Constellation Brands reported fiscal 2027 second-quarter net sales of $2.63 billion, up 6% from $2.48 billion in the prior-year period.
Reported operating income totaled $805 million, down 8%.
Comparable operating income increased 1% to approximately $897 million.
Reported diluted earnings per share increased 25% to $3.32.
Comparable diluted EPS increased 3% to $3.74.
The company’s Beer Business generated $2.47 billion in net sales, up 5% year-over-year.
Beer shipment volumes increased 5.5%, while operating income increased 1% to $964.2 million.
Beer operating margin declined to 39% from 40.6% as increased marketing and other selling, general and administrative spending more than offset lower tariff expenses and improved fixed-cost absorption.
Beer depletions declined 0.6%.
Modelo Especial depletions declined approximately 2% and Corona Extra declined approximately 5%, while Pacifico increased approximately 19%, Victoria grew approximately 15%, and Modelo Chelada brands increased approximately 5%.
Constellation said its Beer Business was the No. 1 dollar and volume share gainer across Circana U.S. tracked channels.
Modelo Especial maintained its position as the No. 1 U.S. beer brand by dollar sales.
The Wine and Spirits Business generated net sales of $159.4 million, up 17%.
Shipments increased 15.4%, while depletions increased 10.2%.
Wine and Spirits operating income improved to $6.1 million from a $19.8 million operating loss in the prior-year period.
The business benefited from tariff recoveries and savings from optimization and restructuring programs.
Kim Crawford depletions increased approximately 11%, while Mi CAMPO increased approximately 51%.
Following the end of the quarter, Constellation acquired SpikedAde, a spirit-based ready-to-drink brand.
Constellation paid $75 million at closing for 100% of the business, with additional contingent consideration of up to $278 million payable over five years based on SpikedAde’s future performance.
The acquisition does not change Constellation’s fiscal 2027 outlook.
During the first half of fiscal 2027, Constellation generated $1.5 billion of operating cash flow and $1.1 billion of free cash flow.
The company repurchased $530 million of shares through September and returned more than $800 million to shareholders through repurchases and dividends during the first half.
Constellation updated its fiscal 2027 reported EPS guidance to $11.85 to $12.55.
The company reaffirmed comparable EPS guidance of $11.20 to $11.90, operating cash flow of $2.4 billion to $2.5 billion, and free cash flow of $1.6 billion to $1.7 billion.
Its board also declared a quarterly dividend of $1.03 per Class A share.
KEY QUOTES:
“During the second quarter, our portfolio of iconic brands continued to resonate with consumers. We have sharpened our execution and increased investment across the business, and are beginning to see early returns through accelerating dollar and volume share gains in both our Beer and Wine & Spirits businesses relative to the first quarter.”
Nicholas Fink, President and CEO of Constellation Brands
“As a result, we were the #1 dollar share gainer in beverage alcohol during the second quarter. Looking ahead, we remain focused on building on this momentum by expanding our reach across more consumers and occasions, while investing behind the brands and capabilities that will support our next phase of growth.”
Nicholas Fink, President and CEO of Constellation Brands
“Through the first half of fiscal 2027, our strong cash flow generation enabled us to continue executing our disciplined and balanced capital allocation priorities.”
Garth Hankinson, Executive Vice President and CFO of Constellation Brands
“We maintained our target comparable net leverage ratio of ~3.0x, returned more than $800 million to shareholders through share repurchases and dividends, and continued to invest in our business through increased brand marketing support.”
Garth Hankinson, Executive Vice President and CFO of Constellation Brands
