24Q4 STZ constellation earnings

earnings summary

Here is a summary of Constellation Brands’ fiscal 2024 Q4 earnings call with an emphasis on earnings results, future guidance, key themes and market conditions:

Earnings Results:

• Delivered strong performance in FY24 with comparable EPS growth of nearly 9%, net sales growth of 5%, and comparable operating income growth of 7%
• Beer business drove results with over 9% net sales growth and 8% operating income growth, exceeding expectations
• Wine & Spirits faced challenges with organic net sales and operating income both declining 8%

Future Guidance:

• Targeting 6-7% enterprise net sales growth in FY25, with beer growing 7-9% and Wine & Spirits flat to slightly down
• Expect 8-10% comparable operating income growth, with beer up 10-12%, Wine & Spirits down 9-11%
• Forecasting FY25 comparable EPS of $13.50-13.80, +10% at midpoint
• Plan $1.4-1.5B in capex, mainly for Mexico beer capacity expansion

Key Themes & Trends:

• Beer business remains very strong, gaining 2 share points. Modelo Especial became #1 beer brand. Portfolio well-positioned in high end.
• Wine & Spirits taking actions to stabilize business - focusing on key brands, boosting marketing/promo spend, driving efficiencies
• Premiumization and consumer health & wellness trends continue. Investing in better-for-you innovations.
• Balanced capital allocation focused on beer capacity, debt reduction, dividends and select M&A

Market Conditions:

• Beer industry remains healthy especially in high end. Constellation taking share with strong brand loyalty.
• Wine & Spirits category facing challenges, particularly in mainstream and premium segments. Excess inventories an issue.
• Some macroeconomic uncertainty and cost inflation, but Constellation is managing well so far through pricing and cost savings

Sentiment: The tone of the call was cautiously optimistic. Management is very confident and enthusiastic about the continued momentum in beer. They acknowledge the challenges in Wine & Spirits but have a clear turnaround plan and see a path back to growth over time. While not ignoring macro headwinds, they believe Constellation’s strong brands and execution position it well to achieve its medium-term growth targets.