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Nov 30, 2022
Constellation Brands Q3 2023 Earnings Report
Constellation Brands' Q3 2023 earnings showcased strong business performance, driven by the beer business and growth in higher-end wine and craft spirits.
Key Takeaways
Constellation Brands reported a 5% increase in net sales, driven by the beer business which continued to outperform the market. The wine and spirits business also delivered strong relative performance. The company updated its fiscal 2023 comparable basis EPS outlook to $11.00 - $11.20 and increased its free cash flow projection to $1.5 - $1.6 billion.
Reported EPS was $2.52, and comparable EPS was $2.83 which includes Canopy equity losses of $0.18; excluding Canopy equity losses, comparable EPS reached $3.01.
The Beer Business experienced strong net sales and depletion increases, fueled by Modelo Especial and Modelo Chelada brands.
The Wine and Spirits Business showed strong performance in higher-end wine and craft spirits, outpacing corresponding segments of U.S. wine and spirits categories in dollar sales growth in IRI channels.
Operating cash flow was $2.3 billion, a decrease of 7%, while free cash flow was $1.6 billion, a decrease of 13%.
Revenue by Segment
Forward Guidance
Constellation Brands provided guidance for fiscal year 2023, anticipating net sales growth and operating income growth for the Beer Business, while expecting a decline in organic net sales but growth in operating income for the Wine and Spirits Business.
Positive Outlook
- Beer: net sales growth 9 - 10%
- Beer: operating income growth 4 - 5%
- Wine and Spirits: operating income growth 3 - 5%
- Operating cash flow: $2.6 - $2.8 billion
- Free cash flow: $1.5 - $1.6 billion
Challenges Ahead
- Wine and Spirits: organic net sales decline 0 - 2%
- Interest expense: approximately $390 - $400 million
- Tax rate: reported approximately 74%
- Capital expenditures: $1.1 - $1.2 billion, including approximately $1.0 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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