Constellation Brands (STZ) investor relations material

Executive summary

• Q2 FY26 net sales declined 15% year-over-year, mainly due to divestitures in Wine and Spirits and lower Beer shipments, but favorable pricing and cost optimization partially offset the impact.

• Reported EPS was $2.65 and comparable EPS was $3.63 for Q2 FY26; net income attributable to shareholders increased 139% year-over-year, reflecting the absence of prior year impairments.

• Operating income rose 171% year-over-year, mainly due to the prior year's goodwill impairment in Wine and Spirits and cost optimization in Beer.

• Beer business led U.S. tracked channels in dollar share gains, with Modelo Especial remaining the #1 U.S. beer brand by dollar sales.

• Continued investment in marketing, capacity, and share repurchases, with $604M repurchased fiscal YTD and a $1.02 per share dividend declared.

Financial highlights

• Q2 FY26 net sales were $2.48B, down 15% year-over-year; organic net sales declined 8%.

• Q2 reported operating income was $874M (up 171% due to prior-year impairments); comparable operating income was $886M, down 13%.

• Q2 reported EPS was $2.65; comparable EPS was $3.63, down 16% year-over-year.

• Q2 net income attributable to shareholders was $466M, compared to a loss of $1.2B in the prior year.

• Gross margin for the quarter improved to 52.8% from 51.8% year-over-year, aided by divestitures of lower-margin brands and pricing actions.

Outlook and guidance

• Fiscal 2026 reported EPS outlook updated to $9.86–$10.16; comparable EPS affirmed at $11.30–$11.60.

• FY26 operating cash flow guidance of $2.5B–$2.6B and free cash flow of $1.3B–$1.4B.

• Beer net sales expected to decline 2%–4% and operating income to decline 7%–9% for FY26.

• Wine and Spirits organic net sales expected to decline 17%–20%, with operating income down 97%–100% for FY26.

• Management expects the reported effective tax rate for fiscal 2026 to be 17–19%, reflecting impacts from new tax legislation.