Constellation Brands Boosts 2013 Outlook As Q3 Results Top Estimates

ConstellationBrands Stz 010913

Alcoholic beverage maker Constellation Brands, Inc. (STZ,STZ-B) reported Wednesday a profit for the third quarter that grew 4 percent from last year, reflecting sales growth. Both adjusted earnings per share and quarterly sales topped analysts' expectations. Further, the producer of Robert Mondavi wines also raised its adjusted earnings forecast for the full-year 2013 to reflect tax rate benefits.

Following the announcement, the company's stock is trading more than four percent higher in early deals.

"The year is unfolding as we expected and we are on track to meet our financial and strategic goals for the year. We continue to experience strong marketplace momentum across our beer, wine and spirits portfolio and we were well positioned at retail during the key holiday selling season," President and CEO Rob Sands said in a statement.

The Victor, New York-based world's largest wine company reported a net income of $109.5 million or $0.58 per share for the third quarter, higher than $104.8 million or $0.52 per share in the prior-year quarter.

Excluding items and on a comparable basis, adjusted net income for the quarter was $118.6 million or $0.63 per share, compared to $100.8 million or $0.50 per share in the year-ago quarter.

On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $0.55 per share for the third quarter. Analysts' estimates typically exclude special items.

Total net sales for the quarter grew 9 percent to $766.9 million from $700.7 million in the same quarter last year, and topped six Wall Street analysts' consensus estimate of $751.83 million.

Wine and spirits net sales on an organic constant currency basis increased six percent primarily due to an increase in volume and favorable product mix, partially offset by higher promotional costs.

The company noted that its Crown joint venture generated net sales of $547 million, an increase of one percent from last year. Its equity earnings from the 50 percent interest in the Crown Imports joint venture declined 11 percent to $38.5 million from the prior-year quarter.

"Crown continues to outperform the U.S. beer industry and the import category led by strong performance of Modelo Especial, which recently surpassed the 40 million case milestone for calendar 2012," Sands noted.

Crown Imports is the company's 50:50 joint venture with Mexican brewer Grupo Modelo S.A.B. de C.V (GPMCY), owner of the Corona Extra beer.

Constellation Brands said it remains on track to close the acquisition of the remaining 50 percent interest in Crown Imports LLC joint venture in the first quarter of calendar 2013 for $1.85 billion.

"We are especially excited about the prospect of achieving the next significant milestone in the history of our company by obtaining 100 percent ownership of Crown Imports, which will solidify Constellation's position as the largest U.S. multi-category supplier across the beverage alcohol segment," Sands added.

Looking ahead to fiscal 2013, the company now expects comparable earnings in a range of $2.10 to $2.20 per share, up from the prior guidance range of $2.00 to $2.10 per share. Street is currently looking for full-year 2013 earnings of $2.07 per share.

The company also said it is on track to achieve free cash flow of $450 million to $500 million for fiscal 2013.

STZ closed Tuesday's regular trading session at $36.06, down $0.33 on a volume of 4.42 million shares, sharply higher than the three-month average volume of 1.82 million shares. In the past 52-week period, the stock has been trading in a range of $18.50 to $37.57.

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