STZ - Constellation Brands beats earnings estimates on strong beer sales

2023-06-30 12:52:55 ET

Constellation Brands Inc ( NYSE: STZ ) cited the strength in its beer business as it reported market-beating results for its first financial quarter on Friday. Shares still opened in the red.

Constellation Brands reiterates guidance

The price action is interesting considering the liquor company also reiterated its guidance for the full financial year.

For fiscal 2024, Constellation Brands expects its earnings to fall between $11.70 a share to $12 a share, excluding its investment in Canopy Growth Corp. According to CFO Garth Hankinson:

Performance of beer business has reaffirmed our confidence in our annual plans and objectives. We expect our wine and spirits business to accelerate toward its outlook throughout the balance of the year.

Analyst had called for $11.66 a share of per-share earnings. Constellation Brands forecasts up to $1.3 billion in free cash flow this year.

Beer sales were strong in Q1

Beer sales in the recently concluded quarter jumped 11%. Still, Constellation Brands reported a 220 basis points hit to operating margin in that business partially due to higher input costs. The Finance Chief added in the press release :

We’re also now closer to our net leverage ratio goal while continuing to return cash to shareholders and advancing our modular brewery capacity expansions per capital allocation priorities.

Earlier in June, Constellation Brands’ Model Especial dethroned AB InBev’s Bud Light as the top selling beer in the United States ( read more ).

The New York listed company estimates up to a 9.0% increase in its beer sales this year.

Notable figures in Constellation Brands Q1 earnings

• Earned $135.9 million versus the year ago $389.5 million
• Per-share earnings also declined from $2.09 to 74 cents
• Adjusted EPS printed at $2.91 as per the press release
• Sales went up 7.0% year-over-year to $2.525 billion
• Consensus was $2.83 a share on $2.474 billion in sales

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