filings.toolsItem 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)
| August 31, 2026 | February 28, 2026 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 98.5 | $ | 102.4 | |||||||
| Accounts receivable | 678.1 | 658.2 | |||||||||
| Inventories | 1,378.6 | 1,433.9 | |||||||||
| Prepaid expenses and other | 804.3 | 711.8 | |||||||||
| Total current assets | 2,959.5 | 2,906.3 | |||||||||
| Property, plant, and equipment, net of accumulated depreciation of $3,254.7 and $3,095.1, respectively | 8,653.2 | 8,520.9 | |||||||||
| Goodwill | 5,269.3 | 5,233.9 | |||||||||
| Intangible assets | 2,531.2 | 2,533.0 | |||||||||
| Deferred income taxes | 1,339.3 | 1,370.3 | |||||||||
| Other assets | 1,311.2 | 1,336.1 | |||||||||
| Total assets | $ | 22,063.7 | $ | 21,900.5 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Short-term borrowings | $ | 116.5 | $ | 272.0 | |||||||
| Current maturities of long-term debt | 1,103.0 | 603.6 | |||||||||
| Accounts payable | 999.4 | 960.2 | |||||||||
| Other accrued expenses and liabilities | 744.9 | 854.0 | |||||||||
| Total current liabilities | 2,963.8 | 2,689.8 | |||||||||
| Long-term debt, less current maturities | 9,096.2 | 9,692.9 | |||||||||
| Deferred income taxes and other liabilities | 1,124.3 | 1,130.9 | |||||||||
| Total liabilities | 13,184.3 | 13,513.6 | |||||||||
| Commitments and contingencies | |||||||||||
| CBI stockholders’ equity: | |||||||||||
| Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,699,732 shares and 212,699,542 shares, respectively | 2.1 | 2.1 | |||||||||
| Additional paid-in capital | 2,185.0 | 2,185.7 | |||||||||
| Retained earnings | 14,440.1 | 13,574.4 | |||||||||
| Accumulated other comprehensive income (loss) | 489.5 | 423.2 | |||||||||
| Class A Stock in treasury, at cost, 42,893,874 shares and 39,927,096 shares, respectively | (8,529.8) | (8,103.0) | |||||||||
| Total CBI stockholders’ equity | 8,586.9 | 8,082.4 | |||||||||
| Noncontrolling interests | 292.5 | 304.5 | |||||||||
| Total stockholders’ equity | 8,879.4 | 8,386.9 | |||||||||
| Total liabilities and stockholders’ equity | $ | 22,063.7 | $ | 21,900.5 |
The accompanying notes are an integral part of these statements.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 1 |
| 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 Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO CBI | |||||||||||||||||||||||||||||||||||
| Sales | $ | 5,407.1 | $ | 5,331.4 | $ | 2,816.7 | $ | 2,653.9 | |||||||||||||||||||||||||||
| Excise taxes | (341.4) | (335.4) | (183.7) | (172.9) | |||||||||||||||||||||||||||||||
| Net sales | 5,065.7 | 4,996.0 | 2,633.0 | 2,481.0 | |||||||||||||||||||||||||||||||
| Cost of product sold | (2,352.1) | (2,419.4) | (1,240.0) | (1,171.0) | |||||||||||||||||||||||||||||||
| Gross profit | 2,713.6 | 2,576.6 | 1,393.0 | 1,310.0 | |||||||||||||||||||||||||||||||
| Selling, general, and administrative expenses | (995.2) | (936.7) | (538.2) | (436.0) | |||||||||||||||||||||||||||||||
| Asset impairment and related expenses | (68.1) | (52.1) | (49.8) | — | |||||||||||||||||||||||||||||||
| Operating income (loss) | 1,650.3 | 1,587.8 | 805.0 | 874.0 | |||||||||||||||||||||||||||||||
| Income (loss) from unconsolidated investments | 8.3 | (7.0) | 7.8 | (3.5) | |||||||||||||||||||||||||||||||
| Interest expense, net | (169.2) | (186.5) | (83.4) | (87.6) | |||||||||||||||||||||||||||||||
| Income (loss) before income taxes | 1,489.4 | 1,394.3 | 729.4 | 782.9 | |||||||||||||||||||||||||||||||
| (Provision for) benefit from income taxes | (235.2) | (384.4) | (147.1) | (296.8) | |||||||||||||||||||||||||||||||
| Net income (loss) | 1,254.2 | 1,009.9 | 582.3 | 486.1 | |||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | (34.6) | (27.8) | (16.5) | (20.1) | |||||||||||||||||||||||||||||||
| Net income (loss) attributable to CBI | $ | 1,219.6 | $ | 982.1 | $ | 565.8 | $ | 466.0 | |||||||||||||||||||||||||||
| COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI | |||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | $ | 1,323.9 | $ | 1,603.1 | $ | 740.8 | $ | 715.0 | |||||||||||||||||||||||||||
| Comprehensive (income) loss attributable to noncontrolling interests | (38.0) | (50.6) | (23.3) | (29.3) | |||||||||||||||||||||||||||||||
| Comprehensive income (loss) attributable to CBI | $ | 1,285.9 | $ | 1,552.5 | $ | 717.5 | $ | 685.7 | |||||||||||||||||||||||||||
| CLASS A STOCK | |||||||||||||||||||||||||||||||||||
| Net income (loss) per common share attributable to CBI – basic | $ | 7.12 | $ | 5.55 | $ | 3.32 | $ | 2.65 | |||||||||||||||||||||||||||
| Net income (loss) per common share attributable to CBI – diluted | $ | 7.11 | $ | 5.55 | $ | 3.32 | $ | 2.65 | |||||||||||||||||||||||||||
| Weighted average common shares outstanding – basic | 171.323 | 176.804 | 170.460 | 175.821 | |||||||||||||||||||||||||||||||
| Weighted average common shares outstanding – diluted | 171.503 | 176.957 | 170.601 | 175.938 | |||||||||||||||||||||||||||||||
| Cash dividends declared per common share | $ | 2.06 | $ | 2.04 | $ | 1.03 | $ | 1.02 |
The accompanying notes are an integral part of these statements.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 2 |
| FINANCIAL STATEMENTS | Table of Contents |
| 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 28, 2026 | $ | 2.1 | $ | 2,185.7 | $ | 13,574.4 | $ | 423.2 | $ | (8,103.0) | $ | 304.5 | $ | 8,386.9 | ||||||||||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | 653.8 | — | — | 18.1 | 671.9 | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of income tax effect | — | — | — | (85.4) | — | (3.4) | (88.8) | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | 583.1 | |||||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares | — | — | — | — | (223.8) | — | (223.8) | |||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | (177.9) | — | — | — | (177.9) | |||||||||||||||||||||||||||||||||||||
| Noncontrolling interest distributions | — | — | — | — | — | (25.0) | (25.0) | |||||||||||||||||||||||||||||||||||||
| Shares issued under equity compensation plans | — | (31.7) | — | — | 23.5 | — | (8.2) | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | 14.7 | — | — | — | — | 14.7 | |||||||||||||||||||||||||||||||||||||
| Balance at May 31, 2026 | 2.1 | 2,168.7 | 14,050.3 | 337.8 | (8,303.3) | 294.2 | 8,549.8 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | 565.8 | — | — | 16.5 | 582.3 | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of income tax effect | — | — | — | 151.7 | — | 6.8 | 158.5 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | 740.8 | |||||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares | — | — | — | — | (230.9) | — | (230.9) | |||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | (176.0) | — | — | — | (176.0) | |||||||||||||||||||||||||||||||||||||
| Noncontrolling interest distributions | — | — | — | — | — | (25.0) | (25.0) | |||||||||||||||||||||||||||||||||||||
| Shares issued under equity compensation plans | — | (3.2) | — | — | 4.4 | — | 1.2 | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | 19.5 | — | — | — | — | 19.5 | |||||||||||||||||||||||||||||||||||||
| Balance at August 31, 2026 | $ | 2.1 | $ | 2,185.0 | $ | 14,440.1 | $ | 489.5 | $ | (8,529.8) | $ | 292.5 | $ | 8,879.4 | ||||||||||||||||||||||||||||||
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 3 |
| FINANCIAL STATEMENTS | Table of Contents |
| 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 28, 2025 | $ | 2.1 | $ | 2,144.6 | $ | 12,603.4 | $ | (662.7) | $ | (7,205.4) | $ | 252.8 | $ | 7,134.8 | ||||||||||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | 516.1 | — | — | 7.7 | 523.8 | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of income tax effect | — | — | — | 350.7 | — | 13.6 | 364.3 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | 888.1 | |||||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares | — | — | — | — | (306.1) | — | (306.1) | |||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | (180.6) | — | — | — | (180.6) | |||||||||||||||||||||||||||||||||||||
| Noncontrolling interest distributions | — | — | — | — | — | (7.5) | (7.5) | |||||||||||||||||||||||||||||||||||||
| Shares issued under equity compensation plans | — | (24.3) | — | — | 17.4 | — | (6.9) | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | 10.3 | — | — | — | — | 10.3 | |||||||||||||||||||||||||||||||||||||
| Balance at May 31, 2025 | 2.1 | 2,130.6 | 12,938.9 | (312.0) | (7,494.1) | 266.6 | 7,532.1 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | — | — | 466.0 | — | — | 20.1 | 486.1 | |||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of income tax effect | — | — | — | 219.7 | — | 9.2 | 228.9 | |||||||||||||||||||||||||||||||||||||
| Comprehensive income (loss) | 715.0 | |||||||||||||||||||||||||||||||||||||||||||
| Repurchase of shares | — | — | — | — | (297.9) | — | (297.9) | |||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | (179.4) | — | — | — | (179.4) | |||||||||||||||||||||||||||||||||||||
| Noncontrolling interest distributions | — | — | — | — | — | (10.0) | (10.0) | |||||||||||||||||||||||||||||||||||||
| Shares issued under equity compensation plans | — | (1.8) | — | — | 6.6 | — | 4.8 | |||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | 21.7 | — | — | — | — | 21.7 | |||||||||||||||||||||||||||||||||||||
| Balance at August 31, 2025 | $ | 2.1 | $ | 2,150.5 | $ | 13,225.5 | $ | (92.3) | $ | (7,785.4) | $ | 285.9 | $ | 7,786.3 | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these statements.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 4 |
| FINANCIAL STATEMENTS | Table of Contents |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| For the Six Months Ended August 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
| Net income (loss) | $ | 1,254.2 | $ | 1,009.9 | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||
| Deferred tax provision (benefit) | 26.8 | 277.6 | |||||||||
| Depreciation | 194.4 | 207.9 | |||||||||
| Stock-based compensation | 34.9 | 32.1 | |||||||||
| Noncash lease expense | 67.0 | 62.6 | |||||||||
| Asset impairment and related expenses | 68.1 | 52.1 | |||||||||
| Change in operating assets and liabilities, net of effects from purchase and sale of business: | |||||||||||
| Accounts receivable | (18.2) | 72.2 | |||||||||
| Inventories | 3.3 | (48.3) | |||||||||
| Prepaid expenses and other current assets | (45.7) | (56.8) | |||||||||
| Accounts payable | 72.8 | 53.0 | |||||||||
| Contract liabilities | 6.5 | (50.4) | |||||||||
| Other accrued expenses and liabilities | (197.9) | (57.0) | |||||||||
| Other | 12.4 | (65.6) | |||||||||
| Total adjustments | 224.4 | 479.4 | |||||||||
| Net cash provided by (used in) operating activities | 1,478.6 | 1,489.3 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Purchase of property, plant, and equipment | (354.1) | (410.1) | |||||||||
| Purchase of business, net of cash acquired | (15.3) | — | |||||||||
| Proceeds from sale of assets | 4.1 | 30.8 | |||||||||
| Proceeds from sale of business | 13.9 | 851.1 | |||||||||
| Other investing activities | 1.0 | (7.0) | |||||||||
| Net cash provided by (used in) investing activities | (350.4) | 464.8 |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 5 |
| FINANCIAL STATEMENTS | Table of Contents |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| For the Six Months Ended August 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
| Proceeds from issuance of long-term debt | 499.7 | 499.1 | |||||||||
| Principal payments of long-term debt | (602.1) | (902.1) | |||||||||
| Net proceeds from (repayments of) short-term borrowings | (155.5) | (554.2) | |||||||||
| Dividends paid | (353.8) | (361.1) | |||||||||
| Purchases of treasury stock | (454.7) | (604.0) | |||||||||
| Payment of excise tax on share repurchases | (8.8) | (9.9) | |||||||||
| Proceeds from shares issued under equity compensation plans | 7.3 | 13.0 | |||||||||
| Payments of minimum tax withholdings on stock-based payment awards | (10.2) | (9.5) | |||||||||
| Payments of debt issuance, debt extinguishment, and other financing costs | (3.1) | (5.4) | |||||||||
| Distributions to noncontrolling interests | (50.0) | (17.5) | |||||||||
| Payment of contingent consideration | (0.3) | (1.5) | |||||||||
| Net cash provided by (used in) financing activities | (1,131.5) | (1,953.1) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (0.6) | 2.9 | |||||||||
| Net increase (decrease) in cash and cash equivalents | (3.9) | 3.9 | |||||||||
| Cash and cash equivalents, beginning of period | 102.4 | 68.1 | |||||||||
| Cash and cash equivalents, end of period | $ | 98.5 | $ | 72.0 | |||||||
| SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||||||||||
| Additions to property, plant, and equipment | $ | 89.7 | $ | 62.5 | |||||||
The accompanying notes are an integral part of these statements.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 6 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
AUGUST 31, 2026
(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 2026 Annual Report. Results of operations for interim periods are not necessarily indicative of annual results.
2. RESTRUCTURING
The 2025 Restructuring Initiative 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. The majority of the work associated with the 2025 Restructuring Initiative was executed within the year ended February 28, 2026. The 2025 Restructuring Initiative is estimated to result in $130 million of cumulative pre-tax costs once all phases are fully implemented. These costs are expected to be comprised of (i) employee termination costs (50%) and (ii) consulting services as well as other costs, which primarily include contract termination costs (50%).
We recognized pre-tax restructuring costs within selling, general, and administrative expenses in our consolidated results related to the 2025 Restructuring Initiative as follows:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Consulting services | 4.3 | 21.5 | 3.8 | 8.2 | ||||||||||||||||||||||
| Other | 1.2 | 0.1 | 1.1 | 0.1 | ||||||||||||||||||||||
| $ | 5.5 | $ | 21.6 | $ | 4.9 | $ | 8.3 |
Since the inception of the 2025 Restructuring Initiative, we have incurred the following pre-tax restructuring costs:
| Cumulative Costs as of August 31, 2026 | Percent of Total Costs | ||||||||||
| (in millions) | |||||||||||
| Employee termination | $ | 62.0 | 49 | % | |||||||
| Consulting services | 59.8 | 47 | % | ||||||||
| Other | 5.6 | 4 | % | ||||||||
| $ | 127.4 | 100 | % |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 7 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
The activity for the restructuring costs discussed above and the related accruals are as follows:
| Employee Termination | Consulting Services | Other | Total | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Balance at February 28, 2026 (1) | $ | 18.6 | $ | 29.9 | $ | 4.2 | $ | 52.7 | |||||||||||||||
| Restructuring costs | — | 4.3 | 0.1 | 4.4 | |||||||||||||||||||
| Cash payments | (13.4) | (30.6) | (3.9) | (47.9) | |||||||||||||||||||
| Balance at August 31, 2026 (1) | $ | 5.2 | $ | 3.6 | $ | 0.4 | $ | 9.2 |
(1)The total accrual was recorded in accrued restructuring within other accrued expenses and liabilities on our consolidated balance sheets.
3. 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:
| August 31, 2026 | February 28, 2026 | ||||||||||
| (in millions) | |||||||||||
| Raw materials and supplies | $ | 192.2 | $ | 204.6 | |||||||
| In-process inventories | 512.4 | 549.5 | |||||||||
| Finished case goods | 674.0 | 679.8 | |||||||||
| $ | 1,378.6 | $ | 1,433.9 |
The inventories balance at August 31, 2026, excludes $34.3 million of primarily bulk inventory associated with assets held for sale. For additional information, refer to Note 5.
4. DERIVATIVE INSTRUMENTS
Overview
Our risk management and derivative accounting policies are presented in Notes 1 and 7 of our consolidated financial statements included in our 2026 Annual Report and have not changed significantly for the six months and three months ended August 31, 2026.
The aggregate notional value of outstanding derivative instruments is as follows:
| August 31, 2026 | February 28, 2026 | ||||||||||
| (in millions) | |||||||||||
| Derivative instruments designated as hedging instruments | |||||||||||
| Foreign currency contracts | $ | 2,651.5 | $ | 2,080.9 | |||||||
| Net investment hedge contracts | $ | 145.5 | $ | 145.5 | |||||||
| Pre-issuance hedge contracts | $ | — | $ | 50.0 | |||||||
| Derivative instruments not designated as hedging instruments | |||||||||||
| Foreign currency contracts | $ | 533.2 | $ | 522.2 | |||||||
| Commodity derivative contracts | $ | 358.9 | $ | 335.5 | |||||||
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 8 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
Net investment hedge contracts
In April 2025, we entered into cross-currency swaps to hedge portions of our net investment in certain of our non-U.S. operations against fluctuations in foreign currency exchange rates. These cross-currency swaps are designated as net investment hedges and mature between April 2028 and April 2029. The changes in the fair value of these swaps are recognized as a component of other comprehensive income (loss) and reported in accumulated other comprehensive income (loss) in our consolidated balance sheets. The gain or loss will be subsequently reclassified into net earnings when the hedged net investment is either sold, liquidated, or substantially liquidated. We assess the effectiveness of our cross-currency swaps using the spot method. Under this method, the periodic interest settlements are recorded directly in earnings through interest expense, net. Accordingly, interest income recognized in interest expense, net related to these cross-currency swaps was as follows:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Interest income | $ | 1.1 | $ | 0.8 | $ | 0.5 | $ | 0.5 |
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 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 August 31, 2026, there were no derivative instruments in a net liability position due to counterparties.
Results of period derivative activity
The estimated fair value and location of our derivative instruments on our balance sheets are as follows (see Note 5):
| Assets | Liabilities | |||||||||||||||||||||||||
| August 31, 2026 | February 28, 2026 | August 31, 2026 | February 28, 2026 | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Derivative instruments designated as hedging instruments | ||||||||||||||||||||||||||
| Foreign currency contracts: | ||||||||||||||||||||||||||
| Prepaid expenses and other | $ | 140.9 | $ | 156.7 | Other accrued expenses and liabilities | $ | 0.5 | $ | 0.1 | |||||||||||||||||
| Other assets | $ | 202.4 | $ | 177.6 | Deferred income taxes and other liabilities | $ | 0.3 | $ | 0.1 | |||||||||||||||||
| Net investment hedge contracts: | ||||||||||||||||||||||||||
| Other assets | $ | — | $ | — | Deferred income taxes and other liabilities | $ | 4.8 | $ | 6.7 | |||||||||||||||||
| Derivative instruments not designated as hedging instruments | ||||||||||||||||||||||||||
| Foreign currency contracts: | ||||||||||||||||||||||||||
| Prepaid expenses and other | $ | 1.0 | $ | 0.4 | Other accrued expenses and liabilities | $ | 1.8 | $ | 0.9 |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 9 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
| Assets | Liabilities | |||||||||||||||||||||||||
| August 31, 2026 | February 28, 2026 | August 31, 2026 | February 28, 2026 | |||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||
| Commodity derivative contracts: | ||||||||||||||||||||||||||
| Prepaid expenses and other | $ | 45.1 | $ | 22.4 | Other accrued expenses and liabilities | $ | 7.8 | $ | 5.3 | |||||||||||||||||
| Other assets | $ | 15.3 | $ | 8.8 | Deferred income taxes and other liabilities | $ | 2.0 | $ | 2.1 | |||||||||||||||||
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 Six Months Ended August 31, 2026 | ||||||||||||||||||||
| Foreign currency contracts | $ | 81.0 | Sales | $ | 0.2 | |||||||||||||||
| Cost of product sold | 72.6 | |||||||||||||||||||
| Pre-issuance hedge contracts | 1.8 | Interest expense, net | (0.2) | |||||||||||||||||
| $ | 82.8 | $ | 72.6 | |||||||||||||||||
| For the Six Months Ended August 31, 2025 | ||||||||||||||||||||
| Foreign currency contracts | $ | 202.7 | Sales | $ | 0.6 | |||||||||||||||
| Cost of product sold | 23.0 | |||||||||||||||||||
| Selling, general, and administrative expenses | 0.2 | |||||||||||||||||||
| Pre-issuance hedge contracts | (3.4) | Interest expense, net | (0.1) | |||||||||||||||||
| $ | 199.3 | $ | 23.7 | |||||||||||||||||
| For the Three Months Ended August 31, 2026 | ||||||||||||||||||||
| Foreign currency contracts | $ | 72.6 | Sales | $ | 0.1 | |||||||||||||||
| Cost of product sold | 38.4 | |||||||||||||||||||
| Pre-issuance hedge contracts | — | Interest expense, net | (0.1) | |||||||||||||||||
| $ | 72.6 | $ | 38.4 | |||||||||||||||||
| For the Three Months Ended August 31, 2025 | ||||||||||||||||||||
| Foreign currency contracts | $ | 79.1 | Sales | $ | 0.3 | |||||||||||||||
| Cost of product sold | 17.8 | |||||||||||||||||||
| Pre-issuance hedge contracts | — | Interest expense, net | (0.1) | |||||||||||||||||
| $ | 79.1 | $ | 18.0 |
We expect $128.7 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 10 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
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 Six Months Ended August 31, 2026 | ||||||||||||||
| Commodity derivative contracts | Cost of product sold | $ | 52.7 | |||||||||||
| Foreign currency contracts | Selling, general, and administrative expenses | (7.8) | ||||||||||||
| $ | 44.9 | |||||||||||||
| For the Six Months Ended August 31, 2025 | ||||||||||||||
| Commodity derivative contracts | Cost of product sold | $ | (4.7) | |||||||||||
| Foreign currency contracts | Selling, general, and administrative expenses | 7.3 | ||||||||||||
| $ | 2.6 | |||||||||||||
| For the Three Months Ended August 31, 2026 | ||||||||||||||
| Commodity derivative contracts | Cost of product sold | $ | 3.4 | |||||||||||
| Foreign currency contracts | Selling, general, and administrative expenses | (4.9) | ||||||||||||
| $ | (1.5) | |||||||||||||
| For the Three Months Ended August 31, 2025 | ||||||||||||||
| Commodity derivative contracts | Cost of product sold | $ | 13.0 | |||||||||||
| Foreign currency contracts | Selling, general, and administrative expenses | 2.3 | ||||||||||||
| $ | 15.3 |
5. 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:
Derivative instruments
Our derivative instruments consist of foreign currency forward and option contracts, commodity swap contracts, cross-currency swap contracts, interest rate swap contracts, and Pre-issuance hedge contracts. The fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement).
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 11 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
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 August 31, 2026, the carrying amount of long-term debt, including the current portion, was $10,199.2 million, compared with an estimated fair value of $9,444.9 million. As of February 28, 2026, the carrying amount of long-term debt, including the current portion, was $10,296.5 million, compared with an estimated fair value of $9,858.2 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 August 31, 2026, and February 28, 2026, 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) | |||||||||||||||||||||||
| August 31, 2026 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign currency contracts | $ | — | $ | 344.3 | $ | — | $ | 344.3 | |||||||||||||||
| Commodity derivative contracts | $ | — | $ | 60.4 | $ | — | $ | 60.4 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign currency contracts | $ | — | $ | 2.6 | $ | — | $ | 2.6 | |||||||||||||||
| Commodity derivative contracts | $ | — | $ | 9.8 | $ | — | $ | 9.8 | |||||||||||||||
| Net investment hedge contracts | $ | — | $ | 4.8 | $ | — | $ | 4.8 | |||||||||||||||
| February 28, 2026 | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Foreign currency contracts | $ | — | $ | 334.7 | $ | — | $ | 334.7 | |||||||||||||||
| Commodity derivative contracts | $ | — | $ | 31.2 | $ | — | $ | 31.2 | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign currency contracts | $ | — | $ | 1.1 | $ | — | $ | 1.1 | |||||||||||||||
| Commodity derivative contracts | $ | — | $ | 7.4 | $ | — | $ | 7.4 | |||||||||||||||
| Net investment hedge contracts | $ | — | $ | 6.7 | $ | — | $ | 6.7 | |||||||||||||||
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 12 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
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 period presented:
| Fair Value Measurements Using | ||||||||||||||||||||||||||||||||
| Balance Sheet Classification | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Losses | ||||||||||||||||||||||||||||
| (in millions) | ||||||||||||||||||||||||||||||||
| For the Six Months Ended August 31, 2026 | ||||||||||||||||||||||||||||||||
| Assets held for sale and related net assets | Prepaid expenses and other | $ | — | $ | 5.0 | $ | — | $ | 68.1 | |||||||||||||||||||||||
| For the Six Months Ended August 31, 2025 | ||||||||||||||||||||||||||||||||
| Assets held for sale and related net assets | Assets held for sale | $ | — | $ | — | $ | — | $ | 52.1 | |||||||||||||||||||||||
| Equity method investments | Other assets | — | — | — | 1.5 | |||||||||||||||||||||||||||
| Total | $ | — | $ | — | $ | — | $ | 53.6 |
Assets held for sale and related net assets
For the three months ended August 31, 2026, in connection with management’s plan to divest the Nelson’s Green Brier business, assets held for sale with a $54.8 million carrying value were adjusted to their estimated fair value of $5.0 million, less costs to sell, resulting in a $49.8 million net loss. This net loss was included in asset impairment and related expenses within our consolidated results for the six months and three months ended August 31, 2026. The estimated fair value was based on the expected proceeds from a potential divestiture as of August 31, 2026.
For the three months ended May 31, 2026, in connection with the New Zealand Wine Divestitures, then-existing assets held for sale with a $36.7 million carrying value were adjusted to their estimated fair value of $18.4 million, less costs to sell, resulting in an $18.3 million net loss. This net loss was included in asset impairment and related expenses within our consolidated results for the six months ended August 31, 2026. Our estimated fair value of the then-existing assets held for sale was based on the expected proceeds from the New Zealand Wine Divestitures as of May 31, 2026.
For the three months ended May 31, 2025, largely in connection with the 2025 Wine Divestitures, then-existing assets held for sale and related net assets were adjusted to their current estimated fair value of $897.7 million, less costs to sell, resulting in a $52.1 million net loss. This net loss was included in asset impairment and related expenses within our consolidated results for the six months ended August 31, 2025. Our estimated fair value of the then-existing assets held for sale was largely based on the expected proceeds from the 2025 Wine Divestitures as of May 31, 2025.
Equity method investments
As of August 31, 2025, we evaluated an equity method investment, made through our corporate venture capital function within the Corporate Operations and Other segment, and determined there was an other-than-temporary impairment due to business underperformance. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the six months and three months ended August 31, 2025. The estimated fair value was based largely on the cash flows expected to be generated by the investment using unobservable data points.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 13 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
6. GOODWILL
The changes in the carrying amount of the Beer segment goodwill are as follows:
| (in millions) | |||||||||||||||||
| Balance at February 28, 2025 | $ | 5,126.8 | |||||||||||||||
| Foreign currency translation adjustments | 107.1 | ||||||||||||||||
| Balance at February 28, 2026 | 5,233.9 | ||||||||||||||||
| Purchase accounting allocations (1) | 27.6 | ||||||||||||||||
| Foreign currency translation adjustments | 7.8 | ||||||||||||||||
| Balance at August 31, 2026 | $ | 5,269.3 |
(1)Preliminary purchase accounting allocations associated with the HOPWTR acquisition (see below).
The carrying amount of our Wine and Spirits segment goodwill was zero as of August 31, 2026, February 28, 2026, and February 28, 2025, respectively.
ACQUISITION
HOPWTR
In April 2026, we purchased the remaining ownership interest in HOPWTR, a premium non-alcoholic brand crafted with hops, adaptogens, and nootropics. HOPWTR has been a part of our corporate ventures portfolio since 2021. This transaction also included the acquisition of trademarks. The results of operations of HOPWTR are reported in the Beer segment and have been included in our consolidated results of operations from the date of acquisition.
DIVESTITURES
New Zealand Wine Divestitures
In June 2026, we sold eight small-scale domestic-market New Zealand mainstream wine brands and associated inventory, equipment, a winery, and vineyards. The net cash proceeds were used for general corporate purposes. Prior to the completion of the New Zealand Wine Divestitures, we recorded the results of operations of the divested brands in the Wine and Spirits segment.
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 then-owned mainstream wine brands and associated inventory, wineries, vineyards, offices, and facilities. The net cash proceeds from the 2025 Wine Divestitures were used for 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. The following table summarizes the net loss recognized in connection with this transaction for the six months and three months ended August 31, 2025:
| (in millions) | |||||||||||
| Cash received from buyer | $ | 846.5 | |||||||||
| Net assets sold | (859.7) | ||||||||||
| Direct costs to sell | (2.5) | ||||||||||
| Loss on sale of business (1) | $ | (15.7) |
(1)Included in selling, general, and administrative expenses within our consolidated results of operations.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 14 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
SUBSEQUENT EVENT
SpikedAde acquisition
In October 2026, we acquired the SpikedAde business, a spirit-based RTD beverage brand, including inventory and trademarks, for an initial purchase price of $75 million. The agreement also provides for contingent consideration of up to $278 million payable over five years based on the future performance of the SpikedAde business. The results of operations of SpikedAde will be reported in the Beer segment and will be included in our consolidated results of operations from the date of acquisition.
7. INTANGIBLE ASSETS
The major components of intangible assets are as follows:
| August 31, 2026 | February 28, 2026 | ||||||||||||||||||||||
| Gross Carrying Amount | Net Carrying Amount | Gross Carrying Amount | Net Carrying Amount | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Amortizable intangible assets | |||||||||||||||||||||||
| Customer relationships | $ | 85.4 | $ | 12.9 | $ | 85.4 | $ | 13.6 | |||||||||||||||
| Other | 19.6 | 0.3 | 19.6 | 0.3 | |||||||||||||||||||
| Total | $ | 105.0 | 13.2 | $ | 105.0 | 13.9 | |||||||||||||||||
| Nonamortizable intangible assets | |||||||||||||||||||||||
| Trademarks | 2,518.0 | 2,519.1 | |||||||||||||||||||||
| Total intangible assets | $ | 2,531.2 | $ | 2,533.0 |
We did not incur costs to renew or extend the term of acquired intangible assets for the six months and three months ended August 31, 2026, and August 31, 2025. Net carrying amount represents the gross carrying value net of accumulated amortization.
8. BORROWINGS
Borrowings consist of the following:
| August 31, 2026 | February 28, 2026 | ||||||||||||||||||||||
| Current | Long-term | Total | Total | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Short-term borrowings | |||||||||||||||||||||||
| Commercial paper | $ | 116.5 | $ | 272.0 | |||||||||||||||||||
| $ | 116.5 | $ | 272.0 | ||||||||||||||||||||
| Long-term debt | |||||||||||||||||||||||
| Senior notes | $ | 1,099.1 | $ | 9,088.5 | $ | 10,187.6 | $ | 10,285.3 | |||||||||||||||
| Other | 3.9 | 7.7 | 11.6 | 11.2 | |||||||||||||||||||
| $ | 1,103.0 | $ | 9,096.2 | $ | 10,199.2 | $ | 10,296.5 |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 15 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
2025 Credit Agreement
The Company, CB International, the Administrative Agent, and certain other lenders are parties to the 2025 Credit Agreement. Information with respect to borrowings under the 2025 Credit Agreement is as follows:
| Outstanding borrowings | Interest rate | SOFR margin | Outstanding letters of credit | Remaining borrowing capacity (1) | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
| August 31, 2026 | |||||||||||||||||||||||||||||
| Revolving credit facility (2) (3) | $ | — | — | % | — | % | $ | 10.9 | $ | 2,122.6 | |||||||||||||||||||
| February 28, 2026 | |||||||||||||||||||||||||||||
| Revolving credit facility (2) (3) | $ | — | — | % | — | % | $ | 11.3 | $ | 1,966.6 |
(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2025 Credit Agreement, and outstanding borrowings under our commercial paper program of $116.5 million and $272.1 million (excluding unamortized discount) as of August 31, 2026, and February 28, 2026, 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 28, 2030. 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 2025 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 2025 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:
| August 31, 2026 | February 28, 2026 | ||||||||||
| (in millions) | |||||||||||
| Outstanding borrowings (1) | $ | 116.5 | $ | 272.0 | |||||||
| Weighted average annual interest rate | 3.9 | % | 3.9 | % | |||||||
| Weighted average remaining term | 2 days | 6 days |
(1)Outstanding commercial paper borrowings are net of unamortized discount.
Senior notes
In May 2026, we issued $500.0 million aggregate principal amount of 4.85% senior notes due May 2031. Proceeds from this offering, net of discount and debt issuance costs, were $496.7 million. Interest on the 4.85% May 2026 Senior Notes is payable semiannually on May 6 and November 6 of each year, beginning November 6, 2026. The 4.85% May 2026 Senior Notes are redeemable, in whole or in part, at our option at any time prior to April 6, 2031, at a
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 16 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-whole payment based on the present value of the future payments at the adjusted treasury rate, as defined in the applicable indenture, plus 15 basis points. On or after April 6, 2031, we may redeem the 4.85% May 2026 Senior Notes, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest. The 4.85% May 2026 Senior Notes are senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness.
On May 18, 2026, we redeemed $600.0 million aggregate principal amount of 3.70% December 2016 Senior Notes prior to maturity using proceeds from the 4.85% May 2026 Senior Notes and commercial paper borrowings at a redemption price equal to 100% of the outstanding principal amount plus accrued and unpaid interest.
Debt payments
As of August 31, 2026, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $43.4 million and $19.0 million, respectively) for the remaining six months of Fiscal 2027 and for each of the five succeeding fiscal years and thereafter are as follows:
| (in millions) | |||||
| Fiscal 2027 | $ | 1.9 | |||
| Fiscal 2028 | 1,803.1 | ||||
| Fiscal 2029 | 902.4 | ||||
| Fiscal 2030 | 802.0 | ||||
| Fiscal 2031 | 1,101.5 | ||||
| Fiscal 2032 | 1,500.7 | ||||
| Thereafter | 4,150.0 | ||||
| $ | 10,261.6 |
SUBSEQUENT EVENTS
2026 Term Credit Agreement
In September 2026, the Company, M&T, as administrative agent and a lender, and certain other lenders entered into the 2026 Term Credit Agreement. The 2026 Term Credit Agreement provides for a nine-month delayed draw $300.0 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. The proceeds, if drawn, from the 2026 Term Credit Agreement are intended to be used for general corporate purposes, including the repayment of debt.
Senior notes
On September 18, 2026, we redeemed $600.0 million aggregate principal amount of 4.35% May 2022 Senior Notes prior to maturity using commercial paper borrowings at a redemption price equal to 100% of the outstanding principal amount plus accrued and unpaid interest.
9. INCOME TAXES
Overview
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Effective tax rate | 15.8% | 27.6% | 20.2% | 37.9% |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 17 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
For the six months and three months ended August 31, 2026, our effective tax rate was lower than the federal statutory rate of 21% largely due to the benefit of lower effective tax rates applicable to our foreign businesses, partially offset by (i) changes to valuation allowances and (ii) certain tax legislation updates.
For the six months and three months ended August 31, 2025, our effective tax rate was higher than the federal statutory rate of 21% largely due to changes in valuation allowances related to net operating losses and tax legislation updates, partially offset by (i) a net income tax benefit recognized as a result of the resolution of various tax examinations and assessments related to prior periods and (ii) the benefit of lower effective tax rates applicable to our foreign businesses.
Tax Legislation
OB3 Act
On July 4, 2025, the OB3 Act was signed into U.S. law. The OB3 Act extends and modifies several provisions originally introduced under the Tax Cuts and Jobs Act of 2017, while also implementing additional changes to U.S. federal tax law. Key provisions of the OB3 Act include (i) the permanent extension of 100% bonus depreciation for qualifying assets, (ii) the elimination of the requirement to capitalize and amortize U.S.-based research and experimental expenditures, allowing for immediate expensing, (iii) changes to the limitation on the deductibility of interest expense, and (iv) modifications to the taxation of foreign earnings and other international income tax provisions. The OB3 Act contains multiple effective dates, with certain provisions taking effect beginning in calendar year 2025 and others phased in through calendar year 2027.
We have performed an evaluation of the impact of the OB3 Act on our consolidated financial statements, including the effects on our annual effective tax rate, deferred tax assets and liabilities, and cash flows. Based on this analysis and activities performed in response to the legislation, there will be a negative impact on our effective tax rate for Fiscal 2027, primarily driven by modifications to the taxation of foreign earnings and other international income tax provisions.
Pillar Two
The OECD introduced a framework under Pillar Two which includes a 15% global minimum tax rate. 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.
SUBSEQUENT EVENT
As a result of certain foreign tax reform enacted in September 2026, we expect to release a portion of our valuation allowance related to deferred tax assets. We are estimating an income tax benefit of approximately $100 million to $150 million to be recognized during the three months ending November 30, 2026.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 18 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
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 28, 2026 | 212,699,542 | 25,923 | 39,927,096 | ||||||||||||||
| Share repurchases | — | — | 1,465,295 | ||||||||||||||
| Exercise of stock options | — | — | (24,772) | ||||||||||||||
| Vesting of restricted stock units (1) | — | — | (122,930) | ||||||||||||||
| Vesting of performance share units (1) | — | — | (12,043) | ||||||||||||||
| Balance at May 31, 2026 | 212,699,542 | 25,923 | 41,232,646 | ||||||||||||||
| Share repurchases | — | — | 1,704,371 | ||||||||||||||
| Conversion of shares | 190 | (190) | — | ||||||||||||||
| Employee stock purchases | — | — | (31,026) | ||||||||||||||
| Vesting of restricted stock units (1) | — | — | (12,117) | ||||||||||||||
| Balance at August 31, 2026 | 212,699,732 | 25,733 | 42,893,874 | ||||||||||||||
| Balance at February 28, 2025 | 212,698,298 | 27,037 | 34,505,141 | ||||||||||||||
| Share repurchases | — | — | 1,634,718 | ||||||||||||||
| Exercise of stock options | — | 130 | (38,775) | ||||||||||||||
| Vesting of restricted stock units (1) | — | — | (98,959) | ||||||||||||||
| Balance at May 31, 2025 | 212,698,298 | 27,167 | 36,002,125 | ||||||||||||||
| Share repurchases | — | — | 1,740,884 | ||||||||||||||
| Exercise of stock options | — | — | (18,337) | ||||||||||||||
| Employee stock purchases | — | — | (34,341) | ||||||||||||||
| Vesting of restricted stock units (1) | — | — | (5,369) | ||||||||||||||
| Balance at August 31, 2025 | 212,698,298 | 27,167 | 37,684,962 | ||||||||||||||
(1)Net of the following shares withheld to satisfy tax withholding requirements:
| For the Three Months Ended May 31, | For the Three Months Ended August 31, | For the Six Months Ended August 31, | |||||||||||||||||||||||||||
| 2026 | |||||||||||||||||||||||||||||
| Restricted Stock Units | 60,594 | 324 | 60,918 | ||||||||||||||||||||||||||
| Performance Share Units | 5,992 | — | 5,992 | ||||||||||||||||||||||||||
| 2025 | |||||||||||||||||||||||||||||
| Restricted Stock Units | 50,720 | 146 | 50,866 | ||||||||||||||||||||||||||
Stock repurchases
In April 2025, our Board of Directors authorized the repurchase of up to $4.0 billion of our publicly traded common stock under the 2025 Authorization, which expires in February 2028. Shares repurchased under this authorization become treasury shares. For the six months ended August 31, 2026, we repurchased 3,169,666 shares of Class A Stock pursuant to the 2025 Authorization through open market transactions at an aggregate cost of $454.7 million. Subsequent to August 31, 2026, we repurchased 607,371 shares of Class A Stock pursuant to the 2025 Authorization at an aggregate cost of $75.0 million through open market transactions made pursuant to a Rule 10b5-1 trading plan. As of September 30, 2026, $2,546.2 million remains available for future share repurchases, excluding the impact of Federal excise tax owed pursuant to the IRA.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 19 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
11. NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CBI
Net income (loss) per common share attributable to CBI (hereafter referred to as “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. 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. The computation of basic and diluted net income (loss) per common share for Class A Stock are as follows:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions, except per share data) | |||||||||||||||||||||||
| Net income (loss) attributable to CBI | $ | 1,219.6 | $ | 982.1 | $ | 565.8 | $ | 466.0 | |||||||||||||||
| Weighted average common shares outstanding – basic | 171.323 | 176.804 | 170.460 | 175.821 | |||||||||||||||||||
| Stock-based awards (1) | 0.180 | 0.153 | 0.141 | 0.117 | |||||||||||||||||||
| Weighted average common shares outstanding – diluted | 171.503 | 176.957 | 170.601 | 175.938 | |||||||||||||||||||
| Net income (loss) per common share attributable to CBI – basic | $ | 7.12 | $ | 5.55 | $ | 3.32 | $ | 2.65 | |||||||||||||||
| Net income (loss) per common share attributable to CBI – diluted | $ | 7.11 | $ | 5.55 | $ | 3.32 | $ | 2.65 |
(1)Primarily includes performance share units and restricted stock units for the six months and three months ended August 31, 2026 and stock options and restricted stock units for the six months and three months ended August 31, 2025.
The following stock-based awards were excluded from the computation of diluted net income (loss) per common share for Class A Stock, as the effect of including these would have been anti-dilutive:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions, except exercise price) | |||||||||||||||||||||||
| Stock-based awards, primarily stock options | 2.785 | 1.840 | 2.817 | 1.994 | |||||||||||||||||||
| Weighted average exercise price, stock options | $ | 206.87 | $ | 235.49 | $ | 206.85 | $ | 194.96 |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 20 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
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, including cash flow and net investment hedges, 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 Six Months Ended August 31, 2026 | |||||||||||||||||
| Net income (loss) attributable to CBI | $ | 1,219.6 | |||||||||||||||
| Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
| Foreign currency translation adjustments: | |||||||||||||||||
| Net gain (loss) | $ | 55.0 | $ | — | 55.0 | ||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 55.0 | — | 55.0 | ||||||||||||||
| Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
| Net cash flow hedge gain (loss) | 89.3 | (11.0) | 78.3 | ||||||||||||||
| Amounts reclassified | (78.3) | 9.3 | (69.0) | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 11.0 | (1.7) | 9.3 | ||||||||||||||
| Unrealized gain (loss) on net investment hedges: | |||||||||||||||||
| Net investment hedge gain (loss) | 1.9 | (0.5) | 1.4 | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 1.9 | (0.5) | 1.4 | ||||||||||||||
| Pension/postretirement adjustments: | |||||||||||||||||
| Net actuarial gain (loss) | (0.1) | 0.1 | — | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (0.1) | 0.1 | — | ||||||||||||||
| Share of OCI of equity method investments: | |||||||||||||||||
| Net gain (loss) | — | — | — | ||||||||||||||
| Amounts reclassified | 0.8 | (0.2) | 0.6 | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 0.8 | (0.2) | 0.6 | ||||||||||||||
| Other comprehensive income (loss) attributable to CBI | $ | 68.6 | $ | (2.3) | 66.3 | ||||||||||||
| Comprehensive income (loss) attributable to CBI | $ | 1,285.9 | |||||||||||||||
| For the Six Months Ended August 31, 2025 | |||||||||||||||||
| Net income (loss) attributable to CBI | $ | 982.1 | |||||||||||||||
| Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
| Foreign currency translation adjustments: | |||||||||||||||||
| Net gain (loss) | $ | 408.3 | $ | — | 408.3 | ||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 408.3 | — | 408.3 | ||||||||||||||
| Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
| Net cash flow hedge gain (loss) | 216.0 | (26.3) | 189.7 | ||||||||||||||
| Amounts reclassified | (25.0) | 2.8 | (22.2) | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 191.0 | (23.5) | 167.5 | ||||||||||||||
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 21 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
| Before Tax Amount | Tax (Expense) Benefit | Net of Tax Amount | |||||||||||||||
| (in millions) | |||||||||||||||||
| Unrealized gain (loss) on net investment hedges: | |||||||||||||||||
| Net investment hedge gain (loss) | (5.6) | 1.4 | (4.2) | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (5.6) | 1.4 | (4.2) | ||||||||||||||
| Pension/postretirement adjustments: | |||||||||||||||||
| Net actuarial gain (loss) | (0.1) | — | (0.1) | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (0.1) | — | (0.1) | ||||||||||||||
| Share of OCI of equity method investments: | |||||||||||||||||
| Net gain (loss) | — | — | — | ||||||||||||||
| Amounts reclassified | (1.5) | 0.4 | (1.1) | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (1.5) | 0.4 | (1.1) | ||||||||||||||
| Other comprehensive income (loss) attributable to CBI | $ | 592.1 | $ | (21.7) | 570.4 | ||||||||||||
| Comprehensive income (loss) attributable to CBI | $ | 1,552.5 | |||||||||||||||
| For the Three Months Ended August 31, 2026 | |||||||||||||||||
| Net income (loss) attributable to CBI | $ | 565.8 | |||||||||||||||
| Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
| Foreign currency translation adjustments: | |||||||||||||||||
| Net gain (loss) | $ | 119.1 | $ | — | 119.1 | ||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 119.1 | — | 119.1 | ||||||||||||||
| Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
| Net cash flow hedge gain (loss) | 77.8 | (9.0) | 68.8 | ||||||||||||||
| Amounts reclassified | (41.5) | 4.9 | (36.6) | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 36.3 | (4.1) | 32.2 | ||||||||||||||
| Unrealized gain (loss) on net investment hedges: | |||||||||||||||||
| Net investment hedge gain (loss) | 0.6 | (0.2) | 0.4 | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 0.6 | (0.2) | 0.4 | ||||||||||||||
| Pension/postretirement adjustments: | |||||||||||||||||
| Net actuarial gain (loss) | (0.2) | 0.1 | (0.1) | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (0.2) | 0.1 | (0.1) | ||||||||||||||
| Share of OCI of equity method investments: | |||||||||||||||||
| Net gain (loss) | — | — | — | ||||||||||||||
| Amounts reclassified | 0.2 | (0.1) | 0.1 | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 0.2 | (0.1) | 0.1 | ||||||||||||||
| Other comprehensive income (loss) attributable to CBI | $ | 156.0 | $ | (4.3) | 151.7 | ||||||||||||
| Comprehensive income (loss) attributable to CBI | $ | 717.5 | |||||||||||||||
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 22 |
| 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 August 31, 2025 | |||||||||||||||||
| Net income (loss) attributable to CBI | $ | 466.0 | |||||||||||||||
| Other comprehensive income (loss) attributable to CBI: | |||||||||||||||||
| Foreign currency translation adjustments: | |||||||||||||||||
| Net gain (loss) | $ | 164.8 | $ | — | 164.8 | ||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 164.8 | — | 164.8 | ||||||||||||||
| Unrealized gain (loss) on cash flow hedges: | |||||||||||||||||
| Net cash flow hedge gain (loss) | 85.4 | (10.2) | 75.2 | ||||||||||||||
| Amounts reclassified | (19.3) | 2.3 | (17.0) | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | 66.1 | (7.9) | 58.2 | ||||||||||||||
| Unrealized gain (loss) on net investment hedges: | |||||||||||||||||
| Net investment hedge gain (loss) | (2.6) | 0.7 | (1.9) | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (2.6) | 0.7 | (1.9) | ||||||||||||||
| Pension/postretirement adjustments: | |||||||||||||||||
| Net actuarial gain (loss) | (0.1) | — | (0.1) | ||||||||||||||
| Amounts reclassified | — | — | — | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (0.1) | — | (0.1) | ||||||||||||||
| Share of OCI of equity method investments: | |||||||||||||||||
| Net gain (loss) | — | — | — | ||||||||||||||
| Amounts reclassified | (1.8) | 0.5 | (1.3) | ||||||||||||||
| Net gain (loss) recognized in other comprehensive income (loss) | (1.8) | 0.5 | (1.3) | ||||||||||||||
| Other comprehensive income (loss) attributable to CBI | $ | 226.4 | $ | (6.7) | 219.7 | ||||||||||||
| Comprehensive income (loss) attributable to CBI | $ | 685.7 |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 23 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
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 at February 28, 2026 | $ | 143.8 | $ | 285.4 | $ | (5.5) | $ | (0.5) | $ | 423.2 | |||||||||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassification adjustments | 55.0 | 79.7 | — | — | 134.7 | ||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive income (loss) | — | (69.0) | — | 0.6 | (68.4) | ||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | 55.0 | 10.7 | — | 0.6 | 66.3 | ||||||||||||||||||||||||||||||
| Balance at August 31, 2026 | $ | 198.8 | $ | 296.1 | $ | (5.5) | $ | 0.1 | $ | 489.5 |
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 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, 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. Our CODM is our President and Chief Executive Officer. 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. Our CODM utilizes segment comparable operating income (loss) performance in deciding how to deploy capital in line with disciplined and balanced priorities. These priorities largely include investing in our people and our brands, making capital investments and strategic acquisitions, providing a cash dividend program, and from time-to-time, repurchasing shares of our common stock. Our CODM also monitors budgeted versus actual results in assessing segment operating performance and understanding underlying business trends.
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, collectively referred to as comparable operating income (loss). We evaluate segment operating performance based on comparable operating income (loss) of the respective business units.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 24 |
| 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 2026 Annual Report. Segment information is as follows:
| Beer | Wine and Spirits | Corporate Operations and Other | Consolidated | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| For the Six Months Ended August 31, 2026 | |||||||||||||||||||||||
| Net sales | $ | 4,757.1 | $ | 308.6 | $ | — | $ | 5,065.7 | |||||||||||||||
| Cost of product sold (1) | (2,201.2) | (174.0) | — | ||||||||||||||||||||
| Marketing | (450.9) | (30.7) | — | ||||||||||||||||||||
| % Net sales | 9.5 | % | 9.9 | % | |||||||||||||||||||
| General and administrative expenses (1) | (249.4) | (98.9) | (129.8) | ||||||||||||||||||||
| Comparable operating income (loss) (1) | 1,855.6 | 5.0 | (129.8) | 1,730.8 | |||||||||||||||||||
| Operating margin | 39.0 | % | 1.6 | % | |||||||||||||||||||
| Comparable Adjustments (2) | (80.5) | ||||||||||||||||||||||
| Operating income (loss) | 1,650.3 | ||||||||||||||||||||||
| Income (loss) from unconsolidated investments (3) | 8.3 | ||||||||||||||||||||||
| Interest expense, net (4) | (169.2) | ||||||||||||||||||||||
| Income (loss) before income taxes | $ | 1,489.4 | |||||||||||||||||||||
| Capital expenditures | $ | 327.5 | $ | 22.4 | $ | 4.2 | $ | 354.1 | |||||||||||||||
| Depreciation and amortization | $ | 153.8 | $ | 30.9 | $ | 10.3 | $ | 195.0 | |||||||||||||||
| % Net sales | 3.2 | % | 10.0 | % | |||||||||||||||||||
| For the Six Months Ended August 31, 2025 | |||||||||||||||||||||||
| Net sales | $ | 4,579.5 | $ | 416.5 | $ | — | $ | 4,996.0 | |||||||||||||||
| Cost of product sold (1) | (2,152.5) | (265.6) | — | ||||||||||||||||||||
| Marketing | (391.2) | (54.9) | — | ||||||||||||||||||||
| % Net sales | 8.5 | % | 13.2 | % | |||||||||||||||||||
| General and administrative expenses (1) | (210.8) | (121.8) | (103.1) | ||||||||||||||||||||
| Comparable operating income (loss) (1) | 1,825.0 | (25.8) | (103.1) | 1,696.1 | |||||||||||||||||||
| Operating margin | 39.9 | % | (6.2) | % | |||||||||||||||||||
| Comparable Adjustments (2) | (108.3) | ||||||||||||||||||||||
| Operating income (loss) | 1,587.8 | ||||||||||||||||||||||
| Income (loss) from unconsolidated investments (3) | (7.0) | ||||||||||||||||||||||
| Interest expense, net (4) | (186.5) | ||||||||||||||||||||||
| Income (loss) before income taxes | $ | 1,394.3 | |||||||||||||||||||||
| Capital expenditures | $ | 370.2 | $ | 37.5 | $ | 2.4 | $ | 410.1 | |||||||||||||||
| Depreciation and amortization | $ | 159.4 | $ | 36.5 | $ | 12.7 | $ | 208.6 | |||||||||||||||
| % Net sales | 3.5 | % | 8.8 | % | |||||||||||||||||||
| For the Three Months Ended August 31, 2026 | |||||||||||||||||||||||
| Net sales | $ | 2,473.6 | $ | 159.4 | $ | — | $ | 2,633.0 | |||||||||||||||
| Cost of product sold (1) | (1,135.9) | (88.9) | — | ||||||||||||||||||||
| Marketing | (245.2) | (14.3) | — | ||||||||||||||||||||
| % Net sales | 9.9 | % | 9.0 | % | |||||||||||||||||||
| General and administrative expenses (1) | (128.3) | (50.1) | (73.7) | ||||||||||||||||||||
| Comparable operating income (loss) (1) | 964.2 | 6.1 | (73.7) | 896.6 | |||||||||||||||||||
| Operating margin | 39.0 | % | 3.8 | % | |||||||||||||||||||
| Comparable Adjustments (2) | (91.6) | ||||||||||||||||||||||
| Operating income (loss) | 805.0 |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 25 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
| Beer | Wine and Spirits | Corporate Operations and Other | Consolidated | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Income (loss) from unconsolidated investments (3) | 7.8 | ||||||||||||||||||||||
| Interest expense, net (4) | (83.4) | ||||||||||||||||||||||
| Income (loss) before income taxes | $ | 729.4 | |||||||||||||||||||||
| Capital expenditures | $ | 163.2 | $ | 12.6 | $ | 1.1 | $ | 176.9 | |||||||||||||||
| Depreciation and amortization | $ | 76.5 | $ | 15.4 | $ | 5.2 | $ | 97.1 | |||||||||||||||
| % Net sales | 3.1 | % | 9.7 | % | |||||||||||||||||||
| For the Three Months Ended August 31, 2025 | |||||||||||||||||||||||
| Net sales | $ | 2,345.0 | $ | 136.0 | $ | — | $ | 2,481.0 | |||||||||||||||
| Cost of product sold (1) | (1,105.0) | (81.2) | — | ||||||||||||||||||||
| Marketing | (190.7) | (20.0) | — | ||||||||||||||||||||
| % Net sales | 8.1 | % | 14.7 | % | |||||||||||||||||||
| General and administrative expenses (1) | (97.7) | (54.6) | (45.6) | ||||||||||||||||||||
| Comparable operating income (loss) (1) | 951.6 | (19.8) | (45.6) | 886.2 | |||||||||||||||||||
| Operating margin | 40.6 | % | (14.6) | % | |||||||||||||||||||
| Comparable Adjustments (2) | (12.2) | ||||||||||||||||||||||
| Operating income (loss) | 874.0 | ||||||||||||||||||||||
| Income (loss) from unconsolidated investments (3) | (3.5) | ||||||||||||||||||||||
| Interest expense, net (4) | (87.6) | ||||||||||||||||||||||
| Income (loss) before income taxes | $ | 782.9 | |||||||||||||||||||||
| Capital expenditures | $ | 197.0 | $ | 19.5 | $ | 0.8 | $ | 217.3 | |||||||||||||||
| Depreciation and amortization | $ | 82.6 | $ | 14.3 | $ | 6.2 | $ | 103.1 | |||||||||||||||
| % Net sales | 3.5 | % | 10.5 | % |
(1)Amounts are determined and presented on a non-GAAP basis and are intended to reflect our core operations.
(2)Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Cost of product sold | |||||||||||||||||||||||
| Net gain (loss) on undesignated commodity derivative contracts | $ | 52.7 | $ | (4.7) | $ | 3.4 | $ | 13.0 | |||||||||||||||
| Settlements of undesignated commodity derivative contracts | (24.2) | 6.7 | (14.8) | 4.2 | |||||||||||||||||||
| Flow through of inventory step-up | (1.1) | (1.7) | (0.1) | (0.8) | |||||||||||||||||||
| Strategic business reconfiguration costs | (4.3) | (1.6) | (3.7) | (1.2) | |||||||||||||||||||
| Comparable Adjustments, Cost of product sold | 23.1 | (1.3) | (15.2) | 15.2 |
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 26 |
| FINANCIAL STATEMENTS | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | Table of Contents |
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Selling, general, and administrative expenses | |||||||||||||||||||||||
| Transition services agreements activity | (9.7) | (15.5) | (4.6) | (10.0) | |||||||||||||||||||
| 2025 Restructuring Initiative | (5.5) | (21.6) | (4.9) | (8.3) | |||||||||||||||||||
| Gain (loss) on sale of business | (4.3) | (16.3) | (1.8) | (14.9) | |||||||||||||||||||
| Strategic business reconfiguration costs | (13.9) | (5.2) | (14.2) | — | |||||||||||||||||||
| Other gains (losses) (i) | (2.1) | 3.7 | (1.1) | 5.8 | |||||||||||||||||||
| Comparable Adjustments, selling, general, and administrative expenses | (35.5) | (54.9) | (26.6) | (27.4) | |||||||||||||||||||
| Asset impairment and related expenses | (68.1) | (52.1) | (49.8) | — | |||||||||||||||||||
| Comparable Adjustments, Operating income (loss) | $ | (80.5) | $ | (108.3) | $ | (91.6) | $ | (12.2) |
(i)Primarily includes the following:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Gain (loss) on sale of assets | $ | — | $ | 4.1 | $ | — | $ | 4.1 | |||||||||||||||
(3)Income (loss) from unconsolidated investments consists of:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Equity in earnings (losses) from equity method investees and related activities | $ | 7.5 | $ | (0.5) | $ | 7.0 | $ | 3.0 | |||||||||||||||
| Unrealized net gain (loss) on securities measured at fair value | 0.8 | (5.0) | 0.8 | (5.0) | |||||||||||||||||||
| Impairment of equity method investments | — | (1.5) | — | (1.5) | |||||||||||||||||||
| $ | 8.3 | $ | (7.0) | $ | 7.8 | $ | (3.5) |
(4)Interest expense, net consists of:
| For the Six Months Ended August 31, | For the Three Months Ended August 31, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||
| Interest expense | $ | (173.0) | $ | (189.6) | $ | (85.3) | $ | (89.0) | |||||||||||||||
| Interest income | 4.1 | 4.1 | 1.9 | 2.4 | |||||||||||||||||||
| Loss on extinguishment of debt | (0.3) | (1.0) | — | (1.0) | |||||||||||||||||||
| $ | (169.2) | $ | (186.5) | $ | (83.4) | $ | (87.6) |
14. ACCOUNTING GUIDANCE NOT YET ADOPTED
Disaggregation of income statement expenses
In November 2024, the FASB issued a standard requiring disaggregated information about certain income statement expense line items to be disclosed on an annual and interim basis. We are required to adopt these disclosures for our annual period ending February 29, 2028, 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.
| Constellation Brands, Inc. Q2 FY 2027 Form 10-Q | #WORTHREACHINGFOR I 27 |
| MD&A | Table of Contents |
Previous: Cover and table of contents · Next: Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.