Constellation Brands, Inc.

Q3 beer operating margins beat expectations despite volume deleverage (but Q4 set up for pressure) - What drove Q3 strength (vs. expectations): tariffs/logistics/brewery maintenance were headwinds, but progress on cost savings, favorable pricing from spring/fall actions, plus a Q3 depreciation timing benefit (favorable YoY). - Why Q4 margins likely worsen: Q4 is the company’s lowest seasonal quarter (~20% of FY volume) → fixed overhead absorption is most amplified. - Key Q4 margin headwinds flagged: - Depreciation timing reverses into headwind as incremental assets come online. - Tariffs: impact grows in Q4 due to (1) higher aluminum pricing, (2) continued mix shift toward aluminum vs glass, and (3) tariff accounting/timing (accrual vs P&L recognition). - Some expense timing push from Q3 into Q4.

FY ‘27–‘28 beer margin target (39%–40%) acknowledged, but outlook depends on worse macro - Company did not update the prior FY ‘27 and ‘28 beer OP margin guidance range (39%–40%), but CFO emphasized those targets were set under more favorable macro conditions; macroeconomic deterioration since April will be incorporated into the next guidance update. - Timing of more detail: management reiterated they’ll provide more color on FY ‘27+ expectations in the April earnings call (normal cadence).

Depletions/shipments: “stable-to-consistent” demand and channel dynamics; December performed in line - December: came roughly where expected; stronger Christmas period performance was cited from Circana/IRI, attributed to brand strength and holiday purchasing. - Billings vs depletions: management stated that across H2, billings and depletions should be largely aligned (any minor variation in Q3 expected to reverse in Q4). - Independent channel depletions: independent coverage/channel tracking limitations were highlighted as one reason results can look better than some third-party expectations; on-premise share gains also support the overall picture.