Good morning, and welcome to the Molson Coors Beverage Company Second Quarter Fiscal Year 2026 Earnings Conference Call. Now, I'll turn over to Barb Novarini, Vice President of Investor Relations.

Thank you, Operator. I'm pleased to introduce myself as Molson Coors' new Vice President of Investor Relations. Our earnings release and presentation materials are available on the Investor Relations section of our website. Today's discussion includes forward-looking statements within the meaning of U.S. federal securities laws. Please refer to our earnings release in our most recent SCC filings for important information regarding these statements, including risk factors as well as definitions of and reconciliations to any non-GAAP measures. Actual results may differ materially from our expectations and we undertake no obligation to update forward-looking statements except as required by applicable law. Today, we'll focus our prepared remarks on our performance and outlook before opening the line for Q&A. To allow as many participants as possible to ask a question, we ask that you limit yourself to one question and then rejoin the queue if needed. Any technical questions can be addressed with our investor relations team following the call. Unless otherwise indicated, all financial results are comparable prior year period and are in U.S. dollars. With the exception of earnings per share, all financial metrics are in constant currency when referencing percentage changes from the prior year period. Also, shared data references are sourced from CERCANA in the U.S. unless otherwise indicated. Our remarks today will also reference underlying pre-tax income, which equates to underlying income before income taxes and underlying earnings per share, which equates to underlying diluted earnings per share as defined in our earnings release. With that, I will hand it over to Rawal.

Thank you, Bob. Welcome to Molson Coors and hello to everyone on the call. Today we're joining you from Golden, Colorado, the home of Coors. Now since the launch of our Horizon 2030 strategy in Q1, I've been visiting with employees, distributors, and customers across our footprint to discuss our strategy, our early progress, and any gaps that require quick action. Before I begin, let me take a moment to thank our dedicated employees here in Golden and across the globe for their commitment behind our Horizon 2030 strategy. Now, let's start with the category. While the U.S. beer industry began the year on relative solid footing, the unanticipated energy and inflation shock associated with the conflict in Iran demonstrated how quickly global consumer sentiment and behavior can shift. In the second quarter, prices at the gas pump peaked in May, hitting certain U.S. regions especially hard. At the same time, geopolitical uncertainty weighed on consumer confidence and spending behavior in EMEA and APAC. These external factors contributed to our volume performance across our markets in the second quarter. In addition, EMEA and APAC heightened promotional activity as well as channel mix further pressured bottom line results. Of course, in Q2, the industry came together to champion the World Cup as a premier occasion for socialization and celebrating with beer. That said, high industry anticipation increased competitive pressure everywhere. We also saw pockets of intense promotional activity in the UK and across Europe. As such, our share of the early World Cup opportunity, which only included the last three weeks of Q2, varied by geography and segments. How we respond to these and other external pressures remain firmly within our control. I'm confident that our diversified portfolio of well-loved brands, strong cash generation, and disciplined balance sheet provides resilience and flexibility. These advantages enable us to address dynamic external conditions while focusing on the long-term strategic priorities that will grow our business. Based on this, we are reaffirming our fiscal 2026 guidance. So let's discuss our portfolio, starting with our core brands. Horizon 2030 aims to reinforce the relevance of these brands as the first choice for consumer occasions. We're not just sitting back and relying on existing scale and brand awareness to drive volumes. Enhancing our core brand share performance in today's competitive environment requires continued focus and execution. However, we have more work to do here, and we continue to assess how CoorsLite and Millilite can amplify their authentic identities to drive greater impact with both core beard and new consumers in the U.S. This work takes time, and we are pursuing new campaigns, partnerships, and ways to deploy our media investments with an occasion-based approach. In Canada, Coors Light largely performed in line with the industry and held its spot as Canada's number one light beer. In the UK, Carling experienced heightened competition in the quarter, and we've acted quickly with several actions designed to strengthen its position in the market. In EMEA and APAC, Pujusco maintained its leading position in Croatia following its sponsorship of the Croatian men's national team in the World Cup. Meanwhile, Coors Banquet drew share and brand volume in Q2. We attribute the brand's ongoing success to its clear identity and consistent marketing. This includes our campaign for America's 250th, called Icons of the American West, which helped contribute to growth across all U.S. regions in Q2. And it includes our latest partnership with the Yellowstone spinoff, Dutton Ranch, which has also become very popular. Turning to our value brands, our share trends improved, driven by the successful launch of Keystone Light Apple. We also saw share trends improve for Miller High Life. We've chosen to support growth in our value brands by deploying modest but targeted levels of investment. Keystone-like Apple or Capple is a great example of how we quickly responded to emerging flavor trends. We deployed an AI-generated social media campaign that generated buzz and resonated with the consumer seeking flavor at an enticing price point. Demand far outpaced our limited run production, so we're bringing it back in the form. we also decided to bring back fan favorite keystone ice a high abv beer in the value segment in above premium beer we saw mixed performance across our brands and geographies in the us we were pleased to see peroni grow brand volumes by double digits supported by targeted marketing investments earlier in the year but the broader blue moon franchise remains under pressure in q2 That said, we grew brand volumes for both Blue Moon Non-Alk and Peroni Zero Zero in the quarter, underscoring our relevance in the small but growing non-alk beer category. While heightened promotional activity impacted Madrid in the second quarter, above premium brand volumes showed segment growth in EMEA and APAC, driven by Styroprauman, Miller, and Blue Moon. In Canada, Miller Lite also continued its momentum as an above premium offering. We continue to gain scale in Beyond Beer, which is an important part of our journey as a beverage company. NSR growth for Monaco, Topo Chico Hard, and Fevertree was partially offset by other brands in the segment, like Simply Spiked. In Canada, Coors Slushy continued to show momentum in the RTD SELFA segment, while in EMEA and APAC, Kedra continued to benefit from growing interest in functional beverages. Both Fevertree and Monaco are well on track to each contribute 1-2% to NSR, solid proof points of Horizon 2030's focus on both premiumization and portfolio transformation. We have now lapped the first full year of our partnership with Fevertree, and we are encouraged to see momentum continue to build. Following a national campaign that celebrated the ease of mixology at home, Fevertree delivered its highest quarter of sales in the U.S. since our partnership began. Our first full quarter of ownership of Potomac Brands also produced encouraging results. the integration of monaco cocktails has been going well with its overall top and bottom line contributions tracking slightly ahead of our acquisition expectations while still early days this progress underscores the importance of bringing rtd spirits into our portfolio we see monaco as a clear example of how we can use m a as a force multiplier in our transformation journey. This acquisition filled white spaces in our portfolio with a fast-growing beverage segment. It also added an already scaled business, providing both growth and profitability on day one. Currently, the majority of Monaco sales fall within five states, and most of that is inconvenient. This is a strong example of our localized portfolio approach in action, and we see plenty of runway to expand into new geographies and channels as discussed in q1 the launch of horizon 2030 also incorporated changes to our operating model including quick actions and resource allocation at the local level for example in preparation for the world cup we invested incremental resources into host markets to drive memorable on-premise experiences Our partnership with venues in key entertainment districts across Dallas, Philadelphia, and Kansas City resulted in strong consumer engagement with our core and above premium brands. In addition, after reports that the Scottish football fans caused beer shortages in Boston, our restocked the Scots campaign swiftly responded by sending a Miller Lite barge to greet them in Miami. economy. These examples show how we're leaning into and learning from targeted efforts that drive incremental results outside of national media span. In total, while we're encouraged by our ability to make progress from a top-line perspective, we need to stay responsive to the inflationary cost pressures and commodity price volatility that impacted our bottom line. In the near term, our robust cost savings program and other efficiency initiatives mitigates uncertainty within the global macroeconomic backdrop. We made progress in our previously announced three-year $450 million cost savings actions by identifying areas where we believe we can drive greater efficiency. For example, we committed to various restructuring actions in EMEA APAC, including the closure of a small brewery in the UK, alongside other operational changes designed to modernize, simplify, and unlock efficiencies within the region. We've also allocated a portion of our previously announced $650 million in global capex to modernize and expand our supply chain capabilities. Upgrades are already underway at our can plant, Rocky Mountain Metal Company. We're investing in new bulk receiving facilities as well as new and upgraded canning lines. Importantly, we believe investments like these that help to strengthen our supply chain will create efficiencies during a time when aluminum sourcing is top of mind. Finally, on capital allocation. We designed our approach to reinvest in our business and reward shareholders as we progress towards Horizon 2030 together. We are a highly cash generative business and we intend to deploy that cash on prudent growth initiatives both organic and inorganic. We continue to believe that Molson Coors shares currently trade at a compelling value with an attractive dividend yield, and we have ample capacity left on our share repurchase authorization. We're halfway into our first year of the Horizon 2030 strategy, and one thing I'd emphasize is that no single event will suddenly change our trajectory. This process is about building portfolio strength, brick by brick. We already have two of the strongest beer franchises in the industry with Miller & Coors. These brands have scaled, generated cash, and harbored deep consumer loyalty. Our job is to keep them relevant and competitive. That means showing up with strong investment during key beer occasions while working diligently and creatively to find new unexpected moments these brands can truly own. At the same time, we're scaling our next layer of expected growth. We're celebrating success in our core with Banquet, in Above Premium with Peroni, in value with Highlife, and in beyond beer with Topo Chico, Monaco, and Fevertree. None of these opportunities individually change our future. We know that. However, in aggregate, we expect these wins to compound over time. To that end, we're making early progress. With that, I'll turn it over to Tracy to discuss our financial performance and outlook.

Thank you Raul. In the second quarter, our results reflected the challenging category and cost environment we anticipated, while also demonstrating the flexibility of our business model and the actions we are taking to manage through volatility. On a constant currency basis, consolidated net sales revenue was down 3.6%, underlying pre-tax income was down 27.8%, and underlying earnings per share decreased 22.9%. On an underlying basis, the quarter was shaped by a combination of external headwinds, timing impacts, and controllable actions. While some drivers were impacted by phasing considerations, the broader picture was largely consistent with our expectations. The industry remains precious. Our share performance is not yet where we want it to be. and cost inflation remains significant. At the same time, pricing, mix, cost savings, portfolio actions, and disciplined capital allocation continue to support our plan. So let's get into the details. The U.S. beer industry was down minus 4.2% based on our internal estimates. U.S. domestic shipments declined by 7.3%, in line with our expectations of a 6% to 9% reduction in the second quarter. EMEA and APAC brand volume declined 3.4%, primarily driven by ongoing soft market demand and a heightened competitive landscape. The Midwest premium remained elevated, adding approximately $40 million of year-on-year cost increase to second quarter cost of goods sold. Additionally, the elevation of fuel prices and freight market tightening increased cost inflation in the second quarter. MG&A was up 3.2%, largely due to cycling lower employee incentive costs in the prior year and additional investments in technology and capabilities. Taken together, these factors help expand the pressure on the quarter, but they do not change our priorities. We are focused on improving commercial execution where we have the greatest opportunity to influence share, protecting price realisation and using our cost savings programme to help offset inflationary pressure. Turning to the balance sheet, we believe this remains an area of strength and flexibility for the company. In the quarter, we successfully executed a series of public and private placement offerings that allowed us to refinance and retire a portion of our debt. These transactions enabled us to extend maturities and optimize our balance sheets at attractive rates in a rising interest rate environment, resulting in a net debt to underlying EBITDA ratio of 2.53 times at the end of the quarter, bringing us close to meeting our stated goal of under two and a half times by year end. As Raul mentioned earlier, we remain committed to a balanced capital allocation framework with a relative emphasis on reinvestment, M&A, returning cash to shareholders, and debt reduction varying quarter to quarter based on available opportunities and strategic priorities. This quarter, we chose to deploy capital in support of financial flexibility and M&A with the Atomic Brands acquisition. Uses of cash that we believe strengthen the portfolio over the long run while preserving flexibility to continue investing behind our core priorities. We also paid $90 million in dividends and repurchased 1 million shares for $42 million, making further progress on our share repurchase authorizations. We have repurchased 15.3% of our Class B shares outstanding since the plan was announced in October 2023. We continue to believe that Molson-Kurz shares trade at a compelling value and have $2.35 billion of our share repurchase authorization remaining. With that, let's discuss our outlook. As Raul mentioned, we are reaffirming our 2026 guidance. We are doing so with a clear understanding of both the risks and the levers available to us in the second half. Before we discuss the details of our near-term outlook, I'll remind you that the impacts of the global macroeconomic environment are multifaceted and difficult to predict. And while we have included in our guidance our best estimate of some of these factors, external drivers may significantly impact our actual results either up or down. Starting with the top line, US shipments were in line with our expectations for quarterly volatility year today with relatively weaker shipments in q2 following the strongest start of the year the important point is that the shipment variance is primarily a timing and alignment issue rather than a change in our strategic direction our guidance assumes the shipment trends will slightly outpace brand volume trends in the second half of the year our full year guidance also includes nine months of nsr and profit contribution from the integration of the Monaco portfolio. All other top-line drivers remain largely unchanged. Our guidance includes the assumption that full-year 2026 US industry volume trends will be better than the minus 5% we experienced in 2025. As a reminder, in Q1, our internal estimates indicated that the industry improved to down minus 1.6%, but at that time, we acknowledged that economic and geopolitical uncertainty made predicting future quarters very difficult. The industry slowed in Q2 to down 4.2% based on our internal estimates, but this is still ahead of 2025 full-year performance. Barring any further escalation of geopolitical events, our guidance still assumes industry improvements over 2025 levels. That said, we are not satisfied with our share performance. We continue to anticipate making progress as we improve execution in the channels, occasions, and consumer segments where we believe we can have the greatest near-term impact. We continue to expect an annual price increase of 1% to 2% in the U.S., in line with Q2 performance as well as the average historical range, and expect mixed benefits from premiumization in both business units. Moving down the P&L, we expect COGS to continue to be negatively impacted by rising commodity costs through the second half of 2026 on midwest premium we continue to expect elevated costs relative to 2025. as a reminder we had anticipated the largest year-over-year increase in midwest premium to hit the pnl in q2 2026. for the balance of the year we expect midwest premium to continue to be meaningfully inflationary but expect that our hedge coverage will mitigate a portion of this ongoing headwind for the full year we expect midwest premium inflation to be in excess of 130 million dollars we also expect elevated fuel costs relative to 2025 with tighter freight supply causing additional volatility in transportation costs these are meaningful pressures and we are not minimizing them however our hedging strategy productivity initiatives and discipline spending should provide partial offsets as we manage through the year. We now expect a reduction in MG&A expenses in the second half of the year compared to the prior year period. The objective is not simply to spend less, but to carefully manage expenses by redirecting investments toward the opportunities that we expect will improve performance and generate the most effective and highest returns. Our three-year $450 million cost savings program provides an important lever to reduce reliance on industry recovery as we navigate category and macroeconomic volatility. We are also evaluating additional commercial and operational actions to address the headwinds facing the EMEA and APEC segments. In closing, we are realistic about the category and cost pressures we face, and we are not satisfied with every aspect of our current performance at the same time we believe we have meaningful strengths a strong global brand portfolio a healthy balance sheet strong cash generation disciplined capital allocation and a cost savings program that gives us flexibility we are focused on the leaders within our control sharper commercial execution disciplined revenue management more effective marketing investments continued productivity and portfolio strengthening as we manage near-term volatility and stay focused on long-term growth with that we will

take your questions thank you to ask a question please press star followed by one on your telephone keypad now if you change your mind please press star followed by two when preparing to ask your question please ensure your device is unmuted locally to allow everyone the opportunity to address the management team please limit yourself to one question our first question comes from bonnie herzog from goldman sachs bonnie your line is open please go ahead bonnie your line is open please state your question bonnie we've moved to your second line please ask your question unfortunately we can't gain connection with bonnie our next question comes from philippo Saloni from Citi. Your line is open. Please go ahead.

Hi, good morning, everyone. I was hoping you could give a little bit more color on the category growth expectations, including the beneficiary from the World Cup in June and July, and then any additional comment on the market share performance that you're expecting going forward in the last of the year. Thank you.

Good morning, Filippo. Thank you for the question. So maybe I'll address a couple of things. I think it was a little bit of what's happened and what's going to happen. So if you think about Q2, you know, Tracy talked about the category based on internal estimates. So it was in the minus 4.2 range, Filippo. You know, the World Cup obviously was a great occasion from a beer perspective, right? It was a great opportunity for us to showcase our brands, bring people together. But it probably did not have that big an impact across the entire category. You know, if you think about on and off premise, what we did see from the World Cup was strong results in host cities, and particularly on the on premise. So if you think about, you know, on versus off, 14-ish percent versus off, you know, we didn't see a massive impact of the World Cup across the entire country. So in those host cities, in the on-premise, it was a great opportunity to showcase our brands, bring consumers into the category, and really have a great occasion to get our brands performing. So I would say that would be the World Cup assessment. I think your question then around the category, if you think about 2026 versus 2025, we still believe the category is going to be healthier than 2025. It is going to be continue to be a volatile year. You saw the changes in Q1 versus Q2 driven by macro issues, fuel prices, etc. So for us, it is a little bit of, you know, we'll keep close to where the category does in Q3 and Q4. But importantly, is what are we going to do about it? And I think that's where your question around market share comes in, you know, I go back to our portfolio. I mean, we've got a pretty broad set of brands across different price points. And so that gives me confidence that, you know, going into the next quarter, we can continue to make progress. You know, if you look at Q2 versus Q1, we've modestly gained share. You know, if you look at our different parts of our portfolio, we made some good progress in our value segment. We made some good progress in core, in the course trademark. mark, you know, above premium beer, and then also the beyond beer stuff. So we're making progress from a share perspective. We want to continue to make that progress going into Q3 from different parts of our portfolio. But, you know, the category volatility will react to how the category behaves, but probably it'd still be better than what 2025 was. Thank you, Filippo.

Thank you. Thank you. Our next question comes from Peter Grum from UBS. Your line is now open. Please go ahead.

Great. Thank you. Good morning. I actually wanted to ask a follow-up to Filippo's question just on the category. And you noted the weaker performance in C2, and this may be hard to do, but is there a way to kind of parse out the impact from higher gas prices, maybe some unfavorable weather versus maybe some shifts that may be more structural? And I just asked that in the context of, I think people were hoping that the category would be stronger in 2Q, but, you know, obviously saw a meaningful deceleration. And then I guess, you know, underpinning the back half, I mean, I understand that for the full year, you expect it to be better than the down five, but should we be expecting a continuation of kind of maybe what we saw in Q2 from a category standpoint?

Yeah, I think, good morning, Peter. I think your question around the category, you know, passing out higher gas prices and impacts is, I would say, is a tricky thing, right? Because maybe I'll explain it in a different way. So if you think about coming into this year, consumer confidence, you know, a little bit of clarity in terms of consumer sentiment and how people were making decisions, I think you saw the category being healthier than Q1. You know, as we get into Q2, I do think you saw different behavior from consumers when things like gas prices, etc., are impacted. You know, we saw that in pack data. We saw that in channel data. So there was definitely a pullback. You know, I didn't go back to occasions, right? I mean, the World Cup, again, was a great opportunity for bringing people together from a bear perspective. But maybe a little deeper into, you know, performance of the category, if you look at some of the channels, channel-specific data, you know, convenience and dollar continued to do well in Q2 versus food and grocery, you know, singles and small packs did well versus some of the other packs. So folks were making choices in a way differently in terms of, you know, their expendable income. Now, on the other hand, I would call out the consumer that continues to grow from a premiumization perspective, right? So above premium portfolio with Peroni, with FIBA 3, continues to see growth. So that consumer is resilient, is healthy. The on-premise performed better than the off-premise overall for the category, and that's also a good sign in terms of consumer health in that regard. So, you know, hopefully that gives you a sense of some of the levers and the drivers in the category for Q2. You know, your second part of the question is, you know, I think that macro impact, oil prices sentiment is probably going to be an important aspect as we think through QH2, Q3 and Q4. But, you know, then I go back to our portfolio, right? Our portfolio is pretty broad. It is encompassing different price points. And that gives me confidence and it gives us our ability to lean in differently, right? Whether it's the value segment with pricing, whether it's our core segment with Coors Light, Miller Lite, with price-backed architecture. And then it's obviously leaning in with our above-freemium beer and beyond beer. So, you know, the category will stay volatile, you know, will stay, I would say, better than 25. but we got the different tools, different brands, different parts of our portfolio to lean in differently and continue to execute, right? And again, I think the previous question about we've got to keep showing share improvement that we've done now Q2 versus Q1, and we've got to keep leaning into that for the balance of the year.

Great. Thank you so much.

Thank you. Our next question comes from Robert Ottenen from Ebercore. Your line is open. Please go ahead.

Great. Thank you very much. I missed the first part of the call, so excuse me if you've already addressed this.

Hi, Robert. Are you still there? Your line is open. Apologies, Robert. We lost connection. We'll now move on to our next question from Chris Carey from Wells Fargo. Your line is open. Please go ahead.

Hi. Good morning, everybody. Hopefully, you don't lose connection with me. I wanted to ask about the evolution of the inflation expectations. I think I heard Tracy say 150, the slide say 130 for a Midwest premium impact, but maybe just um you know conceptually uh you know inflation is the expectation now that it's running you know higher for the full year than the prior expectation how does that impact your outlook for cogs per hectolitre and then similarly or conversely you're expecting i think uh maybe a slight decline in mgna on the full year you know confirm if that's correct and and where does that you know savings things come from relative to prior expectation, and maybe importantly, I'm just starting to think about the path into 2027, can you just perhaps give us any construct for how to think about your ability to be hedging some of the cost increases that you have seen going into next year?

I think you had mentioned that you'll take maybe a pricing in line with similar levels in the fall. and so you know how do you really think about starting to get ahead of some of the the cost curve as as you go into 2027 and love any thoughts on that so thanks for the balance of yeah uh college inflation versus mgna and how and how the path you know unfolds morning chris thank you uh a number of different parts so i think i captured all all your pieces so let me address that and tracy you know please um add enough after this so if you look at uh This year, 26, you know, obviously when we laid out our 26 guidance and we shared our plans, we knew we were stepping into this year with a high inflated, you know, cost base in terms of midwest premium, LME, just the inflationary impact this year. So the way I would call out H1 is I think the teams have done a good job of managing that within the framework that we had laid out, right? So between all the volatility of aluminum pricing and Midwest premium, the teams have done a good job of managing our cocks per hectolitre. The one thing that we did see a little bit more elevated levels now is fuel costs and logistics costs, right, where logistics companies, transportation issues are proving to be a little bit more challenging. But, you know, I would put all of that under the bucket, Chris, of our focused on cost management, our focused on our savings program and managing through that. So for the balance of the year, you know, if you think about our cost per hectolitre, you know, probably in line with what we've said, and I'll let Tracy give you some specifics on that. But, you know, it's a combination of, yes, elevated levels, still a lot of volatility, but working through the levers we have. To address your question around MG&A, you know, there's a number of factors that go into our MG&A for the balance of year, right? So it is I invest in tools and technology capabilities, obviously the cost savings programs that we announced and initiated both last year in the Americas and earlier this year in the MEA and APAC, right? So that all starts playing out in the balance of the year and then making sure we have the right brand support and making sure we're investing behind our brands for the balance of the year. So, you know, for MG&A, just there's a number of things we put in place and obviously to be disciplined around our cost base. You know, you probably saw that in the context of our business results. So, you know, that's how I would characterize the whole MG&A line. You know, I know we don't talk a lot about 27, but it's an important as we, you know, execute on 26, we're obviously thinking through what does that inflationary landscape look like for 27 and, you know, going back for making sure we have the right brand investment and support for our portfolio. You know, this is a competitive landscape, but we're going to lean in from a portfolio investment for 27. So more to come on 27, but hopefully it gives you a sense on 26 and G&A. And Tracy, any more things to add on call?

Yeah, just in terms of the Midwest premium impact, Chris. So if you remember, our initial guidance assumed that the impact of Midwest premium would be at least $125 million. Our latest estimate now is above $150 million, so 130. zero. And so we do, I mean, midwest premium is not coming down, you know, commodity costs are going up. So we do assume that midwest premium and base aluminum will be elevated versus last year. And again, the midwest premium impact for Q2 for us was $40 million. So we do have hedges on for midwest premium that is going to help mitigate some of these increases. But, you know, know, as we've said before, it's very difficult, very expensive. It's not a liquid market. It's not a transparent market. So we also are using our cost savings program, which we've mentioned to help mitigate some of this inflation. But, you know, we do have good line of sight to the balance of the year. But again, you know, continue to see elevated commodity costs, particularly the mid-risk premium.

Thank you, Chris.

And our next question comes from Gamil Gawala from Jefferies. Your line is open. Please go ahead.

Hey, everyone. Good morning. I guess a couple of questions, you know, you hear about buybacks, dividend, balance sheet, cost cutting, many of these things, which, you know, are great and support the stock. But, you know, there's a like there's an essential volume area to focus on. And while you've talked about it a bit, do you feel like that's sufficient? Like, is now the right time to be cutting costs or buying back shares as opposed to maybe really stepping it up in a more meaningful way in your investment behind, you know, a series of brands, including, you know, really galvanizing some of the ones that are working like Peroni or Coors Banquet or figuring out how to be more relevant in, you know, in other spaces where some of your brands aren't?

Yeah, well, thank you for the question and good morning to you. So, you know, absolutely focused on the top line, Kamala. I mean, if you think about our plan, I mean, we are, you know, grounded on making sure our brands are, you know, the key drivers of our business in the future. So let me maybe explain, you know, how we think about our top line and our brands, right? So obviously we are, we have core brands and categories that are under pressure. So the way we think about it is obviously making sure we are supporting those brands well. So whether it's schools like Melalite, things like Banquet, and making sure we have the right level of marketing investment against them. You know, we showed up for our big brands in a big way this year in live sports. So, you know, World Cup was one example. But for the balance of the year, we're going to show up in, you know, NFL football, college sports, you know, MLB, soccer, et cetera. We're going to continue to lean in investment in things like music. So the investment in our core is super important, right? And because, to your point, if the top line and our brands are not healthy, it doesn't really matter. So we will definitely continue to lean into that. If you think about our value segment, this was an important area of our strategy because it is a big part. Consumers are looking for, you know, brands at different price points. and you saw a step change for us in Q2 versus Q1. And it was done in a very, very specific investment approach, right? So some of the work around Keystone Apple, Keystone Light Apple, you know, the work on innovation with Miller High Life, some of the new packaging on Miller High Life that is coming out later this year. So, you know, that part of the portfolio does require investment, but in a very different way than our big brands do. And then to your point in above premium beer, we're leaning into Peroni in a big way. You know, we still have work to do on Blue Moon, but we're going to definitely lean into Peroni and a number of other brands across different markets. You know, Millilide in Canada is a great area for growth for us in the above premium beer. And using the balance sheet for beyond beer is definitely an important priority. You saw us step into that space with the Monaco acquisition earlier this year, and we're going to continue looking at ideas that make sense to augment our portfolio. But you've got to do that at scale, right? You have to do that at scale. It has to do something to move your top and bottom line. And that's why we feel Monaco is a great example of leaning in. And so we're going to use our P&L and balance sheets to help facilitate our business for the top-line perspective. Now, while we're doing that, you're absolutely right. We are being disciplined in a highly inflationary landscape to be focused on cost and drive our cost savings program. We're using the balance sheet in a careful way to make sure we are doing the dividend and buyback. But again, leaning first in terms of investing in our business.

I mean, I think the only thing that I'd add, Kamal, is that we are a highly cash generative business. And so when we look at our capital allocation priorities, because of our cash generation, we are able to invest in all of those, whether that be, you know, through M&A, whether that be through investing in our capabilities or, you know, investing behind our brains. We're able to do that at the same time, you know, buy back shares, which, again, we feel that our shares are a compelling investment and we do have a program which, you know, we'll continue to execute against. But quarter by quarter, those allocation priorities may differ. In Q2, we took the decision to put our money behind M&A with the Monaco acquisition as well as, you know, maintain flexibility in our balance sheet by paying down some of our debts. So, again, we have optionality when it comes to our uses of our cash. And we are able to invest in all of those big assets around capital allocation. Thank you, Paul.

Thank you. Our next question comes from Drew Levine from JPMorgan. Your line is open. Please go ahead.

Hey, good morning. Thanks for taking the question. Hul, you talked to the beer industry freaking sequentially and expectation that it'll probably remain volatile, but still think in the year is better than 2025. But wondering if internally your expectations for the industry have changed at all, you know, given what we've seen in the second quarter and so far in July. And also how are you thinking about the market share performance? You said you weren't happy with it. I think there was some expectation that it would improve relative to one two which which it did in second quarter but um also for the balance of the year um but but maybe where you've fallen short of internal expectations there and um you know i guess everything about the timeline um to sort of interventions um playing out uh to better market share performance thanks yeah no thank you for having uh drew i think a couple of things Thanks for your question.

So first is on the category piece. Yeah, I think your point of, do we have a different point of view on what Q3 or Q4 might look like? I think broadly is in line to what I said, right? I mean, we knew there was going to be volatility in the category coming into this year. We also had an assumption of it's going to be better than 2025. How that volatility plays out, Drew, it is something we'll watch and see and react accordingly. So I'm not sure I can give you more perspective on the category performance. I think your share one is where I would say that's definitely an area that we focus a lot of time internally about. The category is something we all obviously lean into in terms of different locations. But what we can do with our portfolio is important. And, you know, you heard that in my prepared remarks and Tracy's prepared remarks. You know, we don't like where we are in terms of the improvement. Now, we did have modest improvement in Q2 versus Q1 in terms of share, whether it was in value, whether it was collectively in our core. You know, so we are showing progress. It's just we're not showing as much as we would like to. And so that is something we will continue to lean into. And that is a combination of making sure we have all the right commercial programs, right commercial actions. If you think about, you know, retail actions in terms of shelf space or placements or displays, features, we think we are pretty well positioned for the second half of the year. If you think about being competitive in the context of pricing in the U.S., you know, we believe we are being highly competitive. And then if you think about supporting our brands in a big way and being clear in what these brands stand for, I think we're pretty excited about how our brands are showing up. Now, if there's some course corrections needed or we need to lean in a little harder, you know, we continue to do that, whether that's very local in particular cities and states or regions or whether that's at a national level. So, you know, market share is something is important. Again, I just maybe even flag out a mere impact business. Right. So Q2 was a highly competitive landscape. The World Cup played out in a in a different way in our UK business, because, again, from a competition perspective and we're taking the necessary actions. You know, our core brands there are some of the largest in the market, in the category, and we're taking the necessary actions to make sure we are being reactive. So, you know, I understand your question around category, and we will manage through any sort of volatility that has in the category. But internally, a lot of our focus is on making sure our brands show up in the right way, that different parts of our portfolio are showing up in the right way. And that's a combination of multiple levers on the commercial side, right? So retail, pricing, innovation, that's an important, again, lever we've obviously pulled in parts of our portfolio and then the marketing investment to making sure our brands are well So hopefully that gives you a sense of just the thinking around H2.

Thank you. Our next question comes from Bonnie Herzog from Goldman Sachs. Your line is open. Please go ahead. All right. Thank you. Good morning, everyone. I hope you can hear me.

Hi, Bonnie. Morning. Yeah, we can hear you now.

Okay, good. Sorry about that. Just maybe a little bit of a follow-up just on everything that was discussed this morning. You know, as we move through the balance of the summer, I'd be curious to hear from you what you're seeing in terms of, you know, category demand and really consumer behavior. And, you know, are there certain initiatives or maybe innovations that you're leaning into to accelerate your trends? And then could you also update us on, you know, the shelf and cooler space that you maybe took in the spring resets? You know, and I'm just curious, like, you know, what that ended up being.

Thank you, Bonnie. And, you know, so maybe I'll address the different parts of your question. So let me start with consumer behavior. So from a consumer perspective, we definitely saw a change in Q2 versus Q1, right? So when consumers in Q1, whether it was low-income consumers, Hispanic consumers, you know, I would say it was different than 2025, and we saw that in channel data in terms of how consumers came in, in convenience, but also in grocery and in food, right? And we did see a change in Q2. In Q2, convenience and dollar channel was probably the, you know, had the most success in food and grocery did not. We saw that in pack size, right? Historically, folks, you know, singles play out well in our category. We saw a little bit of a decline in large packs, but, you know, progress in or growth in small packs. So, again, that shows you the actions consumers are taking in the context of being pressured, how they're using dollars, how they're putting their money where they want to look at brands. If you think about our portfolio, and this is why your question around innovation, this is why you see us leaning into in different ways. So the value portfolio was important to making sure we can get our consumers price points that they're looking for. You saw us lean into that with Keystone Innovation. You saw, you know, we've announced we have more innovation coming in the second half of the year with Keystone Ice, which is a high ABV, you know, more single centric innovation. You saw that even in high life. So, you know, the portfolio and how we react into that becomes important. The other part you'll see us is obviously things like Monaco. You know, Monaco, as Tracy said, is a business that sells majority in singles. You know, there is a balance of ABV as consumers think about, you know, value. So for us, that is a great stepping into where the consumer trends are, where the consumer may be pressured, but making sure we have the right portfolio around that. On our core brands with Coors Light and Miller Lite, making sure we have the right price back architecture with the right formats in those particular channels. So those are the actions I know we are taking both from an innovation and trend perspective. Your question around shelf and cooler space so we obviously do that in the spring reset um and we did gain shelf space uh for for our brands you know if you think about the broad category yes the category saw some um losing some shelf space in in things like craft uh maybe in some particular flavor uh subcategories but if you think about our business in in the majority of our brands so the the core brands was like another light value, you know, above premium parts of our portfolio, Peroni, et cetera. We did see incremental shelf space. We saw strong retail execution, whether it's in the cooler. We saw strong, you know, execution in terms of displays. You know, Coors Light continues to be one of our biggest brands in the context of displays and features. So, you know, our brands are pretty well being executed in retail. I mean, you know, of course, Banquet continues to see distribution gains and strong execution in retail, Peroni does. So, you know, we feel pretty good about our retail execution, our retail presence, how our brands are showing up. Again, example of Topo Chico, you know, so we are definitely holding our share of space. We're definitely, you know, growing that in different parts of our portfolio. But overall, I think we'll feel pretty good going into, you know, obviously the summer and going into the balance of the year. And then I think I got most of your questions, Bonnie. Thank you for that.

Thank you. Our next question comes from Robert Ettenstein from Evercore. Your line is open. Please go ahead.

Thank you very much. And thank you for giving me another chance. I missed a good part of the call. So, excuse me if you address this already, but I was wondering if you could maybe, you know, talk about Monaco in a little bit more depth, you know, what surprised you, where the integration is, and more specifically, you know, my understanding is that some like 80% or so of the sales are in a handful or so of states. But, you know, what is the game plan to make it, you know, fully national at this point?

Morning, Robert, and no problem. I'm glad you got back in the queue, and we won't hold that against you of missing our call in the first half. I'm joking, Robert. No, we appreciate you being here. So if you think about Monaco, I mean, it's been a great add to our portfolio. If you think about the criteria we laid out, we want to add 1% to 2% brands that give us scale. It's an important thing for us. It's an important thing for our distributor network. So your questions of we close the deal in Q2, we've obviously been focused on integrating it, which is part of making sure it moves to our network. So I would say we're making good progress on that. You know, you're absolutely right. The volume is concentrated in about five states, and it is concentrated in channels, in convenience with singles, right? So it really gives us the opportunity for runway in the future. The way we're approaching it is, one, we want to make sure we first execute in those states, you know, by staying and not dropping a case, right? So being disciplined in terms of the model they have. Just as a reminder, we moved about 80 people from the Monaco team also because what we don't want to do is lose the feet on the street, the execution ability. So, you know, job one is to make sure we keep and grow what we have today in those key states. We will look at channels in the states that, you know, we already have some strong presence in. And then in the other states, we continue to look at following a similar playbook that Monaco had is how do we make sure we win with convenience? How do we make sure we get singles? It goes to some of the other questions that folks had in terms of, you know, how consumers are leaning into this category and how do we make sure we're being competitive in that. So, you know, our goal is to obviously take this business national. We will do that in a measured way, Robert. We want to be careful in these integrations that we don't get in a way ahead of ourselves. So, you know, job one, transition to our network, make sure we are executing in the current states, start thinking about multiple channels in the context of the states where there is a lot of strength for the brand. And then how do we make sure we expand into other states, you know, with the playbook that Monaco has executed over the last 12 and 15 years? So, you know, we're pretty happy about this. We are, you know, I think we said this in our prepared remarks, we're tracking slightly ahead of what our anticipation was in both top and bottom line. So it has been a good ad to not just our business, but also to our network, right? So it's a good point of conversation with our distributor network, with our retail. It creates some excitement. And then, yeah, we're going to keep leaning into the playbook that they had, but also expanding it with our infrastructure and our capabilities. Thank you, Robert.

Thank you. Our next question is from Steve Powers at DB. Your line is open. Please go ahead.

Yes, thanks so much. I wanted to actually ask about EMEA and APAC and the outlook for the back half for improvement. I guess the question I'm grappling with is how much of the expected improvement that you're calling for in the back half comes from identified cost savings and restructuring benefits kind of already in hand, already in motion in your control versus an assumption that demand or promotional intensity or volume trends improve in the back half and just if it's the latter just your confidence around that thank you yeah good morning steve and yeah fair question steve so thank you for that so if you think about uh me and apac you know obviously uh i would say a little bit of a tougher start to in in h1 this year um so a couple of things let me address your top line

piece first and and then your question of confidence in the balance of of the bottom line so You know, we definitely have taken some more actions in terms of giving the competitive context in the M&A pack. If you think about our business there, you know, Central European business, it's been robust and strong. I mean, obviously, some headwinds, but the teams have done a good job of navigating through that. You know, I would call out UK probably is where it has been a pressure on from a consumer perspective, but then also from a competitive perspective. If you look at our portfolio there, I would say we definitely have some strong brands, right? Our core is some of the highest biggest brands in the UK. And we've leaned into that with respect to innovation. So we launched Carling Black Label a few months ago. You know, we're taking the necessary action on Carling for the balance of the year. So, you know, we feel good about the actions we're taking. In premiumization, you know, Madrid obviously is a big brand and the team has done a great job of scaling it. It is, again, in a competitive context, but we have innovation already in market with Zero Zero, with Madrid Le Mans, and other parts of our above premium brands are doing well in the UK, Staroprom and Miller and Blue Moon. So, you know, from a portfolio perspective, a number of these actions are already in place, in motion, and, you know, should give us, you know, higher degree of execution in the second half of the year in terms of the top line. And, you know, if you think about the bottom line and the cost savings initiatives, we did action a number of those earlier this year. You know, I think we announced those. This takes a little longer in Europe, but those are the ones that are going to give us the benefit in the second half of the year, right? Those are now in place. Those actions have been taken, and that is, you know, going to play out. The only thing, other thing I would remind you is just timing in the mean APAC. You know, UK, as you know, November, December is a big season for us, right? I mean, trading and the Christmas time plays an important role in even the beer category. So for us, that is an element of timing also from a trading perspective in the UK. So, yeah, it's been a little bit of a, I would say, challenging start in 26 for EMEA APAC, but I know our teams are, we've got the right commercial plans. we've taken being disciplined on the cost side and taking the necessary actions to make sure we can really execute against our ambitions in the media APAC for the balance of the year.

Thank you. There are no further questions. This now concludes today's Q&A session and today's call. I'd like to thank everyone for joining and you may now disconnect your lines.