01—Abstract
Summary
Summary of the 8-K filed January 5, 2024. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. reported results for its third fiscal quarter ended November 30, 2023, in a news release furnished as Exhibit 99.1 to this Form 8-K.
Net sales were $2,470.9 milliona, up 1% from $2,436.5 million a year earlier, and reported operating income was $796.9 million. Reported diluted EPS was $2.76, while comparable EPS was $3.19 and comparable EPS excluding Canopy EIE was $3.24. The Beer business drove results, with net sales of $1,968.5 million, up 4%, depletions up 8.2%, and Modelo Especial growing approximately 12%.
Wine and Spirits net sales were $502.4 millionb, down 8%, and the company lowered its fiscal 2024 Wine and Spirits outlook to an organic net sales decline of 7 - 9% and an operating income decline of 6 - 8%. The company updated its fiscal 2024 reported EPS outlook to $9.15 - $9.35 and affirmed its comparable EPS outlook excluding Canopy EIE of $12.00 - $12.20. It raised its fiscal 2024 operating cash flow target to $2.6 - $2.8 billion and free cash flow projection to $1.4 - $1.5 billion, from $2.4 - $2.6 billion and $1.2 - $1.3 billion previously.
Nine-month operating cash flow was $2,346.8 millionc and free cash flow was $1,434.9 million, with capital expenditures of $911.9 million. The Board declared a quarterly dividend of $0.89 per Class A share, payable February 22, 2024.
The filing also notes a separately announced leadership transition in the Wine and Spirits business and $215 milliond of share repurchases in the third fiscal quarter. Balance sheet figures include long-term debt, less current maturities, of $10,282.3 million at November 30, 2023, and cash and cash equivalents of $78.7 million.
02—Key points
Key Highlights
- Third quarter net sales of $2,470.9 million, up 1%; reported diluted EPS of $2.76 and comparable EPS of $3.19
- Beer net sales rose 4% to $1,968.5 million, with depletions up 8.2% and Modelo Especial growing approximately 12%
- Wine and Spirits net sales fell 8% to $502.4 million; fiscal 2024 organic net sales outlook lowered to a 7 - 9% decline
- Fiscal 2024 reported EPS outlook updated to $9.15 - $9.35; comparable EPS excluding Canopy EIE affirmed at $12.00 - $12.20
- Fiscal 2024 operating cash flow target raised to $2.6 - $2.8 billion and free cash flow projection raised to $1.4 - $1.5 billion
- Quarterly Class A dividend of $0.89 per share declared, payable February 22, 2024
- $215 million returned to shareholders through share repurchases in the third quarter of fiscal 2024
03—Questions
Frequently Asked Questions
How did Constellation Brands perform in its fiscal third quarter ended November 30, 2023?
Net sales were $2,470.9 million, up 1% from $2,436.5 million. Reported operating income was $796.9 million, and comparable operating income was $819.8 million. Reported diluted EPS was $2.76 and comparable EPS was $3.19.
Why did the company change its fiscal 2024 guidance?
The filing states that the Wine and Spirits Business updated its outlook to an organic net sales decline of 7 - 9% and an operating income decline of 6 - 8%, primarily due to broader marketplace deceleration and U.S. wholesale underperformance. The Beer Business raised its operating income growth outlook to 7 - 8%, while continuing to expect net sales growth of 8 - 9%.
What is the company's cash flow outlook for fiscal 2024?
Operating cash flow is now expected to be $2.6 - $2.8 billion, up from $2.4 - $2.6 billion, and free cash flow is projected at $1.4 - $1.5 billion, up from $1.2 - $1.3 billion. Capital expenditures are expected at $1.2 - $1.3 billion, including approximately $1 billion targeted for Mexico beer operations activities.
What did the company announce regarding shareholder returns?
The Board declared a quarterly cash dividend of $0.89 per share of Class A Common Stock, payable February 22, 2024, to holders of record as of February 8, 2024. The company also returned $215 million through share repurchases in the third quarter of fiscal 2024.
What is the status of the Canopy investment?
The filing reports Constellation's share of Canopy's equity losses and related activities of $(56.5) million on a reported basis and $(6.5) million on a comparable basis for the three months ended November 30, 2023. The equity method investment balance was $233.3 million at November 30, 2023, compared with $663.3 million at February 28, 2023.
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