Constellation Brands Reports Second Quarter Fiscal 2017 Results
(Thomson Reuters ONE) -
* Achieves reported basis EPS of $1.75 and comparable basis EPS of $1.77
* Generates $1.04 billion of operating cash flow and $676 million of free cash
flow
* Increases fiscal 2017 outlook driven primarily by strong beer business
results; expects reported basis EPS of $6.25 - $6.40 and comparable basis
EPS of $6.30 - $6.45
* Affirms fiscal 2017 operating cash flow target of at least $1.5 billion and
increases free cash flow projection to $375 - $475 million; now expects
total capital expenditures to be $1.125 - $1.225 billion for fiscal 2017
* Agrees to acquire the award-winning High West Distillery, based in Utah
* Declares quarterly cash dividend
+------------------------------------------------------------------------------+
|Second Quarter 2017 Financial |
|Highlights* |
| |
|(in millions, except per share |
|data) |
| |
| Reported % Change Comparable % Change|
| |
|Net sales $2,021 17% $2,021 17% |
| |
| |
| |
|Operating income $611 27% $620 24% |
| |
| |
| |
|Operating margin 30.2% +250 bps 30.7% +180 bps|
| |
| |
| |
|Earnings before interest and taxes |
|(EBIT) NA NA $620 24% |
| |
| |
| |
|Net income attributable to CBI $359 19% $364 15% |
| |
| |
| |
|Diluted net income per share |
|attributable to CBI (EPS) $1.75 17% $1.77 13% |
+------------------------------------------------------------------------------+
*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., Oct. 5, 2016 - Constellation Brands, Inc. (NYSE: STZ and STZ.B), a
leading beverage alcohol company, reported today its second quarter 2017
results.
"The strong consumer demand for our portfolio continues to propel our business.
During the quarter, we gained share and improved margins across our business,
while continuing to make smart investments designed to fuel growth today and in
the future. I am proud of our accomplishments in the first half of the year,
which are enabling an increase in our overall guidance for the year," said Rob
Sands, president and chief executive officer, Constellation Brands.
Today, the company announced an agreement to purchase the Utah-based High West
Distillery for approximately $160 million. This acquisition includes a portfolio
of distinctive, award-winning and high-end American straight whiskeys and other
spirits brands. With High West, which has experienced double-digit volume growth
year over year for the past three years, Constellation Brands enters the dynamic
and profitable high-end craft whiskey market segment. "High West will be an
excellent addition to our spirits portfolio and we look forward to partnering
with the team there to continue to develop distinctive high-quality whiskeys
that consumers love," said Sands. The transaction is expected to close by the
end of October.
Net Sales Commentary
For the quarter, the company generated consolidated net sales growth of 17
percent. This reflects organic net sales growth on a constant currency basis of
13 percent and acquisition benefits from Ballast Point craft beer, as well as
Meiomi and The Prisoner wine brands.
Net sales for beer increased 20 percent. This was due to a 15 percent increase
in organic net sales driven primarily by volume growth and favorable pricing,
and the acquisition benefit from Ballast Point.
"During the second quarter, our beer business contributed 60% of IRI category
dollar growth for the U.S. beer industry and continues to outperform the high
end of the market, with accelerating growth trends versus the previous quarter,
and overall share gains driven by Corona Extra and Modelo Especial. Strong
consumer demand and excellent marketplace execution helped us to win the July
4th holiday. These excellent results are driving the upward revision to our EPS
target for the year. In addition, Ballast Point continues to expand distribution
and achieved strong, double-digit depletion growth for the quarter," said Sands.
Wine and spirits net sales increased 12 percent. This reflects an eight percent
increase in organic net sales on a constant currency basis driven primarily by
volume growth and favorable mix, and the acquisition benefit from Meiomi and The
Prisoner wine brands. U.S. shipment volume has outpaced depletion volume during
the first half of fiscal 2017. This is primarily timing related as we expect
U.S. shipment volume to be generally aligned with depletion volume for the year.
"During the quarter, our U.S. wine business improved margins and gained IRI
volume and dollar share driven by some of our largest and fastest-growing Focus
Brands, including Kim Crawford, Black Box, Clos du Bois, Ruffino, The Dreaming
Tree and Woodbridge by Robert Mondavi. We continue to achieve distribution gains
for our recently acquired Meiomi and The Prisoner wine brands, both of which
posted strong, double-digit depletion growth during the quarter," said Sands.
Operating Income Commentary
For the quarter, consolidated reported and comparable basis operating income
increased 27 percent and 24 percent, respectively.
For second quarter 2017, comparable adjustments affecting operating income
totaled $9 million as compared to $22 million for the same period last year.
Beer operating income increased 27 percent, primarily due to organic volume
growth, favorable pricing and the Ballast Point acquisition, partially offset by
higher marketing investment. The 17 percent increase in wine and spirits
operating income primarily reflects the benefit from organic volume growth, the
Meiomi and Prisoner acquisitions and favorable mix, partially offset by higher
investment in SG&A and marketing.
Operating Cash Flow and Free Cash Flow Commentary
For the first six months of fiscal 2017, operating cash flow totaled $1.04
billion, an increase of 30 percent. Free cash flow for the first half of fiscal
2017 totaled $676 million, as compared to $508 million for the same period last
year. This reflects higher operating cash flow, partially offset by higher
capital expenditures.
"We are pleased with our strong operating cash flow results for the first half
of the year and continue to target at least $1.5 billion for fiscal 2017," said
David Klein, executive vice president and chief financial officer, Constellation
Brands. "We are now expecting lower capital expenditures for the year due to a
shift in the timing of payments related to Nava capital investments, which will
drive free cash flow to be in the range of $375 to $475 million for fiscal
2017," added Klein.
Quarterly Dividend
On October 4, 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 November 22, 2016, to stockholders of record as of
the close of business on November 8, 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 | FY16 | FY17 | FY16 |
| | Estimate |Actual | Estimate |Actual |
+-----------------------------+-------------+-------+-------------+-------+
|Fiscal Year Ending Feb. 28/29|$6.25 - $6.40|$5.18 |$6.30 - $6.45|$5.43 |
+-----------------------------+-------------+-------+-------------+-------+
For fiscal 2017, the beer business now expects net sales growth of 16 - 17
percent and operating income growth at the high teens level. 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 $1.125 - $1.225 billion
* Free cash flow: approximately $375 - $475 million
Conference Call
A conference call to discuss second 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 Wednesday, Oct. 5, 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. Constellation is a Fortune 500(®) company and one
of the top performing stocks in the S&P 500 Consumer Staples Index.
Constellation is the No. 3 beer company in the U.S. with high-end, iconic
imported brands, such as Corona Extra, Corona Light, Modelo Especial, Modelo
Negra 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 Casa Noble Tequila.
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 Nov. 30, 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. The
proposed High West Distillery transaction is subject to regulatory approvals and
certain closing conditions. There can be no assurance the High West Distillery
transaction will occur or will occur on the timetable contemplated hereby.
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 announced High West Distillery transaction on the expected
terms, timetable and costs, and with receipt of any necessary regulatory
approvals;
* Mexicali brewery construction, Nava brewery expansion activities and joint
venture glass plant expansion activities take place with expected scope, on
expected terms and timetables, and with receipt of any necessary permits and
regulatory approvals;
* accuracy of supply projections, including those relating to Mexicali brewery
construction, Nava brewery expansions and glass sourcing;
* timeframe and actual costs associated with beer supply, Mexicali brewery
construction, Nava brewery expansions and glass sourcing, including joint
venture glass plant expansions, 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 proposed High West Distillery
transaction and 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 and acquisitions 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 Second Quarter Fiscal 2017 Results - Financial Tables:
http://hugin.info/143788/R/2046889/765047.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq 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
Unternehmensinformation / Kurzprofil:
Datum: 05.10.2016 - 13:35 Uhr
Sprache: Deutsch
News-ID 498959
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