• Achieves fiscal 2015 comparable basis EPS of $4.44 and reported basis EPS of $4.17
  • Generates $362 million of free cash flow and $1.1 billion of operating cash flow for fiscal 2015
  • Provides fiscal 2016 outlook; expects comparable basis EPS of $4.70 - $4.90 and reported basis EPS of $4.55 - $4.75
  • Projects free cash flow of $100 - $200 million for fiscal 2016 including operating cash flow target of at least $1.15 billion and total capital expenditure estimate of $1.05 - $1.15 billion
  • Brewery expansion progressing as planned from a timing and budget standpoint
  • Initiates quarterly dividend for first time in company history
Fiscal 2015 Financial Highlights*
(in millions, except per share data)
Comparable % Change Reported % Change
Net sales $6,028 24% $6,028 24%
Operating income $1,583 35% $1,500 -38%
Operating margin 26.3% +230 bps 24.9% NM
Earnings before interest and taxes (EBIT) $1,605 28% NA NA
Net income attributable to CBI $893 39% $839 -57%
Diluted net income per share attributable to CBI (EPS) $4.44 37% $4.17 -58%

*Definitions of reported and comparable, as well as reconciliations of non-GAAP financial measures, are contained elsewhere in this news release.
NM=Not Meaningful
NA=Not Applicable

VICTOR, N.Y., APRIL 9, 2015 - Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading beverage alcohol company, reported today its fiscal 2015 results.

"We have completed another year of impressive results propelled by our Mexican beer business, which continues its incredible momentum and remains strongly positioned to generate ongoing sustainable growth. We outperformed the U.S. beer industry for the fifth consecutive year while achieving growth for every brand in our Mexican beer portfolio. And, our Nava brewery expansion is progressing as planned from a budget and timing of completion perspective," said Rob Sands, president and chief executive officer, Constellation Brands. "Within our wine and spirits business, we achieved strong earnings growth and margin expansion, while delivering better than expected results for our spirits portfolio. The collective strength of these businesses has provided the foundation that enables us to initiate a common stock cash dividend for the first time in the history of our company, as announced earlier today. This action reflects our confidence in the long-term sustainability of our business strategy, future growth potential and the expected strength of our cash flows."

Fiscal 2015 Net Sales Commentary

The 24 percent increase in consolidated net sales for the year was driven primarily by $941 million of incremental net sales due to the timing of the beer business acquisition. Consolidated organic net sales on a constant currency basis increased five percent.

Net sales for the beer segment increased 12 percent primarily due to volume growth and favorable pricing. Beer depletions grew eight percent, reflecting strong consumer demand for all key brands within the beer portfolio. In addition, distributors increased their inventories during the second half of the year in an effort to align with historical levels and be better positioned to meet consumer demand heading into the key summer selling season.

"Our beer business delivered strong marketplace results and enhanced market share throughout the year driven by Modelo Especial, Corona Extra and Modelo Especial Chelada," said Sands. "The outstanding performance of our beer business reflects ongoing excellent commercial execution by our distributors and sales team, exciting brand marketing initiatives, and expanded distribution for our portfolio."

Wine and spirits net sales on a constant currency basis increased one percent. This result reflects favorable mix, combined with a "make-whole" distributor payment associated with planned distributor destocking during the first quarter and distributor performance payments in the fourth quarter, partially offset by lower volumes, lower non-branded wine sales and higher promotional spend. "While we did not achieve our overall wine market share goals for the year, we improved product mix and posted strong depletion trends for some of our fastest-growing wine brands, including Kim Crawford, Mark West, Ruffino, Black Box, Simi, Nobilo and The Dreaming Tree. Our spirits portfolio generated excellent growth for the year and gained share in the U.S. spirits category driven by new flavor introductions, including SVEDKA Strawberry Lemonade and Mango Pineapple, as well as Paul Masson Grande Amber Peach brandy. Our Casa Noble tequila brand is gaining traction and we are introducing new promotional programs at retail for the upcoming Cinco de Mayo holiday," said Sands.

Fiscal 2015 Operating Income and Net Income Commentary

The increase in consolidated comparable basis operating income includes an incremental benefit of $309 million due to the timing of the beer business acquisition. Operating income also benefited from excellent volume growth and favorable pricing for the base beer business, partially offset by higher marketing and general and administrative expenses. The increase in wine and spirits operating income primarily reflects favorable mix and COGS and a benefit from distributor performance payments, partially offset by higher SG&A expense, increased promotional spend and lower volume.

For fiscal 2015, pre-tax unusual items totaled $87 million of expense. This primarily included integration and other acquisition-related costs associated with the beer business acquisition and a net loss from the mark to fair value of undesignated commodity derivative contracts, primarily driven by diesel fuel. Fiscal 2014 results included a $1.6 billion non-cash gain on the remeasurement to fair value of the company's original 50 percent interest in the Crown Imports joint venture as a result of the beer business acquisition and $301 million of non-cash impairment charges related to goodwill and intangible assets associated with the company's Canadian wine business.

Interest expense for the year totaled $338 million, an increase of four percent. The increase was primarily due to higher average borrowings, partially offset by lower average interest rates.

The comparable basis effective tax rate for fiscal 2015 was 29.5 percent compared to a 31.2 percent tax rate for the prior year.

The reported basis effective tax rate for fiscal 2015 was 29.1 percent compared to an 11.8 percent tax rate for the prior year, which reflected the recognition of the $1.6 billion non-taxable gain and the non-deductible goodwill impairment charge.

Free Cash Flow Commentary

Free cash flow for fiscal 2015 totaled $362 million as compared to $603 million for the prior year. Benefits from the growth of the beer business were more than offset by higher capital expenditures related primarily to the expansion of the Nava brewery in Mexico.

"The exceptional cash generation capability of each of our business segments is driving our operating cash flow expectation of $1.15 to $1.35 billion for fiscal 2016. While the overall timing and costs for our brewery expansion remain unchanged, we expect to spend approximately 70% to 80% of our remaining brewery capital investments during fiscal 2016," said Bob Ryder, chief financial officer, Constellation Brands. "As a result, we expect free cash flow to be in the range of $100 to $200 million for the year."

Fourth Quarter 2015 Financial Highlights*
(in millions, except per share data)
Comparable % Change Reported % Change
Net sales $1,353 5% $1,356 5%
Operating income $350 4% $354 7%
Operating margin 25.8% -40 bps 26.1% +60 bps
EBIT $350 4% NA NA
Net income attributable to CBI $208 28% $215 37%
EPS $1.03 27% $1.06 34%

Fourth Quarter 2015 Net Sales Commentary

For the quarter, the company generated consolidated net sales growth on a constant currency basis of six percent.

Net sales for the beer segment increased 11 percent primarily due to volume growth driven by continued strong consumer demand. Wine and spirits net sales on a constant currency basis increased two percent. This reflects favorable mix and distributor performance payments, partially offset by lower volume.

Fourth Quarter 2015 Operating Income and Net Income Commentary

The increase in consolidated comparable basis operating income primarily reflects the higher volume for the beer business. The decrease in wine and spirits operating income primarily reflects higher marketing and SG&A costs.

Interest expense for the fourth quarter totaled $80 million, a decrease of nine percent. The decrease was primarily due to lower average interest rates.

The comparable basis effective tax rate for fourth quarter 2015 was 23.2 percent which reflected the benefit of foreign tax credits. This compares to a 34.8 percent tax rate for the prior year fourth quarter.


The table below sets forth management's current EPS expectations for fiscal 2016 compared to fiscal 2015 actual results, both on a reported basis and a comparable basis.

Reported Basis Comparable Basis
Fiscal Year Ending Feb. 28/29 $4.55 - $4.75 $4.17 $4.70 - $4.90 $4.44

For fiscal 2016, the beer business is targeting mid-single digit volume growth, high-single digit net sales growth and 10 - 12 percent operating income growth. For the wine and spirits business, the company expects net sales and operating income growth to be in the low-to-mid-single digit range.

Full-year fiscal 2016 guidance also includes the following current assumptions:

  • Interest expense: approximately $325 - $335 million
  • Tax rate: approximately 30.5 percent
  • Weighted average diluted shares outstanding: approximately 204 million
  • Free cash flow: approximately $100 - $200 million
  • Operating cash flow: approximately $1.15 - $1.35 billion
  • Capital expenditures: approximately $1.05 - $1.15 billion, including $950 million - $1.05 billion for the beer business

The beer segment's capital investment project in Mexico (outlined in the table below) remains on track from an overall estimated cost and timing of completion perspective.

Beer Project Capital Expenditures
(in millions) FY 2014 FY 2015 (1) FY 2016 FY 2017 - 2018 (2) Total
Nava Brewery (3) $125 $550 $650 - $700 $125 - $275 $1,450 - $1,650
Nava Glass Plant - Warehouse and Rail
(Investments outside of the Glass JV)
$25 $125 - $150 $25 - $50 $175 - $225
Glass Plant JV With Owens-Illinois (4)
(Furnace expansion)
$25 $175 - $200 $100 - $175 $300 - $400
Total Beer Project Capital Expenditures $125 $600 $950 - $1,050 $250 - $500 $1,925 - $2,275

(1) Some rounding for presentation purposes.

(2) Consists of the initial investment from 10M - 20M HL (expected to be completed in FY 2017) and the additional expansion from 20M - 25M HL (expected to be completed in FY 2018).

(3) The significant majority of capital expenditure investment for FY 2017 - 2018 is expected to occur in FY 2017.

(4) The company expects to receive 50% contributions from Owens-Illinois for these amounts.

Conference Call

A conference call to discuss fourth quarter and full year fiscal 2015 results and outlook will be hosted by President and Chief Executive Officer Rob Sands and Executive Vice President and Chief Financial Officer Bob Ryder on Thursday, April 9, 2015 at 10:30 a.m. (eastern). The conference call can be accessed by dialing +973-935-8505 beginning 10 minutes prior to the start of the call. A live listen-only webcast of the conference call, together with a copy of this news release (including the attachments), and other financial information that may be discussed during the call will be available on the Internet at the company's website: www.cbrands.com under "Investors," prior to the call.


Reported basis ("reported") operating income, net income and EPS are as reported under generally accepted accounting principles. Operating income, net income and EPS on a comparable basis ("comparable"), exclude items that affect comparability ("unusual items"). The company's measure of segment profitability excludes unusual items, which is consistent with the measure used by management to evaluate results.

The company discusses additional non-GAAP measures in this news release, including constant currency net sales, organic net sales, comparable basis EBIT, comparable basis effective tax rate and free cash flow.

Supplemental Financial Information

Tables reconciling non-GAAP measures, together with definitions of these measures and the reasons management uses these measures, are attached to and are part of this news release.

About Constellation Brands

Constellation Brands (NYSE: STZ and STZ.B) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy. In 2014, Constellation was one of the top performing stocks in the S&P 500 Consumer Staples Index. Constellation is the number three beer company in the U.S. with high-end, iconic imported brands including Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico. Constellation is also the world's leader in premium wine selling great brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford, Rex Goliath, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company's premium spirits brands include SVEDKA Vodka and Black Velvet Canadian Whisky.

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. Founded in 1945, Constellation has grown to become a significant player in the beverage alcohol industry with more than 100 brands in its portfolio, sales in approximately 100 countries, about 40 facilities and approximately 7,200 talented employees. We express our company vision: to elevate life with every glass raised. To learn more, visit www.cbrands.com.

Forward-Looking Statements

The statements made under the heading Outlook, and all statements other than statements of historical fact set forth in this news release regarding Constellation Brands' business strategy, future operations, financial position, estimated revenues, projected costs, expected cash flow, prospects, future payments of dividends, plans and objectives of management, as well as information concerning expected actions of third parties, are forward-looking statements (collectively, the "Projections") that involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the Projections.

During the current quarter, Constellation Brands may reiterate the Projections. Prior to the start of the company's quiet period, which will begin at the close of business May 29, 2015, the public can continue to rely on the Projections as still being Constellation Brands' current expectations on the matters covered, unless the company publishes a notice stating otherwise. During Constellation Brands' "quiet period," the Projections should not be considered to constitute the company's expectations and should be considered historical, speaking as of prior to the quiet period only and not subject to update by the company.

The Projections are based on management's current expectations and, unless otherwise noted, do not take into account the impact of any future acquisition, merger or any other business combination, divestiture, restructuring or other strategic business realignments, financing or share repurchase that may be completed after the date of this release. The Projections should not be construed in any manner as a guarantee that such results will in fact occur.

In addition to the risks and uncertainties of ordinary business operations, the Projections of the company contained in this news release are subject to a number of risks and uncertainties, including:

  • brewery expansion activities and joint venture glass plant expansion activities take place with expected scope, on expected terms and timetable, and with receipt of any necessary regulatory approvals;
  • accuracy of supply projections, including those relating to brewery expansion and glass sourcing;
  • timeframe and actual costs associated with beer supply, brewery expansion and glass sourcing, including joint venture glass plant expansion, may vary from management's current expectations due to market conditions, the company's cash and debt position, and other factors as determined by management;
  • free cash flow, operating cash flow, and capital expenditures to support long-term growth may vary from management's current estimates;
  • timing and volume amount of beer shipments to wholesalers may vary from current expectations due to actual consumer demand;
  • the impact of and the ability to realize the anticipated benefits of acquisitions, including as a result of difficulty in integrating the businesses of the companies involved;
  • the exact duration of the share repurchase implementation and the amount and timing of any additional share repurchases;
  • amount and timing of future dividends are subject to the determination and discretion of the Board of Directors;
  • ability to use cash flow to fund dividends could be affected by unanticipated increases in net total debt, inability to generate cash flow at the levels anticipated, and failure to generate expected earnings;
  • raw material and water supply, production or shipment difficulties could adversely affect the company's ability to supply its customers;
  • increased competitive activities in the form of pricing, advertising and promotions could adversely impact consumer demand for the company's products and/or result in lower than expected sales or higher than expected expenses;
  • general economic, geo-political and regulatory conditions, instability in world financial markets, or unanticipated environmental liabilities and costs;
  • changes to accounting rules and tax laws, and other factors which could impact the company's reported financial position, results of operations or effective tax rate;
  • changes in interest rates and the inherent unpredictability of currency fluctuations, commodity prices and raw material costs;
  • accuracy of the bases for forecasts relating to joint ventures and associated costs, losses, purchase obligations and capital investment requirements; and
  • other factors and uncertainties disclosed in the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Feb. 28, 2014, which could cause actual future performance to differ from current expectations.

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Investor Relations
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