Q2 FY2027
Filed Oct 6, 2026Delivers EPS Growth Driven by Net Sales and Business Division Operating Income Growth; returns an additional $400 million to shareholders through share repurchases and dividends.
Second-quarter net sales, reported EPS, Beer sales, and Wine and Spirits sales increased, while reported operating income declined 8% and Beer depletions decreased 0.6%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net sales, three months ended August 31, 2026GAAP | $2.63B | – | 6 % |
| Organic net sales, three months ended August 31, 2026non-GAAP | $2.63B | – | 6 % |
| Gross profit, three months ended August 31, 2026GAAP | $1.39B | – | 6 % |
| Selling, general, and administrative expenses, three months ended August 31, 2026GAAP | −$538.2M | – | – |
| Asset impairment and related expenses, three months ended August 31, 2026GAAP | $(49.8) | – | – |
| Operating income, three months ended August 31, 2026GAAP | $805M | – | (8 %) |
| Operating margin, three months ended August 31, 2026GAAP | 30.6 % | – | – |
| Comparable operating income, three months ended August 31, 2026non-GAAP | $896.6M | – | 1 % |
| Comparable operating margin, three months ended August 31, 2026non-GAAP | 34.1 % | – | – |
| Net income, three months ended August 31, 2026GAAP | $582.3M | – | – |
| Net income attributable to CBI, three months ended August 31, 2026GAAP | $565.8M | – | 21 % |
| Comparable net income attributable to CBI, three months ended August 31, 2026non-GAAP | $637.3M | – | (0 %) |
| Diluted EPS, three months ended August 31, 2026GAAP | $3.32 | – | 25 % |
| Comparable EPS, three months ended August 31, 2026non-GAAP | $3.74 | – | 3 % |
| Reported effective tax rate, three months ended August 31, 2026GAAP | 20.2 % | – | – |
| Comparable effective tax rate, three months ended August 31, 2026non-GAAP | 20.4 % | – | – |
| Net sales, six months ended August 31, 2026GAAP | $5.07B | – | 1 % |
| Organic net sales, six months ended August 31, 2026non-GAAP | $5.07B | – | 4 % |
| Operating income, six months ended August 31, 2026GAAP | $1.65B | – | 4 % |
| Comparable operating income, six months ended August 31, 2026non-GAAP | $1.73B | – | 4 % |
| Net income attributable to CBI, six months ended August 31, 2026GAAP | $1.22B | – | 24 % |
| Diluted EPS, six months ended August 31, 2026GAAP | $7.11 | – | 28 % |
| Comparable EPS, six months ended August 31, 2026non-GAAP | $7.16 | – | 5 % |
| Net cash provided by operating activities, six months ended August 31, 2026GAAP | $1.48B | – | (1%) |
| Free cash flow, six months ended August 31, 2026non-GAAP | $1.12B | – | 4% |
| Purchase of property, plant, and equipment, six months ended August 31, 2026GAAP | −$354.1M | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Beer, three months ended August 31, 2026Net sales increased 5% driven by a 5.5% increase in shipment volumes. Depletions decreased 0.6%. | $2.47B | – | 5 % |
| Wine and Spirits, three months ended August 31, 2026Net sales increased 17% driven by a 15.4% increase in shipment volumes. Depletions increased 10.2% driven by growth from Kim Crawford and Mi CAMPO. | $159.4M | – | 17 % |
| Beer, six months ended August 31, 2026Shipments were 237.2 versus 228.7 and increased 3.7 %; depletions increased 3.7 %. | $4.76B | – | 4 % |
| Wine and Spirits, six months ended August 31, 2026Organic net sales were $308.6 versus $274.5 and increased 12 %; organic shipments were 2.9 versus 2.6 and increased 11.5 %. | $308.6M | – | (26 %) |
Amounts quoted below without a unit are in millions, as in the filing’s tables. Per-share figures are as printed.
Fiscal year ending February 28, 2027 outlook
- RevenueEnterprise: organic net sales growth (decline) of (1)% - 1%; Beer: net sales growth (decline) of (1)% - 1%; Wine and Spirits: organic net sales growth (decline) of (1)% - 1%
- Tax ratereported ~12%; comparable ~20%
- NoteReported EPS: $11.85 - $12.55
- NoteComparable EPS: $11.20 - $11.90
- NoteEnterprise operating margin: reported of 31% - 32%; comparable of 32% - 33%
- NoteBeer operating margin: 37% - 38%
- NoteWine and Spirits operating margin: 5% - 6%
- NoteOperating cash flow: $2.4 - $2.5 billion
- NoteCapital expenditures: ~$800 million
- NoteFree cash flow: $1.6 - $1.7 billion
Capital returns
- Repurchases $530 million of shares year-to-date through September 2026.
- Purchase of treasury stock was $(454.7) for the six months ended August 31, 2026.
- Dividends paid were $(353.8) for the six months ended August 31, 2026.
- Cash dividends declared per common share were $1.03 for the three months ended August 31, 2026.
- On October 6, 2026, the board declared a quarterly cash dividend of $1.03 per share of Class A Common Stock payable on November 13, 2026, to stockholders of record as of the close of business on October 30, 2026.
- The company returned more than $800 million to shareholders through share repurchases and dividends through the first half of fiscal 2027.
What drove it
- Beer shipment volumes increased 5.5%, supporting 5% Beer net sales growth.
- Beer was the #1 dollar and volume share gainer in Circana U.S. tracked channels.
- Wine and Spirits shipment volumes increased 15.4%, supporting 17% net sales growth.
- Wine and Spirits operating margin improved to 3.8% on favorability in COGS from recoveries of U.S. tariffs and savings across marketing and other SG&A from optimization and restructuring initiatives.
- The company acquired SpikedAde subsequent to the quarter, including a $75 million payment at close and contingent consideration of up to $278 million payable over five years based on future performance.
Concerns
- Beer depletions decreased 0.6%, including declines for Modelo Especial of approximately 2% and Corona Extra of approximately 5%.
- Beer operating margin decreased 160 bps to 39.0% as increased marketing investment and other SG&A spend more than offset lower tariff expenses and favorable fixed cost absorption.
- Consolidated reported operating income declined 8% to $805.0.
- Asset impairment and related expenses were $(49.8) in the quarter.
- Wine and Spirits segment operating margin was 3.8%, despite improvement from (14.6) % in the prior-year quarter.
What to watch
- Beer depletion trends for Modelo Especial and Corona Extra, alongside growth from Pacifico, Victoria, and Modelo Chelada brands.
- Whether increased marketing investment and other SG&A spend continues to pressure Beer operating margin.
- Execution against fiscal 2027 enterprise organic net sales growth (decline) guidance of (1)% - 1%.
- Progress toward operating cash flow of $2.4 - $2.5 billion and free cash flow of $1.6 - $1.7 billion.
- Performance of the SpikedAde acquisition, which does not impact fiscal 2027 outlook.
Balance sheet and cash flow
- Cash and cash equivalents were $98.5 as of August 31, 2026, versus $102.4 as of February 28, 2026.
- Short-term borrowings were $116.5 as of August 31, 2026, versus $272.0 as of February 28, 2026.
- Current maturities of long-term debt were $1,103.0 as of August 31, 2026, versus $603.6 as of February 28, 2026.
- Long-term debt, less current maturities, was $9,096.2 as of August 31, 2026, versus $9,692.9 as of February 28, 2026.
- Total assets were $22,063.7 as of August 31, 2026, versus $21,900.5 as of February 28, 2026.
- Net cash provided by operating activities was $1,478.6 for the six months ended August 31, 2026, versus $1,489.3 for the six months ended August 31, 2025.
- Net cash used in financing activities was $(1,131.5) for the six months ended August 31, 2026, versus $(1,953.1) for the six months ended August 31, 2025.
Analysis
Constellation Brands reported second-quarter fiscal 2027 net sales of $2,633.0, up 6 %, led by 5% growth in Beer and 17% growth in Wine and Spirits. Reported diluted EPS increased 25 % to $3.32, while comparable EPS increased 3 % to $3.74. The divergence reflects the effect of comparable adjustments: reported operating income declined 8 % to $805.0, while comparable operating income increased 1 % to $896.6.
Beer remained the principal revenue contributor, with net sales of $2,473.6 and shipment growth of 5.5%. Demand indicators were mixed: Beer depletions decreased 0.6%, as approximately 2% and 5% declines for Modelo Especial and Corona Extra were partly offset by approximately 19%, 15%, and 5% growth for Pacifico, Victoria, and Modelo Chelada brands, respectively. Beer segment operating income increased 1% to $964.2, but operating margin fell to 39.0% from 40.6% as increased marketing investment and other SG&A spend outweighed lower tariff expenses and favorable fixed-cost absorption.
Wine and Spirits returned to reported growth in the quarter, with net sales of $159.4, up 17%, shipments up 15.4%, and depletions up 10.2%. The segment generated operating income of $6.1 compared with an operating loss of $(19.8) in the prior-year quarter, and margin improved to 3.8%. Management attributed the margin improvement to tariff recoveries in COGS and savings from optimization and restructuring initiatives. For the first half, reported Wine and Spirits net sales remained down 26% because the prior period included businesses subsequently divested, while organic net sales increased 12%.
Cash generation was broadly stable through the first half. Operating cash flow was $1,478.6 compared with $1,489.3, while free cash flow rose to $1,124.5 from $1,079.2. The company repurchased $530 million of shares year-to-date through September 2026, declared a $1.03 per-share quarterly dividend, and stated that it maintained its target comparable net leverage ratio of ~3.0x. Cash and cash equivalents were $98.5, and long-term debt less current maturities was $9,096.2 at August 31, 2026.
Management updated reported EPS guidance to $11.85 - $12.55 and reaffirmed comparable EPS guidance of $11.20 - $11.90. Fiscal 2027 organic net sales growth assumptions remain (1)% - 1% for the enterprise, Beer, and Wine and Spirits. The outlook also retains operating cash flow of $2.4 - $2.5 billion and free cash flow of $1.6 - $1.7 billion. The subsequent SpikedAde acquisition included a $75 million payment at close and contingent consideration of up to $278 million payable over five years, and management stated that the transaction does not affect fiscal 2027 outlook.
Management, verbatim
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 & CEO
Through the first half of fiscal 2027, our strong cash flow generation enabled us to continue executing our disciplined and balanced capital allocation priorities. 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 & CFO
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so comparisons of actual results with prior guidance are unavailable.
- Quarterly operating cash flow was not reported.
- Quarterly free cash flow was not reported.
- Consolidated gross margin was not reported.
- Quarterly total debt was not reported as a single line item.
- Prior-quarter comparisons for reported metrics were not reported.
- Forward gross margin guidance was not reported.
- Forward operating-expense guidance was not reported.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.