Constellation Brands : Reports Fiscal 2016 Results and Fiscal 2017 Outlook

• Achieves fiscal 2016 comparable basis EPS of $5.43 and reported basis EPS of $5.18
• Generates $522 million of free cash flow and $1.4 billion of operating cash flow for fiscal 2016
• Provides fiscal 2017 outlook; expects comparable basis EPS of $6.05 - $6.35 and reported basis EPS of $6.00 - $6.30
• Projects free cash flow of $250 - $350 million for fiscal 2017 including operating cash flow target of at least $1.5 billion and total capital expenditure estimate of $1.25 - $1.35 billion
• Agrees to purchase The Prisoner Wine Company portfolio of super-luxury brands; transaction expected to be accretive for fiscal 2017
• Nava brewery and glass plant expansions progressing as planned
• Declares quarterly dividend of $0.40 per share Class A and $0.36 per share Class B common stock, a 29% increase
• Repurchases approximately 246,000 shares of common stock for $34 million during fourth quarter 2016
• Evaluates merits of an IPO for a portion of the Canadian Business

*Definitions of reported and comparable, as well as reconciliations of non-GAAP financial measures, are contained elsewhere in this news release.
NA=Not Applicable

VICTOR, N.Y., April 6, 2016 - Constellation Brands, Inc. (NYSE: STZ and STZ.B), a leading beverage alcohol company, reported today its fiscal 2016 results.

"It has proved to be another dynamic year of significant accomplishments and impressive financial results for Constellation," said Rob Sands, president and chief executive officer, Constellation Brands. "In fiscal 2016, our beer business delivered industry-leading market results as the #1 growth contributor in the U.S. beer category, achieving stellar growth across the portfolio. We also acquired Ballast Point, one of the most awarded, major craft brewers in the industry, and solidified our position in the high-end segment of the U.S. beer market. We successfully completed our first 5 million hectoliter capacity expansion at our Nava brewery, and we began investing in a new, state-of-the art brewery in Mexicali, Mexico, in order to support the ongoing momentum of our iconic Mexican beer brands. In our wine and spirits business, we further strengthened the financial profile by channeling resources and brand-building investments toward higher-growth, higher-margin brands. This strategy, combined with the Meiomi wine acquisition, helped to drive healthy margin expansion and earnings growth. Overall, we are excited to build on the success of fiscal 2016, as we are targeting impressive results for the coming year," said Sands.

Today, the company announced an agreement to acquire The Prisoner Wine Company brands, a fast-growing, super-luxury portfolio of five highly rated wine brands that have grown volumes at an annual rate of 30% over the last three years to reach 175,000 cases in 2015. "This acquisition aligns with our portfolio premiumization strategy, enables us to capitalize on U.S. market trends that favor high-end wine brands and strengthens our position in the dynamic and margin enhancing super-luxury wine category," said Sands. The cash paid at closing for the deal is expected to approximate $285 million. The transaction is expected to close by the end of April 2016 and to be $0.03 to $0.05 accretive to EPS for fiscal 2017.

Constellation is also announcing today that the company is evaluating plans to execute an IPO for a portion of the Canadian wine business. "As part of our ongoing strategic efforts to identify opportunities to create value for our shareholders and strengthen the financial profile of our wine and spirits business, we are evaluating the merits of an initial public offering for a portion of our Canadian wine business," said Sands. "In fiscal 2016, our business in Canada delivered excellent overall financial results, outperformed the industry and gained market share, and we believe its full value is not being recognized. An IPO will create better visibility to this dynamic part of the business. A final decision regarding whether to pursue a potential initial public offering is expected to be made later this calendar year," added Sands.

Fiscal 2016 Net Sales Commentary

For the year, the company generated consolidated net sales growth of nine percent. This reflects organic net sales growth on a constant currency basis of eight percent and acquisition benefits from Meiomi and Ballast Point, partially offset by unfavorable currency impact.

Organic net sales for beer increased 13 percent primarily due to volume growth and favorable pricing. Beer depletions grew 12 percent, reflecting strong consumer demand for the beer portfolio.

"The exceptional marketplace results and market share gains delivered by our beer business were driven by Modelo Especial and Corona Extra, and complemented by the solid growth of our remaining stable of beer brands. This performance reflects ongoing excellent commercial execution and best-in-class brand marketing initiatives," said Sands.

Wine and spirits organic net sales on a constant currency basis increased three percent. This primarily reflects volume growth and favorable mix. Fiscal 2016 net sales benefited from the overlap of a planned U.S. distributor inventory destocking during fiscal 2015, partially offset by the overlap of a "make-whole" distributor payment associated with this activity.

"Our focus brands strategy is working as we are reaping the benefits of investments in these key wine brands, which posted depletion growth of five percent for the year, driven by Kim Crawford, Meiomi, Ruffino, Black Box, SIMI, Clos du Bois, The Dreaming Tree and Woodbridge by Robert Mondavi. Our spirits portfolio generated solid growth for the year driven by the continued success of our flavored line extensions for Paul Masson Grande Amber Brandy and SVEDKA Vodka. The Casa Noble tequila brand is one of the fastest-growing tequila brands in the U.S. and gained market share for the year," said Sands.

Fiscal 2016 Operating Income and Net Income Commentary

For the year, consolidated comparable basis operating income increased 18 percent.

Beer operating income increased 24 percent primarily due to organic volume growth, favorable pricing and lower cost of product sold, partially offset by increased marketing spend. The eight percent increase in wine and spirits operating income primarily reflects the benefit of the Meiomi acquisition, lower cost of product sold and organic volume growth, partially offset by higher marketing spend.

For the year, pre-tax comparable adjustments totaled $77 million as compared to $87 million for the prior year.

Interest expense for the year totaled $314 million, a decrease of seven percent. The decrease was primarily due to lower average interest rates.

The comparable basis effective tax rate for fiscal 2016 was 29.6 percent compared to 29.5 percent for fiscal 2015.

Free Cash Flow Commentary

Free cash flow for fiscal 2016 totaled $522 million compared to $362 million for the prior year. Benefits from the growth of the beer business were partially offset by higher capital expenditures related primarily to the expansion of the company's Mexican operating platform.

"Our strong earnings and operating cash flow growth continue to enhance our financial profile and create significant financial flexibility. This has enabled us to finish fiscal 2016 with a net debt to comparable basis EBITDA ratio below the 4 times mark, even as we made significant capital investments in our Mexican operations, acquired Meiomi and Ballast Point, initiated a dividend and repurchased shares," said David Klein, chief financial officer, Constellation Brands. "We are significantly increasing our dividend for the coming year and expect to continue to grow operating cash flow with a goal of $1.5 to $1.7 billion for fiscal 2017. Ongoing investments in our Mexican operations will drive our targeted free cash flow for fiscal 2017 to be in the range of $250 to $350 million," said Klein.

Fourth Quarter 2016 Net Sales Commentary

For the quarter, the company generated consolidated net sales growth of 14 percent. This reflects organic net sales growth on a constant currency basis of 10 percent and acquisition benefits from Meiomi and Ballast Point, partially offset by unfavorable currency impact.

Organic net sales for beer increased 18 percent primarily due to volume growth and favorable pricing. Wine and spirits net sales on an organic constant currency basis increased four percent primarily driven by volume growth.

Fourth Quarter 2016 Operating Income and Net Income Commentary

For the quarter, consolidated comparable basis operating income increased 24 percent.

Beer operating income increased 29 percent primarily due to organic volume growth, favorable pricing and lower cost of product sold, partially offset by increased selling, general and administrative expenses driven largely by higher marketing spend. The 14 percent increase in wine and spirits operating income primarily reflects the benefit of the Meiomi acquisition, organic volume growth and lower cost of product sold, partially offset by increased marketing spend.

Interest expense for fourth quarter 2016 totaled $84 million, an increase of four percent. The increase was due to higher average borrowings.

The comparable basis effective tax rate for fourth quarter 2016 was 29.8 percent. This compares to a 23.2 percent tax rate for the prior year fourth quarter which reflected the benefit of certain foreign tax credits.

Quarterly Dividend and Share Repurchases

On April 5, 2016, Constellation's board of directors declared a quarterly cash dividend of $0.40 per share of Class A Common Stock and $0.36 per share of Class B Common Stock, payable on May 24, 2016, to stockholders of record as of the close of business on May 10, 2016.  This represents a 29 percent increase in the dividend rate per share for both the Class A and Class B Common Stock.

During fourth quarter 2016, the company repurchased approximately 246,000 shares of common stock for $34 million.

Outlook

The table below sets forth management's current EPS expectations for fiscal 2017 compared to fiscal 2016 actual results, both on a comparable basis and a reported basis.

For fiscal 2017, the beer business is targeting net sales and operating income growth in the range of 14 - 17 percent that includes an estimated incremental benefit from the Ballast Point acquisition. For the wine and spirits business, the company expects net sales growth in the mid single-digit range and operating income growth to be in the mid to high single-digit range. These growth rates include estimated incremental benefits from the Meiomi and Prisoner acquisitions.

Full-year fiscal 2017 guidance also includes the following current assumptions:

• Interest expense: approximately $325 - $335 million
• Tax rate: approximately 29 percent
• Weighted average diluted shares outstanding: approximately 206 million
• Free cash flow: approximately $250 - $350 million
• Operating cash flow: approximately $1.5 - $1.7 billion
• Capital expenditures: approximately $1.25 - $1.35 billion

The beer segment's capital investment projects in Mexico (outlined in the table below) remain on track from an overall estimated cost and timing of completion perspective.

⁽¹⁾     Some rounding for presentation purposes.

⁽²⁾     Based on implied midpoint for all ranges.

⁽³⁾     Includes 10M HL to 27.5M HL brewery capacity expansion; and glass plant warehouse, rail and furnace expansion.  Expected to be completed by early calendar 2018.

⁽⁴⁾     Includes 10M HL capacity and land, water rights, infrastructure and other site requirements to accommodate scalability to 20M HL capacity.  Expected to be completed by end of calendar 2020.

Conference Call

A conference call to discuss fourth quarter and full year fiscal 2016 results and outlook will be hosted by President and Chief Executive Officer Rob Sands and Executive Vice President and Chief Financial Officer David Klein on Wednesday, April 6, 2016 at 10:30 a.m. (eastern). The conference call can be accessed by dialing +973-935-8505 beginning 10 minutes prior to the start of the call. A live listen-only webcast of the conference call, together with a copy of this news release (including the attachments), and other financial information that may be discussed during the call will be available on the Internet at the company's website: www.cbrands.com under "Investors," prior to the call.

Explanations

Reported basis ("reported") operating income, net income and EPS are as reported under generally accepted accounting principles. Operating income, net income and EPS on a comparable basis ("comparable"), exclude items that affect comparability ("comparable adjustments"), as they are not reflective of core operations of the segments. The company's measure of segment profitability excludes comparable adjustments, which is consistent with the measure used by management to evaluate results.

The company discusses additional non-GAAP measures in this news release, including constant currency net sales, organic net sales, comparable basis EBIT, net debt, comparable basis effective tax rate and free cash flow.

Supplemental Financial Information

Tables reconciling non-GAAP measures, together with definitions of these measures and the reasons management uses these measures, are attached to and are part of this news release.

About Constellation Brands
Constellation Brands (NYSE: STZ and STZ.B) is a leading international producer and marketer of beer, wine and spirits with operations in the U.S., Canada, Mexico, New Zealand and Italy. In 2015, Constellation was one of the top performing stocks in the S&P 500 Consumer Staples Index. Constellation is the number three beer company in the U.S. with high-end, iconic imported brands including Corona Extra, Corona Light, Modelo Especial, Negra Modelo, Pacifico, and Ballast Point, one of the most awarded craft brewers in the U.S. Constellation is also the world's leader in premium wine selling great brands that people love including Robert Mondavi, Clos du Bois, Kim Crawford, Meiomi, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company's premium spirits brands include SVEDKA Vodka and Black Velvet Canadian Whisky.

Based in Victor, N.Y., the company believes that industry leadership involves a commitment to brand-building, our trade partners, the environment, our investors and to consumers around the world who choose our products when celebrating big moments or enjoying quiet ones. Founded in 1945, Constellation has grown to become a significant player in the beverage alcohol industry with more than 100 brands in its portfolio, sales in approximately 100 countries, about 40 facilities and approximately 9,000 talented employees. We express our company vision: to elevate life with every glass raised. To learn more, visit www.cbrands.com.

Forward-Looking Statements
The statements made under the heading Outlook, and all statements other than statements of historical fact set forth in this news release regarding Constellation Brands' business strategy, future operations, financial position, estimated revenues, projected costs, estimated EPS, expected cash flow, prospects, future payments of dividends, plans and objectives of management, as well as information concerning expected actions of third parties, are forward-looking statements (collectively, the "Projections") that involve risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by the Projections.

During the current quarter, Constellation Brands may reiterate the Projections. Prior to the start of the company's quiet period, which will begin at the close of business May 31, 2016, the public can continue to rely on the Projections as still being Constellation Brands' current expectations on the matters covered, unless the company publishes a notice stating otherwise. During Constellation Brands' "quiet period," the Projections should not be considered to constitute the company's expectations and should be considered historical, speaking as of prior to the quiet period only and not subject to update by the company.

The Projections are based on management's current expectations and, unless otherwise noted, do not take into account the impact of any future acquisition, merger or any other business combination, divestiture, restructuring or other strategic business realignments, financing or share repurchase that may be completed after the date of this release. The Projections should not be construed in any manner as a guarantee that such results will in fact occur. The Prisoner Wine Company transaction is subject to the satisfaction of certain closing conditions and receipt of any required regulatory approvals. The decision whether to pursue a potential initial public offering of a portion of the company's Canadian business (the "Canadian IPO") is subject to the determination and discretion of the company. There can be no assurance that either The Prisoner Wine Company transaction or the Canadian IPO will occur or will occur on the timetables contemplated hereby.

In addition to the risks and uncertainties of ordinary business operations, the Projections of the company contained in this news release are subject to a number of risks and uncertainties, including:

• completion of The Prisoner Wine Company transaction under the expected terms;
• Mexicali brewery construction and Nava brewery expansion activities and joint venture glass plant expansion activities take place with expected scope, on expected terms and timetable, and with receipt of any necessary permits and regulatory approvals;
• accuracy of supply projections, including those relating to Mexicali brewery construction and Nava brewery expansion and glass sourcing;
• timeframe and actual costs associated with beer supply, Mexicali brewery construction and Nava brewery expansion and glass sourcing, including joint venture glass plant expansion, may vary from management's current expectations due to market conditions, the company's cash and debt position, and other factors as determined by management;
• free cash flow, operating cash flow and capital expenditures to support long-term growth may vary from management's current estimates;
• timing and volume amount of beer shipments to wholesalers may vary from current expectations due to actual consumer demand;
• accuracy of projections associated with the acquisition of the Meiomi wine brand and the Ballast Point business, and the expected acquisition of The Prisoner Wine Company brand portfolio;
• the impact of and the ability to realize the anticipated benefits of acquisitions, including as a result of difficulty in integrating the businesses of the companies involved;
• the exact duration of the share repurchase implementation and the amount and timing of any additional share repurchases;
• amount and timing of future dividends are subject to the determination and discretion of the Board of Directors;
• ability to use cash flow to fund dividends could be affected by unanticipated increases in net total debt, inability to generate cash flow at the levels anticipated, and failure to generate expected earnings;
• raw material and water supply, production or shipment difficulties could adversely affect the company's ability to supply its customers;
• increased competitive activities in the form of pricing, advertising and promotions could adversely impact consumer demand for the company's products and/or result in lower than expected sales or higher than expected expenses;
• general economic, geo-political and regulatory conditions, instability in world financial markets, or unanticipated environmental liabilities and costs;
• changes to accounting rules and tax laws, and other factors which could impact the company's reported financial position, results of operations or effective tax rate;
• changes in interest rates and the inherent unpredictability of currency fluctuations, commodity prices and raw material costs;
• accuracy of the bases for forecasts relating to joint ventures and associated costs, losses, purchase obligations and capital investment requirements; and
• other factors and uncertainties disclosed in the company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended Feb. 28, 2015, which could cause actual future performance to differ from current expectations.

CONTACTS
Media
Cheryl Gossin: 585-678-7191
Amy Martin: 585-678-7141

Investor Relations
Patty Yahn-Urlaub: 585-678-7483
Bob Czudak: 585-678-7170