Constellation Brands(STZ) - 2025 Q4 - Annual Results

Financial Performance - Reported net sales for FY25 were $10.2 billion, reflecting a 2% increase compared to FY24, while organic net sales also grew by 3%[22]. - The beer segment achieved a net sales growth of 9% in FY25, with operating income increasing by 10% to $3.4 billion[18][25]. - Wine and spirits segment reported a decline in net sales of 7% to $1.67 billion, with operating income decreasing by 18% to $325 million[18][21]. - Consolidated net sales for the year ended February 28, 2025, increased by 2% to $10,208.7 million, up from $9,961.8 million in the previous year[102]. - Organic net sales for the year ended February 28, 2025, rose by 3% to $10,208.7 million, compared to $9,939.2 million for the year ended February 29, 2024[102]. - Beer net sales for the year ended February 28, 2025, increased by 5% to $8,539.8 million, while Wine and Spirits net sales decreased by 7% to $1,668.9 million[102]. - Net income for the year ended February 28, 2025, was a loss of $31.1 million, compared to a net income of $1,765.2 million for the year ended February 29, 2024[97]. - The company reported a net loss attributable to Constellation Brands, Inc. of $375.3 million for the three months ended February 28, 2025, compared to a net income of $392.4 million for the same period in 2024[95]. Cash Flow and Capital Expenditures - Expected operating cash flow of approximately $9 billion from FY26 to FY28, with free cash flow projected between $6 billion to $7 billion[14]. - Operating cash flow for FY25 was $3.2 billion, representing a 28% increase compared to FY24[21]. - Capital expenditures for FY25 were $992 million, with expectations of approximately $1 billion in cumulative CAPEX for FY26 to FY28[33]. - Total capital expenditures from FY26 to FY28 are expected to be around $2.4 billion, with approximately $2 billion allocated to the Beer Business[66]. Strategic Initiatives and Cost Savings - Enterprise-wide restructuring actions are expected to yield over $200 million in net annualized cost savings by FY28[14]. - The company anticipates over $100 million in net annualized cost savings across COGS, Marketing, and SG&A by FY28, including approximately $55 million in FY26[58]. - The company delivered approximately $220 million in cost savings through supply chain efficiencies, resulting in a 180 basis point increase in beer business operating margin to 39.7%[21]. - Significant cash generation and returns to shareholders expected, with a compelling growth outlook beyond FY26[13]. Market Growth and Segment Performance - Beer segment anticipated to achieve 2% to 4% net sales growth and operating margins of 39% to 40% in FY27 and FY28, driven by distribution gains and marketing investments[14]. - Wine and Spirits segment expected to deliver up to 3% net sales growth and operating margins of 22% to 24% in FY27 and FY28, following the 2025 Wine Divestitures Transaction projected to generate around $900 million in proceeds[14]. - The company is the only large-scale entity to be a Top 10 growth leader for 12 consecutive years, holding the 1 position for 6 of the last 8 years[14]. - Modelo Especial contributed over 40% of Core Beer Brands POD growth from FY23 to FY25 and is expected to contribute over 30% from FY25 to FY28[40]. - Pacifico was the second largest POD growth driver among Core Beer Brands from FY23 to FY25, contributing over 20% of uplift and is expected to contribute over 30% from FY25 to FY28[40]. Shareholder Returns and Dividends - Committed to a disciplined capital allocation strategy, including share repurchases against a $4 billion authorization approved in April 2025[14]. - A new total 3-year $4 billion share repurchase authorization has been established to enhance returns[65]. - The company reported a cash dividend declared per common share of $1.01 for the three months ended February 28, 2025, compared to $0.89 in the prior year[95]. - The company plans to maintain a net leverage ratio of around 3.0x and a dividend payout ratio of approximately 30% from FY26 to FY28[31]. Future Projections - The company expects low single-digit CAGR for consolidated net sales from FY26 to FY28, with an operating margin target of approximately 34-35%[30]. - The company expects to maintain best-in-class operating margins of approximately 39% to 40% in FY26-FY28[52]. - The forecasted EPS (GAAP) for the year ending February 28, 2026, is projected to be between $12.33 and $12.63, with a comparable EPS (Non-GAAP) forecasted between $12.60 and $12.90[138]. - Free cash flow (Non-GAAP) guidance for the year ending February 28, 2026, is estimated to be between $1,500 million and $1,600 million[141].