01—Abstract
Summary
Summary of the 10-K filed April 23, 2024. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. reported fiscal 2024 (year ended February 29, 2024) net sales of $9.96 billiona, up from $9.45 billion in fiscal 2023, with operating income of $3.17 billion versus $2.84 billion.
The Beer segment drove the results: net sales rose to $8.16 billionb from $7.47 billion, with shipment volume growth of $564.5 million and $147.6 million of favorable pricing, while the company cut costs through efficiency initiatives that yielded nearly $205 million of net cost savings. Wine and Spirits net sales fell to $1.80 billion from $1.99 billion, driven by a decline in branded shipment volume and the divestiture of certain mainstream and premium wine brands, and management expects unfavorable U.S. wholesale wine trends to continue into Fiscal 2025. Net income attributable to CBI increased to $1.73 billion from a loss of $71.0 million, primarily because Canopy-related impairment and equity losses were much smaller than in fiscal 2023 (income from unconsolidated investments was a loss of $511.8 million versus $2.04 billion).
Operating cash flow was $2.78 billionc, while capital expenditures were $1.27 billion, largely for the Mexico Beer Projects, and the company expects to spend approximately $3 billion on those projects over Fiscal 2025 through Fiscal 2028. Total debt was $11.88 billion at year end, and the company repurchased $249.7 million of Class A Stock and declared dividends of $654.1 million in the year.
The company also converted its Canopy common shares into Exchangeable Shares in April 2024, and it recognized a Canopy equity method investment carrying value of $170.6 milliond in total equity method investments at year end. Management's Fiscal 2025 capital expenditure guidance is $1.4 billion to $1.5 billion, and its expected effective tax rate is 17.5% to 19.5%.
02—Key points
Key Highlights
- Net sales rose 5% to $9.96 billion, driven by Beer segment net sales growth of 9% to $8.16 billion, partially offset by a 9% decline in Wine and Spirits to $1.80 billion.
- Operating income increased 11% to $3.17 billion, supported by Beer shipment volume growth of 7.4% and nearly $205 million of net cost savings.
- Net income attributable to CBI was $1.73 billion, compared with a loss of $71.0 million in fiscal 2023, mainly due to lower Canopy-related impairments and losses.
- Modelo Especial became the #1 beer brand in the U.S. beer market in dollar sales in Fiscal 2024, and the company describes itself as the #1 brewer and seller of imported beer in the U.S.
- The Mexico Beer Projects increased total capacity in Mexico from approximately 42 million to 48 million hectoliters, with capital expenditures of $1.27 billion in Fiscal 2024 and approximately $3 billion expected over Fiscal 2025 through Fiscal 2028.
- Wine and Spirits faced headwinds, with branded shipment volume down 12.2% and mainstream brands Woodbridge and SVEDKA under pressure; management expects these trends to extend into the medium term.
- Total debt was $11.88 billion at February 29, 2024, and the company repurchased $249.7 million of stock and paid $653.8 million in dividends during the year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2024, Constellation Brands kept $0.17.
- Revenue$9.96B100.0%
- Cost of revenue−$4.94B49.6%
- Gross profit$5.02B50.4%
- Operating costs−$1.85B18.5%
- Operating income$3.17B31.8%
- Interest, other & tax−$1.44B14.5%
- Net income$1.73B17.3%
Where FY2024 revenue went
$9.96B- Cost of revenue: $4.94B, 50% of revenue
- SG&A: $1.83B, 18% of revenue
- Net income: $1.73B, 17% of revenue
- Interest, other & tax: $1.44B, 14% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2024filed April 23, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $9.96B$9.45B | +5.4% |
| Cost of Revenue | $4.94B$4.68B | +5.6% |
| Gross Profit | $5.02B$4.77B | +5.2% |
| SG&A Expenses | $1.83B$1.93B | −4.9% |
| Operating Income | $3.17B$2.84B | +11.5% |
| Net Income | $1.73B-$71.00M | +2533.0% |
05—Questions
Frequently Asked Questions
Why did Constellation Brands return to positive net income in fiscal 2024?
Net income attributable to CBI rose to $1.73 billion from a loss of $71.0 million, primarily because the impairment and other losses tied to the Canopy investment were much lower than in fiscal 2023. Income (loss) from unconsolidated investments was a loss of $511.8 million, compared with $2.04 billion the prior year. Beer operating income growth also contributed.
How is the Wine and Spirits business performing?
Wine and Spirits net sales declined 9% to $1.80 billion, driven by a decrease in branded shipment volume, with branded shipments down 12.2%. Management said the broader wine category decelerated and that its largest mainstream and premium brands declined. It expects unfavorable U.S. wholesale wine trends to continue in Fiscal 2025 and expects the segment to return to net sales growth over the medium term.
What are the company's major capital spending plans?
The company spent $1.27 billion on capital expenditures in Fiscal 2024, including $947.9 million in the Beer segment for the Mexico Beer Projects. It plans to spend $1.4 billion to $1.5 billion in Fiscal 2025, including approximately $1.2 billion for the Beer segment, and expects roughly $3 billion over Fiscal 2025 through Fiscal 2028 on Mexico beer expansion, optimization, and construction.
How is the company returning capital to shareholders?
In Fiscal 2024 the company paid $653.8 million in dividends and repurchased 1,043,366 shares of Class A Stock for $249.7 million under the 2021 Authorization. Subsequent to year end, it repurchased 424,783 more shares for $110.0 million. The company expects to return approximately $740 million to stockholders through cash dividends in Fiscal 2025, and $2,503.7 million remained available for future repurchases as of April 23, 2024.
What happened with the Canopy investment?
Canopy recorded other-than-temporary impairments of $123.5 million in the Canopy equity method investment as of May 31, 2023, and the company wrote off its 2023 Canopy Promissory Note to zero. In April 2024, the company converted its 17.1 million Canopy common shares into Exchangeable Shares on a one-for-one basis and exchanged the promissory note for 9.1 million Exchangeable Shares, and it expects to recognize a gain on the conversion and exchange.
06—Continue