Constellation Brands Reports Third Quarter Fiscal 2017 Results
(Thomson Reuters ONE) -
* Achieves reported basis EPS of $1.98 and comparable basis EPS of $1.96, an
increase of 49% and 38%, respectively
* Results reflect strong operating performance and include favorable tax rate
benefit driven by reinvestment of certain foreign earnings (APB 23)
* Generates $1.42 billion of operating cash flow and $824 million of free cash
flow
* Increases fiscal 2017 outlook; expects reported basis EPS of $7.55 - $7.65
and comparable basis EPS of $6.55 - $6.65 primarily reflecting lower tax
rate projection
* Affirms fiscal 2017 free cash flow projection of $575 - $675 million
* Completes acquisitions of High West and Charles Smith in October 2016 and
Obregon brewery in December 2016
* Completes sale of Canadian wine business in December 2016
* Repurchases 2.4 million shares of common stock for $367 million during third
quarter fiscal 2017; repurchases 5.4 million shares of common stock for $823
million during fiscal 2017 through December 31, 2016
* Declares quarterly cash dividend
+------------------------------------------------------------------------------+
|Third Quarter Fiscal 2017 |
|Financial Highlights* |
| |
|(in millions, except per share |
|data) |
| |
| Reported % Change Comparable % Change|
| |
|Net sales $1,811 10% $1,811 10% |
| |
| |
| |
|Operating income $534 19% $532 12% |
| |
| |
| |
|Operating margin 29.5% +220 bps 29.4% +40 bps |
| |
| |
| |
|Earnings before interest and taxes |
|(EBIT) NA NA $559 11% |
| |
| |
| |
|Net income attributable to CBI $406 50% $403 40% |
| |
| |
| |
|Diluted net income per share |
|attributable to CBI (EPS) $1.98 49% $1.96 38% |
+------------------------------------------------------------------------------+
*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., Jan. 5, 2017 - Constellation Brands, Inc. (NYSE: STZ and STZ.B), a
leading beverage alcohol company, reported today its third quarter fiscal 2017
results.
"It has been another dynamic quarter for our business and I am proud of our
impressive financial results and recent accomplishments," said Rob Sands,
president and chief executive officer, Constellation Brands. "We sold our
Canadian wine business as part of our strategy to focus on premium, margin
accretive, growth opportunities. We increased our functioning brewery capacity
and innovation flexibility to support our fast-growing, high-end Mexican beer
portfolio with the purchase of the Obregon brewery operation in Mexico. We
strengthened our premium wine and spirits portfolio with the acquisitions of
Charles Smith Wines and High West Distillery, and we repurchased a significant
number of our shares. Our business has never been stronger and the future
prospects across our beer, wine and spirits portfolio are compelling," said
Sands.
Net Sales Commentary
For the quarter, the company generated consolidated net sales growth of 10
percent. This reflects organic net sales growth on a constant currency basis of
seven percent and acquisition benefits.
Net sales for beer increased 16 percent. This was due to a 12 percent increase
in organic net sales driven primarily by volume growth and favorable pricing,
and the acquisition benefit from Ballast Point.
"Our beer business delivered double-digit sales and profit growth for the third
quarter, and gained significant market share of the high-end of the U.S. beer
category, as the #1 contributor to growth, with our key brands growing across
all market channels," said Sands.
Wine and spirits net sales increased five percent. This primarily reflects the
acquisition benefit from The Prisoner wine brands and favorable mix, partially
offset by lower volume due to timing, as U.S. depletion volume outpaced shipment
volume during the quarter.
"During the quarter, our wine business gained IRI volume and dollar share driven
by strong depletion growth for our Focus Brands, and became the #1 share gainer
in the U.S. wine category. We also successfully integrated Charles Smith and
High West into our portfolio. We're driving strong growth trends for these
brands, which are enabling us to capitalize on U.S. market trends that favor
high-end wine and spirits," said Sands.
Operating Income and Income Tax Commentary
For the quarter, consolidated reported and comparable basis operating income
increased 19 percent and 12 percent, respectively.
Third quarter fiscal 2017 comparable adjustments affecting operating income
totaled a net gain of $2 million as compared to a net loss of $29 million for
the same period last year.
Beer operating income increased 15 percent, primarily due to organic volume
growth and favorable pricing, partially offset by higher marketing investment.
The four percent increase in wine and spirits operating income primarily
reflects favorable mix, the benefit from The Prisoner acquisition and favorable
COGS, partially offset by higher investment in SG&A and marketing, as well as
lower volumes.
The effective tax rate for third quarter fiscal 2017 was 16 percent versus 32
percent for the prior year third quarter. During third quarter fiscal 2017, the
company determined that a portion of the earnings of certain foreign
subsidiaries would be indefinitely reinvested (APB 23). This assertion allows
the company to record income taxes on certain foreign earnings using the
applicable foreign jurisdiction tax rates, rather than the higher U.S. tax rate.
The fiscal 2017 year-to-date impact of this change was recorded in third quarter
fiscal 2017. The effective tax rate for nine months fiscal 2017 was 27 percent.
For fiscal 2017, the company expects the effective tax rate on a reported basis
to approximate 26 percent, which reflects a tax benefit from the sale of the
Canadian wine business, and the effective tax rate on a comparable basis to
approximate 27 percent.
Operating Cash Flow and Free Cash Flow Commentary
For the first nine months of fiscal 2017, operating cash flow totaled $1.42
billion, an increase of 30 percent. Free cash flow for the first nine months of
fiscal 2017 totaled $824 million, as compared to $578 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 and we continue to
target fiscal 2017 free cash flow in the range of $575 to $675 million," said
David Klein, executive vice president and chief financial officer, Constellation
Brands. "We recently achieved "Investment Grade" status, successfully completed
a new senior notes offering at an attractive interest rate, and
opportunistically repurchased a significant number of our shares. These
activities continue to build shareholder value," added Klein.
Recent Business Activities
In October 2016, the company completed the acquisitions of High West for $137
million, net of cash acquired and subject to post-closing adjustments, and
Charles Smith for $121 million.
In December 2016, the company completed the purchase of the Obregon, Mexico
brewery operation from Grupo Modelo, a subsidiary of Anheuser-Busch InBev SA/NV
for $583 million, net of cash acquired and subject to post-closing adjustments.
The company also completed the sale of its Canadian wine business to Ontario
Teachers' Pension Plan in December 2016. The transaction was valued at C$1.04
billion ($776 million) and the company received cash proceeds, net of
outstanding debt, of approximately C$775 million ($581 million), subject to
post-closing adjustments. The company received the proceeds from the
outstanding debt prior to the sale. The company expects to record a net gain in
connection with this transaction during fourth quarter fiscal 2017 and after-tax
proceeds are expected to approximate $511 million.
For nine months fiscal 2017, net sales and operating income that will no longer
be part of the wine and spirits segment results after the sale of the Canadian
wine business totaled $289 million and $45 million, respectively. This compares
to $284 million of net sales and $48 million of operating income for nine months
fiscal 2016. For fiscal 2016, net sales and operating income for the divested
business totaled $365 million and $63 million, respectively.
During the third quarter, Constellation Brands also made minority investments in
Catoctin Creek Distilling Company, a producer of premium rye whisky and gin from
organic sources, as well as Bardstown Bourbon Company, the largest new whiskey
distillery in the U.S.
Share Repurchases
In November 2016, Constellation's board of directors authorized a new share
repurchase program of up to $1 billion of the company's common stock. This new
program was in addition to the company's then-existing $1 billion share
repurchase program. During third quarter fiscal 2017, the company repurchased
2.4 million shares of common stock for $367 million. Through December 31, 2016,
the company repurchased 5.4 million shares of common stock for $823 million. As
of December 31, 2016, the company has fully utilized its prior $1 billion share
repurchase authorization and has $847 million remaining under its new share
repurchase authorization.
Quarterly Dividend
On January 4, 2017, 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 February 23, 2017, to stockholders of record as of
the close of business on February 9, 2017.
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|$7.55 - $7.65|$5.18 |$6.55 - $6.65|$5.43 |
+-----------------------------+-------------+-------+-------------+-------+
For fiscal 2017, the beer business continues to expect 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, Prisoner, High West and Charles Smith
acquisitions, net of the Canadian wine business divestiture.
Fiscal 2017 guidance also includes the following current assumptions:
* Interest expense: approximately $335 - $345 million
* Tax rate: reported basis approximately 26%, which reflects a tax benefit
from the sale of the Canadian wine business; comparable basis approximately
27%
* Weighted average diluted shares outstanding: 204.5 million
* Operating cash flow: approximately $1.4 - $1.6 billion
* Capital expenditures: approximately $825 - $925 million
* Free cash flow: approximately $575 - $675 million
Conference Call
A conference call to discuss third quarter fiscal 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, Jan. 5, 2017 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, effective tax rate, net income and
EPS are as reported under generally accepted accounting principles. Operating
income, effective tax rate, 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), a Fortune 500® company, 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 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 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 The Prisoner. The
company's premium spirits brands include SVEDKA Vodka, Casa Noble Tequila and
High West Whiskey.
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, about 40 facilities and approximately 8,000 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, expected effective tax rate, estimated
diluted EPS, expected cash flow, future payments of dividends, prospects, plans
and objectives of management, including the duration of reinvestment of earnings
of certain foreign subsidiaries, manner and timing of share repurchases, 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 Feb. 28, 2017, 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.
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, Nava brewery expansion and Obregon brewery
optimization 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 Mexicali brewery
construction, Nava brewery expansions, Obregon brewery optimization, and
glass sourcing;
* timeframe and actual costs associated with beer supply, Mexicali brewery
construction, Nava brewery expansions, Obregon brewery optimization 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, effective tax rate 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, The Prisoner Wine Company brand portfolio, High West,
the Charles Smith Wine Collection, and the Obregon brewery and the
projections associated with the sale of the Canadian wine business;
* 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,
timing and source of funds 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, domestic, international and regulatory
conditions, instability in world financial markets, or unanticipated
environmental liabilities and costs;
* changes to international trade agreements and tariffs, 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
Constellation Brands Third Quarter Fiscal 2017 Results Financials:
http://hugin.info/143788/R/2069199/777256.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: 05.01.2017 - 13:30 Uhr
Sprache: Deutsch
News-ID 516054
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contact information:
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Kategorie:
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