-
Achieves reported basis EPS of
$1.55 and comparable basis EPS of $1.54
-
Generates $346 million of
operating cash flow and $177 million of free cash flow
-
Updates fiscal 2017 reported
basis EPS outlook to $5.98 - $6.28 and reaffirms fiscal 2017
comparable basis EPS outlook of $6.05 - $6.35
-
Reaffirms fiscal 2017 operating
cash flow target of at least $1.5 billion and free cash flow
projection of $250 - $350 million; continues to expect total
capital expenditures to be $1.25 - $1.35 billion for fiscal
2017
-
Completes next phase of
capacity expansion to 20 million hectoliters at Nava
brewery
-
Completes acquisition of The
Prisoner Wine Company brands at the end of April 2016
-
Declares quarterly cash
dividend
First Quarter 2017 Financial
Highlights* |
|
|
|
|
|
|
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
Reported |
|
% Change |
|
Comparable |
|
% Change |
Net sales |
$1,872 |
|
15% |
|
$1,872 |
|
15% |
|
|
|
|
|
|
|
|
Operating income |
$553 |
|
29% |
|
$549 |
|
21% |
|
|
|
|
|
|
|
|
Operating margin |
29.5% |
|
+330 bps |
|
29.3% |
|
+150 bps |
|
|
|
|
|
|
|
|
Earnings before interest and taxes (EBIT) |
NA |
|
NA |
|
$549 |
|
21% |
|
|
|
|
|
|
|
|
Net income attributable to CBI |
$318 |
|
33% |
|
$317 |
|
24% |
|
|
|
|
|
|
|
|
Diluted net income per share attributable to CBI
(EPS) |
$1.55 |
|
31% |
|
$1.54 |
|
22% |
*Definitions of reported and comparable, as well
as reconciliations of non-GAAP financial measures, are contained
elsewhere in this news release.
NA=Not Applicable
VICTOR, N.Y., June 30, 2016 -
Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading
beverage alcohol company, reported today its first quarter 2017
results.
"With sales and net income up double digits, our
first quarter results are setting the stage for fiscal 2017," said
Rob Sands, president and chief executive officer, Constellation
Brands. "We're off to a great start due to our ability to
effectively integrate and grow our recently acquired brands,
increase margin across the portfolio, and drive consumer demand
through our best in class marketing and sales execution efforts for
our core, higher margin, premium brands. We also completed a
significant expansion milestone at our Nava brewery, bringing our
total current capacity to 20 million hectoliters."
Net Sales Commentary
For the quarter, the company generated
consolidated net sales growth of 15 percent. This reflects organic
net sales growth on a constant currency basis of 10 percent and
acquisition benefits primarily from Ballast Point and Meiomi.
Net sales for beer increased 19 percent. This was
primarily due to a 15 percent increase in organic net sales driven
by volume growth and favorable pricing.
"We successfully kicked off our '120 Days of
Summer' selling season by posting depletion growth of almost 10%.
At retail, Constellation was the #1 share gainer in the high-end
segment of the U.S. beer market and won the Cinco de Mayo and
Memorial Day holidays as the fastest growing among the top 5
suppliers. Ballast Point continues to achieve outstanding levels of
growth, posting depletions of more than 60% in the first quarter,"
said Sands.
Wine and spirits net sales increased eight
percent, which primarily reflects the acquisition benefit of Meiomi
and organic net sales growth on an organic constant currency basis
of three percent driven by volume growth and favorable mix.
The U.S. wine business gained IRI dollar share and
achieved strong earnings growth and margin expansion driven by
high-end wine acquisitions and Constellation's award winning
collection of Focus Brands. The Canadian wine business also posted
solid results and continued to gain share across major market
segments.
"We recently closed on The Prisoner acquisition
and have successfully integrated this collection of super-luxury
wine brands into our portfolio. Our other high-end wine
acquisition, Meiomi, posted IRI dollar growth of more than 90%
during the quarter and achieved double digit depletion growth along
with several of our other Focus Brands including Kim Crawford,
Black Box, Clos du Bois, Ruffino, Mark West and Woodbridge by
Robert Mondavi," said Sands.
Operating Income
Commentary
For the quarter, consolidated reported and
comparable basis operating income increased 29 percent and 21
percent, respectively.
For first quarter 2017, pre-tax comparable
adjustments totaled a net benefit of $4 million as compared to $27
million of expense for the same period last year.
Beer operating income increased 22 percent,
primarily due to organic volume growth, favorable pricing and
benefit from the Ballast Point acquisition. The 17 percent increase
in wine and spirits operating income primarily reflects the benefit
from the Meiomi acquisition, organic volume growth and favorable
mix.
Operating Cash Flow and Free Cash
Flow Commentary
For the quarter, operating cash flow totaled $346
million, an increase of 68 percent. Free cash flow for the
first quarter 2017 totaled $177 million, as compared to $76 million
for the same period last year. This reflects the higher operating
cash flow, partially offset by higher capital expenditures.
"We are pleased with our strong operating cash
flow results during the first quarter and remain focused on
achieving our full year goal of generating $1.5 to $1.7 billion of
operating cash flow. Due to significant ongoing investments in our
beer operations, we continue to target free cash flow in the range
of $250 to $350 million for fiscal 2017," said David Klein,
executive vice president and chief financial officer, Constellation
Brands.
Quarterly Dividend
On June 29, 2016, Constellation's board of
directors declared a quarterly cash dividend of $0.40 per share of
Class A Common Stock and $0.36 per share of Class B Common Stock,
payable on August 24, 2016, to stockholders of record as of
the close of business on August 10, 2016.
Outlook
The table below sets forth management's current
EPS expectations for fiscal 2017 compared to fiscal 2016 actual
results, both on a reported basis and a comparable basis.
|
Reported Basis |
Comparable Basis |
|
FY17
Estimate |
FY16
Actual |
FY17
Estimate |
FY16
Actual |
Fiscal Year Ending Feb. 28/29 |
$5.98 -
$6.28 |
$5.18 |
|
$6.05 - $6.35 |
$5.43 |
|
For fiscal 2017, the beer business continues to
expect net sales and operating income growth of approximately 14 -
17 percent. These growth rates include an estimated incremental
benefit from the Ballast Point acquisition. For the wine and
spirits business, the company continues to expect net sales growth
in the mid single-digit range and operating income growth in the
mid to high single-digit range. These growth rates include an
estimated incremental benefit from the Meiomi and The Prisoner wine
brands acquisitions.
Fiscal 2017 guidance also includes the following
current assumptions:
·
Interest expense: approximately $325 - $335 million
· Tax rate:
approximately 29 percent
· Weighted average
diluted shares outstanding: approximately 206 million
· Operating cash flow:
approximately $1.5 - $1.7 billion
· Capital expenditures:
approximately $1.25 - $1.35 billion
· Free cash flow:
approximately $250 - $350 million
Conference Call
A conference call to discuss first quarter 2017
results and outlook will be hosted by President and Chief Executive
Officer Rob Sands and Executive Vice President and Chief Financial
Officer David Klein on Thursday, June 30, 2016 at 10:30 a.m.
(eastern). The conference call can be accessed by dialing
+973-935-8505 beginning 10 minutes prior to the start of the call.
A live listen-only webcast of the conference call, together with a
copy of this news release (including the attachments), and other
financial information that may be discussed during the call will be
available on the Internet at the company's website: www.cbrands.com
under "Investors," prior to the call.
Explanations
Reported basis ("reported") operating income, net
income and EPS are as reported under generally accepted accounting
principles. Operating income, net income and EPS on a comparable
basis ("comparable"), exclude items that affect comparability
("comparable adjustments"), as they are not reflective of core
operations of the segments. The company's measure of segment
profitability excludes comparable adjustments, which is consistent
with the measure used by management to evaluate results.
The company discusses additional non-GAAP measures
in this news release, including constant currency net sales,
organic net sales, comparable basis EBIT and free cash flow.
Supplemental Financial
Information
Tables reconciling non-GAAP measures, together
with definitions of these measures and the reasons management uses
these measures, are attached to and are part of this news
release.
About Constellation
Brands
Constellation Brands (NYSE: STZ and STZ.B) is a leading
international producer and marketer of beer, wine and spirits with
operations in the U.S., Canada, Mexico, New Zealand and Italy. In
2015, Constellation was one of the top performing stocks in the
S&P 500 Consumer Staples Index. Constellation is the number
three beer company in the U.S. with high-end, iconic imported
brands including Corona Extra, Corona Light, Modelo Especial, Negra
Modelo and Pacifico. The company's beer portfolio also includes
Ballast Point, one of the most awarded craft brewers in the
U.S. In addition, Constellation is the world's leader in
premium wine selling great brands that people love including Robert
Mondavi, Clos du Bois, Kim Crawford, Meiomi, Mark West, Franciscan
Estate, Ruffino and Jackson-Triggs. The company's premium spirits
brands include SVEDKA Vodka and Black Velvet Canadian Whisky.
Based in Victor, N.Y., the company believes that
industry leadership involves a commitment to brand-building, our
trade partners, the environment, our investors and to consumers
around the world who choose our products when celebrating big
moments or enjoying quiet ones. Founded in 1945, Constellation has
grown to become a significant player in the beverage alcohol
industry with more than 100 brands in its portfolio, sales in
approximately 100 countries, about 40 facilities and approximately
9,000 talented employees. We express our company vision: to elevate life with every glass raised. To learn more,
visit www.cbrands.com.
Forward-Looking
Statements
The statements made under the heading Outlook, and all statements
other than statements of historical fact set forth in this news
release regarding Constellation Brands' business strategy, future
operations, financial position, estimated revenues, projected
costs, estimated diluted EPS, expected cash flow, prospects, future
payments of dividends, plans and objectives of management, as well
as information concerning expected actions of third parties, are
forward-looking statements (collectively, the "Projections") that
involve risks and uncertainties that could cause actual results to
differ materially from those set forth in or implied by the
Projections.
During the current quarter, Constellation Brands
may reiterate the Projections. Prior to the start of the company's
quiet period, which will begin at the close of business Aug. 31,
2016, the public can continue to rely on the Projections as still
being Constellation Brands' current expectations on the matters
covered, unless the company publishes a notice stating otherwise.
During Constellation Brands' "quiet period," the Projections should
not be considered to constitute the company's expectations and
should be considered historical, speaking as of prior to the quiet
period only and not subject to update by the company.
The Projections are based on management's current
expectations and, unless otherwise noted, do not take into account
the impact of any future acquisition, merger or any other business
combination, divestiture, restructuring or other strategic business
realignments, financing or share repurchase that may be completed
after the date of this release. The Projections should not be
construed in any manner as a guarantee that such results will in
fact occur.
Any decision whether to pursue a potential initial
public offering for a portion of the company's Canadian wine
business (the "Canadian IPO") is subject to the determination and
discretion of the company. There can be no assurance that the
Canadian IPO will occur or will occur on any contemplated
timetable.
In addition to the risks and uncertainties of
ordinary business operations, the Projections of the company
contained in this news release are subject to a number of risks and
uncertainties, including:
-
Mexicali brewery construction and Nava brewery
expansion activities and joint venture glass plant expansion
activities take place with expected scope, on expected terms and
timetable, and with receipt of any necessary permits and regulatory
approvals;
-
accuracy of supply projections, including those
relating to Mexicali brewery construction and Nava brewery
expansion and glass sourcing;
-
timeframe and actual costs associated with beer
supply, Mexicali brewery construction and Nava brewery expansion
and glass sourcing, including joint venture glass plant expansion,
may vary from management's current expectations due to market
conditions, the company's cash and debt position, and other factors
as determined by management;
-
operating cash flow, free cash flow, and capital
expenditures to support long-term growth may vary from management's
current estimates;
-
timing and volume amount of beer shipments to
wholesalers may vary from current expectations due to actual
consumer demand;
-
accuracy of projections associated with the
acquisitions of the Meiomi wine brand, Ballast Point and The
Prisoner Wine Company brand portfolio;
-
the impact of and the ability to realize the
anticipated benefits of acquisitions, including as a result of
difficulty in integrating the businesses of the companies
involved;
-
the exact duration of the share repurchase
implementation and the amount and timing of any additional share
repurchases;
-
amount and timing of future dividends are
subject to the determination and discretion of the Board of
Directors;
-
ability to use cash flow to fund dividends could
be affected by unanticipated increases in net total debt, inability
to generate cash flow at the levels anticipated, and failure to
generate expected earnings;
-
raw material and water supply, production or
shipment difficulties could adversely affect the company's ability
to supply its customers;
-
increased competitive activities in the form of
pricing, advertising and promotions could adversely impact consumer
demand for the company's products and/or result in lower than
expected sales or higher than expected expenses;
-
general economic, geo-political and regulatory
conditions, instability in world financial markets, or
unanticipated environmental liabilities and costs;
-
changes to accounting rules and tax laws, and
other factors which could impact the company's reported financial
position, results of operations or effective tax rate;
-
changes in interest rates and the inherent
unpredictability of currency fluctuations, commodity prices and raw
material costs;
-
accuracy of the bases for forecasts relating to
joint ventures and associated costs, losses, purchase obligations
and capital investment requirements; and
-
other factors and uncertainties disclosed in the
company's filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K for the fiscal year ended
Feb. 29, 2016, which could cause actual future performance to
differ from current expectations.
CONTACTS
Media
Cheryl Gossin: 585-678-7191
Amy Martin: 585-678-7141
Investor Relations
Patty Yahn-Urlaub: 585-678-7483
Bob Czudak: 585-678-7170
STZ Q1 FY17 Financial
Results
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Constellation Brands Inc via Globenewswire
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