-
Achieves comparable basis diluted EPS of $1.23
and reported basis diluted EPS of $1.10
-
Increases fiscal 2015 diluted EPS outlook driven
by strong beer business shipment volume; expects comparable basis
diluted EPS of $4.25 - $4.35 and reported basis diluted EPS of
$3.90 - $4.00
-
Reaffirms free cash flow projection of $275 -
$350 million for fiscal 2015 including operating cash flow target
of at least $1 billion and total capital expenditure estimate of
$725 - $775 million
-
Forms 50-50 joint venture with Owens-Illinois;
joint venture completes acquisition of the Nava glass plant
Third Quarter 2015 Financial
Highlights* |
|
|
|
|
|
|
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
Comparable |
|
% Change |
|
Reported |
|
% Change |
Net sales |
$1,542 |
|
7% |
|
$1,542 |
|
7% |
|
|
|
|
|
|
|
|
Operating income |
$415 |
|
11% |
|
$376 |
|
3% |
|
|
|
|
|
|
|
|
Operating margin |
26.9% |
|
+90 bps |
|
24.4% |
|
-80 bps |
|
|
|
|
|
|
|
|
Earnings before interest and taxes (EBIT) |
$437 |
|
11% |
|
NA |
|
NA |
|
|
|
|
|
|
|
|
Net income |
$248 |
|
14% |
|
$222 |
|
5% |
|
|
|
|
|
|
|
|
Diluted earnings per share |
$1.23 |
|
12% |
|
$1.10 |
|
3% |
*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. 8, 2015 -
Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading
beverage alcohol company, reported today its third quarter 2015
results.
"We achieved outstanding results for the third
quarter driven by the exceptional on-going momentum for our beer
business. This industry leading performance reflects the benefits
of our marketing and brand building efforts, distribution growth
for key brands, as well as excellent sales and distributor
execution. Strong beer shipment volume performance is the primary
driver of the upward revision to our EPS outlook for the year,"
said Rob Sands, president and chief executive officer,
Constellation Brands. "I am also pleased that we have finalized and
begun implementing our long-term glass sourcing strategy for the
beer business. We believe this strategy provides the optimal
solution for this essential component of our beer production
process. In addition, our wine and spirits business delivered solid
earnings growth and our spirits brands gained share during the
quarter."
Net Sales Commentary
For the quarter, the company generated
consolidated net sales growth of seven percent.
Net sales for the beer segment increased 16
percent primarily due to volume growth. This result includes the
expected shift of approximately two million case shipments to
wholesalers and approximately $37 million of net sales from the
second quarter into the third quarter as a result of the previously
announced Corona Extra recall activities. Excluding the impact from
the recall, third quarter underlying beer net sales increased 11
percent. Beer depletions grew eight percent, reflecting strong
consumer demand for all key brands within the beer portfolio. In
addition, distributors increased their inventory during the quarter
to be more in-line with historical levels and be better positioned
to capture growth opportunities for the beer portfolio going
forward.
"Our beer business continued to gain share across
all channels during the third quarter driven by Modelo Especial,
Corona Extra and Modelo Especial Chelada," said Sands. "Our
outstanding beer portfolio is experiencing tremendous momentum and
generated the vast majority of total U.S. industry volume growth in
IRI channels during the quarter."
Wine and spirits net sales on a constant currency
basis were even with the prior year third quarter. This primarily
reflects higher spirits shipment volume offset by lower wine
volume, higher promotional spend and lower bulk wine net sales.
"While we are on track to meet our earnings goal for the year, we
do not expect depletions to grow in line with the U.S. wine
category," said Sands. "However, during the third quarter, we
experienced solid depletion trends for some of our fastest-growing
wine brands, including Kim Crawford, Ruffino, Black Box and The
Dreaming Tree. Our spirits business generated outstanding growth
and gained share in the spirits category driven by new flavor
introductions across the portfolio. We also completed the
integration of the Casa Noble tequila brand into our marketing and
sales organizations and the brand is quickly gaining traction."
Operating Income and Net Income
Commentary
The increase in consolidated comparable basis
operating income primarily reflects the higher volume for the beer
business. The increase in wine and spirits operating income
primarily reflects favorable costs of goods sold.
Interest expense for the third quarter totaled $86
million, a decrease of four percent. The decrease was primarily due
to lower average interest rates.
The effective tax rate for the third quarter 2015
was 29 percent compared to a 28 percent tax rate for the prior year
third quarter.
Free Cash Flow Commentary
Free cash flow for the first nine months of fiscal
2015 totaled $209 million as compared to $543 million for the same
period last year. Benefits from the growth of the beer business
were more than offset by higher capital expenditures related
primarily to the expansion of the Nava brewery in Mexico.
"Our Nava brewery expansion and glass-sourcing
initiatives which are designed to support the strong growth of the
beer business over the long-term, are progressing as planned from a
timing and budget perspective," said Bob Ryder, chief financial
officer, Constellation Brands. "For fiscal 2015, we continue to
expect free cash flow to be in the range of $275 - $350 million and
to generate operating cash flow of at least $1 billion."
Outlook
The table below sets forth management's current
diluted EPS expectations for fiscal 2015 compared to fiscal 2014
actual results, both on a reported basis and a comparable
basis.
|
Reported Basis |
Comparable Basis |
|
FY15
Estimate |
FY14
Actual |
FY15
Estimate |
FY14
Actual |
Fiscal Year Ending Feb. 28 |
$3.90 - $4.00 |
$9.83 |
|
$4.25 -
$4.35 |
$3.25 |
|
Full-year fiscal 2015 guidance includes the
following current assumptions:
-
Interest expense: approximately $345 - $355
million
-
Tax rate: approximately 30 percent
-
Weighted average diluted shares outstanding:
approximately 201 million
-
Free cash flow: approximately $275 - $350
million
-
Capital expenditures: approximately $725 - $775
million, including $600 - $650 million for the beer business
Conference Call
A conference call to discuss third quarter 2015
results and outlook will be hosted by President and Chief Executive
Officer Rob Sands and Executive Vice President and Chief Financial
Officer Bob Ryder on Thursday, Jan. 8, 2015 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 diluted EPS are as reported under generally accepted
accounting principles. Operating income, net income and diluted EPS
on a comparable basis ("comparable"), exclude items that affect
comparability ("unusual items"). The company's measure of segment
profitability excludes unusual items, 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, 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.
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 and Pacifico. Constellation is
also the world's leader in premium wine selling great brands that
people love including Robert Mondavi, Clos du Bois, Kim Crawford,
Rex Goliath, 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
6,300 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, prospects, 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 Feb. 27,
2015, 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:
-
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
regulatory approvals;
-
accuracy of supply projections, including those
relating to brewery expansion and glass sourcing;
-
timeframe and actual costs associated with
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;
-
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;
-
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, 2014, 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
Q3 FY 15 Earnings Financial
Statements
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
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