Constellation Brands (STZ) Tops Q4 EPS by 12c; Guides Above Views

Constellation Brands (NYSE: STZ) reported Q4 EPS of $1.48, $0.12 better than the analyst estimate of $1.36. Revenue for the quarter came in at $1.63 billion versus the consensus estimate of $1.59 billion.

For the quarter, the company generated consolidated net sales growth of five percent. This reflects organic net sales growth on a constant currency basis of seven percent.

Net sales for beer increased 11 percent. This was due to a 10 percent increase in organic net sales driven primarily by volume growth and favorable pricing.

Wine and spirits net sales were flat. This reflects a four percent increase in organic net sales and the acquisition benefit from Prisoner, Charles Smith and High West, offset by the divestiture of the Canadian wine business.

Fourth Quarter Fiscal 2017 Operating Income and Net Income Commentary

For the quarter, consolidated reported and comparable basis operating income increased 71 percent and 14 percent, respectively.

For the quarter, comparable adjustments affecting operating income totaled a net gain of $207.0 million as compared to a net loss of $24 million for the same period last year.

Beer operating income increased 21 percent primarily due to organic volume growth, favorable pricing and lower cost of product sold, partially offset by higher marketing spend. The six percent increase in wine and spirits operating income primarily reflects organic volume growth and the acquisition benefit from Prisoner, Charles Smith and High West, partially offset by higher investment in SG&A and marketing.

Interest expense for fourth quarter fiscal 2017 totaled $77 million, a decrease of eight percent. The decrease was due to lower average interest rates, partially offset by higher average borrowings.

The reported basis effective tax rate for fourth quarter fiscal 2017 was 26.0 percent versus 30.0 percent for the prior year fourth quarter. The comparable basis effective tax rate for fourth quarter fiscal 2017 was 26.9 percent. This compares to a 29.8 percent tax rate for the prior year. The fourth quarter fiscal 2017 effective tax rates reflect the benefit of APB 23. In addition, the reported basis effective tax rate includes a tax benefit from the sale of the Canadian wine business.

GUIDANCE:

Constellation Brands sees FY2018 EPS of $7.70-$8.00, versus the consensus of $7.51.

For earnings history and earnings-related data on Constellation Brands (STZ) click here.

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