Item 1. Financial Statements.

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Item 1. Financial Statements.

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

(unaudited)


	May 31, 2024		February 29, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	73.8	$	152.4
Accounts receivable	893.9		832.8
Inventories	2,127.0		2,078.3
Prepaid expenses and other	733.7		666.0

Total current assets	3,828.4		3,729.5
Property, plant, and equipment	8,298.0		8,055.2
Goodwill	7,985.4		7,980.3
Intangible assets	2,731.5		2,731.7


Deferred income taxes	2,020.3		2,055.0

Other assets	1,196.5		1,140.0
Total assets	$	26,060.1	$	25,691.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	793.2	$	241.4
Current maturities of long-term debt	406.2		956.8
Accounts payable	1,139.3		1,107.1
Other accrued expenses and liabilities	783.5		836.4
Total current liabilities	3,122.2		3,141.7
Long-term debt, less current maturities	10,682.9		10,681.1

Deferred income taxes and other liabilities	1,683.1		1,804.3
Total liabilities	15,488.2		15,627.1
Commitments and contingencies
CBI stockholders’ equity:
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,698,298 shares and 212,698,298 shares, respectively	2.1		2.1
Additional paid-in capital	2,070.3		2,047.3
Retained earnings	14,109.5		13,417.2
Accumulated other comprehensive income (loss)	367.8		376.8
Class A Stock in treasury, at cost, 30,341,484 shares and 29,809,881 shares, respectively	(6,297.9)		(6,100.3)
Total CBI stockholders’ equity	10,251.8		9,743.1
Noncontrolling interests	320.1		321.5
Total stockholders’ equity	10,571.9		10,064.6
Total liabilities and stockholders’ equity	$	26,060.1	$	25,691.7

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

(unaudited)


	For the Three Months Ended May 31,
	2024		2023
Sales	$	2,860.7	$	2,699.5
Excise taxes	(198.9)		(184.6)
Net sales	2,661.8		2,514.9
Cost of product sold	(1,258.0)		(1,257.1)
Gross profit	1,403.8		1,257.8
Selling, general, and administrative expenses	(462.2)		(493.1)



Operating income (loss)	941.6		764.7
Income (loss) from unconsolidated investments	82.0		(415.4)
Interest expense, net	(102.8)		(118.9)

Income (loss) before income taxes	920.8		230.4
(Provision for) benefit from income taxes	(28.0)		(91.2)
Net income (loss)	892.8		139.2
Net (income) loss attributable to noncontrolling interests	(15.8)		(3.3)
Net income (loss) attributable to CBI	$	877.0	$	135.9

Comprehensive income (loss)	$	884.1	$	364.5
Comprehensive (income) loss attributable to noncontrolling interests	(16.1)		(14.2)
Comprehensive income (loss) attributable to CBI	$	868.0	$	350.3

Class A Stock:
Net income (loss) per common share attributable to CBI – basic	$	4.80	$	0.74
Net income (loss) per common share attributable to CBI – diluted	$	4.78	$	0.74

Weighted average common shares outstanding – basic	182.766		183.270
Weighted average common shares outstanding – diluted	183.461		183.863

Cash dividends declared per common share	$	1.01	$	0.89

The accompanying notes are an integral part of these statements.


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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	Class A Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
Balance at February 29, 2024	$	2.1	$	2,047.3	$	13,417.2	$	376.8	$	(6,100.3)	$	321.5	$	10,064.6

Comprehensive income (loss):
Net income (loss)	—		—		877.0		—		—		15.8		892.8
Other comprehensive income (loss), net of income tax effect	—		—		—		(9.0)		—		0.3		(8.7)
Comprehensive income (loss)													884.1
Repurchase of shares	—		—		—		—		(200.0)		—		(200.0)
Dividends declared	—		—		(184.7)		—		—		—		(184.7)
Non-controlling interest distributions	—		—		—		—		—		(17.5)		(17.5)
Shares issued under equity compensation plans	—		5.7		—		—		2.4		—		8.1
Stock-based compensation	—		17.3		—		—		—		—		17.3
Balance at May 31, 2024	$	2.1	$	2,070.3	$	14,109.5	$	367.8	$	(6,297.9)	$	320.1	$	10,571.9





















Balance at February 28, 2023	$	2.1	$	1,903.0	$	12,343.9	$	28.5	$	(5,863.9)	$	320.3	$	8,733.9

Comprehensive income (loss):
Net income (loss)	—		—		135.9		—		—		3.3		139.2
Other comprehensive income (loss), net of income tax effect	—		—		—		214.4		—		10.9		225.3
Comprehensive income (loss)													364.5
Repurchase of shares	—		—		—		—		(35.0)		—		(35.0)
Dividends declared	—		—		(163.1)		—		—		—		(163.1)
Noncontrolling interest distributions	—		—		—		—		—		(11.3)		(11.3)
Shares issued under equity compensation plans	—		0.6		—		—		4.1		—		4.7
Stock-based compensation	—		14.5		—		—		—		—		14.5
Balance at May 31, 2023	$	2.1	$	1,918.1	$	12,316.7	$	242.9	$	(5,894.8)	$	323.2	$	8,908.2

The accompanying notes are an integral part of these statements.


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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Three Months Ended May 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	892.8	$	139.2
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	—		71.8
Deferred tax provision (benefit)	25.0		(0.3)
Depreciation	111.6		105.3
Stock-based compensation	17.3		14.5
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings	1.3		220.6
Noncash lease expense	29.1		22.0




Impairment of equity method investments	—		123.5






Net gain on conversion and exchange to Exchangeable Shares	(83.3)		—
Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable	(63.4)		(31.5)
Inventories	(47.3)		(57.6)
Prepaid expenses and other current assets	(61.4)		(17.9)
Accounts payable	62.7		34.2
Deferred revenue	15.6		24.3
Other accrued expenses and liabilities	(97.7)		(73.2)
Other	(111.8)		90.5
Total adjustments	(202.3)		526.2
Net cash provided by (used in) operating activities	690.5		665.4

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment	(375.3)		(277.0)


Investments in equity method investees and securities	(13.0)		(21.6)
Proceeds from sale of assets	12.9		—

Proceeds from sale of business	—		6.7
Other investing activities	(2.0)		—
Net cash provided by (used in) investing activities	(377.4)		(291.9)


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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Three Months Ended May 31,
	2024		2023
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	—		744.8
Principal payments of long-term debt	(552.2)		(502.5)
Net proceeds from (repayments of) short-term borrowings	551.8		(346.3)
Dividends paid	(185.3)		(164.1)
Purchases of treasury stock	(200.0)		(35.0)
Proceeds from shares issued under equity compensation plans	24.7		15.9
Payments of minimum tax withholdings on stock-based payment awards	(13.8)		(11.2)
Payments of debt issuance, debt extinguishment, and other financing costs	—		(5.0)
Distributions to noncontrolling interests	(17.5)		(11.3)
Payment of contingent consideration	(0.7)		—





Net cash provided by (used in) financing activities	(393.0)		(314.7)

Effect of exchange rate changes on cash and cash equivalents	1.3		0.2

Net increase (decrease) in cash and cash equivalents	(78.6)		59.0
Cash and cash equivalents, beginning of period	152.4		133.5
Cash and cash equivalents, end of period	$	73.8	$	192.5

Supplemental disclosures of noncash investing and financing activities











Additions to property, plant, and equipment	$	195.2	$	142.2

The accompanying notes are an integral part of these statements.


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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

MAY 31, 2024

(unaudited)

1. BASIS OF PRESENTATION

We have prepared the Financial Statements, without audit, pursuant to the rules and regulations of the SEC applicable to quarterly reporting on Form 10-Q and reflect, in our opinion, all adjustments necessary to present fairly our financial information. All such adjustments are of a normal recurring nature. Certain information and footnote disclosures normally included in financial statements, prepared in accordance with generally accepted accounting principles, have been condensed or omitted as permitted by such rules and regulations. These Financial Statements should be read in conjunction with the consolidated financial statements and related notes included in the 2024 Annual Report. Results of operations for interim periods are not necessarily indicative of annual results.

Reclassification

We reclassified equity method investments to other assets on our consolidated balance sheet as of February 29, 2024, to conform with current year presentation.

2. INVENTORIES

Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor, and overhead and consist of the following:


	May 31, 2024		February 29, 2024
(in millions)
Raw materials and supplies	$	244.1	$	254.1
In-process inventories	1,109.5		1,096.0
Finished case goods	773.4		728.2
	$	2,127.0	$	2,078.3

3. DERIVATIVE INSTRUMENTS

Overview

Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our 2024 Annual Report and have not changed significantly for the three months ended May 31, 2024.

The aggregate notional value of outstanding derivative instruments is as follows:


	May 31, 2024		February 29, 2024
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts	$	2,083.1	$	2,045.6




Derivative instruments not designated as hedging instruments
Foreign currency contracts	$	829.5	$	735.9
Commodity derivative contracts	$	351.5	$	397.5

Credit risk

We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the derivative contracts. To manage this risk, we contract only with major


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financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association agreements which allow for net settlement of the derivative contracts. We have also established counterparty credit guidelines that are regularly monitored. Because of these safeguards, we believe the risk of loss from counterparty default to be immaterial.

In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of May 31, 2024, the estimated fair value of derivative instruments in a net liability position due to counterparties was $2.2 million. If we were required to settle the net liability position under these derivative instruments on May 31, 2024, we would have had sufficient available liquidity on hand to satisfy this obligation.

Results of period derivative activity

The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note 4):


Assets					Liabilities
	May 31, 2024		February 29, 2024			May 31, 2024		February 29, 2024
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	148.0	$	154.1	Other accrued expenses and liabilities	$	2.5	$	3.5
Other assets	$	141.0	$	153.5	Deferred income taxes and other liabilities	$	0.5	$	0.2









Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	2.7	$	3.6	Other accrued expenses and liabilities	$	3.8	$	1.7
Commodity derivative contracts:
Prepaid expenses and other	$	11.2	$	4.8	Other accrued expenses and liabilities	$	19.1	$	27.9
Other assets	$	5.7	$	1.4	Deferred income taxes and other liabilities	$	4.5	$	8.1

The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as OCI, net of income tax effect, is as follows:


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 Three Months Ended May 31, 2024
Foreign currency contracts	$	26.1	Sales	$	0.1
			Cost of product sold	39.1



	$	26.1		$	39.2

For the Three Months Ended May 31, 2023
Foreign currency contracts	$	79.3	Sales	$	—
			Cost of product sold	26.4

Pre-issuance hedge contracts	0.6		Interest expense, net	(0.2)
	$	79.9		$	26.2


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We expect $128.3 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.

The effect of our undesignated derivative instruments on our results of operations is as follows:


Derivative Instruments Not Designated as Hedging Instruments	Location of Net Gain (Loss) Recognized in Income (Loss)	Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Three Months Ended May 31, 2024
Commodity derivative contracts	Cost of product sold	$	14.6
Foreign currency contracts	Selling, general, and administrative expenses	4.0

		$	18.6

For the Three Months Ended May 31, 2023
Commodity derivative contracts	Cost of product sold	$	(34.7)
Foreign currency contracts	Selling, general, and administrative expenses	12.7

		$	(22.0)

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

Authoritative guidance establishes a framework for measuring fair value, including a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The hierarchy includes three levels:

Level 1 inputs are quoted prices in active markets for identical assets or liabilities;
Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates, and yield curves that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Fair value methodology

The following methods and assumptions are used to estimate the fair value of our financial instruments:

Foreign currency and commodity derivative contracts

The fair value is estimated using market-based inputs, obtained from independent pricing services, entered into valuation models. These valuation models require various inputs, including contractual terms, market foreign exchange prices, market commodity prices, interest-rate yield curves, and currency volatilities, as applicable (Level 2 fair value measurement).

Short-term borrowings

Our short-term borrowings consist of our commercial paper program and the revolving credit facility under our senior credit facility. The revolving credit facility is a variable interest rate bearing note with a fixed margin, adjustable based upon our debt rating (as defined in our senior credit facility). For these short-term borrowings, the carrying value approximates the fair value.

Long-term debt

The fair value of our fixed interest rate long-term debt is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement). As of May 31, 2024, the carrying amount of long-term debt, including the current portion, was $11,089.1 million, compared with an estimated fair value of $10,176.1 million. As of February 29, 2024, the carrying amount of long-


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term debt, including the current portion, was $11,637.9 million, compared with an estimated fair value of $10,775.8 million.

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value as of May 31, 2024, and February 29, 2024, due to the relatively short maturity of these instruments.

Recurring basis measurements

The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:


	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)
May 31, 2024
Assets:
Foreign currency contracts	$	—	$	291.7	$	—	$	291.7
Commodity derivative contracts	$	—	$	16.9	$	—	$	16.9


Liabilities:
Foreign currency contracts	$	—	$	6.8	$	—	$	6.8
Commodity derivative contracts	$	—	$	23.6	$	—	$	23.6




February 29, 2024
Assets:
Foreign currency contracts	$	—	$	311.2	$	—	$	311.2
Commodity derivative contracts	$	—	$	6.2	$	—	$	6.2


Liabilities:
Foreign currency contracts	$	—	$	5.4	$	—	$	5.4
Commodity derivative contracts	$	—	$	36.0	$	—	$	36.0

Nonrecurring basis measurements

The following table presents our assets and liabilities measured at estimated fair value on a nonrecurring basis for which an impairment assessment was performed for the periods presented:


	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 Three Months Ended May 31, 2023
Equity method investments	$	142.7	$	—	$	—	$	123.5

Equity method investments

We evaluated the Canopy Equity Method Investment as of May 31, 2023, and determined there was an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recorded significant costs in its fourth quarter of fiscal 2023 results designed to align its


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Canadian cannabis operations and resources in response to continued unfavorable market trends, (iii) the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, and (iv) Canopy’s identification of material misstatements in certain of its previously reported financial results related to sales in its BioSteel Sports Nutrition Inc. reporting unit that were accounted for incorrectly, including the recording of a goodwill impairment during its restated second quarter of fiscal 2023. As a result, the Canopy Equity Method Investment with a carrying value of $266.2 million was written down to its estimated fair value of $142.7 million, resulting in an impairment of $123.5 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the three months ended May 31, 2023. The estimated fair value was determined based on the closing price of the underlying equity security as of May 31, 2023. We no longer apply the equity method to our investment in Canopy following the April 2024 conversion of our Canopy common shares to Exchangeable Shares. See Note 7 for further discussion.

5. GOODWILL

The changes in the carrying amount of goodwill are as follows:


	Beer		Wine and Spirits		Consolidated
(in millions)
Balance, February 28, 2023	$	5,188.9	$	2,736.5	$	7,925.4
Purchase accounting allocations (1)	—		6.5		6.5

Foreign currency translation adjustments	49.3		(0.9)		48.4

Balance, February 29, 2024	5,238.2		2,742.1		7,980.3


Foreign currency translation adjustments	4.4		0.7		5.1


Balance, May 31, 2024	$	5,242.6	$	2,742.8	$	7,985.4

(1)Purchase accounting allocations associated with the June 2023 acquisition of the Domaine Curry wine business.

If broader industry and market conditions decline and/or our expectations of future performance as reflected in our current strategic operating plans are not fully realized, a future impairment of Wine and Spirits goodwill is reasonably possible.

Subsequent event

Sea Smoke acquisition

In June 2024, we acquired the Sea Smoke business, including a California-based luxury wine brand, vineyards, and a production facility for $170.0 million, subject to adjustments. This transaction also included the acquisition of a trademark, inventory, and goodwill. The results of operations of Sea Smoke will be reported in the Wine and Spirits segment and will be included in our consolidated results of operations from the date of acquisition.


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6. INTANGIBLE ASSETS

The major components of intangible assets are as follows:


	May 31, 2024				February 29, 2024
	Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	85.4	$	15.8	$	85.3	$	16.2
Other	20.8		0.3		20.8		0.3
Total	$	106.2	16.1		$	106.1	16.5

Nonamortizable intangible assets
Trademarks			2,715.4				2,715.2
Total intangible assets			$	2,731.5			$	2,731.7

We did not incur costs to renew or extend the term of acquired intangible assets for the three months ended May 31, 2024, and May 31, 2023. Net carrying amount represents the gross carrying value net of accumulated amortization.

7. OTHER ASSETS

The major components of other assets are as follows:


	May 31, 2024		February 29, 2024
(in millions)

Operating lease right-of-use asset	$	606.2	$	615.3
Derivative assets	146.7		154.9
Equity method investments	126.9		170.6
Exchangeable Shares	97.3		—
Other investments in debt and equity securities	86.0		73.0
Assets held for sale	26.1		25.7
Other	107.3		100.5
	$	1,196.5	$	1,140.0

Equity method investments

The carrying value of our equity method investments are as follows:


	May 31, 2024		February 29, 2024
(in millions)
Canopy Equity Method Investment (1)	$	—	$	42.5
Other equity method investments	126.9		128.1
	$	126.9	$	170.6

(1)Following the April 2024 conversion to Exchangeable Shares we no longer apply the equity method.


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Exchangeable Shares

In April 2024, we elected to convert our 17.1 million Canopy common shares into Exchangeable Shares on a one-for-one basis. Additionally, in April 2024, we exchanged C$81.2 million of the principal amount of the C$100.0 million 4.25% promissory note issued to us by Canopy for 9.1 million Exchangeable Shares and forgave all accrued but unpaid interest together with the remaining principal amount of the note. As a result of these transactions, we (i) have 26.3 million Exchangeable Shares and (ii) recognized an $83.3 million net gain in income (loss) from unconsolidated investments within our consolidated results of operations for the three months ended May 31, 2024. The fair value of Exchangeable Shares on the date of the conversion and exchange was estimated using a valuation model based primarily on the following inputs: (i) Canopy’s common share price, (ii) the expected volatility of Canopy’s common shares, and (iii) the probability and timing of U.S. federal legalization of recreational cannabis. As the Exchangeable Shares are an equity security without a readily determinable fair value, we elected to account for the Exchangeable Shares under the measurement alternative method. Future impairments, if any, will also be reported in income (loss) from unconsolidated investments within our consolidated results.

Other investments in debt and equity securities

We have multiple investments through our corporate venture capital function in debt and equity securities.

Subsequent event

Mexicali Brewery

In July 2024, we closed on the sale of the remaining assets classified as held for sale at the canceled Mexicali Brewery. These net assets had met held for sale criteria as of May 31, 2024, and February 29, 2024.

8. BORROWINGS

Borrowings consist of the following:


	May 31, 2024						February 29, 2024
	Current		Long-term		Total		Total
(in millions)
Short-term borrowings

Commercial paper	$	793.2					$	241.4

	$	793.2					$	241.4

Long-term debt


Senior notes	$	399.7	$	10,673.7	$	11,073.4	$	11,620.1
Other	6.5		9.2		15.7		17.8
	$	406.2	$	10,682.9	$	11,089.1	$	11,637.9

Bank facilities

The Company, CB International, the Administrative Agent, and certain other lenders are parties to the 2022 Credit Agreement. The October 2022 Credit Agreement Amendment revised certain defined terms and covenants in the 2022 Credit Agreement and became effective in April 2024 following (i) the amendment by Canopy of its Articles of Incorporation, (ii) the conversion of our Canopy common shares into Exchangeable Shares, and (iii) the resignation of our nominees from the board of directors of Canopy.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Information with respect to borrowings under the 2022 Credit Agreement is as follows:


	Outstanding borrowings		Interest rate		SOFR margin		Outstanding letters of credit		Remaining borrowing capacity (1)
(in millions)
May 31, 2024
Revolving credit facility (2) (3)	$	—	—	%	—	%	$	11.4	$	1,443.1

February 29, 2024
Revolving credit facility (2) (3)	$	—	—	%	—	%	$	11.5	$	1,997.0

(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2022 Credit Agreement and outstanding borrowings under our commercial paper program of $795.5 million and $241.5 million (excluding unamortized discount) as of May 31, 2024 and February 29, 2024, respectively (see “Commercial paper program” below).

(2)Contractual interest rate varies based on our debt rating (as defined in the agreement) and is a function of SOFR plus a margin and a credit spread adjustment, or the base rate plus a margin, or, in certain circumstances where SOFR cannot be adequately ascertained or available, an alternative benchmark rate plus a margin.

(3)We and/or CB International are the borrower under the $2,250.0 million revolving credit facility with a maturity date of April 14, 2027. Includes a sub-facility for letters of credit of up to $200.0 million.

We and our subsidiaries are subject to covenants that are contained in the 2022 Credit Agreement, including those restricting the incurrence of additional subsidiary indebtedness, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions, and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio.

Commercial paper program

We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.25 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2022 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility. Information with respect to our outstanding commercial paper borrowings is as follows:


	May 31, 2024			February 29, 2024
(in millions)
Outstanding borrowings (1)	$	793.2		$	241.4
Weighted average annual interest rate	5.7		%	5.7		%
Weighted average remaining term	20 days			4 days

(1)Outstanding commercial paper borrowings are net of unamortized discount.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Debt payments

As of May 31, 2024, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $53.8 million and $22.8 million, respectively) for the remaining nine months of Fiscal 2025 and for each of the five succeeding fiscal years and thereafter are as follows:


(in millions)
Fiscal 2025	$	405.3
Fiscal 2026	1,404.9
Fiscal 2027	603.8
Fiscal 2028	1,801.5
Fiscal 2029	900.1
Fiscal 2030	800.0
Thereafter	5,250.1
	$	11,165.7

9. INCOME TAXES

Our effective tax rate for the three months ended May 31, 2024, and May 31, 2023, was 3.0% and 39.6%, respectively.

For the three months ended May 31, 2024, our effective tax rate was lower than the federal statutory rate of 21% primarily due to (i) a net income tax benefit recognized as a result of the resolution of various tax examinations and assessments related to prior periods, (ii) the benefit of lower effective tax rates applicable to our foreign businesses, and (iii) a decrease in the valuation allowance related to our investment in Canopy.

For the three months ended May 31, 2023, our effective tax rate was higher than the federal statutory rate of 21% primarily due to an increase in the valuation allowance related to our investment in Canopy, partially offset by (i) a net income tax benefit recognized as a result of a change in tax entity classification and (ii) the benefit of lower effective tax rates applicable to our foreign businesses.

The Organization for Economic Cooperation and Development introduced a framework under Pillar Two which includes a global minimum tax rate of 15%. Many jurisdictions in which we do business have started to enact laws implementing Pillar Two. We are monitoring these developments and currently do not believe these rules will have a material impact on our financial condition and/or consolidated results.

10. STOCKHOLDERS’ EQUITY

Common stock

The number of shares of common stock issued and treasury stock, and associated share activity, are as follows:


	Class A Stock	Class 1 Stock	Class A Stock in Treasury
Balance at February 29, 2024	212,698,298	23,661	29,809,881
Share repurchases	—	—	775,334

Exercise of stock options	—	1,880	(149,324)


Vesting of restricted stock units (1)	—	—	(85,650)
Vesting of performance share units (1)	—	—	(8,757)

Balance at May 31, 2024	212,698,298	25,541	30,341,484


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


	Class A Stock	Class 1 Stock	Class A Stock in Treasury
Balance at February 28, 2023	212,697,428	22,705	29,498,426
Share repurchases	—	—	153,937
Conversion of shares	80	(80)	—
Exercise of stock options	—	800	(129,595)


Vesting of restricted stock units (1)	—	—	(71,189)
Vesting of performance share units (1)	—	—	(13,113)

Balance at May 31, 2023	212,697,508	23,425	29,438,466

(1)Net of the following shares withheld to satisfy tax withholding requirements:


			For the Three Months Ended May 31,
2024
Restricted Stock Units			48,501
Performance Share Units			5,728

2023
Restricted Stock Units			39,839
Performance Share Units			8,735

Stock repurchases

In each of January 2021 and November 2023, our Board of Directors authorized the repurchase of up to $2.0 billion of our publicly traded common stock. The Board of Directors did not specify a date upon which these authorizations would expire. Shares repurchased under these authorizations become treasury shares.

For the three months ended May 31, 2024, we repurchased 775,334 shares of Class A Stock pursuant to the 2021 Authorization through open market transactions at an aggregate cost of $200.0 million. Beginning May 31, 2024, we repurchased 187,843 shares of Class A Stock pursuant to the 2021 Authorization at an aggregate cost of $47.0 million through open market transactions made pursuant to a Rule 10b5-1 trading plan.

As of July 3, 2024, total shares repurchased under our board authorizations are as follows:


			Class A Stock
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)


2021 Authorization (1)	$	2,000.0	$	1,633.3	6,838,453
2023 Authorization (1)	$	2,000.0	$	—	—

(1)As of July 3, 2024, $2,366.7 million remains available for future share repurchases, excluding the impact of Federal excise tax owed pursuant to the IRA.

11. NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CBI

For the three months ended May 31, 2024, and May 31, 2023, net income (loss) per common share – basic for Class A Stock has been computed based on the weighted average shares of common stock outstanding during the period. Net income (loss) per common share – diluted for Class A Stock reflects the weighted average shares of common stock plus the effect of dilutive securities outstanding during the period using the treasury stock method.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

The effect of dilutive securities includes the impact of outstanding stock-based awards. The dilutive computation does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on the net income (loss) per common share attributable to CBI. The computation of basic and diluted net income (loss) per common share for Class A Stock are as follows:


	For the Three Months Ended May 31,
	2024		2023
(in millions, except per share data)
Net income (loss) attributable to CBI	$	877.0	$	135.9

Weighted average common shares outstanding – basic	182.766		183.270
Stock-based awards, primarily stock options	0.695		0.593
Weighted average common shares outstanding – diluted	183.461		183.863

Net income (loss) per common share attributable to CBI – basic	$	4.80	$	0.74
Net income (loss) per common share attributable to CBI – diluted	$	4.78	$	0.74

12. COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI

Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments, unrealized net gain (loss) on derivative instruments, pension/postretirement adjustments, and our share of OCI of equity method investments. The reconciliation of net income (loss) attributable to CBI to comprehensive income (loss) attributable to CBI is as follows:


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
For the Three Months Ended May 31, 2024
Net income (loss) attributable to CBI					$	877.0
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	13.5	$	—	13.5
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	13.5		—		13.5
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	28.2		(3.3)		24.9
Amounts reclassified	(42.1)		5.0		(37.1)
Net gain (loss) recognized in other comprehensive income (loss)	(13.9)		1.7		(12.2)








Share of OCI of equity method investments
Net gain (loss)	—		—		—
Amounts reclassified	(10.3)		—		(10.3)
Net gain (loss) recognized in other comprehensive income (loss)	(10.3)		—		(10.3)
Other comprehensive income (loss) attributable to CBI	$	(10.7)	$	1.7	(9.0)
Comprehensive income (loss) attributable to CBI					$	868.0


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
For the Three Months Ended May 31, 2023
Net income (loss) attributable to CBI					$	135.9
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	163.4	$	—	163.4
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	163.4		—		163.4
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	86.4		(10.4)		76.0
Amounts reclassified	(27.8)		3.2		(24.6)
Net gain (loss) recognized in other comprehensive income (loss)	58.6		(7.2)		51.4




Pension/postretirement adjustments:
Net actuarial gain (loss)	(0.3)		0.1		(0.2)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(0.3)		0.1		(0.2)
Share of OCI of equity method investments
Net gain (loss)	(0.3)		0.1		(0.2)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(0.3)		0.1		(0.2)
Other comprehensive income (loss) attributable to CBI	$	221.4	$	(7.0)	214.4
Comprehensive income (loss) attributable to CBI					$	350.3

Accumulated other comprehensive income (loss), net of income tax effect, includes the following components:


	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 29, 2024	$	102.9	$	266.2	$	(2.6)	$	10.3	$	376.8
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	13.5		24.9		—		—		38.4
Amounts reclassified from accumulated other comprehensive income (loss)	—		(37.1)		—		(10.3)		(47.4)
Other comprehensive income (loss)	13.5		(12.2)		—		(10.3)		(9.0)
Balance, May 31, 2024	$	116.4	$	254.0	$	(2.6)	$	—	$	367.8

13. BUSINESS SEGMENT INFORMATION

Our internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits and we report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio that includes higher-end wine brands


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate development, corporate finance, corporate strategy, executive management, growth, human resources, internal audit, investor relations, IT, legal, and public relations, as well as our Canopy investment and investments made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by, our CODM as it is not used to make strategic decisions, allocate resources, or assess performance.

In addition, management excludes Comparable Adjustments from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating income (loss) which does not include the impact of these Comparable Adjustments.

We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:


	For the Three Months Ended May 31,
	2024		2023
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts	$	14.6	$	(34.7)
Settlements of undesignated commodity derivative contracts	8.5		0.6
Flow through of inventory step-up	(1.1)		(0.7)






Comparable Adjustments, Cost of product sold	22.0		(34.8)

Selling, general, and administrative expenses
Transition services agreements activity	(2.8)		(5.7)
Restructuring and other strategic business development costs	(1.8)		(14.9)

Transaction, integration, and other acquisition-related costs	(0.2)		(0.3)





Other gains (losses) (1)	0.4		(6.8)
Comparable Adjustments, Selling, general, and administrative expenses	(4.4)		(27.7)





Comparable Adjustments, Operating income (loss)	$	17.6	$	(62.5)


(1)	Primarily includes the following:
		For the Three Months Ended May 31,
		2024		2023
	(in millions)
	Gain (loss) on sale of business	$	—	$	(7.0)


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2024 Annual Report. Segment information is as follows:


	For the Three Months Ended May 31,
	2024		2023
(in millions)
Beer
Net sales	$	2,272.8	$	2,098.6





Segment operating income (loss)	$	923.0	$	797.8



Capital expenditures	$	314.4	$	205.6
Depreciation and amortization	$	86.4	$	78.8

Wine and Spirits
Net sales:
Wine	$	329.3	$	361.0
Spirits	59.7		55.3
Net sales	$	389.0	$	416.3





Segment operating income (loss)	$	59.7	$	79.3

Income (loss) from unconsolidated investments	$	0.4	$	2.3

Equity method investments	$	101.2	$	96.8

Capital expenditures	$	49.6	$	38.6
Depreciation and amortization	$	21.3	$	22.5

Corporate Operations and Other
Segment operating income (loss)	$	(58.7)	$	(49.9)
Income (loss) from unconsolidated investments	$	(1.7)	$	(33.3)

Equity method investments	$	25.7	$	194.5

Capital expenditures	$	11.3	$	32.8
Depreciation and amortization	$	4.2	$	4.4











Comparable Adjustments

Operating income (loss)	$	17.6	$	(62.5)
Income (loss) from unconsolidated investments	$	83.3	$	(384.4)


Consolidated
Net sales	$	2,661.8	$	2,514.9
Operating income (loss)	$	941.6	$	764.7
Income (loss) from unconsolidated investments (1)	$	82.0	$	(415.4)

Equity method investments	$	126.9	$	291.3

Capital expenditures	$	375.3	$	277.0
Depreciation and amortization	$	111.9	$	105.7


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


(1)	Income (loss) from unconsolidated investments consists of:
			For the Three Months Ended May 31,
			2024		2023
		(in millions)
		Net gain on conversion and exchange to Exchangeable Shares (i)	$	83.3	$	—
		Equity in earnings (losses) from other equity method investees and related activities	(1.3)		(0.3)
		Equity in earnings (losses) from Canopy and related activities	—		(219.8)
		Impairment of equity method investments	—		(123.5)
		Unrealized net gain (loss) on securities measured at fair value (i)	—		(71.8)


			$	82.0	$	(415.4)

(i)Effective as of May 31, 2023, we determined that the 2023 Canopy Promissory Note did not have future economic value given the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, prior to the maturity of the note. Accordingly, the fair value of the remaining balance for this instrument was determined to be zero. In April 2024, we exchanged the 2023 Canopy Promissory Note for Exchangeable Shares.

14. ACCOUNTING GUIDANCE NOT YET ADOPTED

Segment reporting

In November 2023, the FASB issued a standard requiring disclosures, on an annual and interim basis, of significant segment expenses and other segment items that are regularly provided to the CODM as well as the title and position of the CODM. We are required to adopt these disclosures for our annual period ending February 28, 2025, and interim periods beginning March 1, 2025, with early adoption permitted. The amendments in this standard will be applied retrospectively to all prior periods presented in the financial statements. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.

Income taxes

In December 2023, the FASB issued a standard aimed at improving tax disclosure requirements, primarily through enhanced disclosures related to the income tax rate reconciliation and income taxes paid. We are required to adopt these disclosures for our annual period ending February 28, 2026, with early adoption permitted and this standard may be applied retrospectively. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.

Climate

In March 2024, the SEC adopted final rules to require disclosures about certain climate-related information in registration statements and annual reports. In April 2024, the SEC issued an order to stay the rules pending the completion of judicial review of multiple petitions challenging the rules. The rules will require disclosure of, among other things, material climate-related risks, how the board of directors and management oversee and manage such risks, and the actual and potential material impacts of such risks on us. The rules also require disclosure about material climate-related targets and goals, Scope 1 and Scope 2 GHG emissions, and the financial impacts of severe weather events and other natural conditions. The SEC has indicated that it will publish a new effective date for the rules, if ultimately implemented, at the conclusion of the stay. These rules will be applied prospectively. We are currently assessing the impact of these rules on our SEC filings.


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MD&A			Table of Contents

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