-
Achieves fiscal 2016 comparable
basis EPS of $5.43 and reported basis EPS of $5.18
-
Generates $522 million of free
cash flow and $1.4 billion of operating cash flow for fiscal
2016
-
Provides fiscal 2017 outlook;
expects comparable basis EPS of $6.05 - $6.35 and reported basis
EPS of $6.00 - $6.30
-
Projects free cash flow of $250
- $350 million for fiscal 2017 including operating cash flow target
of at least $1.5 billion and total capital expenditure estimate of
$1.25 - $1.35 billion
-
Agrees to purchase The Prisoner
Wine Company portfolio of super-luxury brands; transaction expected
to be accretive for fiscal 2017
-
Nava brewery and glass plant
expansions progressing as planned
-
Declares quarterly dividend of
$0.40 per share Class A and $0.36 per share Class B common stock, a
29% increase
-
Repurchases approximately
246,000 shares of common stock for $34 million during fourth
quarter 2016
-
Evaluates merits of an IPO for
a portion of the Canadian Business
Fiscal 2016 Financial
Highlights* |
|
|
|
|
|
|
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
Comparable |
|
% Change |
|
Reported |
|
% Change |
Net sales |
$6,548 |
|
9% |
|
$6,548 |
|
9% |
|
|
|
|
|
|
|
|
Operating income |
$1,866 |
|
18% |
|
$1,765 |
|
18% |
|
|
|
|
|
|
|
|
Operating margin |
28.5% |
|
+220 bps |
|
27.0% |
|
+210 bps |
|
|
|
|
|
|
|
|
Earnings before interest and taxes (EBIT) |
$1,892 |
|
18% |
|
NA |
|
NA |
|
|
|
|
|
|
|
|
Net income attributable to CBI |
$1,107 |
|
24% |
|
$1,055 |
|
26% |
|
|
|
|
|
|
|
|
Diluted net income per share attributable to CBI
(EPS) |
$5.43 |
|
22% |
|
$5.18 |
|
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, 2016 -
Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading
beverage alcohol company, reported today its fiscal 2016
results.
"It has proved to be another dynamic year of
significant accomplishments and impressive financial results for
Constellation," said Rob Sands, president and chief executive
officer, Constellation Brands. "In fiscal 2016, our beer business
delivered industry-leading market results as the #1 growth
contributor in the U.S. beer category, achieving stellar growth
across the portfolio. We also acquired Ballast Point, one of the
most awarded, major craft brewers in the industry, and solidified
our position in the high-end segment of the U.S. beer market. We
successfully completed our first 5 million hectoliter capacity
expansion at our Nava brewery, and we began investing in a new,
state-of-the art brewery in Mexicali, Mexico, in order to support
the ongoing momentum of our iconic Mexican beer brands. In our wine
and spirits business, we further strengthened the financial profile
by channeling resources and brand-building investments toward
higher-growth, higher-margin brands. This strategy, combined with
the Meiomi wine acquisition, helped to drive healthy margin
expansion and earnings growth. Overall, we are excited to build on
the success of fiscal 2016, as we are targeting impressive results
for the coming year," said Sands.
Today, the company announced an agreement to
acquire The Prisoner Wine Company brands, a fast-growing,
super-luxury portfolio of five highly rated wine brands that have
grown volumes at an annual rate of 30% over the last three years to
reach 175,000 cases in 2015. "This acquisition aligns with our
portfolio premiumization strategy, enables us to capitalize on U.S.
market trends that favor high-end wine brands and strengthens our
position in the dynamic and margin enhancing super-luxury wine
category," said Sands. The cash paid at closing for the deal is
expected to approximate $285 million. The transaction is expected
to close by the end of April 2016 and to be $0.03 to $0.05
accretive to EPS for fiscal 2017.
Constellation is also announcing today that the
company is evaluating plans to execute an IPO for a portion of the
Canadian wine business. "As part of our ongoing strategic efforts
to identify opportunities to create value for our shareholders and
strengthen the financial profile of our wine and spirits business,
we are evaluating the merits of an initial public offering for a
portion of our Canadian wine business," said Sands. "In fiscal
2016, our business in Canada delivered excellent overall financial
results, outperformed the industry and gained market share, and we
believe its full value is not being recognized. An IPO will create
better visibility to this dynamic part of the business. A final
decision regarding whether to pursue a potential initial public
offering is expected to be made later this calendar year," added
Sands.
Fiscal 2016 Net Sales
Commentary
For the year, the company generated consolidated
net sales growth of nine percent. This reflects organic net sales
growth on a constant currency basis of eight percent and
acquisition benefits from Meiomi and Ballast Point, partially
offset by unfavorable currency impact.
Organic net sales for beer increased 13 percent
primarily due to volume growth and favorable pricing. Beer
depletions grew 12 percent, reflecting strong consumer demand for
the beer portfolio.
"The exceptional marketplace results and market
share gains delivered by our beer business were driven by Modelo
Especial and Corona Extra, and complemented by the solid growth of
our remaining stable of beer brands. This performance reflects
ongoing excellent commercial execution and best-in-class brand
marketing initiatives," said Sands.
Wine and spirits organic net sales on a constant
currency basis increased three percent. This primarily reflects
volume growth and favorable mix. Fiscal 2016 net sales benefited
from the overlap of a planned U.S. distributor inventory destocking
during fiscal 2015, partially offset by the overlap of a
"make-whole" distributor payment associated with this activity.
"Our focus brands strategy is working as we are
reaping the benefits of investments in these key wine brands, which
posted depletion growth of five percent for the year, driven by Kim
Crawford, Meiomi, Ruffino, Black Box, SIMI, Clos du Bois, The
Dreaming Tree and Woodbridge by Robert Mondavi. Our spirits
portfolio generated solid growth for the year driven by the
continued success of our flavored line extensions for Paul Masson
Grande Amber Brandy and SVEDKA Vodka. The Casa Noble tequila brand
is one of the fastest-growing tequila brands in the U.S. and gained
market share for the year," said Sands.
Fiscal 2016 Operating Income and
Net Income Commentary
For the year, consolidated comparable basis
operating income increased 18 percent.
Beer operating income increased 24 percent
primarily due to organic volume growth, favorable pricing and lower
cost of product sold, partially offset by increased marketing
spend. The eight percent increase in wine and spirits operating
income primarily reflects the benefit of the Meiomi acquisition,
lower cost of product sold and organic volume growth, partially
offset by higher marketing spend.
For the year, pre-tax comparable adjustments
totaled $77 million as compared to $87 million for the prior
year.
Interest expense for the year totaled $314
million, a decrease of seven percent. The decrease was primarily
due to lower average interest rates.
The comparable basis effective tax rate for fiscal
2016 was 29.6 percent compared to 29.5 percent for fiscal 2015.
Free Cash Flow Commentary
Free cash flow for fiscal 2016 totaled $522
million compared to $362 million for the prior year. Benefits from
the growth of the beer business were partially offset by higher
capital expenditures related primarily to the expansion of the
company's Mexican operating platform.
"Our strong earnings and operating cash flow
growth continue to enhance our financial profile and create
significant financial flexibility. This has enabled us to finish
fiscal 2016 with a net debt to comparable basis EBITDA ratio below
the 4 times mark, even as we made significant capital investments
in our Mexican operations, acquired Meiomi and Ballast Point,
initiated a dividend and repurchased shares," said David Klein,
chief financial officer, Constellation Brands. "We are
significantly increasing our dividend for the coming year and
expect to continue to grow operating cash flow with a goal of $1.5
to $1.7 billion for fiscal 2017. Ongoing investments in our Mexican
operations will drive our targeted free cash flow for fiscal 2017
to be in the range of $250 to $350 million," said Klein.
Fourth Quarter 2016 Financial
Highlights* |
|
|
|
|
|
|
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
Comparable |
|
% Change |
|
Reported |
|
% Change |
Net sales |
$1,543 |
|
14% |
|
$1,543 |
|
14% |
|
|
|
|
|
|
|
|
Operating income |
$435 |
|
24% |
|
$411 |
|
16% |
|
|
|
|
|
|
|
|
Operating margin |
28.2% |
|
+240 bps |
|
26.6% |
|
+50 bps |
|
|
|
|
|
|
|
|
EBIT |
$433 |
|
24% |
|
NA |
|
NA |
|
|
|
|
|
|
|
|
Net income attributable to CBI |
$243 |
|
17% |
|
$243 |
|
13% |
|
|
|
|
|
|
|
|
EPS |
$1.19 |
|
16% |
|
$1.19 |
|
12% |
Fourth Quarter 2016 Net Sales
Commentary
For the quarter, the company generated
consolidated net sales growth of 14 percent. This reflects organic
net sales growth on a constant currency basis of 10 percent and
acquisition benefits from Meiomi and Ballast Point, partially
offset by unfavorable currency impact.
Organic net sales for beer increased 18 percent
primarily due to volume growth and favorable pricing. Wine and
spirits net sales on an organic constant currency basis increased
four percent primarily driven by volume growth.
Fourth Quarter 2016 Operating
Income and Net Income Commentary
For the quarter, consolidated comparable basis
operating income increased 24 percent.
Beer operating income increased 29 percent
primarily due to organic volume growth, favorable pricing and lower
cost of product sold, partially offset by increased selling,
general and administrative expenses driven largely by higher
marketing spend. The 14 percent increase in wine and spirits
operating income primarily reflects the benefit of the Meiomi
acquisition, organic volume growth and lower cost of product sold,
partially offset by increased marketing spend.
Interest expense for fourth quarter 2016 totaled
$84 million, an increase of four percent. The increase was due to
higher average borrowings.
The comparable basis effective tax rate for fourth
quarter 2016 was 29.8 percent. This compares to a 23.2 percent tax
rate for the prior year fourth quarter which reflected the benefit
of certain foreign tax credits.
Quarterly Dividend and Share
Repurchases
On April 5, 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 May 24, 2016, to stockholders of record as of the
close of business on May 10, 2016. This represents a 29
percent increase in the dividend rate per share for both the Class
A and Class B Common Stock.
During fourth quarter 2016, the company
repurchased approximately 246,000 shares of common stock for $34
million.
Outlook
The table below sets forth management's current
EPS expectations for fiscal 2017 compared to fiscal 2016 actual
results, both on a comparable basis and a reported basis.
|
Comparable Basis |
Reported Basis |
|
FY17
Estimate |
FY16
Actual |
FY17
Estimate |
FY16
Actual |
Fiscal Year Ending Feb. 28/29 |
$6.05 - $6.35 |
$5.43 |
|
$6.00 - $6.30 |
$5.18 |
|
For fiscal 2017, the beer business is targeting
net sales and operating income growth in the range of 14 - 17
percent that includes an estimated incremental benefit from the
Ballast Point acquisition. For the wine and spirits business, the
company expects net sales growth in the mid single-digit range and
operating income growth to be in the mid to high single-digit
range. These growth rates include estimated incremental benefits
from the Meiomi and Prisoner acquisitions.
Full-year 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
-
Free cash flow: approximately $250 - $350
million
-
Operating cash flow: approximately $1.5 - $1.7
billion
-
Capital expenditures: approximately $1.25 -
$1.35 billion
The beer segment's capital investment projects in
Mexico (outlined in the table below) remain on track from an
overall estimated cost and timing of completion perspective.
Mexico Beer Expansion Capital
Expenditures (1) |
(in millions) |
|
|
|
|
|
|
FY 2014 - 2015 |
FY 2016 |
FY 2017 |
FY 2018 - 2021 |
Total (2) |
Nava Projects (3) |
$725 |
$650 |
$675 - $725 |
$400 - $450 |
$2,500 |
|
|
|
|
|
|
Mexicali Brewery Build (4) |
|
$125 |
$425 - $475 |
$1,400 - $1,450 |
$2,000 |
|
|
|
|
|
|
Total |
$725 |
$775 |
$1,100 - $1,200 |
$1,800 - $1,900 |
$4,500 |
(1) Some
rounding for presentation purposes.
(2) Based
on implied midpoint for all ranges.
(3) Includes
10M HL to 27.5M HL brewery capacity expansion; and glass plant
warehouse, rail and furnace expansion. Expected to be
completed by early calendar 2018.
(4) Includes
10M HL capacity and land, water rights, infrastructure and other
site requirements to accommodate scalability to 20M HL
capacity. Expected to be completed by end of calendar
2020.
Conference Call
A conference call to discuss fourth quarter and
full year fiscal 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,
April 6, 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, net debt, 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
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, Pacifico, and Ballast Point, one of the most awarded craft
brewers in the U.S. Constellation is also 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 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 May 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. The Prisoner Wine Company transaction is subject to the
satisfaction of certain closing conditions and receipt of any
required regulatory approvals. The decision whether to pursue a
potential initial public offering of a portion of the company's
Canadian business (the "Canadian IPO") is subject to the
determination and discretion of the company. There can be no
assurance that either The Prisoner Wine Company transaction or the
Canadian IPO will occur or will occur on the timetables
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 Prisoner Wine Company
transaction under the expected terms;
-
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;
-
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;
-
accuracy of projections associated with the
acquisition of the Meiomi wine brand and the Ballast Point
business, and the expected acquisition of 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. 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
Earnings Release Financial
Statements
Constellation Brands Logo
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
HUG#2000934
Constellation Brands (NYSE:STZ)
Historical Stock Chart
From Mar 2024 to Apr 2024
Constellation Brands (NYSE:STZ)
Historical Stock Chart
From Apr 2023 to Apr 2024