Constellation Brands Reports Fiscal 2017 Results and Fiscal 2018 Outlook
(Thomson Reuters ONE) -
* Achieves fiscal 2017 reported basis EPS of $7.52 and record comparable basis
EPS of $6.76
* Generates record $1.7 billion of operating cash flow and $789 million of
free cash flow for fiscal 2017
* Provides fiscal 2018 outlook; expects reported basis EPS of $7.65 - $7.95
and comparable basis EPS of $7.70 - $8.00
* Projects operating cash flow target of approximately $2.0 billion, total
capital expenditure estimate of $1.175 - $1.275 billion and free cash flow
of $725 - $825 million for fiscal 2018
* Completes expansion to 25 million hectoliters ahead of schedule at Nava
Brewery
* Declares quarterly dividend of $0.52 per share Class A and $0.47 per share
Class B common stock, an increase of approximately 30%
* Repurchases approximately 7.4 million shares of common stock for $1.1
billion during fiscal 2017 at an average price of $151.57 per share
+------------------------------------------------------------------------------+
|Fiscal 2017 Financial Highlights* |
| |
|(in millions, except per share |
|data) |
| |
| Reported % Change Comparable % Change|
| |
|Net sales $7,332 12% $7,332 12% |
| |
| |
| |
|Operating income $2,399 36% $2,195 18% |
| |
| |
| |
|Operating margin 32.7% +570 bps 29.9% +140 bps|
| |
| |
| |
|Earnings before interest and taxes |
|(EBIT) NA NA $2,224 18% |
| |
| |
| |
|Net income attributable to CBI $1,535 46% $1,381 25% |
| |
| |
| |
|Diluted net income per share |
|attributable to CBI (EPS) $7.52 45% $6.76 24% |
+------------------------------------------------------------------------------+
*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., April 6, 2017 - Constellation Brands, Inc. (NYSE: STZ and STZ.B),
a leading beverage alcohol company, reported today its fiscal 2017 results.
"Fiscal 2017 has been a year marked by operational excellence and record
financial performance," said Rob Sands, president and chief executive officer,
Constellation Brands. "We look forward to building on these results to achieve
comparable EPS growth that exceeds our target of at least 10% for fiscal 2018,
as we continue to build shareholder value," said Sands.
Fiscal 2017 Net Sales Commentary
For the year, the company generated consolidated net sales growth of 12 percent.
This reflects organic net sales growth on a constant currency basis of nine
percent.
Net sales for the beer business increased 17 percent. This was due to a 13
percent increase in organic net sales driven primarily by volume growth and
favorable pricing, and the acquisition benefit from Ballast Point.
"Our beer business continues to be a powerhouse for growth. We exceeded our
profit and margin goals for the year," said Sands. "These excellent results were
driven by solid performance for every brand in our portfolio, which resulted in
Constellation being the #1 growth contributor to the U.S. beer industry for the
year. In addition, our portfolio posted industry-leading depletion growth in the
9 to 10 percent range for the first calendar quarter of 2017 after a challenging
December for the U.S. beer industry," said Sands.
Wine and spirits net sales increased six percent. This reflects a four percent
increase in organic net sales on a constant currency basis driven primarily by
volume growth and favorable mix, and the acquisition benefit primarily from
Meiomi and Prisoner. These benefits were partially offset by the divestiture of
the Canadian wine business.
"Our wine and spirits business achieved strong earnings growth and margin
expansion driven by our fast-growing, high-margin Focus Brands, which
collectively delivered depletion growth of nine percent for the year. We
continue to gain distribution for our newly acquired High West whiskey brands,
as well as the Prisoner and Charles Smith wine brands, all of which posted
strong, double-digit depletion growth for the year," said Sands.
Fiscal 2017 Operating Income and Net Income Commentary
For the year, consolidated reported and comparable basis operating income
increased 36 percent and 18 percent, respectively.
For the year, comparable adjustments affecting operating income totaled a net
gain of $204 million as compared to a net loss of $101 million for the same
period last year.
Beer operating income increased 21 percent primarily due to organic volume
growth and favorable pricing, partially offset by higher marketing investment.
The 10 percent increase in wine and spirits operating income primarily reflects
the acquisition benefit from Meiomi and Prisoner, and organic volume growth and
favorable mix, partially offset by higher investment in SG&A and marketing.
Interest expense for the year totaled $333 million, an increase of six percent.
The increase was due to higher average borrowings, partially offset by lower
average interest rates.
The reported basis effective tax rate for fiscal 2017 was 26.5 percent compared
to 29.3 percent for fiscal 2016. The comparable basis effective tax rate for
fiscal 2017 was 26.8 percent compared to 29.6 percent for fiscal 2016. 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. For fiscal 2017, the effective tax rate on a reported basis also
reflects a tax benefit from the sale of the Canadian wine business.
Operating Cash Flow and Free Cash Flow Commentary
Operating cash flow for fiscal 2017 totaled $1.7 billion, an increase of 20
percent. Free cash flow for fiscal 2017 totaled $789 million compared to $522
million for the prior year. This primarily reflects higher operating cash flow
driven by growth in both the beer business and the wine and spirits business.
"Our strong financial results and record operating cash flow in fiscal 2017
created flexibility that enabled a dividend increase, significant share
repurchases, value-creating acquisitions and continued investments to support
the ongoing growth of our business throughout the year. Given this momentum, we
are significantly increasing our dividend for the coming year and we are
expecting to generate approximately $2.0 billion in operating cash flow for
fiscal 2018," said David Klein, executive vice president and chief financial
officer, Constellation Brands. "I am also pleased that we have completed the
next phase of our expansion project to 25 million hectoliters ahead of schedule
at our Nava brewery in Mexico," said Klein.
Canadian Wine Business Divestiture
The company completed the sale of its Canadian wine business to Ontario
Teachers' Pension Plan on December 17, 2016. The transaction was valued at
C$1.03 billion ($775 million) and the company received cash proceeds, net of
outstanding debt and direct costs to sell, of $575 million, subject to post-
closing adjustments. The company received the proceeds from the outstanding debt
prior to the sale. The company recorded a net gain on the sale of the business
of $262 million during fourth quarter fiscal 2017 and after-tax proceeds are
expected to approximate $495 million.
For fiscal 2017, through the date of divestiture, 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 $311 million and $50 million,
respectively. For fiscal 2016, net sales and operating income for the divested
business totaled $365 million and $63 million, respectively.
+------------------------------------------------------------------------------+
|Fourth Quarter Fiscal 2017 |
|Financial Highlights* |
| |
|(in millions, except per share |
|data) |
| |
| Reported % Change Comparable % Change|
| |
|Net sales $1,628 5% $1,628 5% |
| |
| |
| |
|Operating income $702 71% $495 14% |
| |
| |
| |
|Operating margin 43.1% NM 30.4% +220 bps|
| |
| |
| |
|EBIT NA NA $496 15% |
| |
| |
| |
|Net income attributable to CBI $452 86% $296 22% |
| |
| |
| |
|EPS $2.26 90% $1.48 24% |
+------------------------------------------------------------------------------+
NM=Not Meaningful
Fourth Quarter Fiscal 2017 Net Sales Commentary
For the quarter, the company generated consolidated net sales growth of five
percent. This reflects organic net sales growth on a constant currency basis of
seven percent.
Net sales for beer increased 11 percent. This was due to a 10 percent increase
in organic net sales driven primarily by volume growth and favorable pricing.
Wine and spirits net sales were flat. This reflects a four percent increase in
organic net sales and the acquisition benefit from Prisoner, Charles Smith and
High West, offset by the divestiture of the Canadian wine business.
Fourth Quarter Fiscal 2017 Operating Income and Net Income Commentary
For the quarter, consolidated reported and comparable basis operating income
increased 71 percent and 14 percent, respectively.
For the quarter, comparable adjustments affecting operating income totaled a net
gain of $207.0 million as compared to a net loss of $24 million for the same
period last year.
Beer operating income increased 21 percent primarily due to organic volume
growth, favorable pricing and lower cost of product sold, partially offset by
higher marketing spend. The six percent increase in wine and spirits operating
income primarily reflects organic volume growth and the acquisition benefit from
Prisoner, Charles Smith and High West, partially offset by higher investment in
SG&A and marketing.
Interest expense for fourth quarter fiscal 2017 totaled $77 million, a decrease
of eight percent. The decrease was due to lower average interest rates,
partially offset by higher average borrowings.
The reported basis effective tax rate for fourth quarter fiscal 2017 was 26.0
percent versus 30.0 percent for the prior year fourth quarter. The comparable
basis effective tax rate for fourth quarter fiscal 2017 was 26.9 percent. This
compares to a 29.8 percent tax rate for the prior year. The fourth quarter
fiscal 2017 effective tax rates reflect the benefit of APB 23. In addition, the
reported basis effective tax rate includes a tax benefit from the sale of the
Canadian wine business.
Quarterly Dividend and Share Repurchases
On April 5, 2017, Constellation's board of directors declared a quarterly cash
dividend of $0.52 per share of Class A Common Stock and $0.47 per share of Class
B Common Stock, payable on May 24, 2017, to stockholders of record as of the
close of business on May 10, 2017. This represents an increase of approximately
30 percent in the dividend rate per share for both the Class A and Class B
Common Stock.
During fiscal 2017, the company repurchased approximately 7.4 million shares of
common stock for $1.1 billion, including approximately 5 million shares of
common stock for $750 million during fourth quarter fiscal 2017.
Outlook
The table below sets forth management's current EPS expectations for fiscal
2018 compared to fiscal 2017 actual results, both on a reported basis and a
comparable basis.
+--------------------------+---------------------+---------------------+
| | Reported Basis | Comparable Basis |
| +-------------+-------+-------------+-------+
| | FY18 | FY17 | FY18 | FY17 |
| | Estimate |Actual | Estimate |Actual |
+--------------------------+-------------+-------+-------------+-------+
|Fiscal Year Ending Feb. 28|$7.65 - $7.95|$7.52 |$7.70 - $8.00|$6.76 |
+--------------------------+-------------+-------+-------------+-------+
For fiscal 2018, the beer business is targeting net sales growth in the range of
9 - 11 percent and operating income growth in the range of 11 - 13 percent.
For the wine and spirits business, the company expects net sales to decrease in
the range of 4 - 6 percent and operating income to be flat. These projections
include the estimated impact of the December 2016 divestiture of the Canadian
wine business and the estimated incremental benefits from High West, Charles
Smith and Prisoner acquisitions. Excluding the $311 million of net sales and $50
million of operating income from the fiscal 2017 wine and spirits segment
results related to the Canadian wine business divestiture, the company expects
net sales growth of 4 - 6 percent and operating income growth of 5 - 7 percent
for fiscal 2018.
Full-year fiscal 2018 guidance also includes the following current assumptions:
* Interest expense: approximately $340 - $350 million
* Tax rate: approximately 22 percent
* Weighted average diluted shares outstanding: approximately 201 million
* Operating cash flow: approximately $1.9 - $2.1 billion
* Capital expenditures: approximately $1.175 - $1.275 billion, including
approximately $1.0 billion targeted for Mexico beer operations expansion
activities
* Free cash flow: approximately $725 - $825 million
Conference Call
A conference call to discuss fourth quarter and full year 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, April 6, 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 Information
Financial statements, as well as supplemental schedules and 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.
In addition to our strong financial performance, the past year was marked by an
impressive list of awards and recognitions. A listing of those achievements is
attached to and is 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., Mexico, New Zealand, Italy and Canada. 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 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, 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 May 31, 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:
* beer operations expansion activities, including construction, expansion and
optimization activities at our Mexican breweries and joint venture glass
plant, 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 construction,
expansion and optimization of our Mexican breweries and joint venture glass
plant, and glass sourcing;
* timeframe and actual costs associated with beer supply; construction,
expansion and optimization activities at our Mexican breweries and joint
venture glass plant; and glass sourcing 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;
* net sales, operating income, 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 product 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 standards
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
Mike McGrew: 773-251-4934
Amy Martin: 585-678-7141
Investor Relations
Patty Yahn-Urlaub: 585-678-7483
Bob Czudak: 585-678-7170
Constellation Brands 2016 Awards and Accolades:
http://hugin.info/143788/R/2094162/791765.pdf
Earnings Release Financial Statements:
http://hugin.info/143788/R/2094162/791764.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: 06.04.2017 - 13:31 Uhr
Sprache: Deutsch
News-ID 534979
Anzahl Zeichen: 29546
contact information:
Town:
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Kategorie:
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