Constellation Brands, Inc. · NYSE:STZ
Constellation Brands — 2022 Morgan Stanley Global Consumer & Retail Conference
32 slides from Constellation Brands's conference presentation, Dec 5, 2022
Slide 1: 2022 Morgan Stanley Global Consumer & Retail Conference
Exhibit 99.1 2022 MORGAN STANLEY GLOBAL CONSUMER & RETAIL CONFERENCE DECEMBER 6, 2022
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements that are based on certain assumptions, estimates, expectations, plans, analyses, and opinions made by management in light of their experience and perception of historical trends, current conditions, and expected future
Slide 3: Forward-Looking Statements (Cont.)
FORWARD-LOOKING STATEMENTS (CONT.) In addition to the risks and uncertainties of ordinary business operations and conditions in the general economy and markets in which we compete, our forward-looking statements contained in this presentation are also subject to the risk, uncertainty, and possible v
Slide 4: Use of Non-GAAP Financial Measures, Disclaimer, Caution Regarding Outdated Material
USE OF NON-GAAP FINANCIAL MEASURES, DISCLAIMER, CAUTION REGARDING OUTDATED MATERIAL, AND LOCATION OF DEFINED TERMS This presentation (including audio, video, and supplemental slides, if any) may contain non-GAAP financial measures. These and other non-GAAP financial measures, the purposes for which
Slide 5: Sustaining Profitable Growth and Building Shareholder Value
SUSTAINING PROFITABLE GROWTH AND BUILDING SHAREHOLDER VALUE MOST CONSECUTIVE YEARS OUTPERFORMED COMPETITORS (2) AS A GROWTH LEADER IN TSR SINCE START OF FY20 (1) AMONG CPG PEERS CONSTELLATION BRANDS 10-K COMPETITORS 58% 54% CY21 CY20 CY19 ~10% 26% 26% COMPETITOR 20% AVERAGE CY18 CY17 CY16 N/A -3% -6
Slide 6: Best-in-Class Beer Business
BEST-IN-CLASS BEER BUSINESS (1) MEDIUM-TERM TARGETS SUPPLIER IN THE HIGH-END #1 7-9% NET SALES GROWTH (2) 39-40% OPERATING MARGIN #1 BEER (2) NET SALES OPERATING INCOME IN THE HIGH-END #2 BEER 8% - 10% ~9% CAGR IN THE U.S. BEER MARKET GROWTH $6.8 $6.1 $5.6 #3 BEER $5.2 IN THE HIGH-END (2) ~40% AVERA
Slide 7: Optimized Wine & Spirits Business
OPTIMIZED WINE & SPIRITS BUSINESS (1) MEDIUM-TERM TARGETS SUPPLIER IN U.S. WINE MARKET 2-4% ORGANIC NET SALES GROWTH #2 (2) 28-29% OPERATING MARGIN (2) NET SALES OPERATING INCOME #1 SAUVIGNON BLANC IN U.S. WINE MARKET ADJUSTMENTS FROM INCLUDES DIVESTITURE OF LOWER-PRICED ADDITIONAL DIVESTITURE OF BR
Slide 8: Strong Cash Generation and Balanced Uses of Cash
STRONG CASH GENERATION AND BALANCED USES OF CASH REFOCUSED ON BALANCE SHEET, CASH SIGNIFICANT CASH FLOW SUPPORTED RETURNS, AND ORGANIC GROWTH BY SOLID GROWTH AND MARGINS OPERATING CASH FLOW USES OF CASH DEBT PAYDOWN DIVIDENDS M&A SHARE REPURCHASES CAPEX 2% $2.7 20% 1% 61% 1% FY20 9% 16% 8% $8.1 $2.8
Slide 9: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES COMMITTED TO A DISCIPLINED FINANCIAL FOUNDATION 1 FOCUSED ON MAINTAINING A TARGETING DIVIDEND GROWTH SOLID INVESTMENT GRADE RATING IN-LINE WITH EARNINGS (1) TARGET ~3.0X LEVERAGE RATIO TARGET ~30% DIVIDEND PAYOUT RATIO BALANCING REINVESTMENT AND ADDITIONAL RETURNS 2 DEP
Slide 10: Focused on Maintaining a Solid Investment Grade Rating
FOCUSED ON MAINTAINING A SOLID INVESTMENT GRADE RATING (1) TARGET NET LEVERAGE RATIO IN THE ~3.0X RANGE (1) (2) NET LEVERAGE RATIO DEBT MATURITY PROFILE SENIOR NOTES BANK DEBT INCLUDES REVOLVER RECLASSIFICATION FINANCING ~$3.2B OF DEBT 4.5X (BANK DEBT) (3) REDUCTION 3.9X 3.5X 3.1X 3.1X $2.3 3.0X PRE
Slide 11: Targeting Dividend Growth In-Line with Earnings
TARGETING DIVIDEND GROWTH IN-LINE WITH EARNINGS TARGET DIVIDEND PAYOUT RATIO IN THE ~30% RANGE (1) (1) DIVIDEND PAYOUT RATIO DIVIDEND YIELD CONSTELLATION BRANDS 10-K COMPETITORS AVERAGE ~$1.7B OF DIVIDENDS PAID 1.8% 1.8% 30% 30% 1.7% 29% 29% 29% 29% 28% 1.6% 1.6% 27% 1.5% 1.4% 1.3% FY22 FY21 FY20 FY
Slide 12: Deploying Capital to Organic Investments to Support Growth
DEPLOYING CAPITAL TO ORGANIC INVESTMENTS TO SUPPORT GROWTH ADDING 25-30M HL OF BREWING CAPACITY TO SUPPORT MEDIUM TERM (1) MID TO HIGH SINGLE-DIGIT VOLUME GROWTH OF BEER BUSINESS CAPITAL EXPENDITURE FOR THE BEER BUSINESS IS EXPECTED TO BE (2) IN THE $5.0B - $5.5B RANGE FOR THE FY23 - FY26 TIME PERIO
Slide 13: Share Repurchases Targeted to At Least Cover Dilution
SHARE REPURCHASES TARGETED TO AT LEAST COVER DILUTION (1) ABILITY TO OPPORTUNISTICALLY DO MORE WITH ~$1.2B OF CAPACITY (2) SHARE REPURCHASE RATIO FROM FY20-FY22 COMPLETED REPURCHASES AND (1) REMAINING CAPACITY CONSTELLATION BRANDS 10-K COMPETITORS 4.5% 4.6% $1.2 $2.8 3.2% 0.3% $1.4 0.0% ~1.3% COMPET
Slide 14: Small Acquisitions to Fill Portfolio Gaps
SMALL ACQUISITIONS TO FILL PORTFOLIO GAPS CONSUMER-LED, ACCRETIVE, SYNERGISTIC TARGETS M&A OPERATING RECENT ACQUISITIONS OF HIGH-GROWTH BRANDS EXPENDITURES CASH FLOW ALMOST ENTIRELY SELF-FUNDED THROUGH SALE $8.1 OF SUCCESSFUL VENTURE INVESTMENT ACQUISITIONS HIGHER-END WINES FROM PASO ROBLES, CALIFOR
Slide 15: Thank You
THANK YOU stellation Brands #WORTHREACHINGFOR | 15
Slide 16: Appendix: Defined Terms & Additional Financial Information
APPENDIX DEFINED TERMS & ADDITIONAL FINANCIAL INFORMATION |
Slide 17: Defined Terms
DEFINED TERMS Unless the context otherwise requires, the terms “Company,” “CBI,” STZ, “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. We use terms in this presentation that are specific to us or are abbreviations that may not be commonly known or used. Term Meaning 202
Slide 18: Comparable Measures (Non-GAAP)
COMPARABLE MEASURES (NON-GAAP) Comparable measures are provided because management uses this information in evaluating the results of the core operations of the Company and/or internal goal setting. In addition, the Company believes this information provides investors valuable insight on underlying
Slide 19: Comparable Measures (Non-GAAP)
COMPARABLE MEASURES (NON-GAAP) Other Other includes items that are not specifically related to acquisitions and divestitures or restructuring and other strategic business development costs (e.g. unrealized net (gain) loss on securities measured at fair value, loss on extinguishment of debt, impairme
Slide 20: Reported Statement of Operations (GAAP)
REPORTED STATEMENT OF OPERATIONS (GAAP) Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2018 2019 2020 2021 2022 2022 2022 2022 2022 2023 2023 2023 (in millions, except share and per share d
Slide 21: Reconciliation of Reported and Comparable Non-GAAP Information
RECONCILIATION OF REPORTED AND COMPARABLE NON-GAAP INFORMATION Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2018 2019 2020 2021 2022 2022 2022 2022 2022 2023 2023 2022 (in millions, excep
Slide 22: Reconciliation of Reported and Comparable Non-GAAP Information
RECONCILIATION OF REPORTED AND COMPARABLE NON-GAAP INFORMATION Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2018 2019 2020 2021 2022 2022 2022 2022 2022 2023 2023 2022 Operating Income (L
Slide 23: Comparable Statements of Operations (Non-GAAP)
COMPARABLE STATEMENTS OF OPERATIONS (NON-GAAP) Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2018 2019 2020 2021 2022 2022 2022 2022 2022 2023 2023 2023 (in millions, except share and per
Slide 24: Canopy Equity Earnings (Losses) and Related Activities (Non-GAAP)
CANOPY EQUITY EARNINGS (LOSSES) AND RELATED ACTIVITIES ( CANOPY EIE ) (NON-GAAP) Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2018 2019 2020 2021 2022 2022 2022 2022 2022 2023 2023 2023 (
Slide 25: Adjusted EBITDA Calculation and Reconciliation, Free Cash Flow Reconciliation
ADJUSTED EBITDA CALCULATION AND RECONCILIATION, FREE CASH FLOW RECONCILIATION (NON-GAAP) Fiscal Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2017 2018 2019 2020 2021 2022 2022 2022 2
Slide 26: Adjusted EBITDA Calculation and Reconciliation, Excluding Canopy EIE
ADJUSTED EBITDA CALCULATION AND RECONCILIATION, EXCLUDING CANOPY EIE (NON-GAAP) Fiscal Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Year Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Six Months 2017 2018 2019 2020 2021 2022 2022 2022 2022 2022
Slide 27: Business Segment Information
BUSINESS SEGMENT INFORMATION Organic Net Sales Through February 28, 2019, our internal management financial reporting consisted of two business divisions: (i) Beer and (ii) Wine and Spirits. Beginning March 1, 2019, as a result of our Amounts included for the Canopy segment represent 100% of Canopy’
Slide 28: Business Segment Information
BUSINESS SEGMENT INFORMATION Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2018 2019 2020 2021 2022 2022 2022 2022 2022 2023 2023 2023 (in millions) Net Sales Beer $ 4,660.4 $ 5,202.1 $ 5,
Slide 29: Business Segment Information
BUSINESS SEGMENT INFORMATION Fiscal Fiscal Fiscal Fiscal First Second Third Fourth Fiscal First Second Six Year Year Year Year Quarter Quarter Quarter Quarter Year Quarter Quarter Months 2018 2019 2020 2021 2022 2022 2022 2022 2022 2023 2023 2023 Income (Loss) from Unconsolidated Investments Beer (B
Slide 30: Reported and Organic Net Sales
REPORTED AND ORGANIC NET SALES First First Percent Second Second Percent Third Third Percent Fourth Fourth Percent Six Six Percent Fiscal Year 2023 Quarter Quarter Change Quarter Quarter Change Quarter Quarter Change Quarter Quarter Change Months Months Change 2023 2022 2023 2022 2023 2022 2023 2022
Slide 31: Reported and Organic Net Sales
REPORTED AND ORGANIC NET SALES First First Percent Second Second Percent Third Third Percent Fourth Fourth Percent Fiscal Fiscal Percent Fiscal Year 2020 Quarter Quarter Change Quarter Quarter Change Quarter Quarter Change Quarter Quarter Change Year Year Change 2020 2019 2020 2019 2020 2019 2020 20
Slide 32: Thank You
THANK YOU #WORTHREACHINGFOR | 32
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