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AB InBev (BUD) Tops Q3 Earnings Estimates, Raises EBITDA View
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Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported better-than-anticipated earnings in third-quarter 2022, while its sales missed the Zacks Consensus Estimate. Moreover, earnings and sales improved year over year.
Top and bottom-line growth reflected continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Results also benefited from continued consumer demand for its brand portfolio. Backed by the continued business momentum, the company raised its view for 2022.
Shares of the Zacks Rank #3 (Hold) company have lost 24.5% in the past year compared with the industry’s decline of 8.7%.
Image Source: Zacks Investment Research
Q3 Highlights
AB InBev reported normalized earnings per share (EPS) of 81 cents, which rose 62% from 50 cents in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of 78 cents.
Underlying EPS (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs and the impacts of hyperinflation) was 84 cents in third-quarter 2022, down 1.2% from 85 cents earned in the year-ago quarter.
Revenues of $15,091 million improved 5.7% from the year-ago quarter, missing the Zacks Consensus Estimate of $15,124 million. The company registered organic revenue growth of 12.1%, primarily driven by robust volume and revenue per hectoliter (hl) growth. The top line benefited from strong consumer demand for its portfolio and buoyant beer category growth despite the challenging operating environment. Accelerated digital transformation also contributed to top-line growth in the quarter.
Revenues reflected strong performances of its three global brands — Budweiser, Corona and Stella Artois — which advanced 12.7% outside their home markets in the third quarter.
Revenues per hl were up 8% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across key markets and premiumization efforts. The total organic volume grew 3.7%, with a 3.4% increase in the own-beer volume and 5.2% growth in the non-beer volume.
AnheuserBusch InBev SANV Price, Consensus and EPS Surprise
AB InBev remains keen on making the most of investments in its portfolio over the years, as well as rapidly growing its digital platform, including BEES and Zé Delivery. The company’s digital transformation initiatives remain on track, with B2B digital platforms generating about 57% of its revenues in the third quarter. The company noted that the monthly active user base of BEES reached 3.1 million users as of Sep 30, 2022. In the third quarter, the company’s direct-to-consumer ecosystem generated more than $385 million in revenues and approximately 17 million e-commerce orders.
The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $400 million to the total revenues in the quarter. The global Beyond Beer business’s revenues improved more than 10% in the third quarter.
The cost of sales increased 13.6% on a reported basis and 20% on an organic basis to $6,860 million in the third quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $5,313 million, which rose 1.9% year over year and 6.5% on an organic basis. However, the normalized EBITDA margin contracted 130 basis points (bps) to 35.2% and declined 183 bps organically. EBITDA margins were impacted by commodity cost headwinds, currency impacts, and higher sales and marketing investments in brands. This was partly offset by the increase in revenues.
SG&A expenses declined 0.7% year over year to $4,347 million and increased 8% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2022, AB InBev expects EBITDA growth of 6-8% compared with 4-8% growth stated earlier. It anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing. Over the medium term, the company anticipates EBITDA growth of 4-8%.
The company expects net pension interest expenses and accretion expenses of $170-$200 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2022.
Management anticipates a normalized effective tax rate of 28-30% for 2022. Net capital expenditure is projected to be $4.5-$5 billion for 2022, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , Constellation Brands (STZ - Free Report) and Dutch Bros (BROS - Free Report) .
Coca-Cola FEMSA currently sports a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 26%, on average. It has a long-term earnings growth rate of 9.4%. The company has rallied 13.1% in the past year.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year earnings per share suggests a decline of 3.3% from the year-ago quarter’s reported figure, whereas the same for sales suggests growth of 15%. The consensus mark for KOF’s earnings per share has moved up 1.4% in the past 30 days.
Constellation Brands currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 11.1%. STZ has a trailing four-quarter earnings surprise of 10.5%, on average. The company has gained 9.8% in the past year.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales and earnings suggests growth of 8.2% and 8.7% from the year-ago reported numbers. The consensus mark for STZ’s earnings per share has moved up 14.9 in the past 30 days.
Dutch Bros currently has a Zacks Rank of 2. BROS has a trailing four-quarter earnings surprise of 53%, on average. It has a long-term earnings growth rate of 32%. The company has declined 47.5% in the past year.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales suggests growth of 46.1% from the prior-year reported number, whereas the same for earnings suggests a decline of 26.7%. The consensus mark for BROS’ earnings per share has moved down 4.3% in the past 30 days.
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AB InBev (BUD) Tops Q3 Earnings Estimates, Raises EBITDA View
Anheuser-Busch InBev SA/NV (BUD - Free Report) , alias AB InBev, reported better-than-anticipated earnings in third-quarter 2022, while its sales missed the Zacks Consensus Estimate. Moreover, earnings and sales improved year over year.
Top and bottom-line growth reflected continued business momentum, owing to relentless execution, investment in its brands and accelerated digital transformation. Results also benefited from continued consumer demand for its brand portfolio. Backed by the continued business momentum, the company raised its view for 2022.
Shares of the Zacks Rank #3 (Hold) company have lost 24.5% in the past year compared with the industry’s decline of 8.7%.
Image Source: Zacks Investment Research
Q3 Highlights
AB InBev reported normalized earnings per share (EPS) of 81 cents, which rose 62% from 50 cents in the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of 78 cents.
Underlying EPS (normalized EPS, excluding mark-to-market gains and losses related to the hedging of share-based payment programs and the impacts of hyperinflation) was 84 cents in third-quarter 2022, down 1.2% from 85 cents earned in the year-ago quarter.
Revenues of $15,091 million improved 5.7% from the year-ago quarter, missing the Zacks Consensus Estimate of $15,124 million. The company registered organic revenue growth of 12.1%, primarily driven by robust volume and revenue per hectoliter (hl) growth. The top line benefited from strong consumer demand for its portfolio and buoyant beer category growth despite the challenging operating environment. Accelerated digital transformation also contributed to top-line growth in the quarter.
Revenues reflected strong performances of its three global brands — Budweiser, Corona and Stella Artois — which advanced 12.7% outside their home markets in the third quarter.
Revenues per hl were up 8% on an organic basis, backed by revenue-management initiatives, the expansion of the beer category across key markets and premiumization efforts. The total organic volume grew 3.7%, with a 3.4% increase in the own-beer volume and 5.2% growth in the non-beer volume.
AnheuserBusch InBev SANV Price, Consensus and EPS Surprise
AnheuserBusch InBev SANV price-consensus-eps-surprise-chart | AnheuserBusch InBev SANV Quote
AB InBev remains keen on making the most of investments in its portfolio over the years, as well as rapidly growing its digital platform, including BEES and Zé Delivery. The company’s digital transformation initiatives remain on track, with B2B digital platforms generating about 57% of its revenues in the third quarter. The company noted that the monthly active user base of BEES reached 3.1 million users as of Sep 30, 2022. In the third quarter, the company’s direct-to-consumer ecosystem generated more than $385 million in revenues and approximately 17 million e-commerce orders.
The company remains focused on expanding its Beyond Beer portfolio, which has also been aiding the top line. Notably, the Beyond Beer portfolio contributed more than $400 million to the total revenues in the quarter. The global Beyond Beer business’s revenues improved more than 10% in the third quarter.
The cost of sales increased 13.6% on a reported basis and 20% on an organic basis to $6,860 million in the third quarter.
The company’s normalized earnings before interest, taxes, depreciation and amortization (EBITDA) were $5,313 million, which rose 1.9% year over year and 6.5% on an organic basis. However, the normalized EBITDA margin contracted 130 basis points (bps) to 35.2% and declined 183 bps organically. EBITDA margins were impacted by commodity cost headwinds, currency impacts, and higher sales and marketing investments in brands. This was partly offset by the increase in revenues.
SG&A expenses declined 0.7% year over year to $4,347 million and increased 8% on an organic basis. Higher SG&A expenses can be attributed to elevated supply-chain costs.
Outlook
For 2022, AB InBev expects EBITDA growth of 6-8% compared with 4-8% growth stated earlier. It anticipates revenue growth to be higher than EBITDA growth, driven by strong volume and pricing. Over the medium term, the company anticipates EBITDA growth of 4-8%.
The company expects net pension interest expenses and accretion expenses of $170-$200 million, based on currency and interest rate fluctuations. It anticipates an average gross debt coupon of 4% for 2022.
Management anticipates a normalized effective tax rate of 28-30% for 2022. Net capital expenditure is projected to be $4.5-$5 billion for 2022, driven by higher investments in innovation and other consumer-centric initiatives to fuel the ongoing momentum.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Coca-Cola FEMSA (KOF - Free Report) , Constellation Brands (STZ - Free Report) and Dutch Bros (BROS - Free Report) .
Coca-Cola FEMSA currently sports a Zacks Rank #1 (Strong Buy). KOF has a trailing four-quarter earnings surprise of 26%, on average. It has a long-term earnings growth rate of 9.4%. The company has rallied 13.1% in the past year.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Coca-Cola FEMSA’s current financial-year earnings per share suggests a decline of 3.3% from the year-ago quarter’s reported figure, whereas the same for sales suggests growth of 15%. The consensus mark for KOF’s earnings per share has moved up 1.4% in the past 30 days.
Constellation Brands currently has a Zacks Rank #2 (Buy) and an expected long-term earnings growth rate of 11.1%. STZ has a trailing four-quarter earnings surprise of 10.5%, on average. The company has gained 9.8% in the past year.
The Zacks Consensus Estimate for Constellation Brands’ current financial-year sales and earnings suggests growth of 8.2% and 8.7% from the year-ago reported numbers. The consensus mark for STZ’s earnings per share has moved up 14.9 in the past 30 days.
Dutch Bros currently has a Zacks Rank of 2. BROS has a trailing four-quarter earnings surprise of 53%, on average. It has a long-term earnings growth rate of 32%. The company has declined 47.5% in the past year.
The Zacks Consensus Estimate for Dutch Bros’ current financial-year sales suggests growth of 46.1% from the prior-year reported number, whereas the same for earnings suggests a decline of 26.7%. The consensus mark for BROS’ earnings per share has moved down 4.3% in the past 30 days.