STZ - Constellation Brands to Outline Strategic Foundation for Continued Growth at 2023 Investor Day | Benzinga
Beer Business Medium-Term ~7-9% Net Sales Growth and ~39-40% Operating Margins Outlook Unchanged
Wine & Spirits Business Now Expects Medium-Term ~1-3% Net Sales Growth and ~25-26% Operating Margins
Company Targeting Annual Low Double-Digit Diluted EPS Growth (Excluding Canopy EIE) Over Medium-Term
Expects Cumulative $15-17B Operating Cash Flow and $10-12B Free Cash Flow from Fiscal 2024 to Fiscal 2028
Capital Allocation Priorities Unchanged, Company Announces Additional $2B Share Repurchase Authorization
VICTOR, N.Y., Nov. 02, 2023 (GLOBE NEWSWIRE) -- Constellation Brands, Inc. (NYSE:STZ), a leading beverage alcohol company, will today reinforce its strategic foundation for continued growth at its Investor Day hosted at 2:00 p.m. EDT at the New York Stock Exchange in New York City. The event will provide investors, analysts, and other stakeholders with a comprehensive overview of the company's continued value creation opportunities supported by its strategic priorities.
"We remain extremely optimistic about the future outlook of our business and look forward to sharing our plans to continue to deliver shareholder value," said Bill Newlands, Constellation Brands' President and Chief Executive Officer. "We are confident in our ability to deliver sustained, strong profitable growth through our strategy, which remains focused on continuing to drive our iconic high-end portfolio, consumer-led innovation, disciplined capital allocation, and advancing our ESG commitments."
"We are pleased to see Constellation Brands' continued commitment to profitable growth, prudent capital allocation and enhanced governance," said Marc Steinberg, Elliott Management Senior Portfolio Manager, and Michael Goldberg, Elliott Management Portfolio Manager. "As investors will see today, the Company's strategy includes a double-digit earnings-per-share growth target supported by the Beer Business' sustainable volume trajectory and a capital-allocation approach prioritizing organic investment and shareholder returns. We look forward to continuing to work with Bill and the team as they drive further shareholder value creation."
During the event, members of Constellation Brands' executive and broader leadership teams will present insights into the company's leading performance and plans for ongoing success, including through:
Continuing to Deliver Best-in-Class Growth and Profitability from Beer Business
Constellation remains committed to delivering best-in-class ~7-9% annual net sales growth for its Beer Business over the medium term, mainly driven by strong volume growth due to continued high consumer demand for its brands. The company's core beer brands continue to have significant momentum, with Modelo Especial becoming the #1 dollar sales beer brand in U.S. tracked channels, Corona Extra also holding a top five spot across the entire market, and Pacifico doubling in size since fiscal 2019 to a top 10 high-end brand. The company also expects its Beer Business to deliver operating margins of ~39-40% and achieve increased cash generated over the medium term. This will support, among other things, an optimized investment plan for brewing capacity expansions amounting to 18 million hectoliters from its fiscal year 2024 through fiscal year 2028. The revised expansion plans account for capacity additions from brewery efficiency and optimization initiatives, which will reduce previously anticipated capital expenditures by approximately $1 billion.
Driving Growth and Higher Profitability of Wine & Spirits Business
The company anticipates sequential improvement in the top-line and profitability of its Wine & Spirits Business, reaching ~1-3% net sales growth and ~25-26% operating margins over the medium term. Constellation's Wine & Spirits portfolio underwent significant transformation over the last several years, doubling its number of fine wine and craft spirits brands since fiscal year 2019. Notable higher-end acquisitions, including Casa Noble, Meiomi, The Prisoner Wine Company, High West, and My Favorite Neighbor, have underpinned this transformation with further growth delivered through innovative varietal, betterment, and ready-to-drink cocktail extensions to these brands. The Wine & Spirits Business is also making progress broadening its avenues for growth by significantly increasing sales in direct-to-consumer channels and expanding share in international markets.
Targeting Low Double-Digit Diluted EPS Growth (Excluding Canopy EIE) and Incremental Cash Flows
Strong outlooks in both the Beer and Wine & Spirits Business give the company confidence to aim to deliver double-digit diluted EPS growth (excluding Canopy EIE) as part of its medium-term algorithm. In addition, the company anticipates a step-up in operating cash flow growth, which combined with optimized organic investments primarily focused on supporting incremental brewing capacity, are expected to enable the company to deliver between $10 and $12 billion in free cash flow from its fiscal year 2024 to fiscal year 2028.
Reinforced Capital Allocation Priorities, $2 Billion Increase in Share Repurchase Authorization