Constellation Brands (STZ) Q3 2025 earnings summary

Executive summary

• Q3 FY25 net sales were flat year-over-year at $2.46B, with reported EPS of $3.39 (up 23%) and comparable EPS of $3.25 (flat); net income attributable to CBI rose 21% to $616M, driven by lower tax provision and improved Beer performance.

• Beer business achieved its 59th consecutive quarter of depletion volume growth, outpacing the beverage industry and CPG sector in dollar sales, while Wine and Spirits faced double-digit declines and ongoing headwinds.

• Wine and Spirits business completed the SVEDKA divestiture in January 2025, focusing on higher-growth, higher-margin brands; a $2.25B goodwill impairment was recognized due to U.S. market declines.

• Capital allocation priorities remained consistent, with ~$220M returned to shareholders in Q3 and over $1.2B year-to-date through dividends and buybacks; net leverage ratio maintained at 2.9x, below the 3.0x target.

• Strategic focus remains on premiumization, cost savings, digital initiatives, and continued investment in Beer capacity and high-end brands.

Financial highlights

• Q3 FY25 enterprise net sales were flat year-over-year at $2.46B; Beer net sales grew 3% to $2.03B, operating income up 2% to $770M; Wine and Spirits net sales declined 14% to $431M, operating income down 25% to $95M.

• Q3 net income attributable to CBI was $616M, up 21% year-over-year; diluted EPS was $3.39, up 23%.

• YTD free cash flow reached $1.63B–$1.6B, up 13% year-over-year; YTD operating cash flow was $2.6B, up 9%.

• Gross margin for Q3 was 52.0% for Beer and 47.6% for Wine and Spirits; consolidated operating margin was 32.2%.

• Quarterly dividend of $1.01 per share declared; YTD dividends paid were $491M.

Outlook and guidance

• FY25 organic net sales growth expected at 2–5% for the enterprise; Beer net sales growth 4–7%, Wine and Spirits organic net sales decline 5–8%.

• FY25 operating income growth: Beer 9–12%, Wine and Spirits decline 17–19%, enterprise comparable operating income up 6–9%.

• FY25 reported EPS outlook $3.90–$4.30; comparable EPS guidance narrowed to $13.40–$13.80.

• FY25 operating cash flow target raised to $2.9–$3.1B; free cash flow projected at $1.6–$1.8B.

• FY25 effective tax rate expected between 7% and 9%, reflecting SVEDKA divestiture impact.