Constellation Brands(US:STZ)2026-01-07 21:06Financial Performance - Reported net sales for Q3 FY2026 were $2,223 million, a decline of 10% year-over-year[1] - Comparable diluted EPS for Q3 FY2026 was $3.06, down 6% from the previous year[1] - Fiscal 2026 reported EPS outlook is updated to $9.72 - $10.02, with comparable EPS outlook affirmed at $11.30 - $11.60[6] - Consolidated net sales for the three months ended November 30, 2025, were $2,222.8 million, a decrease of 10% compared to $2,463.8 million for the same period in 2024[46] - Gross profit for the three months ended November 30, 2025, was $1,183.2 million, down 8% from $1,284.3 million in the prior year[46] - Operating income for the three months ended November 30, 2025, was $692.0 million, a 13% decline from $793.0 million in 2024, while operating margin decreased to 31.1% from 32.2%[46] - Net income attributable to CBI for the three months ended November 30, 2025, was $502.8 million, an 18% decrease from $615.9 million in 2024[48] - Comparable EPS for the three months ended November 30, 2025, was $3.06, a 6% decline from $3.25 in the same period last year[48] - The company reported a significant increase in operating income for the nine months ended November 30, 2025, reaching $2,279.8 million, compared to $505.2 million in 2024, marking a 351% increase[46] - The company experienced a 10% decrease in gross profit for the nine months ended November 30, 2025, totaling $3,759.8 million, down from $4,199.9 million in 2024[46] Shareholder Returns - The company returned nearly $1.4 billion to shareholders through share repurchases and maintained a ~30% dividend payout ratio[5] - The company declared cash dividends of $1.02 per common share for the three months ended November 30, 2025, slightly up from $1.01 in the same period of 2024[34] - Dividends paid during the nine months ended November 30, 2025, totaled $(538.8) million, slightly down from $(551.3) million in the previous year[38] Cash Flow and Liquidity - Year-to-date operating cash flow reached $2.1 billion, with free cash flow of $1.45 billion[6] - Cash and cash equivalents increased to $152.4 million as of November 30, 2025, compared to $68.1 million as of February 28, 2025, an increase of 123.4%[32] - The company reported a net cash provided by operating activities of $2,106.2 million for the nine months ended November 30, 2025, compared to $2,557.5 million for the same period in 2024, a decrease of 17.6%[36] - For the nine months ended November 30, 2025, net cash provided by operating activities was reported at $2.106 billion, down from $2.557 billion in the prior year[71] Business Segments Performance - The Beer Business gained dollar and volume share, outperforming the total beverage alcohol category by nearly 0.5 percentage points[6] - Wine and Spirits net sales declined 51%, driven by a 70.6% decrease in shipment volumes due to divestitures[15] - Beer net sales for the three months ended November 30, 2025, were $2,009.7 million, a decline of 1% from $2,032.4 million in 2024[41] - Wine and Spirits net sales for the three months ended November 30, 2025, were $213.1 million, a significant drop of 51% compared to $431.4 million in 2024[41] - Wine net sales dropped 53% to $174.5 million for the three months ended November 30, 2025, compared to $374.6 million in 2024[46] - Spirits net sales decreased by 32% to $38.6 million for the three months ended November 30, 2025, down from $56.8 million in the previous year[46] Strategic Initiatives - The company anticipates potential impacts from its acquisition and divestiture strategies, including the 2025 Wine Divestitures, which may affect future performance[30] - The company completed the sale of the SVEDKA brand on January 6, 2025, and the 2025 Wine Divestitures on June 2, 2025, impacting net sales[40] - The company recognized costs related to the 2025 Restructuring Initiative aimed at optimizing business performance, with an estimated cost of $73 million for the year ending February 28, 2026[54][66] - The company incurred strategic business reconfiguration costs of $6 million as part of its efforts to streamline operations[66] Asset and Liability Management - Total current assets decreased to $2,909.1 million as of November 30, 2025, from $3,716.4 million as of February 28, 2025, a decline of 21.7%[32] - Total liabilities decreased to $13,683.1 million as of November 30, 2025, from $14,517.5 million as of February 28, 2025, a reduction of 5.8%[32] - Cash and cash equivalents at the end of the period were $152.4 million, an increase from $73.7 million at the end of the previous year[38] Impairments and Losses - The company experienced a goodwill impairment of $2,250.0 million in the nine months ended November 30, 2024, which significantly impacted net income for that period[34] - The company reported a goodwill impairment related to negative trends in the Wine and Spirits business, impacting financial results significantly[58] - A net loss of $1.1 million was recorded from the sale of assets for the three months ended November 30, 2025, while a net gain of $3.0 million was reported for the nine months ended November 30, 2024[59] - The company recognized a loss of $20.7 million related to foreign currency as a result of tax examinations and assessments[59] Future Guidance - Free cash flow guidance for the year ending February 28, 2026, is projected to be between $1.3 billion and $1.4 billion, with net cash provided by operating activities estimated at $2.5 billion to $2.6 billion[71] - Operating income (GAAP) guidance for the year ending February 28, 2026, is set between $2.685 billion and $2.756 billion, reflecting a significant increase from the previous year[66]