Constellation Brands (STZ) - Get Report clearly did not get the memo that beer and wine sales are reportedly succumbing to gains in sales of pot and related products, thanks to the legalization of marijuana in Canada and parts of the U.S.
On the contrary, the global beer and wine distributor posted better-than-expected fiscal third-quarter results, despite taking a big, multi-million-dollar hit related to its own investment in Canadian pot company Canopy Growth (CGC) - Get Report.
The distributor of Corona, Modelo and other popular beer and wine brands such as Kim Crawford posted earnings for the three months ended Nov. 30, of $360.4 million, or $1.85 a share, vs. $303.1 million, or $1.56 a share, in the comparable year-ago period.
Analysts polled by FactSet had been excepting earnings of $1.82 a share.
The numbers included the $71 million loss related to the company’s investment in Canopy Growth, which has taken a chunk out of Constellation Brands’ bottom line in recent quarters amid an ongoing drop in demand for legalized marijuana and related products.
Excluding that 25-cent-a-share hit, the company would have posted earnings of $2.14 a share. Sales came in at $1.99 billion vs. $1.97 billion a year ago, in line with analysts’ estimates. The company generated $2.1 billion in operating cash flow and $1.5 billion in free cash flow.
Constellation Brands now expects per-share earnings of between 95 cents and $1.05 for the fourth quarter, or $9.45-$9.55 a share on a year-over-year basis. It is also now projecting operating cash flow of approximately $2.3 billion and free cash flow of between $1.5 billion and $1.6 billion - a sign of what it expects to achieve in its final fiscal quarter.