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STZ Constellation Brands Sept 2013 Investor Slide Deck Powerpoint PPT PDF

STZ Constellation Brands Sept 2013 Investor Slide Deck Powerpoint PPT PDF

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STZ Constellation Brands Sept 2013 Investor Slide Deck Powerpoint PPT PDF
STZ Constellation Brands Sept 2013 Investor Slide Deck Powerpoint PPT PDF

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Investor Presentation

July 2012

Barclays Back-to-School Consumer Conference Bob Ryder – CFO, September 4, 2013 Elevating Life with Every Glass Raised

FORWARD-LOOKING

statements

This presentation may contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements which are not historical facts and relate to future plans, events or performance are forward-looking statements that are based on management's current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including but not limited to future global economic conditions; market conditions; regulatory conditions; the consolidation of the company’s U.S. distributor network; changes in tax laws, tax rates, interest rates and foreign exchange rates; the actions of competitors; consumer preferences; operating and financial risks related to managing growth; greater costs related to or less than expected savings or synergies from ongoing restructuring plans; the amount and timing of any share repurchases; the impact and ability to receive the expected benefits of the Beer Business Acquisition; the accuracy of supply projections and raw materials and water supply expectations; brewery expansion on the expected terms and timing; receipt of any necessary regulatory approvals; and risks associated with the company’s joint venture businesses, including, among others, each joint venture's ability to operate and grow its business successfully. Many of these factors are beyond the control of the company. Any projections of future results of operations should not be construed in any manner as a guarantee that such results will in fact occur. More detailed information regarding risk factors is included in company filings with the Elevating Life with Every Glass Raised U.S. Securities and Exchange Commission.

USE OF NON-GAAP FINANCIAL MEASURES, CAUTION REGARDING OUTDATED MATERIAL AND QUARTERLY INFORMATION
This presentation may contain non-GAAP financial measures. These measures, the purposes for which management uses them, why management believes they are useful to investors, and a reconciliation to the most directly comparable GAAP financial measures can be found on our website, www.cbrands.com, under the Investors section by selecting Financial History or under the News and Media section. All references to profit measures and earnings per share on a comparable basis exclude restructuring charges and net unusual items. Non-GAAP financial measures are also referred to as being presented on a comparable, organic or constant currency basis. The information presented is as of September 4, 2013. Thereafter, it should be considered historical and not subject to further update by the company. This presentation does not provide information regarding the company’s fiscal 2014 second quarter results or financial condition.

Elevating Life with Every Glass Raised

Company Estimates Elevating Life with Every Glass Raised 4| . #3 seller & producer of beer for U.S.S.S. • Wine & Spirits • • • • • • • • • • • • World’s leading premium wine company 100+ brands sold in 100+ countries ~64 million cases ~40 facilities worldwide #1 wine company in Canada #1 producer of New Zealand wine #2 imported vodka in the U.S.S.Constellation Today • Largest multi-category total beverage alcohol supplier in the U. IRI. market • Imported Beer Source: Impact. ACD. ~170 million cases State-of-the-art brewery in Mexico 6 of top 25 imported beer brands in U. NZ Growers. – SVEDKA #1 imported beer company in the U. Beer Marketer’s Insight. Beverage Information Group.

Brand Premiumization and Strategy Focus Scale Building Organic Growth Focus Beer Business Investment 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (1) (4) (2) Brewery (3) (1) (2) (3) (4) Retained ~20% interest in Australian / U.K. Brand Rights Elevating Life with Every Glass Raised 5| . Acquisition of the remaining 50% of Crown. Mexican Brewery and U. Acquired remaining ~50% interest in October 2011.S. Acquisition closed July 2012. business.

Strong Financial Profile Net Sales Operating Margin Free Cash Flow Average Net Debt Stock Buybacks Diluted EPS FY13: $2.8 billion FY08: 15% FY13: 20% FY08 – FY10: $350 million FY11 – FY13: $580 million FY08 – FY13: $2. ~$20 per share FY08: $1. Net debt defined as total debt less cash Elevating Life with Every Glass Raised 6| .44 FY13: $2.3 billion FY11 – FY13: 56 million shares for $1.19 Note: Operating margin and diluted EPS .1 billion.on a comparable basis. plant and equipment. Note: Free cash flow defined as net cash provided by operating activities less purchase of property.

Cases 300 250 200 150 100 50 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013P Off Premise Source: Beverage Information Group and Company Estimates On Premise 7| Elevating Life with Every Glass Raised . Wine Growth 10 Year CAGR +3% 350 3 Year CAGR +3% Millions of 9L Eq.S.U.

Premium Continues to Outperform Value 8% 7% 6% 5% 4% 3% 2% 1% 0% -1% Pre-Recession (12/20079/2008) Recession (10/2008-12/2009) Premium Plus ($5+) 6% 7% 6% 4% 1% 0% Post Recession (1/20108/2013) Value (<$5) Source: IRI – Total US Food and Drug Elevating Life with Every Glass Raised 8| .

2012 Wine Consumption 3 Year CAGR 9| Elevating Life with Every Glass Raised .0% 0.0% -3.S.0% Millions of 9L Cases 250 200 150 100 50 0 US France Italy -1.0% 3.4% 3.0% 2.0% 1.U. Leads in Total Wine Consumption 400 350 300 3.0% -1.8% -2.0% Source: IWSR.2% 4.4% UK Australia Canada -2.0% 1.0% -1.

1% -2.1% 3.U.5% -1.0% Liters Per Person 20 10 0 -1. & Canada Per Capita Consumption Growth Drives Opportunity 60 50 40 30 2.0% -1.0% 0.0% -4.0% 2.0% 2.0% 0.4% -3.0% 1.S.0% France Source: IWSR.0% -3. 2012 Italy Australia UK Canada US Per Capita Consumption Elevating Life with Every Glass Raised 3 Year CAGR 10 | .

Adopting Wine Faster Than Generations Before Them 62 8 MILLION Millennials between 21 & 36 in the U.Millennials . MILLION Millennials reaching LDA in next 2 years Elevating Life with Every Glass Raised 11 | .S.

IRI.S.8 billion – Operating margin – 23% Source: Impact.Wine and Spirits Business • World’s leading premium wine company – Leading ~20% share of U.000 acres of vineyards • ~40 facilities • FY13 Performance: – Cases – ~64 million (wine ~57M. NZ Wine Growers.S. Company Estimates Elevating Life with Every Glass Raised 12 | . – Black Velvet – #2 Canadian whisky in U. Premium+ – #1 wine company in Canada – #1 producer of New Zealand wine • 2 of top 25 spirits brands in U. • 100+ brands sold in 100+ countries • ~19. – SVEDKA – #2 imported vodka in U. Beverage Information Group. spirits ~7M) – Net sales – $2.S.S. ACD.

Profitability Elevating Life with Every Glass Raised 13 | . Focus Brands: Represent Majority of U.U.S.S.

Robert Mondavi Brand Franchise 90+ Scores Since 2004 18 Elevating Life with Every Glass Raised 14 | .

Rex Goliath – “Super Charged” Premium Growth Elevating Life with Every Glass Raised 15 | .

Innovation – Packaging & Extensions Elevating Life with Every Glass Raised 16 | .

Innovation – New Brands Recent successes Launching soon Elevating Life with Every Glass Raised 17 | .

Multi-Outlet + Convenience for FY13 and FY14 YTD. U.S.FY14 YTD) STZ (FY11) STZ (FY12) STZ (FY13) STZ (FY14 YTD) New Skus Introduced Within Last 24 Months Source: IRI – U. Food/Drug/MassX/Convenience for FY11 and FY12. FY14 YTD is through 8/11/13 Elevating Life with Every Glass Raised 18 | .New Items Contribution to Overall Sales Contribution of New Wine SKUs on Wine Sales 7% 6% 5% 4% 3% 2% 1% 0% Industry (Avg FY11 .S.

S. Import Categories NEW ZEALAND ITALY CHILE ARGENTINA Elevating Life with Every Glass Raised 19 | .Growth in Key U.

S. and “Top 10” U. Increased Regional Investment (3) • Double Digit IRI Growth in Fiscal 2013 (1) (1) Beverage Information Group . New Packaging.SVEDKA Vodka • #2 Imported Vodka in U.S. (2) IRI Elevating Life with Every Glass Raised 20 | .Calendar 2012. Spirits Brand • ~ 4 Million Cases • New Flavors.

Calendar 2012 Elevating Life with Every Glass Raised 21 | . Spirits Brand (1) • New Toasted Caramel & Cinnamon Rush capitalize on strong growth in flavored whisky category (1) Beverage Information Group .S.Black Velvet • #2 brand in the Canadian Whisky category (1) • Top 25 U.

Investment in National Advertising & Social Media 25+ brands on Facebook 15+ Elevating Life with Every Glass Raised brands on Twitter/YouTube 22 | .

Total Wine Category and Constellation Volume Growth Trends 16% 12% 8% 4% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 FY13 FY13 FY13 FY13 FY14 Constellation Source: IRI – Multi-Outlet + Convenience through 5-19-13 Market Elevating Life with Every Glass Raised 23 | .S.Brand Building Efforts: Driving Marketplace Performance Improvement U.

– ~49% volume share of imported beer market (1) • Third-largest U.56 billion – Operating Income: – Crown: $442 million – Mexican Production/Brand Rights: $320 million(4) (1) Beer Institute Calendar 2012.S. (3) BMC Strategic Associates Calendar 2012.Beer Business • Largest imported beer company in U. (2) Beer Marketers Insights Calendar 2012. beer company overall – ~8% dollar share (3) • State-of-the-art brewery in Mexico – Current capacity: 10 million hectoliters • 6 of top 25 import brands (2) • Calendar 2012 Performance: – Cases: ~170 million – Net Sales: $2. (4) Company Estimates Elevating Life with Every Glass Raised 24 | .S.

Beverage Information Group – Calendar Year 2012 #15 import. #6 beer overall. ~4 million cases Elevating Life with Every Glass Raised 25 | . ~6 million cases Source: Beer Marketer’s Insights. #8 import. ~13 million cases #3 import.Crown Imports . ~43 million cases #13 import. ~100 million cases #1 imported light.Portfolio Highlights #1 import.

Promotions/Initiatives “Own” Cinco de Mayo Holiday Elevating Life with Every Glass Raised Summer Promotions 26 | Find Your Beach Campaign .

Capturing Opportunities INNOVATION/ PACKAGING PACIFICO CAMPAIGN RICK BAYLESS PARTNERSHIP EXPANDING MODELO ESPECIAL DISTRIBUTION Elevating Life with Every Glass Raised 27 | .

S. Beer Category and Crown – Volume Growth Trends 20% 16% 12% 8% 4% 0% -4% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 FY11 FY11 FY11 FY11 FY12 FY12 FY12 FY12 FY13 FY13 FY13 FY13 FY14 Crown Source: IRI – Multi-Outlet + Convenience through 5-19-13 Total Beer Imported Beer Elevating Life with Every Glass Raised 28 | .Crown Imports: Outperforming Import and Total Beer Categories U.

Draft Format Opportunity • Key On-Premise Growth Opportunity: ̶ FY 13: ~2 million case equivalents .up 50%+ ̶ Drives consumer awareness and trial. contributes to off-premise growth Elevating Life with Every Glass Raised 29 | .

Brewery: State-of-the-Art Facility Elevating Life with Every Glass Raised 30 | .

On a comparable basis.Beer Segment – Operating Margin Opportunity Note . Elevating Life with Every Glass Raised 31 | .

Elevating Life with Every Glass Raised 32 | . plant and equipment.Free Cash Flow History(1) $800 $600 Average FCF $580 (Millions) $400 $200 $0 Average FCF $350 FY08 FY09 FY10 FY11 FY12 FY13 (1) Free cash flow defined as net cash provided by operating activities less purchases of property.

Free Cash Flow Opportunity FY17 Target: More Than $1 Billion Drivers: • Realize Full Year Benefit of Beer Transaction • Fund One-Time Transactional Costs • Complete Brewery Expansion – Fund CapEx Requirements • Drive EBIT Growth • Deleverage – Reduce Interest Elevating Life with Every Glass Raised 33 | .

Stock Repurchases: Cash Returned to Shareholders 56 million shares repurchased for $1.1 billion : ~ $20 per share $450 $400 $350 $300 Millions $250 $200 $150 $100 $50 $0 FY 2011 FY 2012 34 | FY 2013 Elevating Life with Every Glass Raised .

EBITDA is on a comparable basis 6 5 4 3 2 1 0 Net Debt/TTM EBITDA Elevating Life with Every Glass Raised 35 | .Debt / Leverage History Net Debt (1) (1) Net Debt / TTM EBITDA $6 $5 Net Debt ($Billions) $4 $3 $2 $1 $0 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 (1) Net Debt = Debt less cash and restricted cash.

0 3.0 0.0 2.Deleveraging Target Net Debt / TTM EBITDA(1) Net Debt / TTM EBITDA Target 6. (2) Factors in full year of acquisition earnings Elevating Life with Every Glass Raised .0 1.0 5.0 Target Ratio 4. EBITDA is on a comparable basis.0 5x + (2) FY13 06/13 PF FY14 FY15 FY16 36 | Post FY16 (1) Net Debt = Debt less cash.

Capital Allocation Opportunity Delevering Back into 3x to 4x Target Range + Strong Free Cash Flow Generation = Capital Allocation Flexibility • Focus on Returning Cash to Shareholders – Dividend Initiation Evaluation • Payout ratio/yield considerations – Stock Buybacks • Offset dilution from stock-based compensation share activity • Opportunistic share repurchases • Complement Shareholder Cash Return Activities – Additional Debt Pay Down – Enhance Portfolio – Selective Brand Acquisitions Elevating Life with Every Glass Raised 37 | .

Summary • Strong Financial Profile – Organic sales and EBIT growth focus • Beer Transaction is Transformational – Enhances Financial Profile • Generating Strong Free Cash Flow – Fund brewery expansion – Get back to 3x – 4x leverage target in ~ 2 years – Reduced interest expense drives EPS growth ahead of EBIT growth • Creating Capital Allocation Management Flexibility – Shareholder return opportunities Elevating Life with Every Glass Raised 38 | .

Elevating Life with Every Glass Raised .

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