Constellation Brands(US:STZ)2024-04-11 18:47Financial Data and Key Metrics Changes - The company reported a comparable earnings per share (EPS) growth of nearly 9% for fiscal 2024, exceeding the guidance range of $12 to $12.20, with a final EPS of $12.38 [81] - Net sales increased by 5% at an enterprise level, driven by a strong performance in the Beer Business, which saw net sales growth of over 9% [10][57] - Comparable operating income rose by 7%, resulting in a comparable operating margin of 32.6%, a 50-basis-point increase from the previous year [60][81] Business Line Data and Key Metrics Changes - The Beer Business delivered net sales and operating income growth above 9% and 8% respectively, contributing significantly to overall performance [14] - The Wine & Spirits business experienced declines of approximately 8% for both organic net sales and operating income, attributed to challenging market dynamics [35][76] Market Data and Key Metrics Changes - The Beer Business captured an impressive two points of dollar share within the US beer category, with Modelo Especial becoming the number one beer in US dollar sales [15][16] - International markets saw a 7% decline in net sales due to destocking, particularly in Canada, but Q4 showed a recovery with a 14% growth in net sales from international markets [69] Company Strategy and Development Direction - The company aims to maintain 6% to 8% enterprise net sales growth and achieve low-double-digit comparable EPS growth in fiscal 2025 [13][55] - A new President of Wine & Spirits has been appointed to enhance execution and drive growth, focusing on key brands that represent three-quarters of net sales [17][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong enterprise results aligned with medium-term targets despite challenges in the Wine & Spirits segment [48][55] - The company anticipates free cash flow in fiscal 2025 to be between $1.4 billion and $1.5 billion, reflecting ongoing investments in brewery expansions [39][40] Other Important Information - The company generated $2.8 billion in operating cash flow and returned over $900 million to shareholders through dividends and share repurchases [20][75] - The company has set a new environmental goal of restoring more than 5 billion gallons of water to key watersheds between fiscal 2023 and 2025 [54] Q&A Session Summary Question: Inquiry about gross margin and shipment context - Management noted a write-off of a bad accrual impacting Q4 operating margin by about 100 basis points, with minimal impact from the Aguas Frescas launch [45] Question: Future expectations for fiscal 2025 - Management expressed confidence in delivering against the plan with strong enterprise results and capital allocation priorities [48] Question: Discussion on promotional pressures and inventory levels - Management acknowledged challenges in the promotional environment and noted ongoing efforts to manage inventory levels effectively [124] Question: Insights on commodity input inflation and operating profit - Management highlighted that while commodity prices have stabilized, they remain higher than historical norms, impacting margins [143]