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Molson Coors Brewing Co (TAP 0.44%)
Q1Â 2019 Earnings Call
May. 01, 2019, 11:00 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good day, and welcome to the Molson Coors Brewing Company First Quarter 2019 Earnings Conference Call. Before we begin, I will paraphrase the company's safe harbor language. Today's discussion includes forward-looking statements within the meaning of applicable securities laws. Important factors that could affect -- cause actual results to differ materially from the expectations and projections contained therein -- in such statements are disclosed in the company's filings with the SEC. The company does not undertake to update forward-looking statements, whether as a result of new information, future events or otherwise.
Regarding any non-U.S. GAAP measures that maybe discussed during the call, 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 actual -- to the nearest U.S. GAAP results. Also, unless otherwise stated, all financial results the company discusses today are -- versus the comparable prior year period are on a U.S. dollar basis.
Our call will open with remarks from Mark Swartzberg, VP of Investor Relations of Molson Coors. Please go ahead, sir.
Mark Swartzberg -- Global Vice President of Investor Relations
Yes. Thank you, Keith, and good morning, everyone. Thank you for joining us this morning. Following prepared remarks this morning, we will turn the call over for your questions. (Operator Instructions)
With that, I'd like to turn the call over to our CEO, Mark Hunter.
Mark R. Hunter -- President and Chief Executive Officer
Okay. Thank you, Mark. Hello, and welcome, everybody. With me on the call this morning are Tracey Joubert, our CFO; the CEOs of our business units; Lee Reichert, our Chief Legal and Corporate Affairs Officer; and Brian Tabolt, our Global Controller. Today, Tracey and I will take you through our plans to drive long-term total shareholder returns, discussing our first quarter results and outlook. And as usual, related slides can be found on the Investor Relations page of our website. Our first quarter was solid, delivering on our commitment to improving top line performance while also protecting the bottom line.
Even with industry volume pressure in North America and the shift of Easter from Q1 to Q2, revenue was up on a constant currency basis driven by strong and disciplined net sales revenue per hectoliter growth across our business, ongoing portfolio of premiumization and improving share trends in our largest market. While only the first and the smallest of our quarters, I am encouraged by the meaningful growth of net sales revenue in the U.S., led by the increasingly strong performance of Miller Lite, which held total beer industry share and an improved performance of Coors Light in our largest and most profitable market as well as strong U.S. retailer placements for our up-weighted innovation program. We also saw a continuing strong net sales revenue growth in Europe, our second largest business unit.
Across Molson Coors, I'm pleased with the continuing acceleration of our portfolio of premiumization efforts alongside our intensified innovation program and the growth in our underlying EBITDA, which despite higher inflation, grew on a constant currency basis. Now as you know, our First Choice strategy has 3 major components: focus on top line, bottom line and the use of cash, allowing us to improve our long and short-term shareholder returns. And more is focused on improving top line growth and we're advancing in multiple fronts. We're realizing strong pricing across brands and regions, giving us more fuel to invest for growth. Our 2 largest brands improved their volume trends in our largest market, resulting in better STRs for our U.S. business. Global priority brands were a key driver of our consolidated net revenue increase, a strong net sales per hectoliter gains more than offset volume softness.
Our above premium mix continue to improve with Peroni, Sol, Henry's Hard Sparkling and Arnold Palmer Spiked growing very rapidly in the U.S.; Blue Moon growing rapidly outside of the U.S.; and Staropramen continuing its strong growth across Europe. We continue to win in retail with additional placements flowing through in Q1 and more significantly in Q2. And we're advancing an up-weighted innovation program from accelerating the development of Clearly Kombucha and the full national launch of Cape Line and Sol Chelada in the U.S., the Coors Slice, Aquarelle and Bella Amari in Canada and the Pravha in the U.K., plus multiple rapid incubation initiatives such as in Archer Gold, La Colombe hard coffee and Hydra, and the readiness for launch of more disruptive initiatives such as Truss, our Canada-focused cannabis beverage JV less discipline is demonstrated by more than $200 million of expected cost savings in 2019 and our expectation of another $450 million of cost savings over the period 2020 to 2022.
Underlying these commitments are several enterprise productivity and capability driving initiatives, namely World Class Supply Chain 2.0; global business services, which is now scaled to over 500 people in Romania; IT consolidation and procurement savings from multiple sources. All remain on track and include development of our 2 greenfield breweries in Canada, including our British Columbia brewery, which is on plan to begin brewing in the third quarter. And we're investing wisely. We reduced our debt by more than $2 billion since closing the MillerCoors transaction and our Board's intention remains to reinstitute a dividend payout ratio in the range of 20% to 25% of annual trailing underlying EBITDA for the second half of 2019 and ongoing thereafter. And we're taking advantage of opportunities to invest more, buying their commercial agenda to drive our revenue performance while also increasing our commitment to attractive returns on every marketing dollar.
So with that context, over to you, Tracey.
Tracey I. Joubert -- Chief Financial Officer
Thank you, Mark, and hello, everybody. I will speak first to the quarter on a consolidated and regional basis, then to our cost savings and 2019 outlook and finally, to our capital allocation plan. As highlighted in our earnings release, net sales revenue increased 0.6% in constant currency reflecting strong pricing in each business units and improving mix in Europe. Net sales per hectoliter on a brand volume basis increased 3.7% in constant currency. Our worldwide brand volume decreased 4.7% and financial volume decreased 3.4%. Our global priority brand volume decreased 3.6%. Underlying cost per hectoliter increased 5.3% on a constant currency basis driven by commodity inflation, transportation costs, increased packaging costs associated with our U.S. bottle furnace rebuild and volume deleverage partially offset by cost savings.
Underlying MG&A decreased on a constant currency basis driven by lower G&A. As a result, underlying EBITDA increased 0.2% on a constant currency basis. Underlying free cash flow was a use of $270.1 million, an increase in cash used of $75 million from the prior year's first quarter primarily due to unfavorable timing of working capital partially offset by lower cash paid for interest and capital expenditures. Moving to our business units. In the U.S., net sales revenue increased 0.7%, driven by price increases partially offset by 2.7% decline in sales-to-wholesalers excluding contract brewing. Our COGS per hectoliter increased 5.9%, driven by higher commodity and transportation costs, increased packaging costs associated with our U.S. bottle furnace rebuild and volume deleverage, partially offset by cost savings.
MG&A decreased 4.5%, reflecting lower employee-related costs and quarterly timing of innovation spend partially offset by higher marketing investment behind our premium light brands. As a result, underlying EBITDA increased 3.4%. Brand volume trends improved versus last quarter and last year, declining 3.8% on a trading-day adjusted basis, which is an improvement boost at both the fourth quarter and last year. Miller Lite held share of industry and increased share of Premium Light for the 18th consecutive quarter according to Nielsen. Coors Light volume trends improved while holding share of segment.
As the company's top priority, Coors Light continued its progress following its rollout of new creations late in Q4 with new on-premise content and partnerships. We posted significant growth in a number of brands within the above premium segment, including Henry's Hard Sparkling, Peroni, Sol and Arnold Palmer Spiked. And we are confident we can scale the segment more rapidly going forward. In Europe, net sales revenue increased 4.4% on a constant currency basis, driven by price increases and favorable mix partially offset by 2.3% brand volume decline. COGS per hectoliter increased 3.7% in constant currency, driven by commodity inflation. MG&A increased 9.5% in constant currency, reflecting our higher investment on our national champion brand and premiumization initiatives.
As a result, underlying EBITDA increased 2% in constant currency. Continued momentum in 2019 was evidenced by top line growth, driven by 8.2% increase in net sales per hectoliter on a constant currency basis, more than offsetting the volume, which was impacted by our planned declines in our low-margin value brand as we increase our focus on our national champion brands and above premium portfolio. In Canada, net sales revenue decreased 3.4% in constant currency driven by 6% decline in brand volume due to soft Canadian industry volume, which we estimate to be kind of approximately 5%, partially offset by cost increases. COGS per hectoliter increased 6.3% in constant currency driven by volume deleverage, increased distribution costs and cost inflation, partially offset by cost savings. MG&A decreased 1.1% in constant currency driven by timing of employee-related expenses partially offset by higher investment to support the rebranding of our Molson brands and Truss-related costs.
As a result, underlying EBITDA decreased 22.4% in constant currency. Volume was impacted by industry weakness. In terms of brands, strong growth from Belgium Moon and Miller High Life partially offset softness in our core brand. for the Molson trademark also improved during the quarter following initiation of the brand relaunch. Also note, we estimate Truss-related start-up costs of CAD 10 million to CAD 15 million in 2019. In international, net sales revenue decreased 14.4% on a constant currency basis driven by 6.7% decline in brand volume and favorable geographic mix and the shift of local production in Mexico partially offset by price increases.
COGS per hectoliter increased 2% in constant currency driven by geographic mix and inflation. MG&A increased 11.9% in constant currency driven by pricing with $2 million of settlement proceeds related to our Columbia business in the first quarter of last year, partially offset by lower marketing investments. As a result, underlying EBITDA decreased to $2.7 million. Brand volume declined as a result of balancing higher pricing with lower volume in Mexico. The shift of Easter to Q2 and cycling a strong post-hurricane result in Puerto Rico, and this was partially offset by growth in several of our focus markets such as Chile, Paraguay and Honduras. Coors Light's volume was down principally because of the ongoing focus on brand equity growth versus promotional volume growth in Mexico, partially offset by strong double-digit increase for Miller Lite. Now moving to outlook. Our earnings release details our guidance.
The EBITDA margin expansion guidance we communicated in June is unchanged. We expect 2019 consolidated underlying cost per hectoliter to increase at a mid-single-digit range on a constant currency basis. In terms of cost savings, we continue to expect a total of $700 million of savings for the 3 years ending 2019 and plan an added $450 million for the period 2020 through 2022. We expect procurements and supply chain, including brewery optimization, to constitute the majority of these new savings with RC and global business services also contributing to the $450 million. We expect these savings to be spread evenly over the period of 2020 through 2022 to help fund our internal investment plan, the cost of achieving the savings and offset input inflation.
We expect our international business to deliver underlying EBITDA growth of strong double digit in constant currency for the full year 2019 versus 2018. We estimate underlying free cash flow of $1.4 billion plus or minus 10% this year. Now as you contemplate full year 2019, keep in mind that we recently rescheduled our Albany brewery system implementation from Q1 to post this selling season, which will impact STW saving. We expect increased packaging cost associated with our U.S. bottle furnished reboot to moderate this fall and we intend to incrementally support our brand building initiatives for the rest of the year.
At this point, I'll turn it back over to Mark.
Mark R. Hunter -- President and Chief Executive Officer
Thanks, Tracey. Our revenue focus, or earn more, is one of the 3 platforms by which we drive total shareholder returns, and this depends upon extraordinary brands, customer excellence and disruptive growth. Looking at our brands, our commitment to energizing our core brands is paying off. As I mentioned, in our largest market, Coors Light trends improved with our brands regaining positive segment share momentum. And Miller Lite continues taking segment share while also holding share of the total U.S. beer market. We're also further intensifying our focus on premiumization. Highlights of the quarter include strong double-digit or even stronger brand volume growth for Arnold Palmer Spiked, Sol, Henry's Hard Sparkling and Peroni in the U.S. and upper single-digit growth for Coors Light in the U.K. while we drive the national rollout of Pravha Staropramen. And our global brands remain a priority.
Miller Genuine Draft, Miller Lite, Coors Light, Coors Banquet, Blue Moon and Staropramen, each of the household name in its own market and each can become bigger, thanks to our multinational reach. Miller Lite's Staropramen and Blue Moon are great examples. Brand volume of Miller Lite grew strong double digits in our international business in the quarter. Staropramen brand volume grew 15.8%, including growth in the Czech Republic, and Blue Moon and Belgium Moon brand volume grew strong double digits in each of international, Europe and Canada in the quarter. Continuous development of our customer excellence capability also remains a focus and is evident across our business. We continue to be a leader in category management in the U.S. as evidenced by a first place result overall in the most recent annual Advantage survey and the first place on-premise result in the most recent annual CM Profit Group survey.
Retailers trust those to grow the size and value of their beer category and we consistently outperform our competition in this area. In Europe, customers rate us with a leading Net Promoter Score of 60-plus in a majority of the countries in which we operate. And our U.K. business was again ranked #1 by on-premise GN accounts. In Canada, we continue to help customers drive category growth. For example, a major retailer has seen improving beer category growth in stores where we reset beer shelves and joint brewer retailer teams are applying our success to other major chains.
We're also improving our intensity buying innovation and disruptive growth. Our stepped up innovation approach is demonstrated by the introduction of Cape Line and Archer Gold and Sol Chelada in the U.S., contributing to more than 180,000 expected placements for our new and year 2 products in 2019. In Canada, Coors Slice, Aquarelle, hard seltzer and Bella Amari are rolling out, and Truss remains on track to be a first mover when cannabis-infused beverages are planned to be legalized in October of this year. In international, our portfolio is benefiting not only from Miller Lite's strength, but also from continued expansion of Blue Moon, which is now available in 20 international markets.
And finally, we're delivering new services and revenue streams through upgrading our digital and e-commerce capabilities in Europe and beyond. Concluding on pack and driving shareholder value, we plan to increase cash returns through an increased dividend later this year. We remain committed to our investment-grade status and our balanced approach to capital allocation. I look forward to intensifying our top line revenue opportunities in front of us through our first choice for consumer and customer agenda. Thanks for your time and attention.
And with that, I'll turn it back to Mark.
Mark Swartzberg -- Global Vice President of Investor Relations
Yes. Thank you, Mark. We look forward to meeting with many of you over the course of the year. In terms of upcoming events, I want to highlight several. Barclays will be hosting a meeting in Milwaukee with Tracey and Gavin and other members of our leadership team next week. Later in the month, on May 22, we'll hold our Annual Meeting of Stockholders in Montreal followed by investor meetings hosted by BMO with Mark and Tracey and our Canada leadership team. And in June, Evercore ISI will be hosting investor meetings in New York with Mark, Tracey and our Global Treasurer, Mike Rumley, followed by investor meetings in Paris at the Deutsche Conference with Tracey.
So with that, Keith, I think we'll go to Q&A.
Questions and Answers:
Operator
(Operator Instructions) And our first question comes from Lauren Lieberman with Barclays.
Lauren Lieberman -- Barclays -- Analyst
Great, thanks, good morning.
Mark R. Hunter -- President and Chief Executive Officer
Hey, Lauren.
Lauren Lieberman -- Barclays -- Analyst
So first, I was just curious about just for the shape of the P&L this quarter. MG&A's still down year-over-year, but I think not as much as people were probably expecting. And then you called out the higher marketing spend on Premium Lights in the quarter. So I was just wondering if there's any change here sort of reinvest in philosophy and whether you think the brands kind of need more support on an absolute dollar basis rather than just the per hectoliter approach you've been taking. And also, in terms of the degree of step up that might be required as to push harder on the high end.
Mark R. Hunter -- President and Chief Executive Officer
Thanks, Lauren. Let me try and take that on an enterprise level. So I mean if you look across our MG&A spend, clearly, you saw a step up in Europe. And as we intimated in the prepared remarks, we increased our spend buy in Coors Light and Miller Lite. And don't forget, we've got a significant decrease in terms of the G&A component of our MG&A following the restructuring work we did through the Q3 and Q4 of last year, particularly in the U.S. So we remain very committed to driving the breadth and depth and strength of our portfolio. And really ensuring that we've got equal focus on progress on the revenue line while we continue to manage our deleverage program. And clearly, as we go into 2020, we start to have more flexibility as we continue with the paydown of our debt.
It was very important for us that as we come through this year, we see progress on our revenue. And I'm encouraged by the fact that our 2 biggest business units in the first quarter, with the U.S. up almost 1% in revenue and Europe, up over 4%, I think that's symptomatic of what we're trying to drive across our business. In terms of the requirement of any step up, again, we continue to focus on a couple of things. One is improving the productivity of the dollars that we have within our business.
And Miller Lite's a great example, where we haven't made dramatic shifts to the spend buying Miller Lite, but because of the quality and consistency of the marketing activity, we've seen just consistent improvements in the trajectory of that brand where it's actually now holding share of the total U.S. beer market. Clearly, as we get more confident in a number of our initiatives, we will look to fuel growth as it emerges and we'll keep you attuned to that. But we're not going to make any statements about a step up in marketing and speculate on what that might look like. We'll do this in a very thoughtful and considered way. But we are equally focused on the revenue improvement performance in our business as we are in the continuing deleverage of our business, and that's the balance that the executive team are really trying to drive against.
Operator
Thank you.And the next question comes from Bryan Spillane with Bank of America.
Bryan Spillane -- Bank of America -- Analyst
Hey, good morning everyone.
Mark R. Hunter -- President and Chief Executive Officer
Good morning, Bryan.
Bryan Spillane -- Bank of America -- Analyst
So I guess just maybe a very more high level question. The stock's reaction today, I think, is just kind of reflective of what the results were versus where consensus was. And so I guess -- and I guess it also sort of explains or suggests that there's risk to the year. So I guess how did this quarter unfold relative to what your own internal expectations are? And is there -- what's the risk or the probability of achieving your full year results now versus maybe what they were when you originally gave the guidance in February?
Mark R. Hunter -- President and Chief Executive Officer
Okay. Thanks, Bryan. So let me offer a couple of comments around that. So I mean we're not going to get in a habit of continually commenting on consensus. But let me make a comment this quarter as I look at the consensuses out there in the marketplace. So on a full year basis, the consensus looks to be within acceptable limits. It's kind of in the ballpark. But my perspective is H1 and Q2 are too optimistic and the second half is too pessimistic. And some of that's to do with phasing and timing in our business.
The shift of the Albany go-live from the first half to the second half, and our continuing focus on building momentum behind our brand portfolio and our revenue growth. But on a full year basis, the consensus looks, as I say, pretty much to be in the ballpark. Relative to the first quarter, the first quarter came in pretty much in line with our expectations. And the guidance that we've given for the year remains unchanged. And I think if you look at our track record, Bryan, over the last 3 or 4 years, we deliver on the commitments we've put into the marketplace. We've done that in cost savings, we've done it in our free cash flow. We've done it on our margin expansion. So we remain committed to the guidance that we issued a quarter ago and we're off to a solid start this year. But I do think some of you need to just reflect on the phasing as you look at the buildup of our P&L.
Operator
Thank you.And the next question comes from Judy Hong with Goldman Sachs.
Judy Hong -- Goldman Sachs -- Analyst
Thank you, good morning.
Mark R. Hunter -- President and Chief Executive Officer
Hi, Judy.
Judy Hong -- Goldman Sachs -- Analyst
So I guess I wanted to just have a little bit more color just on your top line performance on MillerCoors for the quarter, put more broadly, kind of thinking about the balance of the year. On the positive side, your price/mix realization was the strongest I think in quite a while. So maybe unpack for us sort of how much was price versus mix and how you see that playing out? And then on the volume side, I mean, the STR I guess got a little bit better sequentially, but down 3.8%. Seems like it's still underperforming the broader inventories. So how do you think that, that -- how did that come in relative to your expectation? And I guess when you think about the consensus number that you called out, to Brian's question, embedded in that maybe is sort of the expectation that volume does get better for the balance of the year. So perhaps, you could give us some more color just in terms of your confidence level on that front.
Mark R. Hunter -- President and Chief Executive Officer
Okay. So Judy, I think there was 3 or 4 parts to your question there. So Gav, if you get right in, I will just pass it across to you in a sec. And I think, Judy, on your price/mix question, as you look across our business, one of the things I've talked to very consistently over the last 24 to 36 months is to focus on our business on building our pricing and revenue management capability and making sure that we're managing in a very thoughtful way the balance between price/mix and volume. And we know that in our big developed markets, industry volume is under pressure. That's not new news. And we're really building the muscle around the price and mix element of that.
And I think you've seen that demonstrated both in the U.S. and very consistently in our European business with a very strong performance from the European seen through the first quarter. So just take that as a context of one of the capabilities and focus areas that you'll continue to see us come back to. And we're really driving our teams very hard in terms of our total revenue performance. That's something we've now introduced into our long-term incentive plan as well. So even more focused in our business on an LTIP basis around our revenue performance. So that's just a little bit of context. Gav, do you want to talk about really the first quarter and your thoughts on the full year from a U.S. point of view?
Gavin D.K. Hattersley -- Chief Executive Officer and President of MillerCoors
Sure, Mark. Good morning, Judy. So yes, first quarter pricing was strong. We were pleased with it. Mix, to answer your question specifically, was negative 30 basis points. That's the base to that performance that we've had since, I think, 2017. And even more pleasing was the brand mix side of it was actually flat, which is an illustration of our above premium mix starting to come through. Most of the negativity on mix was related to package. The full benefits of our mix shift really only going to start kicking in Q2 as a lot of our innovation comes through and increased spend behind brands like Blue Moon, where we're nearly doubling our media spend. As far as outlook's concerned, look, it's too early to tell the impact of the spring GIs, but I can certainly tell you, they haven't been as widespread or as impactful as has been speculated in some of the industry newsletters. From a volume perspective, Judy, it was a slight improvement over 2018, but it was a substantial improvement over our fourth quarter trend.
And the Easter timing obviously didn't help with the move from Q1 into Q2. I mean it wasn't a meaningful driver, but it wasn't helpful. And a lot of our activities, I said, is directed to start in the second quarter, our new innovation, Cape Line, for example, our strong push behind Peroni, which is -- its performance has doubled since -- its gross rate has doubled since last year into the strong double digits. So yes, I think that covers it, Mark.
Mark R. Hunter -- President and Chief Executive Officer
Thanks, Gavin.
Operator
Thank you. And the next question comes from Rob Ottenstein with Evercore ISI.
Eric Serotta -- Evercore ISI. -- Analyst
It's Eric Serotta for Robert. In terms -- I'm wondering whether Mark or Gavin can give us some commentary on the U.S. pricing environment. Yes, if you're saying that mix was negative 30 bps for the quarter implies roughly 4% pricing before some of the spring industry pricing goes in place. Any additional color you could go on as to what's going on there because that seems like a tremendous acceleration? And related to that, are you seeing any prebuying from distributors ahead of the spring pricing initiative?
Mark R. Hunter -- President and Chief Executive Officer
Eric, I think Gavin touched on that in his answer to Judy. But Gavin, any further thoughts or any more color that you would offer? Or any restatement of what you just said?
Gavin D.K. Hattersley -- Chief Executive Officer and President of MillerCoors
I mean, look, much more to add, Mark. I mean, we did some pricing performance in Q1 and that followed the healthy increases, which we talked about in the fall of last year's. I mean we already started to see acceleration of pricing in the fourth quarter. As far as the spring price increases are concerned, I wouldn't say there's been much prebuying or certainly nothing material to call out, Eric.
Mark R. Hunter -- President and Chief Executive Officer
Yes. And Eric, I mean the headline that we all read of about in terms of the potential spring, the price increase seems to be much more patchy and sporadic than maybe industry commentators had speculated on. So I mean we are running our own playbook in terms of how we're managing our portfolio and how we're focused on our revenue line, and Q4 demonstrated some good improvement and Q1 has continued that.
Operator
Thank you.And the next question comes from Amit Sharma with BMO Capital Markets.
Amit Sharma -- BMO Capital Markets -- Analyst
Hi, good morning everyone.
Mark R. Hunter -- President and Chief Executive Officer
Good morning.
Amit Sharma -- BMO Capital Markets -- Analyst
Mark, just a clarification. So should we expect this level of price and perhaps better mix to continue for the rest of the year? I mean if you think, in the U.S, and that's one. And the second one is a broader question like, look, it's fairly clear that you're talking about revenue management and you want us to focus on the dollars versus the volume. And I think most investor will think that's desirable. And so the company has have obviously done that successfully. My question is, like, how do we deal with the volume deleverage in the meantime, right? Is there any way for you to dilute the impact of deleverage or overcome it so that margins don't continue to come down as do those volumes, especially on the economy end?
Mark R. Hunter -- President and Chief Executive Officer
Okay. A couple of questions there. So on price/mix, I mean we just don't give guidance in that area. I think the best thing to do is look at our historical track record, particularly over the course of the last 4 to 6 quarters. You've seen very consistent progress, particularly in our European business. And as Gavin and I intimated, Q4 saw an improving trend. Q1 has continued that. And as I mentioned in my earlier comments, we're really focused on managing the balance across price/mix and volume. So all 3 of those are important. So at the end of the day, in aggregate, we are focused on driving the revenue performance of our business. So we're not either overemphasizing any of those 3 components or giving up in any 1 of those 3 components. Clearly, if there is a volume deleverage challenge in our business, then we'll continue to manage our cost base appropriately and effectively.
And I think we've demonstrated that on a multiyear basis, our ability to do that. And clearly, we're looking to invest more heavily buying our brand portfolio as well to really ensure that volume remains an important part of that revenue equation. So I think, as I mentioned earlier, the focus for the management team is to ensure that we've got improving revenue performance while we continue to manage our P&L to drive the deleverage commitments and retain our investment-grade status. And that becomes -- as we get into 2020, that balance shifts probably a bit more finally toward revenue because we'll have delivered on very fundamental deleverage commitments through 2017 to 2019 and you're starting to see the repurposed focus on revenue as we come into 2019. And it will be a continuing theme from us as a management team.
Tracey I. Joubert -- Chief Financial Officer
And Mark, if you don't mind, if I just add. I mean some of the things that we've spoken to before in terms of margin and costs. So I'll remind you about cost savings, that, but as well as some of the initiatives like our World Class Supply Chain 2.0, which is focused on capability building as well as efficiency in our breweries. And in some of that other ongoing cost savings in IT and our global business services in Bucharest. So in a cost savings and cost continue to get the strong focus that Molson Coors has always had. And these are just some of the initiatives that will continue to drive costs down and margin.
Operator
Thank you.And the next question comes from Andrea Teixeira with JPMorgan.
Andrea Faria Teixeira -- JPMorgan -- Analyst
Hi, Yeah. thank you, good morning.
Mark R. Hunter -- President and Chief Executive Officer
Good morning.
Andrea Faria Teixeira -- JPMorgan -- Analyst
Yes. So can you update us on the brewers systems roll out? And I understand, Tracey had a call out, a delay in the go-live for Albany into after the big season. So I was wondering if there's any impact on the on the other brewers that went live recently and if you can update us on the most recent category trends in the second quarter, all outlets. I think you called out the second quarter obviously has some downside risk to consensus on them, but I'm wondering if it's more on investment or if it's also top line.
Mark R. Hunter -- President and Chief Executive Officer
Okay. So Gavin, do you want to talk more broadly about the BP&S rollout, including just the progress that you and the team have made over the last 12 months and how we see the balance of this year?
Gavin D.K. Hattersley -- Chief Executive Officer and President of MillerCoors
Sure, Mark. Look, I mean as you know, we are converting all our legacy breweries to integrated systems platform. It's going to get our entire network on to a single tool for ordering, for claims, damage, return and so on. And frankly, whenever you have a systems implementation of this magnitude, challenges are expected. The rollout has continued since Golden. We've gone Trenton. We've done Fort Worth, and we've most recently done Milwaukee. The last 3 rollouts have all been meaningfully better than our Golden roll out. It's not to say we haven't had some challenges. But as you do with the system rollout of this extent and all the change management that comes with it. But the Milwaukee issues that we've had are very limited to the Milwaukee brewery orbit.
And like last year with Golden, where they were fairly national. And on top of that, our stock trends are in a much better place than they were a year ago. We are right back where we historically operate from an out of stock point of view. To address your question on Albany specifically, we recently rescheduled the Albany brewery go-live to after the peak selling summer season because we just wanted to make sure that our product's completely available for the summer. Given our learnings from Golden, we decided to exercise an abundance of caution with Albany and so that we don't disrupt the network given the transition. So we're on track. Albany will go live in the -- after summer and all of that will follow soon after that and we should be done this year.
Mark R. Hunter -- President and Chief Executive Officer
Thanks, Gavin. I think it's fair to say with that shift as well, clearly, what that does is it moves some of the STW phasing in our business from H1 into H2.
Gavin D.K. Hattersley -- Chief Executive Officer and President of MillerCoors
That's correct.
Mark R. Hunter -- President and Chief Executive Officer
Yes. Something to bear in mind as you think through the balance of the year. In terms of the second part of your question. Certainly, as we come through the second quarter, I think one of the things, as I look at some of the consensus numbers, I think COGS is understated relative to our guidance. So I would actually take a look at that as you look at the Q2 number in particular. And clearly, we're ramping up our innovation pipeline as we've come out of Q1 into Q2. So I expect this to be investing as we go into the peak selling season because we want to continue to drive the momentum from a top line perspective. None of that undermines in any way our full year guidance that we gave you a quarter ago and we've restated again today.
Operator
And the next question comes from Randi Yoant (ph) with Guggenheim.
Analyst -- -- Analyst
Yes, good morning. I'd like to focus on Canada. Last quarter, you mentioned you were seeing improving commercial trends in Canada. Seems like you didn't measure this quarter. So could you please give us some more color here in how we should think about Canada going forward? And also, as a potential positive catalyst here, could you please update us on your Truss cannabis JV? Would you be ready to launch or test new products, I mean, Q4 this year when it becomes legal in Canada for beverages? And what are your expectation as your scale in Canada could be an advantage versus some of your competitors?
Mark R. Hunter -- President and Chief Executive Officer
Okay. So Fred, do you want to pick up the -- well, actually, why don't you take both parts to that question just in terms of our underlying performance in Canada relative to industry and then just a preparedness for our Truss launch.
Frederic Landtmeters -- President and Chief Executive Officer of Molson Coors Canada
Sure. So starting with the volume part of your question. We obviously have soft volumes in our first quarter this year. And despite the fact that it's a small quarter, I mean, it's a big percentage. Now the main driver, an 80% of that volume softness is explained by industry. And just to be clear, we don't expect the industry to be down 5% for the remainder of the year like it was in Q1. Obviously, Easter timing is a big driver of that. But as industry performance comes back to a normal trend, I think what we should focus on is our share trends. And actually, that's where we've got stability for the last 3, 4 quarters. We've got a stable share trend. It's not good enough, but we're actively working on further improving it. So the stability of the trend is driven by our performance in the economy segments where we're continuing to grow share. We've got some significant initiatives in place to continuously improve the trends on our premium brands.
And especially in the above premium craft space in the beyond beer space, we've got some big initiatives that have been launched in the past few weeks, and that should help us significantly changing the trends in the quarters going forward. So those initiatives include RTDs, but also include Coors Slice in the premium segment. And that's one of those initiatives that should contribute to a meaningful change of trend there. So from a commercial performance, I think the underlying -- behind the softness of Q1, I think there's still a high level of confidence that we're continuing a good trajectory from a share performance perspective.
The second part of the question on Truss. Absolutely still on track to be ready on day 1 of legalization. So as you know, legalization of cannabis-infused beverages is expected to happen on the 17th of October 2019. I can confirm what I said last quarter, which is we're going to be ready to be one of the first movers. We're making great progress in terms of product developments. We're making great progress in terms of implementation of the supply chain components. So yes, confirming what I said before, we're going to be ready.
Mark R. Hunter -- President and Chief Executive Officer
And Fred, just to add to that. As we indicated in the script, obviously, we've set up our business. We've got a great team of people in place working with the team at HEXO. So clearly, there's additional readiness in start-up costs through this year. Though assuming the timing goes ahead as are indicated by the authorities in Canada, then we'll start to get a little bit of revenue coming through right at the end of this year and then it becomes part of our overall revenue performance really from 2020 going forward. So again, just bear that in mind as you think about phasing of cost in our business, in particular, Canadian business through this year.
Operator
Thank you.And the next question comes from Steve Powers with Deutsche Bank.
Steve Powers -- Deutsche Bank -- Analyst
Hey guys thanks. So as you said, you stand committed to the deleveraging and dividend step-up commitments that you set last year, which is very validating. But given where you finished the first quarter in terms of net debt and trailing EBITDA. And then now, Mark, earlier your second quarter comments, it seems like you've got a good ways to go in order to hit that 3.75 net debt-to-EBITDA level, if my math is right. And I know that historically, second quarter has been a really strong cash generation quarter and perhaps more so this year if the working capital headwinds that we saw in the first quarter reverse out. But is that the right way to think about achievement of the deleveraging target by midyear-ish? Or other reasons to believe in stronger EBITDA growth? Your second quarter comments would seem to rule that out. But I just want to confirm if I'm hearing you right relative to the phasing of EBITDA versus cash generation and net debt reduction.
Mark R. Hunter -- President and Chief Executive Officer
Okay. Thanks, Steve. Yes, I mean the way the Board is looking at this is where are we going to be at year-end and are we on our deleverage flight path. The midyear is a staging post. But they are looking for us to give confidence around our full year performance. And we remain very committed both internally and externally to the guidance we've given. There is I think a little bit more volatility than we had originally anticipated in terms of H1 versus H2. Some of that had to do with the shift in Albany. But Tracey, do you want to just give a little bit more color around that and some of the phasing differentials, none of which affect our full year commitments.
Tracey I. Joubert -- Chief Financial Officer
Yes. So thanks, Mark. So hi Steve, yes. Our full year-end guidance that we've given remains. In terms of the shift from H1 to H2, as we mentioned, the Albany shift, obviously, that would have an STW impact going from half 1 to half 2, which also impacts our free cash flow. And also, in the first half, we've got that increased investment behind innovation and premiumization as we go into peak period that marks bulk of assets. And looking at free cash flow, the bigger driver in Q1 is the timing of working capital. Obviously, working capital is a lever that we look at and we would pull for the back half of the year to reverse that timing.
And then the other things I'd add is our cost-savings initiatives, which will impact both P&L and free cash flow. So we've spoken about the $205 million of cost savings to achieve this year. So that will obviously hit those P&L and free cash flow for the balance of the year. And the final thing I would say is if you just refer back to our history of hitting our free cash flow targets across 2 years. We've delivered about $3 billion of free cash flow and we have a record of delivering or over delivering on all of our commitments across both our P&L and our free cash flow.
Mark R. Hunter -- President and Chief Executive Officer
Yes, thanks Tracy.
Operator
Thank you. And the next question comes from Kevin Grundy with Jefferies.
Kevin Grundy -- Jefferies -- Analyst
Thanks, good morning everyone. Cleanup question for me on Canada, just given the weakness in the quarter with the STRs down 6%. I think the comment was 80% was ode to the industry and some of the weakness there. And I think Easter timing was called out. But one thing that, that was not mentioned was cannabis. And I know it's still very early days. But how much work have you done on that? What do you think the impact has been so far from it? It's obviously very topical with implications going forward. So any thoughts you had there would be helpful.
Mark R. Hunter -- President and Chief Executive Officer
Okay. Thanks a lot. Fred, back to you. You want to build on your earlier comments?
Frederic Landtmeters -- President and Chief Executive Officer of Molson Coors Canada
Yes, absolutely. So Kevin, on that question, we're obviously monitoring the situation and the potential correlation of beer sales and cannabis sales since the legalization back in October 2018. And I think at this point in time, it's really fair to say we see absolutely no correlation between the sales of cannabis and the sales of beer across the industry or for most in Canada specifically. So we're going to continue to monitor that. But there's no evidence, no data that show us based on the last 5 months of cannabis sales, that show us an impact there.
Mark R. Hunter -- President and Chief Executive Officer
And Kevin, the only thing I would add to that is I mean we're seeing a similar picture in the U.S. where we monitor the space. I mean there's -- if you look at beer industry volume trends and states where cannabis has been legalized, some states are slightly better, some states are slightly worse. There's not been any kind of major discontinuity and underlying beer volume trends. So we're watching in both markets. But I can't point to any real connection between cannabis legalization and performance of the beer industry at this stage.
Operator
Thank you. And the next question comes from Tristan Van Strien with Redburn Partners.
Tristan Van Strien -- Redburn Partners -- Analyst
Hi, good morning guys. Just I've got 2 -- I've got a question on Europe. But before, I just want to clarify, and is that correctly from Gavin. So basically in Q1, you've got 4% frontline pricing. I just wanted to confirm that because that seems to be the best performance since Q3 2009. And I think I don't see it in any of the IRI or AC Nielsen data. So I just want to confirm that number. And then my question really was to Simon Cox, who seems to be a little bit lonely here. There's also -- just that performance just seems remarkable on price/mix. If you can just break that down, how is that working also in terms of country mix and how the U.K.'s doing and what have been the drivers behind that very strong performance?
Mark R. Hunter -- President and Chief Executive Officer
Okay. Thanks, Tristan. Gavin, do you want to pick up firstly on the U.S. pricing question?
Gavin D.K. Hattersley -- Chief Executive Officer and President of MillerCoors
Yes. Tristan, I can confirm that our frontline pricing for Q1 was 4% and the negative mix was 30 basis points, net of 3.7%. I mean I'll just remind you that a lot of things go into the pricing, a lot of things like the FET tax law, retail operations, fairs and festivals, top sales, all of those things are a factor in there. But you're correct, it's 4% and it's our best performance in quite some time.
Mark R. Hunter -- President and Chief Executive Officer
And I think, Gavin, just building on that. If you track that through to some of the IRI or Nielsen data, clearly, retailers themselves choose to invest in price activity. So as you know, what we're realizing in price doesn't necessarily then get reflected in terms of what's showing up through the retail data. So just bear that in mind, Tristan, as you're trying to connect the 2. And then Simon, do you want give a broader picture on how we've been managing the revenue performance in Europe?
Simon Cox -- President and Chief Executive Officer of Molson Coors Europe
Yes. Thanks, Mark. Thanks, Tristan. So yes, we've consistently tried to ensure that we've got good underlying momentum on our top line growth. We've managed to do that quite consistently now for a good few quarters. We try and focus on volume, price and mix, as Mark mentioned earlier, as equally important drivers. We don't expect that to be the same every quarter, but we do expect across those 3 levers for that to grow our top line. As it manifested in quarter 1, we grew our top line by 4.4%. And on this quarter, that was mostly driven by -- well, it was driven by pricing and mix.
Pricing was up about 4.8% and mix of about 3.4%. And that's a manifestation of our very deliberate focus on ensuring that our national champion brands are well invested across all of our markets and that we continue to premiumize the portfolio. So again, we've put our marketing efforts into our mainstream national champion brands and into our premium portfolio, and we believe that continues to work well for us and we think that works in results. We don't tend to break out country mix.
But U.K. is still our #1 revenue and profit business. So there's no way that we will be able to post that type of strong top line growth unless the U.K. were participation in it as well. And again, it's the same strategy in the U.K. We're going to make sure that Carling's well invested. We have a new company called the Made Local campaign, which we're putting significant money behind, and it's off to a good start. And the U.K. is fully participating in the premiumization Staropramen doing well, Blue Moon doing well, our craft beer portfolio continues to be in good shape. And outside the portfolio, continue to premiumize. So same strategy in the U.K. as the rest of the business units. We won't break it out specifically. But a very pleasing quarter when it comes to our overall revenue growth.
Tristan Van Strien -- Redburn Partners -- Analyst
Thanks, Simon. Good summary.
Simon Cox -- President and Chief Executive Officer of Molson Coors Europe
Thank you. And the next question comes from Brett Cooper with Consumer Edge Research.
Brett Cooper -- Consumer Ad Research -- Analyst
Yeah, good morning, Just a quick question. I mean as you think about Molson Coors in 3 to 5 years, and you highlighted the soft beer industry a number in your larger markets, can you, your management team and the Board get to where you want to be by being a brewer only?
Mark R. Hunter -- President and Chief Executive Officer
As opposed to what, Brett? I mean if you look at what we're doing in our business, let me characterize how we're trying to build out our portfolio. I mean our center of gravity is clearly today and will continue to be as a brewer, focused on our beer brands and the premiumization and modernization of our beer portfolio. We're then continuing to accelerate the development into what we described as adjacencies, whether that's cider or RTDs. Beyond that, we're moving into brewed beverages more broadly. And you've seen a number of our initiatives, whether that's nonalc businesses like Clearly Kombucha, testing La Colombe hard coffee. But that's an area and a territory which we believe we can develop further from a revenue perspective. And that also includes the nonalc beers as well. If you look at our low and nonalc business overall, we are well over I think 1.2 million hectoliters of low and nonalc beer, and that revenue continue to grow positively through 2018 and it's grown positively again in the first quarter of this year.
But then if you go out even further, clearly, we're into some new frontier areas, and I would put Truss in our cannabis JV in that area. So we're already developing our portfolio to have more stretch and breadth. And what we talked about in our business is energizing our core brands or national champions, premiumizing the portfolio, modernizing our offering and then really disrupting, and those are the 4 drivers. And then alongside that, we'll continue to look for infill M&A opportunities. And I think we've used those kind of opportunities very effectively, the most recent one being the Aspall Cider acquisition in the U.K., and we remain open to further opportunities to really broaden our portfolio and generate new sources of revenue. So you will see us do more of that over the course of the next 3 to 5 years. I've avoided trying to get ahead of ourselves on this because I think it's really important that we deliver proof points to use as opposed to just speculate what we're trying to do, and I think those proof points are now starting to emerge in our business. And you'll see more focus on that in the coming quarters.
Operator
Thank you. And the next question is a follow-up from Lauren Lieberman with Barclays.
Lauren Lieberman -- Barclays -- Analyst
Thank you. So I just wanted to ask one more question. You've mentioned about flexibility building as you go into 2020. And I -- our math also that does include free cash. So as you think about cash returns, and I was just curious to what degree you think has gotten this far with the board in talking about shareholder return beyond the dividend increase of share repurchases. It seems like something that would be on the table as we move toward that timeframe or is that discussion still a bit further out?
Mark R. Hunter -- President and Chief Executive Officer
It's probably more of the latter, Lauren. I mean, we've been very consistent about our capital allocation framework, which is really focused on continuing to delever our business, returning cash to shareholders, and that can be dividends and/or share buybacks. And importantly, continuing to strengthen our business and use of cash to pursue other brand led growth opportunities. So that's the framework that we have used, are using and will continue to use. Clearly, the current commitment and use is around our expectation on the dividend going through the second half and beyond. And I think it's premature at this stage to speculate beyond that. But we will be applying that same framework in our ongoing discussions with the Finance Committee and our Board.
Operator
Thank you. And the next is a follow-up from Amit Sharma with BMO Capital Markets.
Amit Sharma -- BMO Capital Markets -- Analyst
Hi, thank you so much for the follow-up. Gavin, just wanted to ask you about Blue Moon in the U.S. You talked about above premium brands, but didn't hear much about Blue Moon. Obviously, you are looking to invest a little bit more. Can you talk about wherever you are in that cycle?
Mark R. Hunter -- President and Chief Executive Officer
Gav, do you want to pick that up?
Gavin D.K. Hattersley -- Chief Executive Officer and President of MillerCoors
Sure. Yes. Sorry about that. I mean Blue Moon is already the #1 craft beer in the United States. That is what people are looking for, which is a great brand. It's a great session beer. And we're going to be increasing our activation support across the business in -- well, we started toward the back end of Q1. But the real push comes in Q2 and Q3. We've got a goal of becoming the number 1 tap handle in America. And we recently secured a really good win with Red Lobster, which I think is one of the last major on-premise outlets not to carry Blue Moon. This weekend, we've got the Kentucky Derby, where we're the official sponsor and we're activating that across the country as well, Amit, and we're also going to do activation around the 50th anniversary of the moon landing. 12-pack bottles and 15-pack cans are a big opportunity for those brand. And we're going to nearly double the media spend behind it. So a lot of activity behind Blue Moon this year and looking forward to seeing the results.
Operator
And that's all the time we have right now for questions. So I would like to return the call to Mark Hunter for any closing comments.
Mark R. Hunter -- President and Chief Executive Officer
Okay. Thank you. And thanks, everybody, for their time and attention. Just a couple of headlines to finish. But obviously, I've offered some perspective of our own consensus. So hopefully, that's been useful and helpful as you think about Q2 and the full year. And on the back of the first quarter, I'm encouraged by a number of things across the Molson Coors business. In our 2 biggest business units, we saw both revenue growth and EBITDA growth. We've seen a strengthening of Miller Lite and improvement on Coors Light. I'm encouraged by the ongoing premiumization progress we're making. And there will be more to come on that front.
And our innovation initiatives have been very positively received. And you can see us ramping up now the intensity of our incubate and test initiatives. As we mentioned, we are ready for the launch of cannabis-infused nonalc beverages in Canada and our Truss JV is firing on all cylinders, ready for that go-live date. And importantly, we remain fully committed to our full year guidance metrics, albeit as we've mentioned, there's a little bit more phasing volatility than originally planned, and I think we've explained why. So that's why I've described the first quarter as a solid start to the year. And we look forward to catching up with many of you at the forthcoming events that Mark outlined. In the meantime, really appreciate your time and attention and the quality of the questions and look forward to catching up on a face-to-face basis. So thank you, everybody.
Operator
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Duration: 60 minutes
Call participants:
Mark Swartzberg -- Global Vice President of Investor Relations
Mark R. Hunter -- President and Chief Executive Officer
Tracey I. Joubert -- Chief Financial Officer
Lauren Lieberman -- Barclays -- Analyst
Bryan Spillane -- Bank of America -- Analyst
Judy Hong -- Goldman Sachs -- Analyst
Gavin D.K. Hattersley -- Chief Executive Officer and President of MillerCoors
Eric Serotta -- Evercore ISI. -- Analyst
Amit Sharma -- BMO Capital Markets -- Analyst
Andrea Faria Teixeira -- JPMorgan -- Analyst
Analyst -- -- Analyst
Frederic Landtmeters -- President and Chief Executive Officer of Molson Coors Canada
Steve Powers -- Deutsche Bank -- Analyst
Kevin Grundy -- Jefferies -- Analyst
Tristan Van Strien -- Redburn Partners -- Analyst
Simon Cox -- President and Chief Executive Officer of Molson Coors Europe
Brett Cooper -- Consumer Ad Research -- Analyst
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