Constellation Brands (STZ) 3 Jul 242025 Q1 Earnings call transcript

Good morning, and welcome to the Constellation Brands' First Quarter Fiscal Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Joseph Suarez, SVP of Investor Relations. Thank you.

You may begin.

Daryl. you, Thank and Conference all, Constellation QX Brands' Good welcome 'XX Call. Fiscal morning, to this Newlands, I'm Garth with morning here Bill CFO. Hankinson, our our and CEO;

may As on call the Constellation's are comparable forward-looking in on our refer most impact non-GAAP between to or news measures website included a SEC otherwise at this release risk and Please available financial this and measure factors, company's made filings any directly on discussed news reminder, reconciliations the release which GAAP statements for call. the www.cbrands.com.

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

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

now Thanks advance, Bill. and in here's

Thanks, to all we QX start few for pleased a call. like our Joe, And usual, and earnings solid quarter. I'd key to that to off a as got the to welcome in fiscal I'm QX. say with 'XX start highlights to

within our as extend sector. to dollar continue we First, goods, a consumer growth achieving increase percentage position the points CPG of entire leader X.X packaged sales enterprise an above that

the sector an their achieved CPG the We points sales of on weeks for increase that dollar channel ended Quad that. May enterprise repeat me Let Week. the entire XX Circana data percentage above XX for tracked X.X

weeks total industry beverage gain June with top which X, attained most again aligns our once growth continued by as XX quarter. gain business, well was which ended the alcohol. share the in Beer outperformance as share significant This driven for Circana all our the largely second closely This in beverage largest the the of

beer by sales single-digit our strong savings cost Second, portfolios' year as of operational depletion was quarter of and another aligned high all operating course, margin driven our continuing Beer business. full with our quarter of medium-term initiatives. the increase with And XXth growth and efficiency well our guidance by business. improvement our this net outlook consecutive as delivered for supported We significant with

balanced Third, with delivered which X several allocation our priorities, line first in now, disciplined quarter against did and of year, have fiscal in capital more consistently this we things. the years than we for

First, and in net we target maintained to Xx still ratio our achieve sheet leverage balance 'XX. strong our investment-grade expect fiscal

shareholders over million dividends Second, plus in more we $XXX in of repurchases June. $XXX in we and to executed million share completed returned $XX million buybacks

noncore as continue mainly which, latest repurposed the addition most we of to reminder, executed advance site, new Veracruz. divestiture at acquisition brewery we of are as the equipment. Fourth, had the Obregon our the development and tuck-in Spirits assets, for capacity Mexicali pleased with growing a better building and Sea land and our to process cost. Staying of Wine parallel, vineyards Spirits Wine to few potential facilities offset space of address a sales enhance including acquisition the align in in white utilization our portfolio and wine a to Third, at executed have we our initiated and partially asset and was we certain and And a moment. Smoke already network

category year operating to fiscal the of our outlook income sales headwinds, near-term driven the and we face challenges unchanged. While improvements business largely and expect continues the broader performance net is by for

EPS and more our on earnings remain than Lastly, growth. low per share achieving guidance and focused XX% target all stated we of of year in, comparable growth full drove medium-term comparable double-digit

of net business the more sales during than the fiscal business performance. income and to of first turn more momentum in fully our with XX%, let's growth respectively. quarter Beer With Beer X% our 'XX maintained We and nearly that, operating

As as noted efficiencies. well growth cost as supported strong and these operational increases earlier, were by volume primarily

in volume reported brand shipments mid- depletions important expectations divestitures this is of our to with a last business in Our to for medium-term high fiscal June grew X.X% craft excluding Beer basis as reiterate single-digit that level fully was impact year. growth as our the year of well QX by X.X%, shared It on we the while aligned of up the algorithm. were

other data, delivered or the targets category, be performance segments, or our the the it weather, to affecting consistently despite scanner other once due short-term beer team, due of or brands our objectives. timing of that on again, of be broader volatility to nonstructural beer So holidays factors dynamics and

Now and upheld on channels. depletions #X as XX% extending top of the performance nearly brand our its the honing brands. its grew in largest lead by the tracked gainer, Especial in as beer share U.S. position Modelo

a basis. XX-week to X.X on household Importantly, increase of percentage rising point at also on penetration, Modelo metric a Especial the to become the end continues grow #X with this May brand

While in deliver Corona Extra QX, can this continue single-digit from to we just expect depletions X% we brand. declined growth over low

a gain category. Pacifico in depletion remarkable growth delivered total Corona in it the of over share share gainer across top the X beer the category. and beer dollar and the Extra brand remains #X XX% U.S., Importantly, continues was to

X that more are build 'XX on an X% Our excited increase depletions. con fiscal Negra flavors: Modelo Picante than we in in delivered to Chile. momentum Chelada with and new continue Fresa brands to And of

national pipeline a as Modelo perspective, underway X year. Oro More of approach thoughtfully using sizes pack launch the our our an rollout build the last is innovation continue new to out brand we after broadly, successful from disciplined

In additional more our of to pack test also are launch coming over in Sunbrew an markets year. XX Aguas Corona addition, plans, to advancing to variety select our the the our and look we additions per Eastern on Frescas forward the these portfolio markets and expansion of sharing

points X.X operating business driving execution strong ability Beer significant also in expansion QX in percentage The of year-over-year. our our of operating was deliver to margin leverage, reflected

sales expect operating X%, 'XX. X% to deliver of to XX% income business continue of XX% approximately growth we operating margin growth an XX% ahead, and Looking in our to net to Beer fiscal of

Spirits. and Wine to on Moving

in we These face to X% that these particularly were challenging the decline QX. dynamics most of continue earlier, price net business across the in headwinds of noted sales As drivers the for segments. main wine categories,

craft That shipment portfolio spirits well growth of spirits of outperforming Circana said, volume higher-end U.S. significantly the channels, the growth sales our in segment. achieved dollar rate growth XX% double-digit low single-digit as tracked as

in in business good identified the XX% business support sales commercial our for fiscal in most net make represent of XX of that brands addition, performance now volumes this group against we the improve our quarter that we see for and stable underway. investments 'XX. 'XX. The XX% over are the to sales of Wine to business in In execution offerings to last and relatively scaled the the to fiscal our continue underpinning of operational net progress of and initiatives in over efforts expect select the 'XX fiscal the outlook remainder ultimately Spirits And year, improvements tactical

these have incremental operating did near-term in income, first investments XX% However, a which the impact the declined quarter. on

continue the Spirits to X% of year-over-year to operating the we And income business operating XX% to down in also we target of improve Wine and 'XX. our remainder and performance wine expect be said, fiscal to throughout year. spirits income That

our towards continuing this remain As Day. the to business advance shared years in target we the to coming have medium-term Investor noted previously, over we committed

continue ambitions, progress waste received Waste our to our for Lastly, breweries, a recently meeting Nava having against TRUE in we good Zero commitment. reduction Obregon make our milestone marking at Certification and ESG significant

then also frame set we nearly our ahead year, last achieved of 'XX commitment 'XX. completed original reminder, a the goal ambitious as time an to be to And fiscal target year X water And restoration same of schedule. Xx the we size initial within the of

delivered maintain in of by again closing, performance committed the our fiscal we continued momentum 'XX this beyond rest expect the of solid business, another of So throughout driven we and to at Investor once as Beer and Day. strength quarter

and the performance continues industry broader of our its above largest This sector. outperformance Our beverage growth reinforce CPG growth beverage entire second dollar the well share and alcohol. to that business Beer strong achieve the total within gain relative to category volume supported significant outstanding

identified and comparable All in EPS while initiatives we upholding to support this making toward the this far guidance. in, our our priorities and from June. And share the of for allocation Our Garth. year the fiscal the Wine shareholders and to return year's balanced execution its double-digit over enterprise-wide Spirits growth disciplined advance trajectory against included to which years, $XXX capital operation call delivery through with progress business continue is I quarter last turn repurchases to last million so also of the financial over commercial including targets, has that, X

Thank everyone. you, Bill, morning, good and

details. focus will performance by usual, discussion comparable my fiscal results segment our 'XX of enterprise business accompanied QX our on As mainly

line net enterprise our full growth We our sales. of Investor top quarter, X% Starting for expectations delivered for in line with our outlook and medium-term targets. with our Day year the

As this Beer driven elaborate our strong was anticipated, which I business, by growth on shortly. will

a operating a margin resulted expect XX% operating between net on grow basis, reported increase operating and in XX% sales XX.X%. increased we enterprise point in margin For 'XX, X%. continue to This year-over-year to XXX to XX.X% income fiscal X% to comparable Enterprise respectively. reported and a basis and comparable

year. comparable $XX.XX, first to continue enterprise our remain very Beer comparable $X.XX income driven full income quarter. expect strong operating year of having At by of enterprise EPS we for growth $XX.XX X% in operating also full first comparable guidance on track for EPS of to XX% the our we delivered the growth While achieve level, quarter, an to the we again, business, delivered to

our comparable increase of using As midpoint year-over-year range. represents a full guidance reminder, XX% a the our EPS year

double-digit comparable expectations our at last annual our EPS these also consistent target medium-term low EPS Investor outlined with Day November. are we results growth Importantly, and comparable

performance. turning start underlying QX off of with our is detailed Now to great our a the fiscal business. 'XX. more segment drivers Starting The to in discussion of the Beer

by Our depletion any be this excluding Beer periods eliminate craft X.X% grew volumes from of depletion the craft basis brand last impact the year year's our which will distortions without lapping business to brands. the figures sequential divestitures, of

demand This performance execution quarter Mayo the during holidays. during the de well strong the as Memorial solid key and and as reflected consumer Day the Cinco

dollar top beer. X.X sales, Cinco Circana once Memorial beer and have pleased won to de points total Day gaining X.X Mayo. usual, high-end supplier of are led and we As And share the share again growing we gaining holiday X.X% points of in as share the

and was gaining of brands. X point, total X top XX the picking had a up of gaining share brand, share Especial Modelo share top we out

grew #X spot X% draft in on to U.S. continue to now Modelo by beer the gain we handles up the demonstrated as shifting Our Especial capture as on-premise and depletions share one tap be

and rate Beer an slightly ahead usual on growth X.X% with ran depletions shipment volume peak distributor aligned prepare and This both for the as on our the season. quarter seasonality and increased summer absolute basis. retailers of for a is

year expect share quarterly That shipment align anticipate perspective, full other. terms closely to a depletion from 'XX, with of be and that volumes our of quarterly full volumes fiscal to and absolute depletion still shipments volumes said, largely aligned And in continue a the volumes in of with we 'XX. we each year cadence of to fiscal

days were Beer for selling for flat regarding 'XX. first Lastly, of the They quarter business. fiscal our

the one less the in which QX. year, have we of will selling will balance For occur day,

which of In of the Beer of X% fall with sales Altogether, pricing X% we actions lapping benefits calendar the growth above benefits net pricing year price/mix growth due we than more our business. realized combined pricing to in for impacts the to took of drove wraparound volume XXXX, volume than our the normal algorithm. addition growth, were shipment less

fiscal to of our pursuit from outlined of we for Day. captured this the perspective top country line additional distribution are during of our what As with we balance our continue. spring the The space look 'XX our gains and anticipate business, line points across past portfolio the shelf a in of Beer towards we we momentum Investor ongoing

brands disciplined underpinned our tailwinds as strong well brands consistent is that efforts, consumers, opportunities from by incredible have innovation give as our the and across sustainable. the for high and of assurance our demographic affinity our equity Hispanic marketing loyalty our us top line who further In addition, launches the performance

impact line a to Moving margin the our basis but income in growth operating operating performance increase of and operating our in the growth top our largely Beer business a and and Beer increase from as on partially $XX nearly these savings This increases segment offset were driven These of currency. savings XX% as efficiency margin foreign for in income delivered and benefit of well X% initiatives, of volume operating which inclusive COGS XX.X%. excluding to XXX an million by strong point business.

we of Mexican our XX% reminder, peso, year. approximately are that the hedged the exposed exposure to approximately a and against fiscal total COGS for XX% As are

X.X% under X.X% as net of Marketing relatively full with as percent quarter, year a X.X%. Other expense our line approximately net expense was of our talent in integrated cost year half as expectation for absorption sales slightly as a in was sales, expect percent we of lower uplift investments. second SG&A the and fixed due to full acquisition supply an expectation as well chain the

period the to volume lower continue in year. from relative due HX anticipate cost write-off QX XX% with seasonality in a last approximately we from of perspective, fiscal beer And same expect sales We incremental operating favorability some from margins the cadence lapping to to COGS absorption in 'XX. VAT normal for fixed net

business. Shifting This marketplace driven a was and decrease wine to Spirits segment challenging, the volume X.X% sales X% remain first Wine by quarter. wholesale largely U.S. in net as particularly dynamics realized in in The the category. our in shipment a decline

That aligned to performance and and should in category towards that the the help stable expect ultimately fiscal last of benefits more year in Note, the business operational relatively and more recently the the begin sales headwinds operational of the effectively broader 'XX. to in QX initiatives execution initiatives said, in net however, identified be as fiscal and of hold. execution line expect to underway business our we seasonality us continue and second our usual take weighted performance navigate to commercial half QX completed deliver top of that uplift year, year-over-year Wine commercial set the and the segment heavily our Spirits with we

in realized approximately turn, From operating sold, mix expense perspective, in an category decline which margin and SG&A $XX of declines of million, were goods XXX segments, driven and lower pricing. volumes These a into product headwinds Spirits decrease by to which, and favorable the basis unfavorable in income higher-priced offset XX.X%. operating our a of than unfavorable cost Wine resulted extending due business favorable point to more primarily impacts

by partially was driven higher freight relative costs, unfavorable net The to realized and sales cost by warehousing. COGS in and primarily grape offset low-end savings spirits

medium-term largest was around some due elevated as expense when to XX.X%. percent was marketing initiatives. of tactical marketing compared Our to a our through ongoing net particularly sales investments This our brands, target of

are a percent in XX.X%, as was also realized of compared savings to benefits net as which was of SG&A when our sales future be to elevated initiatives our medium-term quarters. target expected SG&A

both we As income we initial margin, in expect a decline 'XX and look Spirits performance our guidance. rest for full X% for in year the towards operating Wine while of XX% to improvement business, we operating operating our continue our year for to anticipate and income the fiscal

or Corporate P&L. the $X and of year-over-year million higher benefits for largely and a XX% rest approximately reflecting the of out million, increase expense by $XX fees. compensation professional quarter the Rounding was driven

from the quarter for million, a compared our comparable And XX% $XXX was prior quarter decrease last rate to XX.X% the corresponding year. the XX.X% was tax expense year. effective for Interest

corporate expense Our for million $XXX and tax effective $XXX 'XX expense, XX.X%, comparable rate million unchanged remain fiscal respectively. million, and interest $XXX expectations to at

benefits and quarters marginal in the coming mainly to a increase due an and expect compensation increase We investments. capabilities in corporate over expense digital

expense income. business incremental our to rate Beer a to also our enterprise beyond our We a Wine effective slight in increase interest interest due and uplift from and due expect contributions to operating in expansions QX business from our minor anticipated Spirits capitalized lower tax

operating cash capital activities Turning less which net cash flow, define as provided expenditures. to by we free

a prior first free of brewery the primarily we fiscal construction of decrease from $XXX driven cash XX%, 'XX, flow increased as generated million, of quarter XX% expenditures For our the year Veracruz. in capital greenfield the by

our redundancy planned. construction production progressing capacity, our business. as will enhance That product efficiency we to is similar recent And for our of overall believe all and Beer expansions,

our for in results the enterprise in excellent operational We in our new be fiscal in as on pursue quarter the confidence portfolio fiscal our fiscal conclude, achieved of year and to deliver to the 'XX brands, financial were next allocation our of our disciplined part full excellence of leverage of 'XX. To towards objectives brewery we to remain the adhering our continue year balanced support capital earlier ability strong relentlessly and first operational to strategic the consistent end or and expect priorities.

to action closely the to and any do, macro headwinds. take we we consumer, to potential currencies That continue will our always response appropriate costs volatility said, input in monitor and or as

continued we support sharing will thank our our progress the year. your throughout interest and company, always, you by we with and you report for As in

happy Bill take will With your Thank Q&A I and that, questions our you. session. to be during

comes Our question from Teixeira the with first Andrea JPMorgan. Instructions] line [Operator of

got So Bill, a few.

on sustainability disciplined and You leading beer elaborated -- commented the in of you growth. continued marketing momentum efforts to

I we little any all hearing the all given state quarter, other are companies given you bit commentary the of in are consumer, exit the from so general. a hoping June from the you how and hear to think we far economy of

So can on if comment you that.

shares a benefiting of we that us tell can I to that you was came much or all say little that, benefited expansion if of just from and X.X%, like the related hope how distribution. -- you And like the from bit distribution? how you in growth you how same-shelf reported kind in think are additional And depletions you all much would the from

Sure.

that. with start me Let

a being at consumer. slightly the of keep the that very all, with Hispanic community buy to digit high the than mind Hispanic We community total important both within remain higher business First our in rates Beer consumer our strong. is level for and thing I think always single the saw

tremendous but remain I shift rates buy pack sizes some said strong. aren't is frankly, it theme in -- and to channels, loyalty. beer our time going has consistent there companies mean might or And business is be a sector. therefore, continues with whatever in extremely which we've despite doesn't around time our again, this think brands that Now time And the other that on with brand Beer excel other

things As I unusually #X gains gainer CPG had noted, this of strong performance shelf in additive this. beverage your It sectors, saw we're very us is year. fiscal all we To excited plenty gives for we're expand within again sets that about we an against in certainly Oro, point, we factor the the to and an think which other chance alcohol. share also like

think very on no I delivered it's it. after And is dimension I So year after we've this year seen put do, difficult we the said exact number year to on what exactly an would and quarter consistently we think of you've different.

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

very good to or quarter. this turned able pretty despite profit been You've strongly recent appreciated peso that having well But stable pretty have the sustain to in seems here margins remarkably margins Mexican profit years.

If to weakness, of is a pricing to close periods be you gaps able you might coming strategy? 'XXs, that today. transparent, this your flexibility mainstream with sort enter just asking were peso give and peso I'm dividends that that of speak to and beer you Look, through price were successfully through weakness, went and in to of the 'XXs into enter would because are can still period the or we the of the reason you

to how be you're it this, just would could speak about you if thinking So helpful.

Yes, Carlos.

indication effective how just the our policies really an results you hedging referenced are that of are. think I

We policy, us you if to have see moments in which layer of will. hedges weakness, we multiyear when hedging period a over incremental a allows multiyear

took we for there there hedges, see greater And just layering movement again, movements also than year, team, advantage of for a incremental years not with well. some actually treasury fairly significant XX%. our couple of but QX, this in that future did as days where we In was

year. range incremental sit as about when we fiscal fiscal of hedges, as peso. this were now XX% entered Just a a at reminder, the these we about mid-XX% against year, the we And result for full hedged

us. it's a flexible paying been robust approach. disciplined practice, certainly and So again, dividends methodical, for very it's very And

comes Our line the next Morgan Dara question Mohsenian of Stanley. from with

on Andrea's for up business. high-end middle Can follow little terms of from versus macros consumers and impact a terms what potential the in more of in to Beer low your demand you question versus just Beer So seeing on you're business? unpack maybe

fiscal in front? just also any throughout update on-premise channel And any of what big summer so any that course shifts you're then if just and far QX or we're types trends impact and on channel this the of terms seeing of seeing on

Dara. Sure,

Let's within prior had, start saw, expected slightly versus The first. we significant on-premise had than you weaker our had years. with franchises, position the stepped we what particularly some have up although which might we question Modelo, in gains as was second what a

couple of on-premise, like I scenario people over think business. have great, that to of spring/beginning the that as existed the part impacts One relates a some summer much the of of weather is the early it wasn't the overall things. which noted, many of the course impacts

So I think play. a that a bit of was

But points, none. question the I summer I'd second into exists again, are yet your to right answer her with in back price brand I consumers me, that getting excuse this to points is -- goes at what our is said this loyalty to reemphasize question, to which think the we income months, the various consumer is as some to where show expected about we resiliency.

I given more that the very buy that I the was than irrespective speaks XX% that see the think consumer that mean is rate of to one mix, which when very consumer you base, total we consumer, closely consumer. overall look Hispanic we compared Again, at of strongly watch our to it's loyalty income. up within

respects, many beer long-range benefit will business for is to a That, benefit views and to in a stable. continue that community, be our business particular, long-range our given as a in

X.X%. of overall, pleased despite very And of the think in during it's quarter, buy rate be our to gives with depletion quarterly again, continue result. the rates. strong our takes we reflected I So course a It's and very

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

Andrea's on First, question. a quick just follow-up

just what you're June. seeing the any into on update quarter you just If can provide exiting

pretty picture talk Corona think and Last year, And the Can you bit which a else had innovation on expansion and about successful, including we innovation, contribution year. and runway some then for innovation. was terms obviously, Oro, you year's have this bigger Sunbrew Modelo Modelo Frescas in this you Aguas of should in anything a question about beer.

You bet.

to guidance. quarters, going quarterly I in But as will tomorrow with we've this of depletion As big pleased not business. And factor always what forecast the we're the is say we're particular terms going quite said, we've for other of really And into that's terrific. in the give is status really a said weather quarter. the of the delivery frankly,

the So being Day another Memorial forward and did we're win, will like to that case, weekday and event in looking X July on before we much yet a weekend it. we this

So the agenda, expanded markets. have we to innovation Aguas Frescas Modelo XX additional relative to

test XX%, expected the markets, covers recall, XX Las now #X last FMB additional it was in product. that is of you marketed strong pack and in particular consumption market, variety was which And As had total for roughly in year XX% may that very that Vegas a the start.

So we're very as excited on. goes year the to watch one develop that

going Similarly, days, that, much done to is product us to we of run it's And been with getting pleased -- Northeast, around consumer it. that sampling with the we're started. Sunbrew the home just just consumer. And testing are be their again, a suggests the for product response in very but very that certainly, Corona that's early

probability have only to them mix have testing high to to give those really right significant always we that days do, would we were what both the the sure But make introduced after very I too a call again, a early product, package at So results. consumer of concrete as any, level the those right are pricing and success. right of

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

Great.

start Particularly, hit nothing profit to on the timing the more strong quarter. XX% material for from guide for the in year flexibility too to a there's the would create beer seemingly perspective XX% year. So to profitability that operating

from guidance see the the So key operating of kind range variables do versus the that low end of that profit high here? what you as influence

Well, look, feel about we feel we the good And results good reported full really guidance the Lauren, gave we about we today. for obviously, year. really the

this perspective, XX% gave And that we XX% out expected we growth income operating reiterated we beer very guidance year, range. April laid we As in would much from certainly obviously, in a of to that that that be today. our

that operating would margins at our about be implied That XX%.

to I I note or -- that say. important think it's XX%, should

relates to an the important we not it I quarterly basis, as basis. on note guidance think on that margin to gave that annual it's a

So that or XX% hit quarter. that XX% means we won't necessarily every approximately

fixed on year breweries. the then second year we seasonality, to there's in a going half the regular a which our absorption the just to expect as means our that volumes as drag results year, due see half year of maintenance of bit we the of well of overhead seasonality is in we when of Certainly, that volumes first do most the half higher we every the normal which have be the and lower in second

of lower the first perspective be So year the margin from therefore, the half will of a half the year. second than

VAT see in a write-off expect That we previously, of year-over-year some the that will being noted to lapping said, due basis QX year. do we've as that last of favorability we the on

the comes RBC question next Nik line Markets. with Capital Modi Our of from

Bill, just the more on business it has has of beer category the poor Obviously, obviously, trade And investors I that. sentiment disconnected it, a very talks the philosophical mean for been as but been from your question. see a now. well. pretty about while

pieces discussion curious middle fact it's and maybe of and especially as a the moving they are mean can't curious, really relative fall what's I'm chain on the the for occasions I conversation in around mean because I retailers, to like versus just index next and that like? engage with the distributors, coming I'm holistic So your there's you're category? they year. look going business consumption, about partners, beer just as your what's lot cross discussions supply now, you shelf category of some like in resets what looks right just probably like that even the anymore

a to position by of to And time is point, critical out of tip giving brands think you gotten in this brands. the strength double-digit what those is increase because cap of because Nik, their brands a little takeaway. is our shelf the this reason The have I'll pointed period of about start, all the is you we which have during and

we've is our in of our rate Xx As calls, the prior SKU takeaway average said on competitors. chief dollars

a a And represent emphasis you're on and strong retailer, you you're that. get if takeout our brands the profitability distributor going you're and growth velocities. to in where or in growth So put

why the #X being see dollar growth being in That's you why off-premise volume. play Pacifico Modelo now That's and #X the share gainer. you with XX% see Especial

Our many and out agree made distinctively in they brands brands we are and times, you've very category. from to that. stand with think happen And I strong, note that fully other the

we are I'd say them. investment we and is the the brands. behind in continue on longer Part terms what brands Lastly, our we put significant our upside of believe of term doing there's in still that to invest we

go #X, We're and being Aguas it. a Modelo and bringing occasions awareness same we're more get scenarios there's Frescas still and lot opportunity, We to new Sunbrew. Oro of like to Despite planning about and new things the consumers. feel way

excited you prospects, only I all not the that speak of think or the whether our long today, retail about whether they're you but I speaks strength to term. distributors, for to think all very speak brands. to And our

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

in relative some comment foundation construction? X then a Have sense how in know made of follow-up. and I I we you and a to can questions. in just piped that Just yet? we a prepared where the Garth have just one Bill, where are just or the kind the of first Do far you have are is just, is if plan, water? Veracruz. have comment along remarks, you I on but you I guess

I on our said well Well, I mean, Bryan, we my are in remarks, as mean, I plan.

to year at the fiscal open We year expect in end the that the brewery of next early fiscal that. after or

its So It year is way. we're is CapEx why well this on our our peak. at

everybody in that be reminder, at peak a Day we terms of that of Investor FY with full 'XX As our construction throttle. is as at would CapEx shared kind

we'll of go double-digit of our from we do meaning that outlook, peak sales CapEx sort as this low of the by range of of 'XX, kind net our net to year in of is Importantly, medium-term mid-single-digit CapEx, FY sales. range expect the end

important just as to all relates it track. appreciate and that. on So are you of we know to specifically for Veracruz, But

I stock the XXXX. Okay. maybe the conversations, stock reacted then about of just the earlier tough a elected down And in how election some today concern little there's comparisons bit was Trump in beer, the think Bill, follow-up because a because is on a of when concern of

you on how about could a perspective think us the give So you just comps?

the the plan. set you comps I mean were when comps your

like So they're it's surprise. not a

perspective whether a not should and wins us So and It's about if can you different... to election or even be a people who on loses that worried actually the STZ. give relative or

Yes, sure.

talked to too Garth about I happened what about many longer-range it's rather risky, at times, I about many, excited getting and think tomorrow morning and we've always looking the topic this have picture. than

very the in Year because part strong after from year the And after out. that set delivered QX. goals delivered year, we we're we in year our this of that varying against now, not from performance expectations we've

his worse little variability have go because As noted you or better little various or a there things in have days little that doesn't Garth that times a you on. have when mean or sell less aren't it's a remarks, you

at important bigger it's I look to think picture. the

runway Our after brands year, brands year remains extraordinarily to continue for those and perform the strong.

matter in to going true November. elected a that's think who's I be statement no

ago. delivering focused of to be irrespective difference, is that consumer. are loyal, the Our against brands big just who the happens on President consumer makes And really said the That I a few U.S. as a incredibly of minutes

well. certainly might we're I and add, this So as before said -- we've

government closely, and I time. one think that States of party to advantageous that's capability also again, that any United team works in office And a both and Mexico on irrespective happen particular in local to any both Our us, affairs is in in particular federal level. the be very might

question the Grom UBS. Our of Peter next line with comes from

you some So the touched being profit updated was cost in takes being the April, leverage, I'd volume just changed on versus all the expectations your morning, at understand beer be you but curious, for reiterated have I few versus buckets the at building all your mean headwinds. those watch hoping kind the it of Garth, I price/mix, FX and outlook. just as savings commodities perspective on and tailwinds puts expectations? months? to Back have just outlook relates get last I totally this prior over changed to

mean is just variability driven answer no. every we Well, thanks, I mostly seasonality, question the we to previously, Peter. guess year I quarterly that do see volume I mean out as I will laid to short due as -- seasonality.

are. Certainly, remain what our we at the conference building call blocks provided that where for are or full they in those they we guidance, detail out laid year April

hedge the than the blocks times to actions there's But see we a see we opportunity and to I sure the are building further are blocks. the noted we actions taking be when that that other couple continues As now, the we where business against business mean, like building making weakness. peso we take that, of

Our next Wells Carey Fargo the from line comes of Securities. with question Chris

the the on I'm margin Peter's relative you can specifically. gross frame the going follow beer question paper? your It on in QX strong to margins of certainly specifically up delivery, of in context there rest maybe gross came expectations around how Garth, the like year. to in looks

And around commentary weaker give at advantage that regarding on actually much how this of more fiscal point? peso, And the take you for you 'XX this then can confidence taking year? does the of fiscal advantage just

Yes.

gross give on color of the that margin margins We in a of say improvement in bit XXX basis. to kind would year-over-year came of expectations, a profit our drove I basis points what gross you within about around saw So that. just essentially little

and I and logistics, by About About cost price labor, offset materials, XX% XX that, call driven. would of mix nature. XX things -- what just basis of basis points I say, points goods, or depreciation of is of should volume, are that that

divestiture. And about craft FX a just the points the due exposure the We about XX had points then due got basis basis we against XX hit to bump to that's unhedged.

that's really makeup So the changes. not -- the blocks what or of building the

good Day. to savings our that Investor are against really at balance our year. the initiatives Certainly, we progress the outlined for feel continue aggressive we cost we about We of where

the my in we'll got QX And the we go comments, already in mentioned we that million certainly the we've execute think through is I year. As as savings continue $XX against million of cost initiatives balance or to sustainable. about $XX

of the comes Our Herzog question next Bonnie Sachs. from Goldman with line

marketing. question a just on had I

for guess you brand. I levels. may spend advertising be this year, And and that marketing it's historical starving outlook concern your Your there's below some

this investments on guess good you're and why provide I a efficiencies color investment gained levels? touch the about you feel you've could on approaching to year more gain, this little So these and you how may continue and

Yes.

years. this we than to in bet, dollars going spending be You have prior year actually We're Bonnie. more

brands As to demand profile continue allows you our growth because and would it, our expect, us do it. to

With efficiency. said, slightly did And point purely the our therefore, we've percentage than you we that driven some important created is point years have by in prior done within an spend. is out efficiencies less

we national That fact engaging and the and ever critical than to create against continue. that franchises. important our brands doesn't we've more are We believe strongly our change platforms consumer advertising our spending to into digital will consumers and spent, that continue are critically media bring with to awareness process

seeing fact, against many you're spend our initiatives. new In of

Sunbrew. against that seeing You're

for We off against just that our Oro spend Frescas. the kicked seeing Aguas You're year.

our have We strongly years that brands, been supportive many are for will process we continue. against and very as many,

more. this Bill, I'll mind weigh a Yes. I publicly bit said times little me, we've you And in just mean multiple don't now. if

the invest like just growth do brewery in in in are we We our with to investments our of making will marketing we continue the business, both capacity.

for margin will our to hit profile. continue we We order brands will marketing in a not for starve to growth. Instead, invest

just mind #X why which the piling Modelo why reasons dollars spend by in we we're business. business the United since a the too? in little penetration is we're of our years tiny double-digit and the in in talking pile I One from gone Garth, brand exactly growth what the against on, improvement saw in States. we Modelo's Modelo That's the you about, XX if is has brand So quarter the on, to

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

November I want back election. to come to the

So the universal XX% he of potential a former President Trump has win. baseline mentioned should tariff

how out add the scenario for Constellation? Mexican your risk business, import how And place? think would color do it Given on you you potential would that that beer play would

last happen during just great might to early too And in helm the what extraordinarily I or Quite it's new administration. well of at be frankly, who of irrespective administration, on speculate in think performed not the administration. business that a our may perform would Trump I that would we expect November. may

of think flow. of our are inputs States inputs the heavy there's in business I in lot inputs important an from integral of package our -- United recognize from part to as business. what includes the a it's our Midwest upper Admittedly, overall

we're just that in to trading aggressively fine, anything and just might do be sure I Our navigate that. to partner is Mexico, able this think And that's continue. biggest country we'll work occur and likely we'll to

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

be kind share disappointment down. terrific reiterated to recommending Two the confidence, not management Great. got here a One, the and buybacks questions. of on Board get kind of your much to your since stock quarter, in we've stock has it frankly, really thoughts than you, team XXXX, to your which it. a been guidance, myself, higher and huge lot the was of your Love renew with

question that's So one. number

love you earlier And thoughts you sure overall, just to industry I get there June. question not the how answered it's did in how then question, your two, on that. think, number on been I'm an developing. And beer was

sequentially in comfortable industry in not you're maybe performance talking your about in June, whether If June, May. it overall than better the looked

Robert. Thanks,

Just and continue QX, terms allocation X buybacks. of I priorities. capital the to in opening I that same That in our buybacks, of progress over included as mean, alluded Bill in have years in his share make show terms the the all share think last remarks, to of we we

of then additional first shares and the in $XX-plus million As June, Bill back an through we noted, million. back the end bought bought quarter of $XXX worth

what we've So do would do. we we said continued to

continue left As several the $X.X our share and over years when we've have come that last use $X.X periods exercised of will about out we discipline to same dislocation. on billion, buy billion the the we of still see we And we have reauthorization. QX,

the overall And certainly, out been your beer relative there's about category, June. appears positive come to we've as question some it momentum that of

always to expect as we're We're which of the during the so given selling peak tomorrow summer seasons well. excited into lot to tend those and do of holidays to development win to season, would that of I see we all think the a major heading relates the summer.

and looks been note beneficial of hate often, is were sort of lot and but you around lot been A weather this key hasn't to the reality certainly it of we've at this, holidays part a some year, first calendar covered of this weekends certainly, category moments bad But overall. like the improvement. times which there's for too that, the there over

said we have couple that I outperformed But strong brand which got right for to to amongst that times is we of the long, consumers. what continue of And this have time. a category loyalty our expect back long brands to because today, a I our go already

Moskow comes Our the next question TD from line of with Robert Cowen.

what Are pretty I they in the guess about What how on the it pickup half. have I'll in substantial ramp. the pretty ask a is on because guidance take they're second kind implies making growth, commercial do guess, willing you sales wine. bigger of to visibility with commitments The year a going? about for does your turnaround steep I imply distributors

to we wine back our business get going what We XX expected that to our we pleased work especially were take position do. the after months that with to to into already We're been quarter, that's the X prior said, always done.

that out the points we're have operational we likely recognizing you be I get results work, because the ahead of once you to think to to half wait second the put schedule of loaded some of on they're expect, in them.

with Second, create year. wholesale opportunity significant engagement, we I our particularly going of to some seen this good believe we've half network. in the back think in And improvement our that's

Some quarter of of that this the half in we've said our saw put go now you reexpression back in are forward look a the of play have we terms those we certainly, as early place, in spend some dollars to in in reporting that that we expect of showing times. business out forward. on some the already And But signs. positive of be loaded to as we couple this marketing improvement

those lot business business other where had recognize, of both The performing spending a of our place we we're to against but time I we working And what deliver through fortunately, as I with needs business DTC are we same also what the progress are the be that on year. to the portion, and what to is and closely the key all international very we still wholesale think expect we're done planned. and about thing against partners our wholesale on our expectations. delivery ahead page think, energy

our turn closing of remarks. Bill would back reached have for like to to the question-and-answer session. now We I end floor the Newlands over

joining Daryl, buying call. a today's today again brings clearly and you, opportunity great We're Thank 'XX, a thank for and in start off you all certainly solid for to our fiscal stock.

leading growth Our while our through Beer operational and excellent performance by solid expansion business line top continues achieving underpinned volume margin to efficiency cost deliver savings initiatives.

While commercial and performance. our improved expected and operational initiatives to drive Wine is on execution progress Spirits it making to business continues dynamics, challenging market face

with CPG momentum level, Altogether enterprise year, strong at to remain continue our our And including sector double-digit our the outlook entire full in EPS for comparable the growth. of outperform delivery significantly we and confident we volume-driven our growth. an

during I critical holiday, that, certainly for good performance and you with the our period. have July wish you that hope all and this you joining outstanding that Xth all to we expect to Thank happy And holiday a summer. contribute a of call, have

Thank conclude your you. participation. teleconference. does appreciate This We today's

this of time. the disconnect Enjoy You at may rest your day.