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Aug 31, 2022
Constellation Brands Q2 2023 Earnings Report
Constellation Brands delivered strong business performance, with double-digit net sales and operating income growth in the beer business.
Key Takeaways
Constellation Brands reported a strong Q2 fiscal 2023, with the beer business driving double-digit net sales and operating income growth. The wine and spirits business also contributed with net sales growth. The company updated its fiscal 2023 EPS outlook and affirmed its operating cash flow and free cash flow targets.
Reported EPS of $(6.30) and comparable basis EPS of $3.17, including Canopy equity losses of $0.16; excluding Canopy equity losses, achieved comparable basis EPS of $3.33.
Beer Business achieved double-digit net sales and operating income increases and strong depletion growth driven by continued strength of Modelo Especial and Corona Extra.
Wine and Spirits Business delivered net sales growth driven by U.S. shipment volume growth and strong performance of fine wine and craft spirits portfolio (Aspira) in international markets.
Generated $1.7 billion of operating cash flow, an increase of 8%, and $1.2 billion of free cash flow, an increase of 4%.
Revenue by Segment
Forward Guidance
Constellation Brands provided guidance for fiscal year 2023, including net sales and operating income growth expectations for the beer and wine and spirits businesses, as well as interest expense, tax rate, weighted average diluted shares outstanding, operating cash flow, capital expenditures, and free cash flow projections.
Positive Outlook
- Beer: net sales growth 8 - 10%
- Beer: operating income growth 3 - 5%
- Wine and Spirits: net sales decline 0 - 2%
- Wine and Spirits: operating income growth 3 - 5%
- Operating cash flow: $2.6 - $2.8 billion
Challenges Ahead
- Interest expense: approximately $360 - $370 million
- Tax rate: reported approximately 71%; comparable excluding Canopy equity earnings impact approximately 20%
- Weighted average diluted shares outstanding: approximately 186.5 million
- 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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