Constellation Brands (STZ) Q1 2025 earnings summary

Executive summary

• Achieved a strong start to FY25 with 6% net sales growth to $2.66–$2.7 billion and a 23% increase in operating income to $941.6–$942 million, driven by robust beer business performance and cost savings initiatives.

• Beer business delivered high single-digit net sales growth (8%) and double-digit operating income growth (16%), with 260 bps margin expansion and 57th consecutive quarter of depletion growth.

• Wine and Spirits segment saw a 7% net sales decline and 25% operating income drop, with margin down 370 bps to 15.3%, amid ongoing market headwinds.

• Returned over $240 million to shareholders via share repurchases and dividends through June 2024; $2.4–$2.6 billion buyback authorization remains.

• Completed Sea Smoke acquisition, closed Mexicali Brewery sale, and continued portfolio optimization and brewery capacity investments.

Financial highlights

• Q1 FY25 net sales: $2.66–$2.7 billion, up 6% year-over-year; operating income: $941.6–$942 million, up 23%; comparable EPS: $3.57, up 17%.

• Beer net sales grew 8% to $2.27 billion; operating income up 16% to $923 million; shipment volume up 7.6%.

• Wine and Spirits net sales fell 7% to $389 million; operating income down 25% to $59.7–$60 million.

• Free cash flow was $315 million, down 19% year-over-year due to higher capital expenditures, mainly for brewery expansion.

• Gross margin improved to 52.7% (up from 50.0%); operating margin rose to 35.4% (up from 30.4%).

Outlook and guidance

• FY25 net sales growth expected at 6–7% enterprise-wide; beer net sales growth 7–9%; wine and spirits net sales flat to down 0.5%.

• FY25 operating income growth: 10–12% reported, 8–10% comparable; beer operating income growth 10–12%, wine and spirits operating income decline 9–11%.

• FY25 comparable EPS guidance reaffirmed at $13.50–$13.80; reported EPS outlook raised to $14.63–$14.93.

• FY25 operating cash flow target: $2.8–$3.0 billion; free cash flow: $1.4–$1.5 billion; capex: $1.4–$1.5 billion, with $1.2 billion for Mexico beer operations.

• Quarterly dividend of $1.01 per share declared.