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Nov 30, 2021
Constellation Brands Q3 2022 Earnings Report
Constellation Brands' third quarter results for fiscal year 2022 were released, highlighted by solid beer business growth and strong margin expansion in wine and spirits.
Key Takeaways
Constellation Brands reported a decrease in net sales by 5% and an increase in operating income by 7%. The beer business delivered solid growth, while the wine and spirits business achieved strong margin expansion. EPS was $2.48 on a reported basis and $3.12 on a comparable basis.
Reported basis EPS of $2.48 and comparable basis EPS of $3.12 were generated, including Canopy equity losses of $0.31; excluding Canopy equity losses, comparable basis EPS reached $3.42, an 8% increase.
The Beer Business showed strong depletion growth, driven by the continued strength of Modelo Especial and Corona Extra.
The Wine and Spirits Business delivered strong margin expansion while achieving solid organic net sales growth.
Operating cash flow was $2.4 billion, a 3% increase, and free cash flow was $1.8 billion.
Revenue by Segment
Forward Guidance
Constellation Brands provided guidance for fiscal year 2022, including net sales and operating income growth for the beer business, net sales and operating income decline for the wine and spirits business, and targets for interest expense, tax rate, weighted average diluted shares outstanding, operating cash flow, capital expenditures, and free cash flow.
Positive Outlook
- Beer: net sales growth 10 - 11%.
- Beer: operating income growth 6 - 7%.
- Operating cash flow: $2.4 - $2.6 billion.
- Comparable basis EPS outlook increased to $10.50 - $10.65.
- Wine and Spirits: organic net sales growth 4 - 6%
Challenges Ahead
- Wine and Spirits: net sales decline 21 - 22%.
- Wine and Spirits: operating income decline 23 - 25%.
- Interest expense: approximately $360 million.
- Reported basis EPS outlook to $(0.25) - $(0.10).
Historical Earnings Impact
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Avg. Return Before/After Earnings
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