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Constellation Brands beats by $0.12, beats on revs; raises FY17 EPS above consensus on better beer outlook; acquires High West Distillery for $160 mln
- Reports Q2 (Aug) earnings of $1.77 per share, excluding non-recurring items, $0.12 better than the Capital IQ Consensus of $1.65; revenues rose 16.6% year/year to $2.02 bln vs the $1.96 bln Capital IQ Consensus. This reflects organic net sales growth on a constant currency basis of 13% and acquisition benefits from Ballast Point craft beer, as well as Meiomi and The Prisoner wine brands.
- Net sales for beer increased 20%. This was due to a 15% increase in organic net sales driven primarily by volume growth and favorable pricing, and the acquisition benefit from Ballast Point.
- Wine and spirits net sales increased 12%. This reflects an eight% increase in organic net sales on a constant currency basis driven primarily by volume growth and favorable mix, and the acquisition benefit from Meiomi and The Prisoner wine brands.
- Co issues upside guidance for FY17, raises EPS to $6.30-6.45 (from $6.05-6.35), excluding non-recurring items, vs. $6.30 Capital IQ Consensus.
- For fiscal 2017, the beer business now expects net sales growth of 16 - 17% and operating income growth at the high teens level (up from +14-17% for top and bottom line). These growth rates include an estimated incremental benefit from the Ballast Point acquisition.
- For the wine and spirits business, the company continues to expect net sales growth in the mid single-digit range and operating income growth in the mid to high single-digit range. These growth rates include an estimated incremental benefit from the Meiomi and The Prisoner wine brands acquisitions.
- Co announced an agreement to purchase the Utah-based High West Distillery for ~$160 million. With High West, which has experienced double-digit volume growth year over year for the past three years, Constellation Brands enters the dynamic and profitable high-end craft whiskey market segment.