Earnings Recap: Constellation Brands Third Quarter Fiscal Year 2026

Company advances strategic priorities amid continued challenging operating environment;
Beer Business continues to gain dollar and volume share across U.S. tracked channels:
returns $220 Million in share repurchases

⁽¹⁾Definitions of reported, comparable, adjusted, and organic as well as reconciliations of non-GAAP financial measures, are contained in the earnings release. Comparable, adjusted, and organic amounts are non-GAAP financial measures.

Overarching Highlights
The operating environment during the third quarter of fiscal 2026 remained challenged, which was in line with the Company’s expectations and relatively consistent with the prior quarter. Demand across the beer, wine, and spirits categories remained soft as consumers continued to exhibit cautious spending behavior resulting from multiple variables, including the cumulative effects of inflation, overall economic uncertainty, and other ongoing socioeconomic factors. Despite these headwinds, the Company continued to execute against its strategic business priorities, resulting in expanded market share and increased distribution points in its Beer Business and outperformance in the higher-end wine segment in its Wine & Spirits Business. The Company returned just under $400 million to shareholders through its dividend and share repurchase programs during the quarter, bringing total cash returned to shareholders during fiscal 2026 to nearly $1.4 billion.

Q3 FY26 Highlights

• Net Sales: $2,223 million

• Operating Income and Comparable Operating Income: $692 million and $739 million, respectively

• Cash Flow: Generated year-to-date operating cash flow of $2.1 billion and free cash flow of $1.45 billion

• Beer Business: Continued to outperform the industry – exceeding total beverage alcohol by nearly half a percentage point and the beer category by approximately 1 percentage point in year-over-year Circana U.S. tracked channels for both dollar and volume sales

• Wine and Spirits Business: Continues to outpace the corresponding higher-end wine segment in both dollar and volume sales in Circana U.S. tracked channels

• Shareholder Returns: Company has repurchased $824 million of shares year-to-date through December 2025 and declared a quarterly cash dividend of $1.02 per share of Class A Common Stock.

  
  

A Message from President and CEO Bill Newlands
“The operating environment during the third quarter of fiscal 2026 remained challenged, which was in line with our expectations and relatively consistent with the prior quarter. Our Beer Business delivered dollar and volume share gains in tracked channels and gained incremental distribution points, while our Wine and Spirit Business continued to outperform the U.S. wine industry. By focusing on factors within our control, we are confident that we are positioning the company for long-term success.”

Beer Business
Three Months Ended | In millions, branded products, 24-pack, 12-ounce equivalents

Beer Highlights
Despite the U.S. consumer continuing to face ongoing socioeconomic headwinds, the Company’s Beer Business continues to outperform the category. Its brand-health and loyalty metrics remain strong, with key metrics displaying stable or increasing trends, and loyalty towards its beer portfolio amongst Hispanic and legal drinking age Gen-Z consumers remains the highest relative to other major beer suppliers in the U.S. The Company continues to be the #1 high-end beer supplier in the U.S. by dollar sales. 

• Net sales declined 1% driven by a 2.2% decline in shipment volumes, partially offset by favorable pricing.

• Operating margin increased 10 basis points to 310% as favorable pricing and lower depreciation were partially offset by increased cost of product sold from aluminum tariffs and unfavorable fixed cost absorption from lower volumes.

• Depletions decreased 3.0% as declines for Modelo Especial of approximately 4%, Corona Extra of nearly 9%, and the Modelo Chelada brands of approximately 2% were partially offset by strong growth from Pacifico and Victoria of over 15% and 13%, respectively.

• Our Beer Business ranked as the #3 dollar share gainer in Circana U.S. tracked channels and had 4 of the top 15 dollar share gaining brands across the entire U.S. beer category:
  - Modelo Especial and Corona Extra maintained their positions as the #1 and #5 brands in dollar sales, respectively;
  - Within the Corona brand family, Corona Sunbrew and Corona Familiar were the #6 and #7 dollar share gainers, respectively;
  - Pacifico and Victoria were #3 the #13 dollar share gainers, respectively.
  
  

Wine and Spirits Business
Three Months Ended | In millions, branded product, 9-liter case equivalents

⁽²⁾_{Includes adjustments to remove volumes for the period September 1, 2024, through November 30, 2024 associated with the brands that are no longer part of the wine and spirits segment following the SVEDKA Divestiture and the 2025 Wine Divestitures (both as defined in the earnings release).}
⁽³⁾_{Three months ended November 30, 2024, includes $202.6 million of net sales and $61.6 million of gross profit less marketing that are no longer part of the wine and spirits segment results due to the SVEDKA Divestiture and the 2025 Wine Divestitures.}

Wine and Spirits Highlights
The Company’s higher-end wine portfolio outperformed the corresponding segment in year-over-year dollar and volume sales growth by over 2 points and nearly 7 points, respectively, in Circana U.S. tracked channels.

• Net sales declined 51% driven by a 70.6% decrease in shipment volumes reflecting the impacts of the SVEDKA Divestiture and the 2025 Wine Divestitures, strategic pricing actions taken on select brands, and changes in distributor contractual obligations.

• Operating margin decreased from 22.1% to 15.8%, primarily reflecting the impacts of the SVEDKA Divestiture and the 2025 Wine Divestitures, unfavorable fixed cost absorption, strategic pricing actions taken on select brands, and changes in distributor contractual obligations, partially offset by favorability in marketing and other selling, general, and administrative expenses.

• Our portfolio delivered flat U.S. depletions and outpaced the corresponding higher-end wine segment in both dollar and volume sales performance in Circana U.S. tracked channels.

A Message from EVP and Chief Financial Officer Garth Hankinson

“Through the first three quarters of fiscal 2026, we returned nearly $1.4 billion to shareholders, maintained our investment-grade rating, and consistently met our ~3.0X comparable net leverage and ~30% dividend payout ratio targets. These actions underscore our commitment to disciplined capital allocation, including advancing modular brewery expansions. As we navigate through this challenging operating environment, we continue to pursue incremental cost savings through our efficiency and restructuring initiatives while maintaining strong support behind our brands.”




To access the full earnings release, presentation, and CEO and CFO commentary, click HERE.

This article contains non-GAAP financial measures. These and other non-GAAP financial measures, the purposes for which management uses them, why management believes they are useful to investors, and reconciliations to the most directly comparable GAAP financial measures may be found in the earnings release and at ir.cbrands.com under the Financial Info/Financial History (Non-GAAP) section. All references to profit measures and earnings per share on a comparable basis exclude items that affect comparability.

Please see “Forward-Looking Statements” in the earnings release for a discussion of certain of the uncertainties, risks, and assumptions associated with forward-looking statements in the article.