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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||
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☒ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company |
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Emerging growth company |
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Page | ||||||||
DEFINED TERMS | ||||||||
PART I - FINANCIAL INFORMATION | ||||||||
Item 1. Financial Statements | ||||||||
Consolidated Balance Sheets | ||||||||
Consolidated Statements of Comprehensive Income (Loss) | ||||||||
Consolidated Statements of Changes in Stockholders’ Equity | ||||||||
Consolidated Statements of Cash Flows | ||||||||
Notes to Consolidated Financial Statements | ||||||||
1. Basis of Presentation
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2. Inventories
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3. Acquisitions and Divestitures
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4. Derivative Instruments
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5. Fair Value of Financial Instruments
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6. Goodwill
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7. Intangible Assets
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8. Equity Method Investments
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9. Other Accrued Expenses and Liabilities
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10. Borrowings
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11. Income Taxes
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12. Stockholders' Equity
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13. Net Income (Loss) Per Common Share Attributable to CBI
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14. Comprehensive Income (Loss) Attributable to CBI
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15. Business Segment Information
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | ||||||||
Item 4. Controls and Procedures | ||||||||
PART II – OTHER INFORMATION | ||||||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | ||||||||
Item 4. Mine Safety Disclosures | NA | |||||||
Item 6. Exhibits | ||||||||
INDEX TO EXHIBITS | ||||||||
SIGNATURES |
Term | Meaning | |||||||
$ | U.S. dollars | |||||||
2.25% July 2021 Senior Notes | $1,000.0 million principal amount of 2.25% senior notes issued in July 2021 | |||||||
2.65% November 2017 Senior Notes | $700.0 million principal amount of 2.65% senior notes issued in November 2017 and redeemed in August 2021, prior to maturity | |||||||
2.70% May 2017 Senior Notes | $500.0 million principal amount of 2.70% senior notes issued in May 2017 and redeemed in August 2021, prior to maturity | |||||||
2018 Authorization | authority to repurchase up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock, authorized in January 2018 by our Board of Directors | |||||||
2019 Five-Year Term Facility | a $491.3 million, five-year term loan facility under the June 2021 Term Credit Agreement, originally entered into in June 2019 | |||||||
2020 Credit Agreement | ninth amended and restated credit agreement, dated as of March 26, 2020, provides for an aggregate revolving credit facility of $2.0 billion | |||||||
2020 U.S. wildfires | significant wildfires that broke out in California, Oregon, and Washington states which affected the 2020 U.S. grape harvest | |||||||
2021 Annual Report | our Annual Report on Form 10-K for the fiscal year ended February 28, 2021, unless otherwise specified | |||||||
2021 Authorization | authority to repurchase up to $2.0 billion of our Class A Common Stock and Class B Convertible Common Stock, authorized in January 2021 by our Board of Directors | |||||||
ABA | alternative beverage alcohol | |||||||
Acreage | Acreage Holdings, Inc. | |||||||
Acreage Financial Instrument | a call option for Canopy to acquire 70% of the shares of Acreage, at a fixed exchange ratio and 30% at a floating exchange ratio | |||||||
Acreage Transaction | Canopy’s intention to acquire Acreage upon U.S. federal cannabis legalization, subject to certain conditions | |||||||
Administrative Agent | Bank of America, N.A., as administrative agent for the senior credit facility and term credit agreement | |||||||
AOCI | accumulated other comprehensive income (loss) | |||||||
ASR |
accelerated share repurchase agreement with a third-party financial institution
|
|||||||
Ballast Point Divestiture | sale of Ballast Point craft beer business, including a number of its associated production facilities and brewpubs | |||||||
C$ | Canadian dollars | |||||||
Canopy |
we made an investment in Canopy Growth Corporation, an Ontario, Canada-based public company
|
|||||||
Canopy Debt Securities | convertible debt securities issued by Canopy | |||||||
Canopy Equity Method Investment |
November 2017 Canopy Investment, November 2018 Canopy Investment, and May 2020 Canopy Investment, collectively
|
|||||||
Canopy Strategic Transaction(s) | any potential acquisition, divestiture, investment, or other similar transaction made by Canopy, including but not limited to the Acreage Transaction | |||||||
CARES Act | Coronavirus Aid, Relief, and Economic Security Act | |||||||
CBD | cannabidiol, an active ingredient in cannabis | |||||||
CB International
|
CB International Finance S.à r.l., a wholly-owned subsidiary of ours
|
|||||||
Coca-Cola | The Coca-Cola Company | |||||||
CODM | chief operating decision maker |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
i
|
Term | Meaning | |||||||
Comparable Adjustments | certain items affecting comparability that have been excluded by management | |||||||
Concentrate Business Divestiture
|
sale of certain brands used in our concentrates and high-color concentrate business, and certain related intellectual property, inventory, interests in certain contracts, and other assets
|
|||||||
Copper & Kings |
Copper & Kings American Brandy Company, acquired by us
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|||||||
CSR | corporate social responsibility | |||||||
DE&I | diversity, equity, and inclusion | |||||||
Depletions |
represent U.S. domestic distributor shipments of our respective branded products to retail customers, based on third-party data
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|||||||
DTC | direct-to-consumer | |||||||
Empathy Wines |
Empathy Wines business, including a digitally-native wine brand, acquired by us
|
|||||||
ERP | enterprise resource planning system | |||||||
Financial Statements |
our consolidated financial statements and notes thereto included herein
|
|||||||
Fiscal 2021 |
the Company’s fiscal year ended February 28, 2021
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|||||||
Fiscal 2022 |
the Company’s fiscal year ending February 28, 2022
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|||||||
Fiscal 2023 | the Company’s fiscal year ending February 28, 2023 | |||||||
Fiscal 2026 | the Company’s fiscal year ending February 28, 2026 | |||||||
GivingTuesday | a global generosity movement to encourage others to give back to their community, occurring each year on the Tuesday following Thanksgiving in the U.S. | |||||||
June 2021 Term Credit Agreement | March 2020 Term Credit Agreement, inclusive of amendment dated as of June 10, 2021 | |||||||
Lender | Bank of America, N.A., as lender for the term credit agreement | |||||||
LIBOR | London Interbank Offered Rate | |||||||
March 2020 Term Credit Agreement | amended and restated term loan credit agreement, dated as of March 26, 2020, that provided for aggregate facilities of $491.3 million, consisting of the 2019 Five-Year Term Facility | |||||||
May 2020 Canopy Investment | May 2020 exercise of the November 2017 Canopy Warrants at an exercise price of C$12.98 per warrant share | |||||||
MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 2. of this quarterly report on Form 10-Q | |||||||
Mexicali Brewery
|
suspended brewery construction project located in Mexicali, Baja California, Mexico
|
|||||||
Mexico Beer Projects | expansion, optimization, and construction activities at the Obregon Brewery, Nava Brewery, and Southeast Mexico Brewery | |||||||
My Favorite Neighbor | we made an initial investment in My Favorite Neighbor, LLC and subsequently acquired the remaining ownership interest | |||||||
NA | not applicable | |||||||
Nava Brewery | brewery located in Nava, Coahuila, Mexico | |||||||
Net sales | gross sales less promotions, returns and allowances, and excise taxes | |||||||
Nine Months 2021 |
the Company’s nine months ended November 30, 2020
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|||||||
Nine Months 2022 |
the Company’s nine months ended November 30, 2021
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NM | not meaningful | |||||||
Nobilo Wine Divestiture |
sale of New Zealand-based Nobilo Wine brand and certain related assets
|
|||||||
Note(s) | notes to the consolidated financial statements | |||||||
November 2017 Canopy Investment | our initial investment for 18.9 million common shares of Canopy | |||||||
November 2017 Canopy Warrants | warrants which gave us the option to purchase 18.9 million common shares of Canopy, exercised May 1, 2020 | |||||||
November 2018 Canopy Investment | our incremental investment for 104.5 million common shares of Canopy | |||||||
November 2018 Canopy Transaction |
November 2018 Canopy Investment and the purchase by us of the November 2018 Canopy Warrants, collectively
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
ii
|
Term | Meaning | |||||||
November 2018 Canopy Warrants | Tranche A Warrants, Tranche B Warrants, and Tranche C Warrants, collectively | |||||||
Obregon Brewery
|
brewery located in Obregon, Sonora, Mexico
|
|||||||
OCI | other comprehensive income (loss) | |||||||
Paul Masson Divestiture |
sale of Paul Masson Grande Amber Brandy brand, related inventory, and interests in certain contracts
|
|||||||
SEC | Securities and Exchange Commission | |||||||
Senior Floating Rate Notes | $650.0 million principal amount of senior floating rate notes issued in October 2018 and redeemed in November 2020, prior to maturity | |||||||
Southeast Mexico Brewery | a new brewery intended to be located in Southeast Mexico in the state of Veracruz | |||||||
Third Quarter 2021 |
the Company’s three months ended November 30, 2020
|
|||||||
Third Quarter 2022 |
the Company’s three months ended November 30, 2021
|
|||||||
Tranche A Warrants | warrants which give us the option to purchase 88.5 million common shares of Canopy expiring November 1, 2023 | |||||||
Tranche B Warrants | warrants which give us the option to purchase 38.4 million common shares of Canopy expiring November 1, 2026 | |||||||
Tranche C Warrants | warrants which give us the option to purchase 12.8 million common shares of Canopy expiring November 1, 2026 | |||||||
TSX
|
Toronto Stock Exchange
|
|||||||
U.S. | United States of America | |||||||
U.S. GAAP | generally accepted accounting principles in the U.S. | |||||||
VWAP Exercise Price
|
volume-weighted average of the closing market price of Canopy’s common shares on the TSX for the five trading days immediately preceding the exercise date
|
|||||||
Wine and Spirits Divestiture
|
sale of a portion of our wine and spirits business, including lower-margin, lower-growth wine and spirits brands, related inventory, interests in certain contracts, wineries, vineyards, offices, and facilities
|
|||||||
Wine and Spirits Divestitures
|
Wine and Spirits Divestiture and the Nobilo Wine Divestiture, collectively
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
iii
|
FINANCIAL STATEMENTS |
November 30,
2021 |
February 28,
2021 |
||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ |
|
$ |
|
|||||||
Accounts receivable |
|
|
|||||||||
Inventories |
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|||||||||
Prepaid expenses and other |
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|||||||||
Total current assets |
|
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|||||||||
Property, plant, and equipment |
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|||||||||
Goodwill |
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|||||||||
Intangible assets |
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|||||||||
Equity method investments |
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|||||||||
Securities measured at fair value |
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|
|||||||||
Deferred income taxes |
|
|
|||||||||
Other assets |
|
|
|||||||||
Total assets | $ |
|
$ |
|
|||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Short-term borrowings | $ |
|
$ |
|
|||||||
Current maturities of long-term debt |
|
|
|||||||||
Accounts payable |
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|||||||||
Other accrued expenses and liabilities |
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|||||||||
Total current liabilities |
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|||||||||
Long-term debt, less current maturities |
|
|
|||||||||
Deferred income taxes and other liabilities |
|
|
|||||||||
Total liabilities |
|
|
|||||||||
Commitments and contingencies |
|
|
|||||||||
CBI stockholders’ equity: | |||||||||||
Class A Common Stock, $
|
|
|
|||||||||
Class B Convertible Common Stock, $
|
|
|
|||||||||
Additional paid-in capital |
|
|
|||||||||
Retained earnings |
|
|
|||||||||
Accumulated other comprehensive income (loss) |
(
|
(
|
|||||||||
|
|
||||||||||
Less: Treasury stock – | |||||||||||
Class A Common Stock, at cost,
|
(
|
(
|
|||||||||
Class B Convertible Common Stock, at cost,
|
(
|
(
|
|||||||||
(
|
(
|
||||||||||
Total CBI stockholders’ equity |
|
|
|||||||||
Noncontrolling interests |
|
|
|||||||||
Total stockholders’ equity |
|
|
|||||||||
Total liabilities and stockholders’ equity | $ |
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
1
|
FINANCIAL STATEMENTS |
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Excise taxes |
(
|
(
|
(
|
(
|
|||||||||||||||||||
Net sales |
|
|
|
|
|||||||||||||||||||
Cost of product sold |
(
|
(
|
(
|
(
|
|||||||||||||||||||
Gross profit |
|
|
|
|
|||||||||||||||||||
Selling, general, and administrative expenses |
(
|
(
|
(
|
(
|
|||||||||||||||||||
Impairment of brewery construction in progress |
(
|
|
|
|
|||||||||||||||||||
Impairment of assets held for sale |
|
(
|
|
(
|
|||||||||||||||||||
Operating income (loss) |
|
|
|
|
|||||||||||||||||||
Income (loss) from unconsolidated investments |
(
|
|
(
|
|
|||||||||||||||||||
Interest expense |
(
|
(
|
(
|
(
|
|||||||||||||||||||
Loss on extinguishment of debt |
(
|
(
|
|
(
|
|||||||||||||||||||
Income (loss) before income taxes |
(
|
|
|
|
|||||||||||||||||||
(Provision for) benefit from income taxes |
(
|
(
|
(
|
(
|
|||||||||||||||||||
Net income (loss) |
(
|
|
|
|
|||||||||||||||||||
Net (income) loss attributable to noncontrolling interests |
(
|
(
|
(
|
(
|
|||||||||||||||||||
Net income (loss) attributable to CBI | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Comprehensive income (loss) | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests |
(
|
(
|
|
(
|
|||||||||||||||||||
Comprehensive income (loss) attributable to CBI | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Net income (loss) per common share attributable to CBI: | |||||||||||||||||||||||
Basic – Class A Common Stock | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Basic – Class B Convertible Common Stock | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Diluted – Class A Common Stock | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Diluted – Class B Convertible Common Stock | $ |
(
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic – Class A Common Stock |
|
|
|
|
|||||||||||||||||||
Basic – Class B Convertible Common Stock |
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|||||||||||||||||||
Diluted – Class A Common Stock |
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|||||||||||||||||||
Diluted – Class B Convertible Common Stock |
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|||||||||||||||||||
Cash dividends declared per common share: | |||||||||||||||||||||||
Class A Common Stock | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Class B Convertible Common Stock | $ |
|
$ |
|
$ |
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
2
|
FINANCIAL STATEMENTS |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Common Stock |
Additional
Paid-in Capital |
Retained
Earnings |
Accumulated
Other Comprehensive Income (Loss) |
Treasury
Stock |
Non-controlling
Interests |
Total | |||||||||||||||||||||||||||||||||||||||||
Class A | Class B | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at February 28, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — |
(
|
— | — |
|
(
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|||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — |
|
— |
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|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
(
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||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | — | — |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — |
(
|
— | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — |
(
|
— | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — |
|
— | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2021 |
|
|
|
|
(
|
(
|
|
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — |
|
— | — |
|
|
|||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — |
(
|
— |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
(
|
||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | — | — |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — |
(
|
— | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — |
|
— | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — |
|
— | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||
Balance at August 31, 2021 |
|
|
|
|
(
|
(
|
|
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — |
|
— | — |
|
|
|||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — |
(
|
— |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
|
||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | — | — |
(
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — |
(
|
— | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — |
|
— | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — |
(
|
— | — | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
Balance at November 30, 2021 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
3
|
FINANCIAL STATEMENTS |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
|
|||||||||||||||||||||||||||||||||||||||||||||||
Common Stock |
Additional
Paid-in Capital |
Retained
Earnings |
Accumulated
Other Comprehensive Income (Loss) |
Treasury
Stock |
Non-controlling
Interests |
Total | |||||||||||||||||||||||||||||||||||||||||
Class A | Class B | ||||||||||||||||||||||||||||||||||||||||||||||
Balance at February 29, 2020 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — |
(
|
— | — |
|
(
|
|||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — |
(
|
— |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
(
|
||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — |
(
|
— | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — |
(
|
— | — |
|
— |
(
|
|||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — |
|
— | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2020 |
|
|
|
|
(
|
(
|
|
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — |
|
— | — |
|
|
|||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — |
|
— |
|
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
|
||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — |
(
|
— | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — |
|
— | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — |
|
— | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||
Balance at August 31, 2020 |
|
|
|
|
(
|
(
|
|
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — |
|
— | — |
|
|
|||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — |
|
— |
|
|
|||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
|
||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — |
(
|
— | — | — |
(
|
|||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — |
(
|
(
|
|||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — |
|
— | — |
|
— |
|
|||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — |
|
— | — | — | — |
|
|||||||||||||||||||||||||||||||||||||||
Balance at November 30, 2020 | $ |
|
$ |
|
$ |
|
$ |
|
$ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
4
|
FINANCIAL STATEMENTS |
For the Nine Months
Ended November 30, |
|||||||||||
2021 | 2020 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ |
(
|
$ |
|
|||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
Unrealized net (gain) loss on securities measured at fair value |
|
(
|
|||||||||
Deferred tax provision (benefit) |
|
|
|||||||||
Depreciation |
|
|
|||||||||
Stock-based compensation |
|
|
|||||||||
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings |
|
|
|||||||||
Noncash lease expense |
|
|
|||||||||
Amortization of debt issuance costs and loss on extinguishment of debt |
|
|
|||||||||
Impairment of brewery construction in progress |
|
|
|||||||||
Impairment of assets held for sale |
|
|
|||||||||
Loss on inventory and related contracts associated with business optimization |
|
|
|||||||||
Loss on settlement of treasury lock contracts |
|
(
|
|||||||||
Change in operating assets and liabilities, net of effects from purchase and sale of business: | |||||||||||
Accounts receivable |
(
|
(
|
|||||||||
Inventories |
(
|
|
|||||||||
Prepaid expenses and other current assets |
(
|
|
|||||||||
Accounts payable |
|
|
|||||||||
Deferred revenue |
|
|
|||||||||
Other accrued expenses and liabilities |
|
(
|
|||||||||
Other |
|
(
|
|||||||||
Total adjustments |
|
|
|||||||||
Net cash provided by (used in) operating activities |
|
|
|||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchase of property, plant, and equipment |
(
|
(
|
|||||||||
Purchase of business, net of cash acquired |
(
|
(
|
|||||||||
Investments in equity method investees and securities |
(
|
(
|
|||||||||
Proceeds from sale of assets |
|
|
|||||||||
Proceeds from sale of business |
|
|
|||||||||
Other investing activities |
(
|
|
|||||||||
Net cash provided by (used in) investing activities |
(
|
(
|
|||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
5
|
FINANCIAL STATEMENTS |
For the Nine Months
Ended November 30, |
|||||||||||
2021 | 2020 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Proceeds from issuance of long-term debt |
|
|
|||||||||
Principal payments of long-term debt |
(
|
(
|
|||||||||
Net proceeds from (repayments of) short-term borrowings |
|
(
|
|||||||||
Dividends paid |
(
|
(
|
|||||||||
Purchases of treasury stock |
(
|
|
|||||||||
Proceeds from shares issued under equity compensation plans |
|
|
|||||||||
Payments of minimum tax withholdings on stock-based payment awards |
(
|
(
|
|||||||||
Payments of debt issuance, debt extinguishment, and other financing costs |
(
|
(
|
|||||||||
Distributions to noncontrolling interests |
(
|
(
|
|||||||||
Net cash provided by (used in) financing activities |
(
|
(
|
|||||||||
Effect of exchange rate changes on cash and cash equivalents |
(
|
|
|||||||||
Net increase (decrease) in cash and cash equivalents |
(
|
|
|||||||||
Cash and cash equivalents, beginning of period |
|
|
|||||||||
Cash and cash equivalents, end of period | $ |
|
$ |
|
|||||||
Supplemental disclosures of noncash investing and financing activities | |||||||||||
Additions to property, plant, and equipment | $ |
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
6
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
November 30,
2021 |
February 28,
2021 |
||||||||||
(in millions) | |||||||||||
Raw materials and supplies | $ |
|
$ |
|
|||||||
In-process inventories |
|
|
|||||||||
Finished case goods |
|
|
|||||||||
$ |
|
$ |
|
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||
2021
(1)
|
2020
(2)
|
2021 |
2020
(2)
|
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Loss on inventory write-down | $ |
|
$ |
|
$ |
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
7
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(in millions) | |||||
Cash received from buyer | $ |
|
|||
Net assets sold |
(
|
||||
Contract termination |
(
|
||||
Direct costs to sell |
(
|
||||
Gain on sale of business | $ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
8
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(in millions) | |||||
Cash received from buyer | $ |
|
|||
Net assets sold |
(
|
||||
Transition services agreements |
(
|
||||
Direct costs to sell |
(
|
||||
AOCI reclassification adjustments, primarily foreign currency translation |
(
|
||||
Other |
(
|
||||
Loss on sale of business | $ |
(
|
November 30,
2021 |
February 28,
2021 |
||||||||||
(in millions) | |||||||||||
Derivative instruments designated as hedging instruments | |||||||||||
Foreign currency contracts | $ |
|
$ |
|
|||||||
Derivative instruments not designated as hedging instruments | |||||||||||
Foreign currency contracts | $ |
|
$ |
|
|||||||
Commodity derivative contracts | $ |
|
$ |
|
|||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
9
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Assets | Liabilities | |||||||||||||||||||||||||
November 30,
2021 |
February 28,
2021 |
November 30,
2021 |
February 28,
2021 |
|||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
Derivative instruments designated as hedging instruments | ||||||||||||||||||||||||||
Foreign currency contracts: | ||||||||||||||||||||||||||
Prepaid expenses and other | $ |
|
$ |
|
Other accrued expenses and liabilities | $ |
|
$ |
|
|||||||||||||||||
Other assets | $ |
|
$ |
|
Deferred income taxes and other liabilities | $ |
|
$ |
|
|||||||||||||||||
Derivative instruments not designated as hedging instruments | ||||||||||||||||||||||||||
Foreign currency contracts: | ||||||||||||||||||||||||||
Prepaid expenses and other | $ |
|
$ |
|
Other accrued expenses and liabilities | $ |
|
$ |
|
|||||||||||||||||
Commodity derivative contracts: | ||||||||||||||||||||||||||
Prepaid expenses and other | $ |
|
$ |
|
Other accrued expenses and liabilities | $ |
|
$ |
|
|||||||||||||||||
Other assets | $ |
|
$ |
|
Deferred income taxes and other liabilities | $ |
|
$ |
|
|||||||||||||||||
Derivative Instruments in
Designated Cash Flow Hedging Relationships |
Net
Gain (Loss) Recognized in OCI |
Location of Net Gain (Loss)
Reclassified from AOCI to Income (Loss) |
Net
Gain (Loss) Reclassified from AOCI to Income (Loss) |
|||||||||||||||||
(in millions) | ||||||||||||||||||||
For the Nine Months Ended November 30, 2021 | ||||||||||||||||||||
Foreign currency contracts | $ |
(
|
Sales | $ |
(
|
|||||||||||||||
Cost of product sold |
|
|||||||||||||||||||
Treasury lock contracts |
|
Interest expense |
(
|
|||||||||||||||||
$ |
(
|
$ |
|
|||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
10
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Derivative Instruments in
Designated Cash Flow Hedging Relationships |
Net
Gain (Loss) Recognized in OCI |
Location of Net Gain (Loss)
Reclassified from AOCI to Income (Loss) |
Net
Gain (Loss) Reclassified from AOCI to Income (Loss) |
|||||||||||||||||
(in millions) | ||||||||||||||||||||
For the Nine Months Ended November 30, 2020 | ||||||||||||||||||||
Foreign currency contracts | $ |
(
|
Sales | $ |
|
|||||||||||||||
Cost of product sold |
(
|
|||||||||||||||||||
Interest rate swap contracts |
(
|
Interest expense |
(
|
|||||||||||||||||
Treasury lock contracts |
(
|
Interest expense |
(
|
|||||||||||||||||
$ |
(
|
$ |
(
|
|||||||||||||||||
For the Three Months Ended November 30, 2021 | ||||||||||||||||||||
Foreign currency contracts | $ |
(
|
Sales | $ |
(
|
|||||||||||||||
Cost of product sold |
|
|||||||||||||||||||
Treasury lock contracts |
|
Interest expense |
(
|
|||||||||||||||||
$ |
(
|
$ |
|
|||||||||||||||||
For the Three Months Ended November 30, 2020 | ||||||||||||||||||||
Foreign currency contracts | $ |
|
Sales | $ |
|
|||||||||||||||
Cost of product sold |
(
|
|||||||||||||||||||
Treasury lock contracts |
|
Interest expense |
(
|
|||||||||||||||||
$ |
|
$ |
(
|
Derivative Instruments Not
Designated as Hedging Instruments |
Location of Net Gain (Loss)
Recognized in Income (Loss) |
Net
Gain (Loss) Recognized in Income (Loss) |
||||||||||||||||||
(in millions) | ||||||||||||||||||||
For the Nine Months Ended November 30, 2021 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ |
|
|||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses |
(
|
||||||||||||||||||
$ |
|
|||||||||||||||||||
For the Nine Months Ended November 30, 2020 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ |
(
|
|||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses |
(
|
||||||||||||||||||
$ |
(
|
|||||||||||||||||||
For the Three Months Ended November 30, 2021 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ |
|
|||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses |
(
|
||||||||||||||||||
$ |
(
|
|||||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
11
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Derivative Instruments Not
Designated as Hedging Instruments |
Location of Net Gain (Loss)
Recognized in Income (Loss) |
Net
Gain (Loss) Recognized in Income (Loss) |
||||||||||||||||||
(in millions) | ||||||||||||||||||||
For the Three Months Ended November 30, 2020 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ |
|
|||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses |
|
||||||||||||||||||
$ |
|
November 30, 2021 | February 28, 2021 | ||||||||||||||||||||||
Tranche A
Warrants
(3)
|
Tranche B
Warrants
(4)
|
Tranche A
Warrants
(3)
|
Tranche B
Warrants
(4)
|
||||||||||||||||||||
Exercise price
(5)
|
C$ |
|
C$ |
|
C$ |
|
C$ |
|
|||||||||||||||
Valuation date stock price
(6)
|
C$ |
|
C$ |
|
C$ |
|
C$ |
|
|||||||||||||||
Remaining contractual term
(7)
|
|
|
|
|
|||||||||||||||||||
Expected volatility
(8)
|
|
% |
|
% |
|
% |
|
% | |||||||||||||||
Risk-free interest rate
(9)
|
|
% |
|
% |
|
% |
|
% | |||||||||||||||
Expected dividend yield
(10)
|
|
% |
|
% |
|
% |
|
% |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
12
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
November 30,
2021 |
February 28,
2021 |
||||||||||
Conversion price
(1)
|
C$ |
|
C$ |
|
|||||||
Valuation date stock price
(2)
|
C$ |
|
C$ |
|
|||||||
Remaining term
(3)
|
|
|
|||||||||
Expected volatility
(4)
|
|
% |
|
% | |||||||
Risk-free interest rate
(5)
|
|
% |
|
% | |||||||
Expected dividend yield
(6)
|
|
% |
|
% |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
13
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Fair Value Measurements Using | |||||||||||||||||||||||
Quoted
Prices in Active Markets (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
Total | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
November 30, 2021 | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Foreign currency contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Commodity derivative contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Equity securities
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Canopy Debt Securities
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Commodity derivative contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
February 28, 2021 | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Foreign currency contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Commodity derivative contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Equity securities
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Canopy Debt Securities
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Commodity derivative contracts | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
14
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(1)
|
Unrealized net gain (loss) from the changes in fair value of our securities measured at fair value recognized in income (loss) from unconsolidated investments, are as follows: | ||||||||||||||||||||||||||||
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
November 2017 Canopy Warrants
(i)
|
$ |
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||||||||
November 2018 Canopy Warrants |
(
|
|
(
|
|
|||||||||||||||||||||||||
Canopy Debt Securities |
(
|
|
(
|
|
|||||||||||||||||||||||||
$ |
(
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||||||
(i)
|
In May 2020, we exercised the November 2017 Canopy Warrants at an exercise price of C$
|
Fair Value Measurements Using | |||||||||||||||||||||||||||||
Quoted
Prices in Active Markets (Level 1) |
Significant
Other Observable Inputs (Level 2) |
Significant
Unobservable Inputs (Level 3) |
Total Losses | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
For the Nine Months Ended November 30, 2021 | |||||||||||||||||||||||||||||
Long-lived assets | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||
For the Nine Months Ended November 30, 2020 | |||||||||||||||||||||||||||||
Long-lived assets held for sale | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
15
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Beer | Wine and Spirits | Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Balance, February 29, 2020 | $ |
|
$ |
|
$ |
|
|||||||||||||||||||||||
Purchase accounting allocations
(1)
|
|
|
|
||||||||||||||||||||||||||
Foreign currency translation adjustments |
(
|
|
(
|
||||||||||||||||||||||||||
Reclassified from assets held for sale
(2)
|
|
|
|
||||||||||||||||||||||||||
Balance, February 28, 2021 |
|
|
|
||||||||||||||||||||||||||
Purchase accounting allocations
(1)(3)
|
|
|
|
||||||||||||||||||||||||||
Foreign currency translation adjustments |
(
|
(
|
(
|
||||||||||||||||||||||||||
Balance, November 30, 2021 | $ |
|
$ |
|
$ |
|
November 30, 2021 | February 28, 2021 | ||||||||||||||||||||||
Gross
Carrying Amount |
Net
Carrying Amount |
Gross
Carrying Amount |
Net
Carrying Amount |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Amortizable intangible assets | |||||||||||||||||||||||
Customer relationships | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Other |
|
|
|
|
|||||||||||||||||||
Total | $ |
|
|
$ |
|
|
|||||||||||||||||
Nonamortizable intangible assets | |||||||||||||||||||||||
Trademarks |
|
|
|||||||||||||||||||||
Total intangible assets | $ |
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
16
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
November 30, 2021 | February 28, 2021 | ||||||||||||||||||||||
Carrying Value | Ownership Percentage | Carrying Value | Ownership Percentage | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Canopy Equity Method Investment
(1) (2)
|
$ |
|
|
% | $ |
|
|
% | |||||||||||||||
Other equity method investments |
|
|
|
|
|||||||||||||||||||
$ |
|
$ |
|
Common Shares | Purchase Price | ||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
November 2017 Canopy Investment
|
|
$ |
|
||||||||||||||||||||
November 2018 Canopy Investment |
|
|
|||||||||||||||||||||
May 2020 Canopy Investment
|
|
|
|||||||||||||||||||||
|
$ |
|
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Equity in earnings (losses) from Canopy and related activities | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
17
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Gross profit (loss) | $ |
(
|
$ |
(
|
$ |
(
|
$ |
|
|||||||||||||||
Net income (loss) | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Net income (loss) attributable to Canopy | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
November 30,
2021 |
February 28,
2021 |
||||||||||
(in millions) | |||||||||||
Salaries, commissions, and payroll benefits and withholdings | $ |
|
$ |
|
|||||||
Promotions and advertising |
|
|
|||||||||
Income taxes payable |
|
|
|||||||||
Accrued interest |
|
|
|||||||||
Operating lease liability |
|
|
|||||||||
Accrued excise taxes |
|
|
|||||||||
Deferred revenue |
|
|
|||||||||
Derivative liabilities |
|
|
|||||||||
Other |
|
|
|||||||||
$ |
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
18
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
November 30, 2021 |
February 28,
2021 |
||||||||||||||||||||||
Current | Long-term | Total | Total | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Short-term borrowings | |||||||||||||||||||||||
Commercial paper | $ |
|
$ |
|
|||||||||||||||||||
$ |
|
$ |
|
||||||||||||||||||||
Long-term debt | |||||||||||||||||||||||
Term loan credit facilities | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Senior notes |
|
|
|
|
|||||||||||||||||||
Other |
|
|
|
|
|||||||||||||||||||
$ |
|
$ |
|
$ |
|
$ |
|
Amount | Maturity | ||||||||||
(in millions) | |||||||||||
2020 Credit Agreement | |||||||||||
Revolving credit facility
(1) (2)
|
$ |
|
Sept 14, 2023 | ||||||||
June 2021 Term Credit Agreement | |||||||||||
2019 Five-Year Term Facility
(1) (3)
|
$ |
|
Jun 28, 2024 |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
19
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Outstanding
borrowings |
Interest
rate |
LIBOR
margin |
Outstanding
letters of credit |
Remaining
borrowing
capacity
(1)
|
|||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2020 Credit Agreement | |||||||||||||||||||||||||||||
Revolving credit facility | $ |
|
|
% |
|
% | $ |
|
$ |
|
|||||||||||||||||||
June 2021 Term Credit Agreement | |||||||||||||||||||||||||||||
2019 Five-Year Term Facility
(2) (3)
|
$ |
|
|
% |
|
% |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
20
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(in millions) | |||||
2022 | $ |
|
|||
2023 |
|
||||
2024 |
|
||||
2025 |
|
||||
2026 |
|
||||
2027 |
|
||||
Thereafter |
|
||||
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
21
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Common Stock | Treasury Stock | ||||||||||||||||||||||||||||
Class A | Class B | Class 1 | Class A | Class B | |||||||||||||||||||||||||
Balance at February 28, 2021 |
|
|
|
|
|
||||||||||||||||||||||||
Share repurchases | — | — | — |
|
— | ||||||||||||||||||||||||
Conversion of shares |
|
(
|
(
|
— | — | ||||||||||||||||||||||||
Exercise of stock options | — | — |
|
(
|
— | ||||||||||||||||||||||||
Vesting of restricted stock units
(1)
|
— | — | — |
(
|
— | ||||||||||||||||||||||||
Vesting of performance share units
(1)
|
— | — | — |
(
|
— | ||||||||||||||||||||||||
Balance at May 31, 2021 |
|
|
|
|
|
||||||||||||||||||||||||
Share repurchases | — | — | — |
|
— | ||||||||||||||||||||||||
Exercise of stock options | — | — |
|
(
|
— | ||||||||||||||||||||||||
Employee stock purchases | — | — | — |
(
|
— | ||||||||||||||||||||||||
Vesting of restricted stock units
(1)
|
— | — | — |
(
|
— | ||||||||||||||||||||||||
Balance at August 31, 2021 |
|
|
|
|
|
||||||||||||||||||||||||
Share repurchases | — | — | — |
|
— | ||||||||||||||||||||||||
Exercise of stock options | — | — |
|
(
|
— | ||||||||||||||||||||||||
Balance at November 30, 2021 |
|
|
|
|
|
||||||||||||||||||||||||
Balance at February 29, 2020 |
|
|
|
|
|
||||||||||||||||||||||||
Conversion of shares |
|
(
|
|
— | — | ||||||||||||||||||||||||
Exercise of stock options | — | — |
|
(
|
— | ||||||||||||||||||||||||
Vesting of restricted stock units
(1)
|
— | — | — |
(
|
— | ||||||||||||||||||||||||
Vesting of performance share units
(1)
|
— | — | — |
(
|
— | ||||||||||||||||||||||||
Balance at May 31, 2020 |
|
|
|
|
|
||||||||||||||||||||||||
Conversion of shares |
|
(
|
(
|
— | — | ||||||||||||||||||||||||
Exercise of stock options | — | — |
|
(
|
— | ||||||||||||||||||||||||
Employee stock purchases | — | — | — |
(
|
— | ||||||||||||||||||||||||
Vesting of restricted stock units
(1)
|
— | — | — |
(
|
— | ||||||||||||||||||||||||
Balance at August 31, 2020 |
|
|
|
|
|
||||||||||||||||||||||||
Conversion of shares |
|
(
|
(
|
— | — | ||||||||||||||||||||||||
Exercise of stock options | — | — |
|
(
|
— | ||||||||||||||||||||||||
Vesting of restricted stock units
(1)
|
— | — | — |
(
|
— | ||||||||||||||||||||||||
Balance at November 30, 2020 |
|
|
|
|
|
For the Three
Months Ended May 31, |
For the Three
Months Ended August 31, |
For the Three
Months Ended November 30, |
For the Nine
Months Ended November 30, |
||||||||||||||||||||||||||
2021 | |||||||||||||||||||||||||||||
Restricted Stock Units |
|
|
|
|
|||||||||||||||||||||||||
Performance Share Units |
|
|
|
|
|||||||||||||||||||||||||
2020 | |||||||||||||||||||||||||||||
Restricted Stock Units |
|
|
|
|
|||||||||||||||||||||||||
Performance Share Units |
|
|
|
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
22
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Class A Common Shares | |||||||||||||||||
Repurchase
Authorization |
Dollar Value
of Shares Repurchased |
Number of
Shares Repurchased |
|||||||||||||||
(in millions, except share data) | |||||||||||||||||
2018 Authorization | $ |
|
$ |
|
|
||||||||||||
2021 Authorization | $ |
|
$ |
|
|
For the Nine Months Ended | |||||||||||||||||||||||
November 30, 2021 | November 30, 2020 | ||||||||||||||||||||||
Common Stock | Common Stock | ||||||||||||||||||||||
Class A | Class B | Class A | Class B | ||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||
Net income (loss) attributable to CBI allocated – basic | $ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
Conversion of Class B common shares into Class A common shares |
|
|
|
|
|||||||||||||||||||
Effect of stock-based awards on allocated net income (loss) |
|
|
|
(
|
|||||||||||||||||||
Net income (loss) attributable to CBI allocated – diluted | $ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
Weighted average common shares outstanding – basic |
|
|
|
|
|||||||||||||||||||
Conversion of Class B common shares into Class A common shares
(1)
|
|
|
|
|
|||||||||||||||||||
Stock-based awards, primarily stock options
(1)
|
|
|
|
|
|||||||||||||||||||
Weighted average common shares outstanding – diluted |
|
|
|
|
|||||||||||||||||||
Net income (loss) per common share attributable to CBI –
basic |
$ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
Net income (loss) per common share attributable to CBI – diluted | $ |
(
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
For the Three Months Ended | |||||||||||||||||||||||
November 30, 2021 | November 30, 2020 | ||||||||||||||||||||||
Common Stock | Common Stock | ||||||||||||||||||||||
Class A | Class B | Class A | Class B | ||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||
Net income (loss) attributable to CBI allocated – basic | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Conversion of Class B common shares into Class A common shares |
|
|
|
|
|||||||||||||||||||
Effect of stock-based awards on allocated net income (loss) |
|
(
|
|
(
|
|||||||||||||||||||
Net income (loss) attributable to CBI allocated – diluted | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Weighted average common shares outstanding – basic |
|
|
|
|
|||||||||||||||||||
Conversion of Class B common shares into Class A common shares |
|
|
|
|
|||||||||||||||||||
Stock-based awards, primarily stock options |
|
|
|
|
|||||||||||||||||||
Weighted average common shares outstanding – diluted |
|
|
|
|
|||||||||||||||||||
Net income (loss) per common share attributable to CBI – basic | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Net income (loss) per common share attributable to CBI – diluted | $ |
|
$ |
|
$ |
|
$ |
|
(1)
|
For the nine months ended November 30, 2021, we have excluded the following weighted average common shares outstanding from the calculation of diluted net income (loss) per common share, as the effect of including these would have been anti-dilutive, in millions:
|
||||||||||||||||||||||||||||
Class B Convertible Common Stock |
|
||||||||||||||||||||||||||||
Stock-based awards, primarily stock options |
|
||||||||||||||||||||||||||||
Before Tax
Amount |
Tax (Expense)
Benefit |
Net of Tax
Amount |
|||||||||||||||
(in millions) | |||||||||||||||||
For the Nine Months Ended November 30, 2021 | |||||||||||||||||
Net income (loss) attributable to CBI | $ |
(
|
|||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ |
(
|
$ |
|
(
|
||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
Net derivative gain (loss) |
(
|
|
(
|
||||||||||||||
Reclassification adjustments |
(
|
|
(
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
23
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Before Tax
Amount |
Tax (Expense)
Benefit |
Net of Tax
Amount |
|||||||||||||||
(in millions) | |||||||||||||||||
Pension/postretirement adjustments: | |||||||||||||||||
Net actuarial gain (loss) |
|
(
|
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
|
(
|
|
||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) |
(
|
|
(
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ |
(
|
$ |
|
(
|
||||||||||||
Comprehensive income (loss) attributable to CBI | $ |
(
|
|||||||||||||||
For the Nine Months Ended November 30, 2020 | |||||||||||||||||
Net income (loss) attributable to CBI | $ |
|
|||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ |
(
|
$ |
|
(
|
||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
Net derivative gain (loss) |
(
|
|
(
|
||||||||||||||
Reclassification adjustments |
|
(
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Pension/postretirement adjustments: | |||||||||||||||||
Net actuarial gain (loss) |
(
|
|
(
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) |
|
(
|
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
|
(
|
|
||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ |
(
|
$ |
(
|
(
|
||||||||||||
Comprehensive income (loss) attributable to CBI | $ |
|
|||||||||||||||
For the Three Months Ended November 30, 2021 | |||||||||||||||||
Net income (loss) attributable to CBI | $ |
|
|||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ |
(
|
$ |
|
(
|
||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
24
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Before Tax
Amount |
Tax (Expense)
Benefit |
Net of Tax
Amount |
|||||||||||||||
(in millions) | |||||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
Net derivative gain (loss) |
(
|
|
(
|
||||||||||||||
Reclassification adjustments |
(
|
|
(
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Pension/postretirement adjustments: | |||||||||||||||||
Net actuarial gain (loss) |
|
(
|
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
|
(
|
|
||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) |
|
(
|
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
|
(
|
|
||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ |
(
|
$ |
|
(
|
||||||||||||
Comprehensive income (loss) attributable to CBI | $ |
|
|||||||||||||||
For the Three Months Ended November 30, 2020 | |||||||||||||||||
Net income (loss) attributable to CBI | $ |
|
|||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ |
|
$ |
|
|
||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
|
|
|
||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
Net derivative gain (loss) |
|
|
|
||||||||||||||
Reclassification adjustments |
|
(
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
|
(
|
|
||||||||||||||
Pension/postretirement adjustments: | |||||||||||||||||
Net actuarial gain (loss) |
(
|
|
(
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
|
(
|
||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) |
(
|
(
|
(
|
||||||||||||||
Reclassification adjustments |
|
|
|
||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) |
(
|
(
|
(
|
||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ |
|
$ |
(
|
|
||||||||||||
Comprehensive income (loss) attributable to CBI | $ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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25
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Foreign
Currency Translation Adjustments |
Unrealized
Net Gain (Loss) on Derivative Instruments |
Pension/
Postretirement Adjustments |
Share of OCI of
Equity Method Investments |
Accumulated
Other Comprehensive Income (Loss) |
|||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Balance, February 28, 2021 | $ |
(
|
$ |
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments |
(
|
(
|
|
(
|
(
|
||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) |
|
(
|
|
|
(
|
||||||||||||||||||||||||||||||
Other comprehensive income (loss) |
(
|
(
|
|
(
|
(
|
||||||||||||||||||||||||||||||
Balance, November 30, 2021 | $ |
(
|
$ |
(
|
$ |
(
|
$ |
|
$ |
(
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
26
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Cost of product sold | |||||||||||||||||||||||
Net gain (loss) on undesignated commodity derivative contracts | $ |
|
$ |
(
|
$ |
|
$ |
|
|||||||||||||||
Net flow through of reserved inventory |
|
|
|
|
|||||||||||||||||||
Settlements of undesignated commodity derivative contracts |
(
|
|
(
|
|
|||||||||||||||||||
Strategic business development costs |
(
|
(
|
|
(
|
|||||||||||||||||||
Loss on inventory write-down |
(
|
(
|
(
|
(
|
|||||||||||||||||||
COVID-19 incremental costs |
|
(
|
|
(
|
|||||||||||||||||||
Flow through of inventory step-up |
|
(
|
(
|
|
|||||||||||||||||||
Total cost of product sold |
|
(
|
(
|
(
|
|||||||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||||||||||
Restructuring and other strategic business development costs |
|
(
|
|
(
|
|||||||||||||||||||
Transaction, integration, and other acquisition-related costs |
(
|
(
|
(
|
(
|
|||||||||||||||||||
Net gain (loss) on foreign currency derivative contracts |
|
(
|
|
|
|||||||||||||||||||
COVID-19 incremental costs |
|
(
|
|
(
|
|||||||||||||||||||
Other gains (losses)
(1)
|
|
(
|
|
(
|
|||||||||||||||||||
Total selling, general, and administrative expenses |
|
(
|
|
(
|
|||||||||||||||||||
Impairment of brewery construction in progress |
(
|
|
|
|
|||||||||||||||||||
Impairment of assets held for sale |
|
(
|
|
(
|
|||||||||||||||||||
Comparable Adjustments, Operating income (loss) | $ |
(
|
$ |
(
|
$ |
|
$ |
(
|
(1)
|
Includes the following: | |||||||||||||||||||||||||
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
|||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
Increase in our ownership interest in My Favorite Neighbor | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
Property tax settlement | $ |
|
$ |
|
$ |
|
$ |
|
||||||||||||||||||
Transition services agreements activity | $ |
(
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
Gain (loss) on vineyard sale | $ |
(
|
$ |
|
$ |
(
|
$ |
|
||||||||||||||||||
Gain (loss) on sale of the Black Velvet Canadian Whisky business | $ |
|
$ |
(
|
$ |
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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27
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | |||||||||||||||||||||||
Net sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Segment operating income (loss) | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Capital expenditures | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Depreciation and amortization | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Wine and Spirits | |||||||||||||||||||||||
Net sales: | |||||||||||||||||||||||
Wine | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Spirits |
|
|
|
|
|||||||||||||||||||
Net sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Segment operating income (loss) | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Income (loss) from unconsolidated investments | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Equity method investments
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Capital expenditures | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Depreciation and amortization | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Corporate Operations and Other | |||||||||||||||||||||||
Segment operating income (loss) | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Income (loss) from unconsolidated investments | $ |
(
|
$ |
|
$ |
(
|
$ |
(
|
|||||||||||||||
Equity method investments | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Capital expenditures | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Depreciation and amortization | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Canopy | |||||||||||||||||||||||
Net sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Segment operating income (loss) | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Capital expenditures | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Depreciation and amortization | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Consolidation and Eliminations | |||||||||||||||||||||||
Net sales | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Operating income (loss) | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Income (loss) from unconsolidated investments | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Equity method investments | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Capital expenditures | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Depreciation and amortization | $ |
(
|
$ |
(
|
$ |
(
|
$ |
(
|
|||||||||||||||
Comparable Adjustments | |||||||||||||||||||||||
Operating income (loss) | $ |
(
|
$ |
(
|
$ |
|
$ |
(
|
|||||||||||||||
Income (loss) from unconsolidated investments | $ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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28
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Consolidated | |||||||||||||||||||||||
Net sales | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Operating income (loss) | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Income (loss) from unconsolidated investments
(2)
|
$ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||
Equity method investments
(1)
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Capital expenditures | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
Depreciation and amortization | $ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||
(1)
|
Equity method investments balance at November 30, 2020, exclude amounts reclassified to assets held for sale.
|
||||||||||||||||||||||||||||
(2)
|
Income (loss) from unconsolidated investments consists of: | ||||||||||||||||||||||||||||
For the Nine Months
Ended November 30, |
For the Three Months
Ended November 30, |
||||||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Unrealized net gain (loss) on securities measured at fair value | $ |
(
|
$ |
|
$ |
(
|
$ |
|
|||||||||||||||||||||
Equity in earnings (losses) from Canopy and related activities |
(
|
(
|
(
|
(
|
|||||||||||||||||||||||||
Equity in earnings (losses) from other equity method investees |
|
|
|
|
|||||||||||||||||||||||||
$ |
(
|
$ |
|
$ |
(
|
$ |
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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29
|
MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
30
|
MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
31
|
MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
32
|
MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
33
|
MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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34
|
MD&A |
Third
Quarter 2021 |
Nine
Months 2021 |
|||||||
(in millions) | ||||||||
Net sales | $ | 210.3 | $ | 578.5 | ||||
Gross profit | $ | 80.9 | $ | 229.5 | ||||
Marketing
(1)
|
$ | 7.1 | $ | 12.4 | ||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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35
|
MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
36
|
MD&A |
Third
Quarter 2022 |
Third
Quarter 2021 |
Nine
Months 2022 |
Nine
Months 2021 |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Cost of product sold | |||||||||||||||||||||||
Settlements of undesignated commodity derivative contracts | $ | (12.5) | $ | 6.6 | $ | (24.8) | $ | 30.2 | |||||||||||||||
Loss on inventory write-down | (1.0) | (26.5) | (1.0) | (26.5) | |||||||||||||||||||
Flow through of inventory step-up | (0.1) | — | — | (0.1) | |||||||||||||||||||
Net flow through of reserved inventory | 11.6 | — | 11.6 | — | |||||||||||||||||||
COVID-19 incremental costs | — | (0.8) | — | (6.3) | |||||||||||||||||||
Strategic business development costs | — | (0.7) | (2.6) | (25.8) | |||||||||||||||||||
Net gain (loss) on undesignated commodity derivative contracts | — | 9.1 | 48.1 | (0.3) | |||||||||||||||||||
Total cost of product sold | (2.0) | (12.3) | 31.3 | (28.8) | |||||||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||||||||||
Restructuring and other strategic business development costs | 0.2 | (12.7) | 0.1 | (21.6) | |||||||||||||||||||
Transaction, integration, and other acquisition-related costs | (0.8) | (1.5) | (0.8) | (5.4) | |||||||||||||||||||
COVID-19 incremental costs | — | (0.2) | — | (4.8) | |||||||||||||||||||
Net gain (loss) on foreign currency derivative contracts | — | — | — | (8.0) | |||||||||||||||||||
Other gains (losses)
|
18.7 | (4.6) | 12.6 | (0.1) | |||||||||||||||||||
Total selling, general, and administrative expenses | 18.1 | (19.0) | 11.9 | (39.9) | |||||||||||||||||||
Impairment of brewery construction in progress | — | — | (665.9) | — | |||||||||||||||||||
Impairment of assets held for sale | — | (21.0) | — | (24.0) | |||||||||||||||||||
Comparable Adjustments, Operating income (loss) | $ | 16.1 | $ | (52.3) | $ | (622.7) | $ | (92.7) | |||||||||||||||
Income (loss) from unconsolidated investments | $ | (135.5) | $ | 800.2 | $ | (1,430.7) | $ | 212.5 |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
37
|
MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
38
|
MD&A |
Third
Quarter 2022 |
Third
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 1,752.6 | $ | 1,677.9 | $ | 74.7 | 4 | % | |||||||||||||||
Wine and Spirits: | |||||||||||||||||||||||
Wine | 506.2 | 666.7 | (160.5) | (24 | %) | ||||||||||||||||||
Spirits | 61.8 | 93.5 | (31.7) | (34 | %) | ||||||||||||||||||
Total Wine and Spirits | 568.0 | 760.2 | (192.2) | (25 | %) | ||||||||||||||||||
Canopy | 104.3 | 101.5 | 2.8 | 3 | % | ||||||||||||||||||
Consolidation and eliminations | (104.3) | (101.5) | (2.8) | (3 | %) | ||||||||||||||||||
Consolidated net sales | $ | 2,320.6 | $ | 2,438.1 | $ | (117.5) | (5 | %) |
![]() |
Beer segment |
Third
Quarter 2022 |
Third
Quarter 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 1,752.6 | $ | 1,677.9 | $ | 74.7 | 4 | % | ||||||||||||||||||
Shipments | 95.2 | 92.3 | 3.1 | % | ||||||||||||||||||||||
Depletions | 8.4 | % |
![]() |
Wine and Spirits segment |
Third
Quarter 2022 |
Third
Quarter 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 9-liter case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 568.0 | $ | 760.2 | $ | (192.2) | (25 | %) | ||||||||||||||||||
Shipments | ||||||||||||||||||||||||||
Total | 8.1 | 13.2 | (38.6 | %) | ||||||||||||||||||||||
Organic
(1)
|
8.1 | 7.9 | 2.5 | % | ||||||||||||||||||||||
U.S. Domestic | 7.0 | 12.2 | (42.6 | %) | ||||||||||||||||||||||
Organic U.S. Domestic
(1)
|
7.0 | 6.9 | 1.4 | % | ||||||||||||||||||||||
Depletions
(1)
|
(6.8 | %) | ||||||||||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
39
|
MD&A |
![]() |
Canopy segment
Our ownership interest in Canopy allows us to exercise significant influence, but not control, and, therefore, we account for our investment in Canopy under the equity method.
Amounts included for the Canopy segment represent 100% of Canopy’s reported results
on a two-month lag. Accordingly, we recognize our share of Canopy’s earnings (losses) for the periods (i) July through September 2021, in our
Third Quarter 2022
results, (ii) July through September 2020, in our
Third Quarter 2021 results, (iii)
January through September
2021, in our
Nine Months 2022 results, and (iv) January through September 2020, in our Nine Months 2021 results
. Although we own less than 100% of the outstanding shares of Canopy, 100% of its results are included and subsequently eliminated in order to reconcile to our consolidated
financial statements
. S
ee “Income (loss) from unconsolidated investments” below for a discussion of Canopy’s net sales, gross profit (loss), selling, general, and administrative expenses, and operating income (loss). This discussion is based on information Canopy has publicly disclosed.
|
Third
Quarter 2022 |
Third
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 958.1 | $ | 952.7 | $ | 5.4 | 1 | % | |||||||||||||||
Wine and Spirits | 269.6 | 327.8 | (58.2) | (18 | %) | ||||||||||||||||||
Canopy | (56.5) | 19.6 | (76.1) | NM | |||||||||||||||||||
Consolidation and eliminations | 56.5 | (19.6) | 76.1 | NM | |||||||||||||||||||
Comparable Adjustments | (2.0) | (12.3) | 10.3 | 84 | % | ||||||||||||||||||
Consolidated gross profit | $ | 1,225.7 | $ | 1,268.2 | $ | (42.5) | (3 | %) |
![]() |
The increase in Beer is primarily due to $38.8 million of favorable impact from pricing and $30.2 million of shipment volume growth, partially offset by $62.8 million of higher cost of product sold. The higher cost of product sold is largely due to (i) $37.8 million of higher material costs, including pallets, aluminum, steel, and cartons, (ii) $16.8 million increase in brewery costs primarily driven by higher compensation and benefits to support the growth of our Mexican beer portfolio, and (iii) $11.6 million of higher depreciation, partially offset by $7.6 million of favorable fixed cost absorption related to increased production levels as compared to
Third Quarter 2021
.
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
I
40
|
MD&A |
![]() |
The decrease in Wine and Spirits gross profit is due to a decrease of $80.9 million from the recent divestitures, partially offset by a $22.7 million increase in organic gross profit. The increase in organic gross profit is attributable to (i) $15.4 million of favorable cost of product sold, (ii) $12.8 million of favorable impact from pricing, and (iii) $8.2 million increase primarily from non-branded and bulk wine net sales, partially offset by $14.3 million of unfavorable product mix shift driven by timing. The decrease in cost of product sold was largely attributable to (i) $15.5 million of net favorable fixed cost absorption and (ii) lower grape raw materials and other cost saving initiatives, partially offset by $6.4 million of increased transportation costs resulting from global supply chain logistics, including inflation, and route to market changes. The net favorable fixed cost absorption in Third Quarter 2022 primarily resulted from $20.0 million related to the 2020 U.S. wildfires, partially offset by decreased production levels at certain facilities due to a late frost in New Zealand which reduced the grape harvest.
|
Third
Quarter 2022 |
Third
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 234.5 | $ | 238.2 | $ | (3.7) | (2 | %) | |||||||||||||||
Wine and Spirits | 125.1 | 145.5 | (20.4) | (14 | %) | ||||||||||||||||||
Corporate Operations and Other | 44.3 | 61.4 | (17.1) | (28 | %) | ||||||||||||||||||
Canopy | 114.5 | 233.0 | (118.5) | (51 | %) | ||||||||||||||||||
Consolidation and eliminations | (114.5) | (233.0) | 118.5 | 51 | % | ||||||||||||||||||
Comparable Adjustments | (18.1) | 19.0 | (37.1) | NM | |||||||||||||||||||
Consolidated selling, general, and administrative expenses | $ | 385.8 | $ | 464.1 | $ | (78.3) | (17 | %) |
![]() |
The decrease in Beer is primarily due to $15.5 million of decreased marketing spend, partially offset by $11.5 million of increased general and administrative expenses. The favorable marketing spend was driven by timing as many of our planned investments to support the growth of our Mexican beer portfolio through media and event sponsorships were suspended or canceled in the first half of Fiscal 2021 which shifted our normal spend to the second half of Fiscal 2021. The increase in general and administrative expenses was driven primarily by unfavorable foreign currency transaction losses and increased travel as compared to Third Quarter 2021
resulting from COVID-19 containment measures
, partially offset by lower compensation and benefits primarily related to favorable stock-based compensation as compared to Third Quarter 2021.
|
![]() |
The decrease in Wine and Spirits is primarily due to $9.7 million of decreased marketing spend and $9.2 million of decreased general and administrative expenses. The favorable marketing spend was driven by timing as many of our planned investments to support the growth of our brands through media and event sponsorships were suspended or canceled in the first half of Fiscal 2021 which shifted our normal spend to the second half of Fiscal 2021. The decrease in general and administrative expenses was driven by a decrease in outside services and lower compensation and benefits primarily related to favorable stock-based compensation as compared to Third Quarter 2021.
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
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The decrease in Corporate Operations and Other is largely due to an approximately $19 million decrease in compensation and benefits primarily related to favorable stock-based compensation as compared to Third Quarter 2021.
|
Third
Quarter 2022 |
Third
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 723.6 | $ | 714.5 | $ | 9.1 | 1 | % | |||||||||||||||
Wine and Spirits | 144.5 | 182.3 | (37.8) | (21 | %) | ||||||||||||||||||
Corporate Operations and Other | (44.3) | (61.4) | 17.1 | 28 | % | ||||||||||||||||||
Canopy | (171.0) | (213.4) | 42.4 | 20 | % | ||||||||||||||||||
Consolidation and eliminations | 171.0 | 213.4 | (42.4) | (20 | %) | ||||||||||||||||||
Comparable Adjustments | 16.1 | (52.3) | 68.4 | NM | |||||||||||||||||||
Consolidated operating income (loss) | $ | 839.9 | $ | 783.1 | $ | 56.8 | 7 | % |
![]() |
The increase in Beer is primarily attributable to the favorable pricing impact, strong shipment volume growth within our Mexican beer portfolio, and favorable marketing spend, largely offset by the higher operational costs and increased general and administrative expenses, as described above.
|
![]() |
The decrease in Wine and Spirits is largely attributable to the recent divestitures and unfavorable product mix shift, partially offset by the increase in organic net sales, net favorable fixed cost absorption, lower marketing spend, and reduced general and administrative expenses, as described above.
|
![]() |
As previously discussed, the Corporate Operations and Other decrease in operating loss is largely due to the favorable stock-based compensation as compared to Third Quarter 2021.
|
Third
Quarter 2022 |
Third
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Unrealized net gain (loss) on securities measured at fair value | $ | (199.7) | $ | 769.6 | $ | (969.3) | (126 | %) | |||||||||||||||
Equity in earnings (losses) from Canopy and related activities | (4.2) | (12.4) | 8.2 | 66 | % | ||||||||||||||||||
Equity in earnings (losses) from other equity method investees | 32.1 | 25.2 | 6.9 | 27 | % | ||||||||||||||||||
$ | (171.8) | $ | 782.4 | $ | (954.2) | (122 | %) |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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MD&A |
![]() |
Canopy segment
Canopy net sales increased to $104.3 million for Third Quarter 2022 from $101.5 million for Third Quarter 2021. This increase of $2.8 million, or 3%, is primarily attributable to an increase in global cannabis revenue, largely driven by higher U.S. CBD sales. The increase in global cannabis revenue was partially offset by a decrease in other consumer product revenue resulting from supply chain challenges and shipping restrictions of vaporizers sold by Storz & Bickel GmbH & Co. KG. Canopy gross profit (loss) decreased to $(56.5) million for Third Quarter 2022 from $19.6 million for Third Quarter 2021. This decrease of $76.1 million
is primarily driven by inventory write-downs related to excess Canadian cannabis, price compression in the Canadian recreational channel, and higher shipping and warehousing costs in North America, partially offset by payroll subsidies received from the Canadian government in Third Quarter 2022 pursuant to a COVID-19 relief program. Canopy selling, general, and administrative expenses decreased $118.5 million primarily from a reduction in (i) expected credit losses on financial assets and related charges and (ii) asset impairment and restructuring costs, partially offset by an increase in sales and marketing expenses. The combination of these factors were the main contributors to the decrease in operating loss of $42.4 million.
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 5,185.9 | $ | 4,697.9 | $ | 488.0 | 10 | % | |||||||||||||||
Wine and Spirits: | |||||||||||||||||||||||
Wine | 1,351.1 | 1,711.2 | (360.1) | (21 | %) | ||||||||||||||||||
Spirits | 181.2 | 252.8 | (71.6) | (28 | %) | ||||||||||||||||||
Total Wine and Spirits | 1,532.3 | 1,964.0 | (431.7) | (22 | %) | ||||||||||||||||||
Canopy | 332.4 | 261.5 | 70.9 | 27 | % | ||||||||||||||||||
Consolidation and eliminations | (332.4) | (261.5) | (70.9) | (27 | %) | ||||||||||||||||||
Consolidated net sales | $ | 6,718.2 | $ | 6,661.9 | $ | 56.3 | 1 | % |
![]() |
Beer segment |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 5,185.9 | $ | 4,697.9 | $ | 488.0 | 10 | % | ||||||||||||||||||
Shipments | 281.0 | 258.9 | 8.5 | % | ||||||||||||||||||||||
Depletions | 8.7 | % |
![]() |
Wine and Spirits segment |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 9-liter case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 1,532.3 | $ | 1,964.0 | $ | (431.7) | (22 | %) | ||||||||||||||||||
Shipments | ||||||||||||||||||||||||||
Total | 22.2 | 35.6 | (37.6 | %) | ||||||||||||||||||||||
Organic
(1)
|
22.2 | 21.2 | 4.7 | % | ||||||||||||||||||||||
U.S. Domestic | 19.3 | 32.8 | (41.2 | %) | ||||||||||||||||||||||
Organic U.S. Domestic
(1)
|
19.3 | 18.6 | 3.8 | % | ||||||||||||||||||||||
Depletions
(1)
|
(5.5 | %) | ||||||||||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 2,835.8 | $ | 2,632.9 | $ | 202.9 | 8 | % | |||||||||||||||
Wine and Spirits | 707.6 | 868.2 | (160.6) | (18 | %) | ||||||||||||||||||
Canopy | (26.6) | (33.0) | 6.4 | 19 | % | ||||||||||||||||||
Consolidation and eliminations | 26.6 | 33.0 | (6.4) | (19 | %) | ||||||||||||||||||
Comparable Adjustments | 31.3 | (28.8) | 60.1 | NM | |||||||||||||||||||
Consolidated gross profit | $ | 3,574.7 | $ | 3,472.3 | $ | 102.4 | 3 | % |
![]() |
The increase in Beer is primarily due to $224.3 million of shipment volume growth and $120.4 million of favorable impact from pricing, partially offset by $138.3 million of higher cost of product sold. The higher cost of product sold is largely due to higher operational costs including (i) a $78.2 million increase in obsolescence primarily from excess inventory of hard seltzers
resulting from a slowdown in the overall category,
(ii) $50.3 million of brewery costs primarily driven by higher compensation and benefits and maintenance, (iii) $40.1 million of higher material costs, including aluminum, pallets, steel, and cartons, and (iv) $27.9 million of higher depreciation, partially offset by (i) $46.4 million of favorable fixed cost absorption primarily as a result of COVID-19 containment measures for Nine Months 2021 and increased production levels for Nine Months 2022 and (ii) $14.1 million of foreign currency transactional benefits.
|
![]() |
The decrease in Wine and Spirits gross profit is due to a decrease of $229.5 million from the recent divestitures, partially offset by a $68.9 million increase in organic gross profit. The increase in organic gross profit is attributable to (i) $19.9 million of growth in branded wine and spirits shipment volume, driven by our continued focus on growing our brands as well as the return of our on-premise business, including bars, restaurants, and tasting rooms following a relaxation of COVID-19 containment measures, (ii) $19.0 million of favorable pricing, (iii) $15.9 million increase from favorable product mix shift, (iv) $9.0 million primarily related to favorable bulk wine and non-branded net sales, and (v) $4.1 million of lower cost of product sold. The decreased cost of product sold was largely attributable to (i) approximately $14 million of lower grape raw materials and other cost saving initiatives and (ii) $4.5
million of net favorable fixed cost absorption, offset by $20.6 million of increased transportation costs resulting from global supply chain logistics, including inflation, and route to market changes. The net favorable fixed cost absorption in Nine Months 2022 primarily resulted from the impact of the 2020 U.S. wildfires, partially offset by decreased production levels at certain facilities as a result of a late frost in New Zealand which reduced the grape harvest.
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 746.1 | $ | 644.9 | $ | 101.2 | 16 | % | |||||||||||||||
Wine and Spirits | 358.7 | 360.4 | (1.7) | 0 | % | ||||||||||||||||||
Corporate Operations and Other | 161.7 | 171.3 | (9.6) | (6 | %) | ||||||||||||||||||
Canopy | 481.4 | 1,038.0 | (556.6) | (54 | %) | ||||||||||||||||||
Consolidation and eliminations | (481.4) | (1,038.0) | 556.6 | 54 | % | ||||||||||||||||||
Comparable Adjustments | (11.9) | 39.9 | (51.8) | NM | |||||||||||||||||||
Consolidated selling, general, and administrative expenses | $ | 1,254.6 | $ | 1,216.5 | $ | 38.1 | 3 | % |
![]() |
The increase in Beer is primarily due to $58.2 million of higher marketing spend and $42.2 million of increased general and administrative expenses. The higher marketing spend was driven by our planned investments to support the growth of our Mexican beer portfolio through media and event sponsorships. The increase in general and administrative expenses was primarily driven by increased legal expense, increased depreciation and other costs related to the implementation of a new ERP, unfavorable foreign currency transaction losses, and higher compensation and benefits.
|
![]() |
The decrease in Wine and Spirits is primarily due to a $4.9 million decrease in selling expenses, partially offset by $2.7 million of higher marketing spend. The higher marketing spend was driven by timing and planned investments to support the growth of our brands.
|
![]() |
The decrease in Corporate Operations and Other is largely due to an approximate $15 million decrease in compensation and benefits, primarily related to favorable stock-based compensation as compared to
Nine Months 2021
, and $5 million of favorable foreign currency impact as compared to
Nine Months 2021
, partially offset by a $6 million increase in consulting services, primarily related to the implementation of a new ERP, and an increase in travel as compared to reduced travel in
Nine Months 2021 resulting from COVID-19 containment measures
.
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 2,089.7 | $ | 1,988.0 | $ | 101.7 | 5 | % | |||||||||||||||
Wine and Spirits | 348.9 | 507.8 | (158.9) | (31 | %) | ||||||||||||||||||
Corporate Operations and Other | (161.7) | (171.3) | 9.6 | 6 | % | ||||||||||||||||||
Canopy | (508.0) | (1,071.0) | 563.0 | 53 | % | ||||||||||||||||||
Consolidation and eliminations | 508.0 | 1,071.0 | (563.0) | (53 | %) | ||||||||||||||||||
Comparable Adjustments | (622.7) | (92.7) | (530.0) | NM | |||||||||||||||||||
Consolidated operating income (loss) | $ | 1,654.2 | $ | 2,231.8 | $ | (577.6) | (26 | %) |
![]() |
The increase in Beer is largely attributable to the strong shipment volume growth within our Mexican beer portfolio and favorable pricing impact, partially offset by higher operational costs, marketing spend, and general and administrative expenses, as discussed above.
|
![]() |
The decrease in Wine and Spirits is largely attributable to the recent divestitures, partially offset by the increase in organic net sales, led by branded wine and spirits shipment volume growth, favorable pricing impact, bulk wine net sales, and favorable product mix shift.
|
![]() |
As previously discussed, the Corporate Operations and Other decrease in operating loss is largely due to the favorable stock-based compensation and favorable foreign currency impact, partially offset by the increase in consulting services and travel expense as compared to Nine Months 2021 .
|
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Unrealized net gain (loss) on securities measured at fair value | $ | (1,534.8) | $ | 524.7 | $ | (2,059.5) | NM | ||||||||||||||||
Equity in earnings (losses) from Canopy and related activities
(1)
|
(39.5) | (421.0) | 381.5 | 91 | % | ||||||||||||||||||
Equity in earnings (losses) from other equity method investees | 32.5 | 26.8 | 5.7 | 21 | % | ||||||||||||||||||
$ | (1,541.8) | $ | 130.5 | $ | (1,672.3) | NM |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
![]() |
Canopy segment
Canopy net sales increased to $332.4 million for Nine Months 2022 from $261.5 million for Nine Months 2021. This increase of $70.9 million, or 27%, is primarily attributable to an increase in Canadian recreational sales and other consumer product sales. The Canadian recreational sales for Nine Months 2022 benefited from (i) opening of retail stores across Canada, (ii) the removal of COVID-19 containment measures which adversely impacted Canopy’s results in Nine Months 2021, and (iii) growth in flower sales. The increase in other consumer product sales largely resulted from expanded U.S. distribution for (i) sales of sports nutrition beverages and mixes sold by BioSteel and (ii) vaporizers sold by Storz & Bickel GmbH & Co. KG, partially offset by supply chain challenges and shipping restrictions. Canopy gross profit (loss) improved to $(26.6) million for Nine Months 2022 from $(33.0) million for Nine Months 2021. This decrease in loss of $6.4 million is primarily driven by (i) inventory write-downs for Nine Months 2021 related to its organizational and strategic review of their business, (ii) payroll subsidies received from the Canadian government in Nine Months 2022 pursuant to a COVID-19 relief program, and (iii) increased net sales for Nine Months 2022. The improvements in Canopy’s gross profit (loss) were partially offset by (i) inventory write-downs for Nine Months 2022 related to excess Canadian cannabis, (ii) price compression in the Canadian recreational channel, and (iii) higher shipping and warehousing costs in North America. Canopy selling, general, and administrative expenses decreased $556.6 million primarily from a reduction in (i) asset impairment and restructuring charges related to their decision to close greenhouse facilities as well as other changes related to its organizational and strategic review of their business, (ii) expected credit losses on financial assets and related charges, and (iii)
stock-based compensation expense, partially offset by an increase in sales and marketing expenses. The combination of these factors were the main contributors to the $563.0 million decrease in operating loss.
|
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
#WORTHREACHINGFOR
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MD&A |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||||||||
Operating activities | $ | 2,444.1 | $ | 2,363.6 | $ | 80.5 | 3 | % | |||||||||||||||
Investing activities | (674.2) | (643.2) | (31.0) | (5) | % | ||||||||||||||||||
Financing activities | (1,867.9) | (1,654.7) | (213.2) | (13) | % | ||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (1.3) | 5.8 | (7.1) | (122) | % | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (99.3) | $ | 71.5 | $ | (170.8) | NM |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net income (loss) | $ | (404.6) | $ | 1,641.2 | $ | (2,045.8) | (125) | % | |||||||||||||||
Unrealized net (gain) loss on securities measured at fair value | 1,534.8 | (524.7) | 2,059.5 | NM | |||||||||||||||||||
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings | 6.0 | 403.0 | (397.0) | (99) | % | ||||||||||||||||||
Impairment of brewery construction in progress | 665.9 | — | 665.9 | NM | |||||||||||||||||||
Other non-cash adjustments | 439.3 | 659.4 | (220.1) | (33) | % | ||||||||||||||||||
Change in operating assets and liabilities, net of effects from purchase and sale of business | 202.7 | 184.7 | 18.0 | 10 | % | ||||||||||||||||||
Net cash provided by (used in) operating activities | $ | 2,444.1 | $ | 2,363.6 | $ | 80.5 | 3 | % |
Nine
Months 2022 |
Nine
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net proceeds from (payments of) debt, current and long-term, and related activities | $ | (159.9) | $ | (1,236.5) | $ | 1,076.6 | 87 | % | |||||||||||||||
Dividends paid | (430.5) | (431.2) | 0.7 | 0 | % | ||||||||||||||||||
Purchases of treasury stock | (1,390.5) | — | (1,390.5) | NM | |||||||||||||||||||
Net cash provided by stock-based compensation activities | 149.9 | 35.5 | 114.4 | NM | |||||||||||||||||||
Distributions to noncontrolling interests | (36.9) | (22.5) | (14.4) | (64) | % | ||||||||||||||||||
Net cash provided by (used in) financing activities | $ | (1,867.9) | $ | (1,654.7) | $ | (213.2) | (13) | % |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Debt repayment | Debt issuance |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
November 30,
2021 |
December 31,
2021 |
||||||||||
(in millions) | |||||||||||
Revolving credit facility
(1)
|
$ | 1,744.8 | $ | 1,813.8 | |||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Class A Common Shares | |||||||||||||||||||||||
Repurchase Authorization | Dollar Value of Shares Repurchased | Number of Shares Repurchased | |||||||||||||||||||||
(in millions, except share data) | |||||||||||||||||||||||
2018 Authorization | $ | 3,000.0 | $ | 2,436.4 | 11,076,620 | ||||||||||||||||||
2021 Authorization | $ | 2,000.0 | $ | — | — |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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MD&A |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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OTHER KEY INFORMATION |
Aggregate
Notional Value |
Fair Value,
Net Asset (Liability) |
Increase (Decrease)
in Fair Value – Hypothetical 10% Adverse Change |
|||||||||||||||||||||||||||||||||
November 30,
2021 |
November 30,
2020 |
November 30,
2021 |
November 30,
2020 |
November 30,
2021 |
November 30,
2020 |
||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Foreign currency contracts | $ | 2,244.8 | $ | 2,013.6 | $ | (50.8) | $ | 87.8 | $ | 156.4 | $ | (149.6) | |||||||||||||||||||||||
Commodity derivative contracts | $ | 243.5 | $ | 226.9 | $ | 41.7 | $ | (9.9) | $ | (26.5) | $ | 20.3 |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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OTHER KEY INFORMATION |
Aggregate
Notional Value |
Fair Value,
Net Asset (Liability) |
Increase (Decrease)
in Fair Value – Hypothetical 1% Rate Increase |
|||||||||||||||||||||||||||||||||
November 30,
2021 |
November 30,
2020 |
November 30,
2021 |
November 30,
2020 |
November 30,
2021 |
November 30,
2020 |
||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Fixed interest rate debt | $ | 9,868.5 | $ | 10,564.5 | $ | (10,695.5) | $ | (12,026.2) | $ | (818.9) | $ | (891.1) | |||||||||||||||||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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OTHER KEY INFORMATION |
Period |
Total Number
of Shares Purchased |
Average
Price Paid Per Share |
Total Number
of Shares Purchased as Part of a Publicly Announced Program |
Approximate
Dollar Value
of Shares that
May Yet Be
Purchased
Under the
Program
(1)(2)
|
||||||||||||||||||||||
September 1 – 30, 2021
(3)
|
402,642 | $ | 212.44 | 402,642 | $ | 2,563,568,601 | ||||||||||||||||||||
October 1 – 31, 2021 | — | $ | — | — | $ | 2,563,568,601 | ||||||||||||||||||||
November 1 – 30, 2021 | — | $ | — | — | $ | 2,563,568,601 | ||||||||||||||||||||
Total | 402,642 | $ | 212.44 | 402,642 |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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OTHER KEY INFORMATION |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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OTHER KEY INFORMATION |
Exhibit No. | ||||||||
4.4 | ||||||||
4.5 | ||||||||
4.6 | ||||||||
4.7 | ||||||||
4.8 | ||||||||
4.9 | ||||||||
4.10 | ||||||||
4.11 | ||||||||
4.12 | ||||||||
4.13 | ||||||||
4.14 | ||||||||
4.15 | ||||||||
4.16 | ||||||||
4.17 | ||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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OTHER KEY INFORMATION |
Exhibit No. | ||||||||
4.18 | ||||||||
4.19 | ||||||||
4.20 | ||||||||
4.21 | ||||||||
4.22 | ||||||||
4.23 | ||||||||
4.24 | ||||||||
4.25 | ||||||||
4.26 | ||||||||
4.27 | ||||||||
4.28 | ||||||||
4.29 | ||||||||
4.30 | ||||||||
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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OTHER KEY INFORMATION |
Exhibit No. | ||||||||
4.31 |
Amendment No. 1, dated as of June 10, 2021, to Amended and Restated Term Loan Credit Agreement, dated March 26, 2020, by and between the Company and Bank of America, N.A., as administrative agent and lender
(filed as Exhibit 4.30 to the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2021 and incorporated herein by reference).
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31.1 | ||||||||
31.2 | ||||||||
32.1 | ||||||||
32.2 | ||||||||
99.1 | ||||||||
99.2 | ||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document (filed herewith). | |||||||
101.SCH | XBRL Taxonomy Extension Schema Document (filed herewith). | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith). | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document (filed herewith). | |||||||
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document (filed herewith). | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith). | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
† | The exhibits, disclosure schedules, and other schedules, as applicable, have been omitted pursuant to Item 601(a)(5) of Regulation S-K. | ||||
‡ | Portions of this exhibit are redacted pursuant to Item 601(b)(2)(ii) of Regulation S-K. |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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CONSTELLATION BRANDS, INC. | |||||||||||
Date: | January 6, 2022 | By: | /s/ Kenneth W. Metz | ||||||||
Kenneth W. Metz, Vice President
and Controller |
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Date: | January 6, 2022 | By: | /s/ Garth Hankinson | ||||||||
Garth Hankinson, Executive Vice President and
Chief Financial Officer (principal financial officer and principal accounting officer) |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q |
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No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
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DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
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No information found
Customers
Customer name | Ticker |
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Macy's, Inc. | M |
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
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