Good day, and welcome to the Molson Coors Brewing Company Fourth Quarter 2017 Earnings Conference Call. Before we begin, I will paraphrase the Company's Safe Harbor language. Some of the discussion today may include forward-looking statements. Actual results could differ materially from what the Company projects today, so please refer to its most recent 10-K and 10-Q filings for a more complete description of factors that could affect these projections. The Company does not undertake to publicly update forward-looking statements whether as a result of new information, future events or otherwise. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. Regarding any non-U.S. GAAP measures that may be discussed during the call and from time to time by the Company's executive in discussing the Company's performance, please visit the Company's website at www.molsoncoors.com and click on the Financial Reporting tab of the Investor Relations page for a reconciliation of these measures to the nearest U.S. GAAP results. Also, unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period and in U.S. dollars and consolidated, and U.S. segment results are presented versus pro forma results a year ago, which reflect the acquisition of MillerCoors as if it and the related financing had occurred on January 1, 2016. Following the prepared remarks this morning, management will take your questions. [Operator Instructions] Now, I'd like to turn the call over to Mark Hunter, President and CEO of Molson Coors.

Thank you, Phil, and hello and welcome, everybody, to the Molson Coors earnings call, and many thanks for joining today. With me on the call this morning from Molson Coors, we have Tracey Joubert, our Global CFO; Gavin Hattersley, the COO of our U.S. business; Fred Landtmeters, our Canada CEO; Simon Cox, the CEO of our Europe business; Sergey Yeskov, our new International CEO; who earlier this year moved over from leading our commercial teams in Canada; Lee Reichert, our incoming Chief Legal and Corporate Affairs Officer; Brian Tabolt, our Global Controller; and Dave Dunnewald, the Global VP of Investor Relations. Now before diving into results, I wanted to take a moment to publicly recognize a couple of people. Firstly, Sam Walker, who's led our legal and corporate affairs team and has been on our executive team for almost 13 years; Sam is retiring from our business at the end of this month to pursue an exciting opportunity in the public service sector in Colorado. For me personally, three enormous change; Sam has been a trusted adviser, good friend, and a constant champion for our Company and everything it stands and strives for. These are big shoes to fill in, and we're delighted to have Lee Reichert ready to step into this important role next month. Secondly, I want to recognize Dave Dunnewald, our Investors Relations VP; who has announced he will retire in the first half of this year. Dave celebrates 35 years' service this year and started when our beers were only sold in 18 Western states. For the last 26 year, Dave has led our IR efforts; he has led 113 quarters of earnings calls and has seen our enterprise value grow from less than $1 billion to almost $30 billion. Well done, Dave, and thank you.…

Thank you, Mark, and hello, everyone. Let's review our consolidated financial headlines for the fourth quarter versus pro forma results a year ago except for cash flow which is reported on a full year actual basis. Also, keep in mind that in the fourth quarter of 2017, we changed our method of calculating pension plan assets used to determine our net periodic pension costs, which favorably impacted our Canada, Europe and consolidated results. Net sales increased 4.5% due to positive global pricing, royalty revenue, favorable foreign currency movements and starting [ph] a $50 million indirect tax provision from a year ago, partially offset by lower financial volume. Net sales in constant currency grew 2.4%. Net sales per hectoliter increased 5.8% and 3.7% in constant currency. Worldwide brand volume decreased 1.1% due to lower volume in the U.S. and international, partially offset by growth in Europe and Canada. Global priority brand volume decreased 1.9%, and financial volumes decreased 1.2%, driven by the U.S. Our U.S. GAAP net income increased from a loss last year to income of $588 million this year; this improvement was primarily due to a discrete tax benefit related to that revaluation of our deferred tax balances which resulted from the recent U.S. tax reform along with favorable underlying performance in stocking and impairment charge for the Molson brands in Canada and an indirect tax provision in Europe reported a year ago. Underlying EBITDA increased 17% on a reported basis and increased 14.3% on a constant currency basis. This strong underlying performance was driven by positive pricing, cost savings and MG&A efficiencies, partially offset by the impact of lower volumes, inflation and investments behind our global business capabilities. Results also benefited from indirect tax provision a year ago and higher net pension benefits. Underlying EBITDA margins improved 198…

Thanks, Tracey. I'll begin the call today by outlining our plans to drive total shareholder returns. Going forward, we believe our ambition to be First Choice of our consumers and customers will be central to our bottom and top line success. Our regional business priorities are clear and consistent. In the U.S. 2017 industry dynamics were challenging, our teams continue to be disciplined, decisive and accountable as we continue to deliver long-term profit growth. We've grown underlying EBITDA in the U.S. substantially since 2009 including in difficult trading conditions. And this year, exemplified that ability as we grew underlying EBITDA 4.9% in the quarter from 2.7% for the full year. We know we have the brands, the plants and the teams to achieve our goals, which includes our growth agenda. Our objective for flat volumes by 2018 and growth by 2019 remains our strategic comparator. While we're not driving for growth at any cost we will strengthen and expand our portfolio, drive investment efficiency through ROMI, or return on marketing investment, and also through global procurement and the use of PACC, and will continue to earn category captainships underpinned by tools such as Building with Beer as these are all steps to help us and our partner to sell more beer, more profitably. Within our brand portfolio, we'll continue to gain segment share in premium, grow in Above Premium and continue to stabilize our Below Premium brand volume. We'll refresh Coors Light packaging and release new creative over the next couple of months while continuing to build momentum buying Miller Lite, the original light beer. Within Above Premium, we'll accelerate our performance by building on solid growth in 2017 from our two national craft brands, Blue Moon Belgian White and Leinenkugel's Summer Shandy, as well as the strong growth of…

[Operator Instructions] The first question comes from Andrea Teixeira with JP Morgan. Please go ahead.

I wanted to just cycle back to the synergies and the reinvestment; you had an amazing quarter in terms of flow-through, and it was above what you had initially indicated at the Analyst Day. I was just hoping to see how we should be seeing the cadence for 2018 and if this margin was just a catch-up because, obviously, the first 9 months you had a more challenging environment and you had to defend it. So for the full year, you used to had it like within that guidance. So is there anything that has changed, that made -- I mean, obviously, you had $80 million more than you originally anticipated, but how we should be thinking about the range that you gave us at the in terms of for investment? And how we would layer that through your initial thought about stabilizing volumes in the U.S. in 2018? How should we be thinking of that goal going forward as you have more visibility?

There's quite a lot in there so let me try to answer. If you look at our overall cost savings and synergies, we cleared out very clearly our 3-year exploration, and that transformation was one that had increased following the initial synergy assumption. So we increased synergies, and we accelerated those to get us the $550 million over 3 years. We've now increased that number from $550 million to $600 million. And we've made very good progress in year 1. We actually managed to accelerate some of the savings from years 3 and 2 and to year 1, which was very encouraging. That was important because as we came through 2017, some of the inflation assumptions were actually more negative than we'd anticipated, particularly around aluminum and fuel. So it was important that we over-delivered. And there's no real change that we that we think about allocation of savings within our business. Clearly, we're not going to give a formula because it's important that we retain flexibility to use those cost savings as we see appropriate. But obviously, the offset inflation, which was driven principally through commodities, any volume deleverage we're seeing. We're also using some of those cost savings to focus on our global growth and efficiency initiatives. So we set up the next cycle cost savings in our business and things like global shared services and supply chain infrastructure changes are taking place in Canada as a couple of examples, and then a proportion flows through to the bottom line. So that's the way that we tend to look at our cost savings. And alongside those, obviously, as we intimated, we continued to retain flexibility in terms of our overall MG&A to ensure that we deliver EBITDA margin expansion the bottom line improvements. I think the second part of your question, related to the U.S. and I think Gavin and I have been very clear that stabilizing our volume in the U.S. is a strategic imperative ahead of moving into absolute growth that the business and volume terms have declined for the best part of 10 years. Our intent is still to deliver this on 2018. If industry volumes are softer than anticipated, it may take a lot longer to get there but it doesn't change this strategic imperative. And we'll make sure we do that in a manner that allows us to grow even though margins and overall EBITDA. In other words, we're not chasing stabilization and growth at any cost, but growth in a measured and balanced way I think the team demonstrated our ability to do that if you look at our EBITDA performance in the U.S. in the fourth quarter and on a full year basis.

So the margins that we saw in the fourth quarter there, you see as real, a real improvement over time in the cadence of the synergies? You saw more synergies heading into the fourth quarter? Or they were pretty much balanced throughout the quarters?

There were reasonably balanced. And I think what we've said is we're not going to update on a quarterly basis on cost savings and synergies. We'll do that on a full year basis, and we've now giving you an updated guidance and expanded our cost savings aspiration. The thing to bear in mind is, I think, in 2017, inflation giving about $60 million to $65 million ahead of what we anticipated, and we think inflation will grow by about another $50 million as we go into 2018.

And that's on a global basis, I'm assuming, that number?

That's on a global basis, that's correct. And we also mentioned as well in our guidance, we'll be cycling the benefit direct tax provision reversal in 2017 of -- Q1 of 2017. So there's a few puts and takes as you think about 2018. The improvement and solid financial performance of our business is very real for sure.

The next question comes from Steve Powers with Deutsche Bank.

So maybe to build on Andrea's question a little bit, I think we're all impressed with a strong profit and cash performance exiting '17, the raise having objective to better than expected free cash flow for '18. I guess my first question is a bit more detail on where you are sourcing that cast productivity outside from. It sounds like working capital timing played a role. But I'd love also some more color on what drove the decision to spend a bit less than expected on CapEx. And any more color on marketing promotional investment trends that you may be able to offer, that'll be great.

You covered full sense of the P&L and balance sheet there, Steve. Tracey, do you want to pick up some perspective on Steve's question?

Yes. So if we look at the free cash flow, which I think is the CapEx reporting to that as well. So the free cash flow remains a focus as we look to meet our deleverage commitment to the rating agencies. So when we look at the $1.5 billion, plus or minus 10%, guidance that we're giving for 2018, I think a couple of things to consider. So firstly, we touch on the CapEx. So we actually started speaking about this towards the back half of last year was -- and as we were going through our cost savings and synergies, we found ways to actually spend less behind those initiatives but still continue to deliver the cost savings and synergies, and that spending less came primarily from the CapEx side; so we were able to reduce our CapEx guidance in 2017. And as well in 2018, we'll continue to deliver some CapEx reduction previously thought to be needed around synergies and cost savings through efficiencies and elimination of some projects, so that would not -- that's not timing, that's really efficiencies. And then as we look at some of the other big drivers of the free cash flow, just to think about as you're modeling, the cash taxes will be a bit of a headwind in 2018. So just as a reminder, last year, we strengthened our balance sheet through making additional pension contribution of over $300 million. Our pension contribution regarding to in 2018 is $10 million but because of that contribution last year, we actually received a tax refund. This year, we will be paying cash taxes, so that's assuming that will be a bit of a headwind as well. And then the timing of the working capital; we also just mentioned this in Q3 I believe -- what is difficult to really accurately forecast is mainly in our European business unit -- we cash collections at year-end timing is difficult because we have thousands of customers in different countries. And in 2017, at the end of 2017, we actually -- we had really strong cash collection at year-end so that's a little bit of a timing, also to consider as you look at our free cash flow, both 2017 and 2018. I hope that helps.

I think the other thing you mentioned was really around our MG&A spend, particularly the fourth quarter. I think again, we've been very consistent, we'll retain flexibility around our commercial investment, and we're working very hard across our business to drive commercial investment, productivity, principally through the ROMI model but just becomes stronger and stronger in the U.S. and rolled into Canada and it's rolled into the U.K. as well. So really making sure we're driving higher returns out of every existing dollar. And that's allowed us from the back of some of the procurement work we've done as well through get -- give us more flexibility in some of that marketing spend, and we're utilizing that in real time quarter-by-quarter.

The next question comes from Vivien Azer, Cowen.

I wanted to circle back to the U.S. and get your assessment of some of the strategic moves that you made in 2017 and, in particular, some of the price investments that you made at the low end of the portfolio. Would love kind of a postmortem on how that played out relative to your expectations, in particular as it relates to brand interaction across kind of value or economy and Premium Lights?

Thanks, Vivien. Gavin, do you want to pick up specifically and everybody of the portfolio strategy across the 3 major segments and what was delivered in 2017?

Sure. Thanks, Mark, and good morning, everybody. Vivien, the first thing that I would say is from a pricing point of view, actually our pricing was pretty similar, actually was slightly up in Q4 versus Q3, notwithstanding the success we've had with our economy strategy. And as Mark said, when we came into our flat by '18 growth, by '19 mantra [ph], 2 years ago we had three building blocks which we we're focusing on and economy was just one of them. We wanted to halt the decline rates in economy and we wanted to hold share; and as we headed out of the fourth quarter, actually we've done better on both of those dimensions, we've more than halved the decline and we actually grew share in the fourth quarter, Keystone played a part of that and so did Hams [ph]. Premium Lights was the second building block; and there we needed to gain share and obviously, our job in 2018 is to accelerate share. As Tracey said, we gained share of segment for both, Miller Lite and Coors Light in the fourth quarter for the 13th and 11th time, respectively. And then importantly, our Above Premium and as you talk about strategic building blocks, this is where we laid a strong foundation for '17 for action and execution in 2018, particularly around sold, which we're launching on the 1st of April and Arnold Palmer, which we spiked half-from-half which we launched a couple of weeks ago and then building on the growth of the 4 craft companies. And then we also launched Crispin Rose a couple of weeks ago, and that's off to a really solid start. And at the same time, we turned around both Blue Moon and Leinenkugel's, which had a difficult 2016, and both of them grew strongly in 2017 as Mark or Tracey said. Does it cover it for you, Mark?

Yes, Gavin, that's clear. Vivien, the only thing I will add and I think it was behind your question; are there any unintended consequences of our focus on Below Premium, and that's something we are monitoring them carefully. We don't believe that the work we've done on Below Premium is having an impact on other parts of our portfolio. The economy drinkers are our Below Premium drinkers in the U.S. are very, very loyal; and our job is to ensure that we compete effectively in that segment for those loyal drinkers. And as we come into this year, we're also looking to ensure that LDA to 24 drinkers joined the beer category through introduction of our Two Hats brands. So we're being very careful about the interaction between the segments and our pricing relativities. And I think we feel pretty good about the strategy and effectiveness of that strategy through 2017.

The next question comes from Judy Hong with Goldman Sachs.

So a question about the revenue per barrel performance in the U.S. So in the quarter, up 1.4%. If you could break down rate versus mix. And then as we think about 2018, you obviously called out some of the inflationary pressure you're seeing on the cost structure. So should we see a year where your revenue per unit is going to be below your cost per unit? Or is there sort of an attempt to get more pricing in the marketplace as the inflation is creeping up.

Okay. So Gavin, do you want to pick up on just on the construct of revenue per barrel in the U.S.? And then Tracey, do want to pick up on 2018 inflation, avoiding any guidance as per Judy's question? Gavin, over to you.

Judy, as you say, we generated 1.4% the fourth quarter, which was about 20 basis points higher than in the third quarter. If you break it out between sort of a net pricing, that was about 180 basis points, and mix was negative 40 basis points. And that negative mix was entirely associated with the packaged mix as it relates to some of our packaging strategies, primarily in Keystone Light. From an overall pricing point of view, I would just point out that 2017 pricing was actually slightly up over 2016 full year pricing, about 10 basis points. As for as 2018 outlook is concerned, Judy, as Mark said, we don't guide there.

Yes. And then Judy, just in terms of the cost per hectoliter guidance for the U.S., so our guidance is to be up low single-digit for 2018. As Mark also mentioned, the inflation that we are expecting in 2018 is across Molson Coors. This will be more than $50 million higher than we what we saw in 2017.

The next question comes from Robert Ottenstein from Evercore ISI.

Wondered if you could help us out, there's been a lot of kind of weird industry data that's come out -- that's making it a little bit hard to for us to discern what's going on; the beer institute, STWs down high-single digits in December. And then there's the IRI data is very positive for January; Nielsen, not so positive. Can you give us any -- and I think it's attested to what timing issue on the scanner data? But can you give us any sense either in terms of your own business or the industry in terms of what happened with the December shipments and what's going on in January, please?

Again, assuming your question is specific to U.S., I'll ask Gavin to talk through the detail. Just one thing to remember something from our performance perspective is that our underlying strategy is to shift to consumption. Clearly within our business, there's some pretty significant change initiative still rolling through. So what we call our VPNS or our combined ordering system, which is being going live and golden successfully over the course of the last couple of weeks. And there will be further initiatives on the VPNS initiative as we roll through 2018 and into Q1 2019. But Gavin, can you try and -- try to join the dots differences across the different sources of industry data for December? Is that possible to do?

That's really tough, Mark. I'm trying to draw a line between all of these different industry sources this quite difficult, Robert. I can tell about us. As Mark said, we said on the third quarter called that we're going to take shipments up a little bit or inventories up a little bit in the fourth quarter. So we did that. We took our inventories up by about a day, which is in line with what we said. And that would've positively impacted shipment volumes by about 120 basis points. So it explains most of the difference between the 3 and the 1.5. I mean, I really can't comment on why industry shipments down in December; that's probably a question you should direct at our competitors. From a Nielsen and other market sources, our share remains pretty consistent with all of those sources. And I think we discontinued giving guidance on January some time ago so I'm not going to give any input into that.

The only thing I would add, Gavin and Robert, again if you take a step back, the U.S. industry, beer industry continues to be the largest global profitable in the margin to expand because even with volumes under a little bit of pressure continues to premiumize, so continues to be a great place to compete. And it's probably not something that we get too concerned about in terms of some of the short-term trends and volatility that we see in volume line.

The next question comes from Laurent Grandet with Credit Suisse.

It has been a while since the stock has been that much up, I mean, during the course, so congrats on the good quarter. So I'd like to dig a bit more in term of the tax benefit and the cash redeployment. So the press release provides no information on how the company intends to reinvest tax savings. Could you please tell us how you're planning to redeploy coming from a better tax rate. Do you see a party to invest specifically Coors Light and also the new brands like Sol Arnold Palm [ph]?

Let me take the second question part of your question first, and Tracey can talk about the tax benefits and cash uses in our business. I mean, if you look at a horse our organization, our total marketing spend is close to our marketing spend is close to $1.5 billion. We spent close to $1 billion in the U.S. behind our brands. Their view is that we have the flexibility to support the development of our portfolio. So as we bring new brands in, we continue to drive productivity and efficiency in our commercial spend, and we'll invest a rate that we believe will drive the maximum return. That's through in the U.S., Canada and our European business, and I think we've demonstrated our ability to continue to make that happen. So don't expect any kind of material increase or ballooning of commercial investments as we go into 2018. We'll be working our existing dollars very, very hard to drive further productivity and efficiency and impact improvements. Tracey, do you want to talk to tax benefit and cash deployment?

Yes. So it's -- I look at the end guidance that we've given our transaction-related cash tax benefit. So we're guiding to approximately $200 million of cash tax benefit. Now that is down from what we had previously given before tax reform, and that's really driven by the reduction in the corporate tax rate. But overall, we are a net beneficiary of the tax reform. I'm not going to, at this stage, give you exactly what those details are, but you can see just from the underlying tax rate that we're now guiding to for 2018, which will be between 18% and 22%. That is significantly lower and will provide a net benefit for us. Just in terms of the uses of the tax benefits, as Mark said, our focus is really on deleveraging our business and strengthening our balance sheet. So we will continue to generate free cash flow to pay down our debt and maintain our investment grade rating. And then as we said earlier, towards the back half of the year as we get closer to that deleverage targets, we will talk about capital allocations.

The next question comes from Amit Sharma with BMO Capital Markets.

Mark, two questions, both on U.S. Understand your about price/mix outlook for '18, but can you talk about industry price environment? If everybody is facing inflation, is there appetite within the industry to take adequate pricing? And then second, just on U.S. volumes, really good to see the discipline on investment and yet be able to grow EBITDA margins. Now if industry or let's say volume weak for the industry for the category, do we still have enough confidence that you continue to grow EBITDA margins with that weaker volume environment?

Okay. So Gavin, if you're just going to tune in here and if I miss anything, please share. Certainly, on the price/mix piece, I'm going to comment on industry level. We're going to play our game that will drive our portfolio, and we'll continue to work very hard to ensure that we offer great value to consumers it's appropriate to our brand equity while premiumizing our overall portfolio. And that's consistent with the U.S., Canada and our European business, that's very central to our business. But I mean, overall, the U.S. volumes in your question around EBITDA margins, we are very clear about what our number 1 priority center business, which is to deliver on our EBITDA margin, development as per our guidance, improve our bottom line and generate strong free cash flow. And then secondly, certainly, over the longer to medium term, really start to see improvement in our top line through strengthening and putting our portfolio and strengthening our customer relationships. I think specifically within the U.S., if you look at our EBITDA margins, they've improved sequentially and consistently over the last few years, and we believe now with the MillerCoors part of our of the bigger Molson Coors, there's further opportunities to enhance our EBITDA margins as North American supply chain shared services and the global procurement, which have all got to a great start in 2017 continue to pick up pace through 2018 and 2019. So even against a tough industry environment, driving productivity in the business, and securing some of the benefits of integrating as part of Molson Coors still gives us headroom to continue to expand our EBITDA margins. Gavin, I don't know whether I missed anything there or if any builds on that?

No, that was a very comprehensive, Mark. I have nothing to add.

The next question comes from Pablo Zuanic from SFG.

I have a two-part question on the synergies in 2017 and the outlook for 2018. And then maybe Mark and Tracey, you can show me if I'm doing the right thing in terms of evaluating the performance. The way I see it, your EBITDA for the year consolidated grew $100 million, right? On the synergies of $255 million, that looks good but U.S. EBITDA, up $50 million; Canada, down $24 million, is down $60 million in two years; our corporate expense is up $85 million; so to some extent, the numbers look good because of these big jump in Europe of around $170 million EBITDA for the year, which to me seems to be a one-off for anything accounting related. So if we strip out Europe, EBITDA for the year was down and little slow. So what I'm saying is, when I look at the numbers for 2017, what jumps out as a positive to me is the jump of $50 million in EBITDA in the U.S. But on synergies of $255 million, that's still only 20% realization. Canada seems to be a problem. I don't know if Fred can comment on that margins that are down there for two years in a row? And Europe, the big jump seems to be one-off; so I don't think I can count on Europe growing EBITDA margin next year. Corporate expenses, basically your guidance seems to be flat. So if you can comment on that? And then if I can allow a second question for Gavin in terms of our STRs, you know, this kind of data -- when I look at your STRs, down 3% for the quarter, it would be nice if you can break that down between the growth in Above Premium in the U.S., what I call mainstream and then value? And the reason I asked that is that you are -- the data seems to show that mainstream was down about 3%, whereas value was up about 3%, but mainstream is like 2.5 times the size of value. So if you can comment on that -- if there are any channel differences between those three products groups that may be -- made this kind of data being distorted? You can start with the cost question, first. Thank you.

Thanks, Pablo. As usual, you've used your one/two trick on questions; so we'll try and cover all of the basics here. On the first one, I don't think your analysis on EBITDA is accurate, I mean, our European business has delivered very, very solid top the bottom line performance, volume growth, pricing growth, good cost management and strong EBITDA performance, that was enhanced by the one-off tax provision. But if you strip that out, then we're still seeing very solid performance. And my perspective is our Europe business is kind of a poster side for what we're going to deliver across all of Molson Coors, which is just really solid improvement on our bottom line and a very balanced approach from a top line perspective across volume, premiumization and pricing. So I do think a lot of discredit from a European perspective. I think in the U.S., despite a tough backdrop, we are in the process of turning around our overall volume and refining and reshaping the portfolio. And Gavin and his team did a superb job of improving overall EBITDA performance. And as I mentioned in my previous question, I believe there's still further runway to expand our EBITDA margins as MillerCoors is now part of our global organization. Canada, your comments are fair. I mean it's -- we're in the process of turning that business around, and I was very pleased with the performance as we came through the second half of 2017. I think we've given you some indications as to the strengthening of our top line. Our volume was solid. We're back into share growth. We've seen pricing improvements. And what we're trying to do is balanced delivery for the day, while at the same time setting up the productivity improvements so as we look to 2020 to 2022 cost savings programs as well. So we're taking some of the cost savings and synergies, use them to offset inflation that was higher than anticipated, and we have been investing for the medium to long term in shared services, world-class supply chain, our commercial excellence capabilities. So my job is to get the balance between delivering for today, which I think we've done very successfully in 2017 while at the same time, setting the business up for the medium to long term. So I'm not sure I would agree -- actually, I am sure, I wouldn't agree with your analysis on our EBITDA performance. On the STRs, Gavin, do you want to comment on just the relative performance of each of the kind of major segments within the U.S.?

Right. Sure, Mark. Without getting into specific detail by segment from a performance point of view, in Above Premium, which is where we're putting a lot of emphasis, we grew Blue Moon Belgian White, we grew our core partners and we grew Peroni very strongly. And as I said earlier on, we got a nice platform coming into 2018 with solid and Arnold Palmer and the ones I just mentioned. Our economy portfolio, probably heard of our best performance in 8 years, primarily driven by the success of Keystone Lite. And Mark correctly said that doing extensive analysis on the performance of Keystone Light, and it's having a no material impact on our mainstream brands. It under indexes in terms of going from those 2 brands, and some markets actually provides a Halo. So we're very pleased with the economy portfolio. And in Premium Light, as you said, has been challenged in 2017. And Miller Lite's performance actually the fourth quarter is slightly greater than in the third quarter, and Coors Light challenge for us and we're putting a lot of effort behind it to revitalize it, mostly around the road most refreshing beer. We know that it works it works before. It provides a meaningful product benefit for us. It's shown significant growth in equity, and we probably moved a bit too far away from it. So you see of the world's most refreshing beer in a meaningful way as we head into 2018. Beyond that, Mark, I don't think I should give any more specifics.

Okay. Thanks, Gavin.

The next question comes from Bryan Spillane with Bank of America.

I had -- well, first, I wanted to say congratulations to Dave. You spent a lot of time and patients handling our questions over the years, and I just want to thank you for that and wish you the best as you go off into retirement.

Thanks, Bryan. It's been my pleasure.

I guess I have one clarification and one question. Tracey, when you talk about the $50 million of COGS inflation for 2018, is that net of any impact from the step up in amortization and in D&A? And then also a change in pension accounting, I think, geographically might take some the $27 million of pension income out of COGS and move it below the operating profit line? So just wanted to understand if that's a net number? And then the question I had was for -- I guess for Mark and Gavin. You know you've seen some more, I guess, investment or more activity in, I guess, the fitness beer category for the lack of a better word with Corona Premier coming and you've got I'm still bringing our product into the market. So just kind of your thoughts on that segment as you get more sort of investment behind it, how it interacts with the Premium Light beers and just thoughts around that and how that's evolving would be helpful. Thanks.

Thanks, Bryan. Tracey, do you want to pick up clarification to Bryan's first part?

Yes. So the incremental $50 million inflation that I quoted incremental above 2017 inflation as we saw is not just COGS. It's actually COGS and G&A, and it's across all of that business units that is primarily driven by commodity inflation so aluminum and diesel fuel would be the main drivers, but it's across all [indiscernible] MG&A and COGS. Then in terms of the pension changes so what I may be refer you to is our 10-K is actually up on our website now. We've got quite a detailed lay out in tables and expeditious if you want to refer to footnote 1 and footnote 21 in our 10-K, that's detailed the change in methodology. And in footnote two, actually details the changes around the safety accounting standards. So Bryan, if you want to have a look at that and maybe come back to us after the call, we can break that down a little bit further for you.

Okay. Thanks, Tracey. And Bryan, just on your second question on this new segment that you invented the fitness beer category, I think I know what you're referring to. The good news is a few years descriptor, we have the original fitness beer we just called Miller Lite. That's what we're doubling down on. We continue to believe that continuing to focus on both Miller Lite and its very clear functional benefits and Coors Light and its very clear lifestyle benefits the best way to respond to interest in what you've described as fitness beer. The other thing that's of interest is quite significant crossover between some of the alcoholic seltzers that have come into the marketplace, and fitness or light beer and it's important that we offer bread across our portfolio. So across Miller Lite and Coors Light, we'll continue to strengthen their equities. We'll compete more assertively with Henry's Hard Sparkling, and we'll have the right products for 2018. And then, obviously, some of the metric and imports kind of play into that space as well, and the introduction of Sal becomes very important for us. So we believe that there's more than enough on our plate and we've got to be choice will about ensuring that we deliver real focus behind our portfolio. And against the 2 big light brands, Henry's Hard Sparkling and Sol, we've got the right portfolio to compete effectively and that space if I'm defining it correctly.

The next question comes from Lauren Lieberman with Barclays.

I wanted to solve on two things; first is just commentary on the commercial effectiveness and efficiency in the fourth quarter, just how much of that is one, can you talk a little bit about distinctive efforts there? And two, things that we're planned versus real more sort of real-time adjustments in the second half of the year as you saw that the industry volumes was soft, that was one area of question. And the second was just dimension of the incremental placement and visibility you have from your distributors. So was that primarily on Sol and the Arnold Palmer? Or is that incremental description of our new placement from some of what I'll call it legacy existing portfolio? Thanks.

Okay. So the second part of your question; Gavin, do you just want to pick up on the success on the placements the teams have been driving as we come into 2018?

Yes, sure. Thanks, Mark. We've got tens of thousands of placements for -- actually hundreds of thousands of placements for our innovation brands. You're rightly called them out as Sol and Arnold Palmer spiked half and half. Easy -- not easy, [indiscernible] which is our entry into the tea category and to try and recruit new drinkers into our economy portfolio, 21 through 24-year olds, which have primarily walked away from beer to hedges actually designed tens of thousands of new placements for that. And yes, we did get more presents for brands like Blue Moon and Coors Light and so on.

I think you invented a new brand there, Gavin.

I got caught up between Arnold Palmer and Two Hats. Arnold Palmer is the tea and the lightly flavored light beer to recruit new drinkers.

They're not sharing placements either. They have discrete placements, but I think...

Correct.

On the first part of your question Laurent, on just commercial effectiveness, I mean, clearly, as we've come through this year, we've worked very hard from a procurement perspective, a global media RFP, which is a very successful, which has allowed us moment to drive efficiency and productivity and some of our marketing dollars. And the simplest way to think about this is really coming to the year with an assumption around investment per hectoliter. When I was business unit CEO in Europe in this role, what we've attempted if we see their softness from a volume perspective because maybe the segment is underperforming overall, and we're trying to maintain our investment on a per hectoliter basis buy that means in totality, that investment may fall so we're still drive the same kind of productivity and impact per hectoliter. There is a combination of maintaining that spend per hec, while at the same time also driving productivity through our roaming model so that gives us flexibility in a real-time basis to respond to segment changes, our brand momentum within our business. And hopefully, that gives you a little bit of a flavor.

The final question comes from Mark Swartzberg with Stifel Financial.

Dave, really been a pleasure working with you. So thank you, and Sam, too, thank you. My question, Tracey or Mark, is on the $330 million return of purchase price on the Miller International business, which I think was assigned a value of the $700 million. So in its face, it seems like this proportionally you're getting less to EBITDA, but it might mean that you simply thought you were getting a lot of working capital you didn't get. So I'm just trying to understand what was the basis for the return to the $330 million? Is it more working capital amount of EBITDA? Looking for some more detail there.

Okay. So let me try to try to keep it uncomplicated. The simplest way to think about this is the $330 million that we negotiated with is really a true-up an overall acquisition price the $12 billion -- $330 million. When we made the agreement to acquire the Miller brand internationally, we were very clear that there was a high-level assumption on the EBITDA. That was quite opaque because the Miller brands were embedded across the SAB business, and it wasn't a discrete business. So we started with an assumption and then said we would -- based on the trailing 12-month EBITDA close then get into purchase price adjustment. We kicked off that process and moved into a negotiation with ABI, and we feel that the true-up on overall acquisition price makes sense for us if you then look at the overall multiple we paid with the EBITDA stream. The good news is that the Miller brands are now fully adopted and integrated within our business and performing well with, I think, significant runway ahead of them in Canada and in Europe. And within International business, they're growing very, very strongly. So if you also recall, Mark, one of the things that we pointed out was based on the assumption of the trailing 12-month EBITDA. Our business model, particularly for the International business, would be different because we would be sharing that margin with our partners and our distributors. So it was never going to be apples for apples. But in headline terms, just look on this as a true-up on acquisition cost. It's now dropped to less than $11.7 million. And if you look at the overall multiple we paid for the EBITDA we acquired then feeling very good about the outcome of that negotiation.

This concludes our question-and-answer session. I would like to turn the conference back over to Mark Hunter for any closing remarks.

Yes, many thanks for facilitating things today. Many thanks for your interest in the Molson Coors Brewing Company. We look forward to catching up with you in our next call and obviously, our Investor and Analyst Meeting we'll be having in New York in June of this year. So thanks for your interest in the company and look forward to speaking with you soon. Bye, everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.