What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-18 compared with 2024-02-20 · 198 added, 175 removed, 336 unchanged (53% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

For over two centuries, we have been brewing beverages that unite people to celebrate all life’s moments.

From our core power brands Coors Light , Miller Lite, Coors Banquet, Molson Canadian, Carling and Ožujsko to our above premium brands including Madri, Staropramen, Blue Moon Belgian White and Leinenkugel’s Summer Shandy, to our economy and value brands like Miller High Life and Keystone , we produce many beloved and iconic beer brands.

While our Company’s history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well, including flavored beverages like Vizzy Hard Seltzer , spirits like Five Trail whiskey as well as non-alcoholic beverages.

For more than two centuries, we have brewed beverages that unite people to celebrate all life’s moments.

From our core power brands Coors Light, Miller Lite, Coors Banquet, Molson Canadian, Carling and Ožujsko to our above premium brands including Madrí Excepcional, Staropramen, Blue Moon Belgian White and Leinenkugel’s Summer Shandy , to our economy and value brands like Miller High Life and Keystone Light , we produce many beloved and iconic beers.

While our Company's history is rooted in beer, we offer a modern portfolio that expands beyond the beer aisle as well, including flavored beverages like Vizzy Hard Seltzer , spirits like Five Trail whiskey and non-alcoholic beverages.

We also have partner brands, such as Simply Spiked, ZOA Energy , among others, through license, distribution, partnership and joint venture agreements.

As a business, our ambition is to be the first choice for our people, our consumers and our customers, and our success depends on our ability to make our products available to meet a wide range of consumer segments and occasions.

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Unless otherwise indicated, (a) all $ amounts are in USD, (b) comparisons are to comparable prior periods and (c) 2024, 2023 and 2022 refers to the 12 months ended December 31, 2024, December 31, 2023 and December 31, 2022, respectively.

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Items Affecting Reported Results

Items Affecting Consolidated Results of Operations

Cost Inflation

We have continued to incur significant cost inflation, including materials and manufacturing expenses, which negatively impacted our results of operations for the year ended December 31, 2023, although we experienced moderation in the second half of the year.

While cost inflation has been high in all of our markets, the impact to COGS on a percentage basis was higher for our EMEA&APAC segment than our Americas segment.

In addition, consumers in certain markets in our EMEA&APAC segment continued to be impacted by local inflation leading to a reduction in their discretionary purchases.

In 2024, we expect inflationary pressures to moderate and improve from those experienced over the last year.

To the extent materials and manufacturing prices continue to fluctuate, our business and financial results could continue to be materially adversely impacted.

We continue to monitor these risks and rely on our risk management hedging program, increased pricing to our customers, our premiumization strategy and cost savings programs to help mitigate some of the inflationary pressures.

Even if we are able to raise the prices of our products, consumers might react negatively to such price increases, which could have a material adverse effect on, among other things, our brands, reputation and sales.

If our competitors maintain or substantially lower their prices, we may lose customers or be forced to lower prices to remain competitive.

Our profitability may be impacted by prices that do not offset the inflationary pressures, which would negatively impact gross margins.

In addition, even if we increase the prices of our products in response to increases in the cost of commodities or other cost increases, we may not be able to sustain our price increases or customers may trade down to cheaper alternatives.

Premiumization of our Portfolio

In 2021, in order to support continued premiumization of our portfolio, we strategically de-prioritized and rationalized certain non-core SKUs predominantly in the economy segment.

While we rationalized certain non-core economy SKUs, we retained key economy brands allowing us to maintain a portfolio for all socio-economic demographics.

We believe the continued premiumization of our portfolio will drive sustainable net sales and earnings growth but result in potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifts towards a higher composition of above premium products.

Items Affecting Americas Segment Results of Operations

Items Affecting the Consolidated Results of Operations

Purchases of Annuity Contracts

On September 26, 2024, we purchased annuity contracts for two of our Canadian pension plans.

As a result, on September 30, 2024, we remeasured both pension plans and recorded a total settlement loss of $34.0 million to other pension and postretirement benefit (cost), net in the consolidated statements of operations.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 1 1 , " Employee Retirement Plans and Postretirement Benefits " and Part II—Item 8 Financial Statements and Supplementary Data, Note 15, "Accumulated Other Comprehensive Income (Loss)" for further information.

Cobra Beer Partnership, Ltd.

In March 2024, our partner of CBPL exercised a put option under our partnership agreement which required us to acquire the remaining 49.9% ownership interest.

We adjusted our NCI by $34.5 million to our best estimate of the redemption value that existed at the time of the put option exercise by increasing our net income attributable to noncontrolling interests and decreasing our net income attributable to MCBC.

In addition, we received the final determination of the redemption value in the third quarter of 2024 and as the transaction was considered mandatorily redeemable, we recorded an adjustment of $45.8 million to interest expense in the EMEA&APAC segment.

The transaction was finalized on October 21, 2024, resulting in a cash payment of $89 million which was recorded as a cash outflow from financing activities.

See further discussion of this transaction in Part II—Item 8 Financial Statements and Supplementary Data, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" .

Items Affecting the Americas Segment Results of Operations

On October 31, 2024, we further increased our investment in ZOA bringing our ownership interest to 51%.

Upon conversion from equity method accounting to consolidation accounting, we recognized a gain of $77.9 million in other operating income (expense), net in the consolidated statements of operations.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 3, "Investments" for further information.

Wind Down or Sale of Certain U.S.

Craft Businesses

During the third quarter of 2024, we decided to wind down or sell certain of our U.S.

craft businesses and related facilities and recorded employee-related and asset abandonment charges, including accelerated depreciation in excess of normal depreciation of $93.6 million.

In addition, we recognized a loss of $41.2 million on the sold businesses.

We expect to continue to incur incremental restructuring charges during the first quarter of 2025 through completion of wind down and closure of certain remaining U.S.

craft facilities.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" for further information.

Truss Impairment and Sale

During the first quarter of 2022, we recognized an impairment loss of $28.6 million related to the Truss joint venture asset group of which $12.1 million was attributable to the noncontrolling interest.

During the first quarter of 2022, we recognized an impairment loss of $28.6 million related to the Truss LP ("Truss") joint venture asset group of which $12.1 million was attributable to the noncontrolling interest.

Additionally, during the third quarter of 2023, we sold our controlling interest in Truss and recognized a loss of $11.1 million.

These losses were recorded within other operating income (expense), net.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" and Part II—Item 8 Financial Statements and Supplementary Data, Note 3 , " Investments " for further information.

Goodwill Impairment

During the fourth quarter of 2022, we recorded a partial goodwill impairment charge of $845.0 million related to the Americas reporting unit as a result of the annual goodwill impairment analysis.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for further information.

Montreal/Longueuil, Québec Brewery and Distribution Centers Labor Strike

From late March 2022 until June 2022, approximately 400 unionized employees in our Montreal/Longueuil, Québec brewery and distribution centers went on strike which adversely affected our business and operations.

Over the course of the third quarter of 2022, we recovered from the strike by rebuilding inventory and replenishing our retailers' shelves.

As the brewery had not yet fully recovered until the end of the third quarter, results for the second and third quarters of 2022 were adversely impacted by this strike.

Keystone Litigation

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See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further information.

Items Affecting EMEA&APAC Segment Results of Operations

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Items Affecting the EMEA&APAC Segment Results of Operations

Staropramen Brands Impairment

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While not material to our consolidated net sales, the Russia-Ukraine conflict negatively impacted our EMEA&APAC segment net sales for the years ended December 31, 2023 and December 31, 2022.

In addition, the Russia-Ukraine conflict has caused a negative impact to the global economy which has impacted our Company, driving further increases to materials and manufacturing expenses as discussed in more detail above.

In addition, the Russia-Ukraine conflict has caused a negative impact to the global economy which has impacted our Company, driving further increases to materials and manufacturing expenses.

See risk factors related to this conflict at Part I.—Item 1A.

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For the years ended

December 31, 2023 Change December 31, 2022 Change December 31, 2021

December 31, 2024 % Change

December 31, 2023 % Change

December 31, 2022

(In millions, except percentages and per share data)

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Marketing, general and administrative expenses (2,717.5) (2.2) % (2,779.9) 6.2 % (2,618.8)

Goodwill impairment — N/M (845.0) N/M —

Goodwill impairment — — % — N/M (845.0)

Other operating income (expense), net (65.4) (59.8) % (162.7) 321.5 % (38.6)

Equity income (loss) 12.0 155.3 % 4.7 N/M —

Equity income (loss) 2.7 (77.5) % 12.0 155.3 % 4.7

Operating income (loss) 1,753.2 21.9 % 1,438.2 813.1 % 157.5

Total non-operating income (expense), net (250.2) 34.7 % (185.7) (15.6) % (220.0)

Income (loss) before income taxes 1,252.5 N/M (62.5) N/M 1,239.0

Income (loss) before income taxes 1,503.0 20.0 % 1,252.5 N/M (62.5)

Income tax benefit (expense) (345.3) 16.6 % (296.1) 138.8 % (124.0)

Net income (loss) 956.4 N/M (186.5) N/M 1,008.5

Net (income) loss attributable to noncontrolling interests (7.5) N/M 11.2 N/M (2.8)

Net income (loss) attributable to MCBC $ 948.9 N/M $ (175.3) N/M $ 1,005.7

Net income (loss) attributable to MCBC per diluted share $ 4.37 N/M $ (0.81) N/M $ 4.62

Net income (loss) 1,157.7 21.0 % 956.4 N/M (186.5)

Net (income) loss attributable to noncontrolling interests (35.3) 370.7 % (7.5) N/M 11.2

Net income (loss) attributable to MCBC $ 1,122.4 18.3 % $ 948.9 N/M $ (175.3)

Net income (loss) attributable to MCBC per diluted share $ 5.35 22.4 % $ 4.37 N/M $ (0.81)

Financial volume in hectoliters 79.618 (5.0) % 83.772 1.8 % 82.272

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For the year ended December 31, 2024, foreign currency movements had the following impacts on our USD consolidated results:

• Net sales - Favorable impact of $9.5 million (favorable impact for EMEA&APAC of $56.0 million, partially offset by the unfavorable impact for Americas of $46.5 million).

• Net sales - Unfavorable impact of $1.6 million (unfavorable impact for Americas of $21.9 million, partially offset by the favorable impact for EMEA&APAC of $20.3 million).

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• Cost of goods sold - Favorable impact of $0.6 million (favorable impact for Americas and Unallocated of $14.3 million and $0.4 million, respectively, partially offset by the unfavorable impact for EMEA&APAC of $14.1 million).

• MG&A - Favorable impact of $2.8 million (favorable impact for Americas of $6.5 million, partially offset by the unfavorable impact for EMEA&APAC of $3.7 million).

• Income (loss) before income taxes - Favorable impact of $9.1 million (favorable impact for Unallocated of $15.9 million, partially offset by the unfavorable impact for EMEA&APAC and Americas of $5.3 million and $1.5 million, respectively).

The impacts of foreign currency movements on our consolidated USD results described above for the year ended December 31, 2023 were primarily due to the strength of the USD as compared to the CAD partially offset by the weakening of the USD as compared to all currencies throughout Europe in which we operate.

• Income (loss) before income taxes - Unfavorable impact of $7.0 million (unfavorable impact for Americas and EMEA&APAC of $7.0 million and $2.3 million, respectively, partially offset by the favorable impact for Unallocated of $2.3 million).

The impacts of foreign currency movements on our consolidated USD results described above for the year ended December 31, 2024, were primarily due to the strengthening of the USD compared to the CAD and CZK, partially offset by the weakening of the USD compared to the GBP.

Included in these amounts are both translational and transactional impacts of changes in foreign exchange rates.

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The impact of transactional foreign currency gains and losses, including the impact of undesignated foreign currency forwards, is recorded within other non-operating income (expense), net in our consolidated statements of operations.

Financial volume represents owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), as well as contract brewing, wholesale/factored non-owned volume and company-owned distribution volume.

This metric is presented on an STW basis to reflect the sales from our operations to our direct customers, generally distributors.

Financial volume represents owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), as well as contract brewing, factored non-owned volume and company-owned distribution volume.

This metric is presented on a sales-to-wholesalers ("STW") basis to reflect the sales from our operations to our direct customers, generally distributors.

We believe this metric is important and useful for investors and management because it gives an indication of the amount of beer and adjacent products that we have produced and shipped to customers.

This metric excludes royalty volume, which consists of our brands produced and sold under various license and contract brewing agreements.

Factored volume in our EMEA&APAC segment is the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel, which is a common arrangement in the U.K.

We also utilize net sales per hectoliter and cost of goods sold per hectoliter, as well as the year over year changes in such metrics, as key metrics for analyzing our results.

These metrics are calculated as net sales and cost of goods sold, respectively, per our consolidated statements of operations divided by financial volume for the respective period.

We believe these metrics are important and useful for investors and management because they provide an indication of the trends in pricing and sales mix on our net sales and the trends of sales mix and other cost impacts such as inflation on our cost of goods sold.

In late 2021 we de-prioritized and rat ionalized certain non-core SKUs, predominantly in the economy segment, in order to focus our strategy on growing our above premium portfolio and expanding beyond the beer aisle.

This strategy was intended to drive sustainable net sales growth and earnings growth, despite potential volume declines due to the rationalization of certain SKUs and as the portfolio mix shifted toward a higher composition of above premium products.

The strategy of premiumization, growing our above premium portfolio and expanding beyond the beer aisle continues to be a focus under the Acceleration Plan that was announced in the fourth quarter of 2023.

The following table highlights the drivers of the change in net sales and net sales per hectoliter for the year ended December 31, 2023 compared to December 31, 2022 (in percentages):

Factored volume in our EMEA&APAC segment is the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel such as bars and restaurants, which is a common arrangement in the U.K.

The following table highlights the drivers of the change in net sales for the year ended December 31, 2024, compared to December 31, 2023, (in percentages):

Financial Volume Price and Sales Mix Currency Total

Consolidated net sales (5.0) % 4.4 % — % (0.6) %

Consolidated net sales per hectoliter N/A 7.3 % 0.1 % 7.4 %

Net sale s increased 9.4% for the year ended December 31, 2023, compared to prior year driven by favorable price and sales mix, higher financial volumes and favorable foreign currency impacts.

Financial volume s increased 1.8% for the year ended December 31, 2023, compared to prior year, primarily due to higher financial volumes in the Americas segment, partially offset by lower EMEA&APAC financial volumes.

Price and sales mix favorably i mpacted net sales and net sales per hectoliter for the year ended December 31, 2023, by 7.5% and 7.3%, respectively, primarily due to increased net pricing including the rollover benefit in the first three quarters due to taking several price increases in the prior year, as well as favorable sales mix.

Favorable sales mix was driven by geographic m ix due to higher volumes in the Americas segment and lower contract brewing volume related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024.

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

Net sales decreased 0.6% for the year ended December 31, 2024, compared to prior year driven by lower financial volumes, partially offset by favorable price and sales mix.

Financial volumes decreased 5.0% for the year ended December 31, 2024, compared to prior year, due to lower shipments in the Americas, including lower contract brewing volumes representing almost half of the decline as well as the impact of the macroeconomic environment resulting in industry softness.

EMEA&APAC financial volumes also decreased 2.6%.

Price and sales mix favorably impacted net sales for the year ended December 31, 2024, by 4.4%, primarily due to increased net pricing as well as favorable sales mix for both segments, including as a result of lower contract brewing volumes in the Americas as well as premiumization and favorable channel mix in EMEA&APAC.

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

Cost of goods sold

Cost of goods sold increased 4.1% for the year ended December 31, 2023, compared to prior year, primarily due to higher cost of goods sold per hectoliter and higher financial volumes.

Cost of goods sold per hectoliter increased 2.2% for the year ended December 31, 2023, compared to prior year, primarily due to cost inflation related to materials and manufacturing expenses and unfavorable mix, partially offset by changes in our unrealized mark-to-market commodity derivative positions of $126.9 million, cost savings and volume leverage.

We utilize cost of goods sold per hectoliter, as well as the year over year changes in this metric, as a key metric for analyzing our results.

This metric is calculated as cost of goods sold per our consolidated statements of operations divided by financial volume for the respective period.

We believe this metric is important and useful for investors and management because it provides an indication of the trends of sales mix and other cost impacts on our cost of goods sold.

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Cost of goods sold decreased 3.3% for the year ended December 31, 2024, compared to prior year, primarily due to lower financial volumes, partially offset by higher cost of goods sold per hectoliter.

Cost of goods sold per hectoliter increased 1.8% for the year ended December 31, 2024, compared to prior year, primarily due to cost inflation related to materials and manufacturing expenses, unfavorable mix driven by lower contract brewing volumes and volume deleverage in the Americas segment, partially offset by favorable changes in our unrealized mark-to-market commodity derivative positions of $133.0 million and cost savings initiatives.

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

Marketing, general and administrative expenses

MG&A expenses increased 6.2% for the year ended December 31, 2023, compared to prior year, primarily due to higher incentive compensation expense and increased marketing investment on core and innovation brands, partially offset by cycling the recording of a $56.0 million accrued liability in the prior year related to potential losses as a result of the ongoing Keystone litigation case.

Goodwill Impairment

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" for detail of our goodwill impairments.

MG&A expenses decreased 2.2% for the year ended December 31, 2024, compared to prior year, primarily due to lower incentive compensation expense and lower marketing resulting from cycling higher investment levels in the prior year.

A discussion of currency impacts on marketing, general and administrative expenses is included in the "Foreign currency impacts on results" section above.

Other operating income (expense), net

See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" for detail of our other operating income (expense), net.

Other operating expense, net improved 59.8% for the year ended December 31, 2024, compared to prior year, primarily due to the cycling of a $160.7 million partial impairment charge to our indefinite-lived intangible asset related to the Staropramen family of brands recorded in the prior year as well as a $77.9 million gain recognized upon the consolidation of ZOA in the fourth quarter of 2024, partially offset by the costs incurred related to the wind down and sale of certain U.S.

craft businesses and related restructuring costs including accelerated depreciation charges in excess of normal depreciation of $93.6 million as well as a $41.2 million loss on the disposal of the sold businesses.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 17, "Other Operating Income (Expense), net" for further detail of our other operating income (expense), net.

Total non-operating income (expense), net

Total non-operating expense, net decreased 15.6% for the year ended December 31, 2023, compared to prior year primarily due to lower net interest expense driven by higher interest income as well as the repayment of debt as a result of our continued deleveraging actions and the favorable impact of transactional foreign currency impacts, partially offset by lower pension and OPEB non-service net benefit.

Income taxes benefit (expense)

Total non-operating expense, net increased 34.7% for the year ended December 31, 2024, compared to prior year primarily due to higher interest expense driven by a $45.8 million adjustment to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout recorded in the third quarter of 2024, a settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases and unfavorable transactional foreign currency impacts, partially offset by higher pension and OPEB non-service benefit.

Income tax benefit (expense)

For the years ended

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Effective tax rate 23 % 24 % (198) %

The increase in our effective tax rate for the year ended December 31, 2023 compared to the prior year was primarily due to the impact of the $845 million partial goodwill impairment, recorded within our Americas segment in the fourth quarter of 2022, which related to goodwill not deductible for tax purposes.

Our tax rate can be volatile and may change with, among other things, the amount and source of pretax income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled or when additional information becomes available.

Our effective tax rate decreased for the year ended December 31, 2024 , compared to the prior year, in part due to the impact of the $77.9 million gain recognized upon the consolidation of ZOA in the fourth quarter of 2024, which is non-taxable.

The decrease was partially offset by (i) the $20.0 million increase in valuation allowance that was recorded on deferred tax assets related to the sale of certain U.S.

craft businesses in the third quarter of 2024, and (ii) the impact of the $45.8 million increase in the mandatorily redeemable NCI liability of CBPL in the third quarter of 2024, which is non-deductible for tax purposes.

The effective tax rate for the year ended December 31, 2024, was further decreased by the recognition of additional net tax benefit items totaling $12.8 million, as compared to the recognition of additional net tax expense items totaling $10.0 million in the year ended December 31, 2023.

Our effective tax rate can be volatile and may change with, among other things, the amount and source of pretax income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled or when additional information becomes available.

There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, could have an impact on our effective tax rate.

The OECD and EU have proposed changes to the existing tax laws of member countries.

For instance, the OECD has introduced model rules for a new 15% global minimum tax framework, as well as a proposal on the allocation of profit among tax jurisdictions in which companies operate.

In December 2022, the EU member states agreed to incorporate the 15% global minimum tax into their respective domestic laws effective for fiscal years beginning on or after December 31, 2023.

Additionally, several non-EU countries, including the U.K., have recently proposed and/or adopted legislation consistent with the OECD global minimum tax framework.

We are continuing to evaluate the potential impact on future periods which could affect our effective tax rate.

Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 12, "Income Tax" for additional details regarding our effective tax rate.

Cost Savings Initiatives

Our next generation cost savings program, which began in 2020, delivered $605 million of cost savings over the three year program, which ended December 31 2022.

The program was focused on building our capabilities and reorganizing to support our commercial revitalization strategy.

Total cost savings delivered in 2022 and 2021 totaled approximately $115 million and $220 million, respectively.

While we have not announced a formal cost savings program after the completion of this program in 2022, we continue to generate cost savings through initiatives in the normal course of business.

Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 12, "Income Tax" for further discussion regarding our effective tax rate.

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Net income (loss) attributable to noncontrolling interests

Net income attributable to noncontrolling interests increased $27.8 million for the year ended December 31, 2024, compared to the prior year, primarily due to the recording of an out of period adjustment in the third quarter 2024 to increase the noncontrolling interest to the best estimate of the redemption value that existed at the time of the put option exercise in March 2024.

See further discussion in Part II—Item 8 Financial Statements and Supplementary Data, Note 1, "Basis of Presentation and Summary of Significant Accounting Policies" .

Segment Results of Operations

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For the years ended

December 31, 2023 Change December 31, 2022 Change December 31, 2021

December 31, 2024 % Change

December 31, 2023 % Change

December 31, 2022

(In millions, except percentages)

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(2) Excludes royalty volume of 2.550 million hectoliters, 2.683 million hectoliters and 2.719 million hectoliters for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table highlights the drivers of the change in net sales and net sales per hectoliter for the year ended December 31, 2023 compared to December 31, 2022 (in percentages):

The following table highlights the drivers of the change in net sales for the year ended December 31, 2024, compared to December 31, 2023, (in percentages):

Financial Volume Price and Sales Mix Currency Total

Americas net sales (5.7) % 4.0 % (0.3) % (2.0) %

Americas net sales per hectoliter N/A 5.0 % (0.6) % 4.4 %

Net sale s increased 8.2% for the year ended December 31, 2023, compared to prior year, driven by favorable price and sales mix as well as higher financial volumes, partially offset by unfavorable foreign currency impacts.

Financial volumes increased 3.6% for the year ended December 31, 2023, compared to prior year, primarily due to an increase in U.S.

domestic shipments driven by volume growth in our core brands and higher shipments in Canada mainly attributed to cycling the prior year impacts of the Québec labor strike, partially offset by lower Latin America volumes.

The increase in U.S.

volume was driven in part by the continued shifts in consumer purchasing behavior largely within the premium beer segment.

Price and sales mix favorably im pacted net sales and net sales per hectoliter for the year ended December 31, 2023, by 5.1% and 5.0%, respectively, primarily due to increased net pricing including the rollover benefit in the first three quarters of the year of several price increases taken in the previous year and favorable sales mix as a result of lower contract brewing volume related to the wind down of a contract brewing arrangement leading up to the termination by the end of 2024.

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

Net sales decreased 2.0% for the year ended December 31, 2024, compared to prior year, driven by lower financial volumes and unfavorable foreign currency impacts, partially offset by favorable price and sales mix.

Financial volumes decreased 5.7% for the year ended December 31, 2024, compared to prior year, primarily due to lower contract brewing volumes related to the wind down of a U.S.

contract brewing arrangement (1.9 million hectoliters) and lower U.S.

volumes due to the macroeconomic environment resulting in industry softness partly offset by an increase in volumes in Canada.

Price and sales mix favorably impacted net sales for the year ended December 31, 2024, by 4.0% primarily due to increased net pricing and favorable sales mix as a result of lower contract brewing volumes.

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

Income (loss) before income taxes

Income before income taxes improved 400.7% for the year ended December 31, 2023, compared to prior year, primarily due to cycling a non-cash partial goodwill impairment charge of $845.0 million, increased net pricing, higher financial volumes, lower logistics expenses, partially offset by cost inflation related to materials and manufacturing expenses and higher MG&A expense.

Higher MG&A spend was primarily due to increased marketing investment behind our core and innovation brands and higher incentive compensation expense, partially offset by cycling the recording of a $56.0 million accrued liability related to potential losses as a result of the ongoing Keystone litigation case.

Income before income taxes declined 2.8% for the year ended December 31, 2024, compared to prior year, primarily due to lower financial volumes, cost inflation related to materials and manufacturing expenses and higher other operating expense, net, partially offset by increased net pricing, favorable sales mix, lower MG&A expense and favorable cost saving initiatives.

Higher other operating expense, net was primarily due to the wind down and sale of certain of our U.S.

craft businesses and related restructuring costs, including accelerated depreciation charges in excess of normal depreciation of $93.6 million as well as a $41.2 million loss on the disposal of the sold businesses, partially offset by a $77.9 million gain recognized upon the consolidation of ZOA in the fourth quarter of 2024.

Lower MG&A spend was primarily due to lower incentive compensation expense and lower marketing resulting from cycling higher investment levels in the prior year.

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

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EMEA&APAC Segment

For the years ended

December 31, 2023 Change December 31, 2022 Change December 31, 2021

December 31, 2024 % Change

December 31, 2023 % Change

December 31, 2022

(In millions, except percentages)

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$ 2,411.1 5.0 % $ 2,296.1 14.5 % $ 2,005.2

Income (loss) before income taxes $ (41.1) N/M $ 61.0 85.4 % $ 32.9

Income (loss) before income taxes $ 145.3 N/M $ (41.1) N/M $ 61.0

Financial volume in hectoliters (1)(2)

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(2) Excludes royalty volume of 1.185 million hectoliters, 0.935 million hectoliters and 1.012 million hectoliters for the years ended December 31, 2024, 2023 and 2022, respectively.

The following table highlights the drivers of the change in net sales and net sales per hectoliter for the year ended December 31, 2023 compared to December 31, 2022 (in percentages):

The following table highlights the drivers of the change in net sales for the year ended December 31, 2024, compared to December 31, 2023 (in percentages):

Financial Volume Price and Sales Mix Currency Total

EMEA&APAC net sales (2.6) % 6.7 % 0.9 % 5.0 %

EMEA&APAC net sales per hectoliter N/A 15.2 % 2.9 % 18.1 %

Net sales increased 14.5% for the year ended December 31, 2023, compared to prior year driven by favorable price and sales mix as well as favorable foreign currency impacts, partially offset by a decline in financial volumes.

Financial volume s decreased 3.0% for the year ended December 31, 2023, compared to prior year, primarily due to declines in Central and Eastern Europe due to industry softness given the inflationary pressures on the consumer, partially offset by resilient demand and growth in above premium volumes in the U.K.

Price and sales mix favorably impacted net sales and net sales per hectoliter for the year ended December 31, 2023, by 14.7% and 15.2%, respectively, primarily due to increased net pricing including the rollover benefits from price increases taken in the previous year and favorable sales mix driven by geographic mix and premiumization.

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

Net sales increased 5.0% for the year ended December 31, 2024, compared to prior year, driven by favorable price and sales mix as well as favorable foreign currency impacts, partially offset by lower financial volumes.

Financial volumes decreased 2.6% for the year ended December 31, 2024, compared to prior year, primarily due to lower volumes in Western Europe due to soft market demand and high promotional activity from the competition, partially offset by Central and Eastern Europe volume growth driven by the favorable performance of our above premium and premium brands.

Price and sales mix favorably impacted net sales for the year ended December 31, 2024, by 6.7% primarily due to increased net pricing and favorable sales mix driven by premiumization and favorable channel mix.

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

Income (loss) before income taxes

Loss before income taxes was $41.1 million for the year ended December 31, 2023, compared to income before income taxes of $61.0 million in the prior year.

The decline was primarily due to the impairment charge of $160.7 million to our indefinite-lived intangible asset related to the Staropramen family of brands, as well as cost inflation on materials, logistics and manufacturing expenses, higher MG&A spend, lower financial volumes as well as the unfavorable impact of foreign currency partially offset by increased net pricing to customers and favorable sales mix.

Income before income taxes was $145.3 million for the year ended December 31, 2024, compared to a loss before income taxes of $41.1 million in the prior year.

The improvement was primarily due to the cycling of a $160.7 million partial impairment charge to our indefinite-lived intangible asset related to the Staropramen family of brands recorded in the prior year, increased net pricing, favorable sales mix and cost savings initiatives, partially offset by higher net interest expense, lower financial volumes and higher MG&A spend.

Higher net interest expense was driven by an adjustment of $45.8 million to increase our mandatorily redeemable NCI liability to the final redemption value related to the CBPL buyout in the third quarter of 2024.

Higher MG&A spend was due to increased strategic and transformation project costs as well as increased marketing to support our brands and innovations.

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

Unallocated Segment

We have certain activity that is not allocated to our segments, which has been reflected as Unallocated below.

Specifically, "Unallocated" activity primarily includes financing-related costs such as interest expense and income, foreign exchange gains and losses on intercompany balances and realized and unrealized changes in fair value on instruments not designated in hedging relationships related to financing and other treasury-related activities and the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides.

Specifically, Unallocated primarily includes certain financing-related activities such as interest expense and interest income, foreign exchange gains and losses on intercompany balances as well as realized and unrealized changes in fair value on derivative instruments not designated in hedging relationships related to financing and other treasury-related activities.

Unallocated activity also includes the unrealized changes in fair value on our commodity swaps not designated in hedging relationships recorded within cost of goods sold, which are later reclassified when realized to the segment in which the underlying exposure resides.

Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment, and all other components remain unallocated.

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For the years ended

December 31, 2023 Change December 31, 2022 Change December 31, 2021

December 31, 2024 % Change

December 31, 2023 % Change

December 31, 2022

(In millions, except percentages)

Cost of goods sold $ 32.8 N/M $ (93.5) (59.3)% $ (229.9)

Gross profit (93.5) (59.3) % (229.9) N/M 236.6

Gross profit (loss)

32.8 N/M (93.5) (59.3)% (229.9)

Operating income (loss) 32.8 N/M (93.5) (59.3)% (229.9)

Total non-operating income (expense), net (198.4) 10.5 % (179.6) (13.0)% (206.5)

Income (loss) before income taxes $ (273.1) (37.4) % $ (436.4) N/M $ 29.6

Income (loss) before income taxes $ (165.6) (39.4) % $ (273.1) (37.4)% $ (436.4)

N/M = Not meaningful

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Total non-operating income (expense), net

Total non-operating expense, net decreased 13.0% for the year ended December 31, 2023 compared to prior year primarily due to lower net interest expense and the favorable impact of transactional foreign currency, partially offset by lower pension and OPEB non-service net benefit.

See Part II - Item 8.

Financial Statements and Supplementary Data, Note 9, "Debt" for further details on our debt instruments.

Total non-operating expense, net increased 10.5% for the year ended December 31, 2024, compared to prior year primarily due to a settlement loss of $34.0 million recorded as a result of Canadian pension plan annuity purchases and lower favorable transactional foreign currency impacts, partially offset by higher pension and OPEB non-service benefits and higher interest income from higher cash balances.

See Part II - Item 8 Financial Statements and Supplementary Data, Note 11, "Employee Retirement Plans and Postretirement Benefits" for further discussion of pension and OPEB.

Fever-Tree Partnership

Effective February 1, 2025, we obtained exclusive rights via a license agreement to produce, market and sell Fever-Tree products in the U.S.

In connection with this agreement, we acquired the shares of the Fever-Tree USA, Inc.

entity, with the immaterial acquisition to be accounted for as a business combination and consideration to be allocated primarily to working capital balances.

Further, we made an investment of approximately $90 million in Fever-Tree Drinks Plc, a listed entity on the London Stock Exchange (LSE:FEVR).

The investment will be accounted for at fair value under ASC 321.

We expect to incur certain one-time transition and integration fees related to the transactions over the next several months.

The amounts of such fees will be dependent upon the progression of our integration plans.

Liquidity and Capital Resources

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We do not have any restrictions that prevent or limit our ability to declare or pay dividends.

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While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S.

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We periodically review and evaluate these plans and strategies, including externally committed and non-committed credit agreements accessible by our Company and each of our operating subsidiaries.

We believe these financing arrangements, along with the cash generated from the operations of our U.S.

business, are sufficient to fund our current cash needs in the U.S.

We believe these financing arrangements, along with cash flows from operating activities within the U.S., are sufficient to fund our current cash needs in the U.S.

Guarantor Information

SEC Registered Securities

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture and the July 2016 Indenture.

For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture.

"Subsidiary Guarantors" shall mean certain Canadian and U.S.

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Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 5.0% senior notes due 2042.

Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024.

The issuances of the senior notes issued under the May 2012 Indenture and the July 2016 Indenture were registered under the Securities Act of 1933, as amended.

Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due 2026, 4.2% senior notes due 2046 and 1.25% senior notes due 2024 (subsequently repaid upon maturity on July 15, 2024).

Further, pursuant to the indenture dated May 29, 2024 ("May 2024 Indenture"), MCBC issued its outstanding 3.8% senior notes due 2032.

The issuances of the senior notes issued under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture were registered under the Securities Act of 1933, as amended.

These senior notes are guaranteed on a senior unsecured basis by certain subsidiaries of MCBC, which are listed in Exhibit 22 of this Annual Report on Form 10-K (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group").

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These other guarantees are also full and unconditional and joint and several.

The senior notes and related guarantees rank pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group.

As of December 31, 2024, the senior notes and related guarantees rank pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group.

The guarantees can be released upon the sale or transfer of a Subsidiary Guarantors' capital stock or substantially all of its assets, or if such Subsidiary Guarantor ceases to be a guarantor under our other outstanding debt.

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The balances and transactions with non-guarantor subsidiaries have been separately presented.

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Summarized Financial Information of Obligor Group

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Net interest expense, out of which:

Intercompany net interest expense from non-guarantor subsidiaries

Intercompany net interest income from non-guarantor subsidiaries

Income before income taxes $ 1,338.9

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Long-term debt $ 6,063.6

Noncurrent intercompany notes payable due to non-guarantor subsidiaries $ 13.2

Cash Flows and Use of Cash

Our business historically generates positive operating cash flows each year and our debt maturities are generally of a longer-term nature.

See the debt maturity profile graph below or refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for further details of our debt maturity profile.

However, our liquidity could be impacted significantly by the risk factors described in Part I—Item 1A.

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Cash Flows from Operating Activities

Net cash provided by operating activities of $2,079.0 million for the year ended December 31, 2023 increased $577.0 million compared to $1,502.0 million for the year ended December 31, 2022.

The increase in net cash provided by operating activities was primarily due to higher net income and the favorable timing of working capital in the Americas across all categories, partially offset by higher income taxes paid.

Net cash provided by operating activities of $1,910.3 million for the year ended December 31, 2024, decreased $168.7 million from $2,079.0 million for the year ended December 31, 2023, primarily due to the unfavorable timing of working capital, partially offset by higher net income adjusted for non-cash items.

The unfavorable timing of working capital was primarily driven by the timing of cash paid for our payables as well as higher payments in the current year for 2023 annual incentive compensation, partially offset by the timing of cash receipts.

Cash Flows from Investing Activities

Net cash used in investing activities of $841.7 million for the year ended December 31, 2023 increased $216.6 million compared to $625.1 million for the year ended December 31, 2022.

The increase in net cash used in investing activities was primarily due to higher acquisitions, lower proceeds from the sales of properties and other assets, as well as higher capital expenditures.

Net cash used in investing activities of $648.0 million for the year ended December 31, 2024, decreased $193.7 million from $841.7 million for the year ended December 31, 2023, primarily due to cash paid in the prior year for an acquisition and other investing activities, as well as higher proceeds in the current year from the sale of the U.S.

craft businesses.

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Cash Flows from Financing Activities

Net cash used in financing activities of $981.4 million for the year ended December 31, 2023 increased $91.9 million compared to $889.5 million for the year ended December 31, 2022.

The increase in net cash used in financing activities was primarily due to higher Class B common stock share repurchases, higher dividend payments, partially offset by lower net debt repayments.

Net cash used in financing activities of $1,138.4 million for the year ended December 31, 2024, increased $157.0 million from $981.4 million for the year ended December 31, 2023, primarily due to higher Class B common stock share repurchases and a payment to acquire the noncontrolling interest in CBPL, partially offset by lower net debt repayments.

Capital Resources, including Material Cash Requirements

Cash and Cash Equivalents

We had total cash and cash equivalents of $868.9 million as of December 31, 2023, compared to $600.0 million as of December 31, 2022.

The increase in cash and cash equivalents from December 31, 2022 to December 31, 2023 was primarily due to the net cash provided by operating activities, partially offset by capital expenditures, net debt repayments, including the repayment of our CAD 500 million 2.84% note which matured in July 2023, dividend payments, Class B common stock share repurchases, as well as cash paid for the acquisition of businesses.

As of December 31, 2024, we had total cash and cash equivalents of $969.3 million, compared to $868.9 million as of December 31, 2023.

The increase in cash and cash equivalents from December 31, 2023, was primarily due to net cash provided by operating activities, as well as the issuance of new EUR 800 million 3.80% senior notes due 2032.

This was partially offset by debt repayments, including the repayment of our EUR 800 million 1.25% senior notes which matured in July 2024, capital expenditures, Class B common stock share repurchases, dividend payments and payment to acquire the noncontrolling interest in CBPL.

See Part II—Item 8 Financial Statements and Supplementary Data, Consolidated Statements of Cash Flows for additional detail.

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These efforts include optimizing our inventory levels and managing our payment terms on accounts payable and accounts receivable.

We repaid our CAD 500 million 2.84% notes upon their maturity on July 15, 2023 using cash on hand.

We repaid our EUR 800 million 1.25% senior notes upon their maturity on July 15, 2024, using the cash proceeds from our EUR 800 million 3.80% senior notes issued on May 29, 2024, and cash on hand.

Refer to Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" for details.

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Based on the credit profile of our lenders that are party to our credit facilities, we are confident in our ability to draw on our revolving credit facility if the need arises.

On June 26, 2023, we amended and restated our multi-currency revolving credit facility.

Among other things, the term was extended through June 26, 2028, and the borrowing capacity was increased to $2.0 billion.

This $2.0 billion revolving credit facility amended our pre-existing $1.5 billion revolving credit facility, which would have matured on July 7, 2024.

On September 28, 2023, we amended our commercial paper program, which reduces borrowing capacity under the revolving credit facility, to a maximum borrowing capacity of $2.0 billion to borrow at any time at variable interest rates.

The $150.0 million sub-facility available for the issuance of letters of credit remains unchanged.

As of December 31, 2023, we had $2.0 billion available to draw on our $2.0 billion revolving credit facility.

As of December 31, 2023, we had no borrowings drawn on this revolving credit facility and no commercial paper borrowings.

On June 3, 2024, we amended our existing $2.0 billion multi-currency revolving credit facility to, among other things, extend the maturity date from June 26, 2028 to June 26, 2029.

As of December 31, 2024, we had $2.0 billion available to draw on our amended and restated $2.0 billion multi-currency revolving credit facility.

As of December 31, 2024, we had no borrowings drawn on this amended and restated multi-currency revolving credit facility and no commercial paper borrowings.

We intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper programs for liquidity as needed.

We also have CAD, GBP and USD overdraft facilities across several banks should we need additional short-term liquidity.

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Under the terms of each of our debt facilities, we must comply with certain restrictions.

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

The maximum net debt to EBITDA leverage ratio, as defined by the amended and restated revolving credit facility agreement, was 4.00x as of December 31, 2023 which remained unchanged from the requirement as of December 31, 2022.

The maximum net debt to EBITDA leverage ratio, as defined by the amended and restated multi-currency revolving credit facility agreement, was 4.00x as of December 31, 2024, and December 31, 2023.

As of December 31, 2024, and December 31, 2023, we were in compliance with all of these restrictions and covenants, have met such financial ratios and have met all debt payment obligations.

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(In millions)

Debt obligations $ 6,182.2 $ 904.6 $ 2,377.6 $ — $ 2,900.0

Debt obligations excluding finance leases

$ 6,117.5 $ 20.4 $ 2,364.1 $ 2.2 $ 3,730.8

Interest payments on debt obligations 3,021.4 234.0 396.1 324.2 2,067.1

Finance leases

85.2 13.0 25.9 16.3 30.0

Retirement plan expenditures (1)

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Operating leases 252.3 52.7 79.1 40.9 79.6

Finance leases 74.3 8.5 19.6 9.7 36.5

Other long-term obligations (2)

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Total obligations $ 11,618.3 $ 755.7 $ 3,562.2 $ 844.7 $ 6,455.7

See Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt" , Note 11, "Employee Retirement Plans and Postretirement Benefits," Note 10, "Derivative Instruments and Hedging Activities," Note 13, "Commitments and Contingencies" and Note 8, "Leases" for additional information.

(1) Represents expected contributions of $3.6 million under our defined benefit pension plans in the next twelve months and our benefit payments under postretirement benefit plans through 2033.

The net underfunded liability as of December 31, 2023 of our defined benefit pension plans (excluding our overfunded plans) and postretirement benefit plans is $38.1 million and $470.6 million, respectively.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 9, "Debt, " Note 8, "Leases , " Note 11, "Employee Retirement Plans and Postretirement Benefits," Note 10, "Derivative Instruments and Hedging Activities," and Note 13, "Commitments and Contingencies" for additional information.

(1) Primarily represents expected benefit payments under our OPEB plans through 2033.

The net underfunded liability as of December 31, 2024, of our defined benefit pension plans (excluding our overfunded plans) and OPEB plans is $34.9 million and $423.0 million, respectively.

Defined benefit pension plan contributions in future years will vary based on a number of factors, including actual plan asset returns and interest rates, and thus, have been excluded from the above table.

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The remaining balance relates to derivative payments, information technology services, pre-commencement leases, open purchase orders and other commitments.

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Other Commercial Commitments

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Total amounts

committed 2024 2025-2026 2027-2028 2029 and thereafter

committed 2025 (1)

2026-2027 2028-2029 2030 and thereafter

(In millions)

Standby letters of credit $ 45.2 $ 43.7 $ 1.4 $ 0.1 $ —

(1) Includes $12 million of letters of credit each of which contain a feature that automatically renews for an additional year if no cancellation notice is submitted.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 13, "Commitments and Contingencies" for further discussion.

Credit Rating

Our current long-term credit ratings are BBB/Stable Outlook, Baa2/Positive Outlook and BBB/Stable Outlook with Standard & Poor's, Moody's and DBRS, respectively.

Our current long-term credit ratings are BBB/Stable Outlook, Baa1/Stable Outlook and BBB/Stable Outlook with Standard & Poor's, Moody's and DBRS, respectively.

Our short-term credit ratings are A-2, Prime-2 and R-2, respectively.

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Capital Expenditures

We incurred $688.6 million, and paid $671.5 million, for capital improvement projects worldwide for the year ended December 31, 2023, excluding capital spending by equity method joint ventures, representing a decrease of $6.1 million from the $694.7 million of capital expenditures incurred for the year ended December 31, 2022.

We continue to focus on where and how we employ our planned capital expenditures, with an emphasis on strengthening our focus on required returns on invested capital as we determine how to best allocate cash within the business.

We incurred $720.8 million, and paid $674.1 million, for capital improvement projects worldwide for the year ended December 31, 2024, excluding capital spending by equity method joint ventures, representing an increase of $32.2 million from the $688.6 million of capital expenditures incurred for the year ended December 31, 2023.

We continue to focus on where and how we employ our planned capital expenditures, with an emphasis on obtaining required returns on invested capital as we determine how to best allocate cash within the business.

Contingencies

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In the U.S., we also participate in, and make contributions to, multi-employer pension plans.

Our OPEB plans provide medical benefits for retirees and their eligible dependents as well as life insurance and, in some cases, dental and vision coverage, for certain retirees in the U.S., Canada and Europe.

The U.S., Canada and U.K.

defined benefit pension plans are primarily funded, but all OPEB plans are unfunded.

Further, our OPEB plans provide medical benefits for retirees and their eligible dependents as well as life insurance and, in some cases, dental and vision coverage, for certain retirees in the U.S., Canada and Europe.

The defined benefit pension plans are primarily funded, but all OPEB plans are unfunded.

We also offer defined contribution plans in each of our segments.

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Accounting for pension and OPEB plans requires that we make assumptions that involve considerable judgment which are significant inputs in the actuarial models that measure our net pension and OPEB obligations and ultimately impact our earnings.

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As of December 31, 2024, on a weighted-average basis, the discount rates used were 5.41% for our defined benefit pension plans and 5.15% for our OPEB plans.

The change from the weighted-average discount rates of 5.01% for our defined benefit pension plans and 4.90% for our OPEB plans as of December 31, 2022 was primarily due to a decrease in interest rates at the end of 2023 across all plans.

The change from the weighted-average discount rates of 4.74% for our defined benefit pension plans and 4.64% for our OPEB plans as of December 31, 2023, was primarily due to an increase in interest rates in 2024, particularly for our U.S.

A 50 basis point change in our discount rate assumptions would have had the following effects on the projected benefit obligation balances as of December 31, 2024, for our pension and OPEB plans:

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The assumed long-term expected return on assets is used to estimate the actual return that will occur on each individual funded plan's respective plan assets in the upcoming year.

We determine each plan's EROA with substantial input from independent investment specialists, including our actuaries and our outsourced investment consultant.

We determine each plan's EROA with substantial input from independent investment specialists, including our actuaries and our outsourced investment consultants.

In developing each plan's EROA, we consider current and expected asset allocations, historical market rates as well as historical and expected returns on each plan's individual asset classes.

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Based on the above factors and expected asset allocations, we have assumed, on a weighted-average basis, an EROA of 5.70% for our defined benefit pension plan assets for cost recognition in 2025.

This is an increase from the weighted-average rate of 4.91% we assumed for 2023, primarily due to the increases seen in interest rates throughout the majority of 2023 causing higher expected future fixed income returns.

This is an increase from the weighted-average rate of 5.47% we assumed for 2024, primarily due to the increase in interest rates in 2024 causing higher expected future fixed income returns.

We believe that our EROA assumptions are appropriate;

however, significant changes in our assumptions or actual returns that differ significantly from estimated returns may materially affect our net periodic pension costs.

A 50 basis point change in our expected return on assets assumptions made at the beginning of 2023 would have had the following effects on 2023 net periodic pension and postretirement benefit costs.

Decrease in expected rate of return Increase in expected rate of return

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A 50 basis point change in our EROA assumptions made at the beginning of 2024 would have had the following effects on 2024 net periodic pension and postretirement benefit costs.

Decrease in EROA Increase in EROA

(In millions)

(Unfavorable) favorable impact to the 2024 net periodic pension and postretirement benefit cost $ (13.9) $ 13.9

Net periodic pension and postretirement benefit cost $ (14.1) $ 14.1

Fair Value of Plan Assets

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however, significant changes in our assumptions may materially affect our postretirement benefit obligations and related costs.

As of December 31, 2023, the health care trend rates used were ranging ratably from 6.75% in 2024 to 3.57% in 2040, which are in line with our assumed health care trend rates ranging ratably from

6.50% in 2023 to 3.57% in 2040 as of December 31, 2022.

As of December 31, 2024, the health care trend rates used were ranging ratably from 7.00% in 2025 to 3.57% in 2040, which is a slight increase from our assumed health care trend rates ranging ratably from 6.75% in 2024 to 3.57% in 2040 as of December 31, 2023.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 11, "Employee Retirement Plans and Postretirement Benefits" for further information.

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Contingencies, environmental and litigation reserves are recorded when probable, using our best estimate of loss.

This estimate, involving significant judgment, is based on an evaluation of the range of loss related to such matters and where the amount and range can be reasonably estimated.

These estimates involve significant judgment and are based on an evaluation of the range of loss related to such matters and where the amount and range can be reasonably estimated.

These matters are generally resolved over a number of years and only when one or more future events occur or fail to occur.

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As of December 31, 2024, the carrying values of goodwill and intangible assets were approximately $5.6 billion and $12.2 billion, respectively, with the goodwill balance entirely attributed to the Americas reporting unit.

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We use a combination of discounted cash flow analyses and market approaches to determine the fair value of each of our reporting units and an excess earnings approach to determine the fair values of our indefinite-lived brand intangible assets.

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Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of our reporting units and indefinite-lived intangible assets may include such items as:

(i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives, including our anticipated innovations or an increase in costs driven by inflation or other factors that could significantly impact our immediate and long-range results and an inability to successfully achieve our cost savings targets, (ii) adverse changes in macroeconomic conditions or an economic recovery that significantly differs from our assumptions in timing and/or degree (such as a global pandemic or recession), (iii) significant unfavorable changes in tax rates, (iv) volatility in the equity and debt markets or other country specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples;

(i) a decrease in expected future cash flows, specifically, an inability to execute on our strategic initiatives including our premiumization efforts or an increase in costs driven by inflation or other factors that could significantly impact our immediate and long range results, prolonged weakness in consumer demand or other competitive pressures adversely affecting our long-term volume trends, changes in trends and consumer preferences within the industry towards other brands or product categories, unfavorable working capital changes or an inability to successfully implement our cost savings initiatives, (ii) adverse changes in macroeconomic conditions that significantly differ from our assumptions in timing and/or degree (such as a global pandemic, recession or evolving beer industry), (iii) significant unfavorable changes in tax rates, (iv) volatility in the equity and debt markets or other country-specific factors which could result in a higher weighted-average cost of capital, (v) sensitivity to market multiples;

and (vi) regulation limiting or banning the manufacturing, distribution or sale of alcoholic beverages.

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As of the October 1, 2024, testing date, the fair value of the Americas reporting unit was determined to be in excess of its carrying amount and therefore no goodwill impairment charge was recorded.

The Americas reporting unit continues to be at a heightened risk of future impairment as the carrying value exceeds its respective fair value by slightly less than 15%.

The fair value of the Americas reporting unit increased during the current year, primarily due to higher forecasted cash flow projections, with the increases largely impacted by shifts in consumer preferences in the U.S.

market towards our core brands leading to increased volumes, paired with pricing increases put in place starting in late 2022 as well as lower inflation rates than previously expected.

This is partially offset by an increase to the discount rate as a result of the recent rising interest rate environment.

The Americas reporting unit continues to be at a heightened risk of future impairment as the fair value exceeded its respective carrying value by less than 15%.

The fair value of the Americas reporting unit decreased during the current year, primarily due to lower market multiples and lower forecasted cash flow projections, with the decreases largely driven by more challenging U.S.

industry expectations.

This is partially offset by a decrease to the discount rate as a result of reductions in the interest rate environment.

Specifically, the discount rate used in developing our annual fair value estimates for the Americas reporting unit in the current year was 8.25% based on market-specific factors, as compared to 9.00% used as of the October 1, 2023, annual testing date.

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If our assumptions are not realized, it is possible that further impairment charges may be recorded in the future.

As of the October 1, 2022 testing date, an impairment loss of $845.0 million was recorded as the carrying value of the Americas reporting unit was determined to be in excess of its fair value.

The decline in the fair value of the Americas reporting unit was largely impacted by macroeconomic factors including an increase to the discount rate as a result of the rising interest rate environment as well as reductions in management forecasts and expectations due primarily to cost inflation pressures and a softening beer industry in certain markets in which we operate.

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Indefinite-Lived Intangible Assets

As of the October 1, 2023 testing date, the carrying value of the Staropramen family of brands in EMEA&APAC was determined to be in excess of its fair value such that an impairment loss of $160.7 million was recorded.

As this is a partial impairment, the intangible asset is considered to be at a heightened risk of future impairment, and the carrying value of the brand was $426.9 million as of December 31, 2023.

The decline in the fair value in the current year was impacted by reductions in management forecasts due to delays and changes in strategic priorities for expansion and distribution of the brand in certain export and license markets, increased optionality for consumers in the premium sector in key markets, and reduced demand in Central and Eastern Europe due to cost inflation pressures on consumers as well as macroeconomic factors including an increase to the discount rate as a result of the recent rising interest rate environment.

The discount rate used in developing our annual fair value estimates for the Staropramen family of brands in the current year was 13.25% based on company specific and market-specific factors, as compared to 11.25% used as of the October 1, 2022 annual testing date.

The current year rate includes elevated risk premiums to account for execution risk of strategic initiatives for the brands, including the launch of brand extensions and geographic expansion of the brands in certain markets, in addition to continued economic uncertainty in Central and Eastern Europe due to the effects of cost inflation and the associated impacts on consumer demand and discretionary spending.

The fair values of the Coors brands in the Americas, the Miller brands in the U.S, and the Carling brands in EMEA&APAC continue to be sufficiently in excess of their respective carrying values as of the annual testing date, with each having over 15% cushion of fair value over book value.

The fair values of the Coors brands in the Americas (inclusive of our Coors brand in the U.S.

and Coors distribution agreement in Canada), the Miller brands in the U.S., the Carling brands in the U.K.

and the Staropramen brands in EMEA&APAC are sufficiently in excess of their respective carrying values as of the October 1, 2024 annual testing date, with each having over 15% cushion of fair value over book value.

We utilize Level 3 fair value measurements in our impairment analysis of our indefinite-lived intangible assets.

The future cash flows used in the analyses are based on internal cash flow projections based on our long range plans and include significant assumptions by management.

A 50 basis point increase in our discount rate assumptions would not have resulted in an impairment of the Coors , Miller or Carling brand indefinite-lived intangible assets.

The future cash flows used in the analyses are based on internal cash flow projections utilizing our long range plans and include significant assumptions by management.

A 50 basis point increase in our discount rate assumptions would not have resulted in an impairment of any of our indefinite-lived intangible assets.

As of the October 1, 2023, testing date, the carrying value of the Staropramen family of brands in EMEA&APAC was determined to be in excess of its fair value such that a partial impairment loss of $160.7 million was recorded in our consolidated statements of operations during the fourth quarter of 2023.

Definite-Lived Intangible Assets and Other Long-Lived Assets

Regarding definite-lived intangible assets, we continuously monitor the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed or useful lives should be re-assessed.

During the first quarter of 2022, we identified a triggering event related to the Truss joint venture asset group within our Americas segment and recognized an impairment loss of $28.6 million, of which $12.1 million was attributable to the noncontrolling interest.

The asset group was measured at fair value primarily using a market approach with Level 3 inputs.

See Part II—Item 8 Financial Statements and Supplementary Data, Note 6, "Goodwill and Intangible Assets" and Note 17, "Other Operating Income (Expense), net" for further details on these impairment losses.

No other material triggering events were identified in either 2023 or 2022 related to the definite-lived intangible assets or other definite-lived assets.

We continuously monitor the performance of our definite-lived intangible assets and other long-lived assets for potential triggering events suggesting an impairment review should be performed or useful lives should be re-assessed.

Due to a reduction in forecasted cash flows associated with one of our asset groups, we identified this as a triggering event during the fourth quarter of 2024 and performed a recoverability test for the long-lived assets at the asset group level but concluded that the recoverability test passed and no impairment was recorded.

No other material triggering events were identified in either 2024 or 2023 related to our definite-lived intangible assets or other definite-lived assets.

Income taxes are accounted for in accordance with U.S.

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The realization of tax benefits is evaluated by jurisdiction and the realizability of these assets can vary based on the character of the tax attribute and the carryforward periods specific to each jurisdiction.

In the event we were to determine that we would be able to realize our deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would decrease income tax expense in the period a determination was made.

Likewise, should we determine that we would not be able to realize all or part of our net deferred tax asset in the future, an adjustment to the deferred tax asset would increase income tax expense in the period such determination was made.

There are proposed or pending tax law changes in various jurisdictions in which we do business.

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As a result, such changes may, upon ultimate enactment, result in material impacts to our financial statements.

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What changed 10-K

Item 7. Management’s Discussion and Analysis