01—Abstract
Summary
Summary of the 10-Q filed January 8, 2026. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. reported a nine-month net sales decline of 10%, to $7,218.8 milliona from $8,044.5 million, driven mainly by the loss of sales from the Wine and Spirits Divestitures, lower Beer net sales from shipment volume declines, and a decline in organic Wine and Spirits net sales.
Beer net sales fell 4% to $6,589.2 millionb, with shipments down 5.0% and depletions down 2.7%. Despite lower sales, operating income rose to $2,279.8 million from $505.2 million, largely because the prior-year period included a $2,250.0 million goodwill impairment. Net income attributable to CBI increased to $1,484.9 million, or $8.43 per diluted share, from $293.9 million, or $1.61 per diluted share.
For the third quarter alone, net sales fell 10% and operating income fell 13%, reflecting restructuring costs, tariffs on aluminum, and lower Beer gross profit. Cash flow and capital allocation were central to the period. Operating cash flow was $2,106.2 millionc versus $2,557.5 million, and purchases of property, plant, and equipment were $656.1 million versus $931.5 million.
The company repurchased $824.1 milliond of Class A Stock in the nine months, leaving $3,175.9 million under its $4.0 billion 2025 Authorization. Total debt was $10,663.8 million, a decrease of $833.9 million, or 7%, from February 28, 2025, after the company used proceeds from the 2025 Wine Divestitures, which totaled $845.9 million, to repay debt. Management expects to return $4.0 billion through share repurchases from Fiscal 2026 through Fiscal 2028.
Looking ahead, the 2025 Restructuring Initiative is now estimated to result in $110 million to $130 million of cumulative pre-tax costs, with over $200 million in net annualized cost savings expected by Fiscal 2028. Management expects Beer tariffs of approximately $70 million and Wine and Spirits tariffs of approximately $13 million for Fiscal 2026, and expects the reported effective tax rate for Fiscal 2026 to be in the range of 17% to 19%. The company also noted that the OB3 Act is expected to negatively affect its Fiscal 2026 effective tax rate.
02—Key points
Key Highlights
- Nine-month net sales fell 10% to $7,218.8 million, mainly from $459.1 million lost to the Wine and Spirits Divestitures and a 4% decline in Beer net sales.
- Nine-month operating income rose to $2,279.8 million from $505.2 million, helped by the absence of the prior-year $2,250.0 million goodwill impairment and by Beer efficiency initiatives, partly offset by a $52.1 million asset impairment and related expenses.
- Net income attributable to CBI increased 405% to $1,484.9 million, with diluted EPS of $8.43 versus $1.61 in the prior-year period.
- Third-quarter net sales declined 10% to $2,222.8 million and operating income declined 13% to $692.0 million, with net income attributable to CBI down 18%.
- Operating cash flow was $2,106.2 million for the nine months, compared with $2,557.5 million, and capital expenditures decreased to $656.1 million from $931.5 million.
- Total debt decreased $833.9 million, or 7%, to $10,663.8 million, and the company repaid or redeemed several senior notes using 2025 Wine Divestitures proceeds and cash on hand.
- The company repurchased $824.1 million of stock in the nine months, leaving $3,175.9 million available under the $4.0 billion 2025 Authorization, and declared a quarterly dividend of $1.02 per Class A share on January 7, 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Constellation Brands kept $0.23.
- Revenue$2.22B100.0%
- Cost of revenue−$1.04B46.8%
- Gross profit$1.18B53.2%
- Operating costs−$491.2M22.1%
- Operating income$692.0M31.1%
- Interest, other & tax−$189.2M8.5%
- Net income$502.8M22.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed January 8, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $2.22B$2.46B | −9.8% |
| Cost of Revenue | $1.04B$1.18B | −11.9% |
| Gross Profit | $1.18B$1.28B | −7.9% |
| SG&A Expenses | $491.20M$491.30M | 0.0% |
| Operating Income | $692.00M$793.00M | −12.7% |
| Net Income | $502.80M$615.90M | −18.4% |
05—Questions
Frequently Asked Questions
Why did net sales decline even though operating income increased?
Net sales fell 10% to $7,218.8 million, largely because of $459.1 million in sales lost from the Wine and Spirits Divestitures, a 4% decline in Beer net sales from a $341.6 million shipment volume decline, and lower organic Wine and Spirits net sales. Operating income increased to $2,279.8 million mainly because the prior-year period included a $2,250.0 million goodwill impairment, and because of efficiency initiatives in the Beer segment and lower Wine and Spirits marketing spend.
What is the outlook for the 2025 Restructuring Initiative and its costs?
The company now estimates $110 million to $130 million of cumulative pre-tax costs once all phases are fully implemented, and it has recognized $106.1 million since inception, including $56.4 million in the nine months ended November 30, 2025. The majority of the work is expected to be completed within Fiscal 2026, and the company expects over $200 million in net annualized cost savings by Fiscal 2028.
How is the company returning capital to shareholders?
The company repurchased $824.1 million of Class A Stock in the nine months ended November 30, 2025, with $3,175.9 million remaining under the $4.0 billion 2025 Authorization, which expires in February 2028. It expects to return $4.0 billion through share repurchases from Fiscal 2026 through Fiscal 2028. Cash dividends declared were $3.06 per common share for the nine months, and on January 7, 2026, the Board declared a quarterly dividend of $1.02 per Class A share.
What are the main cost and tax headwinds for Fiscal 2026?
The company expects approximately $70 million of tariff impacts on the Beer segment and approximately $13 million of tariff impacts on the Wine and Spirits segment for Fiscal 2026. It expects the reported effective tax rate to be in the range of 17% to 19% and says the OB3 Act will negatively affect its Fiscal 2026 effective tax rate, primarily due to changes to the limitation on the deductibility of interest expense.
What is the status of the securities class action litigation?
A putative class action, Meza v. Constellation Brands, Inc., et al., was filed in the U.S. District Court for the Western District of New York and was amended on July 17, 2025 to focus on the prospects of the beer business. The company and other defendants filed a motion to dismiss on September 17, 2025, which was fully briefed as of December 12, 2025 and remains pending. Related derivative suits have been consolidated and stayed pending a final judgment in Meza, except for the Wasserman action, which was voluntarily dismissed.
06—Continue