Oct 6, 2026, 4:18 PM ETConsumer Defensive

Constellation Brands — Q2 FY 2027 Earnings Summary

STZCONSTELLATION BRANDS INC

Financial Performance

Reported net sales for the quarter ended August 31, 2026, were $2,633 million, a 6% increase year-over-year; comparable net sales were also $2,633 million.
Reported operating income was $805 million, an 8% decrease year-over-year; comparable operating income was $897 million, a 1% increase.
Reported earnings per share (EPS) were $3.32, a 25% increase year-over-year; comparable EPS were $3.74, a 3% increase.
Year-to-date operating cash flow was $1.5 billion (down 1%); free cash flow was $1.1 billion (up 4%).
Reported gross profit was $1,393 million (6% increase); comparable gross profit was $1,393 million.
Reported operating margin was 30.6% (down from 35.2%); comparable operating margin was 34.1% (down from 35.7%).
Net income attributable to CBI was $565.8 million for the quarter (up 21%); year-to-date net income was $1,219.6 million (up 24%).
Total assets were $22,063.7 million as of August 31, 2026, compared to $21,900.5 million as of February 28, 2026.
Long-term debt, less current maturities, was $9,096.2 million as of August 31, 2026, compared to $9,692.9 million as of February 28, 2026.

Updated fiscal 2027 reported EPS outlook to $11.85 – $12.55.
Reaffirmed fiscal 2027 comparable EPS outlook of $11.20 – $11.90.
Reaffirmed fiscal 2027 operating cash flow target of $2.4 – $2.5 billion.
Reaffirmed fiscal 2027 free cash flow target of $1.6 – $1.7 billion.
Fiscal 2027 guidance assumes enterprise organic net sales growth of (1)% – 1%, Beer net sales growth of (1)% – 1%, and Wine and Spirits organic net sales growth of (1)% – 1%.
Fiscal 2027 guidance assumes reported operating margin of 31% – 32% and comparable operating margin of 32% – 33%.
Fiscal 2027 guidance assumes a reported tax rate of approximately 12% and a comparable tax rate of approximately 20%.
Fiscal 2027 guidance assumes capital expenditures of approximately $800 million.

Beer Business: Net sales increased 5% to $2,473.6 million; operating income increased 1% to $964.2 million. Shipments increased 5.5% to 123.9 million cases; depletions decreased 0.6% to 123.9 million cases. Operating margin decreased 160 basis points to 39.0%. Modelo Especial maintained #1 position by dollar sales; Pacifico became a top-10 brand by dollar sales.
Wine and Spirits Business: Net sales increased 17% to $159.4 million; operating income improved to $6.1 million from a loss of $19.8 million. Shipments increased 15.4% to 1.5 million cases; depletions increased 10.2%. Operating margin improved to 3.8% from (14.6)%. Kim Crawford grew approximately 11%; Mi CAMPO grew approximately 51%.
SpikedAde Acquisition: Subsequent to the quarter, the company acquired SpikedAde for a $75 million payment at close, with additional contingent consideration of up to $278 million payable over five years based on future performance.
Divestitures: The 2025 Wine Divestitures excluded $142 million of net sales from year-over-year comparisons for the six-month period ended August 31, 2025.

The Beer Business ranked as the #1 dollar and volume share gainer in Circana U.S. tracked channels, outperforming the total beer category by 4 percentage points in year-over-year dollar and volume sales.
The Wine and Spirits Business outpaced the total wine and spirits category in both dollar and volume sales; the wine portfolio was the #3 dollar share gainer in the total wine category.
Five of the top-15 dollar share gaining brands in the U.S. beer category were from the company's portfolio: Modelo Especial (#3), Corona Familiar (#14), Pacifico (#2), Victoria (#10), and Modelo Chelada Limón y Sal (#6).

Potential declines in consumption of products sold and dependence on sales of beer brands.
Impacts of acquisitions, divestitures, and new product development strategies, including contingent consideration from the SpikedAde acquisition.
Dependence on trademarks and proprietary rights, including failure to protect intellectual property.
Economic and other uncertainties associated with international operations, including tariffs.
Supply, production, and/or transportation difficulties regarding water, agricultural, raw material, and packaging materials.
Operational disruptions or catastrophic loss to breweries, wineries, and distribution systems.
Severe weather, natural disasters, climate change, and environmental sustainability regulatory compliance.
Dependence on wholesale distributors, major retailers, and government agencies.
Food safety and quality risks, including contamination and product degradation.
Employee labor activities that could increase costs.
Indebtedness, credit ratings, interest rate fluctuations, and credit market disruptions.
Geopolitical uncertainty, including the conflict in the Middle East.
Class action or other litigation, including securities law violations and product liability.
Changes to tax laws and fluctuations in the effective tax rate.

CEO Nicholas Fink stated the portfolio of iconic brands continued to resonate with consumers, noting sharpened execution and increased investment leading to accelerating dollar and volume share gains in Beer and Wine & Spirits relative to the first quarter.
CFO Garth Hankinson highlighted strong cash flow generation enabling the maintenance of a target comparable net leverage ratio of ~3.0x and the return of more than $800 million to shareholders through share repurchases and dividends in the first half of fiscal 2027.
Management expressed commitment to supporting long-term growth, maintaining financial flexibility, and returning capital to shareholders.

The company repurchased $530 million of shares year-to-date through September 2026.
The Board declared a quarterly cash dividend of $1.03 per share of Class A Common Stock, payable on November 13, 2026, to stockholders of record as of October 30, 2026.
The company returned an additional $400 million to shareholders through share repurchases and dividends in the quarter.
The company maintains a target comparable net leverage ratio of approximately 3.0x.
Asset impairment and related expenses included impairments on assets held for sale associated with the Nelson's Green Brier business and New Zealand Wine Divestitures.
Strategic business reconfiguration costs and 2025 Restructuring Initiative costs were recognized as part of comparable adjustments.