TAP Molson Coors Brewing Co

Management Discussion

• During the first quarter of 2020, we recognized a net loss attributable to MCBC of $117.0 million compared to net income of $151.4 million in the prior year. This decrease was primarily driven by an approximate $158 million unfavorable unrealized mark-to-market change on our commodity positions and HEXO warrants, an increase in special charges of approximately $74 million, estimated keg sales returns and finished goods obsolescence reserves and related costs of $50 million resulting from the on-premise impacts of the coronavirus pandemic, the impact of lower financial volume, inflation and negative mix. These items were partially offset by favorable net pricing and cost savings related to the revitalization plan, as well as other targeted spend reductions. Net sales of approximately $2.1 billion in the first quarter of 2020 decreased 8.7% from the prior year, driven by financial volume declines, estimated keg sales returns and reimbursements of $31.5 million related to the on-premise impacts resulting from the coronavirus pandemic across all of our major markets, as well as unfavorable mix, partially offset by higher global net pricing.