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Constellation Brands 8-K Report, Financial Results (Oct 3, 2024)

Reports
Earnings & Results·Regulation FD·Exhibits & Filings
Filing Date
Filed October 3, 2024
Period End
October 3, 2024
Security
STZ
In the record · 2016–202610-K1110-Q338-K237

STZ filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 237 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Sep ’18Sep ’18
  2. Leadership change8-K · Oct ’20Oct ’20
  3. Leadership change8-K · Nov ’22Nov ’22
  4. Material agreement8-K · Sep ’26Sep ’26

01—Abstract

Summary

Summary of the 8-K filed October 3, 2024. Cited figures are marked; the original filing is the authoritative source.

Constellation Brands, Inc. reported second-quarter fiscal 2025 results (quarter ended August 31, 2024) in a news release furnished as Exhibit 99.1.

Reported net sales were $2,918.9 milliona, up 3% from $2,836.8 million, while reported operating loss was $(1,229.4) million and reported diluted EPS was $(6.59). These results include a $2.25 billion non-cash goodwill impairment for the Wine and Spirits business. On a comparable basis, operating income rose 13% to $1,090 million and comparable EPS rose 14% to $4.32.

The Beer Business was the main source of strength, with net sales up 6% to $2,530.2 millionb, shipments up 4.6%, and operating margin up 270 basis points to 42.6%. The Wine and Spirits business continued to weaken, with net sales down 12% to $388.7 million and operating income down 13% to $70.5 million, driven by a 9.8% decline in shipment volumes. The company expects Wine and Spirits net sales to decline 4-6% and operating income to decline 16-18% in fiscal 2025.

The company updated its fiscal 2025 reported EPS outlook to $4.05c-$4.25 and affirmed comparable EPS guidance of $13.60-$13.80. It also affirmed operating cash flow of $2.8-$3.0 billion and free cash flow of $1.4-$1.5 billion, and declared a quarterly dividend of $1.01 per share. Year-to-date operating cash flow was $1.87 billion, and $449 million of shares had been repurchased through August 2024.

02—Key points

Key Highlights

  1. Reported diluted EPS was $(6.59) for the quarter, including a $2.25 billion non-cash goodwill impairment for the Wine and Spirits business; comparable EPS was $4.32, up 14%.
  2. Net sales were $2,918.9 million, up 3%; comparable operating income was $1,089.8 million, up 13%.
  3. Beer Business net sales rose 6% to $2,530.2 million, with operating margin up 270 basis points to 42.6%; Modelo Especial and Pacifico drove depletion growth.
  4. Wine and Spirits net sales fell 12% to $388.7 million and operating income fell 13% to $70.5 million; the business expects further declines for fiscal 2025.
  5. Fiscal 2025 reported EPS outlook was updated to $4.05-$4.25, while comparable EPS guidance of $13.60-$13.80 was affirmed.
  6. Year-to-date operating cash flow was $1.9 billion (up 15%) and free cash flow was $1.2 billion (up 12%); $449 million of shares were repurchased through August 2024.
  7. Quarterly dividend of $1.01 per share declared, payable November 21, 2024 to holders of record on November 5, 2024.

03—Questions

Frequently Asked Questions

  1. Why was the reported loss so large this quarter?

    The reported operating loss of $(1,229.4) million reflects a $2.25 billion non-cash goodwill impairment tied to negative trends in the Wine and Spirits business. Excluding this and other comparable adjustments, comparable EPS was $4.32.

  2. How is the Beer Business performing?

    Beer net sales rose 6% to $2,530.2 million on a 4.6% increase in shipments. Operating margin expanded 270 basis points to 42.6%, supported by cost savings, fixed cost absorption, and favorable pricing, partly offset by higher marketing investments. Beer guidance for fiscal 2025 calls for 6-8% net sales growth and 11-12% operating income growth.

  3. What is the outlook for Wine and Spirits?

    The company expects Wine and Spirits net sales to decline 4-6% and operating income to decline 16-18% in fiscal 2025, inclusive of commercial and operational initiatives. Management expects sequential net sales and operating income improvements in the third and fourth fiscal quarters.

  4. Did the company change its guidance and cash flow expectations?

    Reported EPS guidance was updated to $4.05-$4.25, while comparable EPS guidance of $13.60-$13.80 was affirmed. Operating cash flow of $2.8-$3.0 billion and free cash flow of $1.4-$1.5 billion were also affirmed.

  5. How is the company returning capital to shareholders?

    The company declared a quarterly dividend of $1.01 per share and repurchased $449 million of shares through August 2024, including about $250 million in the quarter. It also reported reaching its target of approximately 3.0x net leverage on a comparable basis.

04—Continue

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