Constellation Brands Reports First Quarter Fiscal 2016 Results
(Thomson Reuters ONE) -
* Achieves comparable basis EPS of $1.26 and reported basis EPS of $1.18
* Generates $76 million of free cash flow and $206 million of operating cash
flow
* Increases fiscal 2016 outlook driven primarily by strong beer business
performance; expects comparable basis EPS of $4.80 - $5.00 and reported
basis EPS of $4.60 - $4.80
* Reaffirms free cash flow projection of $100 - $200 million for fiscal 2016
including operating cash flow target of at least $1.15 billion and total
capital expenditure estimate of $1.05 - $1.15 billion
* Agrees to purchase the Meiomi wine brand for approximately $315 million;
transaction expected to be accretive for fiscal 2016
* Declares quarterly cash dividend
+------------------------------------------------------------------------------+
|First Quarter 2016 Financial |
|Highlights* |
| |
|(in millions, except per share |
|data) |
| |
| Comparable % Change Reported % Change|
| |
|Net sales $1,631 7% $1,631 7% |
| |
| |
| |
|Operating income $454 12% $427 9% |
| |
| |
| |
|Operating margin 27.8% +130 bps 26.2% +50 bps |
| |
| |
| |
|Earnings before interest and taxes |
|(EBIT) $455 12% NA NA |
| |
| |
| |
|Net income attributable to CBI $256 19% $239 15% |
| |
| |
| |
|Diluted net income per share |
|attributable to CBI (EPS) $1.26 18% $1.18 15% |
+------------------------------------------------------------------------------+
*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., JULY 1, 2015 - Constellation Brands, Inc. (NYSE: STZ and STZ.B), a
leading beverage alcohol company, reported today its first quarter 2016 results.
"Our excellent first quarter results reflect a great start to our new fiscal
year. We delivered exceptional performance for our beer business, which is the
primary driver of the upward revision to our EPS outlook for the year, and our
brewery expansion continues to proceed as planned. Within our wine and spirits
business, we experienced improving market trends for our U.S. wine business,
posted better than expected results in Canada and delivered excellent dollar
sales and depletion volume growth for our portfolio of spirits brands," said Rob
Sands, president and chief executive officer, Constellation Brands.
"Today, we are also announcing that we have agreed to purchase the Meiomi wine
brand, which is a high-growth, high-margin, scale brand that can be effectively
integrated into our powerful portfolio of wine brands," said Sands. Launched in
2006, Meiomi has grown from a 60,000 case brand in 2010 to almost 600,000 cases
in 2014 and is experiencing IRI dollar sales growth of more than 50 percent over
the last 52 weeks. Meiomi's pinot noir is also among the fastest-growing, major
pinot noir brands in the latest 12-week period. "This strong record of growth
demonstrates how well the brand resonates with consumers. We are excited about
Meiomi's prospects going forward under our efficient operating structure and
strong route-to-market," added Sands. The purchase price for the brand is
approximately $315 million, subject to post-closing adjustments. The
transaction, which is subject to regulatory approval, is expected to close
around the beginning of August and to be $0.03 - $0.04 accretive to EPS for
fiscal 2016.
Net Sales Commentary
For the quarter, the company generated consolidated net sales growth on a
constant currency basis of eight percent.
Beer net sales increased 11 percent, primarily due to volume growth. Beer
depletions grew 10 percent, reflecting strong consumer demand for the beer
portfolio.
"During the first quarter, our beer business kicked off the '120 Days of Summer'
selling season by posting double-digit sales and depletion growth, with strong
execution across our iconic portfolio led by our two largest brands, Corona
Extra, which includes the new can launch, and Modelo Especial," said Sands. "As
a result of this strong performance, we now expect sales growth of approximately
10 percent for our beer business in fiscal 2016."
Wine and spirits net sales on a constant currency basis increased four percent.
This primarily reflects higher shipment volume and favorable mix. Net sales
benefited from the overlap of a planned U.S. distributor inventory destocking,
net of a related distributor destocking payment, which occurred during first
quarter 2015.
"Our U.S. wine and spirits depletions grew 3.5% and gained traction during the
quarter led by Kim Crawford, Ruffino, Black Box, Simi, Estancia, Clos du Bois,
The Dreaming Tree and Woodbridge by Robert Mondavi," said Sands. "The strong
sales and depletion growth for the spirits business during the quarter was
driven by Casa Noble Tequila, Paul Masson Grande Amber Brandy and SVEDKA Vodka."
Operating Income and Net Income Commentary
For the quarter, consolidated comparable basis operating income increased 12
percent.
Beer operating income increased 17 percent, primarily due to higher volume and
pricing for the beer portfolio, partially offset by an increase in marketing
spend. The one percent increase in wine and spirits operating income primarily
reflects favorable mix and lower cost of product sold.
For first quarter 2016, pre-tax comparable adjustments totaled $27 million. This
included $13 million of costs associated with the company's recently initiated
cost effectiveness plan, the goal of which is to streamline and simplify
processes, and shift resources and investment to long-term, profitable growth
opportunities across the business. The company expects total costs associated
with this plan for fiscal 2016 to approximate $20 million.
Interest expense for first quarter 2016 totaled $78 million, a decrease of 10
percent. The decrease was primarily due to lower average interest rates.
The comparable basis effective tax rate for first quarter 2016 was 31.8 percent
compared to a 32.5 percent tax rate for the prior year first quarter.
Free Cash Flow Commentary
Free cash flow for first quarter 2016 totaled $76 million as compared to $101
million for the same period last year.
"For fiscal 2016, we continue to expect to generate operating cash flow of $1.15
to $1.35 billion and free cash flow of $100 to $200 million as our brewery
capital investments progress as planned," said David Klein, executive vice
president and chief financial officer, Constellation Brands. "Despite our
significant level of capital expenditures in fiscal 2016, the initiation of a
dividend, and purchase of the Meiomi wine brand, our strong projected earnings
and operating cash flow growth position us to cross below the 4X net debt to
comparable basis EBITDA mark during fiscal 2016," added Klein.
Quarterly Dividend
On June 30, 2015, Constellation's board of directors declared a quarterly cash
dividend of $0.31 per share of Class A Common Stock and $0.28 per share of Class
B Common Stock, payable on August 25, 2015 to stockholders of record as of the
close of business on August 11, 2015.
Outlook
The table below sets forth management's current EPS expectations for fiscal
2016 compared to fiscal 2015 actual results, both on a comparable basis and a
reported basis.
+-----------------------------+---------------------+---------------------+
| | Comparable Basis | Reported Basis |
| +-------------+-------+-------------+ |
| | FY16 | FY15 | FY16 | FY15 |
| | Estimate |Actual | Estimate |Actual |
+-----------------------------+-------------+-------+-------------+-------+
|Fiscal Year Ending Feb. 28/29|$4.80 - $5.00|$4.44 |$4.60 - $4.80|$4.17 |
+-----------------------------+-------------+-------+-------------+-------+
For fiscal 2016, the beer business is now targeting mid to high single-digit
volume growth, net sales growth of approximately 10 percent, and 13 - 15 percent
operating income growth. For the wine and spirits business, the company
continues to expect net sales and operating income growth to be in the low to
mid single- digit range before any benefit from the Meiomi acquisition.
Fiscal 2016 guidance also includes the following current assumptions, including
the expected acquisition of the Meiomi wine brand:
* Interest expense: approximately $325 - $335 million
* Tax rate: approximately 30.5 percent
* Weighted average diluted shares outstanding: approximately 204 million
* Free cash flow: approximately $100 - $200 million
* Operating cash flow: approximately $1.15 - $1.35 billion
* Capital expenditures: approximately $1.05 - $1.15 billion, including $950
million - $1.05 billion for the beer business
Conference Call
A conference call to discuss first quarter 2016 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 Wednesday, July 1, 2015 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"). 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, comparable basis EBIT, comparable basis
effective tax rate 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 2014, 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. Constellation is also the world's leader in premium wine selling great
brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford,
Rex Goliath, 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 7,600 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, 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 August 31, 2015, 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.
There can be no assurance that the transaction to acquire the Meiomi wine brand
will occur or will occur on the timetable projected by Constellation Brands.
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:
* completion of the acquisition of the Meiomi wine brand under the expected
terms and the accuracy of projections associated with the Meiomi wine brand;
* total costs associated with the cost effectiveness plan may vary from
management's expectations due to actual costs varying from current
management expectations;
* 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 regulatory approvals;
* accuracy of supply projections, including those relating to brewery
expansion and glass sourcing;
* timeframe and actual costs associated with beer supply, 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;
* free cash flow, operating 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;
* 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. 28, 2015, 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
8K Earnings Release Financial Statements 6.30.15 FINAL V2:
http://hugin.info/143788/R/1933238/695775.pdf
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: Constellation Brands Inc via GlobeNewswire
[HUG#1933238]
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Datum: 01.07.2015 - 13:31 Uhr
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News-ID 404271
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