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May 31, 2022
Constellation Brands Q1 2023 Earnings Report
Constellation Brands delivered a strong start to fiscal year 2023 with double-digit net sales and operating income growth in the beer business and advanced capital allocation priorities by completing share repurchase goal.
Key Takeaways
Constellation Brands reported a strong first quarter for fiscal year 2023, with the beer business achieving double-digit net sales and operating income growth. The wine and spirits business also delivered net sales and depletion growth. The company generated $758 million of operating cash flow and $562 million of free cash flow.
Generated reported basis EPS of $2.06 and comparable basis EPS of $2.66, including Canopy equity losses of $0.24; excluding Canopy equity losses, achieved comparable basis EPS of $2.90.
Beer Business achieved double-digit net sales and operating income growth and strong depletion growth driven by continued solid performance from Modelo Especial and Corona Extra.
Wine and Spirits Business delivered net sales and depletion growth driven by strong performance of higher-end brands including Meiomi, Kim Crawford, SIMI, The Prisoner Wine Company, High West Whiskey, and Casa Noble Tequila.
Generated $758 million of operating cash flow, an increase of 6%, and $562 million of free cash flow.
Revenue by Segment
Forward Guidance
Constellation Brands provided guidance for fiscal year 2023, including expectations for net sales and operating income growth in the beer business, net sales decline and operating income growth in the wine and spirits business, and targets for operating cash flow and free cash flow.
Positive Outlook
- Beer: net sales growth 7 - 9%
- Beer: operating income growth 2 - 4%
- Wine and Spirits: operating income growth 4 - 6%
- Operating cash flow: $2.6 - $2.8 billion
- Free cash flow: $1.3 - $1.4 billion
Challenges Ahead
- Wine and Spirits: net sales decline 1 - 3%
- Interest expense: approximately $350 - $360 million
- Tax rate: reported approximately 21.5%
- Capital expenditures: $1.3 - $1.4 billion, including approximately $1.2 billion targeted for Mexico beer operations expansion, optimization, and/or construction activities
Historical Earnings Impact
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Avg. Return Before/After Earnings
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