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Constellation's beer biz grew depletions for the first time all fiscal yr in its FQ4 from Dec-Feb, and March was "better than planned with continued increasing momentum," outgoing ceo Bill Newlands detailed during his final STZ investor call this morn following yesterday's late afternoon earnings. But "volatility has been high and visibility has been low," he summarized, asked from the git-go to unpack co's seemingly conservative guidance. Net sales are expected to finish upcoming fiscal yr thru Feb 2027 in the -1% to +1% range for both its beer biz and organically across its total enterprise. (Editor's Note: not just the -1% figure we misprinted yesterday.) And beer oper margins are projected to land in 37-38% range, a step down from prior yrs. With pricing expected to be toward the lower end of co's typical 1-2% range, guidance implies flat beer volumes in even the best case scenario. But STZ leadership is being "realistic" about the "fluid" operating environment, said Bill. Several analysts suggested there could be upside beyond the initial outlook. Stock shot up nearly 8% today following a slight drop after hours yesterday.Depletions Still Down for Top 2 Brands in Latest Qtr, but Pacifico & Victoria "Fastest Growing" in Top 50 While Modelo Especial (-1%) and Corona Extra (-6%) both saw depletions drop in the latest qtr, Constellation was more than able to offset those with standout growth from Pacifico (+21%), Victoria (+17%) and Modelo Cheladas (+5%). That's even as Especial and Extra collectively make up ~3/4 of co's biz. Especial was still the #4 $$ share gainer in FQ4 Circana scans, in which co had 6 of the top 15 growth brands altogether. Pacifico and Victoria were the "two fastest growing brands inside the Top 50 brands within the entire beer category," co noted in earnings release, representing the #2 and #12 dollar share gainers. Co's off-prem depletions (~88% of STZ's total mix) grew 0.7% for the qtr whereas on-prem (12%) was flat.Hispanic Consumer Impact "Moderated," Most Notably on Modelo in CA While STZ is "optimistic" after a better end to the fiscal yr and a strong start to the new one, the "single biggest" challenge is "our limited visibility," said Bill. Co's internal research suggests consumers are "still cautious." But in separately issued ceo/cfo commentary, execs noted that "while trends at retailers located in zip codes with larger Hispanic populations continued to weigh on overall portfolio performance," that impact "moderated" in latest qtr. "Rate of decline in those areas improved" and gen mkt zip codes "continued to outperform on a relative basis," per release. On call Bill added that STZ assesses zipcodes by quintiles of Hispanic consumers (0-20%, 20-40%, etc.), and specifically for Modelo, "all of those quintiles showed sequential improvement" in co's latest reads. That was "probably most notable" in CA, he said, which is "part of the reason" Constellation got back to its "more traditional share gaining position" in broader Circana scans. It tacked on "over 1 share point in both dollars and volume over the last 4 weeks."Mktg Up to 9.5% of Sales; Planning to Invest "Very Aggressively" in Summer Mos STZ plans to increase its mktg investment in new fiscal yr, up to 9.5% of net sales vs ~9% previously. It will invest "very aggressively" behind its brands in its fiscal H1, Bill commented, calling it the "perfect time to begin to take advantage of some of this momentum that we're seeing." Part of that is World Cup, especially for Modelo. But Pacifico and Victoria are both "on a tear," and Pacifico in particular will be a "critically important part of our growth profile going forward," said Bill. Tho that's "not to diminish" the "potential that still exists on Modelo." Upped investment will also apply to "our high-end light beer strategy," as co's "seeing momentum" on repositioned Oro and Premier at superpremium price point. "We think that remains a tremendous opportunity for our business," Bill underscored. Asked specifically about declines on Corona Extra, he pointed to strength of the brand fam as "reflective" of the flagship. "While we don&#39;t see that necessarily as the growth driver of the business going forward," he added that co will continue to invest "aggressively" against Extra as well.Veracruz to Come Online Late Summer/Early Fall On the bright side of the balance sheet, co expects relief from aluminum tariffs this year now that new guidelines went into effect Apr 6, said cfo Garth Hankinson. But expansion-related costs at co's new Veracruz brewery will largely offset those benefits, expected to begin production in the middle of the new fiscal yr (late summer/early fall). That's primary reason for margin compression, Garth commented, along with fixed cost absorption headwinds and lapping lower comp expense in fiscal 26. Better-than-expected volume performance would "certainly benefit the margin profile," he added. Recall, co also scrapped its fiscal 2028 guidance. So new ceo Nicholas Fink will have something of a clean slate when he assumes the role Apr 13. "I'm honored to step into the ceo role next week at such an important time for our business," Nick said to kick off the call, adding that STZ is "well positioned" long term and he looks forward to helping to "shape the next phase of our growth journey."

High Volatility, Low Visibility Baked into STZ's Modest Guidance; "Momentum" in March; Stock Up 8%

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