Analysts expect a year-over-year surge in second-quarter sales for Constellation Brands Inc. because of the Victor-based firm's recent multibillion-dollar beer acquisition.
Analysts polled by Thomson Reuters expect Constellation Brands to report sales of nearly $1.53 billion, up 119 percent from $699 million a year ago. They expect earnings per share of 88 cents, up 24 percent from 71 cents a year ago.
Constellation Brands is slated to report second-quarter results Thursday.
The firm ranked 12th, with roughly 620 local workers, on the most recent Rochester Business Journal list of manufacturers.
Constellation Brands completed the acquisition in June of Grupo Modelo S.A.B. de C.V.'s U.S. beer business from Anheuser-Busch InBev SA for some $4.75 billion. The transaction included full ownership of Crown Imports LLC, which gave Constellation complete, independent control of all aspects of the U.S. commercial business; a brewery in Nava, Mexico; an exclusive perpetual brand license in the United States to import, market and sell the Corona and Modelo brands carried by Crown; and the freedom to develop brand extensions and innovations for the U.S. market.
Thomas Mullarkey, an analyst with Morningstar Inc., said the deal should bode well for Constellation Brands, noting that three of its brands are top-20 beer brands by volume in the United States. Those are Corona Extra, Modelo Especial and Corona Light.
"Its brews account for more than 40 percent of the imported beer in the United States, and brand loyalty is much stronger in the beer category than in the wine category," Mullarkey wrote in a research note. "With almost one-third of Hispanic Americans ranking Corona as their favorite beer, we believe that Constellation is poised to generate stable cash flows and to outearn its cost of capital for many years to come."
Company leaders described the deal as transformational and rewarded two of its executives.
The firm gave Robert Sands, its president and CEO, 13,100 restricted stock share grants and up to 26,200 performance shares, a filing with the Securities and Exchange Commission shows. Chief Financial Officer Robert Ryder received 6,550 restricted share grants and up to 13,100 performance shares.
The restricted share grants are guarantees that each can purchase up to that many shares of Constellation stock at a pre-determined price. The performance shares they actually receive will depend on the company meeting performance milestones related to the brewery expansion, the filing states.
The company's stock hit a 52-week high on Sept. 19, trading at $59.92. It was trading at midweek near $57.60.
In addition to the growing beer business, Constellation Brands is adding offerings to its spirits and wine business.
Last month, the company announced the addition of Black Velvet Cinnamon Rush flavored whiskey, following the successful launch last year of a Black Velvet Toast Carmel flavored whiskey. This past summer it also introduced 1.5-liter packages of its Rex Goliath wines as well as "tetra packs," with the equivalent of three servings per package.
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