Constellation Brands Inc. (NYSE:STZ.B) Q1 2019 Earnings Conference Call - Final Transcript

Jun 29, 2018 • 10:30 am ET

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Constellation Brands Inc. (NYSE:STZ.B) Q1 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Welcome to the Constellation Brands First Quarter 2019 Earnings Conference Call. [Operator Instructions]

I will now turn the call over to Patty Yahn-Urlaub, Senior Vice President of Investor Relations. Please go ahead.

Executive
Patty Yahn-Urlaub

Thanks, Laurie.

Good morning and welcome to Constellation's first quarter fiscal 2019 conference call. I'm here this morning with Rob Sands, our President and Chief Executive Officer, and David Klein, our Chief Financial Officer.

As a reminder, reconciliations between the most directly comparable GAAP measure and any non-GAAP financial measures discussed on this call are included in our news release or otherwise available on the Company's website at www.cbrands.com. Please refer to the news release and Constellation's SEC filings for risk factors which may impact forward-looking statements we make on this call.

Before turning the call over to Rob, similar to prior quarters, I would like to ask that we limit everyone to one question per person which will help us to end our call on time.

Thanks in advance and now here's Rob.

Executive
Rob Sands

Thank you, Patty.

Good morning, and welcome to our discussion of Constellation's first quarter sales and earnings results. These results were in line with our expectations and reflect significant investment across the business designed to ensure that we maintain our growth momentum well into the future, as well as other timing issues. We've maintained our earnings guidance as the top line is responding to these investments, including digital enablement for our e-commerce initiatives and our new ERP platform as part of our Fit for Growth initiative.

We continue to work with Canopy Growth to develop and build cannabis brands. Our investment in Canopy is certainly paying off, as we've recognized gains of more than $700 million in our reported results since we made this investment last year.

Now, most importantly, we continue to invest in brand building through our innovation and new product development initiatives across the country. Our most significant investment includes an increase in beer marketing to support our newly introduced products, which are exceeding our expectations and fueling sales momentum.

The successful launches of Corona Premier and Corona Familiar are the first two major Corona initiatives in more than 25 years. Premier has achieved record speed to shelf with velocities increasing each month since launch. Familiar has already achieved a healthy share of the category in its regional expansion with velocities outpacing our expectations. These innovations help drive industry's leading depletion growth of 9% for our beer business during the first quarter, despite unfavorable weather-related impacts early in the quarter in some of our largest markets.

As a matter of fact, this quarter marks 32 consecutive quarters of growth, as the winning streak continues for the Constellation beer business. We remain the leader in the high end of the US beer market, contributing more growth than other supplier during the first quarter. Constellation also won the Cinco de Mayo and Memorial Day holidays driven by strong execution and sales increases across the Modelo Especial, Corona Premier, and Corona Familiar brands, all of