Good day, and welcome to the Molson Coors Beverage Company Second Quarter Fiscal Year 2023 Earnings Conference Call. You can find related slides on the Investor Relations page of the Molson Coors website. Our speakers today are Gavin Hattersley, President and Chief Executive Officer; and Tracey Joubert, Chief Financial Officer. With that, I’ll hand it over to Greg Tierney, Vice President of FP&A, Commercial Finance and Investor Relations. Please go ahead.

Thank you, operator, and hello, everyone. Following prepared remarks today from Gavin and Tracey, we will take your questions. In an effort to address as many questions as possible, we ask that you limit yourself to one question. If you have technical questions on the quarter, please pick them up with our IR team in the days and weeks that follow. Today’s discussion includes forward-looking statements. Actual results or trends could differ materially from our forecast. For more information, please refer to the risk factors discussed in our most recent filings with the SEC. We assume no obligation to update forward-looking statements. GAAP reconciliations for any non-US GAAP measures are included in our news release. Unless otherwise indicated, all financial results the company discusses are versus the comparable prior year period in US dollars and in constant currency when discussing percentage changes from the prior year period. Also, US share data references are sourced from Circana. Further, in our remarks today, we will reference underlying pre-tax income, which equates to underlying income before income taxes on the condensed consolidated statements of operations. With that, over to you, Gavin.

Thanks, Greg, and thank you all for joining today's call. Molson Coors has just finished the single best quarter of reported net sales revenue since the merger of Molson and Coors in 2005. That achievement is not only a measure of those three months, it's a measure of the past three years. It's about the work we've done to strengthen our business, which puts us in a position to attract consumers when they begin looking for alternatives. That's what allowed us to deliver these results today. Now, to try and remove any skepticism that you may have, I want to show you one chart in our slides that summarizes exactly what I'm talking about. Up until three years ago, our biggest brand in our biggest market was losing dollar share quarter after quarter and year after year. Shortly after we launched our revitalization plan, we changed our marketing approach on Coors Light and launched the Made to Chill campaign, and the brand's results began to improve. In the first quarter of this year, Coors Light revenue was up high single digits. In the second quarter, Coors Light grew more industry dollar share than any other beer brand and it grew industry dollar share faster than Modelo Especial and Corona Extra combined. The overlay Miller Lite's performance, it looks remarkably similar. And the reason for that is simple. Three years ago, we generated cost savings and have been reinvesting them back into our brands and back into our business. Three years ago, we completely changed our approach to marketing and media, which unlocked growth for our biggest brands. Over the past three years, we have improved our supply chain. We've diversified our network of material supplies in our shipping methods. We've adjusted our brewery and packaging operations. We've streamlined our ordering…

Thank you, Gavin, and hello, everyone. In the second quarter, on a constant currency basis, we delivered tremendous results. Net sales revenue grew 12.1% and underlying pre-tax income grew 52.6%. We achieved this while continuing to invest in our business, reduce net debt and return cash to shareholders. As Gavin discussed, we have built our business to sustainably grow both the top and bottom line. We achieved this in 2022 and in the first quarter of 2023 before this recent period of accelerated demand in the US. And while we remain mindful of the dynamic global macroeconomic environment and recent beer industry softness, the foundation we have laid coupled with our strong second quarter performance provide us confidence to increase our full year 2023 guidance, meaningfully accelerating growth from our prior expectations. Now before we get to that, let's talk about some of the drivers of the second quarter performance. Net sales per hectoliter grew 9% in the quarter. This was driven by positive global net pricing due to rollover pricing benefits from higher than typical increases taken in 2022 and favorable sales mix driven by geographic mix and premiumization. Financial volume increased 2.8% and consolidated brand volume increased 5%. The volume growth was driven by strength in our Americas business, partially offset by a decline in our EMEA and APAC business. Turning to costs. Underlying cost per hectoliter were up 5.9%. As expected, inflationary pressures continue to be a headwind. As you may recall, we bucket COGS into three areas. First is cost inflation other which includes cost inflation, depreciation, cost savings and other items; second is mix; and third is volume leverage or deleverage. The cost inflation bucket drove 80% of the increase and was mostly due to higher materials and manufacturing costs, partially offset by cost savings.…

Thank you. [Operator Instructions] Our first question comes from Bonnie Herzog from Goldman Sachs. Your line is now open. Please go ahead.

All right. Thank you. Hi, everyone. I had a question on your guidance. You raised your underlying pre-tax income growth guidance, a fair amount, but given the Q2 beat, it does imply a healthy deceleration in the second half. So I guess I wanted to better understand the drivers of this, and really ultimately how much of the top line strength you now plan to reinvest versus maybe letting it flow to the bottom line. Also, are there any other headwinds we should be aware of for the second half, or is there may be some level of conservatism baked into your updated full year guide? Thanks.

Thanks, Bonnie. Let me start with just a couple of facts, and then I'll pass it over to Tracey. Firstly, I would tell you that the momentum behind our brands in the third quarter has not slowed down. It is maintained. And then secondly, we intend to invest very strongly behind the momentum that we've got, hence, the $100 million extra marketing, which Tracey referred to in her remarks. Our job is to maintain those gains that we've got. We've gained, as I said, 12,000 new tap handles, we're working closely with our retailers to change the shelf sets to meet this new reality. We're the number one share gainer in dollars in displays. And we're going to invest behind the momentum that we've got, mostly in the Americas business unit, but also in our EMEA and APAC business unit behind brands such as Madri. So I'll make those two points. Tracey, is there any there's more you want to add to that?

Yes. Bonnie, the one thing that I would add is the PEP contract that's winding down. So as I mentioned in the prepared remarks, we will see a headwind in terms of volume and revenue from that contract, we expect on a book volume basis for that to have a headwind in Q4 of around 2% to 3% of our American volumes. And then just also, don't forget the sort of pricing as we lap the larger price increases that we took supplier in 2022. So we'll see that impact declining through the back half of the year as well.

Thanks, Bonnie.

All right. Thank you.

Thanks, Bonnie. Our next question comes from Bill Kirk from Roth MKM. Your line is now open. Please go ahead.

Thank you. I just wanted to follow-up and try to be super clear. So the guidance in the U.S. includes U.S. volume increases and rate. Has that changed just for what you've experienced year-to-date, or is your -- is your guidance now including those market share shifts that you've seen for them to continue in the back half of the year?

Bill, thanks for that question. Look, I don't think we're going to breakdown the individual components of our guidance. But I'll just -- I'll reiterate that we haven't seen any slowdown in momentum for our brands. One big difference is the extra $100 million versus the first half of this year and actually also versus the back half of last year. To Tracey's point, pricing, we are and have already lapped one of the big price increases we put through last year, and we lapped the other one obviously in the fall. And we've been pretty consistent about the fact that we're expecting pricing to fall back to more historical levels of that sort of 1% to 2% range. And then, of course, there is -- there are some employment-related costs which we referred to in our script as well. So those are sort of big four things, which I would point you to. Next question, operator.

Thanks, Bill. Our next question comes from Andrea Teixeira from JPMorgan. Your line is now open. Please go ahead.

Thank you. Good morning. Gavin, it seems that you're obviously embedding a strong deceleration in the second half and even accounting for the 2% to 3% headwind that you mentioned in the fourth quarter, in particular. Can you comment on the underlying assumptions, perhaps for depletions as you go into the second half? And then embedding to that, you had this 5% increase in cost per act. I understand, Tracey, you mentioned that it's going to actually decelerate -- the inflation is going to decelerate in the second half, which is it just obviously makes sense. To the extent that you can comment on the margin and by the same token, I think it flows through not only the deceleration in top line but also more conservative assumptions for reinvestment, if you can comment on that. Thank you.

Look, Bonnie, not Bonnie -- sorry, Andrea. As I said, our momentum has not slowed down at all, and we're now towards the end of July. Our guidance assumes US brand volume growth in the second half of the year, which implies continued share growth based on current industry trends. It does consider continued caution around the consumer and the competitive environment. And we -- Tracey referred to the PEPs winding down and price increases. And then, of course, there's the extra $100 million that we've got going through from a marketing point of view. So we factored all of those items into our guidance.

Yeah. And then just on the COGS inflation question. So -- as we said, we do expect the impact of cost inflation to continue for this year, but then moderate in the back half of the year. And if we've got good line of thought right now based on hedging our contract prices and the expected cost savings. But again, do expect inflationary pressures to continue, particularly in our EMEA and APAC region as we've mentioned. So from a margin expansion point of view, because of some of these factors as well as the benefit from our efficiency projects as we've invested more in our business around efficiencies and cost savings and really looking at a more normalized cost of goods sold environment. In the medium term, we are expecting a margin expansion.

And when -- that the capacity increases, I also want to make sure that we all ship on that. The 2% to 3% headwind, right, that you spoke about volumes that you mind in this contract. It also gives you more capacity, right? So are you, together with what you mentioned Gavin in the beginning of your call in your prepared remarks that you have some of the top 12 retailers in the US taking on adjusting shop space for you. Would we see that capacity flipping into your own brands, or we should wait for that to settle before we can count on that as you go into the balance of the year? Thank you.

Thanks, Andrea. It's our top -- it's 20 retailers that are going to make changes in the fall resets. Some of them actually already made those changes. And frankly, that number grows every week when I talk to our head of sales. So it's actually somewhat higher than what it was when I made these prepared remarks. From a supply chain point of view, I think our supply chain team has done an amazing job keeping up at such short notice. We always run close to full capacity in summer. So of course, we're going to be a little tighter than normal. And so there are some distributors in some pockets where they may be out of stocks, particularly where the momentum is really strong. We've got some distributors growing 30%, 40%, 50% at the moment. We rebuilt inventory coming out of Memorial Day. We're doing the same now as we rebuild heading into Labor Day. And we came into the second quarter with good inventories. So I think we're doing a great job of keeping up with this unexpected demand. I think we've got the capacity to do that. And of course, when PEPs it starts coming out, we will be able to replace that volume with our own brands, and it will free up a little bit more capacity for us as we head into 2024.

Thanks, Andrea. Our next question comes from Vivian Azer from TD Cowen. Your line is now open. Please go ahead.

Hi. Good morning. Thank you. Gavin and Tracey, I'm hearing some concern from investors that there seems to be perhaps a disconnect in terms of what would have been expected from a depletion standpoint, just using the publicly available data. I have Nielsen, you guys are obviously citing Sircana relative to the shipments. I think we've certainly covered the capacity point pretty well at this point. But were there any other timing factors to consider in terms of understanding why your Americas shipments fell below what we would have seen in Nielsen track channels from a volume growth perspective? A – Gavin Hattersley: A couple of points I'd make. One is that we came into the second quarter with very high -- we're not very high inventory. We came in with higher inventories than we normally did because we wanted to make sure we could supply our consumers and distributors through summer. Now we obviously weren't planning for the current situation, but it's -- we certainly had higher shipments coming into Q2. We always run close to full capacity in summer. So frankly, there isn't a lot of -- from a shipments point of view, a significant increase possible as we operate in summer. Notwithstanding that, our breweries had a record May and June since 2019 and are functioning extremely well. So those are the 2 factors that I would point you to, Vivien. From a capacity point of view, of course, we don't have unlimited capacity, but we're keeping up, I think, amazingly well given the short notice of this demand shift. And we'll rebuild our inventory heading into Labor Day, and we'll build -- rebuild inventory post Labor Day as we head towards the back of the year.

Our next question comes from Nadine Sarwat from Bernstein. Your line is now open. Please go ahead.

Hi. Thank you. Good morning, guys. So last time we spoke, I know you mentioned your expectations at the time where the shelf resets could be more modest in the fall than some other brewers were expecting, but it sounds from your prepared remarks that you believe these are going to be bigger than initially expected. So could you provide a bit more color based on what you're seeing? I know you touched on it, but the puts and takes of those fall resets and then how you're thinking of going into the spring next year? And then one more, if I may ask, in the U.S., where your on-trade and off-trade trends meaningfully different or broadly in line? And if so, a little color on that as well. Thank you. A – Gavin Hattersley: Thanks, Nadine. I'll take your second question first. Yes, our on-premise trends were better than our off-premise trends in the U.S. As far as your shelf reset question is concerned, yes, we are in a better place now than we were necessarily thinking at the end of the first quarter. A lot more retailers have, a, already moved some of their shelf resets and are planning to move their 4 shelf resets than we had initially expected. As I said, nearly 20 of our retailers updating the planograms right now. That number grows every week, every time, as I said, I'll talk to head of sales, that number grows. We're working really closely with our retailers to recommend space and assortment solutions to just drive a sustained category growth for the retailers. And given those recent trends, we have seen a number of retailers make interim adjustments to displays and space this summer. And we do expect that to continue into the fall and also next spring. And as I said, I think in my prepared remarks and maybe in Q&A, I can't remember. But was Molson Coors is the number one in retail dollar display gains year-to-date. So, we're working hard at making sure that shelf resets reflect the current reality in the marketplace, which shows that there is a strong momentum behind all of our core brands.

Thanks Nadine. Our next question comes from Filippo Falorni from Citi. Your line is now open, please go ahead.

Looks like we may have lost Filippo from Citi, Nadine. Not Nadine, operator.

Filippo if you want to -- your line is now open. Please ask your question. Again moving on to the next question. Our next question is from Eric Serotta from Morgan Stanley. Your line is now open, please go ahead.

Sounds like Eric's there either, operator.

Hello. Can you hear me?

Now, we can hear you.

Eric, we can hear you. Go ahead.

Great. Sorry about that. Just wanted to circle back on the shipments versus depletions, not to beat a dead horse here, but is the implication correct that shipments will -- are expected to again lag depletions for the third quarter and that inventory rebuild would happen largely in the fourth quarter? And do you expect shipments and depletions to still be broadly in line for the full year? Do you think it will take until first quarter or early next year in order for the two to converge?

Yes. Hi Eric, it's Tracey here. So, look, we're going to monitor this very closely. Obviously, our distributor inventory levels, as Gavin mentioned, over the sort of holiday period will fall and then we'll grow it again. Typically, we grow on the shoulder quarters, the first quarter and the fourth quarter. But we're monitoring it very carefully. I mean, right now, we focus on making sure that we have enough inventory to meet the demand and that our distributors have enough inventory to meet their demand. So, as we get further into the year, we'll continue to balance that. And again, just really focused on making sure we've got there on the floor.

Great. And then a bigger quick -- bigger picture question for you, Gavin. You referenced several times the weaker US beer industry trend. Hoping you could unpack what you see as the key drivers there. Do you think that the situation at your competitor is having a spillover effect in terms of overall industry? We've seen the beer industry from a volume perspective weaken this year at a time when spirits volume growth has certainly slowed quite dramatically. So, any color as to your take on what's driving the industry weakness would be helpful.

Sure. Thanks Eric. Yes, look, I mean, the US industry in 2023 has been softer than expected. There are obviously a number of drivers behind that. Here on the West Coast, particularly California, big beer drinking market. We had some really difficult weather conditions in the first part of the year. And so that challenged the overall industry. And I think it's true to say that we've had higher-than-expected declines in the overall Seltzer segment. Our data with -- from Circana would suggest that there's actually been a slight improvement in Q2, when you compare it with Q1 and an improvement from an overall industry point of view versus the second half of last year. We do think that some of the bigger drivers of these trends are lifestyle choices and some buyers shifting to other categories. However, core beer drinkers are incredibly loyal and have maintained their share of dollars and volume in beer. So we have seen some pretty seismic shifts across the industries fueled by the continued growth in Mexican imports and fabs. And obviously, the disruption in the AVR [ph] portfolio, our brands, Coors Light, Miller Lite growing industry share. So what really matters here for us is that more consumers are reaching for our beers versus our competitors' beers, regardless of the -- of the segment that they are purchasing from. So those are the comments I would have from an overall industry point, Eric.

Thanks, Eric. Our next question comes from Peter Grom from UBS. Your line is now open. Please go ahead.

Thanks, operator. Good morning, everyone. So Gavin, this may be a hard question to answer, as we're still really only halfway through this year. But I would love to get your perspective on how you see the company's growth algorithm evolving in light of the share shifts we're seeing. Obviously, great to see the share gains, but you're also kind of increasing your exposure to an area of the industry where growth has been challenged for some time. And I know, you had previously communicated that you expect to exit this year with stronger bottom-line growth versus the low-single digits originally targeted for this year. So I would just be curious, how do you think about the ability to kind of grow off of this elevated base especially if some of these share gains prove to be less durable? Thanks.

Yeah. Thanks Peter. Look, obviously, we'll share a lot more detail when we have our Strategy Day in October, but I'll make a few points ahead of that. When we started down the journey of our revitalization plan, we wanted to deliver top and bottom-line growth on a sustainable basis, not just once every now and then. So that's the first thing I would say to you. That's how we measure ourselves. Secondly, we're seeing share and brand improvement in every single one of the markets that we operate in. So this is not just the United States. We're seeing it in Canada. We're seeing it in the United Kingdom. In the US, we are the number one dollar share gainer in the second quarter. Canada is up 1.5 points from a volume perspective. That's through May because we don't have a more recent data than that. We grew premium light dollar share almost 11%. Canada premium beer is up 2.4, in the FAB segment, we grew industry and the segment. We grew all of our core brands in the United States and Canada grew industry a share and we continue to grow our economy segment performance from an improvement point of view. Our job is to make sure that we maintain and retain as many and frankly, more of these consumers that are moving to our brands is one of the reasons we're investing $100 million in the back half of the year. That's a significant investment and commitment to the momentum that we're experiencing. And we're seeing that in the data. We're seeing the 12 -- the handles the new tap handles we're getting. We're seeing the shelf changes. We're seeing the display dollar share gains. And we're going to push hard to maintain that and more, Peter. So I think I think I'll stop there ahead of our strategy data, but we'll share more with you in early October.

Thanks, Peter. Our next question comes from Lauren Lieberman from Barclays. Your line is now open. Please go ahead.

Great. Thanks. I was curious if you could talk a little bit about operating leverage because I know a couple of times, Gavin and Tracey, both referenced that 2Q is normally a time when you're producing pretty close to full capacity. So as we think about the balance of the year and starting to see the structural share shifts in market share persist. If the higher volume growth if we start to see more operating leverage kind of on a year-over-year basis because the delta is bigger in the so-called shoulder quarters than would have been, for example, in 2Q, meaning the upside in your production volume is actually higher later in the year versus 2Q because this is already a seasonally very strong volume production period.

Yes. So maybe let me help maybe give a little bit of color and maybe a little bit more detail around our leverage and operating leverage. So on an enterprise basis, our fixed costs comprise about 20% of our enterprise underlying COGS. So now that does differ by geography. And the composition -- the composition of our year-over-year volume changes that can influence that. But on average, for enterprise COGS makeup is about 20% fixed. And then obviously, as we look at operating leverage, our marketing strategy also supports flexibility, which does allow us to put the right commercial pressure behind our brands. And so as Gavin mentioned, we're going to be spending $100 million more in marketing in the back half of the year. And then just from an overall sort of margin driver as well, we've mentioned the PET contract coming to an end. That's certainly going to help our margins, even though it is a revenue loss, but overall margin expansion as well as a lot of these efficiency projects that we've been working on our ongoing cost savings, that's all going to help drive that margin expansion over the medium term and this year.

Our next question comes from Rob Ottenstein from Evercore. Your line is now open. Please go ahead.

Great. Thank you very much. Just a couple of follow-ups, Gavin. First, you mentioned that on-premise was stronger than off, but I can't -- I'm not sure I heard by how much how much the on-premise was up? And you mentioned that you won 12,000 tap handles, I think, in Q2. Can you give us a sense of what that is as a percentage of total tap handles. And then second, we're seeing and hearing about some weakness in the market overall in the below premium side. Is that something that you're also seeing in your -- not just in your business, but in the market overall? Thank you.

Thanks, Rob. Lots of questions there. I'll take your last one first. No, we're not seeing any slowdown in our economy portfolio. As far as on versus off-premise, you didn't hear it because I didn't say it. And we're not going to get into that level of detail, but suffice it to say that on-premise grew I would say maybe low single digits better than the off-premise. What was your second question? The tap handles. It's a meaningful number, Rob, and that's only Miller Lite and Coors Light and Blue Moon, which I referenced. And let's say -- I'm do not sure we've given this before, but let's say, around 10% higher. Meaningful for us.

Thanks Rob. The next question comes from Chris Carey from Wells Fargo Securities. Your line is now open. Please go ahead.

Hi, everyone. One quick question just on the investment plan for the back half of the year, just given the year-to-date strength makes total sense. I'm trying to understand the tight capacity relative to the investment. It sounds like you're keeping up with demand, but just have you contemplated a dynamic where this accelerated investment into the back half of the year accelerates demand, but you're not able to keep up with the demand. I totally understand the brand building for the medium to longer term, which makes complete sense. But it does sound like this is going to be supportive of perhaps even higher demand. I'm just trying to frame how much excess capacity you might see in the system. If indeed, you do see a step-up with this increased investment activity in the back half? So thanks very much for that.

Thanks, Chris. Look, our tightest period obviously is always during the summer. And we always see a fall off after major holidays, just like we did in July 4th and we are currently rebuilding the inventory as we speak, and we'll continue to rebuild it in August. And then we'll have a fall off coming out of September. And then overall consumer or consumer takeoff traditionally does fall off in the fourth quarter. So it provides us a good opportunity to get inventories back to where we would like to have them going into next year. Our marketing activities, as I said is not just limited to the United States. We are putting more money into our other markets as well behind the momentum of a brand like Madri, behind the Coors Light and Molson trademark brands up in Canada behind some strength in certain territories in our Latin America business. But it's also true to say the lion's share is in the United States. And frankly, the at a very, very high level, two kinds of marketing right in selling expenses, some drive shorter term behavior, which we're investing behind, and some drives longer term brand health, and we're going to be doing both. So as I said, we don't have unlimited capacity, but certainly perhaps coming out of our system and then the shoulder quarters, as I think Lauren referenced in the fourth quarter and the first quarter give us ample opportunity to maintain inventory and supplies where we want them to be.

Thanks, Chris. Our next question comes from Bryan Spillane from Bank of America. Your line is now open. Please go ahead.

Hi. Thanks, operator. Good morning, Gavin. Good morning, Tracey. I just had two sort of related questions about free cash flow. One, Tracey, if you could just talk about the two and half times leverage target and just why that's kind of a desirable target just given how much cash flow tap the company throws off and it just seems a little bit conservative. So just kind of what the thinking was there in terms of getting to the two and half times? And then I just had one other related follow-up.

Yeah. So look, we did a lot of analysis, what was the desirable leverage target for us to have, and we got to the two and half times. And remember, we've been very vocal and make sure that we maintain our investment-grade rating. And over time, we want to improve our investment grade rating. And so it makes sense for us to continue to look at that leverage ratio, reduce our net debt that drives us towards that upgrade in terms of investment grade. So yeah, it's just really important to us. And so we'll continue to look at that, Bryan.

Okay. And then the $1.2 billion of -- or plus or minus 10% free cash flow guidance increase for the year. Is -- I think one of the questions we're getting today is just if you were to hold on to the benefits that accrue to the company this year, would that be a normal cash flow or were there other things like capital spending coming down or just other things that the free cash flow conversion, if we're sort of -- we sort of rebase the company from here could be higher, or put another way, would free cash flow necessarily be higher even for this year, if there weren't some other sort of unusual things pulling on cash?

No. I mean, look, obviously, capital expenditure is one of the things that we look at. But I think we've been quite consistent with our capital expenditure. And we've also said that, any investments we make is not going to drive our capital expenditure up significantly. And even the investments that we've made in new breweries in Canada, we built those 2 new modern breweries in Canada, we're busy modernizing our G150 Brewery in Colorado. We built capabilities in our breweries, whether that's the flavor capabilities or variety of packing capabilities. All of that is within that range of around $700 million, which is the guidance that we've given for this year as well. So I don't see a significant uptick in anything CapEx related or anything unusual. I mean the one thing is, at the end of the year, obviously, working capital will be a driver of our free cash flow but yes, nothing out of the ordinary.

Thanks, Bryan. Our next question comes from Steve Powers from Deutsche Bank. Your line is now open. Please go ahead.

Hey. Thanks and good morning. I wanted to just revisit the capacity question in the US, maybe from a different perspective. I think both in the quarter and year-to-date, the financial volumes you shipped in the Americas lagged what you were able to ship in the first half of both 2020 and 2021. And I guess I'm just -- is that -- is there a reason for that? Is that reflective of capacity that you've taken out of the system at that point? And I'm thinking about it as I look to the back half, I'm just trying to think about a theoretical max on what you might be able to ship and the same logic, I think, in the back half of 2020 and 2021, you shifted, 32 -- 33 million hectoliters. I just -- is that feasible in 2023 or is the capacity just not there? A – Gavin Hattersley: Yes. Steve, look, we don't have unlimited capacity, as I said. But obviously, we had a strong May and June shipments, well above anything that you would have seen in 2020, 2021, 2022. And obviously, I think I've made the point we had higher inventories coming into the second quarter at the end of March, and that might have affected some of our shipments in the sort of first part of April. So there is that as well. We have long had a very robust program of seasonal workers and some are temporary workers which, frankly, if we needed to, we could continue even into the shoulder quarters. We traditionally haven't found that to be necessary. But in the event that it did, we could extend our summer brewery performance into the shoulder quarters. I'd also think, Steve, just to remind you that we are seeing pets come out, and that will free up a lot of capacity for us. And it will free up and simplify our breweries. There won't be so many changeovers. There will be longer runs much more effective and efficient. And as Tracey said, we start to see the benefit of that coming through at a faster rate in the second half of this year in the fourth quarter than we did in the first half, and then obviously, that will accelerate even further into 2024. So based on what we know now, we've got the capacity to supply the market demand.

Thanks, Steve. Our next question comes from Filippo Falorni from Citi. Your line is now open. Please go ahead.

You guys, can hear me okay now? A – Gavin Hattersley: Yes. We can Filippo.

Okay. Great. So I just want to go back to your guidance for net sales growth on a constant currency basis of high single digits. It seems like, Gavin, you mentioned the momentum continued in Q3 in terms of Coors Light and Miller Lite at the consumer level, you should have a little bit of financial volume kind of recovery as you ship ahead of depletions to recover the inventories. So can you -- how many square like what are the other headwinds other than the PABs volume coming out in Q4 that you're assuming that kind of slow the momentum as you're expecting in the second half. Any other things that we should be aware? Thank you. A – Tracey Joubert: Filippo, maybe I'll take that. So the other thing also just to note is the pricing. So recall, the impact of our pricing increases stepped down in the second half of this year as compared to the first half because of the pricing that we took in 2022. And then as we mentioned, we expect the pricing for this year to be more in the historical average of around 1% to 2% in the U.S. We also are a little bit cautious around the consumer particularly in Central and Eastern Europe, as Gavin mentioned in his remarks as well, looking at the competitive environment and then you mentioned the contract going volume coming out as well. So, I would say those are the big things to consider.

We have no further questions at this time. So with that, I will hand back to Greg Tierney for final remarks.

Okay. Thank you, operator, and thanks, everybody, for joining us today. I know if you do have additional questions or may have additional questions that we weren't able to answer today, please follow-up with our IR team. We look forward to talking with you, many of you as the year progresses and certainly looking forward to seeing you at our Strategy Day in October. So with that, thank you all for participating in today's call. Have a great day.

This concludes today's call. Thank you for your participation. You may now disconnect your lines.