Constellation Brands (STZ) 11 Apr 242024 Q4 Earnings call transcript

Good day, and welcome to the Constellation Brands Fiscal Year 2024 Fourth Quarter Full Year Earnings Call. [Operator Instructions] As a reminder, this call is being recorded.

At this time, I'd like to turn the call over to Snehal Shah, Director of Investor Relations. Mr. begin. now may you Shah,

Hankinson, Thank you, Brands' here welcome Constellation and all, morning Good Fiscal XXXX morning Garth CEO; Year-End our I'm Bill and CFO. Earnings with to Newlands, Rob. our Conference this Call.

the reminder, this at GAAP on measures directly a available website included are in non-GAAP As release most measures on or company's any otherwise financial comparable www.cbrands.com. between reconciliations discussed call and today's news the

fiscal comparable on for and comparable earnings earnings, earnings which Canopy refer per years, and impact news Please note, are prior equity statements to noted. Please we call. we release factors figures fiscal may forward-looking Constellation's when discuss per this share share basis, and XXXX referring filings to SEC risk the made otherwise on unless a excluding for

we Following also in of the Investors and by available section a in with Bill our making prepared key the be series company's highlights call. of website shared slides the of call, remarks today's will Garth

Before line on would with end one help call turning to per we that today. person, prior Bill, everyone question limit us in to to ask I which like our quarters, will call time over the to

Bill. here's in and advance, Thanks now

Thanks, earnings Snehal, fiscal morning, to 'XX Welcome call. our and good everyone. year-end

As past usual, few fiscal a I'd this like to headlines year. from start with

of of and growth enterprise We increase net First, we comparable low moving forward. operating an as on for among Constellation I'm calendar in nearly companies focused of 'XX. leverage per by of EPS strong was large leader an operating 'XX performance X% comparable growth Circana drove X level X% pleased CPG Brands medium-term at once last nearly enterprise in remain supported a fiscal that recognition to stated income, X report in earnings X% that growth we comparable comparable margin the of increase years. delivered the have year as growth yielded been another This an This achieving XX%. and #X sales by performance year of again resulted double-digit target share representing operating our in of solid

only scale of top XX are to We make XX company ranking years. the their consecutive for CPG

performance growth, growth, sales operating XX% net achieve intend confidence ability fiscal against income double-digit XX% low at to heading we which into our strong delivering in comparable following fiscal generating continued Day in November, enterprise to and our targets our share the margin to enterprise all maintaining reinforces to comparable X% 'XX Our earnings and Investor deliver this past X% momentum outlined of per 'XX.

full from both they entire which consecutive distributor the delivered our This a #X CPG the certainly retail of dollar nearly XXth another respectively, our in share by 'XX share This among U.S. Second, year dollar business, share drove business U.S. performance differentiator a dollar beer year And strong a concert this were beer driven exceeding volume remarkable beer our capturing for gain in total from gainer, above the results Modelo beer and our across milestone with alcohol, Furthermore, year, year. X% expectations largest our ever the growth points and within driving sales adding X truly segment XX% which operating the fiscal we an the share impressive was #X the working dollar a significant in became of achieved Especial as category. points perspective, beginning companies. the growth sales. and achievement fiscal delivered and of of beverage our sector. net all is largely growth income team for our by X.X incredible dollar beer X%, as was partners

'XX a that and but series and We of as In business, our President is wine recently new promoted throughout strategy faced serve Glaetzer fiscal we remain is accomplished our with Sam near-term successful He efficiency confident to driving headwinds spirits commercial effectiveness. a XX track our nearly spirits of Spirits. and and sound. and category industry record Wine and in years veteran of category operational a well-rounded the and of wine experience

optimization the to focused also world-class for Sam the in to aligned to building preferences business our the deliver market implementation while role end-to-end incremental integral an the played last supply a transformation leading distilling global and network, winemaking few developing international farming, a of route over the business years, term. and growth medium in consumer chain initiatives

our portfolio enhanced largely focus of our positioned team and and and that actions growth on our and well Wine I'll is several team in to drive help line transformation Sam profitability. To performance, Wine lead more to top Spirits of immediate is which in year-over-year identified has end, improved our the detail execution, strategic discuss the complete, with driving shortly. Spirits Now in improvement delivery

flow superior and deployed that disciplined our cash achieve cash manner by in a we priorities. underpinned capital balanced allocation consistent to and Third, generation continue

For returning fiscal ratio repurchases. million 'XX, our we're billion our shareholders to and back by over to leverage quarterly flow, $XXX cash reduce able X.X dividends operating nearly through and $X.X generated we share net in point while

fiscal objectives, growth our in capital additions $X.X focused governance was continue nearly with most also discuss And to invest and billion continued to environmental, deliver in fourth, which which support We operations. expenditures more prudently I'll total shortly. brewing to 'XX, social against of our we capacity to ongoing beer detail on the of

weather grew XXth our turn as business, some that detailed performance, by growth. a fourth depletions consecutive in 'XX of backdrop, challenging our With despite quarter, beer a X%, to our with our fiscal depletions quarter of resulting more let's in discussion which starting

lead full in as volume growth the a channels. and U.S., gains nearly category extend the XX% beer the #X underpinned continue our top total sales to increase year, beer in tracked the across we supplier high-end nearly For dollar share delivering across by XX%

our low in program These incremental role in fiscal growth of captured significant percent XX,XXX adding double-digit expectations, shelf shopper-first space we resets shelf while spring 'XX. played our with a factors our business line in the beer this And all driving through with of its iconic portfolio's and #X in Modelo which position strength nearly starting channels. brand earlier, depletions brands by our and the overall as grew gainer, beer share leading noted tracked U.S. with paired top as the maintained the XX% Especial, another

sold and #X Corona reached across position a and it high-end in share Extra growth increased and depletions nearly top XX over the X% delivered in the XX% XX million gainer maintained as #X share U.S. the depletion the the beer category end. remained and its brand as beer high total case gainer milestone the Pacifico

the of with brands, iconic also are aligned of success our focused with innovations and continue trends building traction we flavor good we on premiumization, While build betterment. our to consumer-led

XX% our also Sandía pack Our and remained surpassing in Modelo XX new launch the sold Chelada Picante, the in the and an brands cases new of size million flavor, Chelada by delivered of category #X depletions increase offerings. supported

the to the flavors, across X are rose SKUs. to brand and #X high in established Fresa gainer on share excited Oro's share national Modelo a category in con and with just end become Picante We momentum total strong that with Negra continue top X launch it the beer X as a foundation the gainer Chile. build to new fiscal 'XX for

Staying in test ongoing brand new products, Oro and spot variety demand strong fiscal a #X launching an of Nevada. our XX-pack. the the for pack reception Aguas family, XX-pack within in more consumer Given and 'XX, are secured betterment new we that its Modelo SKUs FMB Frescas X Modelo market

aligned another liquid markets with consumer-led So rollout and its for this trends 'XX, we authentic technology. project, to fiscal on XX will featuring our be nitro expanding flavor our

introduced we in family, leading nonalcoholic, the nonalcoholic brand share dollar Corona Corona the is beer our In which fast-growing segment. gainer

refreshing brewed splash Eastern real real peels with fiscal testing are for is and of Sunbrew we new This juice. beer in citrus 'XX, As a select citrus Corona markets.

combating was to in of business The in headwinds maintain margins with initiatives. 'XX and savings reflected ability inflation efficiency fiscal strong execution by best-in-class beer cost also our trailing our

through work We of $XXX meet supporting also brewing in expansion continued Obregon 'XX, continued Nava capital ability at beer invest Veracruz site. ongoing at for and our million our brands beer fiscal we our the business to expenditures, demand approximately our new our deploying robust and the to see the in capacity in

and business operating to X% X% plan at we in laid Looking November, our operating we our Day by algorithm out 'XX of for XX%. income to in the remain our beer XX% within gradually ahead to of line growth supported with fiscal and our expect Investor to to margins sales net improve, growth

earlier, to revised challenging for the and on referenced saw dynamics business guidance Wine net market approximately income to within but X% declines Moving still and operating our sales landed and of both Spirits Due organic Spirits. our range. largely Wine

our Mondavi, particularly and and business in we investments the and fiscal additional largest including, above drive equity several growth Woodbridge, mainstream improve Crawford, of limited significant in portfolio Lumina. for transformation brand, tactical our ensuring refocusing Robert while expect Prisoner, Wine offerings, central not and do scaled in Mi more the our and category support premium Vint and brands most in Spirits other to brands as mainstream subside, to demand to the Campo in price challenges have While and not in such we notably The wine within immediately our our but consistently to, to we by West our Meiomi, premium and continue SVEDKA, support efforts that ongoing High to accelerating the identified and of spirits revitalize areas performance Ruffino 'XX, segments, the

and XX is more brands XX% which of investment Wine for our net fiscal them. and these Spirits that we volumes plan over and for business in to of Note provide 'XX, sales focus why represent X/X

performance with help markets distributor focused in largest area key priorities on are enhance our wholesale we channels. aligning partners U.S. on clear our our and is to Another

in mix, sales focus As priorities these on prior our call, execution. improving include inventory enhanced noted and

efforts we and price focus beer in We in and to our the execution our operational capabilities to will And go-to-market making support will our Spirits to opportunities Wine partners. own distributor adjustments excellence continue well additional sales investments broadly more media segment. similar spend and better across be and of sales our business, on to drive as also as promotions efficiency

organizational chain more This will the effective competitive highlighted and supply a at model. operational enable enhancements as operating our to initiatives to and the structure include Day well business's as Investor

be be our relatively Looking income and forward net to stable X% operating sales business to and to down to 'XX, expect we XX%. fiscal Spirits Wine

help promotions as some pressures that continued payments contractual the and line growth on cost our investments on of Spirits, occurred in I incentive distributor just and 'XX. reduced sales and inflationary top While we guidance goods of as incremental reflects compensation believe sold price income the and lapping operating spend Wine execution fiscal outlined sales focus will capabilities media for stabilize well additional in

the over business we years medium-term As this our coming committed remain to noted, Investor to continuing at Day. shared toward we the advance targets

capital to we continue 'XX. fiscal allocation. targets in deliver our to on Moving and against stated priorities

noted our our leverage with net debt our earlier, supported in earnings management. performance strengthened a and As strong sheet we balance ratio, our reduction by disciplined further

brewery to our of cash gap-filling growth the are capital shareholders and our beer returned that conduct continue business, We deployed investments consumer-led expansions complemented acquisitions to our to tuck-in support most trends aligned we and of with to and portfolio.

regards progress our We 'XX. governance ambitions in social to also and fiscal in made environmental, notable

the a our new actions that in strong undertook independent governance financial appointment with backgrounds. directors, From each refreshment of perspective, X Board resulted

a announced wealth senior of Baldwin, brings election leadership of new experience also a Chair, recently who the independent from CPG the Board Chris sector. We

covering of our commitment water to water and and 'XX thriving of the our water sheds a key billion to our gallons with of the goal to time ample local in ensure residents access sustainable be is we to X line which than 'XX. This have in environment, is and designed key frame fiscal established building stewards near 'XX, supply since fiscal target water, surpassed initial and to restoring operations we between good the goal communities. new more addition, restoration had businesses In

environmental new packaging. operating and X reduce circular facilities in fiscal our within announced we commitments enhance waste key to Finally, 'XX to

and strategic initiatives summary, again achieved once and momentum progress 'XX. fiscal performance 'XX, across significant we on in year build in this in fully our strong expect to So another of fiscal we

We double-digit our margins to commitment single-digit create business, are to Wine our to and confident category with execution and generating EPS our for deliver shareholder high allocation a for challenges low delivering value our growth sales on enhanced for way business in and of by and trajectory and capital Spirits the and the growth our and in including net achieving good improving managing beer world. ability good is maintaining comparable business best-in-class continue discipline growth operate that commitments,

I Constellation their performance, dedication to as partners year in another hard want work we keep 'XX. for deliver our up, and wrap helping in momentum of to once as that colleagues across As again believe I our us and of are positioned thank trade all I well fiscal going well industry-leading

I results and Garth, that, the who call give outlook. financial on over with will our turn more And will to details

Thank you, Bill, and good morning, everyone.

focus detail will our As level results, I and for will usual, at discussion matter. same segment an P&L mainly the comparable outlook on discuss my enterprise in business then expectations followed fiscal by 'XX. starting 'XX fiscal our

Starting with net sales.

As delivered range our exceeding performance This slightly exceeding which X%. of business, X%. an X% of was sales to fiscal our X%, guidance growth by beer over guidance driven X% of enterprise, the grew we of over to X% 'XX our strong net

as another carried increase the entire Off-premise X%, of year. which depletions had grew balance of business of As depletions growth, grew by our X.X% the strong throughout represent XX% of on-premise depletion year Bill total our volume. a by over accounts The portfolio our over nearly X%. the strength for depletion our mentioned, beer and

to coming 'XX to our Investor momentum incremental opportunity will drive space to shelf spring, from channels, shortly. in Modelo in this Especial last November. expect continue our Pacifico with low see draft fiscal which that on new foreshadowed double-digit particularly elaborate We Day on-premise we we supported And the in growth fiscal and the by at captured on build I year. the handles we off-premise

achieved 'XX volume, and favorable divestiture mix volumes the amounted shift product business occurred volumes mix. had as in for year. beer nearly XX% 'XX. craft we partially X%. of of day $XXX the grew absolute we and business by Shipment price shipments beer in the QX. volume In unfavorable minimal extra and a increases fiscal impact were days, pricing on sell These depletions for X.X%, pricing and a and million beer offset which This over our our the regards net changes In were to in basis increase to aggregate, our in had in selling for fiscal sales an X year, aligned on an

net a organic organic within particularly decline. wholesale and basis, X% a for declined range mainstream in and decline and X% to across X% The our sales For Wine driven of by and Spirits business sales was our and reported respectively. X% was This our net on performance, guidance Spirits premium brands. our business, U.S. Wine change lowered largely unfavorable

'XX. Bill our we partners As are wholesale working U.S. and noted, with distributor in markets largest our to enhance fiscal in channels performance

our by sales where inventory our in market markets normalize. Canadian the growth Additionally, markets fiscal decline were market. in export in net for driven our wholesale destocking, international net direct-to-consumer in markets, XX%, sales X% our and recently, channel. More in U.S. The grew QX, 'XX by levels largely Canada, begun net our partially from international have down international largest were offset by sales to net particularly sales XX%

and Moving operating at increase to to comparable was operating point resulting enterprise-wide by upper At strong we X% end business, income by margin level, operating driven delivered operating X% increase margin. basis just our in guidance This on the over grew margin of a performance XX.X%. XX X% of of beer an and in income which XX.X%. to an our comparable our delivered operating a in the X% income

Wine are corporate by an This expense Enterprise-wide related performance margins DBA results, X%. This excluding less range within third-party guidance operating operating following or offset a was their lowered longer decrease $XX no the divestiture, year-over-year brands of and Spirits driven the fees X% our profit, our spend. also resulting reduced by that project of to margin part decline of reduction decline, operating as was gross solid consulting declined million X% business the XX% to benefited a of marketing flat from by partially our in income, in mainly XX.X%.

the the with absolute increased margin in XX point more in decrease in and income and fiscal $XXX in of were COGS. cost an increase on basis savings in in million from XX% initiatives margin detail, the 'XX. puts increase slight overall includes The Elaborating and volume of takes of business. reflective COGS the realized starting operating increase impact operating This approximately nearly beer

under and over and the approximately and of portion savings component making of just brought and representing landed of XX%; on up construction Veracruz cost COGS, to our COGS inclusive the in basis, changes and came the volume an remaining just total as brewery; X% year-over-year XX% XX% increased attributable absolute activities cost absolute were the Labor COGS total follows: and from overhead growth this XX% million, of COGS a to Raw By XX% packaging increase agenda of our depreciation that total an represented $XX of both of from savings, fiscal capacity benefits portion at large the XX% was of materials incremental had Logistics, increased as total at midpoint increased area; and online 'XX. COGS

Moving on to marketing.

X% by Our spend dollar approximately increased year-over-year.

our As a in sales, below the X.X%, from efficiencies medium-term our net algorithm partly beer was brands marketing the driven fiscal and our of craft X% media to divestiture coming percent new agency. transition approximately of 'XX slightly by

SG&A, benefits. impact legal driven lower divestiture currency from X%, represented by by unfavorable the These increased partially sales approximately offset compensation approximately of X% and net beer the Lastly, and which increases and fees. foreign craft benefits of were increased

Moving on.

of initiatives, million a following income $XX reduction channel expense. SG&A coming driven the Our gross pricing, our year-over-year by unfavorable marketing mix marketing our were flat nearly the remained in from offset in margin, decline other and savings divestiture cost reduced and COGS, are favorable by expenses favorability longer excluding profit, business last no year's as brands Wine volume business operating the that and the less of Spirits part

Interest expense Xx 'XX prior achieve our to borrowings net and our from target in fiscal driven average comparable average leverage approximately million, rates. by earnings leaving ended We 'XX fiscal us and year increase positioned Canopy $XXX fiscal a was well of for with higher weighted equity excluding X% about of interest X.Xx, 'XX. ratio,

equity effective year-over-year 'XX, and for earnings, XX.X% nearly comparable guidance versus above our $XX.XX $XX last excluding EPS Our in equity Canopy Canopy $XX.XX. year. tax fiscal was earnings, X% came grew and to and to rate, excluding Comparable of range XX.X%

cash year-over-year, which $X.X net exceeding over range. XX% slightly flow, flow fiscal in the 'XX $X.X provided billion generated operating guidance We to our billion define our a expansions as billion, increase cash Moving ongoing construction activities CapEx. facilities new existing Free cash decreased investments flow to free free to we cash less driven our of by CapEx brewery in Veracruz. by and XX% at attributable our $X.X

by In the increased capacity ramped fully were from with optimization incremental Mexico million hectoliters dividends brought and brewery XX million year-end Consistent we fiscal delivered of once share again from XX $XXX total of our we modular a allocation 'XX, nominal unlocked that in cash to hectoliters over our our summer priorities, with the returns expenditures along our online as our over with result shareholders expansions initiatives. capacity approximately to operations capital through repurchases. million

Black-founded with fiscal transactions, 'XX. successful space in female acquisition venture and portfolio a executed high-growth nonalcoholic gap a of both brand we addition, a and investment In tuck-in record encompassing filling track luxury the in wine a

through our net outlook starting 'XX, now with me With fiscal that, step for let sales.

our to and expected this of bolstered innovation and products distribution achieved largest support gains, our of sales pack from new to of beer inclusive the grow primarily Spirits be We a continued to of for X.X% decline our new-to-world continued health The spring business brands by X% our the growth volume X% Again, expect come net is in and our outlook our by top growth reset business. we net beer X% X.X% to portfolio. for sizes. sales shelf and form to Wine line of enterprise-wide to X%, growth a targeting target are strong in brand extensions, and consumers

consistent of Regarding with closely beer our with perspective terms of and fairly and in depletions annual we 'XX shipments to and shipments a year expect from an in quarter prior volumes. absolute years. anticipate to of the Similarly, fiscal be depletions share cadence 'XX. basis, a line fiscal volumes on We half track

net category For sales, by Wine sales largely and drive ongoing marketing headwinds described expect to offset as the we earlier. Bill execution Spirits and we initiatives

for demand the continue brands. our headwinds expect higher-end performance bulk we Furthermore, growth sales the to anticipate remain overall which we sales premium unfavorable Additionally, of and to a better That to benefits through particularly challenged, due of expecting mix-related are net we 'XX. volumes. volume to mainstream in in price lapping perspective, fiscal said, our from major part due a segments, account

and 'XX. From to of aligned a the be expect perspective, we depletion fairly year shipments also quarterly cadence half total and with yearly full shares fiscal

comparable For $XXX business, operating expense growth reflecting beer our to and for a and expect spirits income business XX% and a our corporate XX%, we fiscal to operating slight in approximately wine 'XX X% income between XX% income, operating increase for million. enterprise-wide XX% growth decline X% to

For business, pricing. and income anticipate growth our from tailwinds we operating beer favorable volume

expect high growth, cost in and partially digits. COGS, by the continued with our We inflation cost of hedging initiatives offset single tailwinds actions absolute increase multiyear will these savings be an volume in inclusive input

of COGS each percent component. across total We following and absolute increases the expect

and increase packaging single to XX% raw materials mid- For XX% and to high digits. account to for

up driven given years headcount, recent prior all increased 'XX. and of our XX%, COGS an of of make increase, a packaging depreciation as the be increase the line the operational approximately teens Veracruz that to facility of salary was overhead with $XX given mid-single-digit million construction. performance the business mid-single the strong increases primarily ABA and brewery XX% by in Logistics digits. to to the incremental merit which slightly lower Labor approximately equates we with which And a step-up is fiscal depreciation primarily remainder from than operational approximately throughout and continue high at

investment which of of medium-term net change our in a shift as approximately unchanged The COGS, marketing of algorithm our lower for X.X%, innovation expense high-growth marketing value. of on Outside percent to potential our percent next a then a followed momentum shift support investment our support be their is to maximizing brands marketing expense deliberate geared pipeline. and prioritizing sales The net wave is towards allocation with to by 'XX largest driven our an of expect is brands fiscal investments thoughtful sales overall X%. and than by as focus we continued

And medium-term savings new anticipate in this as driven SG&A Day. All beer efficiencies generate best-in-class algorithm from net during XX% we margins announced and by our continues targets. the our margin close operating line to out with operating improvement our provided to we QX 'XX. partnership be business our of agency on Rounding medium-term margins Investor in, drivers, approximately implies operating sales in X%, beer media beer fiscal we as in as a year-over-year percent of approximately of

favorable as For cost seller absorption Wine fixed higher digits, business, increase of of by by cost operating and anticipate result and costs logistics Spirits a our lower to income, less of high costs blend driven packaging in favorability our and offset initiatives. overhead part as single an mid- savings we and volumes partially overall COGS

referenced For marketing, to partially and sales, respectively, each XX%, points by we changes, structure a anticipate expense Bill. our and pricing line medium-term of driven to previously by investments outlook, sales adjustments by net SG&A our both offset marketing above and X% and growth drive percent top as slightly other the organizational

activities. improvement over FY headwinds in Spirits savings 'XX That in to and marketing execution expect Wine we sales margin at planned medium payments benefits targets the said, addition, Day cost 'XX. the on and Investor enhanced to our approximately contract We distributor face navigate category outlined In lower of focus provide compensation contractual certain investment from in continue and and lapping to November. headwinds and to believe this margins reset unfavorable toward as in operating can fiscal term XX% we our and implies

anticipated Corporate broadly. increase as more continue in while expense fees we invest reducing is the to third-party business to slightly

to million, coming to be by average to tax and interest at our weighted approximately expense driven in expect million $XXX rates, higher unchanged comparable $XXX XX.X%. rate we We effective interest expect approximately remain

$XX fiscal increase EPS we $XX.XX, interest our on anticipated these and $XX.XX average XX% around reported share of midpoint $XX.XX inclusive to 'XX for and to to and our noncontrolling million expect be weighted expect We Based repurchase be representing be shares EPS and to between year-over-year. outstanding comparable about assumptions, a XXX diluted be activity. $XX.XX between million,

flow in our greenfield flow expect Investor our site Veracruz. of as remaining the the with construction Day expected our to cash between fiscal cumulatively From flow $X $X.X billion $X.X fiscal spend breweries to $X.X 'XX expansions in 'XX reflective fiscal And $X of CapEx we from of messaging, 'XX approximately billion yield billion, $X.X be fiscal a of the to 'XX. billion with peak of to that free a primarily spend year expect free flow cash driven $X.X by with net of fiscal construction perspective, from fiscal billion, cash we consistent should 'XX to spend be 'XX progress we of step-up cash billion existing $X $X CapEx billion the billion and our to Veracruz. in billion ongoing between and in We operating to anticipate

To conclude, results we share. reached fiscal continued strong milestones core our in as driven ended market growth brands 'XX with beer and business sold cases by outstanding new its in

market Spirits 'XX, and key Wine we've actions difficult performance. but identified business conditions faced Our execution to improve and FY in

we fiscal progress deliver for against plan throughout fiscal ongoing strong our our 'XX confident look capital fiscal seek you on are and with your execute We and As thank enterprise value with results aligned support our to to our shareholders. targets, look we updating create medium-term that 'XX. 'XX, to you we allocation for ahead our can priorities and success forward in

Bill and happy that, are answer With I your questions. to

Morgan comes from line Stanley. with Mohsenian today question of first the Our Instructions] [Operator Dara

our questioner to on Modi Moving with is coming RBC Nick from next Capital Markets.

ones quick X Just for me.

for Just the have been getting beer? this on that wanted any gross there's margin get a any quarter onetime perspective questions about to gross affected issues and might lot if of margin

about on any helpful. the second -- is wholesale -- us some can launch how the the Aguas shipments would when this Frescas it or some be then whether think have just you easements, And to of give quarter, shelf into part much might context you that be the attributable of preparing that for been

I'll Nick, of those. both Yes, to try address

margins. First, on gross the

bad out of As operating a bit a in about points. have a it we our did write-off to bad QX. our That as release, laid in XXX impacted press by we QX receivables basis margin relates of accrual

full have basis impacted the Frescas what would launch, to hit strength year points, of of more QX margin QX. profit the relates operating minimal impact the as XX that drove by really about Obviously, is as very, portfolio very gross again, Aguas margin the and broadly well, at impact, just -- that it

next line question Mohsenian come the Stanley. of is Morgan Dara The with from

sort sense for sense in momentum give maybe quarter of wanted April day a I us when is so the result the result any on depletions, the give drag or a was how QX? far in Just in underlying of March big January to pretty a us trends. weather and the normalized So near solid considering weather. just beer touch Can X% the ex you extra

gains impact juxtapose Bud How space brands a impact you on disproportionate and positive you your struggles. better that you direct that? get the this the Bud And Light some being post you from market shelf can versus much that? on expecting from see just year And are share, trends of risk that Light mentioned

should account our X I'd the was keep say with what more. expectations expectations March into has March March has results Everyone our April for in mind that Sure. We our selling with But very less consistent year. take obviously overall X days, were.

the months. internally we it those sort of plan look of at X So as combo

strong very as March solid us a on New think we we a had what at really year said, the as we would with expected off and said, comfortably that in it's that setting we With Investor we said York. Day consistent

that's we As what we our in in of here low also double-digit shelf than greater values to we one spring, be our And is in the our of script, growth which expected. added had algorithm, the total the growth year. certainly, sets delivery going noted in my

what that is not at pleased our We've brands position. large, for know, you because return. retailers velocity of it space, They've we're certainly in $XX over SKU the returns. and the existing all But said reflective it's million of as dollar our and category. velocity deserve growth same as the brands it. With marginal is sure incremental many I'm seeing really increase years with what And as we've in the have are said, and very shelf that from you averaged driving by our all in said per are

from comes Bank Spillane Our of of America. next question line Bryan with the

we at times had So and maybe this the of basically beer guess year at Spirits in enterprise the on just, normal, than maybe back least back, terms an on help operating underdelivers the morning -- is in faster little a rate a profit, this I a of where question little for Wine but get below stepping year, a line and couple just underlying question growth level, on we interest algorithm from being to expense.

be making can to get some under right, delivering or tax to a maybe credits. that there Spirits some coincidence, hole but of all this place, a were Wine a function Or it and it's whether adjustments there using that offsets. So pulling some forward with basically, more was you savings other just is

are people sort do make I how think work a or whether had understand trying the or much manipulation coincidence. difference you just So how just this was much to of to to up

don't the No, numbers. Bryan, with The our beer results numbers we reflected strong business. very play in

we've business. challenges said, and in Spirits Wine had our we've As some

and our President a of whose As new on focus you business know, execution. we be just Spirits will installed Wine

that this on reset and number are a issues, number lapping of but of year We stop a we're today. at us going cause line committed will in to have from isn't a that that be that bottom bit the year coming New onetime delivering results the it we reiterating a to in York of because to things we enterprise-wide

results. We continue to expect to show best-in-class

anything the heard last you we and years, companies success again not that growth in else. business, as the year, X my our driving in we remarks, is the X really company of last #X As have what's Circana were been of large

Our Barclays. Lieberman the Lauren from of next line question is with

have spoke distributor just manufacturers But destocking, just industry about was the of you the we've color the level. pressures. inventory gave Other -- quarter more promotional curious, management and help heard and retailer more last I you I at Spirits. Wine in talked curious, about lot a was about on seeing

kind levels the on hear view to inventory curious in system, state the have curious on system environment knowing your promotional and the of of within inventory Just visibility online. on just but the take of kind to union tough it's X your within tier,

changes. in seen that of us particularly I think the to as in our the there important see to We those for reduction we've of And are bit bet. well. XX been made on a The you biggest we've this a year, has There is success. That's brands past quite a in number of that focus really some Canada. fiscal of thing did U.S. bit continue drivers We're Canada. going some realignment to certainly, is inventory that was inventory on Yes, a change. focus

we an little and buttered Frankly, too on the brands where in our efforts those promotional for We're brands to a we term. going on we'd important the that's part have more long real of broadly past, to also do that the consumer growth a like spend we're than peanut past, Woodbridge, probably believe dynamic. bit in going potential particularly have focus the

acknowledging pipeline a year, critical in dynamics the and execute of improved we has of this be there'll those a see that that reflective around been I And bottom last will think against that's dynamics make year. you reset coming the an work the this line. few bit at and brands, to of lot A all months understand in of research consumer our sure done we

the Fargo is line Chris with question from of Wells Securities. Carey Next

expectations perspective around Can just number the Garth, a So is on commodity on you bit expand specifically your full what for inflation, margins perhaps thank little year. for the input you all driving the one?

I expecting need number line G&A feel more bit secondly, all year get maybe the in then little the this to leverage like together, bit savings division. there's line a put for full on of it or the double-digit you a does little you're And top if to the low

maybe that. So provide context on any just help

So thanks full profit the number the commodities some operating you're of assumptions how year. maybe for the to just and the getting on on

Yes.

just we've beer, elevated at margin we acknowledge back get to feat. of for that we -- I you margins and the the expansion moving look to past as the of that's target first end 'XX and to in forward our I look years with think our So relates with have low no that environment improved disruption the then all, you I 'XX and near inflation it that to been saw margins the starting that chains X fiscal at think of if half global significant FY then in dealing range, that, small think the supply

headwinds be face the to have As and as 'XX, as years. given several the FY volumetric algorithm. that our of similar forward we tailwinds pricing last -- look our The again, strength well for to we growth going typical brands, we're tailwinds, the will

or their Some of norms face higher still than is highs, we'll or abated have certainly sort face that while of we'll their the near-term norms. from historical commodity certainly issues headwinds prices that that historical they're

we haven't a down their hoped. couple as strength, much resilient or of commodities would if you And come been there bit nearly have have a that have as been in will,

face So those. we still

that of something addition, have through. is the to manage to In the we're peso, which going we continue strength

the at Fortunately, the enter XX%. hedged about against we as we're peso year

going manage we're that So to effectively.

as both And set Investor have of aggressive and last year as call Day, the this as you've initiatives we help heard us savings well year business. benefit that have cost will had talk about an on this extensively,

towards we margin to all that growth closer there midterm growth mean, in in, FY margin our we getting move 'XX algorithm I or -- expansion fairly significant is So here, think margin as algorithm. midterm

line Kaumil Gajrawala question from the of next is Our with Jefferies.

the question. on space Just shelf one quick follow-up

of Wine space space do Spirits how that spring? this part complete. To guess just the the of sense we a it, And business thing? I or consider much divestments us you of whole think pieces give already. Can is a incremental for even like gained as it lot then strategic the you secondly, did You've about what for and maybe expect maybe valuation either as you or on looks of shelf degree

Sure.

over the we what space and I shelf all least map pleased are And that's what again, aggregate. We're where spring get, Obviously, As as total the that in in double-digit in that's getting depending, as expected. but primary the in with number remarks, very low we varies is at is to stated, resets. what expected Kaumil much landed. fact, my that's, it roughly we

as we've of only Therefore, occasions across that by person categories. drinks significant X and categories, business, individual consumer the as times. made comment an and all are continue accessing that play important and number much this spending additional spirits beer, Xx being X that in drinks to spend we we that's of wine to The Wine X to those a categories. those Spirits Relative consumer all in feel able X of that

Our next Sarwat question Nadine with is from of Bernstein. the line

Two interrelated questions me. from

trading or beer are First, of of shift this health you you Any consumer down posted robust the seeing growth the of signs terms in quarter. very What in today? volume U.S. obviously behavior?

And second then the on consumer. the also question

being younger are amongst have age Other headwind industry drinking this patterns out highlighted consumers. peers your year. of commentators drinking calling legal more January dry Some meaningful different

consumer. these changes the comes hear any So observing are you from in I'd what to when behavior be really trends, curious to it

franchise We're very think many the loyalty We've Sure, our the many, of really said I important. health superb. Nadine. pleased we consumer. brand that's And that have is our with times, within

has people I of little the with which fact you what judicious bit done together Garth been from think have in some last number on years is few industries. our that this -- put pricing when different in a other occasions, a that CPG we've strategy the and mentioned over

an where in we rate. compete beer the very It's consumer to that increase important buy that that the in within see But place high we to that's given also important note which base only strong think to the have we maintain our franchises. is continues loyalty end,

So take premiumize, and that that perfect in the particular position consumer to the to to we're speaks advantage again the fact point. of continues that

nonalcoholic like number Illuminate in so products any consumer out bring betterment. about Crawford, being but nonalcoholic the on, And people noted change of designated in does Corona our reflect Kim segment. outstanding start. gainer the the I we've changes #X Meiomi. and to and It to enjoy and great Relative are or couple lighter beer. January think still light share an or tasting that some things is consumer We've times Similarly, driver behavior had of was that Bright the concerned things in our business wine in to a a one of done that want in a

here to a of grow well. number We're expect Corona and our continue trends the nonalcoholic this betterment go with to forward product we emphasize continue to year in fiscal to offerings as going as coming certainly

question the with Teixeira next is Andrea line of Our from JPMorgan.

Andrea. is Drew for on Levine This

X may. just we if for So us,

trends of California the comment back how you on during depletion California inside throughout to earlier quarter. if those one questions, can Bill, the versus outside going of maybe and Just quarter progressed the

you then mentioned beer $XXX one million 'XX. of fiscal I think cost roughly for in Garth, for And savings

pretty step-up a the implies meaningful that think quarter. I fourth in

'XX. thinking if a about cost talk you benefit could the where you So be saw about maybe how just savings some of we should for projects and fiscal

place time significant Pacifico, up question. across lot a for brand And joking depletions California. across got country. example, the were as let an the voice our you is the very me the last use asked very, the year obviously, your big XX%. stronghold All the that really A Andrea, -- since lower strong, trends were aside,

Texas But California. markets be Modelo and we've this success many past secondary of many, we're state country, for those the Florida. the places markets, element going of #X Especial the showed always over said and increases an continues to like are many, year. to secondary good seeing across be really brand And also double-digit in important us

to broad-based Garth, do and is that one 'XX. were year, So the to in out our I we're for a pleased growth closed very here a continue in second as you. see fiscal for to think business the we position profile we think we

the ramped We throughout through of the went QX. started the $XX that the factors. again, that as started is we year. savings a business year, very the year Just benefited that throughout year in through out up as new out initiatives the but also right really million put on earlier year. X The we in yes, of from cost And things or the the ramped ramp One gate throughout from place for up year, on strong beer perspective well. those went as identified almost based we in up compounding roughly then of you that the came

that undertook global The around we year materials over last the RFPs to we of initiatives last increases environment. saw X that procurement-related in in of where terms initiatives raw were the was various operational kinds initiatives we're There address well as able outsized were stacking a of of years to number a logistics inflationary of due some supply number and disruptions and chain that the underway. of as terms railcars also double

Our next Ottenstein with of from question is Evercore. the line Rob

well what be been the XX First, could us has Circana, gross mix looking the this and And the dollar data, price weeks so. last below then you So that your or please just category your is of X, great. beer at second, are remind would are? over amount scanner expenses that peso-denominated

is is apparent that's trying pricing in why your scanner kind this understand the timing less what of And took the Super case. of most realization other again, Bowl. the before to big than on why the or year? your of And and brands. And other the price increases I'm after So the players market data the most

Yes.

XX% to are amount of business first of one, in as we're terms XX%. And enter hedged that are year, the is at costs we So beer costs of this XX% as our on about the peso-denominated for said, I peso-denominated. about our

of consistently And or you whole is X% were X% to we're course X% to pricing price the know, realization, things pricing increases you when see types actions to these pricing depends And over on the to X% said We of taken. have of our expecting what in year, see still a relative as pricing algorithm. lot actions.

different that's we'll kind year, as an course any X% as to trend. anything we actually Robert, and over know, don't we the that of market-by-market year I as frames said, in do communicated we've when also X% concerned shows SKU-by-SKU of As you basis, a we ongoing have think about the the we And would. are or therefore, that to get you on across up. reflections time that expect to

Our the from Falorni Filippo with line Citi. next question is of

share we on of industry the and last with rate market in was this overall around the question above controversy, a the big growing your you to shift might some Bud benefited had have about share well that from thoughts your market concerns this are year. but the I Clearly, controversy are shift. at there as beer business April Light cycle before

business see can it you're those we about So of maybe start some and cycle your thinking you the on as how impact to impacts? you address that

strong again, it we said said the in single out to we that we've only high the to is I controversy were the we've point earlier, play gainer I'd related not loyalty probably as biggest Well, brand which end. also, something But right as you extraordinarily along, continue and got know.

that's reflects position, high presence of of think beer the The brands. that, category in we points single total shelf sheer we've here X seen during the in think great X.X recognized is at this growth our in It's And gain history significant high increase gain, the business. and strength fortunate add a we end points we a spring the growth where the the the in play. exactly is moment. that in our an beer where we're reset Constellation our share off share it are When you in in fact biggest program, and Brands the an unprecedented we're I end. all coming

with Securities. is line from Wedbush question of Pascarelli the Next Gerald

the to prepared on expectations. the I trends, above the think Just based out expectations, came wine, back definitely outlook current But in your our were Bill, drivers year helpful. in you remarks very going above laid for

the I to achieving maybe confidence the start this fiscal the revenue assumption does would be could some of context And wine performance, flat in downs in improve embed guess will last current you this So outlook provide guide level in that if early levels ultimately that just year commentary your the then year, more on your X year? great. of category from

we the support critically several carefully important. lot thought what The think, I distributor I involved. network. much we're variables months, over and our has to closely Garth going was few with time reflection obviously, at improved to our more of One, our an of spent Wine looking performance capabilities and a last colleagues sales enhance work

both think we've to gotten to had to distributor distributors are, as came much from us been and our we out year. I we aligned and last expectations us what as more than where of intentions

did have we've overall Second, brands or and not XX our so our we radically addressed There prioritization within have amount probably portfolio, the are critical refocused priorities. right that that. of

we're after think Third, going are and business, had. efficiencies within we to the be there those

our business. Beer against last know, that And success Spirits last same strong Wine the resources year and a As that business that some helped year. was generate of putting result very you our in we're tremendous

number So reset to a place, recognizing we are elements bit there's the particularly line year, that at a going Wine of of is a for this in bottom be putting the business.

go this the forward. And as crystal of it's sound. to think going get all execution be at are the It's strategy and However, our said Sam us It's against we again, going our I on we've And the to Glaetzer strategy. we think right. point, rest team to about medium-term algorithms is focused execution.

of next Carlos Laboy question HSBC. the is line from Our with

activity more expand further you end that Can you towards currently? state the of on on-premise and saw your please important

issue excited you and gains it for frame significant us time fully in some had continuing next us. and have behind time volatility, saw and now year time for think the the we big the period the issues into brief Cinco, this development which to a we frame. And strong of particularly where on environment. see done historically depends share interesting during an about in with I on-premise, particular retail heading and when that. some we're We kegs, we is saw on-premise which We're had frame the well made is in both very obviously a some

continued fiscal going to share that that are that all be going and part of expect is optimistic growing is Modelo, channel, Extra this that, this results very in Both year. an continue to growth our we what we're in Corona share and So the are year. on-premise Pacifico important

the this to we've the the reached Newlands session, end hand of closing question-and-answer Bill I'll and floor for back remarks. At time,

all joined call. thank and you Rob, to who you, today's Thank

trade As want we well as performance once our wrap across year up, another colleagues to fiscal strong 'XX. partners our for of as delivering in again I Constellation thank

can leader growth Constellation XX of Your in and for a made say CPG recent that, we're other achievement. top-performing focus companies consecutive continued years. and company discipline this has No times among proud extremely

growth and best-in-class which of additional continuing growth As we business delivering fueled to in Spirits where capital heightened on our double-digit our execution further communities disciplined confident to we on operating head focus we shareholder by commercial single-digit and fiscal generate create beer in Wine allocation low we're and the to into approach our and margins, and maintaining while primarily net momentum EPS sales value and operational build stewards environment to serve good business, high our to as 'XX, expect ability operate. our our our by

with season, we and products your as summer speaking festivities, again key forward tasting some we you on our the of look great approach we As invite to our of you next selling to quarterly call. enjoy part

much, day, a very you good Thank everybody. and have

wonderful today's for conclude conference. will Have you your Thank a participation. day. This