On June 28, alcoholic beverage distributor Constellation Brands
- It was a rough-and-tumble report this time, but don't be fooled by the raw numbers. Comparability is difficult, as Constellation recently reduced its wine distributions in the U.S., completed the acquisition of SVEDKA premium vodka and Vincor, and formed a joint venture in Crown Imports.
- Net earnings were hurt by higher interest payments on the larger debt load, leaving the balance sheet a bit precarious by using borrowed funds to grow through acquisition.
- The increase in cash usage resulted from the timing of payments related to an earlier harvest in Australia and from building working capital for its newly established beer business.
- Our Motley Fool CAPS players seem to enjoy the fruity tang of Constellation, giving the stock four stars. That's even with larger rival Brown-Forman
(NYSE:BF-B) and almost as tasty as Motley Fool Income Investor recommendation Diageo(NYSE:DEO) with its five stars.
(Figures in millions, except per-share data)
Income Statement Highlights
Q1 2008 |
Q1 2007 |
Change |
|
---|---|---|---|
Sales |
$901 |
$1,156 |
(22%) |
Net Profit |
$29.8 |
$83.0 |
(64.1%) |
EPS |
$0.13 |
$0.36 |
(63.9%) |
Diluted Shares |
233.4 |
240.1 |
(2.8%) |
Get back to basics with the income statement.
Margin Checkup
Q1 2008 |
Q1 2007 |
Change* |
|
---|---|---|---|
Gross Margin |
29.8% |
27.6% |
2.2 |
Operating Margin |
7.6% |
12.4% |
(4.8) |
Net Margin |
3.3% |
7.2% |
(3.9) |
Margins are the earnings engine.
Balance Sheet Highlights
Assets |
Q1 2008 |
Q1 2007 |
Change |
---|---|---|---|
Cash + ST Invest. |
$33.5 |
$37.5 |
(10.7%) |
Accounts Rec. |
$764 |
$854 |
(10.6%) |
Inventory |
$1,955 |
$1,751 |
11.7% |
Liabilities |
Q1 2008 |
Q1 2007 |
Change |
---|---|---|---|
Accounts Payable |
$271 |
$365 |
(25.9%) |
Long-Term Debt* |
$4,745 |
$2,860 |
65.9% |
The balance sheet reflects the company's health.
Cash Flow Highlights
Q1 2008 |
Q1 2007 |
Change |
|
---|---|---|---|
Cash From Ops. |
($86.1) |
$6.7 |
N/A |
Capital Expenditures |
$17.7 |
$45.1 |
(60.8%) |
Free Cash Flow |
($103.8) |
($38.4) |
(170.3%) |
$50.8 |
$14.1 |
260.3% |
Free cash flow is a Fool's best friend.
Related Foolishness:
Diageo is a Motley Fool Income Investor pick. Take a free 30-day trial to find out how to make money on booze without starting your own neighborhood bar.
Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
At the time of publication, Anders Bylund had no position in any company mentioned. He prefers fruity, blue Polar Bear cocktails, or simple vodka on the rocks. Fool rules are here.