Constellation Brands (STZ) reported Wednesday that fiscal 2013 third-quarter profits increased 4.5 percent, topping Wall Street estimates, as company raised its earnings forecast for the full year for the second time. The wine and spirits manufacturer said that increased marketing help pump-up sales as it also notched higher gains because of favorable tax credits. Constellation makes Robert Mondavi and Ravenswood wines, Svedka vodka and Grupo Modelo beers that include Corona and Modelo, amongst other popular alcoholic beverages. Corona is the number one beer import in the United States.
For the quarter, Constellation reported a profit of $109.5 million, or 58 cents per share, from $104.8 million, or 52 cents per share, in the year prior quarter.
Adjusted earnings, which excluded restructuring, acquisition and other charges, totaled 63 cents per share, beating analyst expectations of 55 cents per share. Analysts typically don’t account for one-time items. Net sales increased by 9.5 percent to $766.9 million, also beating analysts’ predictions of $751.8 million.
"The year is unfolding as we expected and we are on track to meet our financial and strategic goals for the year," said Rob Sands, president and chief executive officer at Constellation Brands.
The Victor, New York-based company benefited from lower tax rates during the quarter because of foreign tax credits. A rate of 28 percent, compared to the year prior quarter’s 37 percent tax rate, shifted taxes lower by $22.1 million to $40.4 million in the recent quarter.
Constellation also reported that expects to close the acquisition of the remaining 50 percent interest in Crown Imports this quarter. Last June, the company announced that it was spending $1.85 billion to buy-out Grupo Modelo SAB de CV’s half of the 50/50 joint venture between the companies.
Further, the company reaffirmed its free cash flow target of $450 million to $500 million for fiscal 2013 and boosted its adjusted income estimate from between $2 and $2.10 per share to $2.10 to $2.20 per share. Analysts were anticipating earnings of $2.07 per share for the full year. During fiscal 2012, the company recorded an EPS of $2.34.
Shares of Constellation Brands have been soaring since announcing the Crown Imports acquisition last June. During that month, shares could be had for as low as $18.50, but have since appreciated about 100 percent.
Shares initially popped to over $37.50 each at Wednesday’s open to challenge making an all-time high, but have lost momentum 30 minutes into the trading day, now down by 1.50 percent from Tuesday’s close and printing $35.50.
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