Constellation Brands Reports Fiscal Q1 2020 Earnings, Results Exceed Expectations

Constellation Brands (NYSE: STZ) (NYSE: STZ.B) released their financial results for the first quarter of fiscal 2020 today. The company reported that they exceeded expectations due to their strong operating margin and cash flow performance achieved by their core business. A conference call to discuss their earnings took place this morning at 10:30 am EST. The call was hosted by CEO Bill Newlands and CFO David Klein. For details on the earnings call click here.

Q1 2020 Earnings Highlights:

Constellation Brands reported basis EPS of $(1.30) and comparable basis EPS of $2.21.
- This included Canopy Growth’s equity losses of $0.20.
- It also excluded Canopy Growth’s equity losses, achieved on comparable basis EPS of $2.40 or +9%.
The company reported a $1.6 billion unrealized net gain in reported basis results since their initial investment in Canopy in November 2017.
- An $828 million decrease in the fair value of their Canopy investments was recognized for Q1 2020.
The company generated $593 million of operating cash flow.
- $437 million of free cash flow.
  - Representing an increase of 18% and 30%, respectively.
Constellation’s Wine and Spirits Transaction is expected to close in the second half of the 2019 calendar year.
The company reported a fiscal 2020 reported basis EPS outlook to $4.95 – $5.25.
- The company increased its comparable basis EPS outlook to $8.65 – $8.95.
  - For guidance purposes, this assumes the close of their previously mentioned Wine and Spirits Transaction.
The company increased its fiscal 2020 operating cash flow target to approximately $2.1 billion.
- As well as their free cash flow projection to $1.2 – $1.3 billion.
  - Both due to the revised timing for the Wine and Spirits Transaction.
Constellation Brands declared a quarterly cash dividend.

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Canopy Growth (TSX: WEED) (NYSE: CGC) Investment:

Canopy Growth’s equity earnings for fiscal Q1 2020 worked out to a loss of $106.0 million on a reported basis.
- As well as a loss of $54.4 million on a comparable basis.
Canopy Growth and Acreage Holdings (CSE: ACRG.U) (OTCQX: ACRGF) received shareholder approval for Canopy’s planned acquisition of Acreage.
- This will put Canopy Growth in a position to enter the U.S. cannabis market once federally legalized.
The Acreage deal also results in the extension of the Canopy Growth warrants held by Constellation Brands.
- This is expected to result in a material gain during fiscal Q2 2020.

“As we kick off fiscal 20, I’m pleased with our strong start to the year. Our wine and spirits transformation strategy is working, led by our collection of Power Brands, which delivered industry-leading depletion growth of 4% during the quarter. In addition, our iconic beer portfolio continues to be a cornerstone of growth in the U.S. beer industry, driven by double-digit depletion growth for Modelo Especial and Corona Premier. We believe these brands, along with our innovation initiatives, will drive our targeted goals for the year.” – Constellation Brands CEO Bill Newlands.

Investors can view the quarterly report in its entirety here.

Investors looking for additional information on Constellation Brands are encouraged to visit the company’s website here.

Additional investor due diligence links: Constellation Brands IR Website & Constellation Brands Investor Deck

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About Constellation Brands:

Constellation Brands (NYSE: STZ) (NYSE: STZ.B), a Fortune 500® company, is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy, and Canada. Constellation is the No. 3 beer company in the U.S. with high-end, iconic imported beer brands such as the Corona and Modelo brand families, and Pacifico. Its high-quality wine and spirits brands include the Robert Mondavi and The Prisoner Wine Company brand families, Kim Crawford, Ruffino, Meiomi, and SVEDKA Vodka. The company’s portfolio also includes a collection of highly-rated wine brands such as SIMI and Mount Veeder Winery, spirits brands High West Whiskey and Casa Noble Tequila, as well as new wine innovations such as Cooper & Thief and Spoken Barrel.

Based in Victor, N.Y., the company believes that industry leadership involves a commitment to brand building, our trade partners, the environment, our investors, and to consumers around the world who choose our products when celebrating big moments or enjoying quiet ones. Since its founding in 1945, Constellation’s ability to see, meet and stay ahead of shifting consumer preferences and trends across total beverage alcohol has fueled our success and made us the No. 1 growth contributor in beverage alcohol in the U.S.

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