(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Not Applicable | ||
(Former name or former address, if changed since last report.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
Emerging growth company | ||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Item 2.02 | Results of Operations and Financial Condition. |
Item 7.01 | Regulation FD Disclosure. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description | ||||
99.1 | |||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | ||||
Date: | October 5, 2023 | CONSTELLATION BRANDS, INC. | |||||||||
By: | /s/ Garth Hankinson | ||||||||||
Garth Hankinson | |||||||||||
Executive Vice President and Chief Financial Officer |
Net Sales | Operating Income (Loss) | Net Income (Loss) Attributable to CBI | Adjusted Earnings Before Interest & Taxes | Diluted Net Income (Loss) Per Share Attributable to CBI (EPS) | EPS Excluding Canopy EIE | |||||||||||||||
Second Quarter Fiscal Year 2024 Financial Highlights (1) | In millions, except per share data | ||||||||||||||||||||
Reported | $2,837 | $979 | $690 | $959 | $3.74 | NA | ||||||||||||||
% Change | 7% | 20% | NM | NM | NM | NA | ||||||||||||||
Comparable | $2,837 | $968 | $682 | $955 | $3.70 | $3.80 | ||||||||||||||
% Change | 7% | 10% | 16% | 12% | 17% | 14% |
![]() |
![]() | "Our Beer Business this quarter delivered double-digit net sales and operating income growth. Modelo Especial continued to outperform the market as the top share gainer and solidified its position as the #1 Beer in U.S. tracked channels. Meanwhile, our higher-end wine brands, Meiomi and Kim Crawford outperformed their corresponding segment in tracked channels and we continue to expect solid growth acceleration and margin improvement from our overall Wine and Spirits Business in the second half." | ![]() | "The record top-line and operating income performance of our Beer Business has enabled us to keep delivering on our capital allocation priorities, as we continue to move closer to our net leverage ratio target while returning cash to shareholders in-line with our dividend payout ratio target and advancing our modular brewery capacity expansions. We continue to make good progress against our operating and financial plans for Fiscal 24, and our interest expense management actions have enabled us to raise our earnings per share outlook." | |||||||||||||||||
Bill Newlands | Garth Hankinson | |||||||||||||||||||
President and Chief Executive Officer | Chief Financial Officer |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 1 |
![]() | beer | ||||||||||||||||
Shipments | Depletions | Net Sales | Operating Income (Loss) | ||||||||||||||
Three Months Ended | In millions; branded product, 24-pack, 12-ounce case equivalents | |||||||||||||||||
August 31, 2023 | 123.0 | $2,392.7 | $953.9 | ||||||||||||||
August 31, 2022 | 113.2 | $2,139.3 | $865.6 | ||||||||||||||
% Change | 8.7% | 7.9% | 12% | 10% |
![]() | wine and spirits | ||||||||||||||||||||||
Shipments | Organic Shipments (1) (2) | Depletions (1) (2) | Net Sales (3) | Organic Net Sales (1) | Operating Income (Loss) (3) | ||||||||||||||||||
Three Months Ended | In millions; branded product, 9-liter case equivalents | |||||||||||||||||||||||
August 31, 2023 | 6.1 | 6.1 | $444.1 | $444.1 | $80.7 | ||||||||||||||||||
August 31, 2022 | 7.4 | 7.2 | $515.8 | $501.4 | $99.4 | ||||||||||||||||||
% Change | (17.6%) | (15.3%) | (7.8%) | (14%) | (11%) | (19%) |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 2 |
outlook | |||||||||||||||||||||||
The table sets forth management's current EPS expectations for fiscal 2024 compared to fiscal 2023 actual results, on a reported basis, a comparable basis, and a comparable basis excluding Canopy equity earnings (losses) and related activities. | |||||||||||||||||||||||
Reported | Comparable | ||||||||||||||||||||||
FY24 Estimate | FY23 Actual | FY24 Estimate (Excl. Canopy EIE) | FY23 Actual | FY23 Actual (Excl. Canopy EIE) | |||||||||||||||||||
Fiscal Year Ending February 28/29 | $9.60 - $9.80 | $(0.11) | $12.00 - $12.20 | $10.65 | $11.40 | ||||||||||||||||||
Fiscal 2024 Guidance Assumptions: | |||||||||||||||||||||||
•Beer: net sales growth of 8 - 9%; operating income growth of 6 - 7% •Wine and Spirits: organic net sales decline of 0.5% to growth of 0.5%; operating income growth of 2 - 4%, excluding $38.5 million of net sales and $19.5 million of gross profit less marketing that are no longer part of results •Corporate expense: $270 million •Interest expense: $460 million | •Tax rate: reported approximately 20%; comparable excluding Canopy equity earnings impact approximately 19% •Weighted average diluted shares outstanding: approximately 184 million •Operating cash flow: $2.4 - $2.6 billion •Capital expenditures: $1.2 - $1.3 billion, including approximately $1 billion targeted for Mexico beer operations activities •Free cash flow: $1.2 - $1.3 billion | ||||||||||||||||||||||
The reported EPS guidance includes the fiscal 2024 year to date Canopy impairment and equity earnings and related activities impact. Additionally, the company continues to evaluate the future potential equity earnings impact from the Canopy equity method investment and related activities and, as such, these items have been excluded from the guidance assumptions noted above. |
Constellation’s share of Canopy’s equity earnings (losses) and related activities were as follows: | |||||||||||
Reported | Comparable | ||||||||||
Three Months Ended I In millions | |||||||||||
August 31, 2023 | $(12.0) | $(19.5) | |||||||||
August 31, 2022 | $(650.7) | $(34.8) |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 3 |
CONSTELLATION BRANDS TO HOST INVESTOR DAY | ||||||||
Constellation Brands' Investor Day event is scheduled to begin at 2:00 p.m. EDT and is expected to provide investors, analysts, and other stakeholders with a comprehensive overview of the company's continued value creation opportunities supported by its strategic priorities. During the event, members of Constellation Brands' executive and broader leadership teams will present insights into the company's leading performance and plans for ongoing success, including through: the continued growth of the company’s iconic higher-end beer, wine, and spirits brands portfolio; its efforts to capitalize on emerging beverage trends through its consumer-led approach to innovation; the company’s ambitions to consistently achieve strong revenue growth and profitability, as well as to deliver value to shareholders by deploying capital in-line with disciplined and balanced priorities; and its latest achievements and initiatives to serve as a good steward of the environment, enhance social equity in underserved communities, promote responsible beverage alcohol consumption, and to continue implementing value-additive governance enhancements. | ![]() | |||||||
In-person attendance for financial analysts and institutional investors will be by invitation only due to limited capacity, but presentation materials and a live video webcast of the event, as well as a replay of the webcast following the event, will be made available through the company’s investor relations website at ir.cbrands.com under the News & Events section. When the presentation begins, financial information discussed in the presentation, and a reconciliation of reported GAAP financial measures with comparable and other non-GAAP financial measures, will also be available on the company’s investor relations website under the Financial History section. For anyone unable to participate in the webcast, a replay will be available on the company’s investor relations website through the close of business on May 2, 2024. |
ABOUT CONSTELLATION BRANDS Constellation Brands (NYSE: STZ) is a leading international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy. Our mission is to build brands that people love because we believe elevating human connections is Worth Reaching For. It’s worth our dedication, hard work, and calculated risks to anticipate market trends and deliver more for our consumers, shareholders, employees, and industry. This dedication is what has driven us to become one of the fastest-growing, large CPG companies in the U.S. at retail, and it drives our pursuit to deliver what’s next. Every day, people reach for our high-end, iconic imported beer brands such as those in the Corona brand family like the flagship Corona Extra, Modelo Especial and the flavorful lineup of Modelo Cheladas, Pacifico, and Victoria; our fine wine and craft spirits brands, including The Prisoner Wine Company, Robert Mondavi Winery, Casa Noble Tequila, and High West Whiskey; and our premium wine brands such as Kim Crawford and Meiomi. As an agriculture-based company, we have a long history of operating sustainably and responsibly. Our ESG strategy is embedded into our business and our work focuses on serving as good stewards of the environment, enhancing social equity within our industry and communities, and promoting responsible beverage alcohol consumption. These commitments ground our aspirations beyond driving the bottom line as we work to create a future that is truly Worth Reaching For. To learn more, visit www.cbrands.com and follow us on X, Instagram, and LinkedIn. |
MEDIA CONTACTS | INVESTOR RELATIONS CONTACTS | ||||||||||||||||
Amy Martin | 585-678-7141 | amy.martin@cbrands.com | Joseph Suarez | 773-551-4397 | joseph.suarez@cbrands.com | ||||||||||||
Snehal Shah | 847-385-4940 | snehal.shah@cbrands.com | |||||||||||||||
David Paccapaniccia | 585-282-7227 | david.paccapaniccia@cbrands.com | |||||||||||||||
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 4 |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 5 |
August 31, 2023 | February 28, 2023 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 83.3 | $ | 133.5 | |||||||
Accounts receivable | 933.2 | 901.6 | |||||||||
Inventories | 1,814.0 | 1,898.7 | |||||||||
Prepaid expenses and other | 603.8 | 562.3 | |||||||||
Total current assets | 3,434.3 | 3,496.1 | |||||||||
Property, plant, and equipment | 7,580.3 | 6,865.2 | |||||||||
Goodwill | 7,985.6 | 7,925.4 | |||||||||
Intangible assets | 2,734.5 | 2,728.1 | |||||||||
Equity method investments | 277.1 | 663.3 | |||||||||
Deferred income taxes | 2,147.6 | 2,193.3 | |||||||||
Other assets | 770.6 | 790.9 | |||||||||
Total assets | $ | 24,930.0 | $ | 24,662.3 | |||||||
LIABILITIES AND STOCKHOLDER’S EQUITY | |||||||||||
Current liabilities: | |||||||||||
Short-term borrowings | $ | 467.4 | $ | 1,165.3 | |||||||
Current maturities of long-term debt | 558.3 | 9.5 | |||||||||
Accounts payable | 978.8 | 941.5 | |||||||||
Other accrued expenses and liabilities | 853.0 | 852.0 | |||||||||
Total current liabilities | 2,857.5 | 2,968.3 | |||||||||
Long-term debt, less current maturities | 10,680.8 | 11,286.5 | |||||||||
Deferred income taxes and other liabilities | 1,667.7 | 1,673.6 | |||||||||
Total liabilities | 15,206.0 | 15,928.4 | |||||||||
CBI stockholders’ equity | 9,390.8 | 8,413.6 | |||||||||
Noncontrolling interests | 333.2 | 320.3 | |||||||||
Total stockholders’ equity | 9,724.0 | 8,733.9 | |||||||||
Total liabilities and stockholders’ equity | $ | 24,930.0 | $ | 24,662.3 |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 6 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
Sales | $ | 3,053.0 | $ | 2,864.3 | $ | 5,752.5 | $ | 5,405.0 | |||||||||||||||
Excise taxes | (216.2) | (209.2) | (400.8) | (386.7) | |||||||||||||||||||
Net sales | 2,836.8 | 2,655.1 | 5,351.7 | 5,018.3 | |||||||||||||||||||
Cost of product sold | (1,386.9) | (1,329.2) | (2,644.0) | (2,437.4) | |||||||||||||||||||
Gross profit | 1,449.9 | 1,325.9 | 2,707.7 | 2,580.9 | |||||||||||||||||||
Selling, general, and administrative expenses | (471.2) | (512.8) | (964.3) | (951.4) | |||||||||||||||||||
Operating income (loss) | 978.7 | 813.1 | 1,743.4 | 1,629.5 | |||||||||||||||||||
Income (loss) from unconsolidated investments | (20.2) | (1,719.1) | (435.6) | (1,907.0) | |||||||||||||||||||
Interest expense | (110.6) | (94.3) | (228.8) | (182.8) | |||||||||||||||||||
Loss on extinguishment of debt | — | (8.0) | (0.7) | (23.3) | |||||||||||||||||||
Income (loss) before income taxes | 847.9 | (1,008.3) | 1,078.3 | (483.6) | |||||||||||||||||||
(Provision for) benefit from income taxes | (147.2) | (132.4) | (238.4) | (257.8) | |||||||||||||||||||
Net income (loss) | 700.7 | (1,140.7) | 839.9 | (741.4) | |||||||||||||||||||
Net (income) loss attributable to noncontrolling interests | (10.7) | (10.5) | (14.0) | (20.3) | |||||||||||||||||||
Net income (loss) attributable to CBI | $ | 690.0 | $ | (1,151.2) | $ | 825.9 | $ | (761.7) | |||||||||||||||
Net income (loss) per common share attributable to CBI: | |||||||||||||||||||||||
Basic – Class A Common Stock | $ | 3.76 | $ | (6.30) | $ | 4.50 | $ | (4.13) | |||||||||||||||
Basic – Class B Convertible Common Stock | NA | $ | (5.73) | NA | $ | (3.77) | |||||||||||||||||
Diluted – Class A Common Stock | $ | 3.74 | $ | (6.30) | $ | 4.49 | $ | (4.13) | |||||||||||||||
Diluted – Class B Convertible Common Stock | NA | $ | (5.73) | NA | $ | (3.77) | |||||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic – Class A Common Stock | 183.498 | 161.730 | 183.384 | 163.532 | |||||||||||||||||||
Basic – Class B Convertible Common Stock | NA | 23.206 | NA | 23.206 | |||||||||||||||||||
Diluted – Class A Common Stock | 184.277 | 161.730 | 184.074 | 163.532 | |||||||||||||||||||
Diluted – Class B Convertible Common Stock | NA | 23.206 | NA | 23.206 | |||||||||||||||||||
Cash dividends declared per common share: | |||||||||||||||||||||||
Class A Common Stock | $ | 0.89 | $ | 0.80 | $ | 1.78 | $ | 1.60 | |||||||||||||||
Class B Convertible Common Stock | NA | $ | 0.72 | NA | $ | 1.44 |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 7 |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) | |||||||||||
Six Months Ended | |||||||||||
August 31, 2023 | August 31, 2022 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ | 839.9 | $ | (741.4) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
Unrealized net (gain) loss on securities measured at fair value | 74.4 | 31.7 | |||||||||
Deferred tax provision (benefit) | 26.3 | 208.6 | |||||||||
Depreciation | 213.7 | 183.5 | |||||||||
Stock-based compensation | 32.5 | 37.8 | |||||||||
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings | 226.5 | 815.6 | |||||||||
Noncash lease expense | 43.3 | 44.4 | |||||||||
Amortization of debt issuance costs and loss on extinguishment of debt | 6.1 | 28.2 | |||||||||
Impairment of equity method investments | 135.8 | 1,060.3 | |||||||||
Gain (loss) on settlement of pre-issuance hedge contracts | 1.2 | 20.7 | |||||||||
Change in operating assets and liabilities, net of effects from purchase and sale of business: | |||||||||||
Accounts receivable | (30.0) | (84.8) | |||||||||
Inventories | 81.3 | (86.3) | |||||||||
Prepaid expenses and other current assets | (47.9) | 165.6 | |||||||||
Accounts payable | (56.4) | 188.9 | |||||||||
Deferred revenue | 17.6 | 9.5 | |||||||||
Other accrued expenses and liabilities | (33.9) | (287.7) | |||||||||
Other | 91.6 | 59.7 | |||||||||
Total adjustments | 782.1 | 2,395.7 | |||||||||
Net cash provided by (used in) operating activities | 1,622.0 | 1,654.3 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchase of property, plant, and equipment | (582.0) | (435.0) | |||||||||
Purchase of business, net of cash acquired | (7.5) | (37.2) | |||||||||
Investments in equity method investees and securities | (27.6) | (21.0) | |||||||||
Proceeds from sale of assets | 14.8 | 6.6 | |||||||||
Proceeds from sale of business | 5.4 | — | |||||||||
Other investing activities | (4.0) | 0.6 | |||||||||
Net cash provided by (used in) investing activities | (600.9) | (486.0) | |||||||||
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 8 |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) | |||||||||||
Six Months Ended | |||||||||||
August 31, 2023 | August 31, 2022 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Proceeds from issuance of long-term debt | 744.8 | 1,846.8 | |||||||||
Principal payments of long-term debt | (805.1) | (1,654.7) | |||||||||
Net proceeds from (repayments of) short-term borrowings | (697.9) | 340.9 | |||||||||
Dividends paid | (327.6) | (295.3) | |||||||||
Purchases of treasury stock | (35.0) | (1,400.5) | |||||||||
Proceeds from shares issued under equity compensation plans | 86.2 | 30.5 | |||||||||
Payments of minimum tax withholdings on stock-based payment awards | (11.2) | (10.5) | |||||||||
Payments of debt issuance, debt extinguishment, and other financing costs | (5.3) | (33.3) | |||||||||
Distributions to noncontrolling interests | (21.3) | (22.5) | |||||||||
Net cash provided by (used in) financing activities | (1,072.4) | (1,198.6) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 1.1 | (4.0) | |||||||||
Net increase (decrease) in cash and cash equivalents | (50.2) | (34.3) | |||||||||
Cash and cash equivalents, beginning of period | 133.5 | 199.4 | |||||||||
Cash and cash equivalents, end of period | $ | 83.3 | $ | 165.1 |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 9 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | Percent Change | August 31, 2023 | August 31, 2022 | Percent Change | ||||||||||||||||||||||||||||||
Consolidated net sales | $ | 2,836.8 | $ | 2,655.1 | 7 | % | $ | 5,351.7 | $ | 5,018.3 | 7 | % | |||||||||||||||||||||||
Wine Divestiture (1) | — | (14.4) | — | (34.8) | |||||||||||||||||||||||||||||||
Consolidated organic net sales | $ | 2,836.8 | $ | 2,640.7 | 7 | % | $ | 5,351.7 | $ | 4,983.5 | 7 | % | |||||||||||||||||||||||
Beer net sales | $ | 2,392.7 | $ | 2,139.3 | 12 | % | $ | 4,491.3 | $ | 4,037.5 | 11 | % | |||||||||||||||||||||||
Wine and Spirits net sales (2) | $ | 444.1 | $ | 515.8 | (14 | %) | $ | 860.4 | $ | 980.8 | (12 | %) | |||||||||||||||||||||||
Wine Divestiture (1) | — | (14.4) | — | (34.8) | |||||||||||||||||||||||||||||||
Wine and Spirits organic net sales | $ | 444.1 | $ | 501.4 | (11 | %) | $ | 860.4 | $ | 946.0 | (9 | %) |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | Percent Change | August 31, 2023 | August 31, 2022 | Percent Change | ||||||||||||||||||||||||||||||
U.S. Wholesale (i) | $ | 370.3 | $ | 422.0 | (12 | %) | $ | 714.5 | $ | 797.3 | (10 | %) | |||||||||||||||||||||||
International (i) | 45.9 | 56.3 | (18 | %) | 90.3 | 112.3 | (20 | %) | |||||||||||||||||||||||||||
DTC | 11.5 | 12.4 | (7 | %) | 28.7 | 27.6 | 4 | % | |||||||||||||||||||||||||||
Other | 16.4 | 25.1 | (35 | %) | 26.9 | 43.6 | (38 | %) | |||||||||||||||||||||||||||
Wine and Spirits net sales | $ | 444.1 | $ | 515.8 | (14 | %) | $ | 860.4 | $ | 980.8 | (12 | %) | |||||||||||||||||||||||
(i)Includes the impacts of the Wine Divestiture. |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 10 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | Percent Change | August 31, 2023 | August 31, 2022 | Percent Change | ||||||||||||||||||||||||||||||
Beer | |||||||||||||||||||||||||||||||||||
(branded product, 24-pack, 12-ounce case equivalents) | |||||||||||||||||||||||||||||||||||
Shipments | 123.0 | 113.2 | 8.7 | % | 230.0 | 212.7 | 8.1 | % | |||||||||||||||||||||||||||
Depletions (1) | 7.9 | % | 6.8 | % | |||||||||||||||||||||||||||||||
Wine and Spirits | |||||||||||||||||||||||||||||||||||
(branded product, 9-liter case equivalents) | |||||||||||||||||||||||||||||||||||
Shipments | 6.1 | 7.4 | (17.6 | %) | 12.0 | 14.2 | (15.5 | %) | |||||||||||||||||||||||||||
Organic shipments (2) | 6.1 | 7.2 | (15.3 | %) | 12.0 | 13.7 | (12.4 | %) | |||||||||||||||||||||||||||
U.S. Domestic shipments | 5.4 | 6.4 | (15.6 | %) | 10.6 | 12.2 | (13.1 | %) | |||||||||||||||||||||||||||
U.S. Domestic organic shipments (2) | 5.4 | 6.3 | (14.3 | %) | 10.6 | 11.9 | (10.9 | %) | |||||||||||||||||||||||||||
Depletions (1) (2) | (7.8 | %) | (7.0 | %) | |||||||||||||||||||||||||||||||
(1) | Depletions represent U.S. domestic distributor shipments of our respective branded products to retail customers, based on third-party data. | ||||||||||||||||||||||
(2) | Includes adjustments to remove volumes associated with the Wine Divestiture for the periods June 1, 2022, through August 31, 2022, and March 1, 2022, through August 31, 2022, included in the three months and six months ended August 31, 2022, respectively. | ||||||||||||||||||||||
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 11 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | Percent Change | August 31, 2023 | August 31, 2022 | Percent Change | ||||||||||||||||||||||||||||||
Consolidated | |||||||||||||||||||||||||||||||||||
Net sales | $ | 2,836.8 | $ | 2,655.1 | 7 | % | $ | 5,351.7 | $ | 5,018.3 | 7 | % | |||||||||||||||||||||||
Gross profit | $ | 1,449.9 | $ | 1,325.9 | 9 | % | $ | 2,707.7 | $ | 2,580.9 | 5 | % | |||||||||||||||||||||||
Operating income (loss) | $ | 978.7 | $ | 813.1 | 20 | % | $ | 1,743.4 | $ | 1,629.5 | 7 | % | |||||||||||||||||||||||
Comparable adjustments (1) | |||||||||||||||||||||||||||||||||||
Gross profit | $ | 23.9 | $ | (46.4) | NM | $ | (10.9) | $ | (22.0) | NM | |||||||||||||||||||||||||
Operating income (loss) | $ | 10.9 | $ | (69.6) | NM | $ | (51.6) | $ | (45.7) | NM | |||||||||||||||||||||||||
Beer | |||||||||||||||||||||||||||||||||||
Net sales | $ | 2,392.7 | $ | 2,139.3 | 12 | % | $ | 4,491.3 | $ | 4,037.5 | 11 | % | |||||||||||||||||||||||
Segment gross profit | $ | 1,228.7 | $ | 1,147.6 | 7 | % | $ | 2,327.4 | $ | 2,167.1 | 7 | % | |||||||||||||||||||||||
% Net sales | 51.4 | % | 53.6 | % | 51.8 | % | 53.7 | % | |||||||||||||||||||||||||||
Segment operating income (loss) | $ | 953.9 | $ | 865.6 | 10 | % | $ | 1,751.7 | $ | 1,628.4 | 8 | % | |||||||||||||||||||||||
% Net sales | 39.9 | % | 40.5 | % | 39.0 | % | 40.3 | % | |||||||||||||||||||||||||||
Wine and Spirits | |||||||||||||||||||||||||||||||||||
Wine net sales | $ | 383.9 | $ | 442.0 | (13 | %) | $ | 744.9 | $ | 846.1 | (12 | %) | |||||||||||||||||||||||
Spirits net sales | 60.2 | 73.8 | (18 | %) | 115.5 | 134.7 | (14 | %) | |||||||||||||||||||||||||||
Net sales | $ | 444.1 | $ | 515.8 | (14 | %) | $ | 860.4 | $ | 980.8 | (12 | %) | |||||||||||||||||||||||
Segment gross profit | $ | 197.3 | $ | 224.7 | (12 | %) | $ | 391.2 | $ | 435.8 | (10 | %) | |||||||||||||||||||||||
% Net sales | 44.4 | % | 43.6 | % | 45.5 | % | 44.4 | % | |||||||||||||||||||||||||||
Segment operating income (loss) | $ | 80.7 | $ | 99.4 | (19 | %) | $ | 160.0 | $ | 190.4 | (16 | %) | |||||||||||||||||||||||
% Net sales | 18.2 | % | 19.3 | % | 18.6 | % | 19.4 | % | |||||||||||||||||||||||||||
Corporate Operations and Other | |||||||||||||||||||||||||||||||||||
Segment operating income (loss) | $ | (66.8) | $ | (82.3) | 19 | % | $ | (116.7) | $ | (143.6) | 19 | % | |||||||||||||||||||||||
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 12 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | Percent Change | August 31, 2023 | August 31, 2022 | Percent Change | ||||||||||||||||||||||||||||||
Operating income (loss) (GAAP) | $ | 978.7 | $ | 813.1 | 20 | % | $ | 1,743.4 | $ | 1,629.5 | 7 | % | |||||||||||||||||||||||
Less: Comparable adjustments (Non-GAAP) (1) | 10.9 | (69.6) | (51.6) | (45.7) | |||||||||||||||||||||||||||||||
Comparable operating income (loss) (Non-GAAP) | $ | 967.8 | $ | 882.7 | 10 | % | $ | 1,795.0 | $ | 1,675.2 | 7 | % | |||||||||||||||||||||||
Net income (loss) attributable to CBI (GAAP) | $ | 690.0 | $ | (1,151.2) | NM | $ | 825.9 | $ | (761.7) | NM | |||||||||||||||||||||||||
Plus: Net income (loss) attributable to noncontrolling interests (GAAP) | 10.7 | 10.5 | 14.0 | 20.3 | |||||||||||||||||||||||||||||||
Provision for (benefit from) income taxes (GAAP) | 147.2 | 132.4 | 238.4 | 257.8 | |||||||||||||||||||||||||||||||
Loss on extinguishment of debt (GAAP) | — | 8.0 | 0.7 | 23.3 | |||||||||||||||||||||||||||||||
Interest expense (GAAP) | 110.6 | 94.3 | 228.8 | 182.8 | |||||||||||||||||||||||||||||||
Adjusted EBIT (Non-GAAP) | 958.5 | (906.0) | NM | 1,307.8 | (277.5) | NM | |||||||||||||||||||||||||||||
Less: Comparable adjustments (Non-GAAP) (1) | 3.5 | (1,755.1) | (443.4) | (1,866.6) | |||||||||||||||||||||||||||||||
Comparable EBIT (Non-GAAP) | $ | 955.0 | $ | 849.1 | 12 | % | $ | 1,751.2 | $ | 1,589.1 | 10 | % | |||||||||||||||||||||||
Net income (loss) attributable to CBI (GAAP) | $ | 690.0 | $ | (1,151.2) | NM | $ | 825.9 | $ | (761.7) | NM | |||||||||||||||||||||||||
Less: Comparable adjustments (Non-GAAP) (1) | 8.2 | (1,739.9) | (390.4) | (1,854.2) | |||||||||||||||||||||||||||||||
Comparable net income (loss) attributable to CBI (Non-GAAP) | $ | 681.8 | $ | 588.7 | 16 | % | $ | 1,216.3 | $ | 1,092.5 | 11 | % | |||||||||||||||||||||||
EPS (GAAP) | $ | 3.74 | $ | (6.30) | NM | $ | 4.49 | $ | (4.13) | NM | |||||||||||||||||||||||||
Less: Comparable adjustments (Non-GAAP) (1) | 0.04 | (9.37) | (2.12) | (9.89) | |||||||||||||||||||||||||||||||
Comparable EPS (Non-GAAP) (2) | $ | 3.70 | $ | 3.17 | 17 | % | $ | 6.61 | $ | 5.83 | 13 | % | |||||||||||||||||||||||
Weighted average common shares outstanding - diluted (2) | 184.277 | 185.737 | 184.074 | 187.540 |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 13 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
Net gain (loss) on undesignated commodity derivative contracts | $ | 19.1 | $ | (15.4) | $ | (15.6) | $ | 33.1 | |||||||||||||||
Settlements of undesignated commodity derivative contracts | 5.6 | (31.3) | 6.2 | (54.6) | |||||||||||||||||||
Flow through of inventory step-up | (0.8) | (0.9) | (1.5) | (1.9) | |||||||||||||||||||
Net flow through of reserved inventory | — | 1.2 | — | 1.2 | |||||||||||||||||||
Recovery of (loss on) inventory write-down | — | — | — | 0.2 | |||||||||||||||||||
Comparable adjustments, Gross profit | 23.9 | (46.4) | (10.9) | (22.0) | |||||||||||||||||||
Transition services agreements activity | (7.0) | (4.5) | (12.7) | (7.9) | |||||||||||||||||||
Restructuring and other strategic business development costs | (3.4) | (1.2) | (18.3) | (2.6) | |||||||||||||||||||
Transaction, integration, and other acquisition-related costs | (0.3) | (0.5) | (0.6) | (0.7) | |||||||||||||||||||
Costs associated with the Reclassification | — | (20.6) | 0.2 | (21.3) | |||||||||||||||||||
Other gains (losses) | (2.3) | 3.6 | (9.3) | 8.8 | |||||||||||||||||||
Comparable adjustments, Operating income (loss) | 10.9 | (69.6) | (51.6) | (45.7) | |||||||||||||||||||
Comparable adjustments, Income (loss) from unconsolidated investments | (7.4) | (1,685.5) | (391.8) | (1,820.9) | |||||||||||||||||||
Comparable adjustments, Adjusted EBIT | 3.5 | (1,755.1) | (443.4) | (1,866.6) | |||||||||||||||||||
Comparable adjustments, Loss on extinguishment of debt | — | (8.0) | (0.7) | (23.3) | |||||||||||||||||||
Comparable adjustments, (Provision for) benefit from income taxes | 4.7 | 23.2 | 53.7 | 35.7 | |||||||||||||||||||
Comparable adjustments, Net income (loss) attributable to CBI | $ | 8.2 | $ | (1,739.9) | $ | (390.4) | $ | (1,854.2) |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 14 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
Gain (loss) on sale of business | $ | (7.9) | $ | — | $ | (14.9) | $ | — | |||||||||||||||
Recognition of a previously deferred gain upon release of a related indemnity | $ | 5.6 | $ | — | $ | 5.6 | $ | — | |||||||||||||||
Decrease (increase) in estimated fair values of contingent liabilities associated with prior period acquisitions | $ | — | $ | 4.4 | $ | — | $ | 4.4 | |||||||||||||||
Gain from remeasurement of previously held equity method investments | $ | — | $ | — | $ | — | $ | 5.2 | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
Impairment of equity method investments | $ | (12.3) | $ | (1,060.3) | $ | (135.8) | $ | (1,060.3) | |||||||||||||||
Unrealized gain (loss) from the changes in fair value of our securities measured at fair value | $ | (2.6) | $ | (9.3) | $ | (74.4) | $ | (31.7) | |||||||||||||||
Comparable adjustments to Canopy EIE (see page 16 for further information) | $ | 7.5 | $ | (615.9) | $ | (181.5) | $ | (728.9) |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
Net income tax benefit recognized as a result of a change in tax entity classification | $ | 2.3 | $ | — | $ | 31.2 | $ | — | |||||||||||||||
Net income tax benefit recognized as a result of a legislative update in Switzerland | $ | — | $ | — | $ | 4.7 | $ | — | |||||||||||||||
Net income tax benefit related to a prior period divestiture | $ | — | $ | 150.4 | $ | — | $ | 150.4 | |||||||||||||||
Net income tax (provision) benefit recognized for adjustments to valuation allowances | $ | — | $ | (192.0) | $ | — | $ | (192.0) | |||||||||||||||
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 15 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Equity earnings (losses) and related activities, Canopy EIE (GAAP) (1) | $ | (12.0) | $ | (650.7) | $ | (231.8) | $ | (815.7) | |||||||||||||||
(Provision for) benefit from income taxes (2) | 1.7 | 28.2 | 8.2 | 48.4 | |||||||||||||||||||
Net income (loss) attributable to CBI, Canopy EIE (GAAP) (1) | $ | (10.3) | $ | (622.5) | $ | (223.6) | $ | (767.3) | |||||||||||||||
Equity earnings (losses) and related activities, Canopy EIE (GAAP) (1) | $ | (12.0) | $ | (650.7) | $ | (231.8) | $ | (815.7) | |||||||||||||||
Net (gain) loss on fair value financial instruments | (15.0) | 52.7 | (8.1) | 61.6 | |||||||||||||||||||
(Gain) loss on dilution of Canopy stock ownership | 4.2 | 93.5 | 7.8 | 94.0 | |||||||||||||||||||
Acquisition costs | 1.8 | 1.1 | 2.7 | 1.5 | |||||||||||||||||||
Restructuring and other strategic business development costs | 0.4 | 1.8 | 161.0 | 102.7 | |||||||||||||||||||
Goodwill impairment | — | 460.8 | 14.1 | 460.8 | |||||||||||||||||||
Other (gains) losses, net | 1.1 | 6.0 | 4.0 | 8.3 | |||||||||||||||||||
Comparable adjustments, Canopy EIE (Non-GAAP) | (7.5) | 615.9 | 181.5 | 728.9 | |||||||||||||||||||
Comparable equity earnings (losses), Canopy EIE (Non-GAAP) (1) | (19.5) | (34.8) | (50.3) | (86.8) | |||||||||||||||||||
Comparable (provision for) benefit from income taxes (Non-GAAP) (2) | 1.7 | 4.5 | 8.2 | 11.7 | |||||||||||||||||||
Comparable net income (loss) attributable to CBI, Canopy EIE (Non-GAAP) (1) | $ | (17.8) | $ | (30.3) | $ | (42.1) | $ | (75.1) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
EPS, Canopy EIE (GAAP) | $ | (0.06) | $ | (3.35) | $ | (1.21) | $ | (4.09) | |||||||||||||||
Comparable adjustments, Canopy EIE (Non-GAAP) | (0.04) | 3.19 | 0.99 | 3.69 | |||||||||||||||||||
Comparable EPS, Canopy EIE (Non-GAAP) (3) | $ | (0.10) | $ | (0.16) | $ | (0.23) | $ | (0.40) |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 16 |
Three Months Ended | |||||||||||||||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | ||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | (Provision for) benefit from income taxes (2) | Effective tax rate (4) | Income (loss) before income taxes | (Provision for) benefit from income taxes (2) | Effective tax rate (4) | ||||||||||||||||||||||||||||||
Reported basis (GAAP) | $ | 847.9 | $ | (147.2) | 17.4 | % | $ | (1,008.3) | $ | (132.4) | (13.1) | % | |||||||||||||||||||||||
Comparable adjustments - (Non-GAAP) | (3.5) | (4.7) | 1,763.1 | (23.2) | |||||||||||||||||||||||||||||||
Comparable basis (Non-GAAP) | 844.4 | (151.9) | 18.0 | % | 754.8 | (155.6) | 20.6 | % | |||||||||||||||||||||||||||
Less: Comparable basis, Canopy EIE (Non-GAAP) | (19.5) | 1.7 | (34.8) | 4.5 | |||||||||||||||||||||||||||||||
Comparable basis, excluding Canopy EIE (Non-GAAP) | $ | 863.9 | $ | (153.6) | 17.8 | % | $ | 789.6 | $ | (160.1) | 20.3 | % |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2023 | August 31, 2022 | August 31, 2023 | August 31, 2022 | ||||||||||||||||||||
Comparable EPS (Non-GAAP) (5) | $ | 3.70 | $ | 3.17 | $ | 6.61 | $ | 5.83 | |||||||||||||||
Comparable EPS, Canopy EIE (Non-GAAP) | 0.10 | 0.16 | 0.23 | 0.40 | |||||||||||||||||||
Comparable EPS, excluding Canopy EIE (Non-GAAP) (3) | $ | 3.80 | $ | 3.33 | $ | 6.84 | $ | 6.23 |
EPS Guidance | Range for the Year Ending February 29, 2024 | ||||||||||
Forecasted EPS (GAAP) | $ | 9.60 | $ | 9.80 | |||||||
Comparable adjustments (Non-GAAP) (1) | 2.17 | 2.17 | |||||||||
Comparable basis, Canopy EIE (Non-GAAP) | 0.23 | 0.23 | |||||||||
Forecasted comparable EPS, excluding Canopy EIE (Non-GAAP) (2) | $ | 12.00 | $ | 12.20 |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 17 |
Actual for the Year Ended February 28, 2023 | |||||
EPS (GAAP) (3) | $ | (0.11) | |||
Reclassification (Non-GAAP) (4) | (0.27) | ||||
Comparable adjustments (Non-GAAP) (1) | 11.03 | ||||
Comparable EPS (Non-GAAP) (2) | 10.65 | ||||
Comparable basis, Canopy EIE (Non-GAAP) | 0.75 | ||||
Comparable EPS, excluding Canopy EIE (Non-GAAP) (2) | $ | 11.40 |
(1) | Comparable adjustments include: (2)(5) | Estimated for the Year Ending February 29, 2024 | Actual for the Year Ended February 28, 2023 | |||||||||||
(Income) loss from unconsolidated investments | $ | 2.11 | $ | 9.92 | ||||||||||
Transition services agreements activity | $ | 0.10 | $ | 0.08 | ||||||||||
Restructuring and other strategic business development costs | $ | 0.08 | $ | 0.04 | ||||||||||
Net (gain) loss on undesignated commodity derivative contracts | $ | 0.06 | $ | 0.06 | ||||||||||
Net (gain) loss on sale of business | $ | 0.06 | $ | (0.05) | ||||||||||
Flow through of inventory step-up | $ | 0.01 | $ | 0.02 | ||||||||||
Net income tax benefit recognized as a result of a change in tax entity classification | $ | (0.17) | $ | — | ||||||||||
Net income tax provision (benefit) recognized as a result of a legislative update in Switzerland | $ | (0.03) | $ | 0.06 | ||||||||||
Settlements of undesignated commodity derivative contracts | $ | (0.03) | $ | 0.31 | ||||||||||
Other (gains) losses | $ | (0.03) | $ | (0.11) | ||||||||||
Net income tax provision recognized for adjustments to valuation allowances | $ | — | $ | 1.03 | ||||||||||
Impairments of assets | $ | — | $ | 0.27 | ||||||||||
Costs associated with the Reclassification | $ | — | $ | 0.20 | ||||||||||
Loss on extinguishment of debt | $ | — | $ | 0.10 | ||||||||||
Transaction, integration, and other acquisition-related costs | $ | — | $ | 0.01 | ||||||||||
Net income tax benefit related to a prior period divestiture | $ | — | $ | (0.89) | ||||||||||
Net flow through of reserved inventory | $ | — | $ | (0.01) | ||||||||||
(2) | May not sum due to (i) rounding as each item is computed independently and (ii) income allocated through the date of the Reclassification for the year ended February 28, 2023. The comparable adjustments and comparable EPS are calculated on a fully dilutive basis. | |||||||||||||
(3) | EPS was computed using the two-class method, until such conversion took place pursuant to Reclassification. | |||||||||||||
(4) | Adjustment for income allocated through the date of the Reclassification. | |||||||||||||
(5) | See page 14 for further information on comparable adjustments. |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 18 |
Free Cash Flow Guidance Free cash flow, as defined in the reconciliation below, is considered a liquidity measure and is considered to provide useful information to investors about the amount of cash generated, which can then be used, after required debt service and dividend payments, for other general corporate purposes. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Free cash flow should be considered in addition to, not as a substitute for, or superior to, cash flow from operating activities prepared in accordance with GAAP. | |||||||||||
Range for the Year Ending February 29, 2024 | |||||||||||
Net cash provided by operating activities (GAAP) | $ | 2,400.0 | $ | 2,600.0 | |||||||
Purchase of property, plant, and equipment | (1,200.0) | (1,300.0) | |||||||||
Free cash flow (Non-GAAP) | $ | 1,200.0 | $ | 1,300.0 | |||||||
Six Months Ended | |||||||||||
August 31, 2023 | August 31, 2022 | ||||||||||
Net cash provided by operating activities (GAAP) | $ | 1,622.0 | $ | 1,654.3 | |||||||
Purchase of property, plant, and equipment | (582.0) | (435.0) | |||||||||
Free cash flow (Non-GAAP) | $ | 1,040.0 | $ | 1,219.3 |
Constellation Brands, Inc. Q2 FY 2024 Earnings Release | #WORTHREACHINGFOR I 19 |
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