Bulletin: Constellation Brands Inc.'s Third-Quarter Results Support Brewery Expansions

NEW YORK (S&P Global Ratings) Jan. 7, 2022--S&P Global Ratings today said that Constellation Brands Inc.'s (BBB/Stable/A-2) fiscal 2022 third-quarter results, which reported an increase in its full-year earnings guidance (excluding Canopy Growth Corp.) and a roughly $2 billion incremental increase in planned capital expenditures (capex) through fiscal 2026 to build out brewing capacity, are consistent with the rating. Leverage should remain at the lower end of the company's target of 3x-4x despite the higher capex, as operating cash flows remain strong and sales and EBITDA growth are robust. Leverage, which we estimate totaled 3.1x for the 12 months ended Nov. 30, 2021, could temporarily increase closer to or above 4x for the possible November 2023 option exercise of its

...January 7, 2022 NEW YORK (S&P Global Ratings) Jan. 7, 2022--S&P Global Ratings today said that Constellation Brands Inc.'s (###/Stable/A-2) fiscal 2022 third-quarter results, which reported an increase in its full-year earnings guidance (excluding Canopy Growth Corp.) and a roughly $2 billion incremental increase in planned capital expenditures (capex) through fiscal 2026 to build out brewing capacity, are consistent with the rating. Leverage should remain at the lower end of the company's target of 3x-4x despite the higher capex, as operating cash flows remain strong and sales and EBITDA growth are robust. Leverage, which we estimate totaled 3.1x for the 12 months ended Nov. 30, 2021, could temporarily increase closer to or above 4x for the possible November 2023 option exercise of its tranche A warrants in Canopy. However, at an exercise price of C$50.40, the warrants are currently out of the money and therefore may not be exercised. Our ratings on Constellation are unchanged. Net sales...

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