Revenue grew 2.4% year over year. (The company’s Mexican import Model Especial was the top market share gainer for the entire U.S. beer category.) Beer operating margins grew by 150 basis points to 39.3%, above the company’s 39% target. Beer accounts for 70% of the company’s sales.
It is hard to compare earnings this quarter the first quarter of 2018 due to the accounting treatment of the company’s 37% equity stake in Canadian marijuana producer Canopy Growth. (Warrants, if exercised, would increase ownership to move than 50% by November 2021.) The total pre-tax net gain recognized since the company’s initial Canopy investment in November, 2017, 2017 is $1.6 billion. In the fiscal first quarter Constellation recognized an $828 million decrease in the fair value of the Canopy Growth investment. That decrease was excluded from comparable basis results. Canopy equity earnings that our recognized on Constellation’s income statement are non-cash and are not factored into the company’s fiscal 2020 EPS guidance range of $8.65 to $8.95.
In its conference call the company said core operating cash flow increased 18% and free cash flow climbed 30%. The company raised its forecast of full fiscal year comparable earnings to $8.95 from $8.65 a share.