Sept 2009 Constellation Brands STZ Presentation
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Transcript of Sept 2009 Constellation Brands STZ Presentation
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8/14/2019 Sept 2009 Constellation Brands STZ Presentation
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Barclays
Back-To-School ConferenceSeptember 10, 2009
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Bob Ryder
Chief Financial Officer
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Forward-Looking Statements
This presentation contains forward-looking statements within the meaning of the "safeharbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements
which are not historical facts and relate to future plans, events or performance are
forward-looking statements that are based on management's current expectations and
are subject to a number of factors and uncertainties that could cause actual results to
differ materially from those described in the forward-looking statements, including but notlimited to future global economic conditions, market conditions, regulatory conditions, the
consolidation of the companys U.S. distributor network, changes in tax laws, tax rates
interest rates and foreign exchange rates, the actions of competitors, consumer
preferences and operating and financial risks related to managing growth and integratingacquired businesses, greater costs related to or less than expected savings or synergies
from the companys ongoing integration and restructuring plans, realization of expected
proceeds from divestitures, and risks associated with the companys joint venture
businesses, including, among others, each joint venture's ability to operate and grow its
business successfully. Many of these factors are beyond the control of the company.Any projections of future results of operations should not be construed in any manner as
a guarantee that such results will in fact occur. More detailed information regarding risk
factors is included in company filings with the U.S. Securities and Exchange Commission.
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This presentation contains non-GAAP financial measures. These measures,
the purposes for which management uses them, why management believes
they are useful to investors, and a reconciliation to the most directly
comparable GAAP financial measures can be found on our website atwww.cbrands.com under the Investors section by selecting Financial
Information then Financial History or under the News section.All references to
profit measures and earnings per share on a comparable basis excluderestructuring charges, acquisition-related integration costs and net unusual
items. Non-GAAP financial measures are also referred to as being presented
on a comparable, organic or constant currency basis.
This presentation does not provide information regarding the companys fiscal
2010 second quarter results or financial condition.
Use of Non-GAAP Financial Data,
Quarterly Information
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A leading beverage alcohol company Wine
Spirits
Imported Beer
Leading market positions in wineand imported beer (through CrownImports joint venture)
Major presence in core markets U.S., Canada, U.K., Australia and
New Zealand
Portfolio of more than 100 brands
Included in S&P 500 Index
Constellation Today
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#1 Wine company in the world
#1 Premium wine company in U.S. ($5.00 and up)
#1 Wine company in Canada, U.K. & Australia
#2 Wine company in New Zealand
#1 Beer importer in the U.S.(1)
Source: Impact, IRI, ACNielsen, ACD, Adams Handbook Advance, Company estimates Calendar Year 2008.
(1) Through Crown Imports Joint Venture with Grupo Modelo.
Leading Market Positions
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Wine Category
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FY2009 - $3.02 billion
Constellation Branded Wine Net Sales
Geographic Regions
72%
17%
11%
North America Australia/New Zealand Europe
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U.S. Wine Market
0
50
100
150
200
250
300
98 99 00 01 02 03 04 05 06 07 08
Cases
(Millions)
Source: Adams Handbook Advance, Calendar 2008.
3%CAGR
297
217
(Shipment 9L Cases)
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Source: IRI, Adams, Impact Databank Calendar 2008.
Largest selling:Premium portfolio (>$5.00 retail)
Super-premium + (>$8.00 retail)
Wines in U.S.
18 of the top 100 table wine brands
Strong portfolio of leading scale brands at key premium retail price points:
Premium $5-$8 Woodbridge by Robert Mondavi, Rex Goliath
Super-Premium $8-$11 Robert Mondavi Private Selection, Blackstone, Ravenswood
Ultra-Premium $11-$15 Clos du Bois, Estancia, Toasted Head
Luxury $15-$20 Simi, Franciscan, Robert Mondavi Winery, Wild Horse
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Acquired Fortune Brands U.S. wine business December 2007
Clos du Bois 2 million case ultra-premium brand Wild Horse 150k case luxury brand
Sale of Almaden and Inglenook value brands February 2008
Brands represent approximately 10 million 9-liter cases and retail forless than $3.00 per 750ml bottle equivalent
Sale of value spirits business March 2009
Brands represented more than 10 million cases Svedka and Black Velvet brands retained and integrated into U.S.
wine business
SKU rationalization
Increased focus on selling higher growth, higher-margin premium,consumer-preferred scale brands
Portfolio Transformation
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July 2009 - Exclusive rights awarded to distributors in19 states representing over 50 percent ofConstellations wine/spirits volume
Dedicated distributor sales resources
Incremental marketing/promotional support to be
provided by distributors
Distributor incentive structure better aligned withConstellations performance goals
U.S. Distributor Consolidation
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SVEDKA
2.1 million cases in 2008, up 38% versus 2007 Third largest and fastest growing major imported
vodka in the U.S.
Strategy in FY 2010:
Expand on-premise and control statedistribution
Grow national accounts in on/off premisechannels
Increase west coast distribution
New packaging
(1)
1) Source: Adams Handbook Advance. Calendar Year 2008.
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Largest Canadian wine company
6 brands in the top 25
Market share almost 3 times nearest competitor Key domestic brands: Jackson-Triggs, Inniskillin,Sawmill Creek, Naked Grape, Sumac Ridge
Inniskillin - leading icewine brand
Consumers trading up to premium price points
New World Wines (NWW) fastest growing
category
Wine in Canada
Source: ACD Calendar 2008.
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#2 Wine company in New Zealand
High price points and margins
Capitalize on domestic market growth
Export opportunities into the U.S., Canada,U.K. and expansion markets
Source: AZTEC
Wine in New Zealand
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#1 Wine company in the U.K.
Strong positions in NWW categories Australia, New Zealand, South
Africa and California wines
5 brands in the top 25
#1 Wine company in Australia
6 brands in the top 25 Export opportunities
Echo Falls
Stowells
Hardys
Kumala Banrock Station
Wine in U.K. / Australia
Source: ACNielsen
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Running businesses with a focus on cash Reducing cost
Decreasing net working capital and fixed asset investment
Consolidating production
Simplifying organization to provide increased synergieswithin the U.K. and Australian markets
Consolidating Australian operations selling vineyards andfacilities
Consolidating bottling operations and rationalizing SKUs inboth markets
Australia / U.K. Focus
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Imported Beer Category
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Commenced January 2, 2007
50/50 JV: Constellation and brand owner Grupo Modelo
First time Grupo Modelo brands imported and marketed throughoutthe U.S. by a single U.S. company
Largest imported beer company in the U.S. with 40% shareof imported beer market
Third largest U.S. beer company overall
FY 2009 Crown Performance:
Net Sales $2.4 billion Operating Income Over $500 million
1) Source: Adams Handbook Advance Calendar Year 2008.
(1)
Crown Imports
(1)
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Source: Adams Handbook Advance, Calendar 2008.
#1 Corona Extra
#3 Modelo Especial#5 Corona Light#
17 Pacifico#19 Negra Modelo#23 St. Pauli Girl Lager
6 of Top 25 Imported Beer Brands
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Package / Product Introduction
Opportunities Corona Extra 12 pack cans
Coronita Light
Corona Light Tall Cans
Corona and Corona Light 18packs
Modelo Especial and NegraModelo variety packs and draftformat
d ildi
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Creative advertising, marketing spend and sponsorships Optimizing promotional activity and media support during key selling
seasons
Brand Building
FY 2009 R l (1)
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(1) On a comparable basis.
9%$ 321.0$ 351.3Net Income
11%$ 1.44$ 1.60EPS diluted
34.9%37.1%Gross Margin
16.4%
$ 598.0
$ 3,654.6 (3%)$ 3,773.0Net Sales
14.4%Operating Margin
10%$ 544.9Operating Income
Equity Earnings
EBIT $ 867.9
$ 269.9
$ 818.8
$ 273.9
6%
(1%)
1%$ 376.0$ 378.3Free Cash Flow
FY 2009 FY 2008 %
$ in millions, except EPS
FY 2009 Results(1)
FY 2010 Q1 R lt(1)
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(1) On a comparable basis.
(1%)$ 73.6$ 72.7Net Income
(3%)$ 0.34$ 0.33EPS diluted
36.4%34.9%Gross Margin
15.6%
$ 123.3
$ 791.6 (15%)$ 931.8Net Sales
14.1%Operating Margin
(6%)$ 131.3Operating Income
Equity Earnings
EBIT $ 186.1
$ 62.8
$ 203.4
$ 72.1
(9%)
(13%)
5/31/09 5/31/08
Q1 Ended
%
$ in millions, except EPS
FY 2010 Q1 Results(1)
D bt P d Hi t
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Debt to Trailing Twelve Months Comparable Basis EBITDA
0x
1x
2x
3x
4x
5x
6x
May-04 May-05 May-06 May-07 May-08 May-09
RobertMondavi
Ruffino
Effen
12/04
Vincor6/06
Svedka3/07
Matthew Clark JVProceeds
4/07
$500 Million ShareRepurchase
5/07
Fortune BrandsU.S. Wine Business
12/07
Almaden/InglenookDivestiture
2/08
Certain Californiaand Pacific
Northwest Brands
Divestiture6/08
Value SpiritsDivestiture
3/09
Debt Pay-down History
Summary
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Grow strong, premium, consumer-preferred scale brands Portfolio transformation, SKU rationalization, organic focus and
distributor consolidation initiative
Leverage scale Distributor consolidation initiative, U.S. SG&A consolidation and
winery rationalization
Leverage P&L Global cost initiative, U.S. SG&A consolidation, wineryrationalization and debt pay-down
Improve ROIC Sale of Almaden/Inglenook and value spirits, SKU rationalization
and organic focus
Summary
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