By RTT News, October 03, 2013, 09:45:00 AM EDT
(RTTNews.com) - Alcoholic beverage maker Constellation Brands, Inc. (STZ, CBR.AX, STZ-B) on Thursday reported a profit for the second quarter that surged from last year, as results were helped by the company's acquisition of Grupo Modelo'sS.A.B. de C.V.'s (GPMCY) U.S. beer business.
Adjusted earnings per share beat analysts' expectations, while revenues missed their estimates. Looking ahead, the company significantly raised its earnings outlook for fiscal 2014.
The New York-based world's largest wine company reported net income for the second quarter of $1.52 billion or $7.74 per share, sharply higher than $124.6 million or $0.67 per share in the prior-year quarter. Earnings per Class B convertible common stock increased to $7.11 from $0.62 in the year-ago period.
The company completed its acquisition of its joint-venture partner Mexican brewer Grupo Modelo's U.S. beer business from Anheuser-Busch InBev ( BUD ) for about $4.75 billion on June 7, 2013.
This includes the acquisition of Grupo Modelo's 50 percent stake in Crown Imports LLC for $1.85 billion, and the acquisition of Piedras Negras brewery in Mexico as well as the perpetual brand rights for Corona and all other Modelo brands in the U.S. for $2.9 billion.
The latest quarter's results include non-cash impairment of goodwill and intangible assets of $300.9 million associated with the company's acquired Canadian wine business and a non-cash gain of $1.64 billion on the remeasurement to fair value of the company's original 50 percent stake in Crown Imports LLC.
Excluding items, adjusted net income for the quarter was $188.7 million or $0.96 per share, compared to $131 million or $0.71 per share in the year-ago quarter. On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.88 per share for the quarter. Analysts' estimates typically exclude special items.
Total net sales for the quarter more than doubled to $1.46 billion from $698.50 million in the same quarter last year, but missed analysts' consensus estimate of $1.53 billion.
The sales growth was driven by $763 million of incremental net sales related to the consolidation of Crown. Net sales for the beer segment rose 3 percent from the year-ago period to $815 million.
Wine and spirits net sales on an organic constant currency basis declined 1 percent, as wine volume growth was more than offset by higher promotional expense and lower spirits volume.
Interest expense for the quarter surged 65 percent to $90 million from last year, primarily due to higher average borrowings driven by the financing for the beer business acquisition, partially offset by lower average interest rates.
The company's equity earnings from its 50 percent interest in the Crown Imports joint venture fell 94 percent from the prior-year period to $4 million, reflecting the timing of the close of the beer acquisition.
Looking ahead to fiscal 2014, Constellation Brands now forecasts earnings per share of $9.30 to $9.60 on a reported basis and $2.80 to $3.10 on a comparable basis, reflecting reduced tax rate guidance. Previously, the company forecast earnings per share of $2.32 to $2.62 on a reported basis and $2.60 to $2.90 on a comparable basis.
Analysts expect the company to report earnings of $2.83 per share for the year.
In Thursday's regular trading session, STZ is trading at $59.85, up $1.59 or 2.73 percent on a volume of 497,170 shares.
For comments and feedback: contact firstname.lastname@example.org