Alcoholic beverage brand management giant Constellation Brands
Constellation owns more than 200 brands, including widely known labels such as Tsingtao, St. Pauli Girl, and Corona beers; Kentucky Gentleman, Black Velvet, and Old Pulteney whiskeys; and Inglenook, Arbor Mist, and Manischewitz wines. The company pointed to extremely strong demand for its wines and beers, but also noted that its large revenue components from the U.K. and Australia had a currency translation tailwind that accounted for about 38% of its total increase in sales. Total sales for the quarter exceeded $1 billion, a first for the company. Constellation's performance reinforces the positive results reported in August by rival Brown-Forman
As my colleague Rex Moore has commented in the past, Constellation's earnings press releases are a bit of a confusing mess. The company provides a "reported basis" as well as a "comparable basis," the latter of which is meant to demonstrate underlying business trends. For 2005, the items that blur comparability include the company's calling of a corporate bond issue in March, a restructuring, and an "inventory step-up" (related to inventory included with an acquisition), where for 2004 there were excise tax recognitions, inventory step-up (again), inventory writedown, financing costs, restructuring (again), interest charges, and a gain on sale for derivatives.
I have to admit liking the concept of an explanation for comparison basis, but on the other hand, in things like serial restructuring charges, inventory writedowns and inventories seem to me to be integral to business, not set-asides for comparability.
But to Constellation Brands' infinite credit, it includes such information as a robust cash flow statement in its earnings release, a rarity among companies. If the biggest knock on the company's release is that it has provided too much information, then we have very little problem with it.
Constellation Brands Shines On, by Rex Moore
Brown-Forman's Brand Power, by Bill Mann
Constellation Brands was a February 2002 selection in the Motley Fool Select, the predecessor to Hidden Gems. Nice. Would you like to see what companies our crack analysts have uncovered today? A free trial inHidden Gemsis a click away.
Bill Mann owns none of the companies mentioned in this story.