Molson Coors Beverage Company
04/30/2026 | Press release | Distributed by Public on 04/30/2026 06:50
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
For more than two centuries, we have brewed beverages that unite people to celebrate all life's moments. From our core power brands, Coors Light, Miller Lite, Coors Banquet, Molson Canadian, Carling and Ožujsko, to our above premium brands, including Madrí Excepcional, Staropramen, Blue Moon Belgian White and Leinenkugel's Summer Shandy, to our value brands, like Miller High Life and Keystone Light, we produce many beloved and iconic beers. While our 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 and Monaco, spirits and non-alcoholic beverages. We also have partner brands, such as Simply Spiked, ZOA Energy, Fever-Tree, 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.
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") in this Quarterly Report on Form 10-Q is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements, the accompanying notes and the MD&A included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 ("Annual Report"), as well as our unaudited condensed consolidated financial statements and the accompanying notes included in this report. Due to the seasonality of our operating results, quarterly financial results are not necessarily indicative of the results that may be achieved for the full year or any other future period.
Unless otherwise noted in this report, any description of "we," "us" or "our" includes Molson Coors Beverage Company ("MCBC" or the "Company"), principally a holding company, and its operating and non-operating subsidiaries included within its reporting segments. Our reporting segments include the Americas and EMEA&APAC. Our Americas segment operates in the U.S., Canada and various countries in Latin America. Our EMEA&APAC segment operates in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, Romania, Serbia, the U.K., various other European countries and certain countries within the Middle East, Africa and Asia Pacific.
Unless otherwise indicated, information in this report is presented in USD and comparisons are to comparable prior year periods. Our primary operating currencies, other than the USD, include the CAD, the GBP and our Central European operating currencies such as the EUR, CZK, RON and RSD.
Global Market Conditions and Competitive Trends
Our industry is experiencing and continues to navigate a dynamic macroeconomic environment driven by tariffs and shifting global trade policies as well as other geopolitical events including the recent conflict in Iran with potential resulting impacts on economic growth, consumer confidence, supply chain pressures, commodity cost volatility and other inflation, and foreign currency exchange rates.
For example, the surcharge added to the base price of aluminum in the U.S., known as the Midwest Premium, rose substantially in the second quarter of 2025, and base aluminum and fuel prices have also been volatile and remain at elevated levels. In addition to impacting the prices of raw materials, a constant or periodic change in these commodities has and may continue to decrease our profit margins or we may pass on the increased costs to our consumers, which could in turn result in the loss of sales if the end consumer is not willing to pay the increased price.
Further, the associated impacts of the macroeconomic environment on the beer industries in which we operate has resulted in lower consumer confidence and heightened competitive activity resulting in market share reductions of our products in certain regions and segments. The magnitude of the resulting impacts on our business are dependent on the evolution of the global macroeconomic environment and the competitive landscape, including whether share losses are sustained. The economic and competitive pressures on our Company and our consumers' consumption behavior and preferences have negatively impacted, and may continue to negatively impact, our results of operations during this volatile period.
We plan to continue to evaluate and implement strategies which are designed to help mitigate the impact on our business, consolidated results of operations and financial condition while continuing to support our long-term strategic growth and capital allocation priorities.
Consolidated Results of Operations
The following table highlights summarized components of our unaudited condensed consolidated statements of operations for the three months ended March 31, 2026 and March 31, 2025. See Part I.-Item 1. Financial Statements for additional details of our U.S. GAAP results.
N/M = Not meaningful
| Three Months Ended | |||||||||||||||||
| March 31, 2026 | March 31, 2025 | % change | |||||||||||||||
| (In millions, except percentages and per share data) | |||||||||||||||||
| Net sales | $ | 2,351.1 | $ | 2,304.1 | 2.0 | % | |||||||||||
| Cost of goods sold | (1,453.9) | (1,453.2) | - | % | |||||||||||||
| Gross profit | 897.2 | 850.9 | 5.4 | % | |||||||||||||
| Marketing, general and administrative expenses | (610.0) | (653.2) | (6.6) | % | |||||||||||||
| Other operating income (expense), net | (32.1) | (15.9) | 101.9 | % | |||||||||||||
| Equity income (loss) | 3.2 | 4.5 | (28.9) | % | |||||||||||||
| Operating income (loss) | 258.3 | 186.3 | 38.6 | % | |||||||||||||
| Total non-operating income (expense), net | (63.6) | (30.0) | 112.0 | % | |||||||||||||
| Income (loss) before income taxes | 194.7 | 156.3 | 24.6 | % | |||||||||||||
| Income tax benefit (expense) | (44.6) | (33.2) | 34.3 | % | |||||||||||||
| Net income (loss) | 150.1 | 123.1 | 21.9 | % | |||||||||||||
| Net (income) loss attributable to noncontrolling interests | 1.2 | (2.1) | N/M | ||||||||||||||
| Net income (loss) attributable to MCBC | $ | 151.3 | $ | 121.0 | 25.0 | % | |||||||||||
| Net income (loss) attributable to MCBC per diluted share | $ | 0.80 | $ | 0.59 | 35.6 | % | |||||||||||
| Financial volume in hectoliters | 14.964 | 15.409 | (2.9) | % | |||||||||||||
Foreign Currency Impacts on Results
For the three months ended March 31, 2026, foreign currency movements had the following impacts on our USD consolidated results:
•Net sales - Favorable impact of $45.2 million (Favorable impact for EMEA&APAC and Americas of $34.0 million and $11.2 million, respectively).
•Cost of goods sold - Unfavorable impact of $31.9 million (Unfavorable impact for EMEA&APAC and Americas of $25.6 million and $7.4 million, respectively, partially offset by the favorable impact for Unallocated of $1.1 million).
•MG&A - Unfavorable impact of $16.1 million (Unfavorable impact for EMEA&APAC and Americas of $12.3 million and $3.8 million, respectively).
•Income (loss) before income taxes - Unfavorable impact of $4.6 million (Unfavorable impact for EMEA&APAC and Americas of $5.4 million and $1.6 million, respectively, partially offset by the favorable impact for Unallocated of $2.4 million).
The impacts of foreign currency movements on our consolidated USD results described above for the three months ended March 31, 2026 were primarily due to the weakening of the USD compared to the CAD, GBP and other operating currencies in Europe.
Included in these amounts are both translational and transactional impacts of changes in foreign exchange rates. We calculate the impact of foreign exchange by translating our current period local currency results at the average exchange rates used to translate the financial statements in the comparable prior year period during the respective period throughout the year and comparing that amount with the reported amount for the period. The impact of transactional foreign currency gains and losses is recorded within other non-operating income (expense), net in our unaudited condensed consolidated statements of operations.
Volume
Financial volume represents owned or actively managed brands sold to unrelated external customers within our geographic markets (net of returns and allowances), as well as contract brewing, factored non-owned volume and company-owned distribution volume. This metric is presented on a sales-to-wholesalers 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 represents the distribution of beer, wine, spirits and other products owned and produced by other companies to the on-premise channel, which is a common arrangement in the U.K.
Net sales
We utilize net sales 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 net sales per our unaudited condensed consolidated statements of operations divided by financial volume for the respective period. We believe this metric is important and useful for investors and management because it provides an indication of the trends of price and sales mix and other impacts on our net sales.
The following table highlights the drivers of the change in net sales for the three months ended March 31, 2026, compared to March 31, 2025 (in percentages):
| Financial Volume | Price and Sales Mix | Currency | Total | ||||||||||||||||||||
| Consolidated net sales | (2.9) | % | 3.0 | % | 1.9 | % | 2.0 | % | |||||||||||||||
Net sales increased 2.0% for the three months ended March 31, 2026, compared to prior year, driven by favorable price and sales mix and favorable foreign currency impacts, partially offset by lower financial volume.
Financial volume decreased 2.9% for the three months ended March 31, 2026, compared to prior year, primarily due to lower shipments in both the Americas and EMEA&APAC segments.
Price and sales mix favorably impacted net sales by 3.0% for the three months ended March 31, 2026, compared to prior year, primarily due to favorable sales mix as a result of premiumization in both the Americas and EMEA&APAC segments and increased net pricing in the Americas segment. Net sales per hectoliter increased 5.1% for the three months ended March 31, 2026.
A discussion of currency impacts on net sales for the three months ended March 31, 2026 is included in the "Foreign currency impacts on results" section above.
Cost of goods sold
We utilize cost of goods sold per hectoliter, as well as the year over year changes in this metric, as a key metric for analyzing our results. This metric is calculated as cost of goods sold per our unaudited condensed consolidated statements of operations divided by financial volume for the respective period. We believe this metric is important and useful for investors and management because it provides an indication of the trends of mix and other cost impacts on our cost of goods sold.
Cost of goods sold was flat for the three months ended March 31, 2026 compared to prior year. Cost of goods sold was impacted by higher cost of goods sold per hectoliter offset by lower financial volume. Cost of goods sold per hectoliter increased 3.0% for the three months ended March 31, 2026, compared to prior year, primarily due to cost inflation related to material and manufacturing expenses, including an approximate $30 million unfavorable impact attributable to Midwest Premium pricing, unfavorable foreign currency impacts, unfavorable mix driven by premiumization, as well as volume deleverage, partially offset by favorable changes in our unrealized mark-to-market commodity derivative positions of $70.5 million and cost savings initiatives.
A discussion of currency impacts on cost of goods sold for the three months ended March 31, 2026, is included in the "Foreign currency impacts on results" section above.
Marketing, general and administrative expenses
MG&A expenses decreased 6.6% for the three months ended March 31, 2026, compared to prior year, primarily due to the cycling of approximately $30 million of integration and transition fees from the Fevertree USA, Inc. acquisition in the prior year, lower employee-related costs as a result of our Americas Restructuring Plan and lower marketing expense, partially offset by unfavorable foreign currency impacts and costs incurred related to our global modernization enterprise resource planning ("ERP") system implementation project.
A discussion of currency impacts on MG&A expenses for the three months ended March 31, 2026, is included in the "Foreign currency impacts on results" section above.
Other operating income (expense), net
See Part I.-Item 1. Financial Statements, Note 12, "Other Operating Income (Expense), net" for detail of our other operating income (expense), net.
Total non-operating income (expense), net
Total non-operating expense, net increased 112.0% for the three months ended March 31, 2026, compared to prior year, primarily due to unfavorable changes in the fair value of our investment in Fevertree Drinks plc of $36.1 million.
Income tax benefit (expense)
| Three Months Ended | |||||||||||
| March 31, 2026 | March 31, 2025 | ||||||||||
| Effective tax rate | 23 | % | 21 | % | |||||||
The higher effective tax rate for the three months ended March 31, 2026, compared to the prior year, was primarily due to the recognition of a lower discrete tax benefit.
Our effective tax rate can be volatile and may change with, among other things, the amount and source of pretax income or loss, our ability to utilize foreign tax credits, excess tax benefits or deficiencies from share-based compensation, changes in tax laws and the movement of liabilities established pursuant to accounting guidance for uncertain tax positions as statutes of limitations expire, positions are effectively settled or when additional information becomes available. There are proposed or pending tax law changes in various jurisdictions and other changes to regulatory environments in countries in which we do business that, if enacted, could have an impact on our effective tax rate.
Segment Results of Operations
Americas Segment
| Three Months Ended | |||||||||||||||||
| March 31, 2026 | March 31, 2025 | % change | |||||||||||||||
| (In millions, except percentages) | |||||||||||||||||
|
Net sales(1)
|
$ | 1,900.5 | $ | 1,881.8 | 1.0 | % | |||||||||||
| Income (loss) before income taxes | $ | 207.4 | $ | 209.3 | (0.9) | % | |||||||||||
|
Financial volume in hectoliters(1)(2)
|
11.427 | 11.742 | (2.7) | % | |||||||||||||
(1)Includes gross inter-segment sales and volume which are eliminated in the consolidated totals.
(2)Excludes royalty volumes of 0.722 million hectoliters and 0.673 million hectoliters for the three months ended March 31, 2026 and March 31, 2025, respectively.
Net sales
The following table highlights the drivers of the change in net sales for the three months ended March 31, 2026, compared to March 31, 2025 (in percentages):
| Financial Volume | Price and Sales Mix | Currency | Total | ||||||||||||||||||||
| Americas net sales | (2.7) | % | 3.1 | % | 0.6 | % | 1.0 | % | |||||||||||||||
Net sales increased 1.0% for the three months ended March 31, 2026, compared to prior year, driven by favorable price and sales mix and favorable foreign currency impacts, partially offset by lower financial volume.
Financial volume decreased 2.7% for the three months ended March 31, 2026, compared to prior year, primarily due to lower U.S. financial volume resulting from lower share performance in core and value brands, partly offset by the timing of shipments.
Price and sales mix favorably impacted net sales by 3.1% for the three months ended March 31, 2026, compared to prior year, primarily due to favorable sales mix as a result of positive brand mix as well as increased net pricing. Net sales per hectoliter increased 3.8% for the three months ended March 31, 2026.
A discussion of currency impacts on net sales for the three months ended March 31, 2026 is included in the "Foreign currency impacts on results" section above.
Income (loss) before income taxes
Income before income taxes decreased 0.9% for the three months ended March 31, 2026, compared to the prior year, primarily due to cost inflation related to materials and manufacturing expenses including an approximate $30 million of unfavorable impact attributable to Midwest Premium pricing, unfavorable changes in the fair value of our investment in Fevertree Drinks plc of $36.1 million and lower financial volume, partially offset by lower MG&A, increased net pricing and favorable mix. Lower MG&A was primarily driven by the cycling of approximately $30 million of integration and transition fees from the Fevertree USA, Inc. acquisition in the prior year, cost savings initiatives including lower employee-related costs as a result of our Americas Restructuring Plan, and lower marketing expenses, partially offset by costs incurred related to our global modernization ERP system implementation project.
A discussion of currency impacts on income (loss) before income taxes for the three months ended March 31, 2026 is included in the "Foreign currency impacts on results" section above.
EMEA&APAC Segment
| Three Months Ended | |||||||||||||||||
| March 31, 2026 | March 31, 2025 | % change | |||||||||||||||
| (In millions, except percentages) | |||||||||||||||||
|
Net sales(1)
|
$ | 456.1 | $ | 427.3 | 6.7 | % | |||||||||||
| Income (loss) before income taxes | $ | (51.7) | $ | (19.2) | 169.3 | % | |||||||||||
|
Financial volume in hectoliters(1)(2)
|
3.540 | 3.669 | (3.5) | % | |||||||||||||
(1)Includes gross inter-segment sales and volume which are eliminated in the consolidated totals.
(2)Excludes royalty volume of 0.223 million hectoliters and 0.220 million hectoliters for the three months ended March 31, 2026 and March 31, 2025, respectively.
Net sales
The following table highlights the drivers of the change in net sales for the three months ended March 31, 2026, compared to March 31, 2025 (in percentages):
| Financial Volume | Price and Sales Mix | Currency | Total | ||||||||||||||||||||
| EMEA&APAC net sales | (3.5) | % | 2.3 | % | 7.9 | % | 6.7 | % | |||||||||||||||
Net sales increased 6.7% for the three months ended March 31, 2026, compared to prior year, driven by favorable foreign currency impacts and favorable price and sales mix, partially offset by lower financial volume.
Financial volume decreased 3.5% for the three months ended March 31, 2026, compared to prior year, primarily due to lower volume in the U.K. driven by soft market demand and a heightened competitive landscape.
Price and sales mix favorably impacted net sales by 2.3% for the three months ended March 31, 2026, compared to prior year, primarily due to premiumization. Net sales per hectoliter increased 10.6% for the three months ended March 31, 2026.
A discussion of currency impacts on net sales for the three months ended March 31, 2026, is included in the "Foreign currency impacts on results" section above.
Income (loss) before income taxes
Loss before income taxes of $51.7 million increased $32.5 million or 169.3% for the three months ended March 31, 2026, compared to the prior year, primarily due to higher restructuring related charges, lower financial volume, unfavorable foreign currency impacts and cost inflation related to materials and manufacturing expenses.
A discussion of currency impacts on income (loss) before income taxes for the three months ended March 31, 2026 is included in the "Foreign currency impacts on results" section above.
Unallocated Segment
We have certain activity that is not allocated to our segments, which has been reflected as Unallocated below. Specifically, Unallocated primarily includes certain financing-related activities such as interest expense and interest income, as well as foreign exchange gains and losses on intercompany balances. 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 exposure resides. Additionally, only the service cost component of net periodic pension and OPEB cost is reported within each operating segment. Meanwhile all other components remain in Unallocated.
| Three Months Ended | |||||||||||||||||
| March 31, 2026 | March 31, 2025 | % change | |||||||||||||||
| (In millions, except percentages) | |||||||||||||||||
| Cost of goods sold | $ | 89.2 | $ | 18.7 | 377.0 | % | |||||||||||
| Gross profit (loss) | 89.2 | 18.7 | 377.0 | % | |||||||||||||
| Operating income (loss) | 89.2 | 18.7 | 377.0 | % | |||||||||||||
| Total non-operating income (expense), net | (50.2) | (52.5) | (4.4) | % | |||||||||||||
| Income (loss) before income taxes | $ | 39.0 | $ | (33.8) | N/M | ||||||||||||
Cost of goods sold
The unrealized changes in fair value on our commodity derivatives, which are economic hedges, make up substantially all of the activity presented within cost of goods sold in the table above for the three months ended March 31, 2026 and March 31, 2025. The increase in the unrealized gain recognized during the three months ended March 31, 2026, compared to the prior year was primarily due to unrealized gains recognized on our U.S. diesel swaps, our U.S. aluminum swaps and our U.S. Midwest Premium swaps. As the exposure we are managing is realized, we reclassify the gain or loss on our commodity derivatives to the segment in which the underlying exposure resides, allowing our segments to realize the economic effects of the derivative without the resulting unrealized mark-to-market volatility. See Part I.-Item 1. Financial Statements, Note 8, "Derivative Instruments and Hedging Activities" for further information.
Total non-operating income (expense), net
Total non-operating expense, net, decreased 4.4% for the three months ended March 31, 2026, compared to prior year, primarily due to favorable foreign currency transactional impacts.
Liquidity and Capital Resources
Liquidity
Overview
Our primary sources of liquidity include cash provided by operating activities and access to external capital. We continue to monitor world events which may create credit or economic challenges that could adversely impact our net income (loss) or operating cash flows and our ability to obtain additional liquidity. We believe that our cash and cash equivalents, cash flows from operations and cash provided by short-term and long-term borrowings, when necessary, will be adequate to meet our ongoing operating requirements, scheduled principal and interest payments on debt, anticipated dividend payments, capital expenditures and other obligations for the twelve months subsequent to the date of the issuance of this quarterly report and our long-term liquidity requirements. We have upcoming debt maturities in July 2026, as illustrated in the debt maturity profile graph in the Capital Resources, including Material Cash Requirements section below. We expect to refinance at least $1.0 billion and up to $1.9 billion of these maturities. We are currently evaluating various alternatives with respect to these maturities which may involve utilizing the remaining capacity on our amended and restated $2.0 billion multi-currency revolving credit facility ($1.8 billion as of April 30, 2026). We have not made a decision at this time, and the timing, structure and terms of any such transactions will depend on capital market conditions and other factors. There can be no assurance that such transactions, including a potential refinancing, will be pursued or completed on terms acceptable to the Company, or at all. We do not have any restrictions that prevent or limit our ability to declare or pay dividends.
While a significant portion of our cash flows from operating activities are generated within the U.S., our cash balances include cash held outside the U.S. and in currencies other than the USD. As of March 31, 2026, approximately 78% of our cash and cash equivalents were located outside the U.S., largely denominated in foreign currencies. Fluctuations in foreign currency exchange rates could have a material impact on these foreign cash balances. Cash balances in foreign countries are often subject to additional restrictions. We may, therefore, have difficulties repatriating cash held outside the U.S. on a timely basis and such repatriation may be subject to tax. These limitations may affect our ability to fully utilize our cash resources for needs in the U.S. and other countries and may adversely affect our liquidity. To the extent necessary, we accrue for tax consequences on the earnings of our foreign subsidiaries as they are earned. We may utilize tax planning and financing strategies in an effort to ensure that our worldwide cash is available in the locations in which it is needed. We periodically review and evaluate these plans and strategies, including externally committed and non-committed credit agreements accessible by our Company and each of our operating subsidiaries. We believe these financing arrangements, along with cash flows from operating activities within the U.S., are sufficient to fund our current cash needs in the U.S.
Cash Flows and Use of Cash
Our business historically generates positive operating cash flows each year and our debt is generally of a longer-term nature. See the debt maturity profile graph for further details of our debt maturities. However, our liquidity could be impacted significantly by the risk factors we described in Part I-Item 1A. "Risk Factors" in our Annual Report, Part II.-Item 1A. "Risk Factors" in this report and the items listed above.
Cash Flows from Operating Activities
Net cash provided by operating activities of $2.5 million for the three months ended March 31, 2026, increased $93.2 million compared to cash used in operating activities of $90.7 million for the three months ended March 31, 2025. The increase was primarily due to favorable changes in working capital and higher net income adjusted for non-cash items. The favorable changes in working capital were primarily driven by lower payments for prior year annual incentive compensation and the cycling of a $60.6 million payment as final resolution of the Keystone litigation case, partially offset by the timing of cash receipts.
Cash Flows from Investing Activities
Net cash used in investing activities of $230.1 million for the three months ended March 31, 2026, decreased $111.2 million compared to $341.3 million for the three months ended March 31, 2025. The decrease in cash used in investing activities was primarily due to our prior year investment in Fevertree Drinks plc of $88.1 million and the prior year acquisition of Fevertree USA, Inc.
Cash Flows from Financing Activities
Net cash used in financing activities of $282.2 million for the three months ended March 31, 2026, increased $151.0 million compared to $131.2 million for the three months ended March 31, 2025. The increase in cash used in financing activities was primarily due to higher Class B common stock share repurchases, higher payments on debt and other borrowings and lower cash inflow from other financing activities.
Capital Resources, including Material Cash Requirements
Cash and Cash Equivalents
As of March 31, 2026, we had total cash and cash equivalents of $382.6 million, compared to $896.5 million as of December 31, 2025 and $412.7 million as of March 31, 2025. The decrease in cash and cash equivalents from December 31, 2025 was primarily due to capital expenditures, Class B common stock share repurchases, dividends paid and payments on debt and borrowings. The decrease in cash and cash equivalents from March 31, 2025, was primarily due to Class B common stock share repurchases, capital expenditures and dividends paid, partially offset by net cash provided by operating activities.
Borrowings
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. We maintain an amended and restated $2.0 billion multi-currency revolving credit facility with a maturity date of June 26, 2030. As of March 31, 2026, we had $2.0 billion available to draw on our amended and restated $2.0 billion multi-currency revolving credit facility.
Subsequent to March 31, 2026, we had commercial paper borrowings that resulted in commercial paper outstanding of approximately $0.2 billion as of April 30, 2026. As such, as of April 30, 2026, we have approximately $1.8 billion available to draw on our amended and restated $2.0 billion multi-currency revolving credit facility.
We intend to further utilize our cross-border, cross currency cash pool as well as our commercial paper programs for liquidity as needed. We also have CAD, GBP and USD overdraft facilities across several banks should we need additional short-term liquidity.
Under the terms of each of our debt facilities, we must comply with certain restrictions. These include customary events of default and specified representations, warranties and covenants, as well as covenants that restrict our ability to incur certain additional priority indebtedness (certain thresholds of secured consolidated net tangible assets), certain leverage threshold percentages, create or permit liens on assets and restrictions on mergers, acquisitions and certain types of sale lease-back transactions.
The maximum net debt to EBITDA leverage ratio, as defined by the amended and restated multi-currency revolving credit facility agreement, was 4.00x as of March 31, 2026 and December 31, 2025. As of March 31, 2026 and December 31, 2025, we were in compliance with all of these restrictions and covenants, have met such financial ratios and have met all debt payment obligations. All of our outstanding senior notes as of March 31, 2026, rank pari-passu.
See Part I.-Item 1. Financial Statements, Note 7, "Debt" for further discussion of our borrowings and available sources of borrowings, including lines of credit.
Guarantees
We guarantee indebtedness and other obligations to banks and other third parties for some of our equity method investments and consolidated subsidiaries. See Part I.-Item 1. Financial Statements, Note 3, "Investments" and Part I.-Item 1. Financial Statements, Note 10, "Commitments and Contingencies" for further discussion.
Material Cash Requirements from Contractual and Other Obligations
There were no material changes to our material cash requirements from contractual and other obligations outside the ordinary course of business or due to factors similar in nature to inflation, changing prices on operations or changes in the remaining terms of the contracts since December 31, 2025, as reported in Part II.- Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, "Material Cash Requirements from Contractual and Other Obligations" in our Annual Report.
Credit Rating
Our current long-term credit ratings are BBB/Stable Outlook, Baa1/Stable Outlook and BBB/Stable Outlook with Standard & Poor's, Moody's and DBRS, respectively. Our short-term credit ratings are A-2, Prime-2 and R-2, respectively. A securities rating is not a recommendation to buy, sell or hold securities, and it may be revised or withdrawn at any time by the applicable rating agency.
Guarantor Information
SEC Registered Securities
For purposes of this disclosure, including the tables, "Parent Issuer" shall mean MCBC in its capacity as the issuer of the senior notes under the May 2012 Indenture, the July 2016 Indenture and the May 2024 Indenture. "Subsidiary Guarantors" shall mean certain Canadian and U.S. subsidiaries reflecting the substantial operations of our Americas segment.
Pursuant to the indenture dated May 3, 2012 (as amended, the "May 2012 Indenture"), MCBC issued its outstanding 5.0% senior notes due 2042. Additionally, pursuant to the indenture dated July 7, 2016 ("July 2016 Indenture"), MCBC issued its outstanding 3.0% senior notes due July 2026 and 4.2% senior notes due 2046. 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 Quarterly Report on Form 10-Q (the Subsidiary Guarantors, and together with the Parent Issuer, the "Obligor Group"). Each of the Subsidiary Guarantors is 100% owned by the Parent Issuer. The guarantees are full and unconditional and joint and several.
None of our other outstanding debt was issued in a transaction that was registered with the SEC, and such other outstanding debt was issued or otherwise generally guaranteed on a senior unsecured basis by the Obligor Group or other consolidated subsidiaries of MCBC. These other guarantees are also full and unconditional and joint and several.
As of March 31, 2026, the senior notes and related guarantees ranked pari-passu with all other unsubordinated debt of the Obligor Group and senior to all future subordinated debt of the Obligor Group. The guarantees can be released upon the sale or transfer of a Subsidiary Guarantors' capital stock or substantially all of its assets, or if such Subsidiary Guarantor ceases to be a guarantor under our other outstanding debt.
See Part I.-Item 1. Financial Statements, Note 7, "Debt" for details of all debt issued and outstanding as of March 31, 2026.
The following summarized financial information relates to the Obligor Group as of March 31, 2026, on a combined basis, after elimination of intercompany transactions and balances between the Obligor Group, and excluding the investments in and equity in the earnings of any non-guarantor subsidiaries. The balances and transactions with non-guarantor subsidiaries have been separately presented.
Summarized Financial Information of Obligor Group
| Three Months Ended | |||||
| March 31, 2026 | |||||
| (In millions) | |||||
| Net sales, out of which: | $ | 1,858.5 | |||
| Intercompany sales to non-guarantor subsidiaries | $ | 48.2 | |||
| Gross profit, out of which: | $ | 729.8 | |||
| Intercompany net costs from non-guarantor subsidiaries | $ | (79.7) | |||
| Net interest expense, out of which: | $ | (61.5) | |||
| Intercompany net interest expense from non-guarantor subsidiaries | $ | (4.1) | |||
| Income before income taxes | $ | 226.2 | |||
| Net income | $ | 172.1 | |||
| As of March 31, 2026 | As of December 31, 2025 | ||||||||||
| (In millions) | |||||||||||
| Total current assets, out of which: | $ | 1,816.6 | $ | 1,861.3 | |||||||
| Intercompany receivables from non-guarantor subsidiaries | $ | 227.9 | $ | 223.8 | |||||||
| Total noncurrent assets, out of which: | $ | 20,226.4 | $ | 20,360.8 | |||||||
| Noncurrent intercompany notes receivable from non-guarantor subsidiaries | $ | 3,422.9 | $ | 3,460.6 | |||||||
| Total current liabilities, out of which: | $ | 4,968.2 | $ | 5,015.0 | |||||||
| Current portion of long-term debt and short-term borrowings | $ | 2,365.9 | $ | 2,372.1 | |||||||
| Intercompany payables due to non-guarantor subsidiaries | $ | 847.0 | $ | 797.5 | |||||||
| Total noncurrent liabilities, out of which: | $ | 6,329.9 | $ | 6,339.3 | |||||||
| Long-term debt | $ | 3,818.0 | $ | 3,834.3 | |||||||
| Noncurrent intercompany notes payable due to non-guarantor subsidiaries | $ | 24.6 | $ | 29.4 | |||||||
Capital Expenditures
We incurred $98.1 million and paid $231.7 million, for capital improvement projects worldwide for the three months ended March 31, 2026, excluding capital spending by equity method joint ventures, representing a decrease of $32.5 million from the $130.6 million of capital expenditures incurred in the three months ended March 31, 2025. We continue to prioritize our planned capital expenditures with a focus on optimizing returns on invested capital.
Contingencies
We are party to various legal proceedings arising in the ordinary course of business, environmental matters and indemnities associated with our sale of Kaiser to FEMSA. See Part I.-Item 1. Financial Statements, Note 10, "Commitments and Contingencies" for further discussion.
Off-Balance Sheet Arrangements
Refer to Part II.-Item 8. Financial Statements, Note 13, "Commitments and Contingencies" in our Annual Report for discussion of off-balance sheet arrangements. As of March 31, 2026, we did not have any other material off-balance sheet arrangements.
Critical Accounting Estimates
Our accounting policies and accounting estimates critical to our financial condition and results of operations are set forth in our Annual Report and did not change during the three months ended March 31, 2026. SeePart I.-Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for discussion of any recently adopted accounting pronouncements.
New Accounting Pronouncements Not Yet Adopted
See Part I.-Item 1. Financial Statements, Note 2, "New Accounting Pronouncements" for a description of any new accounting pronouncements that have or could have a significant impact on our financial statements.
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