☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 16-0716709 | ||||
(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 | ||||||
Class A Common Stock | STZ | New York Stock Exchange | ||||||
Class B Common Stock | STZ.B | New York Stock Exchange |
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | ||||||||
Emerging growth company | ☐ |
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. Borrowings
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10. Income Taxes
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11. Stockholders' Equity
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12. Net Income (Loss) Per Common Share Attributable to CBI
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13. Comprehensive Income (Loss) Attributable to CBI
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14. 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 $2.0 billion of our Class A Common Stock and Class B Convertible Common Stock, authorized in January 2021 by our Board of Directors | |||||||
ABA | alternative beverage alcohol | |||||||
Acreage | Acreage Holdings, Inc. | |||||||
Acreage Financial Instrument | a call option for Canopy Growth Corporation to acquire 70% of the shares of Acreage Holdings, Inc., at a fixed exchange ratio and 30% at a floating exchange ratio | |||||||
Acreage Transaction | Canopy Growth Corporation’s intention to acquire Acreage Holdings, Inc. upon U.S. federal cannabis legalization, subject to certain conditions | |||||||
Administrative Agent | Bank of America, N.A., as administrative agent for the senior credit facility and term credit agreement | |||||||
AOCI | accumulated other comprehensive income (loss) | |||||||
ASR |
accelerated share repurchase agreement with a third-party financial institution
|
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Ballast Point Divestiture | sale of Ballast Point craft beer business, including a number of its associated production facilities and brewpubs | |||||||
C$ | Canadian dollars | |||||||
Canopy |
we made an investment in Canopy Growth Corporation, an Ontario, Canada-based public company
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Canopy Debt Securities | convertible debt securities issued by Canopy Growth Corporation | |||||||
Canopy Equity Method Investment |
November 2017 Canopy Investment, November 2018 Canopy Investment, and May 2020 Canopy Investment, collectively
|
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CARES Act | Coronavirus Aid, Relief, and Economic Security Act | |||||||
CB International
|
CB International Finance S.à r.l., a wholly-owned subsidiary of ours
|
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CODM | chief operating decision maker | |||||||
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
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I i
|
Term | Meaning | |||||||
Copper & Kings |
Copper & Kings American Brandy Company, acquired by us
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CSR | corporate social responsibility | |||||||
DTC | direct-to-consumer | |||||||
Empathy Wines |
Empathy Wines business, including a digitally-native wine brand, acquired by us
|
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ERP | enterprise resource planning system | |||||||
Financial Statements |
our consolidated financial statements and notes thereto included herein
|
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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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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
|
brewery originally planned to be located in Mexicali, Baja California, Mexico
|
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Mexico Beer Projects | expansion activities at the Obregon Brewery and Nava Brewery | |||||||
My Favorite Neighbor | we made an investment in My Favorite Neighbor, LLC | |||||||
NA | not applicable | |||||||
Nava Brewery | brewery located in Nava, Coahuila, Mexico | |||||||
Net sales | gross sales less promotions, returns and allowances, and excise taxes | |||||||
NM | not meaningful | |||||||
Nobilo Wine Divestiture |
sale of New Zealand-based Nobilo Wine brand and certain related assets
|
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Note(s) | notes to the consolidated financial statements | |||||||
November 2017 Canopy Investment | our initial investment for 18.9 million in common shares of Canopy Growth Corporation | |||||||
November 2017 Canopy Warrants |
warrants which gave us the option to purchase 18.9 million common shares of Canopy Growth Corporation, exercised May 1, 2020
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November 2018 Canopy Investment | our incremental investment for 104.5 million in common shares of Canopy Growth Corporation | |||||||
November 2018 Canopy Transaction |
November 2018 Canopy Investment and the purchase by us of the November 2018 Canopy Warrants, collectively
|
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November 2018 Canopy Warrants | Tranche A Warrants, Tranche B Warrants, and Tranche C Warrants, collectively | |||||||
Obregon Brewery
|
brewery located in Obregon, Sonora, Mexico
|
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OCI | other comprehensive income (loss) | |||||||
Paul Masson Divestiture |
sale of Paul Masson Grande Amber Brandy brand, related inventory, and interests in certain contracts
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SEC | Securities and Exchange Commission | |||||||
Second Quarter 2021 |
the Company’s three months ended August 31, 2020
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Second Quarter 2022 |
the Company’s three months ended August 31, 2021
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Six Months 2021 |
the Company’s six months ended August 31, 2020
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Six Months 2022 |
the Company’s six months ended August 31, 2021
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Tranche A Warrants | warrants which give us the option to purchase 88.5 million common shares of Canopy Growth Corporation expiring November 1, 2023 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I ii
|
Term | Meaning | |||||||
Tranche B Warrants | warrants which give us the option to purchase 38.4 million common shares of Canopy Growth Corporation expiring November 1, 2026 | |||||||
Tranche C Warrants | warrants which give us the option to purchase 12.8 million common shares of Canopy Growth Corporation expiring November 1, 2026 | |||||||
TSX
|
Toronto Stock Exchange
|
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U.S. | United States of America | |||||||
U.S. GAAP | generally accepted accounting principles in the United States of America | |||||||
VWAP Exercise Price
|
volume-weighted average of the closing market price of Canopy’s common shares on the Toronto Stock Exchange for the five trading days immediately preceding the exercise date
|
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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
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Wine and Spirits Divestitures
|
Wine and Spirits Divestiture and the Nobilo Wine Divestiture, collectively
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I iii
|
FINANCIAL STATEMENTS |
August 31,
2021 |
February 28,
2021 |
||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 103.4 | $ | 460.6 | |||||||
Accounts receivable | 972.8 | 785.3 | |||||||||
Inventories | 1,339.0 | 1,291.1 | |||||||||
Prepaid expenses and other | 528.5 | 507.5 | |||||||||
Total current assets | 2,943.7 | 3,044.5 | |||||||||
Property, plant, and equipment | 5,505.4 | 5,821.6 | |||||||||
Goodwill | 7,798.9 | 7,793.5 | |||||||||
Intangible assets | 2,729.7 | 2,732.1 | |||||||||
Equity method investments | 2,819.0 | 2,788.4 | |||||||||
Securities measured at fair value | 488.6 | 1,818.1 | |||||||||
Deferred income taxes | 2,448.0 | 2,492.5 | |||||||||
Other assets | 607.0 | 614.1 | |||||||||
Total assets | $ | 25,340.3 | $ | 27,104.8 | |||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities: | |||||||||||
Short-term borrowings | $ | 486.0 | $ | — | |||||||
Current maturities of long-term debt | 5.8 | 29.2 | |||||||||
Accounts payable | 840.4 | 460.0 | |||||||||
Other accrued expenses and liabilities | 854.9 | 779.9 | |||||||||
Total current liabilities | 2,187.1 | 1,269.1 | |||||||||
Long-term debt, less current maturities | 10,081.7 | 10,413.1 | |||||||||
Deferred income taxes and other liabilities | 1,546.9 | 1,493.5 | |||||||||
Total liabilities | 13,815.7 | 13,175.7 | |||||||||
Commitments and contingencies | |||||||||||
CBI stockholders’ equity: | |||||||||||
Class A Common Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 187,247,721 shares and 187,204,280 shares, respectively
|
1.9 | 1.9 | |||||||||
Class B Convertible Common Stock, $0.01 par value – Authorized, 30,000,000 shares; Issued, 28,227,478 shares and 28,270,288 shares, respectively
|
0.3 | 0.3 | |||||||||
Additional paid-in capital | 1,648.3 | 1,604.2 | |||||||||
Retained earnings | 13,922.2 | 15,117.8 | |||||||||
Accumulated other comprehensive income (loss) | (290.4) | (335.5) | |||||||||
15,282.3 | 16,388.7 | ||||||||||
Less: Treasury stock – | |||||||||||
Class A Common Stock, at cost, 22,588,014 shares and 17,070,550 shares, respectively
|
(4,087.4) | (2,787.6) | |||||||||
Class B Convertible Common Stock, at cost, 5,005,800 shares
|
(2.2) | (2.2) | |||||||||
(4,089.6) | (2,789.8) | ||||||||||
Total CBI stockholders’ equity | 11,192.7 | 13,598.9 | |||||||||
Noncontrolling interests | 331.9 | 330.2 | |||||||||
Total stockholders’ equity | 11,524.6 | 13,929.1 | |||||||||
Total liabilities and stockholders’ equity | $ | 25,340.3 | $ | 27,104.8 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 1
|
FINANCIAL STATEMENTS |
For the Six Months
Ended August 31, |
For the Three Months
Ended August 31, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
Sales | $ | 4,753.3 | $ | 4,591.4 | $ | 2,565.0 | $ | 2,459.7 | |||||||||||||||
Excise taxes | (355.7) | (367.6) | (193.9) | (199.3) | |||||||||||||||||||
Net sales | 4,397.6 | 4,223.8 | 2,371.1 | 2,260.4 | |||||||||||||||||||
Cost of product sold | (2,048.6) | (2,019.7) | (1,141.4) | (1,044.6) | |||||||||||||||||||
Gross profit | 2,349.0 | 2,204.1 | 1,229.7 | 1,215.8 | |||||||||||||||||||
Selling, general, and administrative expenses | (868.8) | (752.4) | (490.5) | (399.1) | |||||||||||||||||||
Impairment of brewery construction in progress | (665.9) | — | — | — | |||||||||||||||||||
Impairment of assets held for sale | — | (3.0) | — | 22.0 | |||||||||||||||||||
Operating income (loss) | 814.3 | 1,448.7 | 739.2 | 838.7 | |||||||||||||||||||
Income (loss) from unconsolidated investments | (1,370.0) | (651.9) | (470.8) | (80.7) | |||||||||||||||||||
Interest expense | (182.5) | (200.2) | (95.8) | (100.2) | |||||||||||||||||||
Loss on extinguishment of debt | (29.4) | (7.6) | (29.4) | (0.6) | |||||||||||||||||||
Income (loss) before income taxes | (767.6) | 589.0 | 143.2 | 657.2 | |||||||||||||||||||
(Provision for) benefit from income taxes | (117.8) | (239.8) | (131.3) | (135.4) | |||||||||||||||||||
Net income (loss) | (885.4) | 349.2 | 11.9 | 521.8 | |||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | (21.2) | (15.0) | (10.4) | (9.7) | |||||||||||||||||||
Net income (loss) attributable to CBI | $ | (906.6) | $ | 334.2 | $ | 1.5 | $ | 512.1 | |||||||||||||||
Comprehensive income (loss) | $ | (838.6) | $ | (231.7) | $ | (45.8) | $ | 733.2 | |||||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests | (22.9) | 16.7 | (6.5) | (14.2) | |||||||||||||||||||
Comprehensive income (loss) attributable to CBI | $ | (861.5) | $ | (215.0) | $ | (52.3) | $ | 719.0 | |||||||||||||||
Net income (loss) per common share attributable to CBI: | |||||||||||||||||||||||
Basic – Class A Common Stock | $ | (4.77) | $ | 1.74 | $ | 0.01 | $ | 2.68 | |||||||||||||||
Basic – Class B Convertible Common Stock | $ | (4.34) | $ | 1.58 | $ | 0.01 | $ | 2.43 | |||||||||||||||
Diluted – Class A Common Stock | $ | (4.77) | $ | 1.71 | $ | 0.01 | $ | 2.62 | |||||||||||||||
Diluted – Class B Convertible Common Stock | $ | (4.34) | $ | 1.58 | $ | 0.01 | $ | 2.42 | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic – Class A Common Stock | 169.025 | 169.841 | 167.447 | 170.078 | |||||||||||||||||||
Basic – Class B Convertible Common Stock | 23.234 | 23.289 | 23.222 | 23.284 | |||||||||||||||||||
Diluted – Class A Common Stock | 169.025 | 194.962 | 192.530 | 195.142 | |||||||||||||||||||
Diluted – Class B Convertible Common Stock | 23.234 | 23.289 | 23.222 | 23.284 | |||||||||||||||||||
Cash dividends declared per common share: | |||||||||||||||||||||||
Class A Common Stock | $ | 1.52 | $ | 1.50 | $ | 0.76 | $ | 0.75 | |||||||||||||||
Class B Convertible Common Stock | $ | 1.38 | $ | 1.36 | $ | 0.69 | $ | 0.68 |
Constellation Brands, Inc. Q2 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)
|
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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 | $ | 1.9 | $ | 0.3 | $ | 1,604.2 | $ | 15,117.8 | $ | (335.5) | $ | (2,789.8) | $ | 330.2 | $ | 13,929.1 | |||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | (908.1) | — | — | 10.8 | (897.3) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — | 98.9 | — | 5.6 | 104.5 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | (792.8) | ||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | — | — | (400.8) | — | (400.8) | |||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — | (146.1) | — | — | — | (146.1) | |||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — | (10.6) | (10.6) | |||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — | (0.9) | — | — | 3.8 | — | 2.9 | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 15.9 | — | — | — | — | 15.9 | |||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2021 | 1.9 | 0.3 | 1,619.2 | 14,063.6 | (236.6) | (3,186.8) | 336.0 | 12,597.6 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | 1.5 | — | — | 10.4 | 11.9 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — | (53.8) | — | (3.9) | (57.7) | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | (45.8) | ||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | — | — | (904.2) | — | (904.2) | |||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — | (142.9) | — | — | — | (142.9) | |||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — | (10.6) | (10.6) | |||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — | 8.9 | — | — | 1.4 | — | 10.3 | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 20.2 | — | — | — | — | 20.2 | |||||||||||||||||||||||||||||||||||||||
Balance at August 31, 2021 | $ | 1.9 | $ | 0.3 | $ | 1,648.3 | $ | 13,922.2 | $ | (290.4) | $ | (4,089.6) | $ | 331.9 | $ | 11,524.6 | |||||||||||||||||||||||||||||||
Balance at February 29, 2020 | $ | 1.9 | $ | 0.3 | $ | 1,514.6 | $ | 13,695.3 | $ | (266.3) | $ | (2,814.0) | $ | 342.5 | $ | 12,474.3 | |||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | (177.9) | — | — | 5.3 | (172.6) | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — | (756.1) | — | (36.2) | (792.3) | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | (964.9) | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — | (143.3) | — | — | — | (143.3) | |||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — | (6.0) | — | — | 2.8 | — | (3.2) | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 14.7 | — | — | — | — | 14.7 | |||||||||||||||||||||||||||||||||||||||
Balance at May 31, 2020 | 1.9 | 0.3 | 1,523.3 | 13,374.1 | (1,022.4) | (2,811.2) | 311.6 | 11,377.6 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | 512.1 | — | — | 9.7 | 521.8 | |||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss), net of income tax effect | — | — | — | — | 206.9 | — | 4.5 | 211.4 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) | 733.2 | ||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | — | — | — | (144.0) | — | — | — | (144.0) | |||||||||||||||||||||||||||||||||||||||
Noncontrolling interest distributions | — | — | — | — | — | — | (10.0) | (10.0) | |||||||||||||||||||||||||||||||||||||||
Shares issued under equity compensation plans | — | — | 10.9 | — | — | 16.7 | — | 27.6 | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | 19.4 | — | — | — | — | 19.4 | |||||||||||||||||||||||||||||||||||||||
Balance at August 31, 2020 | $ | 1.9 | $ | 0.3 | $ | 1,553.6 | $ | 13,742.2 | $ | (815.5) | $ | (2,794.5) | $ | 315.8 | $ | 12,003.8 | |||||||||||||||||||||||||||||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 3
|
FINANCIAL STATEMENTS |
For the Six Months
Ended August 31, |
|||||||||||
2021 | 2020 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ | (885.4) | $ | 349.2 | |||||||
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 | 1,335.1 | 244.9 | |||||||||
Deferred tax provision (benefit) | (19.2) | 196.1 | |||||||||
Depreciation | 162.3 | 142.7 | |||||||||
Stock-based compensation | 36.0 | 34.0 | |||||||||
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings | 35.3 | 408.1 | |||||||||
Noncash lease expense | 40.1 | 41.3 | |||||||||
Amortization of debt issuance costs and loss on extinguishment of debt | 35.1 | 13.7 | |||||||||
Impairment of brewery construction in progress | 665.9 | — | |||||||||
Impairment of assets held for sale | — | 3.0 | |||||||||
Loss on inventory and related contracts associated with business optimization | — | 25.1 | |||||||||
Loss on settlement of treasury lock contracts | — | (29.3) | |||||||||
Change in operating assets and liabilities, net of effects from purchase and sale of business: | |||||||||||
Accounts receivable | (187.8) | (56.1) | |||||||||
Inventories | (49.3) | 73.0 | |||||||||
Prepaid expenses and other current assets | 10.1 | 51.3 | |||||||||
Accounts payable | 245.9 | 116.7 | |||||||||
Deferred revenue | 144.6 | 21.8 | |||||||||
Other accrued expenses and liabilities | (3.8) | (141.3) | |||||||||
Other | (39.0) | (49.3) | |||||||||
Total adjustments | 2,411.3 | 1,095.7 | |||||||||
Net cash provided by (used in) operating activities | 1,525.9 | 1,444.9 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchase of property, plant, and equipment | (353.4) | (277.8) | |||||||||
Purchase of business, net of cash acquired | — | (19.9) | |||||||||
Investments in equity method investees and securities | (28.6) | (217.4) | |||||||||
Proceeds from sale of assets | 1.3 | 18.1 | |||||||||
Proceeds from sale of business | 4.6 | 41.1 | |||||||||
Other investing activities | (1.0) | 0.6 | |||||||||
Net cash provided by (used in) investing activities | (377.1) | (455.3) | |||||||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 4
|
FINANCIAL STATEMENTS |
For the Six Months
Ended August 31, |
|||||||||||
2021 | 2020 | ||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Proceeds from issuance of long-term debt | 1,001.9 | 1,194.6 | |||||||||
Principal payments of long-term debt | (1,357.1) | (1,536.4) | |||||||||
Net proceeds from (repayments of) short-term borrowings | 486.0 | (238.9) | |||||||||
Dividends paid | (289.3) | (287.6) | |||||||||
Purchases of treasury stock | (1,305.0) | — | |||||||||
Proceeds from shares issued under equity compensation plans | 22.9 | 32.0 | |||||||||
Payments of minimum tax withholdings on stock-based payment awards | (9.8) | (7.6) | |||||||||
Payments of debt issuance, debt extinguishment, and other financing costs | (34.8) | (18.2) | |||||||||
Distributions to noncontrolling interests | (21.2) | (10.0) | |||||||||
Net cash provided by (used in) financing activities | (1,506.4) | (872.1) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 0.4 | 5.7 | |||||||||
Net increase (decrease) in cash and cash equivalents | (357.2) | 123.2 | |||||||||
Cash and cash equivalents, beginning of period | 460.6 | 81.4 | |||||||||
Cash and cash equivalents, end of period | $ | 103.4 | $ | 204.6 | |||||||
Supplemental disclosures of noncash investing and financing activities | |||||||||||
Additions to property, plant, and equipment | $ | 196.5 | $ | 69.9 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 5
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
August 31,
2021 |
February 28,
2021 |
||||||||||
(in millions) | |||||||||||
Raw materials and supplies | $ | 166.0 | $ | 151.1 | |||||||
In-process inventories | 703.5 | 735.9 | |||||||||
Finished case goods | 469.5 | 404.1 | |||||||||
$ | 1,339.0 | $ | 1,291.1 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 6
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
(in millions) | |||||
Cash received from buyer | $ | 272.0 | |||
Net assets sold | (206.4) | ||||
Contract termination | (4.0) | ||||
Direct costs to sell | (3.2) | ||||
Gain on sale of business | $ | 58.4 |
(in millions) | |||||
Cash received from buyer | $ | 667.4 | |||
Net assets sold | (669.1) | ||||
Transition services agreements | (13.0) | ||||
Direct costs to sell | (8.4) | ||||
AOCI reclassification adjustments, primarily foreign currency translation | (5.1) | ||||
Other | (5.2) | ||||
Loss on sale of business | $ | (33.4) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 7
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
August 31,
2021 |
February 28,
2021 |
||||||||||
(in millions) | |||||||||||
Derivative instruments designated as hedging instruments | |||||||||||
Foreign currency contracts | $ | 1,378.3 | $ | 1,558.0 | |||||||
Derivative instruments not designated as hedging instruments | |||||||||||
Foreign currency contracts | $ | 549.6 | $ | 704.7 | |||||||
Commodity derivative contracts | $ | 187.0 | $ | 221.6 | |||||||
Assets | Liabilities | |||||||||||||||||||||||||
August 31,
2021 |
February 28,
2021 |
August 31,
2021 |
February 28,
2021 |
|||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
Derivative instruments designated as hedging instruments | ||||||||||||||||||||||||||
Foreign currency contracts: | ||||||||||||||||||||||||||
Prepaid expenses and other | $ | 37.0 | $ | 32.0 | Other accrued expenses and liabilities | $ | 2.7 | $ | 3.5 | |||||||||||||||||
Other assets | $ | 31.3 | $ | 41.3 | Deferred income taxes and other liabilities | $ | 4.9 | $ | 2.7 | |||||||||||||||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 8
|
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 Six Months Ended August 31, 2021 | ||||||||||||||||||||
Foreign currency contracts | $ | 11.7 | Sales | $ | (0.4) | |||||||||||||||
Cost of product sold | 21.6 | |||||||||||||||||||
Treasury lock contracts | — | Interest expense | (1.5) | |||||||||||||||||
$ | 11.7 | $ | 19.7 | |||||||||||||||||
For the Six Months Ended August 31, 2020 | ||||||||||||||||||||
Foreign currency contracts | $ | (156.0) | Sales | $ | 0.9 | |||||||||||||||
Cost of product sold | (27.2) | |||||||||||||||||||
Interest rate swap contracts | (0.6) | Interest expense | (1.1) | |||||||||||||||||
Treasury lock contracts | (16.1) | Interest expense | (0.7) | |||||||||||||||||
$ | (172.7) | $ | (28.1) | |||||||||||||||||
For the Three Months Ended August 31, 2021 | ||||||||||||||||||||
Foreign currency contracts | $ | (7.6) | Sales | $ | (0.2) | |||||||||||||||
Cost of product sold | 12.6 | |||||||||||||||||||
Treasury lock contracts | — | Interest expense | (0.9) | |||||||||||||||||
$ | (7.6) | $ | 11.5 | |||||||||||||||||
For the Three Months Ended August 31, 2020 | ||||||||||||||||||||
Foreign currency contracts | $ | 37.4 | Sales | $ | 0.5 | |||||||||||||||
Cost of product sold | (18.7) | |||||||||||||||||||
Interest rate swap contracts | (0.3) | Interest expense | (0.7) | |||||||||||||||||
Treasury lock contracts | — | Interest expense | (0.7) | |||||||||||||||||
$ | 37.1 | $ | (19.6) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 9
|
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 Six Months Ended August 31, 2021 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ | 48.1 | |||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses | (8.4) | ||||||||||||||||||
$ | 39.7 | |||||||||||||||||||
For the Six Months Ended August 31, 2020 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ | (9.4) | |||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses | (20.0) | ||||||||||||||||||
$ | (29.4) | |||||||||||||||||||
For the Three Months Ended August 31, 2021 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ | 24.0 | |||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses | (6.2) | ||||||||||||||||||
$ | 17.8 | |||||||||||||||||||
For the Three Months Ended August 31, 2020 | ||||||||||||||||||||
Commodity derivative contracts | Cost of product sold | $ | 17.4 | |||||||||||||||||
Foreign currency contracts | Selling, general, and administrative expenses | 5.9 | ||||||||||||||||||
$ | 23.3 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 10
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
August 31, 2021 | February 28, 2021 | ||||||||||||||||||||||
Tranche A
Warrants (3)
|
Tranche B
Warrants (4)
|
Tranche A
Warrants (3)
|
Tranche B
Warrants (4)
|
||||||||||||||||||||
Exercise price (5)
|
C$ | 50.40 | C$ | 76.68 | C$ | 50.40 | C$ | 76.68 | |||||||||||||||
Valuation date stock price (6)
|
C$ | 21.71 | C$ | 21.71 | C$ | 41.90 | C$ | 41.90 | |||||||||||||||
Remaining contractual term (7)
|
2.2 years | 5.2 years | 2.7 years | 5.7 years | |||||||||||||||||||
Expected volatility (8)
|
65.0 | % | 65.0 | % | 70.0 | % | 70.0 | % | |||||||||||||||
Risk-free interest rate (9)
|
0.4 | % | 0.8 | % | 0.5 | % | 1.1 | % | |||||||||||||||
Expected dividend yield (10)
|
0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 11
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
August 31,
2021 |
February 28,
2021 |
||||||||||
Conversion price (1)
|
C$ | 48.17 | C$ | 48.17 | |||||||
Valuation date stock price (2)
|
C$ | 21.71 | C$ | 41.90 | |||||||
Remaining term (3)
|
1.9 years | 2.4 years | |||||||||
Expected volatility (4)
|
65.0 | % | 57.6 | % | |||||||
Risk-free interest rate (5)
|
0.4 | % | 0.4 | % | |||||||
Expected dividend yield (6)
|
0.0 | % | 0.0 | % |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 12
|
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) | |||||||||||||||||||||||
August 31, 2021 | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Foreign currency contracts | $ | — | $ | 70.0 | $ | — | $ | 70.0 | |||||||||||||||
Commodity derivative contracts | $ | — | $ | 53.7 | $ | — | $ | 53.7 | |||||||||||||||
Equity securities (1)
|
$ | — | $ | 332.7 | $ | — | $ | 332.7 | |||||||||||||||
Canopy Debt Securities (1)
|
$ | — | $ | 153.8 | $ | — | $ | 153.8 | |||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency contracts | $ | — | $ | 10.6 | $ | — | $ | 10.6 | |||||||||||||||
Commodity derivative contracts | $ | — | $ | 0.4 | $ | — | $ | 0.4 | |||||||||||||||
February 28, 2021 | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Foreign currency contracts | $ | — | $ | 76.6 | $ | — | $ | 76.6 | |||||||||||||||
Commodity derivative contracts | $ | — | $ | 21.2 | $ | — | $ | 21.2 | |||||||||||||||
Equity securities (1)
|
$ | — | $ | 1,639.7 | $ | — | $ | 1,639.7 | |||||||||||||||
Canopy Debt Securities (1)
|
$ | — | $ | 176.3 | $ | — | $ | 176.3 | |||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency contracts | $ | — | $ | 9.7 | $ | — | $ | 9.7 | |||||||||||||||
Commodity derivative contracts | $ | — | $ | 5.3 | $ | — | $ | 5.3 | |||||||||||||||
Constellation Brands, Inc. Q2 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 Losses | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
For the Six Months Ended August 31, 2021 | |||||||||||||||||||||||||||||
Long-lived assets | $ | — | $ | — | $ | 20.0 | $ | 665.9 | |||||||||||||||||||||
For the Six Months Ended August 31, 2020 | |||||||||||||||||||||||||||||
Long-lived assets held for sale | $ | — | $ | — | $ | 795.2 | $ | 3.0 | |||||||||||||||||||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 14
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Beer | Wine and Spirits | Consolidated | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Balance, February 29, 2020 | $ | 5,163.4 | $ | 2,593.7 | $ | 7,757.1 | |||||||||||||||||||||||
Purchase accounting allocations (1)
|
— | 14.3 | 14.3 | ||||||||||||||||||||||||||
Foreign currency translation adjustments | (38.7) | 15.9 | (22.8) | ||||||||||||||||||||||||||
Reclassified from assets held for sale (2)
|
0.9 | 44.0 | 44.9 | ||||||||||||||||||||||||||
Balance, February 28, 2021 | 5,125.6 | 2,667.9 | 7,793.5 | ||||||||||||||||||||||||||
Purchase accounting allocations (1)
|
— | 0.9 | 0.9 | ||||||||||||||||||||||||||
Foreign currency translation adjustments | 6.8 | (2.3) | 4.5 | ||||||||||||||||||||||||||
Balance, August 31, 2021 | $ | 5,132.4 | $ | 2,666.5 | $ | 7,798.9 |
August 31, 2021 | February 28, 2021 | ||||||||||||||||||||||
Gross
Carrying Amount |
Net
Carrying Amount |
Gross
Carrying Amount |
Net
Carrying Amount |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Amortizable intangible assets | |||||||||||||||||||||||
Customer relationships | $ | 87.2 | $ | 24.5 | $ | 87.2 | $ | 26.3 | |||||||||||||||
Other | 21.0 | 0.2 | 21.1 | 0.2 | |||||||||||||||||||
Total | $ | 108.2 | 24.7 | $ | 108.3 | 26.5 | |||||||||||||||||
Nonamortizable intangible assets | |||||||||||||||||||||||
Trademarks | 2,705.0 | 2,705.6 | |||||||||||||||||||||
Total intangible assets | $ | 2,729.7 | $ | 2,732.1 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 15
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
August 31, 2021 | February 28, 2021 | ||||||||||||||||||||||
Carrying Value | Ownership Percentage | Carrying Value | Ownership Percentage | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Canopy Equity Method Investment (1) (2)
|
$ | 2,580.2 | 36.2 | % | $ | 2,578.8 | 38.1 | % | |||||||||||||||
Other equity method investments | 238.8 |
20%-50%
|
209.6 |
20%-50%
|
|||||||||||||||||||
$ | 2,819.0 | $ | 2,788.4 |
Common Shares | Purchase Price | ||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
November 2017 Canopy Investment
|
18.9 | $ | 130.1 | ||||||||||||||||||||
November 2018 Canopy Investment | 104.5 | 2,740.3 | |||||||||||||||||||||
May 2020 Canopy Investment
|
18.9 | 173.9 | |||||||||||||||||||||
142.3 | $ | 3,044.3 |
For the Six Months
Ended August 31, |
For the Three Months
Ended August 31, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Equity in earnings (losses) from Canopy and related activities | $ | (35.3) | $ | (408.6) | $ | 120.5 | $ | (31.0) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 16
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Six Months
Ended August 31, |
For the Three Months
Ended August 31, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net sales | $ | 228.1 | $ | 160.0 | $ | 110.8 | $ | 79.7 | |||||||||||||||
Gross profit (loss) | $ | 29.9 | $ | (52.6) | $ | 22.2 | $ | 4.7 | |||||||||||||||
Net income (loss) | $ | (169.7) | $ | (1,066.2) | $ | 317.4 | $ | (92.6) | |||||||||||||||
Net income (loss) attributable to Canopy | $ | (233.5) | $ | (1,031.7) | $ | 319.4 | $ | (78.3) |
August 31, 2021 |
February 28,
2021 |
||||||||||||||||||||||
Current | Long-term | Total | Total | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Short-term borrowings | |||||||||||||||||||||||
Commercial paper | $ | 486.0 | $ | — | |||||||||||||||||||
$ | 486.0 | $ | — | ||||||||||||||||||||
Long-term debt | |||||||||||||||||||||||
Term loan credit facilities | $ | — | $ | 300.0 | $ | 300.0 | $ | 454.4 | |||||||||||||||
Senior notes | — | 9,768.3 | 9,768.3 | 9,972.4 | |||||||||||||||||||
Other | 5.8 | 13.4 | 19.2 | 15.5 | |||||||||||||||||||
$ | 5.8 | $ | 10,081.7 | $ | 10,087.5 | $ | 10,442.3 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 17
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Amount | Maturity | ||||||||||
(in millions) | |||||||||||
2020 Credit Agreement | |||||||||||
Revolving credit facility (1) (2)
|
$ | 2,000.0 | Sept 14, 2023 | ||||||||
June 2021 Term Credit Agreement | |||||||||||
2019 Five-Year Term Facility (1) (3)
|
$ | 491.3 | Jun 28, 2024 |
Outstanding
borrowings |
Interest
rate |
LIBOR
margin |
Outstanding
letters of credit |
Remaining
borrowing
capacity (1)
|
|||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
2020 Credit Agreement | |||||||||||||||||||||||||||||
Revolving credit facility | $ | — | — | % | — | % | $ | 12.2 | $ | 1,501.8 | |||||||||||||||||||
June 2021 Term Credit Agreement | |||||||||||||||||||||||||||||
2019 Five-Year Term Facility (2) (3)
|
$ | 300.0 | 0.7 | % | 0.63 | % |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 18
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 19
|
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 | 187,204,280 | 28,270,288 | 612,936 | 17,070,550 | 5,005,800 | ||||||||||||||||||||||||
Share repurchases | — | — | — | 1,696,722 | — | ||||||||||||||||||||||||
Conversion of shares | 43,441 | (42,810) | (631) | — | — | ||||||||||||||||||||||||
Exercise of stock options | — | — | 781 | (116,058) | — | ||||||||||||||||||||||||
Vesting of restricted stock units (1)
|
— | — | — | (66,157) | — | ||||||||||||||||||||||||
Vesting of performance share units (1)
|
— | — | — | (7,934) | — | ||||||||||||||||||||||||
Balance at May 31, 2021 | 187,247,721 | 28,227,478 | 613,086 | 18,577,123 | 5,005,800 | ||||||||||||||||||||||||
Share repurchases | — | — | — | 4,079,651 | — | ||||||||||||||||||||||||
Exercise of stock options | — | — | 1,267 | (34,736) | — | ||||||||||||||||||||||||
Employee stock purchases | — | — | — | (28,768) | — | ||||||||||||||||||||||||
Vesting of restricted stock units (1)
|
— | — | — | (5,256) | — | ||||||||||||||||||||||||
Balance at August 31, 2021 | 187,247,721 | 28,227,478 | 614,353 | 22,588,014 | 5,005,800 | ||||||||||||||||||||||||
Balance at February 29, 2020 | 186,090,745 | 28,300,206 | 1,692,227 | 18,256,826 | 5,005,800 | ||||||||||||||||||||||||
Conversion of shares | 2,532 | (2,532) | — | — | — | ||||||||||||||||||||||||
Exercise of stock options | — | — | 2,576 | (44,593) | — | ||||||||||||||||||||||||
Vesting of restricted stock units (1)
|
— | — | — | (76,019) | — | ||||||||||||||||||||||||
Vesting of performance share units (1)
|
— | — | — | (17,335) | — | ||||||||||||||||||||||||
Balance at May 31, 2020 | 186,093,277 | 28,297,674 | 1,694,803 | 18,118,879 | 5,005,800 | ||||||||||||||||||||||||
Conversion of shares | 684,808 | (11,113) | (673,695) | — | — | ||||||||||||||||||||||||
Exercise of stock options | — | — | — | (781,075) | — | ||||||||||||||||||||||||
Employee stock purchases | — | — | — | (32,867) | — | ||||||||||||||||||||||||
Vesting of restricted stock units (1)
|
— | — | — | (3,514) | — | ||||||||||||||||||||||||
Balance at August 31, 2020 | 186,778,085 | 28,286,561 | 1,021,108 | 17,301,423 | 5,005,800 | ||||||||||||||||||||||||
For the Three
Months Ended May 31, |
For the Three
Months Ended August 31, |
For the Six
Months Ended August 31, |
|||||||||||||||||||||||||||
2021 | |||||||||||||||||||||||||||||
Restricted Stock Units | 36,048 | 165 | 36,213 | ||||||||||||||||||||||||||
Performance Share Units | 4,565 | — | 4,565 | ||||||||||||||||||||||||||
2020 | |||||||||||||||||||||||||||||
Restricted Stock Units | 37,506 | 187 | 37,693 | ||||||||||||||||||||||||||
Performance Share Units | 9,433 | — | 9,433 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 20
|
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 | $ | 3,000.0 | $ | 2,436.4 | 11,076,620 | ||||||||||||
2021 Authorization | $ | 2,000.0 | $ | — | — |
For the Six Months Ended | |||||||||||||||||||||||
August 31, 2021 | August 31, 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 |
$ | (805.8) | $ | (100.8) | $ | 297.3 | $ | 36.9 | |||||||||||||||
Conversion of Class B common shares into Class A common shares | — | — | 36.9 | — | |||||||||||||||||||
Effect of stock-based awards on allocated net income (loss) | — | — | — | — | |||||||||||||||||||
Net income (loss) attributable to CBI allocated – diluted | $ | (805.8) | $ | (100.8) | $ | 334.2 | $ | 36.9 | |||||||||||||||
Weighted average common shares outstanding –
basic |
169.025 | 23.234 | 169.841 | 23.289 | |||||||||||||||||||
Conversion of Class B common shares into Class A common shares (1)
|
— | — | 23.289 | — | |||||||||||||||||||
Stock-based awards, primarily stock options (1)
|
— | — | 1.832 | — | |||||||||||||||||||
Weighted average common shares outstanding – diluted | 169.025 | 23.234 | 194.962 | 23.289 | |||||||||||||||||||
Net income (loss) per common share attributable to CBI –
basic |
$ | (4.77) | $ | (4.34) | $ | 1.74 | $ | 1.58 | |||||||||||||||
Net income (loss) per common share attributable to CBI – diluted | $ | (4.77) | $ | (4.34) | $ | 1.71 | $ | 1.58 | |||||||||||||||
For the Three Months Ended | |||||||||||||||||||||||
August 31, 2021 | August 31, 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 | $ | 1.3 | $ | 0.2 | $ | 455.5 | $ | 56.6 | |||||||||||||||
Conversion of Class B common shares into Class A common shares | 0.2 | — | 56.6 | — | |||||||||||||||||||
Effect of stock-based awards on allocated net income (loss) | — | — | — | (0.4) | |||||||||||||||||||
Net income (loss) attributable to CBI allocated – diluted | $ | 1.5 | $ | 0.2 | $ | 512.1 | $ | 56.2 | |||||||||||||||
Weighted average common shares outstanding – basic | 167.447 | 23.222 | 170.078 | 23.284 | |||||||||||||||||||
Conversion of Class B common shares into Class A common shares | 23.222 | — | 23.284 | — | |||||||||||||||||||
Stock-based awards, primarily stock options | 1.861 | — | 1.780 | — | |||||||||||||||||||
Weighted average common shares outstanding – diluted | 192.530 | 23.222 | 195.142 | 23.284 | |||||||||||||||||||
Net income (loss) per common share attributable to CBI – basic | $ | 0.01 | $ | 0.01 | $ | 2.68 | $ | 2.43 | |||||||||||||||
Net income (loss) per common share attributable to CBI – diluted | $ | 0.01 | $ | 0.01 | $ | 2.62 | $ | 2.42 |
Before Tax
Amount |
Tax (Expense)
Benefit |
Net of Tax
Amount |
|||||||||||||||
(in millions) | |||||||||||||||||
For the Six Months Ended August 31, 2021 | |||||||||||||||||
Net income (loss) attributable to CBI | $ | (906.6) | |||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ | 73.0 | $ | — | 73.0 | ||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | 73.0 | — | 73.0 | ||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
Net derivative gain (loss) | 19.3 | (8.5) | 10.8 | ||||||||||||||
Reclassification adjustments | (20.1) | 1.7 | (18.4) | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (0.8) | (6.8) | (7.6) | ||||||||||||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 21
|
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) | (0.1) | — | (0.1) | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (0.1) | — | (0.1) | ||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) | (26.1) | 5.9 | (20.2) | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (26.1) | 5.9 | (20.2) | ||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ | 46.0 | $ | (0.9) | 45.1 | ||||||||||||
Comprehensive income (loss) attributable to CBI | $ | (861.5) | |||||||||||||||
For the Six Months Ended August 31, 2020 | |||||||||||||||||
Net income (loss) attributable to CBI | $ | 334.2 | |||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ | (449.0) | $ | — | (449.0) | ||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (449.0) | — | (449.0) | ||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
Net derivative gain (loss) | (163.4) | 3.2 | (160.2) | ||||||||||||||
Reclassification adjustments | 28.0 | (1.9) | 26.1 | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (135.4) | 1.3 | (134.1) | ||||||||||||||
Pension/postretirement adjustments: | |||||||||||||||||
Net actuarial gain (loss) | (0.2) | — | (0.2) | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (0.2) | — | (0.2) | ||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) | 34.7 | (0.6) | 34.1 | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | 34.7 | (0.6) | 34.1 | ||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ | (549.9) | $ | 0.7 | (549.2) | ||||||||||||
Comprehensive income (loss) attributable to CBI | $ | (215.0) | |||||||||||||||
For the Three Months Ended August 31, 2021 | |||||||||||||||||
Net income (loss) attributable to CBI | $ | 1.5 | |||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ | (30.0) | $ | — | (30.0) | ||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (30.0) | — | (30.0) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 22
|
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) | (8.2) | 1.3 | (6.9) | ||||||||||||||
Reclassification adjustments | (12.3) | 1.5 | (10.8) | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (20.5) | 2.8 | (17.7) | ||||||||||||||
Pension/postretirement adjustments: | |||||||||||||||||
Net actuarial gain (loss) | 0.1 | — | 0.1 | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | 0.1 | — | 0.1 | ||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) | (8.0) | 1.8 | (6.2) | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (8.0) | 1.8 | (6.2) | ||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ | (58.4) | $ | 4.6 | (53.8) | ||||||||||||
Comprehensive income (loss) attributable to CBI | $ | (52.3) | |||||||||||||||
For the Three Months Ended August 31, 2020 | |||||||||||||||||
Net income (loss) attributable to CBI | $ | 512.1 | |||||||||||||||
Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
Foreign currency translation adjustments: | |||||||||||||||||
Net gain (loss) | $ | 170.9 | $ | — | 170.9 | ||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | 170.9 | — | 170.9 | ||||||||||||||
Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
Net derivative gain (loss) | 37.1 | (2.1) | 35.0 | ||||||||||||||
Reclassification adjustments | 20.3 | (1.4) | 18.9 | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | 57.4 | (3.5) | 53.9 | ||||||||||||||
Pension/postretirement adjustments: | |||||||||||||||||
Net actuarial gain (loss) | (0.7) | 0.2 | (0.5) | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (0.7) | 0.2 | (0.5) | ||||||||||||||
Share of OCI of equity method investments | |||||||||||||||||
Net gain (loss) | (17.8) | 0.4 | (17.4) | ||||||||||||||
Reclassification adjustments | — | — | — | ||||||||||||||
Net gain (loss) recognized in other comprehensive income (loss) | (17.8) | 0.4 | (17.4) | ||||||||||||||
Other comprehensive income (loss) attributable to CBI | $ | 209.8 | $ | (2.9) | 206.9 | ||||||||||||
Comprehensive income (loss) attributable to CBI | $ | 719.0 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 23
|
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 | $ | (392.5) | $ | 43.5 | $ | (4.2) | $ | 17.7 | $ | (335.5) | |||||||||||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassification adjustments | 73.0 | 10.8 | (0.1) | (20.2) | 63.5 | ||||||||||||||||||||||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | (18.4) | — | — | (18.4) | ||||||||||||||||||||||||||||||
Other comprehensive income (loss) | 73.0 | (7.6) | (0.1) | (20.2) | 45.1 | ||||||||||||||||||||||||||||||
Balance, August 31, 2021 | $ | (319.5) | $ | 35.9 | $ | (4.3) | $ | (2.5) | $ | (290.4) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 24
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Six Months
Ended August 31, |
For the Three Months
Ended August 31, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Cost of product sold | |||||||||||||||||||||||
Net gain (loss) on undesignated commodity derivative contracts | $ | 48.1 | $ | (9.4) | $ | 24.0 | $ | 17.4 | |||||||||||||||
Flow through of inventory step-up | 0.1 | (0.1) | 0.1 | (0.1) | |||||||||||||||||||
Settlements of undesignated commodity derivative contracts | (12.3) | 23.6 | (8.9) | 13.2 | |||||||||||||||||||
Strategic business development costs | (2.6) | (25.1) | — | (0.8) | |||||||||||||||||||
COVID-19 incremental costs | — | (5.5) | — | (0.9) | |||||||||||||||||||
Total cost of product sold | 33.3 | (16.5) | 15.2 | 28.8 | |||||||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||||||||||
Restructuring and other strategic business development costs | (0.1) | (8.9) | 0.8 | (5.8) | |||||||||||||||||||
Net gain (loss) on foreign currency derivative contracts | — | (8.0) | — | — | |||||||||||||||||||
COVID-19 incremental costs | — | (4.6) | — | 1.9 | |||||||||||||||||||
Transaction, integration, and other acquisition-related costs | — | (3.9) | — | (3.1) | |||||||||||||||||||
Other gains (losses) (1)
|
(6.1) | 4.5 | (7.1) | (2.9) | |||||||||||||||||||
Total selling, general, and administrative expenses | (6.2) | (20.9) | (6.3) | (9.9) | |||||||||||||||||||
Impairment of brewery construction in progress | (665.9) | — | — | — | |||||||||||||||||||
Impairment of assets held for sale | — | (3.0) | — | 22.0 | |||||||||||||||||||
Comparable Adjustments, Operating income (loss) | $ | (638.8) | $ | (40.4) | $ | 8.9 | $ | 40.9 |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 25
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Six Months
Ended August 31, |
For the Three Months
Ended August 31, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | |||||||||||||||||||||||
Net sales | $ | 3,433.3 | $ | 3,020.0 | $ | 1,861.3 | $ | 1,635.9 | |||||||||||||||
Segment operating income (loss) | $ | 1,366.1 | $ | 1,273.5 | $ | 693.0 | $ | 695.7 | |||||||||||||||
Capital expenditures | $ | 295.8 | $ | 198.5 | $ | 210.0 | $ | 90.2 | |||||||||||||||
Depreciation and amortization | $ | 118.5 | $ | 92.9 | $ | 64.5 | $ | 48.6 | |||||||||||||||
Wine and Spirits | |||||||||||||||||||||||
Net sales: | |||||||||||||||||||||||
Wine | $ | 844.9 | $ | 1,044.5 | $ | 447.2 | $ | 544.9 | |||||||||||||||
Spirits | 119.4 | 159.3 | 62.6 | 79.6 | |||||||||||||||||||
Net sales | $ | 964.3 | $ | 1,203.8 | $ | 509.8 | $ | 624.5 | |||||||||||||||
Segment operating income (loss) | $ | 204.4 | $ | 325.5 | $ | 100.2 | $ | 161.5 | |||||||||||||||
Income (loss) from unconsolidated investments | $ | 0.2 | $ | 1.1 | $ | (1.1) | $ | (2.4) | |||||||||||||||
Equity method investments (1)
|
$ | 126.7 | $ | 119.2 | $ | 126.7 | $ | 119.2 | |||||||||||||||
Capital expenditures | $ | 54.0 | $ | 37.4 | $ | 28.3 | $ | 27.9 | |||||||||||||||
Depreciation and amortization | $ | 39.6 | $ | 45.3 | $ | 19.7 | $ | 22.8 | |||||||||||||||
Corporate Operations and Other | |||||||||||||||||||||||
Segment operating income (loss) | $ | (117.4) | $ | (109.9) | $ | (62.9) | $ | (59.4) | |||||||||||||||
Income (loss) from unconsolidated investments | $ | (0.8) | $ | 0.5 | $ | (0.2) | $ | 0.3 | |||||||||||||||
Equity method investments | $ | 112.1 | $ | 99.6 | $ | 112.1 | $ | 99.6 | |||||||||||||||
Capital expenditures | $ | 3.6 | $ | 41.9 | $ | 1.2 | $ | 15.5 | |||||||||||||||
Depreciation and amortization | $ | 6.5 | $ | 7.2 | $ | 3.2 | $ | 1.6 | |||||||||||||||
Canopy | |||||||||||||||||||||||
Net sales | $ | 228.1 | $ | 160.0 | $ | 110.8 | $ | 79.7 | |||||||||||||||
Segment operating income (loss) | $ | (337.0) | $ | (857.6) | $ | (152.8) | $ | (124.4) | |||||||||||||||
Capital expenditures | $ | 37.5 | $ | 114.4 | $ | 16.5 | $ | 44.4 | |||||||||||||||
Depreciation and amortization | $ | 43.3 | $ | 54.6 | $ | 20.4 | $ | 24.5 | |||||||||||||||
Consolidation and Eliminations | |||||||||||||||||||||||
Net sales | $ | (228.1) | $ | (160.0) | $ | (110.8) | $ | (79.7) | |||||||||||||||
Operating income (loss) | $ | 337.0 | $ | 857.6 | $ | 152.8 | $ | 124.4 | |||||||||||||||
Income (loss) from unconsolidated investments | $ | (74.2) | $ | (65.8) | $ | (29.9) | $ | (34.1) | |||||||||||||||
Equity method investments | $ | 2,580.2 | $ | 2,713.1 | $ | 2,580.2 | $ | 2,713.1 | |||||||||||||||
Capital expenditures | $ | (37.5) | $ | (114.4) | $ | (16.5) | $ | (44.4) | |||||||||||||||
Depreciation and amortization | $ | (43.3) | $ | (54.6) | $ | (20.4) | $ | (24.5) | |||||||||||||||
Comparable Adjustments | |||||||||||||||||||||||
Operating income (loss) | $ | (638.8) | $ | (40.4) | $ | 8.9 | $ | 40.9 | |||||||||||||||
Income (loss) from unconsolidated investments | $ | (1,295.2) | $ | (587.7) | $ | (439.6) | $ | (44.5) | |||||||||||||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 26
|
FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |
For the Six Months
Ended August 31, |
For the Three Months
Ended August 31, |
||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Consolidated | |||||||||||||||||||||||
Net sales | $ | 4,397.6 | $ | 4,223.8 | $ | 2,371.1 | $ | 2,260.4 | |||||||||||||||
Operating income (loss) | $ | 814.3 | $ | 1,448.7 | $ | 739.2 | $ | 838.7 | |||||||||||||||
Income (loss) from unconsolidated investments (2)
|
$ | (1,370.0) | $ | (651.9) | $ | (470.8) | $ | (80.7) | |||||||||||||||
Equity method investments (1)
|
$ | 2,819.0 | $ | 2,931.9 | $ | 2,819.0 | $ | 2,931.9 | |||||||||||||||
Capital expenditures | $ | 353.4 | $ | 277.8 | $ | 239.5 | $ | 133.6 | |||||||||||||||
Depreciation and amortization | $ | 164.6 | $ | 145.4 | $ | 87.4 | $ | 73.0 | |||||||||||||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 27
|
MD&A |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 28
|
MD&A |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 29
|
MD&A |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 30
|
MD&A |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 31
|
MD&A |
Second
Quarter 2021 |
Six
Months 2021 |
|||||||
(in millions) | ||||||||
Net sales | $ | 181.4 | $ | 368.2 | ||||
Gross profit | $ | 70.7 | $ | 148.6 | ||||
Marketing (1)
|
$ | 4.0 | $ | 5.3 | ||||
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 32
|
MD&A |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 33
|
MD&A |
Second
Quarter 2022 |
Second
Quarter 2021 |
Six
Months 2022 |
Six
Months 2021 |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Cost of product sold | |||||||||||||||||||||||
Net gain (loss) on undesignated commodity derivative contracts | $ | 24.0 | $ | 17.4 | $ | 48.1 | $ | (9.4) | |||||||||||||||
Flow through of inventory step-up | 0.1 | (0.1) | 0.1 | (0.1) | |||||||||||||||||||
Settlements of undesignated commodity derivative contracts | (8.9) | 13.2 | (12.3) | 23.6 | |||||||||||||||||||
Strategic business development costs | — | (0.8) | (2.6) | (25.1) | |||||||||||||||||||
COVID-19 incremental costs | — | (0.9) | — | (5.5) | |||||||||||||||||||
Total cost of product sold | 15.2 | 28.8 | 33.3 | (16.5) | |||||||||||||||||||
Selling, general, and administrative expenses | |||||||||||||||||||||||
Restructuring and other strategic business development costs | 0.8 | (5.8) | (0.1) | (8.9) | |||||||||||||||||||
Transaction, integration, and other acquisition-related costs | — | (3.1) | — | (3.9) | |||||||||||||||||||
Net gain (loss) on foreign currency derivative contracts | — | — | — | (8.0) | |||||||||||||||||||
COVID-19 incremental costs | — | 1.9 | — | (4.6) | |||||||||||||||||||
Other gains (losses)
|
(7.1) | (2.9) | (6.1) | 4.5 | |||||||||||||||||||
Total selling, general, and administrative expenses | (6.3) | (9.9) | (6.2) | (20.9) | |||||||||||||||||||
Impairment of brewery construction in progress | — | — | (665.9) | — | |||||||||||||||||||
Impairment of assets held for sale | — | 22.0 | — | (3.0) | |||||||||||||||||||
Comparable Adjustments, Operating income (loss) | $ | 8.9 | $ | 40.9 | $ | (638.8) | $ | (40.4) | |||||||||||||||
Income (loss) from unconsolidated investments | $ | (439.6) | $ | (44.5) | $ | (1,295.2) | $ | (587.7) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 34
|
MD&A |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 35
|
MD&A |
Second
Quarter 2022 |
Second
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 1,861.3 | $ | 1,635.9 | $ | 225.4 | 14 | % | |||||||||||||||
Wine and Spirits: | |||||||||||||||||||||||
Wine | 447.2 | 544.9 | (97.7) | (18 | %) | ||||||||||||||||||
Spirits | 62.6 | 79.6 | (17.0) | (21 | %) | ||||||||||||||||||
Total Wine and Spirits | 509.8 | 624.5 | (114.7) | (18 | %) | ||||||||||||||||||
Canopy | 110.8 | 79.7 | 31.1 | 39 | % | ||||||||||||||||||
Consolidation and Eliminations | (110.8) | (79.7) | (31.1) | (39 | %) | ||||||||||||||||||
Consolidated net sales | $ | 2,371.1 | $ | 2,260.4 | $ | 110.7 | 5 | % |
|
Beer segment |
Second
Quarter 2022 |
Second
Quarter 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 1,861.3 | $ | 1,635.9 | $ | 225.4 | 14 | % | ||||||||||||||||||
Shipment volume | 101.0 | 90.4 | 11.7 | % | ||||||||||||||||||||||
Depletion volume (1)
|
7.3 | % |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 36
|
MD&A |
|
Wine and Spirits segment |
Second
Quarter 2022 |
Second
Quarter 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 9-liter case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 509.8 | $ | 624.5 | $ | (114.7) | (18 | %) | ||||||||||||||||||
Shipment volume | ||||||||||||||||||||||||||
Total | 7.4 | 11.6 | (36.2 | %) | ||||||||||||||||||||||
Organic (2)
|
7.4 | 7.0 | 5.7 | % | ||||||||||||||||||||||
U.S. Domestic | 6.3 | 10.7 | (41.1 | %) | ||||||||||||||||||||||
Organic U.S. Domestic (2)
|
6.3 | 6.3 | — | % | ||||||||||||||||||||||
Depletion volume (1) (2)
|
(2.3 | %) | ||||||||||||||||||||||||
|
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) April through June 2021, in our Second Quarter 2022 results, (ii) April through June 2020, in our Second Quarter 2021 results, (iii) January through June 2021, in our Six Months 2022 results, and (iv) January through June 2020, in our Six Months 2021 results. Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included and subsequently eliminated in order to reconcile to our consolidated financial statements. See “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.
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 37
|
MD&A |
Second
Quarter 2022 |
Second
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 984.0 | $ | 910.5 | $ | 73.5 | 8 | % | |||||||||||||||
Wine and Spirits | 230.5 | 276.5 | (46.0) | (17 | %) | ||||||||||||||||||
Canopy | 22.2 | 4.7 | 17.5 | NM | |||||||||||||||||||
Consolidation and Eliminations | (22.2) | (4.7) | (17.5) | NM | |||||||||||||||||||
Comparable Adjustments | 15.2 | 28.8 | (13.6) | (47 | %) | ||||||||||||||||||
Consolidated gross profit | $ | 1,229.7 | $ | 1,215.8 | $ | 13.9 | 1 | % |
|
The increase in Beer is primarily due to $107.0 million of volume growth, $41.9 million of favorable impact from pricing, and approximately $8 million primarily from favorable product mix shift, partially offset by $82.1 million of higher cost of product sold. The higher cost of product sold is largely due to (i) a $66.0 million increase in obsolescence primarily from excess inventory of hard seltzers resulting from a slowdown in the overall category, (ii) a $21.5 million increase in brewery costs primarily driven by higher compensation and benefits, and (iii) $16.2 million of higher depreciation, partially offset by (i) $27.7 million of favorable fixed cost absorption related to an overlap of production focused on our fastest moving products and packaging sizes to meet forecasted demand following reduced production levels in early Fiscal 2021 as a result of COVID-19 containment measures.
|
|
The decrease in Wine and Spirits gross profit is due to a decrease of $70.7 million from the recent divestitures, partially offset by a $24.7 million increase in organic gross profit. The increase in organic gross profit is attributable to (i) a $27.5 million increase from favorable product mix shift and (ii) $5.2 million of growth in branded wine and spirits 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 COVID-19 containment measures, partially offset by $10.7 million of higher cost of product sold. The higher cost of product sold was largely attributable to unfavorable fixed cost absorption including $8.0 million primarily from decreased production levels at certain facilities as a result of both a late frost in New Zealand and the 2020 U.S. wildfires which reduced the respective grape harvests and $7.9 million of increased transportation costs resulting from global supply chain logistics, including inflation, and route to market changes, partially offset by lower grape raw materials and other cost savings initiatives.
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 38
|
MD&A |
Second
Quarter 2022 |
Second
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 291.0 | $ | 214.8 | $ | 76.2 | 35 | % | |||||||||||||||
Wine and Spirits | 130.3 | 115.0 | 15.3 | 13 | % | ||||||||||||||||||
Corporate Operations and Other | 62.9 | 59.4 | 3.5 | 6 | % | ||||||||||||||||||
Canopy | 175.0 | 129.1 | 45.9 | 36 | % | ||||||||||||||||||
Consolidation and Eliminations | (175.0) | (129.1) | (45.9) | (36 | %) | ||||||||||||||||||
Comparable Adjustments | 6.3 | 9.9 | (3.6) | (36 | %) | ||||||||||||||||||
Consolidated selling, general, and administrative expenses | $ | 490.5 | $ | 399.1 | $ | 91.4 | 23 | % |
|
The increase in Beer is primarily due to $46.8 million of higher marketing spend and $29.0 million of increased general and administrative expenses. The higher 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 Second Quarter 2021, resulting from COVID-19 containment measures which shifted our normal spend to the second half of Fiscal 2021. The increase in general and administrative expenses was driven primarily by increased legal expense, higher compensation and benefits, and increased depreciation and other costs related to the implementation of a new ERP.
|
|
The increase in Wine and Spirits is primarily due to $10.1 million of higher marketing spend and $6.8 million increased general and administrative expenses. The higher 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 Second Quarter 2021, resulting from COVID-19 containment measures which shifted our normal spend to the second half of Fiscal 2021. The increase in general and administrative expenses was driven by increased depreciation and other costs related to the implementation of a new ERP, and higher compensation and benefits.
|
|
The increase in Corporate Operations and Other is largely due to approximately a $2 million increase in travel as compared to reduced travel in Second Quarter 2021 resulting from COVID-19 containment measures.
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 39
|
MD&A |
Second
Quarter 2022 |
Second
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 693.0 | $ | 695.7 | $ | (2.7) | — | % | |||||||||||||||
Wine and Spirits | 100.2 | 161.5 | (61.3) | (38 | %) | ||||||||||||||||||
Corporate Operations and Other | (62.9) | (59.4) | (3.5) | (6 | %) | ||||||||||||||||||
Canopy | (152.8) | (124.4) | (28.4) | (23 | %) | ||||||||||||||||||
Consolidation and Eliminations | 152.8 | 124.4 | 28.4 | 23 | % | ||||||||||||||||||
Comparable Adjustments | 8.9 | 40.9 | (32.0) | (78 | %) | ||||||||||||||||||
Consolidated operating income (loss) | $ | 739.2 | $ | 838.7 | $ | (99.5) | (12 | %) |
|
Beer remained relatively flat primarily attributable to higher obsolescence, marketing spend, and increased general and administrative expenses, as described above, largely offset by the strong volume growth within our Mexican beer portfolio and favorable pricing impact.
|
|
The decrease in Wine and Spirits is largely attributable to the recent divestitures, unfavorable cost of product sold, and higher marketing spend, partially offset by the increase in organic net sales, led by favorable product mix shift.
|
|
As previously discussed, the Corporate Operations and Other increase in operating loss is largely due to the increase in travel as compared to Second Quarter 2021.
|
Second
Quarter 2022 |
Second
Quarter 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Unrealized net gain (loss) on securities measured at fair value | $ | (590.0) | $ | (47.6) | $ | (542.4) | NM | ||||||||||||||||
Equity in earnings (losses) from Canopy and related activities | 120.5 | (31.0) | 151.5 | NM | |||||||||||||||||||
Equity in earnings (losses) from other equity method investees | (1.3) | (2.1) | 0.8 | 38 | % | ||||||||||||||||||
$ | (470.8) | $ | (80.7) | $ | (390.1) | NM |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 40
|
MD&A |
|
Canopy segment
Canopy net sales increased to $110.8 million for Second Quarter 2022 from $79.7 million for Second Quarter 2021. This increase of $31.1 million, or 39% is primarily attributable to increases in Canadian recreational sales and other consumer product sales. The Canadian recreational sales for Second Quarter 2022 benefited from (i) opening of retail stores across Canada, (ii) growth resulted from their recent acquisitions of AV Cannabis Inc. and Supreme Cannabis Company, Inc., and (iii) removal of COVID-19 containment measures which adversely impacted Canopy’s results in Second Quarter 2021. The increase in other consumer product sales largely resulted from expanded U.S. distribution for (i) vaporizers sold by Storz & Bickel GmbH & Co. KG and (ii) sports nutrition beverages and mixes sold by BioSteel. Canopy gross profit (loss) increased to $22.2 million for Second Quarter 2022 from $4.7 million for Second Quarter 2021. This increase of $17.5 million is primarily driven by increased net sales, favorable fixed cost absorption, and payroll subsidies received from the Canadian government in Second Quarter 2022 pursuant to a COVID-19 relief program. Canopy selling, general, and administrative expenses increased $45.9 million primarily from an increase in restructuring charges and sales and marketing expenses, partially offset by a decrease in stock-based compensation expense. The combination of these factors were the main contributors to the increase in operating loss of $28.4 million.
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 41
|
MD&A |
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 3,433.3 | $ | 3,020.0 | $ | 413.3 | 14 | % | |||||||||||||||
Wine and Spirits: | |||||||||||||||||||||||
Wine | 844.9 | 1,044.5 | (199.6) | (19 | %) | ||||||||||||||||||
Spirits | 119.4 | 159.3 | (39.9) | (25 | %) | ||||||||||||||||||
Total Wine and Spirits | 964.3 | 1,203.8 | (239.5) | (20 | %) | ||||||||||||||||||
Canopy | 228.1 | 160.0 | 68.1 | 43 | % | ||||||||||||||||||
Consolidation and Eliminations | (228.1) | (160.0) | (68.1) | (43 | %) | ||||||||||||||||||
Consolidated net sales | $ | 4,397.6 | $ | 4,223.8 | $ | 173.8 | 4 | % |
|
Beer segment |
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 3,433.3 | $ | 3,020.0 | $ | 413.3 | 14 | % | ||||||||||||||||||
Shipment volume | 185.8 | 166.6 | 11.5 | % | ||||||||||||||||||||||
Depletion volume (1)
|
8.8 | % |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 42
|
MD&A |
|
Wine and Spirits segment |
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
Percent
Change |
|||||||||||||||||||||
(in millions, branded product, 9-liter case equivalents) | ||||||||||||||||||||||||||
Net sales | $ | 964.3 | $ | 1,203.8 | $ | (239.5) | (20 | %) | ||||||||||||||||||
Shipment volume | ||||||||||||||||||||||||||
Total | 14.1 | 22.4 | (37.1 | %) | ||||||||||||||||||||||
Organic (2)
|
14.1 | 13.3 | 6.0 | % | ||||||||||||||||||||||
U.S. Domestic | 12.3 | 20.6 | (40.3 | %) | ||||||||||||||||||||||
Organic U.S. Domestic (2)
|
12.3 | 11.7 | 5.1 | % | ||||||||||||||||||||||
Depletion volume (1) (2)
|
(4.8 | %) | ||||||||||||||||||||||||
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 1,877.7 | $ | 1,680.2 | $ | 197.5 | 12 | % | |||||||||||||||
Wine and Spirits | 438.0 | 540.4 | (102.4) | (19 | %) | ||||||||||||||||||
Canopy | 29.9 | (52.6) | 82.5 | NM | |||||||||||||||||||
Consolidation and Eliminations | (29.9) | 52.6 | (82.5) | NM | |||||||||||||||||||
Comparable Adjustments | 33.3 | (16.5) | 49.8 | NM | |||||||||||||||||||
Consolidated gross profit | $ | 2,349.0 | $ | 2,204.1 | $ | 144.9 | 7 | % |
|
The increase in Beer is primarily due to $193.0 million of volume growth and $81.5 million of favorable impact from pricing, partially offset by $80.2 million of higher cost of product sold. The higher cost of product sold is largely due to (i) a $78.2 million increase in obsolescence primarily from excess inventory of hard seltzers resulting from a slowdown in the overall category, (ii) $35.6 million of brewery costs primarily driven by compensation and benefits and maintenance, and (iii) $16.3 million of higher depreciation, partially offset by $39.8 million of favorable fixed cost absorption as a result of COVID-19 containment measures related to an overlap of (i) production focused on our fastest moving products and packaging sizes to meet forecasted demand in Second Quarter 2021 and (ii) reduced production in early Fiscal 2021 as well as $13.2 million of foreign currency transactional benefits.
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 43
|
MD&A |
|
The decrease in Wine and Spirits gross profit is due to a decrease of $148.6 million from the recent divestitures, partially offset by a $46.2 million increase in organic gross profit. The increase in organic gross profit is attributable to (i) $25.2 million increase from favorable product mix shift, (ii) $18.9 million of growth in branded wine and spirits 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 COVID-19 containment measures, (iii) $6.2 million of favorable pricing, and (iv) $5.8 million primarily related to favorable DTC mix, partially offset by $11.2 million of higher cost of product sold. Higher cost of product sold was largely attributable to $14.2 million of increased transportation costs resulting from global supply chain logistics, including inflation, and route to market changes and $11.0 million from unfavorable fixed cost absorption. The unfavorable fixed cost absorption primarily resulted from decreased production levels at certain facilities as a result of both the 2020 U.S. wildfires and a late frost in New Zealand which reduced the respective grape harvests, partially offset by lower grape raw materials and other cost saving initiatives.
|
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 511.6 | $ | 406.7 | $ | 104.9 | 26 | % | |||||||||||||||
Wine and Spirits | 233.6 | 214.9 | 18.7 | 9 | % | ||||||||||||||||||
Corporate Operations and Other | 117.4 | 109.9 | 7.5 | 7 | % | ||||||||||||||||||
Canopy | 366.9 | 805.0 | (438.1) | (54 | %) | ||||||||||||||||||
Consolidation and Eliminations | (366.9) | (805.0) | 438.1 | 54 | % | ||||||||||||||||||
Comparable Adjustments | 6.2 | 20.9 | (14.7) | (70 | %) | ||||||||||||||||||
Consolidated selling, general, and administrative expenses | $ | 868.8 | $ | 752.4 | $ | 116.4 | 15 | % |
|
The increase in Beer is primarily due to $73.7 million of higher marketing spend and $30.7 million increased general and administrative expenses. The higher 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 Six Months 2021, resulting from COVID-19 containment measures which shifted our normal spend to the second half of Fiscal 2021. The increase in general and administrative expenses was primarily driven by increased legal expense, higher compensation and benefits, and increased depreciation and other costs related to the implementation of a new ERP.
|
|
The increase in Wine and Spirits is primarily due to $12.4 million of higher marketing spend and $9.7 million increased general and administrative expenses. The higher 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 Six Months 2021, resulting from COVID-19 containment measures which shifted our normal spend to the second half of Fiscal 2021. The increase in general and administrative expenses was driven by increased depreciation and other costs related to the implementation of a new ERP and higher compensation and benefits.
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 44
|
MD&A |
|
The increase in Corporate Operations and Other is largely due to approximately a $6 million increase in consulting services, primarily related to the implementation of a new ERP, and $5 million increase in compensation and benefits, partially offset by a $5 million favorable foreign currency impact as compared to Six Months 2021.
|
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Beer | $ | 1,366.1 | $ | 1,273.5 | $ | 92.6 | 7 | % | |||||||||||||||
Wine and Spirits | 204.4 | 325.5 | (121.1) | (37 | %) | ||||||||||||||||||
Corporate Operations and Other | (117.4) | (109.9) | (7.5) | (7 | %) | ||||||||||||||||||
Canopy | (337.0) | (857.6) | 520.6 | 61 | % | ||||||||||||||||||
Consolidation and Eliminations | 337.0 | 857.6 | (520.6) | (61 | %) | ||||||||||||||||||
Comparable Adjustments | (638.8) | (40.4) | (598.4) | NM | |||||||||||||||||||
Consolidated operating income (loss) | $ | 814.3 | $ | 1,448.7 | $ | (634.4) | (44 | %) |
|
The increase in Beer is largely attributable to the strong volume growth within our Mexican beer portfolio and favorable pricing impact, partially offset by higher obsolescence, marketing spend, and general and administrative expenses, as discussed above.
|
|
The decrease in Wine and Spirits is largely attributable to the recent divestitures, higher marketing spend, unfavorable cost of product sold, and increased general and administrative expenses, partially offset by the increase in organic net sales, led by favorable product mix shift and branded wine and spirits volume growth.
|
|
As previously discussed, the Corporate Operations and Other increase in operating loss is largely due to the increase in consulting services and compensation and benefit costs, partially offset by favorable foreign currency impact as compared to Six Months 2021.
|
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
Percent
Change |
||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Unrealized net gain (loss) on securities measured at fair value | $ | (1,335.1) | $ | (244.9) | $ | (1,090.2) | NM | ||||||||||||||||
Equity in earnings (losses) from Canopy and related activities (1)
|
(35.3) | (408.6) | 373.3 | 91 | % | ||||||||||||||||||
Equity in earnings (losses) from other equity method investees | 0.4 | 1.6 | (1.2) | (75 | %) | ||||||||||||||||||
$ | (1,370.0) | $ | (651.9) | $ | (718.1) | (110 | %) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 45
|
MD&A |
|
Canopy segment
Canopy net sales increased to $228.1 million for Six Months 2022 from $160.0 million for Six Months 2021. This increase of $68.1 million, or 43% is primarily attributable to an increase in Canadian recreational sales and other consumer product sales. The Canadian recreational sales for Six 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 Six 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. Canopy gross profit (loss) increased to $29.9 million for Six Months 2022 from $(52.6) million for Six Months 2021. This increase of $82.5 million is primarily driven by inventory write-downs for Six Months 2021 related to its organizational and strategic review of their business and increased net sales for Six Months 2022. Canopy selling, general, and administrative expenses decreased $438.1 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 and (ii) stock-based compensation expense. The combination of these factors were the main contributors to the $520.6 million decrease in operating loss.
|
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 46
|
MD&A |
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
|||||||||||||||
(in millions) | |||||||||||||||||
Net cash provided by (used in): | |||||||||||||||||
Operating activities | $ | 1,525.9 | $ | 1,444.9 | $ | 81.0 | |||||||||||
Investing activities | (377.1) | (455.3) | 78.2 | ||||||||||||||
Financing activities | (1,506.4) | (872.1) | (634.3) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | 0.4 | 5.7 | (5.3) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | (357.2) | $ | 123.2 | $ | (480.4) |
Constellation Brands, Inc. Q2 FY 2022 Form 10-Q |
#WORTHREACHINGFOR I 47
|
MD&A |
Six
Months 2022 |
Six
Months 2021 |
Dollar
Change |
|||||||||||||||
(in millions) | |||||||||||||||||
Net proceeds from (payments of) debt, current and long-term, and related activities | $ | 96.0 | $ | (598.9) | $ | 694.9 | |||||||||||
Dividends paid | (289.3) | (287.6) | (1.7) | ||||||||||||||
Purchases of treasury stock | (1,305.0) | — | (1,305.0) | ||||||||||||||
Net cash provided by stock-based compensation activities | 13.1 | 24.4 | (11.3) | ||||||||||||||
Distributions to noncontrolling interests | (21.2) | (10.0) | (11.2) | ||||||||||||||
Net cash provided by (used in) financing activities | $ | (1,506.4) | $ | (872.1) | $ | (634.3) |
Debt repayment | Debt issuance |
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MD&A |
Remaining Borrowing Capacity | |||||||||||
August 31,
2021 |
October 1,
2021 |
||||||||||
(in millions) | |||||||||||
Revolving credit facility (1)
|
$ | 1,501.8 | $ | 1,635.8 | |||||||
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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 | $ | — | — |
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MD&A |
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MD&A |
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OTHER KEY INFORMATION |
Aggregate
Notional Value |
Fair Value,
Net Asset (Liability) |
Increase (Decrease)
in Fair Value – Hypothetical 10% Adverse Change |
|||||||||||||||||||||||||||||||||
August 31,
2021 |
August 31,
2020 |
August 31,
2021 |
August 31,
2020 |
August 31,
2021 |
August 31,
2020 |
||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Foreign currency contracts | $ | 1,927.9 | $ | 1,894.0 | $ | 59.4 | $ | (47.6) | $ | (120.4) | $ | 148.8 | |||||||||||||||||||||||
Commodity derivative contracts | $ | 187.0 | $ | 246.5 | $ | 53.3 | $ | (25.5) | $ | (23.0) | $ | 20.2 |
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OTHER KEY INFORMATION |
Aggregate
Notional Value |
Fair Value,
Net Asset (Liability) |
Increase (Decrease)
in Fair Value – Hypothetical 1% Rate Increase |
|||||||||||||||||||||||||||||||||
August 31,
2021 |
August 31,
2020 |
August 31,
2021 |
August 31,
2020 |
August 31,
2021 |
August 31,
2020 |
||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||
Fixed interest rate debt | $ | 9,869.2 | $ | 10,568.7 | $ | (10,897.6) | $ | (11,859.4) | $ | (852.4) | $ | (875.3) | |||||||||||||||||||||||
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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)
|
||||||||||||||||||||||
June 1 – 30, 2021 (3)
|
527,118 | $ | 231.39 | 527,118 | $ | 3,431,317,611 | ||||||||||||||||||||
July 1 – 31, 2021 (3)
|
||||||||||||||||||||||||||
Open market transactions | 24,863 | $ | 231.27 | 24,863 | ||||||||||||||||||||||
ASR transaction | 1,731,752 |
(4)
|
1,731,752 | |||||||||||||||||||||||
July 1 – 31, 2021 | 1,756,615 |
(4)
|
1,756,615 | $ | 2,925,567,617 | |||||||||||||||||||||
August 1 – 31, 2021 (5)
|
||||||||||||||||||||||||||
ASR transaction | 508,645 |
(4)
|
508,645 | |||||||||||||||||||||||
Open market transactions | 1,287,273 | $ | 214.76 | 1,287,273 | ||||||||||||||||||||||
August 1 – 31, 2021 | 1,795,918 |
(4)
|
1,795,918 | $ | 2,649,106,846 | |||||||||||||||||||||
Total | 4,079,651 | $ | 221.63 | 4,079,651 |
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OTHER KEY INFORMATION |
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OTHER KEY INFORMATION |
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OTHER KEY INFORMATION |
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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 | ||||||||
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OTHER KEY INFORMATION |
Exhibit No. | ||||||||
4.31 | ||||||||
10.1 | ||||||||
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). |
* | Designates management contract or compensatory plan or arrangement. | ||||
# | Company’s Commission File No. 001-08495. | ||||
† | 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. |
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CONSTELLATION BRANDS, INC. | |||||||||||
Date: | October 6, 2021 | By: | /s/ Kenneth W. Metz | ||||||||
Kenneth W. Metz, Vice President
and Controller |
|||||||||||
Date: | October 6, 2021 | By: | /s/ Garth Hankinson | ||||||||
Garth Hankinson, Executive Vice President and
Chief Financial Officer (principal financial officer and principal accounting officer) |
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/s/ William A. Newlands | ||
William A. Newlands | ||
President and
Chief Executive Officer |
/s/ Garth Hankinson | ||
Garth Hankinson | ||
Executive Vice President and
Chief Financial Officer |
Dated: | October 6, 2021 | /s/ William A. Newlands | ||||||
William A. Newlands
President and Chief Executive Officer |
Dated: | October 6, 2021 | /s/ Garth Hankinson | ||||||
Garth Hankinson
Executive Vice President and Chief Financial Officer |