did have an impact further up in the Eastern seaboard as well. I would say, it certainly did impact and was part of the 1.8 to 2 million hectoliters, which we announced. The lion's share was obviously the cybersecurity incident, but the Fort Worth shutdown was not immaterial.

Understood. Thank you very much.

The next question comes from Kevin Grundy with Jefferies. Please go ahead.

Great, thanks. Hello, everyone. Gavin, a few related questions if I could on the market share progress that you called out on Coors Light, of course this has been a priority for the company. So three related questions, if I could. One, if you could just spend a moment talking about the strategic shifts around marketing and positioning of the brand given some of the pressures in the light beer segment? Two, what your growth expectations are for light beer broadly sort of coming out of the pandemic here? Lastly, just how you think about maximizing incrementality to the overall portfolio if you lean in on a multi-brand seltzer strategy given that light beers have been a source of demand for seltzer, so your comments there would be helpful? Thank you.

Thanks, Kevin. A lot going on there. Let me try and then maybe try to knock them off. So I'll start with your final point, right? More than half of the seltzer growth is actually coming from outside of the beer category. We've tested that number multiple times over the last year, and it's pretty consistent. Premium lights are losing share to seltzers, but it certainly is coming from other places, including craft and ironically economy, less so actually premium lights, which may surprise you, but it's what the data says. We have seen continued positive trends for Coors Light and Miller Lite over the past quarter, and that's trailing with a strong performance that we had in 2020. The focus on replacing the health of our core brands is paying off, and specifically, our ambitions to connect with new drinkers and giving them a real reason to reach for Miller Lite and Coors Light to break through the big beer advertising clutter with fresh creative approaches, and we're seeing the benefits of it. For example, in Coors Light, we're up significantly in key brand health metrics like consideration and household penetration, positive impressions among 21-34-year-old drinkers, which is a key target market for us. So far in 2021, Miller Lite has seen an increase in both consideration and positive impressions. The Coors Light campaign has turned the corner since the 2019 launch with two major chillers, brands growing segment share in premium lights every quarter since we had that launched; we've cut our share loss in the total category by more than 70%. Coors Light is continuing to establish itself as the brand consumers buy when they are ready to chill, so the campaign for Coors Light resonates strongly with our core market but also our growth targets, for example, the Latino drinkers. Our revitalization strategy required us to invest behind our core brands, and we're doing exactly that, and we are seeing the benefits of it. From a share point of view, I think I gave you some of the stats in our opening remarks; I don't know if I mentioned that above premium also gaining industry share. Blue Moon LightSky is doing particularly well, and I haven't talked much about Vizzy, but we think we've got a real winner with Vizzy; it achieved almost a 3% share in 2020 with only one SKU, and that SKU moved faster in Q1 than all Bud Light Seltzer variety packs put together. We're expanding our footprint with new packs. We've got a second variety pack and the lemonade pack, and we've got a third new variety launching in summer. Our variety pack number two is already turning faster than our variety pack number one, and here Vizzy Lemonade is the second fastest turning lemonade seltzer in the market. Vizzy actually had a record sales week last week. So you gave me a lot of questions; I'll try to give you a lot of answers and give you a little bit of color. I hope that helps, Kevin.

No, Gavin that's fantastic. So congrats on the quarter, and then good luck here.

Thanks.

The next question is from Bryan Spillane from BofA. Please go ahead.

Hey, thanks operator. Good morning, everyone. Gavin, I had a question about on-premise in North America. More specifically, the U.S. as on-premise reopens, how different do you think it might look going forward given seltzer is a much bigger portion of the category, and growing today some accounts may be looking for ways to have reduced touches, kind of on a sanitizing type thought or just thinking about sanitation? I guess I just kind of think that could on-premise potentially look different in the future than it did pre-COVID? And if so, does that create any opportunities for Molson Coors to gain some share in on-premise?

Yes. I think the answer to both of your questions, Bryan, is yes. During the pandemic, we certainly saw an increased demand for large trusted brands, and that's particularly true in the on-premises as your question is directed at. We also saw in the off-premise, but it's particularly true in the on-premise where on-premise owners are sticking to fewer, faster moving brands, and that obviously benefits brands like Miller Lite, Coors Light, and it also helps us from a Blue Moon point of view as well. Blue Moon is the largest craft brand as you know, and it's disproportionately focused on the on-premise. The reopening of the on-premise and the move to large trusted brands is helping us, particularly with Miller Lite, Coors Light, and Blue Moon, and we've seen a tick up a couple of points in our share in the on-premise as the on-premises reopened. You referenced seltzers on-premise, and certainly in packaged form, I think that is absolutely right. We've actually had triple-digit growth in our placements this year, and retailers are reaching out to us asking for Topo Chico as quickly as possible, given its spectacular launch and the demand that's been created by that, and the distribution of seltzers and velocity for us in the on-premise is actually increasing, and it's going to give us a real opportunity to do large scale, sounding opportunities, particularly through our alliances. We know we've got great tasting products; when we get consumers to try them, they're sold, and that also applies to innovations like Blue Moon LightSky. We are launching to drive seltzers on a regional basis through our cross companies, and we'll see how that plays out, but certainly, we're seeing a big uptick in demand for our seltzer packaged brands in the on-premise. I hope I got all of that, Bryan.

Yes. No, that's great. It's helpful perspective. Thanks, Gavin.

Thanks.

The next question is from Rob Ottenstein with Evercore. Please go ahead.

Great. Firstly, just a quick follow-up and then the main question. So just wondering kind of where you are in terms of the current run rate in the U.S. on STRs. They are kind of running down low-double digits in the scanner data, but obviously, on-premise is offsetting that. Just trying to get a sense of where the business actually is, that would be helpful. The main question really is on the hard seltzers, Gavin. It sounds like you're doing better than expected with Topo Chico, better than expected with Vizzy. Do you have increased confidence that you'll reach that double-digit share of the category by the end of the year? And then you also referenced some work that you're doing on the international side with hard seltzers. How do you see those European markets developing for hard seltzers? Do you think there is a chance that can be as big as it is in the U.S. or is it very different given a different consumer? Thank you.

Thanks, Rob. Okay, let me take the first question first. Look, as you know, we don't normally give these updates anymore, but I think given the cybersecurity incident, I'll make an exception and give you some flavor for how April's going. You referenced scanner data. Obviously, that needs context, right? The four-week data includes massive loading that we had in the off-premise from March of last year, and it doesn't take into account any shift into the on-premise. Over the last four weeks, our sales to retailers in the United States are up mid-single digits, Rob. So quite different from what you're seeing in the scanner data. We're shipping over one million barrels a week in the USA, as I said in my prepared remarks. The UK volumes have double-digits, and despite that, as I said, 30% to 40% of on-premise being open and only for outdoor dining. Your second question around seltzers heading towards our goal of double-digits or 10% by the end of the year. I mean you're right. We had a spectacular launch of Topo Chico in very limited markets, only in 16 markets. I think we've got a clear winner here, and we will continue to feel the potential of this brand, and based on the reaction in those 16 markets, I think it's got strong national potential, and we will look to roll that out to future markets when we are confident we can meet the unexpectedly high demand we had in its rollout markets. You're right on Vizzy; I think we believe we have a real winner with Vizzy. I won't repeat the stats I just gave. I think particularly exciting for us is the fact that Vizzy Lemonade is the second fastest turning lemonade seltzer, and as I said, we had a record sales week for Vizzy last year. We're pleased with the performance; we have a singular SKU last year. We only launched in April and had inventory challenges. While we're meeting all the demand for Vizzy now that we've got the capacity up and running in our Fort Worth brewery, that means that we are more confident we can get to our 10% target. We think we've got the brands in the seltzer space to do that, and now we need to execute. Early data in the European market suggests that seltzer is going to be good. I'm not sure yet that I'm ready to tell you that it's going to be as good as it is in the United States. We don't have any data to support that, but certainly, Three Fold has landed well in the United Kingdom, and Wai is already in a couple of markets in Central Eastern Europe, and we'll be rolling it out more fully towards the end of this month. I hope that helps, Rob.

Great, thank you, Gavin.

The next question is from Bonnie Herzog with Goldman Sachs. Please go ahead.

Thank you. Hello, everyone. I just wanted to quickly circle back to the cost pressures you're facing this year. I know you guys touched on this, but maybe you could just give us a little more color on how you expect this will evolve through the balance of the year? Really, what are some of the key levers that you have to mitigate some of these pressures? Maybe touch on a little bit further on any kind of hedging you have in place? And then I'd love to hear how you're thinking about pricing as a potential lever to offset some of these cost pressures. Thanks.

Yes. Bonnie, so I'll take the cost questions. Our underlying COGS in the quarter increased 5.6%, and 470 basis points of that was inflation. Half of that related to transportation. As I think everyone knows, the freight market is really tight. We spoke about that in Q4, and we expected it to continue to advance in Q1. This started showing improvements in January and the beginning of February, but the net change with all the winter storms caused major disruptions to the entire transportation networks. We expect to continue to see that happen in the freight market. As it relates to us, sourcing cans from four continents has also added to that inflation. In terms of levers to mitigate that, I did mention our cost savings program. We achieved $270 million of the $600 million in 2020. We expect to deliver the balance in 2021 and 2022 roughly in equal portions. We are tracking well to achieve those savings. The majority of those cost savings are focused on COGS. We also have a robust hedging program. We hedge all our commodities. I don't want to get into the detail of how we hedge, but our hedging programs are robust, and that will help to mitigate some of the inflationary pressure that we are seeing.

Thanks, Trace. On the revenue side, Bonnie, look in terms of pricing, we don't give forward pricing guidance. Rather than using pricing to offset higher COGS, we've got hedging programs in place which Tracey mentioned and we have the cost savings programs in place as well. I don't know, Trace, did you mention the fact that our guidance does include any new in cost pressures, which we may have factored that into the guidance which Tracey gave earlier on?

Thank you. Helpful.

The next question is from Sean King with UBS. Please go ahead.

Thanks for the question. A broader question about distributor receptivity; is this going to be a beyond beer move that you're making? How has that impacted your relationships with distributors? And then, second question on top of that would just be any update you can provide on progress with the Yuengling JV?

Thanks, Sean. Yes look, my excitement on ZOA got ahead of me when I was answering a Topo Chico question earlier on. ZOA has been extraordinarily well received by retailers and distributors alike, and we've got a very strong partner in Dwayne Johnson. He is not just a celebrity partnership, he is actually an owner of the business together with us, and frankly, every time he puts something out on Instagram, he reaches 231 million followers in a nanosecond. The true test of how innovation lands is what are the distributors order. We just had our order window for the very first order closed, I think it was either last night or the night before, and the orders are strong, and that tells you how the distributors feel about it. The retailers are particularly excited about it as well. We are just getting into the market with it now, so I don't want to get ahead of myself, but where it has been in the market with some of the vitamin stores and GNC and online, it's been – the results are tremendous. Short story: very excited about ZOA from a retailer and a supplier and consumer point of view. La Colombe, we've already hit our distribution targets. We had distribution targets with our partner La Colombe that was set for the full year, and we are in April and we've hit them. This is an illustration of how distributors have executed in C stores and the drug chain. So short answer is very good, Sean. From a Yuengling point of view, a tremendous amount of work has gone into getting that going to launch in the fall of this year in Texas. They've made tremendous progress with the joint venture hiring and setting up the distributor relationships, awarding the brand to the various distributors in Texas and gaining commitments, talking to the chain. I would say we are exactly where we thought we'd be with the Yuengling joint venture.

Great. Thank you very much. All the best.

Thanks, Sean.

The next question is from Kaumil Gajrawala with Credit Suisse. Please go ahead.

Hi, everybody. Thanks for taking the question. A question on seltzers and guidance, perhaps together; on seltzers and profitability. In your guide for mid-single digits for the full year, what are you incorporating for the contribution for seltzer? A lot of positive comments, but how big do you expect it to be? Is it big enough? Is it a point of the five points? Is it three? If you could maybe just give us some context on how you're thinking about it there and how should we think about profits and the impact on profits from many of these products as you mentioned ZOA? Obviously, there is more than one owner; there was Topo Chico, and you’re on with Coke and rolling it out. Can you just maybe give us context on maybe if revenue contribution looks different from the profit contribution? Thank you.

Look, Kaumil, I'm not going to break down the sort of brand contribution to our NSR. I'll give you two points though. One, is that our seltzers and almost all the value innovation operates in the above premium space and some in the super premium space, and some of our innovation actually operates even above the super premium space. There's a lot of profit to go around for both ourselves, our suppliers, distributors, and retail. These are all above premium brands, and they're all going to contribute to the bottom line over time. So as far as contribution to NSR is concerned, we had one brand in the market for eight months of the year last year with Vizzy, and I think we exited the last – exited the year close to full share of seltzers, and we are closer to seven shares now than we were at a four share. We've got the plans, we've got the marketing muscle to put behind our seltzers for the balance of the year. I'm not going to be repetitive and hold you on all the excitement around Vizzy and both with Topo Chico. Proof Point's just launched into the market, so these brands are coming off a very low base from a contribution point of view in 2020 to our business, and so we would expect them to be a much more meaningful contribution to our business in 2021. I hope that's helpful, Kaumil.

Got it. Thank you.

The next question is from Lauren Lieberman with Barclays. Please go ahead.

Hi, sorry. I'll keep it tight. My question was just on cybersecurity and just thinking about go-forward costs, investments you might need to make to shore up your system. I know the company has been through several years of very, very tight times. Just thinking about the degree to which maybe there has been some under-investment and there is a need to kind of catch-up, and the degree to which that's kind of already factored into this year or next year, the thought process on spend. Thanks.

Just in terms of when you talk of the cyber incident, in Q1, as we said in our earnings release, we did incur a net expense of $2 million as it related to various consultants and experts that helped us and are helping us with the investigation. I just don't want to talk too much about it, because it is an open investigation around the incident, but just in terms of investments, we have spent a significant amount of CapEx upgrading our systems in North America, and we've been speaking about U.S. for a number of years, our PP&E systems, and at this stage, we are also upgrading our system support, Canada. We will be actually taking the Canadian systems and putting them onto our U.S. systems. More than that, Lauren, I really don't want to give, because it is an open investigation. Just in terms of Q2 though, as it relates specifically to the incidents, we do anticipate some through the minimal, really immaterial costs as we could have put it to date.

Okay. That's great. Thanks so much.

Thanks, Lauren.

This concludes our question-and-answer session. I'd like to turn the conference back over to Gavin Hattersley for any closing remarks.

Thanks, Debbie. And thanks everybody for participating in our call. There may be additional technical questions, which you have and please feel free to follow up with our Investor Relations team, and we look forward to talking with many of you as the year progresses. So with that, thanks everybody for participating in today's call and have a great day.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.