01—Abstract
Summary
Summary of the 10-Q filed October 7, 2026. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. reported net sales of $2.63 billiona for the three months ended August 31, 2026, up from $2.48 billion a year earlier, driven by shipment volume growth of 5.5% in the Beer segment and 15.4% in the Wine and Spirits segment.
Operating income for the quarter was $805.0 millionb, compared with $874.0 million a year ago, reflecting asset impairment and related expenses of $49.8 million tied to the planned divestiture of the Nelson's Green Brier business, higher marketing spend, and unfavorable short-term incentive accruals. Net income attributable to CBI rose to $565.8 million from $466.0 million, primarily because of a lower provision for income taxes; the quarterly effective tax rate was 20.2% versus 37.9% a year earlier. For the six months, net income attributable to CBI was $1.22 billion and diluted EPS was $7.11.
The balance sheet shows total debt of $10.32 billionc as of August 31, 2026, down from February 28, 2026, with cash and cash equivalents of $98.5 million. Operating cash flow for the six months was $1.48 billion, and the company repurchased $454.7 million of treasury stock. Management now expects its reported effective tax rate for Fiscal 2027 to be in the range of 11% to 13%, including an expected income tax benefit of approximately $100 million to $150 million in the three months ending November 30, 2026, tied to foreign tax reform enacted in September 2026.
Subsequent events include the October 2026 acquisition of the SpikedAde spirit-based RTD brand for an initial $75 million, with up to $278 milliond of contingent consideration over five years, and the September 2026 redemption of $600.0 million of 4.35% senior notes. The company also declared a quarterly dividend of $1.03 per Class A share.
02—Key points
Key Highlights
- Second-quarter net sales rose to $2.63 billion (up from $2.48 billion), with Beer shipments up 5.5% and Wine and Spirits shipments up 15.4%.
- Operating income fell to $805.0 million from $874.0 million, due to $49.8 million of asset impairment expenses related to the planned Nelson's Green Brier divestiture, higher marketing spend, and unfavorable short-term incentive accruals.
- Net income attributable to CBI increased 21% to $565.8 million, primarily due to a lower tax provision; quarterly effective tax rate was 20.2% versus 37.9%.
- Six-month diluted EPS was $7.11 versus $5.55 a year earlier; the company repurchased $454.7 million of stock in the six months under the $4.0 billion 2025 Authorization, with $2,546.2 million remaining as of September 30, 2026.
- Management now expects a Fiscal 2027 reported effective tax rate of 11% to 13%, including a $100 million to $150 million tax benefit expected in the quarter ending November 30, 2026.
- Total debt was $10.32 billion at August 31, 2026, down $252.8 million from February 28, 2026, after issuing $500.0 million of 4.85% senior notes due 2031 in May 2026.
- Subsequent to quarter end, the company acquired SpikedAde for an initial $75 million plus up to $278 million of contingent consideration over five years.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2027, Constellation Brands kept $0.21.
- Revenue$2.63B100.0%
- Cost of revenue−$1.24B47.1%
- Gross profit$1.39B52.9%
- Operating costs−$588.0M22.3%
- Operating income$805.0M30.6%
- Interest, other & tax−$239.2M9.1%
- Net income$565.8M21.5%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2027filed October 7, 2026Financial Statements
Q2 FY2027 against Q2 FY2026
| Line item | Q2 FY2027Q2 FY2026 | Change |
|---|---|---|
| Revenue | $2.63B$2.48B | +6.1% |
| Cost of Revenue | $1.24B$1.17B | +5.9% |
| Gross Profit | $1.39B$1.31B | +6.3% |
| SG&A Expenses | $538.20M$436.00M | +23.4% |
| Operating Income | $805.00M$874.00M | −7.9% |
| Net Income | $565.80M$466.00M | +21.4% |
05—Questions
Frequently Asked Questions
What drove the increase in net income despite lower operating income?
Net income attributable to CBI rose to $565.8 million from $466.0 million mainly because the provision for income taxes fell to $147.1 million from $296.8 million. Operating income declined to $805.0 million from $874.0 million, reflecting asset impairment and related expenses, higher marketing spend, and unfavorable short-term incentive accruals.
How did the 2025 Restructuring Initiative affect results?
The company recognized $5.5 million of pre-tax restructuring costs in the six months ended August 31, 2026, and $127.4 million cumulatively since inception. The initiative is expected to yield over $200 million in net annualized cost savings by Fiscal 2028, and it is estimated to result in nearly $130 million of cumulative pre-tax costs.
What is the company's liquidity and debt position?
As of August 31, 2026, cash and cash equivalents were $98.5 million, and total debt was $10.32 billion, including $116.5 million of commercial paper. The revolving credit facility had $2,122.6 million of remaining borrowing capacity, and the company stated it was in compliance with its covenants. A $300.0 million delayed draw term loan facility was entered into in September 2026, with no borrowings outstanding.
What developments occurred after the quarter ended?
In October 2026 the company acquired the SpikedAde business for an initial $75 million. In September 2026 it redeemed $600.0 million of 4.35% May 2022 senior notes using commercial paper, and it entered into the 2026 Term Credit Agreement. It also repurchased 607,371 shares for $75.0 million after August 31, 2026, and declared a quarterly dividend of $1.03 per Class A share.
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