Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

INTRODUCTION

This MD&A provides additional information on our businesses, current developments, financial condition, cash flows, and results of operations. It should be read in conjunction with our Financial Statements and with our consolidated financial statements and notes included in our 2025 Annual Report. This MD&A is organized as follows:

Overview

This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.

Strategy

This section provides a description of our strategy, including our 2025 Restructuring Initiative, a discussion of a recent development, as well as significant divestitures, acquisitions, and investments.

Results of operations

This section provides an analysis of our results of operations presented on a business segment basis for the three months ended May 31, 2025, and May 31, 2024. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.

Liquidity and capital resources

This section provides an analysis of our cash flows, outstanding debt, and liquidity position. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our on-going operations and future commitments, as well as a discussion of other financing arrangements.

OVERVIEW

We are an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy with powerful, consumer-connected, high-quality brands like Modelo Especial, Corona Extra, Pacifico, Robert Mondavi Winery, Kim Crawford, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO. In the U.S., we are one of the top growth contributors at retail among beverage alcohol suppliers. We are also the second-largest beer company and have the #1 beer brand, Modelo Especial, in dollar sales in the U.S. We continued to strengthen our leadership position in the U.S. beer market as the #1 share gainer in the high-end beer segment and the overall U.S. beer market. Within wine and spirits, we have implemented a multi-year strategy that repositioned this


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business to a portfolio of exclusively higher-end brands that we believe will generate higher growth and higher margins, aligned to our focus on consumer-led premiumization trends, and we continue to progressively expand our supply channels through DTC and international markets. The strength of our brands makes us a supplier of choice to many of our consumers and our customers, which include wholesale distributors, retailers, and on-premise locations. We conduct our business through entities we wholly own as well as through a variety of joint ventures and other entities.

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 comprised of exclusively higher-end wine and spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate communications, corporate development, corporate finance, corporate strategy and growth, executive management, human resources, internal audit, investor relations, IT, legal, and public affairs, as well as our investments such as those 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.

STRATEGY

Our overall strategic vision is to consistently deliver industry-leading total stockholder returns over the long-term through a focus on these key pillars:

continue building strong brands people love with advantaged routes to market;
build a culture that is consumer-obsessed and leverages robust innovation capabilities to stay on the forefront of consumer trends;
deploy capital in line with disciplined and balanced priorities;
deliver on impactful environmental, social, and governance initiatives that we believe are not only good business, but also good for the world; and
empower the whole enterprise to achieve best-in-class operational efficiency.

We will continue to strive for success by ensuring consumer-led decision making drives all aspects of our business; building a strong talent pipeline with best-in-class people development; investing in infrastructure that supports and enables our business, including data systems and architecture; and exemplifying intentional and proactive fiscal management. We place focus on positioning our portfolio on higher-margin, higher-growth categories of the beverage alcohol industry to align with our strategy to address consumer-led premiumization, product, and purchasing trends, which we anticipate will continue to drive faster relative growth rates across beer, wine, and spirits. To continue capitalizing on consumer-led premiumization trends, become more competitive, and grow our business, we have employed a strategy dedicated to organic growth and supplemented by targeted investments and acquisitions. We intend for our multi-year Digital Business Acceleration initiative to enable us to drive results by enhancing our technology capabilities in key areas. In Fiscal 2026, we continue to focus on end-to-end digital supply chain planning, logistics, procurement, and revenue growth management, as well as introducing a new focus area, consumer insights and analytics. Additionally, we believe our continued focus on maintaining a strong balance sheet provides a solid financial foundation to support our broader strategic initiatives.


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Our business strategy for the Beer segment focuses on upholding our leadership position in the U.S. beer market, including the high-end segment, and continuing to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth. In Fiscal 2026, we intend to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization as well as continue to invest in the next phase of modular capacity additions necessary to support our ongoing growth. Expansion, optimization, and/or construction activities continue under our Mexico Beer Projects to align with our anticipated future growth expectations. Additionally, we continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.

Our business strategy for the Wine and Spirits segment continues to focus on delivering growth and improving margins beyond Fiscal 2026 by driving our higher-end brands and operating efficiencies. We have repositioned this business to a portfolio of exclusively higher-end wine and spirits brands that we believe will generate higher growth and higher margins. We remain a key supplier in U.S. 3-tier brick-and-mortar distribution. In addition, we are advancing our aim to become a global, omni-channel competitor in line with evolving consumer preferences as we continue our efforts to progressively expand into international markets, DTC channels (including hospitality), and 3-tier eCommerce.

Marketing, sales, and distribution of our products are primarily managed on a geographic basis allowing us to leverage leading market positions. In addition, market dynamics and consumer trends vary across each of our markets. Within our primary market in the U.S., we offer a range of beverage alcohol products across the imported beer, ABA, and branded wine and spirits categories, with generally separate distribution networks utilized for (i) our beer portfolio and (ii) our wine and spirits portfolio. The environment for our products is competitive in each of our markets.

We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to continue to achieve comparable earnings per share growth as well as our target ratios for (i) comparable net leverage and (ii) dividend payout; investing to support the growth of our business; and delivering additional returns to stockholders through periodic share repurchases. Our results of operations and financial condition have been affected by an evolving consumer demand environment largely driven by what we believe to be non-structural socioeconomic factors. These factors include subdued spend, value-seeking behaviors, and reductions in the discretionary income available to purchase our products among consumers, elevated unemployment, changing prices, inflation, other unfavorable global and regional economic conditions, demographic trends in the U.S., global supply chain disruptions and constraints, and geopolitical events, including the impact of military conflicts, as well as retailer destocking impacting our Wine and Spirits segment.

Recent developments in international trade relations, including significant changes in U.S. trade policy and actions which include threatened, new, and increased tariffs on other countries and retaliatory tariffs and actions imposed on certain U.S. goods have produced heightened uncertainty with respect to trade and tariff policies and regulations affecting trade between the U.S. and other countries, which could continue to alter the global trade environment. For example, the U.S. government has imposed tariffs on product imports, including on raw and packaging materials, from certain countries (such as Mexico, the European Union including Italy, and New Zealand) and certain other countries have implemented tariffs on U.S. goods, such as the tariffs on certain product imports originating from the U.S. imposed by the Canadian government, although some of these tariffs were subsequently modified or delayed.

We expect some or all of these market conditions and their impacts to continue in Fiscal 2026 which could have a material impact on our results of operations and financial condition. We intend to continue to monitor the evolving consumer demand and economic environments and their impacts on our business. In addition, we have implemented the 2025 Restructuring Initiative, which is an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of our business, including through enhanced organizational efficiency and optimized expenditures across our organization. We also intend to continue our commodity and foreign exchange hedging


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programs. However, there can be no assurance that we will be able to adequately respond to softer consumer demand trends or fully mitigate rising costs, including as a result of new or increased tariffs, through increased selling prices, cost, productivity, efficiency, and inventory management initiatives, optimized marketing plans, and/or our commodity and foreign exchange hedging programs. Furthermore, to the extent severe weather events that impact our business, such as wildfires, droughts, floods, extreme heat, and/or late frosts, or other weather conditions that constrain purchasing occasions for our consumers, continue to occur or accelerate in future periods, it could have a material impact on our results of operations and financial condition.

2025 Restructuring Initiative

We have implemented the 2025 Restructuring Initiative which is expected to yield over $200 million in net annualized cost savings by Fiscal 2028. The majority of the work associated with the 2025 Restructuring Initiative is expected to be completed within Fiscal 2026 and is estimated to result in $80 million to $100 million of cumulative pre-tax costs once all phases are fully implemented. In connection with the 2025 Restructuring Initiative, we recognized $13.3 million of pre-tax restructuring costs in First Quarter 2026 and $63.0 million of cumulative pre-tax costs since the inception of this initiative. These costs were included in selling, general, and administrative costs within our consolidated results. For additional information on the 2025 Restructuring Initiative, refer to Note 3.

Recent Development

2025 Wine Divestitures

On June 2, 2025, we sold and, in certain instances, exclusively licensed the trademarks of a portion of our wine and spirits business, primarily centered around our mainstream wine brands and associated inventory, wineries, vineyards, offices, and facilities for $857.6 million, subject to certain post-closing adjustments. The net cash proceeds from the 2025 Wine Divestitures were used for the repayment of debt. Prior to the completion of the 2025 Wine Divestitures, we recorded the results of operations of the divested and exclusively licensed brands in the Wine and Spirits segment. This transaction supports our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumers. For additional information, refer to Notes 2 and 10.

Divestitures, Acquisitions, and Investments

Beer segment

Mexicali Brewery sale

In July 2024, we sold the remaining assets classified as held for sale at the canceled Mexicali Brewery.

Wine and Spirits segment

SVEDKA Divestiture

On January 6, 2025, we sold the SVEDKA brand and related assets, primarily including inventory and equipment. The net cash proceeds were used for general corporate purposes, including funding share repurchases, capital expenditures, and repayment of debt. Prior to the completion of the SVEDKA Divestiture, we recorded the results of operations of the SVEDKA brand in the Wine and Spirits segment.

Nelson’s Green Brier investment

In October 2024, we purchased the remaining 25% noncontrolling interest in Nelson’s Green Brier, a portfolio of Tennessee-based craft bourbon and whiskey products.

Sea Smoke acquisition

In June 2024, we acquired the Sea Smoke business, including a California-based luxury wine brand, vineyards, and a production facility. This transaction also included the acquisition of goodwill, inventory, and a trademark. The results of operations of Sea Smoke are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.


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These Wine and Spirits segment activities support our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumers.

Corporate Operations and Other segment

Canopy investment

We have an investment in Canopy, a North American cannabis and CPG company providing medical and adult-use cannabis products, which expands our portfolio into adjacent categories.

Exchangeable Shares

In April 2024, we elected to convert our Canopy common shares and exchange a portion of the principal amount of a promissory note issued to us by Canopy. As a result of these transactions, we (i) have 26.3 million Exchangeable Shares and (ii) recognized an $83.3 million net gain based on the fair value of Exchangeable Shares on the date of the conversion and exchange. This net gain is included in income (loss) from unconsolidated investments within our consolidated results for First Quarter 2025.

For additional information on these divestitures, acquisitions, and investments refer to Notes 2 and 9.

RESULTS OF OPERATIONS

Financial Highlights

References to organic throughout the following discussion exclude the impact of the SVEDKA Divestiture, as appropriate.

First Quarter 2026 compared to First Quarter 2025

Net sales decreased 6% due to a decline in Wine and Spirits net sales led by a decrease in organic branded shipment volume and a decrease in Beer net sales driven primarily by a shipment volume decline, partially offset by a favorable impact from pricing.

Operating income decreased 24% primarily due to (i) unfavorable Comparable Adjustments led by losses associated with assets held for sale impairment and related expenses as well as losses recognized on undesignated commodity derivative contracts for First Quarter 2026 compared with gains for First Quarter 2025 and (ii) the declines in Wine and Spirits and Beer segments net sales, partially offset by a successful execution of cost initiatives within the Beer segment.

Net income attributable to CBI and diluted net income per common share attributable to CBI decreased 41% and 39%, respectively, largely due to (i) the items discussed above, (ii) a First Quarter 2025 net gain in connection with Exchangeable Shares, and (iii) higher provision for income taxes.

Comparable Adjustments

Management excludes items that affect comparability 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.


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As more fully described herein and in the related Notes, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows:


	First Quarter 2026		First Quarter 2025
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts	$	(17.7)	$	14.6
Flow through of inventory step-up	(0.9)		(1.1)
Strategic business reconfiguration costs	(0.4)		—
Settlements of undesignated commodity derivative contracts	2.5		8.5



Comparable Adjustments, Cost of product sold	(16.5)		22.0
Selling, general, and administrative expenses
2025 Restructuring Initiative	(13.3)		—
Transition services agreements activity	(5.5)		(2.8)
Strategic business reconfiguration costs	(5.2)		(1.8)
Transaction, integration, and other acquisition-related costs	(2.1)		(0.2)

Other gains (losses)	(1.4)		0.4
Comparable Adjustments, Selling, general, and administrative expenses	(27.5)		(4.4)


Assets held for sale impairment and related expenses	(52.1)		—

Comparable Adjustments, Operating income (loss)	$	(96.1)	$	17.6

Comparable Adjustments, Income (loss) from unconsolidated investments	$	—	$	83.3

Cost of product sold

Undesignated commodity derivative contracts

Net gain (loss) on undesignated commodity derivative contracts represents a net gain (loss) from the changes in fair value of undesignated commodity derivative contracts. The net gain (loss) is reported outside of segment operating results until such time that the underlying exposure is recognized in the segment operating results. At settlement, the net gain (loss) from the changes in fair value of the undesignated commodity derivative contracts is reported in the appropriate operating segment, allowing the results of our operating segments to reflect the economic effects of the commodity derivative contracts without the resulting unrealized mark to fair value volatility.

Flow through of inventory step-up

In connection with acquisitions, the allocation of purchase price in excess of book value for certain inventories on hand at the date of acquisition is referred to as inventory step-up. Inventory step-up represents an assumed manufacturing profit attributable to the acquired business prior to acquisition.

Strategic business reconfiguration costs

We recognized costs primarily in connection with losses on write-downs of excess inventory resulting from our initiatives to streamline, increase efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment (First Quarter 2026).

Selling, general, and administrative expenses

2025 Restructuring Initiative

We recognized costs in connection with an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of our business (First Quarter 2026).


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Transition services agreements activity

We recognized costs in connection with transition services agreements related to the previous sale of a portion of our wine and spirits business.

Strategic business reconfiguration costs

We recognized costs in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure.

Transaction, integration, and other acquisition-related costs

We recognized costs in connection with our acquisitions, divestitures, and investments.

Other gains (losses)

We recognized a net loss from the sales of businesses (First Quarter 2026).

Assets held for sale impairment and related expenses

Largely in connection with the 2025 Wine Divestitures we recognized contract liabilities and inventory obsolescence expenses, partially offset by changes in net assets held for sale (First Quarter 2026). For additional information, refer to Note 6.

Income (loss) from unconsolidated investments

We recognized a net gain in connection with Exchangeable Shares (First Quarter 2025). For additional information, refer to Note 9.

Business Segments

First Quarter 2026 compared to First Quarter 2025

Net sales


	First Quarter 2026		First Quarter 2025		Dollar Change		Percent Change
(in millions)
Beer	$	2,234.5	$	2,272.8	$	(38.3)	(2	%)
Wine and Spirits:
Wine	258.5		329.3		(70.8)		(22	%)
Spirits	22.0		59.7		(37.7)		(63	%)
Total Wine and Spirits	280.5		389.0		(108.5)		(28	%)
Consolidated net sales	$	2,515.0	$	2,661.8	$	(146.8)	(6	%)


	Beer segment	First Quarter 2026		First Quarter 2025		Dollar Change		Percent Change
(in millions, branded product, 24-pack, 12-ounce case equivalents)
Net sales		$	2,234.5	$	2,272.8	$	(38.3)	(2	%)


Shipments		111.3		115.1				(3.3	%)


Depletions								(2.6	%)

The decrease in Beer net sales is due to (i) a $75.7 million decrease in shipment volume and (ii) $7.5 million of unfavorable product mix primarily from a shift in package types, partially offset by $44.9 million of


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favorable impact from pricing in select markets. We believe our net sales continue to be suppressed by the non-structural socioeconomic factors discussed above.


	Wine and Spirits segment	First Quarter 2026		First Quarter 2025		Dollar Change		Percent Change
(in millions, branded product, 9-liter case equivalents)
Net sales		$	280.5	$	389.0	$	(108.5)	(28	%)

Shipments
Total		3.9		5.6				(30.4	%)
Organic (1)		3.9		4.5				(13.3	%)
U.S. Wholesale		3.3		4.9				(32.7	%)
Organic U.S. Domestic (1)		3.3		3.8				(13.2	%)





Depletions								(8.1	%)

(1)Includes adjustments to remove volumes associated with the SVEDKA Divestiture for the period March 1, 2024, through May 31, 2024.

The decrease in Wine and Spirits net sales is due to a $72.5 million decrease in organic net sales and $36.0 million from the SVEDKA Divestiture that are no longer part of our business. The decrease in organic net sales is driven by (i) a $53.2 million decrease in branded wine and spirits shipment volume, (ii) an $8.9 million decrease from pricing actions in certain markets, (iii) a $7.9 million decrease in contractual distributor payments as compared to First Quarter 2025, and (iv) $4.9 million of unfavorable product mix. The decrease in branded wine and spirits shipment volume and unfavorable product mix are both attributable to our U.S. wholesale market, including the cadence of shipments to better align with ongoing weaker consumer demand particularly affecting the mainstream price segments. We continue to expect depletion volume to outpace shipment volume for Fiscal 2026, most notably during the first half of Fiscal 2026.

Gross profit


	First Quarter 2026		First Quarter 2025		Dollar Change		Percent Change
(in millions)
Beer	$	1,187.0	$	1,213.1	$	(26.1)	(2	%)
Wine and Spirits	96.1		168.7		(72.6)		(43	%)
Comparable Adjustments	(16.5)		22.0		(38.5)		NM
Consolidated gross profit	$	1,266.6	$	1,403.8	$	(137.2)	(10	%)


			The decrease in Beer gross profit is due to (i) a $40.2 million decline in shipment volume, (ii) $27.4 million of increased cost of product sold, and (iii) $3.4 million of unfavorable product mix, partially offset by the $44.9 million favorable impact from pricing. The increase in cost of product sold is primarily due to (i) $22.6 million of unfavorable fixed cost absorption related to decreased production levels as compared to First Quarter 2025 and (ii) $16.3 million of higher material costs, including aluminum, glass, and starch, of which $6.9 million is attributable to tariffs on aluminum cans, partially offset by $11.7 million of decreased transportation costs, largely driven by efficiency initiatives. To partially offset the increase in cost of product sold we are executing efficiency and cost optimization initiatives focused largely on procurement and logistics that resulted in an approximate $40 million net benefit for First Quarter 2026.


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			The decrease in Wine and Spirits gross profit is due to a $57.5 million decrease in organic gross profit and $15.1 million from the SVEDKA Divestiture that is no longer part of our business. The decrease in organic gross profit is attributable to (i) a $33.3 million decline in branded wine and spirits shipment volume, (ii) the $8.9 million unfavorable pricing, (iii) the $7.9 million decrease in contractual distributor payments, and (iv) $7.0 million of unfavorable product mix. Cost of product sold remained relatively flat as unfavorable fixed cost absorption related to decreased production levels as compared to First Quarter 2025 was offset by decreased transportation costs.

Gross profit as a percent of net sales decreased to 50.4% for First Quarter 2026 compared with 52.7% for First Quarter 2025. This decrease was largely driven by rate declines from (i) an unfavorable change in Comparable Adjustments, contributing approximately 150 basis points, (ii) approximately 110 basis points from higher cost of product sold within the Beer segment, (iii) approximately 30 basis points as a result of pricing actions in certain markets and lower distributor payments both within the Wine and Spirits segment, and (iv) approximately 20 basis points due to lower branded Wine and Spirits shipment volume as compared to First Quarter 2025. These declines were partially offset by a favorable impact from Beer pricing, which contributed rate growth of approximately 85 basis points.

Selling, general, and administrative expenses


	First Quarter 2026		First Quarter 2025		Dollar Change		Percent Change
(in millions)
Beer	$	313.6	$	290.1	$	23.5	8	%
Wine and Spirits	102.1		109.0		(6.9)		(6	%)
Corporate Operations and Other	57.5		58.7		(1.2)		(2	%)
Comparable Adjustments	27.5		4.4		23.1		NM
Consolidated selling, general, and administrative expenses	$	500.7	$	462.2	$	38.5	8	%


			The increase in Beer selling, general, and administrative expenses is largely driven by $12.9 million and $10.2 million of increased general and administrative expenses and marketing spend, respectively. The increase in general and administrative expenses is primarily due to higher compensation and benefits and consulting costs. The higher marketing spend is primarily led by increased media investment to support our high-end imported beer brands.


			The decrease in Wine and Spirits selling, general, and administrative expenses is largely due to $6.0 million and $1.1 million of decreased marketing spend and general and administrative expenses, respectively. Marketing as a percentage of net sales increased year-over-year driven by support of our largest brands.


			The decrease in Corporate Operations and Other selling, general, and administrative expenses is largely due to a net decrease in compensation and benefits, driven by lower stock-based compensation expense as compared to First Quarter 2025, partially offset by higher depreciation expense as a result of our June 2024 corporate headquarters relocation.

Selling, general, and administrative expenses as a percent of net sales increased to 19.9% for First Quarter 2026 as compared to 17.4% for First Quarter 2025. The increase is largely driven by (i) approximately 120 basis points of rate growth from higher Beer selling, general, and administrative expenses, (ii) an unfavorable change in Comparable Adjustments, contributing approximately 90 basis points, and (iii) approximately 25 basis points of rate growth from Wine and Spirits as the decrease in Wine and Spirits net sales exceeded the decrease in selling, general, and administrative expenses.


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Operating income (loss)


	First Quarter 2026		First Quarter 2025		Dollar Change		Percent Change
(in millions)
Beer	$	873.4	$	923.0	$	(49.6)	(5	%)
Wine and Spirits	(6.0)		59.7		(65.7)		(110	%)
Corporate Operations and Other	(57.5)		(58.7)		1.2		2	%
Comparable Adjustments	(96.1)		17.6		(113.7)		NM
Consolidated operating income (loss)	$	713.8	$	941.6	$	(227.8)	(24	%)


			The decrease in Beer operating income is largely attributable to the (i) decline in shipment volume and related unfavorable fixed cost absorption, (ii) increased materials costs, and (iii) higher general and administrative expenses and marketing spend, partially offset by the favorable impact from pricing and cost initiatives, as described above.


			The decrease in Wine and Spirits operating income is largely attributable to the (i) decline in organic branded wine and spirits shipment volume, (ii) SVEDKA Divestiture, (iii) unfavorable impact from pricing actions in certain markets, and (iv) decline in contractual distributor payments, partially offset by lower marketing spend, as described above.


			As previously discussed, the decrease in Corporate Operations and Other operating loss is largely due to the decrease in net compensation and benefits, partially offset by higher depreciation expense, as described above.

Income (loss) from unconsolidated investments


	First Quarter 2026		First Quarter 2025		Dollar Change		Percent Change
(in millions)
Equity in earnings (losses) from equity method investees and related activities	$	(3.5)	$	(1.3)	$	(2.2)	(169	%)
Net gain in connection with Exchangeable Shares	—		83.3		(83.3)		NM




Income (loss) from unconsolidated investments	$	(3.5)	$	82.0	$	(85.5)	(104	%)

Interest expense, net

Interest expense, net decreased to $98.9 million for First Quarter 2026 as compared to $102.8 million for First Quarter 2025. This decrease of $3.9 million, or 4%, is due to approximately $375 million of lower average borrowings. For additional information, refer to Note 10.

(Provision for) benefit from income taxes

The provision for income taxes increased to $87.6 million for First Quarter 2026 from $28.0 million for First Quarter 2025. Our effective tax rate for First Quarter 2026 was 14.3% as compared with 3.0% for First Quarter 2025. In comparison to prior year, our effective tax rate was largely impacted by a higher net income tax benefit from the resolution of various tax examinations and assessments related to prior periods recognized in First Quarter 2025 as compared to First Quarter 2026. For additional information, refer to Note 11.

The OECD introduced a framework under Pillar Two which includes a 15% global minimum tax rate. The current legislation did not have a material impact on our consolidated financial statements. We continue to monitor developments for potential future impacts. Additionally, we provide for taxes that may be payable if undistributed


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earnings of foreign subsidiaries were to be remitted to the U.S., except for those earnings that we consider to be indefinitely reinvested.

We expect our reported effective tax rate for Fiscal 2026 to be in the range of 14% to 16%.

Net income (loss) attributable to CBI

Net income attributable to CBI decreased to $516.1 million for First Quarter 2026 from $877.0 million for First Quarter 2025. This decrease of $360.9 million, or 41%, is largely attributable to (i) the net sales declines in both the Wine and Spirits and Beer segments, (ii) the First Quarter 2025 net gain in connection with Exchangeable Shares, (iii) higher provision for income taxes as compared to First Quarter 2025, and (iv) the First Quarter 2026 assets held for sale impairment and related expenses.

LIQUIDITY AND CAPITAL RESOURCES

General

Our primary source of liquidity has been cash flow from operating activities. Our ability to consistently generate robust cash flow from our operations is one of our most significant financial strengths. It enables us to invest in our people and our brands, make capital investments and strategic acquisitions, provide a cash dividend program, and repurchase shares of our common stock. Our largest use of cash in our operations is for purchasing and carrying inventories and carrying seasonal accounts receivable. Historically, we have used this cash flow to repay our short-term borrowings and fund capital expenditures. Additionally, our commercial paper program is used to fund our short-term borrowing requirements and to maintain our access to the capital markets. We use our short-term borrowings, including our commercial paper program, to support our working capital requirements and capital expenditures, among other things.

We seek to maintain adequate liquidity to meet working capital requirements, fund capital expenditures, and repay scheduled principal and interest payments on debt. Absent deterioration of market conditions, we believe that cash flows from operating and financing activities will provide adequate resources to satisfy our working capital, scheduled principal and interest payments on debt, anticipated dividend payments, periodic share repurchases, and planned capital expenditure requirements for both our short-term and long-term capital needs.

We have an agreement with a financial institution for payment services and to facilitate a voluntary supply chain finance program through this participating financial institution. The program is available to certain of our suppliers allowing them the option to manage their cash flow. We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. As of May 31, 2025, and February 28, 2025, the amount payable to this participating financial institution for suppliers who voluntarily participate in the supply chain finance program was $8.5 million and $3.8 million, respectively, and was included in accounts payable within our consolidated balance sheets. We account for payments made under the supply chain finance program the same as our other accounts payable, as a reduction to our cash flow from operating activities.


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Cash Flows


	First Quarter 2026		First Quarter 2025		Dollar Change
(in millions)
Net cash provided by (used in):
Operating activities	$	637.2	$	690.5	$	(53.3)
Investing activities	(196.1)		(377.4)		181.3
Financing activities	(437.6)		(393.0)		(44.6)
Effect of exchange rate changes on cash and cash equivalents	2.3		1.3		1.0
Net increase (decrease) in cash and cash equivalents	$	5.8	$	(78.6)	$	84.4

Operating activities

The decrease in net cash provided by (used in) operating activities consists of:


	First Quarter 2026		First Quarter 2025		Dollar Change
(in millions)
Net income (loss)	$	523.8	$	892.8	$	(369.0)




Assets held for sale impairment and related expenses	52.1		—		52.1

Net gain in connection with Exchangeable Shares	—		(83.3)		83.3

Other non-cash adjustments	231.1		72.5		158.6
Change in operating assets and liabilities, net of effects from purchase and sale of business	(169.8)		(191.5)		21.7
Net cash provided by (used in) operating activities	$	637.2	$	690.5	$	(53.3)

The $21.7 million net change in operating assets and liabilities was largely driven by changes in inventory levels for the Beer segment. These changes were partially offset by accounts payable in both the Beer and Wine and Spirits segments resulting from the timing of payments. Additionally, net cash provided by operating activities was positively impacted by lower First Quarter 2026 income tax payments as compared to First Quarter 2025 following the resolution of various tax examinations and assessments.

Investing activities

Net cash used in investing activities decreased to $196.1 million for First Quarter 2026 from $377.4 million for First Quarter 2025. This decrease of $181.3 million, or 48%, was primarily due to $182.5 million of reduced capital expenditures for First Quarter 2026 as compared to First Quarter 2025.


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Financing activities

The increase in net cash used in financing activities consisted of:


	First Quarter 2026		First Quarter 2025		Dollar Change
(in millions)
Net proceeds from (payments of) debt, current and long-term, and related activities	$	63.7	$	(0.4)	$	64.1
Dividends paid	(182.2)		(185.3)		3.1
Purchases of treasury stock	(306.1)		(200.0)		(106.1)
Net cash provided by (used in) stock-based compensation activities	(4.1)		10.9		(15.0)
Distributions to noncontrolling interests	(7.5)		(17.5)		10.0
Payment of contingent consideration	(1.4)		(0.7)		(0.7)

Net cash provided by (used in) financing activities	$	(437.6)	$	(393.0)	$	(44.6)

Debt

Total debt outstanding as of May 31, 2025, amounted to $11,567.0 million, an increase of $69.3 million, or 1%, from February 28, 2025. This increase consisted of:

4111


						Debt repayment						Debt issuance

Bank facilities

In May 2025, we entered into the 2025 Term Credit Agreement, which provides for a six-month delayed draw $500.0 million term loan facility, available in up to two draws. The balance is due and payable two years after the initial funding date, if any, occurs. There are no borrowings outstanding under the 2025 Term Credit Agreement.

In April 2025, we entered into the 2025 Restatement Agreement that amended and restated our then-existing senior credit facility. The 2025 Restatement Agreement resulted in (i) refinancing the existing $2.25 billion revolving credit facility, (ii) extending its maturity to April 28, 2030, and (iii) refining certain negative covenants. There are no borrowings outstanding under the 2025 Credit Agreement.

Senior notes

On July 2, 2025, we repaid the 4.75% December 2015 Senior Notes using proceeds from the 2025 Wine Divestitures and cash on hand. On June 12, 2025, we repaid the 5.00% February 2023 Senior Notes using proceeds from the 2025


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Wine Divestitures. Each of these notes were redeemed prior to maturity at a redemption price equal to 100% of the outstanding principal amount plus accrued and unpaid interest.

In May 2025, we issued the 4.80% May 2025 Senior Notes. Proceeds from this offering, net of discount and debt issuance costs, of $496.0 million were used for general corporate purposes, including repayment of commercial paper and other indebtedness, working capital, funding capital expenditures, and other business opportunities.

General

The majority of our outstanding borrowings as of May 31, 2025, consisted of fixed-rate senior unsecured notes, with maturities ranging from calendar 2025 to calendar 2050.

Additionally, 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 2025 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility.

We do not have purchase commitments from buyers for our commercial paper and, therefore, our ability to issue commercial paper is subject to market demand. If the commercial paper market is not available to us for any reason when commercial paper borrowings mature, we expect to utilize unused commitments under our revolving credit facility under our 2025 Credit Agreement to repay commercial paper borrowings. We do not expect that fluctuations in demand for commercial paper will affect our liquidity given our borrowing capacity available under our revolving credit facility.

We had the following remaining borrowing capacity available under our 2025 Credit Agreement:


	May 31, 2025		June 30, 2025
(in millions)
Revolving credit facility (1)	$	1,861.1	$	2,238.7

(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our 2025 Credit Agreement and outstanding borrowings under our commercial paper program (excluding unamortized discount) of $377.6 million and $0.0 million as of May 31, 2025, and June 30, 2025, respectively.

The financial institutions participating in our 2025 Credit Agreement have complied with prior funding requests and we believe they will comply with any future funding requests. However, there can be no assurances that any particular financial institution will continue to do so.

As of May 31, 2025, we and our subsidiaries were subject to covenants that are contained in our 2025 Credit Agreement and the 2025 Term 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, both as defined in our 2025 Credit Agreement. As of May 31, 2025, under our 2025 Credit Agreement, the minimum interest coverage ratio was 2.5x and the maximum net leverage ratio was 4.0x.

The representations, warranties, covenants, and events of default set forth in our 2025 Term Credit Agreement are substantially similar to those set forth in our 2025 Credit Agreement.

Our indentures relating to our outstanding senior notes contain certain covenants, including, but not limited to: (i) a limitation on liens on certain assets, (ii) a limitation on certain sale and leaseback transactions, and (iii) restrictions on mergers, consolidations, and the transfer of all or substantially all of our assets to another person.


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As of May 31, 2025, we were in compliance with our covenants under our 2025 Credit Agreement and our indentures, and have met all debt payment obligations.

For further discussion and presentation of our borrowings and available sources of borrowing, refer to Note 12 of our consolidated financial statements included in our 2025 Annual Report and Note 10.

Common Stock Dividends

On July 1, 2025, our Board of Directors declared a quarterly cash dividend of $1.02 per share of Class A Stock and $0.92 per share of Class 1 Stock payable on August 14, 2025, to stockholders of record of each class as of the close of business on July 30, 2025.

We currently expect to continue to pay a regular quarterly cash dividend to stockholders of our common stock in the future, but such payments are subject to approval of our Board of Directors and are dependent upon our financial condition, results of operations, capital requirements, and other factors, including those set forth under Item 1A. “Risk Factors” of our 2025 Annual Report.

Share Repurchase Program

Our Board of Directors authorized the repurchase of our publicly traded common stock of up to $4.0 billion under the 2025 Authorization which expires in February 2028. As of July 2, 2025, total shares repurchased are as follows:


			Class A Stock
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)
2025 Authorization (1)	$	4,000.0	$	381.1	2,066,296

(1)As of July 2, 2025, $3,618.9 million remains available for future share repurchases, excluding the impact of Federal excise tax owed pursuant to the IRA.

Share repurchases under the 2025 Authorization may be accomplished at management’s discretion from time to time based on market conditions, our cash and debt position, and other factors as determined by management. Shares may be repurchased through open market or privately negotiated transactions. We may fund future share repurchases with cash generated from operations, proceeds from borrowings, and/or divestiture proceeds. Any repurchased shares will become treasury shares, including shares previously repurchased under the 2025 Authorization.

We currently expect to return $4.0 billion in share repurchases to stockholders over the next three fiscal years, but such repurchases are dependent upon our financial condition, results of operations, capital requirements, and other factors, including those set forth under Item 1A. “Risk Factors” of our 2025 Annual Report.

For additional information, refer to Note 17 of our consolidated financial statements included in our 2025 Annual Report and Note 12.

Accounting Guidance

Accounting guidance adopted for First Quarter 2026 did not have a material impact on our Financial Statements.


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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. All statements other than statements of historical fact included in this Form 10-Q are forward-looking statements, including without limitation:

The statements under MD&A regarding:

◦our business strategy, including our strategic vision, growth plans, Digital Business Acceleration initiatives, Beer segment focus on upholding our leadership position in the U.S. beer market, and Wine and Spirits segment focus on delivering growth and improving margins beyond Fiscal 2026;

◦our beer expansion, optimization, and/or construction activities, including anticipated scope, capacity, costs, capital expenditures, and timeframes for completion;

◦our innovation, marketing, sales, and distribution plans, activities, and strategies;

◦our long-term financial model, target comparable net leverage and target dividend payout ratios, future operations, financial condition and position, net sales, expenses including potential future impairment losses, hedging programs, cost, restructuring, and efficiency initiatives, including the 2025 Restructuring Initiative, capital expenditures, effective tax rates and anticipated tax liabilities, expected volume, inventory, supply and demand levels, balance, cadence, and trends, access to capital markets, liquidity and capital resources, including our ability to consistently generate robust cash flow and raise or repay debt, and prospects, plans, and objectives of management;

◦the evolving consumer demand environment and trends, non-structural socioeconomic factors, including subdued spend, value-seeking behaviors, and reductions in the discretionary income, elevated unemployment, changing prices, inflation, other unfavorable global and regional economic conditions, demographic trends in the U.S., global supply chain disruptions and constraints, and geopolitical events, including the impact of military conflicts, as well as retailer destocking impacting our wine and spirits business, and our responses thereto;

◦recent and potential future changes to trade and tariff policies, particularly on imports from Mexico, the European Union including Italy, and New Zealand into the U.S. and retaliatory tariffs imposed on certain product imports originating from the U.S.;

◦expected or potential actions of third parties, including possible changes to laws, rules, and regulations;

◦the potential impact of severe weather events or other weather conditions;

◦the manner, timing, and duration of the share repurchase program and source of funds for share repurchases; and

◦the amount and timing of future dividends.

The statements regarding the future reclassification of net gains from AOCI, potential future impairments of our Canopy investment, our aim to hedge 100% of our balance sheet exposures, and continuing to evaluate internal control changes in connection with the OneStream implementation.

When used in this Form 10-Q, the words “anticipate,” “expect,” “intend,” “will,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. In addition to the risks and uncertainties of ordinary business operations and conditions in the general economy and markets in which we compete, our forward-looking statements contained in this Form 10-Q are also subject to the risk, uncertainty, and possible variance from our current expectations regarding:


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potential declines in the consumption of products we sell and our dependence on sales of our Mexican beer brands;
impacts of our acquisition, divestiture, investment, and new product development strategies and activities;
dependence upon our trademarks and proprietary rights, including the failure to protect our intellectual property rights;
potential damage to our reputation;
competition in our industry and for talent;
economic and other uncertainties associated with our international operations, including new or increased tariffs;
water, agricultural and other raw material, and packaging material supply, production, and/or transportation difficulties, disruptions, and impacts, including limited groups of certain suppliers;
reliance on complex information systems and third‐party global networks as well as risks associated with cybersecurity and artificial intelligence;
dependence on limited facilities for production of our Mexican beer brands, including beer operations expansion, optimization, and/or construction activities, scope, capacity, supply, costs (including impairments), capital expenditures, and timing;
operational disruptions or catastrophic loss to our breweries, wineries, other production facilities, or distribution systems;
severe weather, natural and man-made disasters, climate change, environmental sustainability and CSR-related regulatory compliance, and failure to meet environmental sustainability and CSR targets, commitments, and aspirations;
the success of our cost savings, restructuring, and efficiency initiatives;
reliance on wholesale distributors, major retailers, and government agencies;
contamination and degradation of product quality from diseases, pests, weather, and other conditions;
communicable infection or disease outbreaks, pandemics, or other widespread public health crises impacting our consumers, employees, distributors, retailers, and/or suppliers;
effects of employee labor activities that could increase our costs;
our indebtedness and interest rate fluctuations;
our international operations, worldwide and regional economic trends and financial market conditions, geopolitical uncertainty, including the impact of military conflicts, or other governmental rules and regulations;
class action or other litigation we face or may face, including relating to alleged securities law violations, abuse or misuse of our products, product liability, marketing or sales practices, including product labeling, or other matters;
potential impairments of our intangible assets, such as goodwill and trademarks;
changes to tax laws, fluctuations in our effective tax rate, accounting for tax positions, the resolution of tax disputes, changes to accounting standards, elections, assertions, or policies, and the potential impact of a global minimum tax rate;
uncertainties related to future cash dividends and share repurchases, which may affect the price of our common stock;
ownership of our Class A Stock by certain individuals and entities affiliated with the Sands family and their Board of Director nomination rights;
the choice-of-forum provision in our amended and restated by-laws regarding certain stockholder litigation.

For additional information about risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by our forward-looking statements contained in the Form 10-Q, please refer to Item 1A. “Risk Factors” of our 2025 Annual Report.


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