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Molson Coors delivered 3d qtr volume results roughly in line, if not slightly better than some foresaw. Yet it missed financial expectations while taking a big hit to its reported income in form of multiple non-cash impairment charges. That includes accounting for what co calculated as a huge $3.646-bil drop in value of the goodwill of co's Americas biz unit. Big cos go thru goodwill testing on a regular basis to "check ourselves," newly minted ceo Rahul Goyal explained during MC's earnings call this wk. But timing of this impairment charge appears to align with a broader reset at the co, especially in wake of announcements about sizable commercial restructuring in US, letting Rahul start with a clean slate. US Shipments More in Line with Depletions; Reported Loss & Narrowed Guidance MC US shipments fell 5.5% in the 3d qtr, a notable improvement in part driven by shift in timing compared to yr ago. And loss of Pabst contract volume continues to drive a good chunk of that decline, co showed. So Q3 own-brand shipments came in ahead of its 4.9% depletions drop, also a 0.4-pt improvement from Q2 and way better than near 9% drop in Q1. MC volume in Circana off-premise scans declined a bit more steeply, off 6.1% for 12 wks to Oct 5 and still down 6.9% for 9 mos.A bit of pricing and stronger mix offset volume losses by a few pts, leaving net sales -3.6% in the Americas to $2.26 bil. Co's underlying income declined more steeply. For full yr, execs now expect global net sales down 3-4% (constant currency), with a 12-15% drop in income before income taxes, narrowing to low end of the prior range.Looking to Fill Portfolio Gaps with Discipline Tho tuff, MC's financial results only slightly missed expectations. And co's balance sheet remains "healthy," with a relatively low 2.28x net debt underlying EBITDA ratio, well below its 2.5x target, co showed. Rahul is committed to maintain that level at same time he seeks out "scalable deals" that may have more "meaningful" impact to MC's results than the prior "string of pearls" approach. As one of architects of co's NA deals so far, Rahul is expected to seek additional oppys there. "We recognize we have gaps, including RTD spirits, and we intend to fill them," he added. Still, any larger strategic moves will be "disciplined."Industry, Company, Stock Performance Leads to Loss of Goodwill The $3.6 bil non-cash impairment charge reflects a combo of changed industry dynamics as well as co's own performance in past yr, Rahul explained on the call. Performance of co's stock plays a big role too, involving calculations of "discount rates, risk premium, and frankly, the multiple," he reminded analysts. TAP trades at a much lower multiple of earnings per share (EPS) than it did in yrs past. It's hovering around 8x now, when its 2-yr avg is closer to 10x and 5-yr avg is 11.4x, JP Morgan's Andrea Teixeira showed. The good news: there's "limited downside to shares," she wrote. "Cheap but challenged," quipped Jefferies' Kaumil Gajrawala. Or as Rahul explained, "we think we are very undervalued in the context of our market cap right now." It sits at about $8.3 bil today, some $3.7 bil less than the $12 bil the co paid in 2016 for the other half (58%) of its US biz that it didn't already own.MC's Structural Challenge Remains Rahul agreed with other industry execs and observers that "incremental" pressure on US beer biz this yr is macroeconomic and "cyclical." But MC faces the same basic structural challenge it's worked to address for years. The co must maintain investment in core brands that make up most of its biz, bring new energy to its economy brands, premiumize its biz and build outside beer, Rahul explained this wk. Back when co reported its Q3 2020 results, then-chief Gavin Hattersley told investors that choosing between co's core and innovation was a "false choice," that it needs to do "both."Coming out of his role as strategy chief and decades inside the co, Rahul may understand this challenge as well as anyone. And he repeatedly highlights his "urgency" to make change. It's only been 6 wks since MC announced him as its ceo. He took the reins from Gavin on Thursday, Oct 1, just 10 days after the announcement, telegraphing fast, decisive incisions and acquisitions in remarks to employees and distribs. Cuts started the following Monday with news of major restructuring, folding the Americas commercial division, departure of cco MSJ and more. Elimination of 400 salaried positions came just 2 wks later. Quarterly results and huge valuation reset arrived after another 2 wks. How long after all the cuts will it be before Rahul closes his first deal designed to build MC back up?

Taking $3.9-Bil in Impairments in Soft Q3, Rahul Set the Stage, Reset MC Value Base with Aim to Build

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