01—Abstract
Summary
Summary of the 10-Q filed October 7, 2025. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. reported a sharp swing back to profitability for the second quarter and six months ended August 31, 2025, largely because the prior year included a $2.25 billiona goodwill impairment on its Wine and Spirits reporting unit.
For the three months ended August 31, 2025, net sales fell to $2,481.0 millionb from $2,918.9 million, with Beer net sales at $2,345.0 million and Wine and Spirits at $136.0 million. Operating income was $874.0 million versus a loss of $1,229.4 million a year earlier, and net income attributable to CBI was $466.0 million compared with a loss of $1,199.0 million. For the six months, net income attributable to CBI was $982.1 million versus a loss of $322.0 million, and diluted EPS was $5.55 versus a loss of $1.77.
The top-line decline reflects the June 2025 sale of a portion of the wine and spirits business (2025 Wine Divestitures, $846.5 millionc in consideration) and the January 2025 SVEDKA divestiture, along with lower Beer shipment volume partially offset by pricing. Management cited tariffs on aluminum cans and fixed-cost absorption as headwinds to Beer gross profit. The company also initiated a 2025 Restructuring Initiative, with $21.6 million of pre-tax costs in the six months and cumulative costs of $71.3 million, and expects over $200 million in net annualized cost savings by Fiscal 2028.
On the balance sheet, total debt outstanding was $10,544.9 milliond, down $952.8 million from February 28, 2025, after debt repayments funded partly by the wine divestiture proceeds. The company repurchased $604.0 million of stock during the six months under a $4.0 billion authorization, with $3,396.0 million remaining, and expects to return $4.0 billion through share repurchases from Fiscal 2026 through Fiscal 2028. Operating cash flow was $1,489.3 million for the six months, and the company's revolving credit facility had $1,986.0 million of remaining borrowing capacity at August 31, 2025.
02—Key points
Key Highlights
- Net income attributable to CBI was $466.0 million for the quarter versus a loss of $1,199.0 million a year earlier, largely due to the prior-year $2,250.0 million goodwill impairment; six-month net income was $982.1 million versus a loss of $322.0 million.
- Net sales declined 15% in the quarter to $2,481.0 million and 10% for the six months to $4,996.0 million, reflecting the Wine and Spirits Divestitures and a Beer shipment volume decline of 8.7 million cases in the quarter.
- Beer net sales fell 7% in the quarter to $2,345.0 million, with a $219.3 million decrease in shipment volume partially offset by $40.6 million of favorable pricing.
- Beer gross profit was pressured by $22.6 million of tariffs on aluminum cans in the quarter and $29.5 million for the six months, which management expects to total approximately $70 million for Fiscal 2026.
- Total debt was $10,544.9 million at August 31, 2025, down $952.8 million from February 28, 2025, and the company had $1,986.0 million of remaining revolving credit capacity.
- The company repurchased $604.0 million of Class A Stock in the six months under its $4.0 billion 2025 Authorization, leaving $3,396.0 million available, and declared a quarterly dividend of $1.02 per Class A share.
- The company expects its reported effective tax rate for Fiscal 2026 to be in the range of 17% to 19%, and notes the OB3 Act is expected to negatively affect that rate.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Constellation Brands kept $0.19.
- Revenue$2.48B100.0%
- Cost of revenue−$1.17B47.2%
- Gross profit$1.31B52.8%
- Operating costs−$436.0M17.6%
- Operating income$874.0M35.2%
- Interest, other & tax−$408.0M16.4%
- Net income$466.0M18.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed October 7, 2025Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $2.48B$2.92B | −15.0% |
| Cost of Revenue | $1.17B$1.41B | −16.8% |
| Gross Profit | $1.31B$1.51B | −13.3% |
| SG&A Expenses | $436.00M$491.20M | −11.2% |
| Operating Income | $874.00M-$1.23B | +171.1% |
| Net Income | $466.00M-$1.20B | +138.9% |
05—Questions
Frequently Asked Questions
Why did reported net income swing from a loss to a profit?
The prior-year period included a $2,250.0 million goodwill impairment on the Wine and Spirits reporting unit recorded in the second quarter of Fiscal 2025. That charge did not recur, so operating income rose to $874.0 million in the quarter from a loss of $1,229.4 million. Partially offsetting this were lower net sales, a provision for income taxes compared with a benefit a year earlier, and the absence of the prior-year net gain on Exchangeable Shares.
How much did the wine and spirits divestitures affect results?
The company stated that the Wine and Spirits Divestitures accounted for $220.5 million of the quarterly Wine and Spirits net sales decline and $83.4 million of the gross profit decline. The 2025 Wine Divestitures, completed June 2, 2025, produced cash received from the buyer of $846.5 million and a loss on sale of $15.7 million, which is recorded in selling, general, and administrative expenses.
What is the status of the 2025 Restructuring Initiative?
The company estimates $80 million to $100 million of cumulative pre-tax costs once all phases are implemented, with most of the work expected to be completed within the year ending February 28, 2026. Through August 31, 2025, it had recognized $71.3 million of cumulative pre-tax costs, and $28.8 million remained accrued. Management expects over $200 million of net annualized cost savings to be fully realized by Fiscal 2028.
How is the company managing its debt and shareholder returns?
During the six months, the company repaid $902.1 million of long-term debt principal, including the 4.75% December 2015 Senior Notes and 5.00% February 2023 Senior Notes, and issued $500.0 million of 4.80% senior notes due 2030. It also paid $361.1 million in dividends and repurchased $604.0 million of stock. The company expects to return $4.0 billion through share repurchases from Fiscal 2026 through Fiscal 2028, subject to financial conditions and other factors.
06—Continue