Constellation Brands, Inc.

Constellation did not give consolidated revenue or EPS in the transcript, but management said beer shipments grew 1.8% and beer gross margin was 39% in the quarter. Garth Hankinson said gross margin benefited by about 30 basis points from fixed overabsorption, 20 basis points from pricing net of mix, and was partially offset by about 30 basis points of currency headwinds. Operating margin declined 10 basis points, with 20 basis points of gross margin expansion offset by 20 basis points of SG&A pressure and 10 basis points of higher marketing, mostly tied to World Cup. For the full year, management maintained beer net sales guidance and said Q2 and Q3 marketing will be stepped up, with marketing as a percent of net sales expected to be over 10% in those two quarters. They also said shipments and depletions should closely align on a full-year basis.

Nick Fink’s tone was confident but measured. He said he is increasingly confident in the long-term strength of the company’s brands and stressed that the next phase is about understanding consumer behavior better, remaining relevant at scale, and using data and test-and-learn tools to allocate resources more effectively. He repeatedly pointed to the company’s ability to create demand through disciplined execution, while acknowledging the quarter reflected a still-dynamic consumer backdrop.

Garth Hankinson focused on margin mechanics and the year’s spending cadence. He said beer gross margin benefited from about 30 basis points of fixed overabsorption, progress on cost savings, and 20 basis points of pricing net of mix, partially offset by currency headwinds; operating margin fell 10 basis points because of SG&A tied to Veracruz staffing and 10 basis points of marketing. Looking ahead, he said gross margins should remain strong but operating margins will face headwinds in Q2 and Q3 from higher marketing and SG&A, including increased investment around World Cup, college football, and the NFL.

Analysts pressed on strategy, the consumer slowdown, and whether recent improvement is durable. Management said the consumer slowdown tracked with a big gas-price spike, that June data looks like a modest reacceleration, and that the improvement appears broad-based rather than purely event-driven. On brand execution, Nick Fink said Modelo Especial still has room to grow because distribution and unaided awareness remain low, while Corona Extra needs more saliency and everyday activation now that awareness is already strong. He also said the company is adding talent and sharpening control over pack-price architecture and field execution.