Constellation Brands Inc - Ordinary Shares - Class A

Q1 trade performance: volatile start; June stabilizing - Management described a volatile quarter: strong March, then softer April/May attributed largely to spiking gas prices and broader traffic/consumer headwinds (not company-specific). - Early June indicators show modest reacceleration in category and company performance—not back to March levels, but “healthy return” to some growth. - World Cup benefit: events drove “beer occasions” with consumers coming together; management expects meaningful summer support, especially in on-premise. Mentions New York/NYC activity (Knicks energy) as supportive demand.

Guidance / outlook: maintained full-year beer net sales despite uncertainty - Full-year outlook guidance was maintained even with Q1 momentum because management sees “dynamic environment” and low visibility on macro variables. - Key macro driver referenced: gas-price shock in Q1 (gas up >50% U.S. average; examples: ~40% in California, ~70% Illinois, 50%+ in NY/FL/TX), plus still-elevated inflation pressures. - Implication: investors should expect management to prioritize caution and flexibility into Q2/Q3, with performance heavily influenced by macro normalization and consumer elasticity.

Profitability: gross margin strong, but operating margin pressured by mix, FX and incremental spending - Beer gross margins ~39%; drivers included: - ~+30 bps from fixed overabsorption (higher shipments vs prior year), - ~+20 bps from pricing net of mix, - ~-30 bps from currency headwinds (plus other small COGS items). - Operating margin declined ~10 bps YoY even with gross margin help: - SG&A headwinds: incremental employees tied to Veracruz going live later this year (temporarily in SG&A, not COGS), - Incremental marketing headwinds (World Cup support), - plus timing/“lapping” effects from prior year incentive comp benefits. - Q2/Q3 expectation: gross margins remain strong, but operating margin faces incremental headwinds because marketing spend ramps and SG&A increases; marketing is expected to be >10% of net sales in Q2 and Q3.