Workflow
Constellation Brands(STZ) - 2025 Q4 - Annual Results
STZConstellation Brands(STZ)2025-04-09 20:55
Slide

Financial Performance - Reported net sales for FY25 were 10.2billion,reflectinga210.2 billion, reflecting a 2% increase compared to FY24, while organic net sales also grew by 3%[22]. - The beer segment achieved a net sales growth of 9% in FY25, with operating income increasing by 10% to 3.4 billion[18][25]. - Wine and spirits segment reported a decline in net sales of 7% to 1.67billion,withoperatingincomedecreasingby181.67 billion, with operating income decreasing by 18% to 325 million[18][21]. - Consolidated net sales for the year ended February 28, 2025, increased by 2% to 10,208.7million,upfrom10,208.7 million, up from 9,961.8 million in the previous year[102]. - Organic net sales for the year ended February 28, 2025, rose by 3% to 10,208.7million,comparedto10,208.7 million, compared to 9,939.2 million for the year ended February 29, 2024[102]. - Beer net sales for the year ended February 28, 2025, increased by 5% to 8,539.8million,whileWineandSpiritsnetsalesdecreasedby78,539.8 million, while Wine and Spirits net sales decreased by 7% to 1,668.9 million[102]. - Net income for the year ended February 28, 2025, was a loss of 31.1million,comparedtoanetincomeof31.1 million, compared to a net income of 1,765.2 million for the year ended February 29, 2024[97]. - The company reported a net loss attributable to Constellation Brands, Inc. of 375.3millionforthethreemonthsendedFebruary28,2025,comparedtoanetincomeof375.3 million for the three months ended February 28, 2025, compared to a net income of 392.4 million for the same period in 2024[95]. Cash Flow and Capital Expenditures - Expected operating cash flow of approximately 9billionfromFY26toFY28,withfreecashflowprojectedbetween9 billion from FY26 to FY28, with free cash flow projected between 6 billion to 7billion[14].−OperatingcashflowforFY25was7 billion[14]. - Operating cash flow for FY25 was 3.2 billion, representing a 28% increase compared to FY24[21]. - Capital expenditures for FY25 were 992million,withexpectationsofapproximately992 million, with expectations of approximately 1 billion in cumulative CAPEX for FY26 to FY28[33]. - Total capital expenditures from FY26 to FY28 are expected to be around 2.4billion,withapproximately2.4 billion, with approximately 2 billion allocated to the Beer Business[66]. Strategic Initiatives and Cost Savings - Enterprise-wide restructuring actions are expected to yield over 200millioninnetannualizedcostsavingsbyFY28[14].−Thecompanyanticipatesover200 million in net annualized cost savings by FY28[14]. - The company anticipates over 100 million in net annualized cost savings across COGS, Marketing, and SG&A by FY28, including approximately 55millioninFY26[58].−Thecompanydeliveredapproximately55 million in FY26[58]. - The company delivered approximately 220 million in cost savings through supply chain efficiencies, resulting in a 180 basis point increase in beer business operating margin to 39.7%[21]. - Significant cash generation and returns to shareholders expected, with a compelling growth outlook beyond FY26[13]. Market Growth and Segment Performance - Beer segment anticipated to achieve 2% to 4% net sales growth and operating margins of 39% to 40% in FY27 and FY28, driven by distribution gains and marketing investments[14]. - Wine and Spirits segment expected to deliver up to 3% net sales growth and operating margins of 22% to 24% in FY27 and FY28, following the 2025 Wine Divestitures Transaction projected to generate around 900millioninproceeds[14].−Thecompanyistheonlylarge−scaleentitytobeaTop10growthleaderfor12consecutiveyears,holdingthe1positionfor6ofthelast8years[14].−ModeloEspecialcontributedover40900 million in proceeds[14]. - The company is the only large-scale entity to be a Top 10 growth leader for 12 consecutive years, holding the 1 position for 6 of the last 8 years[14]. - Modelo Especial contributed over 40% of Core Beer Brands POD growth from FY23 to FY25 and is expected to contribute over 30% from FY25 to FY28[40]. - Pacifico was the second largest POD growth driver among Core Beer Brands from FY23 to FY25, contributing over 20% of uplift and is expected to contribute over 30% from FY25 to FY28[40]. Shareholder Returns and Dividends - Committed to a disciplined capital allocation strategy, including share repurchases against a 4 billion authorization approved in April 2025[14]. - A new total 3-year 4billionsharerepurchaseauthorizationhasbeenestablishedtoenhancereturns[65].−Thecompanyreportedacashdividenddeclaredpercommonshareof4 billion share repurchase authorization has been established to enhance returns[65]. - The company reported a cash dividend declared per common share of 1.01 for the three months ended February 28, 2025, compared to 0.89intheprioryear[95].−Thecompanyplanstomaintainanetleverageratioofaround3.0xandadividendpayoutratioofapproximately300.89 in the prior year[95]. - The company plans to maintain a net leverage ratio of around 3.0x and a dividend payout ratio of approximately 30% from FY26 to FY28[31]. Future Projections - The company expects low single-digit CAGR for consolidated net sales from FY26 to FY28, with an operating margin target of approximately 34-35%[30]. - The company expects to maintain best-in-class operating margins of approximately 39% to 40% in FY26-FY28[52]. - The forecasted EPS (GAAP) for the year ending February 28, 2026, is projected to be between 12.33 and 12.63,withacomparableEPS(Non−GAAP)forecastedbetween12.63, with a comparable EPS (Non-GAAP) forecasted between 12.60 and 12.90[138].−Freecashflow(Non−GAAP)guidancefortheyearendingFebruary28,2026,isestimatedtobebetween12.90[138]. - Free cash flow (Non-GAAP) guidance for the year ending February 28, 2026, is estimated to be between 1,500 million and $1,600 million[141].