Good day, and welcome to the Molson Coors Beverage Company First Quarter Earnings Conference Call. You can find related slides on the Investor Relations page of the Molson Coors website. With that, I'll hand over to Greg Tierney, Vice President of FP&A Commercial Finance and Investor Relations.

All right. Thank you, operator, and hello, everyone. Following prepared remarks today, we look forward to taking your questions. 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, except as required by applicable law. GAAP reconciliations for any non-U.S. GAAP measures are included in our earnings release. Unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period in U.S. dollars and in constant currency when discussing percentage changes from the prior year. Also, U.S. share data references are sourced from Sircana, unless otherwise indicated. Further, in our remarks today, we will reference underlying pretax income which equates to underlying income before income taxes as defined in our earnings release. So with that, over to you, Gavin.

Thanks, Greg, and thank you all for joining us this morning. In the first quarter, Molson Coors once again delivered against our commitments, growing the top and bottom line while making strong progress on our acceleration plan. We grew net sales revenue by over 10%. And we grew underlying pretax income by nearly 69%, and we drove significant margin improvement in the first quarter. This morning, we reaffirmed our full-year guidance, which Tracey will discuss in more detail shortly. To sum it up, we remain confident in our ability to grow the top and bottom line for a third consecutive year, but cautious about current trends in the industry. The U.S. beer category has been challenged so far this year. While we did see some improvement in March, there was also volatility in the industry and mismatched weeks such as Easter. So we're keeping a close eye on April's trends and taking those into account for the balance of 2024. In spite of this volatility, we remain confident in our ability to achieve top and bottom line growth in 2024. We also remain confident in our ability to achieve our long-term growth algorithm. In the first quarter, we grew brand volume and net sales per hectoliter in both business units, and our share gains in the U.S. were consistent with the gains we saw in the second half of 2023. Having said that, we aren't the only ones who are confident in our business. Retailers are also confident, having allocated around 13% more space for Coors Light and Miller Lite in the U.S. during spring resets. This supports our confidence that these share shifts are structural. Our distributors are also confident, which is why we expect our core brands to grow distribution this year. And across the globe, we have strong commercial platforms that are designed to serve our brands in 2024 and the years to come. With that, let's get into how our business performed in the first quarter. And I'll start with the first priority of our acceleration plan, growing the revenue of our core brands. Collectively, our core brand started 2024 strong including double-digit brand volume growth for Coors Light and Coors Banquet in the U.S., high single-digit brand volume growth for Miller Lite in the U.S. and double-digit brand volume growth for Ozujsko in Croatia. In the past 4 months, we've launched new long-term campaigns across our core brands, starting with Coors Light during Super Bowl. Shortly thereafter, in the U.S., Coors Light became the top dollar share gainer year-to-date in the on-premise per Nielsen. Miller Lite is a close second and their combined success has fueled 12 consecutive 4-week periods of industry-leading on-premise growth for Molson Coors, 4 times more growth than the next largest competitor. In Canada, Coors Light is seeing similar success and grew nearly a full share point of the industry year-to-date. As I hinted earlier, Coors Light momentum is anchored by our new campaign 'Choose To'. This is an evolution of Coors Light's 'Made to Chill' campaign, which helped turn the brand around. But 'Choose Chill' is more active for consumers and more connected to the refreshment and lifestyle Coors Light represents. You'll continue to see those 'Choose Chill' ads as we launch a new music program this summer and expand Coors Light's presence in soccer and football. We believe work like this has driven Coors to become a trusted and desirable brand for consumers, which is true for Coors Banquet as well. After growing brand volume by nearly 20% in 2023, in the U.S. Banquet grew volume by 23% in the first quarter and gained nearly 0.25 points of industry dollar share. I've already spoken about spring resets. But while we're talking about Banquet, I want to share the significant distribution growth we've seen for this brand and expect to continue seeing moving forward. In 2024, Banquet is expected to grow distribution by nearly 20%, driven by surging demand in parts of the U.S. where Banquet has historically under-indexed, like the Southeast and Great Lakes. This is what happens when consumer demand fuels distributor and retailer confidence. This year, we plan to keep driving Banquet with more television media pressure, TV advertising for the first time in several years and several large programs with current and new partners across television, music, and apparel. Turning to Miller Lite, which grew its U.S. brand volume by high single digits in the first quarter on top of strong comps from the prior year. In March, Miller Lite launched its new 'All Stars' program, reinvigorating the debate about whether Miller Lite tastes great, is less filling, or both. This campaign brought on a new roster of long-term celebrity partners like J.J. Watt, Reggie Miller, Big Puppy, and Mia Hamm. The early response has been very strong, and we have more planned for the Olympics, Major League Baseball, and football. Now in Canada, Miller Lite sales are at an above premium price point. And year-to-date through February, it was the fastest growing above premium beer nationally, growing its brand volume by over 40%. Speaking of Canada, the Molson trademark also outperformed the industry and gained volume share. In March, we announced a multi-year partnership with the professional women's Hockey League, which was very positively received by fans and retailers alike. Similar to other women's sports, viewership for the PWHL has surged this year with record highs in both broadcast and in-person attendance. We're excited to continue this partnership and Molson will also have a strong presence at the Olympics this summer as the official beer sponsor of Team Canada. Moving on to the U.K., Carling's partnership with the FA Cup began coming to life across TV, digital, and retail in the first quarter. And we believe this is the perfect sponsorship for sustained success. According to our data, Carling is more associated with professional soccer than any other beer in the market. With a 35% association, it's nearly double that of the next competitor. Rounding out our core is Ozujsko, which has continued its strong momentum in Croatia and now has a 54% value share of the core segment. Ozujsko is much loved locally, but also by the many travelers who visit Croatia each year, and we've just launched a new equity campaign nationally to continue growing the brand. So our core brands have collectively continued to perform strongly in 2024, and we believe we have the right commercial plans to keep them growing for years to come. Now turning to our high-end brands. It's clear we have lots of runway in every part of our portfolio. In the first quarter, Madri Excepcional continued its substantial growth. In the U.K., the brand grew value sales by nearly 50% in the on-trade and by over 40% in the off-trade. Madri is currently the #3 world beer in the U.K. total trade, and we have been consistently closing the gap to #2. To keep the pressure on, we launched a new campaign in April that brings the soul of Madri to the U.K. and focuses on growing Madri's awareness. While Madri continues to grow at a strong base in the U.K., you'll recall we also brought the brand to Canada in late February. And while it's still early days, Madri has already made it into about 6,000 accounts across the country, and we believe the brand is performing very well so far. Beyond Madri's success, there are other parts of our Heine portfolio that we're actively working to improve, specifically Blue Moon. Between February and March, we launched new Blue Moon packaging in the U.S., a new name for Blue Moon Light, and a large-scale campaign called 'Made Brighter'. So our full-scale revamp has taken shape. And while it's too early to know the full effect, we are seeing early signs of positive traction. We're also seeing great performance for Blue Moon non-alcohol, which is now the top-selling new non-alc beer of 2024. There have been about 30 non-alc beer launches in the U.S. this year, as well as increasing competition. So there is a truly strong sign as the brand continues to gain distribution and share. While we certainly have more to do on Blue Moon, we are committed to driving the turnaround, and we are satisfied with the progress thus far. Speaking of progress, it was a fast start to the year for Simply Spiked, which grew U.S. brand volume by nearly 35% in the quarter. Simply Spiked Limeade hit shelves in February. And while we are still growing distribution, our variety pack already holds the #1 new item spot for the flavored alternative segment since its launch. Simply Spiked had a major media presence during March Madness, along with Coors Light and Miller Lite, and we'll continue to focus on sports as a primary passion point for consumers throughout the year. And while it's still early days for our new brand, Happy Thursday, which just launched in April, we've seen a very positive response from consumers thus far, and we look forward to building the brand as we approach the peak summer selling season. So as you can see, we are delivering on our long-term commitment to grow the revenue of our core power brands with strong overall performance across the world. We are delivering with the strength of high-end brands like Simply Spiked and Madri Excepcional, and we are beginning to see positive traction on other key areas of our high-end portfolio, such as Blue Moon. And finally, we are delivering on our commitment to enhance our capabilities with a large investment in our Golden Brewery nearing completion and a $100 million investment plan for our U.K. operations over the next 5 years, which we believe will ensure world-class production of our brands today and in the future. We are committed to our overall long-term strategy. We have delivered against it over the last three years, and we plan to continue delivering against it year-over-year. And with that, I'll turn it over to Tracey to share some details on our financials and drivers of our guidance.

Thank you, Gavin. We are proud to report another strong quarter. Net sales revenue grew an impressive 10.1% on strong Americas volume and favorable net pricing across both business units. This top line strength, coupled with volume leverage and ongoing cost savings drove meaningful margin expansion while we continue to invest strongly behind our brands. As a result, underlying pretax income grew 68.8%. Now many of the details can be found in our earnings release and slides, so I'll focus on our prepared remarks on some of the key metrics and drivers of our quarterly performance, and our outlook for the year. Our double-digit top-line growth was driven by both volume and price mix. As planned, we executed global net pricing increases in the quarter. We also had favorable mix driven by lower Pabst contract brewing volumes. This led to a 4.2% increase in net sales per hectoliter driven by both business units. Financial volume grew 5.7%, driven by the Americas. In the U.S., financial volume increased 7.6% despite an approximate 3% or nearly 350,000 hectoliter Americas headwind related to the exit of low-margin Pabst contract brewing volume. Our U.S. domestic shipments benefited not only from continued strong demand but also shipment timing. We typically build inventories in the first quarter ahead of peak season. But this year, we built more than usual in the U.S. This was due to elevated consumer demand and measures taken under our contingency plan related to the Fort Worth brewery strike that commenced in mid-February. For context, this year, our first quarter shipments to distributors exceeded brand volume by over 750,000 hectoliters. While in the prior year, first quarter shipments exceeded brand volumes by roughly 100,000 hectoliters. This U.S. shipment timing was a driver in the financial volume growth exceeding brand volume growth. Consolidated brand volume growth was 4.4%, with growth in both business units. Americas growth was led by the U.S., which was up 5.8%. The growth was driven by the continued strength of our core brands, the Coors Light and Banquet each up double digits and Miller Lite up high single digits. In addition, our key innovations, like Simply Spiked also grew. Canada also contributed to brand volume growth. While the Canadian industry has improved since the fourth quarter, it remains challenged. So we continue to take meaningful volume share, increasing brand volume by 3.6%, driven by our above premium portfolio. In EMEA and APAC, brand volume increased 1.9%, driven by growth in Central and Eastern Europe as inflation pressures ease, partially offset by challenges in the U.K. off-premise. Turning to costs, underlying cost of goods sold per hectoliter was up a modest 0.9%. Inflation while moderating, continued to be a headwind but was largely offset by 110 basis point benefit from volume leverage. The volume leverage was driven by the Americas business. This, along with lower logistics costs more than offset the impacts of direct materials and manufacturing inflation, which resulted in Americas' underlying cost of goods sold per hectoliter being essentially flat. In EMEA and APAC, underlying cost of goods sold per hectoliter increased 3.3%, which was a significant improvement from last year. The increase was due to higher direct materials and logistics costs as well as premiumization of our portfolio. We continue to invest strongly behind our brands globally, increasing marketing spend for our core power brands in particular. This included showing up in a big way in live sports at the Super Bowl, March Madness, and the FA Cup as well as supporting the launch of the new Blue Moon campaign. Turning to capital allocation. We deployed $144 million in capital projects, which support ongoing productivity and cost savings programs as well as our sustainability initiatives. Our Golden Brewery modernization project, which is nearing completion, is a great example of this. And we continue to return cash to shareholders. We raised our quarterly dividend again by 7% and we're active in executing our $2 billion share repurchase program that was announced last October. Utilizing our sustained and opportunistic approach, we repurchased 1.8 million shares for a total cost of approximately $110 million in the quarter. Since the beginning of the program in the fourth quarter of 2023, we have already bought back 4.3 million shares at a total cost of around $260 million. Now let's talk about our outlook. We are maintaining our guidance for 2024 as we are still early in the year, especially concerning our share of the U.S. and Canada beer markets, which have shown signs of accelerated decline in early April. We believe this is a sensible strategy to adopt. Now while the detailed list of metrics is in our earnings release and slides, I'll highlight the primary ones. We continue to expect low single-digit net sales revenue growth on a constant currency basis, mid-single-digit underlying pretax income growth on a constant currency basis, mid-single-digit underlying earnings per share growth, and underlying free cash flow of $1.2 billion, plus or minus 10%. Now let's talk about our guidance assumptions. Our goal is typically to ship to consumption for the year, and this is true for 2024. So given the strong U.S. domestic shipment volumes in the third quarter resulting in a significant gap between shipment and decisions, as I quantified, we expect U.S. brand volumes to exceed shipment volumes during the balance of the year. The termination of the Pabst contract brewing agreement at the end of this year is expected to be a 1.6 million hectoliter headwind to America's financial volumes over the remaining 3 quarters of the year. We expect positive price mix, and we continue to expect pricing in the U.S. and Canada to be between 1% and 2%, in line with historical averages, and for pricing in EMEA and APAC to trend in line with inflation. We also expect premiumization to be supported by our expanding above-premium portfolio. This includes brands like Madri with its strong momentum in the U.K., along with its recent expansion into Canada and Bulgaria, as well as by anticipated improvements in the Blue Moon brand family. It also includes flavor as we enter the summer with three winning flavors for Simply Spiked, as well as our new innovations, Happy Thursday. We believe these brands should keep us moving towards our medium-term goal of reaching approximately 1/3 of our global net brand revenue from our above-premium portfolio. On the cost side, we expect underlying cost of goods sold per hectoliter to increase due to continued, albeit moderating inflationary pressure, including material conversion costs, higher costs related to premiumization, and lower volume leverage impact as compared to 2023 and the first quarter of 2024. We continue to expect MG&A for the year to be roughly in line with 2023. This entails strongly supporting our core power brands and key innovations globally. This is especially true around the peak season as we lean into media at both local and national levels and with robust retail programming that drives consumer engagement. In summary, our strong momentum in 2023 has continued into 2024. This shows that our strategy is working with strong brands, supportive distributor partners, and the financial flexibility to balance growth and reinvestment with confidence in our ability to deliver our guidance in 2024 and on our long-term growth algorithm in the years to come. And with that, we look forward to answering your questions. Operator?

Our first question today comes from Bonnie Herzog from Goldman Sachs.

All right. I guess I have a question on your quarter and then guidance. I guess, first, were your Q1 results better than you expected or more in line with your expectations? And maybe I'm asking specifically on the shipments, given some of the items you called out? And then you did reaffirm your guidance for the year out of prudence given the softer industry data we're seeing in early April. So could you maybe just give us a little bit more color on what you're seeing? And if some of your concern that the weakness could be more structural in nature. I guess, I'm just trying to understand how this impacts your positioning, especially given all the shelf space you've gained recently.

Thanks, Bonnie. Look, I would say for the first quarter, our shipments certainly were higher than what we were expecting. We were obviously planning to ship higher than our brand volumes. But our supply chain team did a tremendous job actually exceeding our expectations each and every week. As you know, we have a strike down in Fort Worth, and we have a contingency plan, and the contingency plan is working better than we had originally expected. So short answer is yes, Q1 was better. And we would expect, obviously, that overshipment to come back over the next 9 months because we always try and ship pretty much to consumption over the year. Given how strong summer always is for us from a shipment point of view, we would expect more of that to come back in the back half of the year than we would in the front half of the year. From an overall industry point of view, the year didn't start off that well from an industry perspective. That was mostly attributable, we believe, to broader weather conditions across the country. March did come back quite nicely, although it was still down, but it bounced back compared to January and February. And then April has been pretty choppy from an industry point of view. The first 2 weeks were not good. Obviously, there were some dislocations like timing issues such as Easter, which moved into Q1. But it's been pretty noisy. The third week actually was a little better. Actually quite a lot better than the first 2 weeks of April. So a lot of volatility at the moment, a lot of holiday mismatches, and that drove us to be just a little bit more cautious about the outlook for the industry. And as I've said in the past, the industry will largely land on how summer goes because it's obviously a really big selling part of the year.

Our next question comes from Andrea Teixeira from JPMorgan.

So I was just hoping, Gavin, what you said now about April I mean, a couple of questions there. If you can help us with the STRs in April? And where do you think the softness is coming from? Is that from the carry across alcohol income levels on mostly low-income consumers? And on that, if you're seeing anything to call out in the economy segment? And as we look at your point, a lot of softness in the category, as we look at the track channel data and as you lap what are you going to lap now the benefit from what happened to your competitor? How can we judge your shelf gains, which are substantial, of course, you called out in the last earnings call, and I'm assuming you can elaborate a little bit more on that. So how can we judge your share gains and how sustainable you said in your prepared remarks that you feel a lot of that is sustainable. So if you can elaborate on that first on the category, STRs, and then on your shelf space gains.

Thanks, Andrea. Yes, a lot of questions in that question. So let me try and cover it off. And let me start with April, right? I mean, obviously, I understand the desire to monitor the industry on a week-by-week basis as we lap the upheaval that we saw in 2023. We did highlight months ago that Q2 comps were going to have a lot of noise. And it was going to be hard to credibly measure what was happening on a weekly basis. And if we stand back and look at the big picture, right? I mean, the decline of Bud Light and the explosive growth that we saw in our brands was staggered over several weeks. It didn't just happen overnight. So that was last year. And obviously, the industry took pricing this spring, which didn't happen in the spring of 2023 as I said in response to Bonnie's question, there was an Easter mismatch since the holiday was in the second quarter of last year and in the first quarter of this year. And then as you say, the shelf resets, which are going to give our core brands substantially more space in stores across America, 13% for Miller Lite and Coors Light and almost 20% for Coors Banquet, which is not a small brand for us. And the vast majority of stores haven't completed their shelf resets yet. So we know for a fact that there's a lot of upside to come from that. I don't believe any of us have seen such a dramatic shift in shelf space before. So I don't have a ready formula to offer you from a volume perspective. But what I do know and what I do believe is that more space equals more volume. It's not a bad thing to be getting all this extra space, and it's hard to see how 13% extra shelf space and 20% extra on Coors Banquet doesn't translate into a positive outcome. From an overall industry point of view, I think the answer there is a little more challenging, right? We haven't seen any data that suggests that GLP-1 is, for example, which I know is often cited as an issue, although that has quieted down. We don't have data to suggest that that's having a meaningful impact on the alcohol space. I do think that we're living in very volatile times. I do think that inflation is proving to be a little more sticky than folks expected, and interest rates are higher and staying for longer. So I do see cautious behavior from consumers. And when you lump all of these things together, that does, as Tracey said in her remarks lead to us being a little bit more cautious and prudent as to how we see the industry going forward. But at the same time, we are confident in our ability to drive to our guidance this year for, I think, the third year in a row. And we're confident in our long-term algorithm. So I hope that helps, Andrea. And I hope I covered off on all your questions in that one question.

Our next question comes from Bill Kirk from ROTH MKM.

So after 1Q with the underlying income, the guidance now seems to imply underlying income down low single digits for the rest of the year. And I guess the question is why would that be if price mix is ahead of COGS per hectoliter inflation, M&A is flat or MG&A is flat, and you have the shelf space gains? Why would the next 9 months be down year-over-year for underlying income?

Thank you, Bill, and good morning. I want to highlight my previous comments regarding shipments. In the first quarter, we shipped about 750,000 hectoliters more than our brand volume. Last year, that figure was 100,000 hectoliters above brand volume, resulting in 650,000 hectoliters exceeding consumption. We anticipate that this will normalize over the next nine months, primarily in the latter half of the year. This outcome is slightly better than initially expected, as our supply chain is effectively managing supply, and we are exceeding our contingency plan consistently. We intentionally increased shipments in Q1 to prepare for the additional momentum and demand from shelf resets. I want to emphasize that this will be the main factor as we move into the final nine months of the year.

Our next question comes from Peter Grom from UBS.

I don't want to kind of beat a dead horse here, but Gavin, you and the team have been pretty confident in your ability to hold share as you lap these gains. And we can all look at the data, and I don't want to overemphasize, but we are starting to see both Coors Light and Miller Lite lose share. Now it doesn't seem to be at the expense of your largest competitor, but just kind of a follow-up on Andrea's question. Are you kind of assuming that what we're seeing in the last couple of weeks here is really noise, and as these shelf resets happen, you're going to see kind of an improvement in share sequentially? And then just following up on that, I think you mentioned that a large percentage of the shelf resets are still to come. Is there any way you can help us understand what percentage of that is or how much has happened already?

Thanks, Peter. Yes, look, I mean, obviously, from an April point of view in the choppiness, I'll refer you to my response to Andrea's question or Bonnie's, I'm not sure. But we're confident we can lap the results that we had from last year. We believe that we've created a new foundation on which to grow. Shares held for more than a year now. And our first quarter share gains are consistent with the gains that we experienced in the second half of 2023. Our core brands in the U.S. now hold around 15.6% volume share of the industry. That's up over 2 share points from the beginning of 2023. And as I said earlier, we expect to see choppiness in Q2 when the 2023 gains were at their highest. So I would be careful about drawing conclusions from week-to-week share data. This month. As I said, our share gains in Q1 are consistent with where we were in the second half of last year. And in April, despite starting to cycle some of the big gains we had last year, our rolling 52-week volume share, which is around 23.1%, I think. Three weeks in is exactly the same as it was at the end of Q1. From a shelf resets point of view, we either draw or validate about 50,000 planograms in a year. And so we've got a really good understanding of what's going to happen from a shelf reset point of view. And we feel confident in the numbers that we've given of 13% extra for Coors Light and Miller Lite and almost 20% extra for Coors Banquet. As to timing, as I said, the vast majority of our retailers have not completed their shelf resets. This takes place from April and can go all the way through to July actually. So we'll expect to see the benefits of that as we head through Q2, Peter.

Our next question comes from Steve Powers from Deutsche Bank.

I wanted to contrast your comments today with what you said at CAGNY, where you seemed much more positive about the underlying trends in the industry and the future of beer. Today, however, the tone feels more cautious just a few months later, even though your guidance suggests not to focus too much on recent volatile data. Is this approach just a matter of being tactically careful, or are you observing factors that are causing you to reconsider some of the optimism you expressed at CAGNY?

Thanks, Steve. Look, from an overall industry point of view, I mean, we are more cautious, right? I mean the first 2 weeks of April were pretty grim from an industry point of view and did bounce back a little bit in the third week, but we're still down. So yes, I would say from an overall industry point of view, we are more cautious since CAGNY as more data has come in, particularly the first couple of weeks of April. Now Steve, I think it's important that we do put that cautious note out there, given what we've just seen over the last 3 weeks. But we won't know exactly what's going to happen with the U.S. beer industry until I think we're through summer and we see what transpires in summer. From an overall guidance point of view, we are confident that we can deliver our guidance that we've issued this year. And that's why we've reiterated, despite the caution that we have in the overall industry trends that we're seeing at the moment.

Our next question comes from Bryan Spillane from Bank of America.

Gavin, Tracey. I'd like to get your perspective on two things, if I can, Gavin. One is just if you could give us a sense of on- versus off-premise performance, both, I guess, in the Americas and in Europe, actually specifically U.K. Just trying to understand if there's any distinction in the softness we saw in the U.S., whether it's more concentrated on or off trade. And then just the second is just simply as you're looking at the Americas or U.S. and the off-premise. Is there anything we can read into just how volumes are performing around, I guess, merchandising events? I guess trying to understand, are consumers stocking up when there's promotions? Is there less stock-up behavior? Just trying to understand if there's anything we can glean in terms of the kind of consumption behavior.

Thanks, Brian. Let's look at the U.K. I think that was the thrust of your earlier first part of your question. In the U.K., the consumer, as we've been saying for quite some time now has been quite resilient, particularly in the face of the severe inflation that we saw there. From an on-premise point of view, continues to perform well, right? And from our perspective, we continue to hold volume share. Where we are seeing a decline from our perspective and more broadly, right, is there was obviously a fairly large excise tax increase in the off-premise specifically to try and close the gap between the off-premise and the on-premise in the U.K. from a tax point of view. But we are also seeing significantly more competitive promotional activities in the off-premise in the U.K., which we have not followed. And so that's impacting our share in the off-premise in the U.K. negatively. On the flip side in Central Eastern Europe, we were pretty cautious about that market last year given the impacts of inflation and the overall economy, energy prices, and so on, on consumers' disposable income. Thankfully, we're starting to see that trend reverse this year as consumers' confidence has improved. The disposable income gap has improved because inflation has come down, energy prices are a little lower. And we're starting to see that flow through in our volumes in Central and Eastern Europe. So positive from that perspective. The on-premise sales in the U.S. continue to outperform off-premise sales in our markets. In terms of consumer behavior, there's no significant trading down between price segments. However, we are noticing some shifts at the extremes of our pack sizes, with an increased focus on singles and small packs, as well as large pack consumption, while the mid-tier pack sizes, like 12 packs and 24 packs, are experiencing a bit more pressure. I don’t have any data indicating a significant change in consumers' consumption and purchasing behavior beyond that.

Our next question comes from Chris Carey from Wells Fargo Securities.

I have one follow-up and a question about cash flow. From a regional perspective in the U.S., have you noticed any differing trends by region that might suggest what you're experiencing in April is primarily weather-related rather than due to other factors? Additionally, regarding your cash position, do you have a strategy to potentially deploy more cash this year, especially given the stock's pressure, through your buyback program and market activities in Q1? Please provide any context on how you plan to manage your cash flow profile this year.

Thanks, Chris. Maybe I'll start with the, I guess, capital allocation question. So look, as with all capital allocation decisions, we've got models that we run our capital allocation decisions through to make sure that we are providing the most value. So in terms of the share repurchase program, I mean, we've got a sustained and opportunistic approach, and it is over 5 years. So again, that's just one part of our capital allocation strategy, and we'll use the models to make the right allocation decisions during a given period.

Thanks, Tracey. And the other part of your question, Chris, firstly, I wouldn't attribute the first few weeks of April's overall industry performance to weather. I don't think that we're seeing that at all. I mean, weather has not really been much of an issue. So I wouldn't pin it on that. It's more around consumer behavior and our belief that around consumer confidence, as I alluded to a little earlier. In terms of regional splits, no. I don't think we've got any data that would suggest there's anything dramatic happening in any particular region from an industry point of view.

Our next question comes from Lauren Lieberman from Barclays.

I have two quick questions. First, have shipments exceeded expectations in Q1, considering you've mentioned that shipments are ahead and the contingency plan performed better than anticipated? Secondly, with the upcoming shelf space gains expected between April and July, how might this affect shipment timing? Or should we consider it as part of the STW dynamic being ahead of depletions, without needing to factor it into our modeling?

Thanks, Lauren. Yes, our shipments were better than we expected in the first quarter. We very deliberately took our shipments up in the first quarter for two reasons: one, which was obviously preplanned, and one we put into action in early February. So obviously, we wanted to make sure that our distributors had sufficient inventory to meet the demands, which we knew were going to come from a shelf reset point of view, and to continue fueling the momentum behind our brands. And so that was planned. And then we did obviously increase inventory because of the strike, which we're experiencing in Fort Worth. The part we weren't expecting is that our supply chain team on a consistent week-over-week basis, I think we're in week 9 or 10 of the strike have overdelivered our expectations from a supply point of view. So that was not expected. And so where it's left us is that we have our inventory is in a very healthy place for us to meet the demands of the shelf resets, which are taking place as we speak to meet the demands of a base of volume, which is substantially higher today than it was more than a year ago. Behind the momentum of our brands and then also to continue to meet the demands of our distributors and our retailers as we move through the strike in Fort Worth. So hopefully, that answers your question, Lauren. Thanks.

Our next question comes from Eric Serotta from Morgan Stanley.

I would like to discuss reinvestment. You've mentioned before that since late last year, you were satisfied with your overall marketing and other expenditures, and you plan to keep that relatively stable. I'm curious about your perspective, especially in a scenario where the industry is becoming softer and there's a more cautious approach to industry volumes. Are you more likely, hypothetically, to increase spending a bit more for the remainder of the year to solidify the market share gains from last year? Or would you prefer to maintain similar spending on a per case basis, or is there really no change at all?

Thanks for that question, Eric. I mean, I'd point to a couple of things. One is we are very confident in our plans that we have behind not only our big core brands but also our new innovations and our Above Premium portfolio, not only in the U.S. but also in Canada and also across the pond. So we're executing against the plan that we had, and we're spending the money behind our brands to maintain the structural shift that we've seen, and we like our plans. We think they're working. We think our Coors plan 'Choose Chill' and Miller Lite's 'All Stars' programs have been very well received by the consumers. Madri in the U.K. and our recent launch into Canada has been extremely well received by consumers and retailers and distributors alike. And so our intent is to fuel the fire that we have, and that's our plan. I would also remind you, though, that we do have lots of tools which didn't exist 10 years ago in which we used to consistently monitor what's working and what's not working. It does help that more than half of our marketing media spend is now in digital, which allows our marketing team to identify what's working and what's not, what's driving value and what's not. And we are almost at the flick of a switch able to change that if we believe that is necessary. So I guess the short answer is, we believe in our acceleration plan. We believe in the health of our brands and we are fueling those brands.

Our next question comes from Robert Moskow from TD Cowen.

Gavin, I wanted to know if you could update your outlook for U.S. beer category volume. On the last call, I think you said flat to down 1% and I guess you're probably closer to the negative 1% right now? And then secondly, you said that the retailers are very excited about your marketing plans and you've gotten more shelf space. Do you have any color on how excited they are about the beer category? Are you giving this category more merchandising space this year? Or is that relatively unchanged? And I also saw a wholesaler index saying that April purchasing intent was actually pretty strong. So have you seen that data point, is that accurate or not?

Thanks, Robert. The retailers are confident and excited about our plans, and they have allocated us unprecedented amounts of extra space based on that confidence. However, I don't expect a significant expansion in the overall space allocated to the beer category. There will be changes within that space, with craft and flavored beverages, particularly seltzers, receiving less space. Additionally, there is a notable shift in the premium light segment as we gain from our largest competitor. Overall, I don't anticipate much change in the beer category as a whole. In terms of updating our outlook on the industry, I think we're just more cautious, and we need more data than just a few weeks in April before we reach conclusions. And as I said earlier, it is easier to do that once we throw the biggest selling season, which will have the biggest impact on where the industry lands for the full year. So hopefully, that helps. Thanks, Robert.

Our next question comes from Nadine Sarwat from Bernstein.

Two questions for me. The first is fully understand your point on it takes more than a couple of weeks in April to determine that sort of medium-term volume outlook for the beer industry. So it sort of sounds like you believe on the whole a lot of these weaknesses are transitory, would that be a correct interpretation? Or do you think that there are more structural headwinds at play? I know you called out not seeing anything from GLP-1, but I think investors are calling out a lot of potential concern as this is on potential. So is there anything else that you're keeping an eye on? And then the second question, Blue Moon, I know you spoke about all the initiatives that you guys are rolling out and still have in store. Could you elaborate on what your long-term ambition is for the brand, whether that be in terms of size or key target consumers or brand occasions?

Thanks, Nadine. Look, I think from an overall industry point of view and drawing conclusions in the first 3 weeks of April is not something that we're going to do, right? There's a lot of choppiness that's taking place in April. I think I covered that off on an earlier question around the timing of Easter, the massive dislocation, which we saw take place over several weeks in April from the Bud Light situation, the Easter mismatch pricing, and so on. So I think it's too soon to say whether these structural or the industry caution that we've expressed is transitory or not. From our perspective, Blue Moon Belgian White is the top craft beer, and Blue Moon Light holds the position of the leading light craft beer. The craft segment has faced considerable challenges in recent years, and as the largest brand in this category, we are not exempt from these issues. Nevertheless, we recognize that there is more to be done with Blue Moon. To address this, we have launched a new campaign and updated the packaging for the entire Blue Moon family to present it as a cohesive group in retail rather than as separate brands. We have also repositioned Blue Moon Light and made an intriguing entry into the non-alcoholic market with Blue Moon non-alcoholic, which is still in its early stages but is performing well and positively impacting the overall Blue Moon family. So Nadine, we are committed to reinvigorating this brand, notwithstanding the challenges in the overall craft space. It's been around for a long time. It's a great brand. It's got a wonderful iconography, and we think we can change the momentum of this brand, and that’s our plan. And whilst it's obviously early days because that plan has only been in place for a month or so, the early signs are positive.

Our next question comes from Michael Lavery from Piper Sandler.

I wanted to revisit the impact of the strike. You mentioned the increase in volume and some of the benefits from operating leverage. Are there any other factors we should consider when modeling for the future? Would it be accurate to say that any disruption costs are likely offset by not having to pay the striking workers? How should we assess the impact for the rest of the year, particularly in the near term, like the second quarter?

Thanks, Mike. Look, Tracey can take the cost side of that particular question. From an overall inventory level, our inventory levels are very healthy. We're maintaining supply to our distributors. Our plan is ahead of where we would expect it to be on a week-to-week basis. So from that point of view, I don't expect any impact. Tracey, from a cost point of view?

Yes. Michael, as of now, the costs related to the contingency plan have not been material, and we don't expect it to be material. So we do not expect it to be significant for the balance of the year based on our current projections.

Our next question comes from Brett Cooper from Consumer Edge Research.

There's been a lot talked about with respect to the soft beer industry. But one thing I would love to get your perspective on is, if you step back and not asking about first quarter or April, but over the last 12 months or whatever, there's been a narrowing in the gap of performance between beer and the overall alcohol space in the U.S. And I would love to hear your perspective on if the beer industry is not right with respect to some of the moves to flavors to be more competitive for share in the overall alcohol space or if you think that this is somewhat transitory?

Thanks, Brett. Look, I think the work that we've done as a category is having more of a positive impact than a transitory one. So I would suggest that the work that we've done around flavors, non-alcohol beers, the moderate impact of all of these things are positive for the overall beer industry, and I don't believe that those are transitory. I will move into flavors more broadly rather than seltzers specifically. It's been very positive for us as we've driven into the consumer trend of wanting flavor and moving around within flavor more actively than perhaps has happened in the past, whether that's moving from brands in the seltzer space to brands in the flavor space, which has really benefited simply. And then obviously, our foray into Happy Thursday opens up a very new and exciting opportunity for us. And I think you see this more broadly across the beer industry. So I don't see those as transitory. I see that as more permanent. Thanks, Brett.

Our next question comes from Gerald Pascarelli from Wedbush Securities.

Gavin, I had a follow-up on your above premium strategy and specifically within spirits. You acquired Blue Run last year, obviously, a very premium but very small brand. So given your goal of driving an increased contribution to above premium and understanding that a big part of that will, in fact, come from beyond beer, would just love to get your thoughts on whether you feel incremental M&A would be necessary to hit your targets and if increasing your exposure to spirits or American whiskey fits into that strategy?

Yes. Thanks, Joe. Look, I think our move into beyond beer is much broader than spirits, right? And actually, I would say the bigger move that we've made is into both flavor with brands like Simply and Happy Thursday, coupled with our move into the non-alcohol space and specifically with ZOA, so the sort of non-alcohol non-beer space with ZOA. I certainly believe that we need to have more than just ZOA in the non-alcohol space, and certainly, that can come from internal development as opposed to buy. I think from a spirits point of view, we did launch our own spirits brands. And we did, as you say, buy a stake in Blue Run. We've been at this for a couple of years, and our competitors have been at this for hundreds of years. So I'm pleased with our progress, and we've got more work to do to understand this space and be more effective in it.

That concludes the Q&A portion of today's call. I will now hand back over to Greg Tierney for any closing remarks.

Thank you, operator. Greg?

All right. Thank you, operator. If you do really appreciate you joining us today. If you do have any additional questions, please follow up with me and Tracey and the IR team. And with that, we thank everybody for participating in today's call. Have a great day.

That concludes today's call. You may now disconnect your lines.