Updates reported EPS guidance to $3.05 – $7.92 and raises lower-end of comparable EPS guidance to $13.60 – $13.80, affirming double-digit comparable EPS growth expectation.
Updates Enterprise net sales growth to 4% – 6%, reported operating income decline to (68)% – (36)% including an expected Wine and Spirits goodwill impairment loss of approximately $1.5 – $2.5 billion and comparable operating income growth to 8% – 9%
Updates Beer net sales growth to 6% – 8% and raises Beer operating income growth to 11% – 12%, at higher-end of initial range, and updates Wine and Spirits net sales and operating income declines to (6)% – (4)% and (18)% – (16)%, respectively.
ROCHESTER, N.Y., Sept. 3, 2024 – Constellation Brands, Inc. (NYSE: STZ), a leading beverage alcohol company, announced today updates to management’s current financial outlook for fiscal 2025.
| Updated Outlook | Prior Outlook | Outlook Update Key Drivers | |
| Reported diluted net income (loss) per share attributable to CBI (EPS) | $3.05 – $7.92 | $14.63 – $14.93 | Per drivers below; reported EPS estimate includes expected Wine and Spirits goodwill impairment |
| Comparable EPS | $13.60 – $13.80 | $13.50 – $13.80 | |
| Guidance Assumptions: | |||
| Enterprise net sales growth | 4% – 6% | 6% – 7% | Incremental macroeconomic headwinds affecting consumer, particularly unemployment, and prolonged inventory destocking in wine and spirits markets |
| Beer net sales growth | 6% – 8% | 7% – 9% | |
| Wine and Spirits net sales growth (decline) | (6)% – (4)% | (0.5)% – 0.5% | |
| Reported Enterprise operating income growth (decline) | (68)% – (36)% | 10% – 12% | Per drivers below; reported Enterprise operating income decline estimate includes expected Wine and Spirits goodwill impairment |
| Comparable Enterprise operating income growth | 8% – 9% | 8% – 10% | |
| Beer operating income growth | 11% – 12% | 10% – 12% | Incremental cost savings partially offset by increased marketing investments |
| Wine and Spirits operating income decline | (18)% – (16)% | (11)% – (9)% | Adjusted top-line impact |
| Corporate expense | Unchanged | ~$260 million | N/A |
| Equity in earnings | |||
| Interest expense, net | ~$430 million | $445 – $455 million | Capitalized interest adjustment |
| Reported tax rate | ~11%(i) | ~12% | Includes expected Wine and Spirits goodwill impairment |
| Comparable tax rate | Unchanged | ~18.5% | N/A |
| Non-controlling interests | |||
| Weighted average diluted shares outstanding (1) | |||
| Operating cash flow | |||
| Capital expenditures | |||
| Free cash flow |
The Company also expects to recognize a non-cash goodwill impairment loss for the Wine and Spirits business of approximately $1.5 to $2.5 billion for its second quarter fiscal 2025 results, which is included above in the fiscal 2025 reported EPS outlook.(2)The impairment reflects the Company’s updated expectations of its fiscal 2025 outlook for its Wine and Spirits business due to continued negative trends primarily in its U.S. wholesale market, driven by declines in both the overall wine market and its mainstream and premium wine brands.
“While ongoing macroeconomic headwinds, particularly rising unemployment, have led to a recent deceleration in the rate of growth of consumer demand for our products, we are on track to deliver a solid mid single-digit volume increase this fiscal year for our Beer Business,” said Constellation Brands President and Chief Executive Officer Bill Newlands. “These trends have been most notable in the top five states for our Beer Business, which account for just over half of our volumes; however, we continue to see volume growth within the low to mid single-digit range in these states and within the high single-digit range on average across the rest of the country. Importantly, our Beer brands remain strong and loyalty among our core consumers is resilient with only some marginal shifts to value packs and value-oriented channels. In our Wine and Spirits Business, the commercial and operational execution initiatives introduced earlier this year are improving the performance of our largest brands, but we continue to face incremental category headwinds further affecting our outlook for this fiscal year. Notably, we continued to outpace the growth of the entire CPG sector by nearly 3 percentage points in dollar sales across Circana tracked channels, and our Beer Business remained the top dollar share gainer in its category with a 1.3 point increase in fiscal 2025 to-date, as well as the third largest dollar share gainer in the entire Beverage industry.”
“Our cost savings and efficiency initiatives are also delivering significant incremental benefits for our Beer Business, enabling us to reinvest some of those savings into incremental opportunities in our Beer marketing programs,” said Executive Vice President and Chief Financial Officer Garth Hankinson. “In our Wine and Spirits Business, we are also taking incremental tactical pricing and marketing actions to support demand for our core brands but are facing operating deleveraging due to more significant top-line headwinds, which in turn we expect will also lead to an impairment charge of the goodwill associated with that Business. All in, while we believe an adjustment to our top-line growth expectations is prudent to reflect the near-term macroeconomic headwinds affecting our consumers, we remain confident in our ability to deliver against our initial double-digit comparable EPS growth expectations and have raised the lower-end of our initial comparable EPS guidance range for fiscal Similarly, in line with our disciplined and balanced capital allocation priorities, we continue to expect to: achieve our ~3.0x net leverage ratio target, on a comparable basis, this fiscal year; return cash to shareholders through our dividend and opportunistic share repurchases, inclusive of the $449 million executed in share repurchases in the first half of this fiscal year; and advance our brewery investments in our Beer Business.”
In addition, Bill Newlands and Garth Hankinson will participate in a fireside chat at the 2024 Barclays Global Consumer Staples Conference today, Tuesday, September 3, in Boston, MA. The presentation is scheduled to begin at 11:15 a.m. EDT and is expected to cover the company’s strategic business initiatives, financial metrics, and operating performance, as well as outlook for the future. A live, listen-only webcast of the presentation will be available on the company’s investor relations website at ir.cbrands.com under the News & Events section. When the presentation begins, financial information discussed in the presentation, and reconciliations of reported GAAP financial measures with comparable and other non-GAAP financial measures, will also be available on the company’s investor relations website under the Financial History section. For anyone unable to participate in the webcast, a replay will be available on the company’s investor relations website through the close of business on March 3, 2025.
ABOUT CONSTELLATION BRANDS
Constellation Brands (NYSE: STZ) is a leading international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy. Our mission is to build brands that people love because we believe elevating human connections is Worth Reaching For. It’s worth our dedication, hard work, and calculated risks to anticipate market trends and deliver more for our consumers, shareholders, employees, and industry. This dedication is what has driven us to become one of the fastest-growing, large CPG companies in the U.S. at retail, and it drives our pursuit to deliver what’s next.
Every day, people reach for our high-end, iconic imported beer brands such as those in the Corona brand family like the flagship Corona Extra, Modelo Especial and the flavorful lineup of Modelo Cheladas, Pacifico, and Victoria; our fine wine and craft spirits brands including The Prisoner Wine Company, Robert Mondavi Winery, Casa Noble Tequila, and High West Whiskey; and our premium wine brands such as Kim Crawford and Meiomi.
As an agriculture-based company, we have a long history of operating sustainably and responsibly. Our ESG strategy is embedded into our business and our work focuses on serving as good stewards of the environment, enhancing social equity within our industry and communities, and promoting responsible beverage alcohol consumption. These commitments ground our aspirations beyond driving the bottom line as we work to create a future that is truly Worth Reaching For. To learn more, visit www.cbrands.com and follow us on X, Instagram, and LinkedIn.
