Quarterly performance
Change to share structure
Constellation announced that it has entered into an agreement with the Sands family to eliminate its Class B common stock. As per the agreement, each outstanding share of the company’s Class B common stock, including those owned by the Sands Family, will be converted into the right to receive one share of Class A common stock plus cash consideration in the amount of $64.64 per share of Class B common stock, or a total amount of $1.5 billion. This will help simplify the company’s equity capital structure as well as provide operating cost savings and administrative savings.
Segment performance
The beer segment posted net sales growth of 21% in Q1 along with depletion growth of almost 9% driven by the strong performance of Modelo Especial and Corona Extra. Modelo Especial gained more than 15% depletion growth while Corona Extra posted depletion growth of over 4%. The company expects net sales in the beer segment to increase 7-9% in FY2023.
Net sales in the wine and spirits segment rose 2% YoY. Depletion growth remained positive driven by double-digit growth for Meiomi, The Prisoner Wine Company, High West Whiskey and Casa Noble Tequila. The fine wine and craft spirits portfolio achieved 16% depletion growth during the quarter. For FY2023, net sales in the wine and spirits segment is expected to decline 1-3%.
Outlook
For FY2023, Constellation now expects reported EPS of $10.50-10.80 versus the prior outlook of $11.15-11.45. Comparable EPS is expected to range between $11.20-11.50. Operating cash flow is projected to range between $2.6-2.8 billion while free cash flow is estimated to be $1.3-1.4 billion.
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