-
Achieves fiscal 2015 comparable
basis EPS of $4.44 and reported basis EPS of $4.17
-
Generates $362 million of free
cash flow and $1.1 billion of operating cash flow for fiscal
2015
-
Provides fiscal 2016 outlook;
expects comparable basis EPS of $4.70 - $4.90 and reported basis
EPS of $4.55 - $4.75
-
Projects free cash flow of $100
- $200 million for fiscal 2016 including operating cash flow target
of at least $1.15 billion and total capital expenditure estimate of
$1.05 - $1.15 billion
-
Brewery expansion progressing
as planned from a timing and budget standpoint
-
Initiates quarterly dividend
for first time in company history
Fiscal 2015 Financial
Highlights* |
|
|
|
|
|
|
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
Comparable |
|
% Change |
|
Reported |
|
% Change |
Net sales |
$6,028 |
|
24% |
|
$6,028 |
|
24% |
|
|
|
|
|
|
|
|
Operating income |
$1,583 |
|
35% |
|
$1,500 |
|
-38% |
|
|
|
|
|
|
|
|
Operating margin |
26.3% |
|
+230 bps |
|
24.9% |
|
NM |
|
|
|
|
|
|
|
|
Earnings before interest and taxes (EBIT) |
$1,605 |
|
28% |
|
NA |
|
NA |
|
|
|
|
|
|
|
|
Net income attributable to CBI |
$893 |
|
39% |
|
$839 |
|
-57% |
|
|
|
|
|
|
|
|
Diluted net income per share attributable to CBI
(EPS) |
$4.44 |
|
37% |
|
$4.17 |
|
-58% |
*Definitions of reported and comparable, as well
as reconciliations of non-GAAP financial measures, are contained
elsewhere in this news release.
NM=Not Meaningful
NA=Not Applicable
VICTOR, N.Y., APRIL 9, 2015 -
Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading
beverage alcohol company, reported today its fiscal 2015
results.
"We have completed another year of impressive
results propelled by our Mexican beer business, which continues its
incredible momentum and remains strongly positioned to generate
ongoing sustainable growth. We outperformed the U.S. beer industry
for the fifth consecutive year while achieving growth for every
brand in our Mexican beer portfolio. And, our Nava brewery
expansion is progressing as planned from a budget and timing of
completion perspective," said Rob Sands, president and chief
executive officer, Constellation Brands. "Within our wine and
spirits business, we achieved strong earnings growth and margin
expansion, while delivering better than expected results for our
spirits portfolio. The collective strength of these businesses has
provided the foundation that enables us to initiate a common stock
cash dividend for the first time in the history of our company, as
announced earlier today. This action reflects our confidence in the
long-term sustainability of our business strategy, future growth
potential and the expected strength of our cash flows."
Fiscal 2015 Net Sales
Commentary
The 24 percent increase in consolidated net sales
for the year was driven primarily by $941 million of incremental
net sales due to the timing of the beer business acquisition.
Consolidated organic net sales on a constant currency basis
increased five percent.
Net sales for the beer segment increased 12
percent primarily due to volume growth and favorable pricing. Beer
depletions grew eight percent, reflecting strong consumer demand
for all key brands within the beer portfolio. In addition,
distributors increased their inventories during the second half of
the year in an effort to align with historical levels and be better
positioned to meet consumer demand heading into the key summer
selling season.
"Our beer business delivered strong marketplace
results and enhanced market share throughout the year driven by
Modelo Especial, Corona Extra and Modelo Especial Chelada," said
Sands. "The outstanding performance of our beer business reflects
ongoing excellent commercial execution by our distributors and
sales team, exciting brand marketing initiatives, and expanded
distribution for our portfolio."
Wine and spirits net sales on a constant currency
basis increased one percent. This result reflects favorable mix,
combined with a "make-whole" distributor payment associated with
planned distributor destocking during the first quarter and
distributor performance payments in the fourth quarter, partially
offset by lower volumes, lower non-branded wine sales and higher
promotional spend. "While we did not achieve our overall wine
market share goals for the year, we improved product mix and posted
strong depletion trends for some of our fastest-growing wine
brands, including Kim Crawford, Mark West, Ruffino, Black Box,
Simi, Nobilo and The Dreaming Tree. Our spirits portfolio generated
excellent growth for the year and gained share in the U.S. spirits
category driven by new flavor introductions, including SVEDKA
Strawberry Lemonade and Mango Pineapple, as well as Paul Masson
Grande Amber Peach brandy. Our Casa Noble tequila brand is gaining
traction and we are introducing new promotional programs at retail
for the upcoming Cinco de Mayo holiday," said Sands.
Fiscal 2015 Operating Income and
Net Income Commentary
The increase in consolidated comparable basis
operating income includes an incremental benefit of $309 million
due to the timing of the beer business acquisition. Operating
income also benefited from excellent volume growth and favorable
pricing for the base beer business, partially offset by higher
marketing and general and administrative expenses. The increase in
wine and spirits operating income primarily reflects favorable mix
and COGS and a benefit from distributor performance payments,
partially offset by higher SG&A expense, increased promotional
spend and lower volume.
For fiscal 2015, pre-tax unusual items totaled $87
million of expense. This primarily included integration and other
acquisition-related costs associated with the beer business
acquisition and a net loss from the mark to fair value of
undesignated commodity derivative contracts, primarily driven by
diesel fuel. Fiscal 2014 results included a $1.6 billion non-cash
gain on the remeasurement to fair value of the company's original
50 percent interest in the Crown Imports joint venture as a result
of the beer business acquisition and $301 million of non-cash
impairment charges related to goodwill and intangible assets
associated with the company's Canadian wine business.
Interest expense for the year totaled $338
million, an increase of four percent. The increase was primarily
due to higher average borrowings, partially offset by lower average
interest rates.
The comparable basis effective tax rate for fiscal
2015 was 29.5 percent compared to a 31.2 percent tax rate for the
prior year.
The reported basis effective tax rate for fiscal
2015 was 29.1 percent compared to an 11.8 percent tax rate for the
prior year, which reflected the recognition of the $1.6 billion
non-taxable gain and the non-deductible goodwill impairment
charge.
Free Cash Flow Commentary
Free cash flow for fiscal 2015 totaled $362
million as compared to $603 million for the prior 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.
"The exceptional cash generation capability of
each of our business segments is driving our operating cash flow
expectation of $1.15 to $1.35 billion for fiscal 2016. While the
overall timing and costs for our brewery expansion remain
unchanged, we expect to spend approximately 70% to 80% of our
remaining brewery capital investments during fiscal 2016," said Bob
Ryder, chief financial officer, Constellation Brands. "As a result,
we expect free cash flow to be in the range of $100 to $200 million
for the year."
Fourth Quarter 2015 Financial
Highlights* |
|
|
|
|
|
|
|
(in millions, except per share data) |
|
|
|
|
|
|
|
|
Comparable |
|
% Change |
|
Reported |
|
% Change |
Net sales |
$1,353 |
|
5% |
|
$1,356 |
|
5% |
|
|
|
|
|
|
|
|
Operating income |
$350 |
|
4% |
|
$354 |
|
7% |
|
|
|
|
|
|
|
|
Operating margin |
25.8% |
|
-40 bps |
|
26.1% |
|
+60 bps |
|
|
|
|
|
|
|
|
EBIT |
$350 |
|
4% |
|
NA |
|
NA |
|
|
|
|
|
|
|
|
Net income attributable to CBI |
$208 |
|
28% |
|
$215 |
|
37% |
|
|
|
|
|
|
|
|
EPS |
$1.03 |
|
27% |
|
$1.06 |
|
34% |
Fourth Quarter 2015 Net Sales
Commentary
For the quarter, the company generated
consolidated net sales growth on a constant currency basis of six
percent.
Net sales for the beer segment increased 11
percent primarily due to volume growth driven by continued strong
consumer demand. Wine and spirits net sales on a constant currency
basis increased two percent. This reflects favorable mix and
distributor performance payments, partially offset by lower
volume.
Fourth Quarter 2015 Operating
Income and Net Income Commentary
The increase in consolidated comparable basis
operating income primarily reflects the higher volume for the beer
business. The decrease in wine and spirits operating income
primarily reflects higher marketing and SG&A costs.
Interest expense for the fourth quarter totaled
$80 million, a decrease of nine percent. The decrease was primarily
due to lower average interest rates.
The comparable basis effective tax rate for fourth
quarter 2015 was 23.2 percent which reflected the benefit of
foreign tax credits. This compares to a 34.8 percent tax rate for
the prior year fourth quarter.
Outlook
The table below sets forth management's current
EPS expectations for fiscal 2016 compared to fiscal 2015 actual
results, both on a reported basis and a comparable basis.
|
Reported Basis |
Comparable Basis |
|
FY16
Estimate |
FY15
Actual |
FY16
Estimate |
FY15
Actual |
Fiscal Year Ending Feb. 28/29 |
$4.55 - $4.75 |
$4.17 |
|
$4.70 - $4.90 |
$4.44 |
|
For fiscal 2016, the beer business is targeting
mid-single digit volume growth, high-single digit net sales growth
and 10 - 12 percent operating income growth. For the wine and
spirits business, the company expects net sales and operating
income growth to be in the low-to-mid-single digit range.
Full-year fiscal 2016 guidance also includes the
following current assumptions:
-
Interest expense: approximately $325 - $335
million
-
Tax rate: approximately 30.5 percent
-
Weighted average diluted shares outstanding:
approximately 204 million
-
Free cash flow: approximately $100 - $200
million
-
Operating cash flow: approximately $1.15 -
$1.35 billion
-
Capital expenditures: approximately $1.05 -
$1.15 billion, including $950 million - $1.05 billion for the beer
business
The beer segment's capital investment project in
Mexico (outlined in the table below) remains on track from an
overall estimated cost and timing of completion perspective.
Beer Project Capital
Expenditures |
(in millions) |
FY 2014 |
|
FY 2015
(1) |
|
FY 2016 |
|
FY 2017 -
2018 (2) |
|
Total |
Nava Brewery (3) |
$125 |
|
$550 |
|
$650 - $700 |
|
$125 - $275 |
|
$1,450 - $1,650 |
Nava Glass Plant - Warehouse and
Rail
(Investments outside of the Glass JV) |
|
|
$25 |
|
$125 - $150 |
|
$25 - $50 |
|
$175 - $225 |
Glass Plant JV With Owens-Illinois
(4)
(Furnace expansion) |
|
|
$25 |
|
$175 - $200 |
|
$100 - $175 |
|
$300 - $400 |
Total Beer Project Capital
Expenditures |
$125 |
|
$600 |
|
$950 - $1,050 |
|
$250 - $500 |
|
$1,925 - $2,275 |
(1)
Some rounding for presentation purposes.
(2)
Consists of the initial investment from 10M - 20M HL (expected to
be completed in FY 2017) and the additional expansion from 20M -
25M HL (expected to be completed in FY 2018).
(3)
The significant majority of capital expenditure investment for FY
2017 - 2018 is expected to occur in FY 2017.
(4)
The company expects to receive 50% contributions from
Owens-Illinois for these amounts.
Conference Call
A conference call to discuss fourth quarter and
full year fiscal 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, April
9, 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 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
("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. In 2014, 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 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
7,200 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 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 29,
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 beer
supply, 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;
-
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, 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
022815 Press Release Financial
Statements_04.08.15
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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