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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 30, 2021
or
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-08495
CONSTELLATION BRANDS, INC.
(Exact name of registrant as specified in its charter)
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Delaware | 16-0716709 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
207 High Point Drive, Building 100, Victor, New York 14564
(Address of principal executive offices) (Zip code)
(585) 678-7100
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
Class A Common Stock | STZ | New York Stock Exchange |
Class B Common Stock | STZ.B | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☒
There were 164,339,182 shares of Class A Common Stock, 23,208,540 shares of Class B Common Stock, and 2,216,750 shares of Class 1 Common Stock outstanding as of December 31, 2021.
TABLE OF CONTENTS
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DEFINED TERMS | |
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PART I - FINANCIAL INFORMATION | |
Item 1. Financial Statements | |
Consolidated Balance Sheets | |
Consolidated Statements of Comprehensive Income (Loss) | |
Consolidated Statements of Changes in Stockholders’ Equity | |
Consolidated Statements of Cash Flows | |
Notes to Consolidated Financial Statements | |
| 1. Basis of Presentation | |
| 2. Inventories | |
| 3. Acquisitions and Divestitures | |
| 4. Derivative Instruments | |
| 5. Fair Value of Financial Instruments | |
| 6. Goodwill | |
| 7. Intangible Assets | |
| 8. Equity Method Investments | |
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| 9. Other Accrued Expenses and Liabilities | |
| 10. Borrowings | |
| 11. Income Taxes | |
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| 12. Stockholders' Equity | |
| 13. Net Income (Loss) Per Common Share Attributable to CBI | |
| 14. Comprehensive Income (Loss) Attributable to CBI | |
| 15. Business Segment Information | |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |
Item 4. Controls and Procedures | |
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PART II – OTHER INFORMATION | |
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 4. Mine Safety Disclosures | NA |
Item 6. Exhibits | |
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INDEX TO EXHIBITS | |
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SIGNATURES | |
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. For further information regarding such forward-looking statements, risks and uncertainties, please see “Information Regarding Forward-Looking Statements” under Part I – Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Defined Terms
Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. We use terms in this Quarterly Report on Form 10-Q and in our notes to the consolidated financial statements that are specific to us or are abbreviations that may not be commonly known or used.
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Term | | Meaning |
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$ | | U.S. dollars |
2.25% July 2021 Senior Notes | | $1,000.0 million principal amount of 2.25% senior notes issued in July 2021 |
2.65% November 2017 Senior Notes | | $700.0 million principal amount of 2.65% senior notes issued in November 2017 and redeemed in August 2021, prior to maturity |
2.70% May 2017 Senior Notes | | $500.0 million principal amount of 2.70% senior notes issued in May 2017 and redeemed in August 2021, prior to maturity |
2018 Authorization | | authority to repurchase up to $3.0 billion of our Class A Common Stock and Class B Convertible Common Stock, authorized in January 2018 by our Board of Directors |
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2019 Five-Year Term Facility | | a $491.3 million, five-year term loan facility under the June 2021 Term Credit Agreement, originally entered into in June 2019 |
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2020 Credit Agreement | | ninth amended and restated credit agreement, dated as of March 26, 2020, provides for an aggregate revolving credit facility of $2.0 billion |
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2020 U.S. wildfires | | significant wildfires that broke out in California, Oregon, and Washington states which affected the 2020 U.S. grape harvest |
2021 Annual Report | | our Annual Report on Form 10-K for the fiscal year ended February 28, 2021, unless otherwise specified |
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2021 Authorization | | authority to repurchase up to $2.0 billion of our Class A Common Stock and Class B Convertible Common Stock, authorized in January 2021 by our Board of Directors |
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ABA | | alternative beverage alcohol |
Acreage | | Acreage Holdings, Inc. |
Acreage Financial Instrument | | a call option for Canopy to acquire 70% of the shares of Acreage, at a fixed exchange ratio and 30% at a floating exchange ratio |
Acreage Transaction | | Canopy’s intention to acquire Acreage upon U.S. federal cannabis legalization, subject to certain conditions |
Administrative Agent | | Bank of America, N.A., as administrative agent for the senior credit facility and term credit agreement |
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AOCI | | accumulated other comprehensive income (loss) |
ASR | | accelerated share repurchase agreement with a third-party financial institution |
| | |
| | |
Ballast Point Divestiture | | sale of Ballast Point craft beer business, including a number of its associated production facilities and brewpubs |
C$ | | Canadian dollars |
Canopy | | we made an investment in Canopy Growth Corporation, an Ontario, Canada-based public company |
Canopy Debt Securities | | convertible debt securities issued by Canopy |
Canopy Equity Method Investment | | November 2017 Canopy Investment, November 2018 Canopy Investment, and May 2020 Canopy Investment, collectively |
Canopy Strategic Transaction(s) | | any potential acquisition, divestiture, investment, or other similar transaction made by Canopy, including but not limited to the Acreage Transaction |
CARES Act | | Coronavirus Aid, Relief, and Economic Security Act |
CBD | | cannabidiol, an active ingredient in cannabis |
CB International | | CB International Finance S.à r.l., a wholly-owned subsidiary of ours |
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| | |
Coca-Cola | | The Coca-Cola Company |
CODM | | chief operating decision maker |
| | | | | |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I i |
| | | | | | |
Term | | Meaning |
| | |
Comparable Adjustments | | certain items affecting comparability that have been excluded by management |
Concentrate Business Divestiture | | sale of certain brands used in our concentrates and high-color concentrate business, and certain related intellectual property, inventory, interests in certain contracts, and other assets |
Copper & Kings | | Copper & Kings American Brandy Company, acquired by us |
| | |
| | |
CSR | | corporate social responsibility |
DE&I | | diversity, equity, and inclusion |
Depletions | | represent U.S. domestic distributor shipments of our respective branded products to retail customers, based on third-party data |
DTC | | direct-to-consumer |
Empathy Wines | | Empathy Wines business, including a digitally-native wine brand, acquired by us |
ERP | | enterprise resource planning system |
| | |
| | |
Financial Statements | | our consolidated financial statements and notes thereto included herein |
| | |
| | |
Fiscal 2021 | | the Company’s fiscal year ended February 28, 2021 |
Fiscal 2022 | | the Company’s fiscal year ending February 28, 2022 |
Fiscal 2023 | | the Company’s fiscal year ending February 28, 2023 |
Fiscal 2026 | | the Company’s fiscal year ending February 28, 2026 |
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GivingTuesday | | a global generosity movement to encourage others to give back to their community, occurring each year on the Tuesday following Thanksgiving in the U.S. |
June 2021 Term Credit Agreement | | March 2020 Term Credit Agreement, inclusive of amendment dated as of June 10, 2021 |
Lender | | Bank of America, N.A., as lender for the term credit agreement |
LIBOR | | London Interbank Offered Rate |
March 2020 Term Credit Agreement | | amended and restated term loan credit agreement, dated as of March 26, 2020, that provided for aggregate facilities of $491.3 million, consisting of the 2019 Five-Year Term Facility |
May 2020 Canopy Investment | | May 2020 exercise of the November 2017 Canopy Warrants at an exercise price of C$12.98 per warrant share |
MD&A | | Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 2. of this quarterly report on Form 10-Q |
Mexicali Brewery | | suspended brewery construction project located in Mexicali, Baja California, Mexico |
Mexico Beer Projects | | expansion, optimization, and construction activities at the Obregon Brewery, Nava Brewery, and Southeast Mexico Brewery |
| | |
My Favorite Neighbor | | we made an initial investment in My Favorite Neighbor, LLC and subsequently acquired the remaining ownership interest |
NA | | not applicable |
Nava Brewery | | brewery located in Nava, Coahuila, Mexico |
Net sales | | gross sales less promotions, returns and allowances, and excise taxes |
| | |
| | |
Nine Months 2021 | | the Company’s nine months ended November 30, 2020 |
Nine Months 2022 | | the Company’s nine months ended November 30, 2021 |
NM | | not meaningful |
Nobilo Wine Divestiture | | sale of New Zealand-based Nobilo Wine brand and certain related assets |
Note(s) | | notes to the consolidated financial statements |
November 2017 Canopy Investment | | our initial investment for 18.9 million common shares of Canopy |
November 2017 Canopy Warrants | | warrants which gave us the option to purchase 18.9 million common shares of Canopy, exercised May 1, 2020 |
November 2018 Canopy Investment | | our incremental investment for 104.5 million common shares of Canopy |
November 2018 Canopy Transaction | | November 2018 Canopy Investment and the purchase by us of the November 2018 Canopy Warrants, collectively |
| | | | | |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I ii |
| | | | | | |
Term | | Meaning |
| | |
November 2018 Canopy Warrants | | Tranche A Warrants, Tranche B Warrants, and Tranche C Warrants, collectively |
| | |
Obregon Brewery | | brewery located in Obregon, Sonora, Mexico |
OCI | | other comprehensive income (loss) |
| | |
Paul Masson Divestiture | | sale of Paul Masson Grande Amber Brandy brand, related inventory, and interests in certain contracts |
| | |
| | |
SEC | | Securities and Exchange Commission |
| | |
| | |
| | |
| | |
| | |
Senior Floating Rate Notes | | $650.0 million principal amount of senior floating rate notes issued in October 2018 and redeemed in November 2020, prior to maturity |
Southeast Mexico Brewery | | a new brewery intended to be located in Southeast Mexico in the state of Veracruz |
Third Quarter 2021 | | the Company’s three months ended November 30, 2020 |
Third Quarter 2022 | | the Company’s three months ended November 30, 2021 |
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| | |
| | |
Tranche A Warrants | | warrants which give us the option to purchase 88.5 million common shares of Canopy expiring November 1, 2023 |
Tranche B Warrants | | warrants which give us the option to purchase 38.4 million common shares of Canopy expiring November 1, 2026 |
Tranche C Warrants | | warrants which give us the option to purchase 12.8 million common shares of Canopy expiring November 1, 2026 |
TSX | | Toronto Stock Exchange |
U.S. | | United States of America |
U.S. GAAP | | generally accepted accounting principles in the U.S. |
VWAP Exercise Price | | volume-weighted average of the closing market price of Canopy’s common shares on the TSX for the five trading days immediately preceding the exercise date |
| | |
Wine and Spirits Divestiture | | sale of a portion of our wine and spirits business, including lower-margin, lower-growth wine and spirits brands, related inventory, interests in certain contracts, wineries, vineyards, offices, and facilities |
Wine and Spirits Divestitures | | Wine and Spirits Divestiture and the Nobilo Wine Divestiture, collectively |
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Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I iii |
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
| | | | | | | | | | | |
| November 30, 2021 | | February 28, 2021 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 361.3 | | | $ | 460.6 | |
Accounts receivable | 917.8 | | | 785.3 | |
Inventories | 1,518.9 | | | 1,291.1 | |
Prepaid expenses and other | 578.6 | | | 507.5 | |
| | | |
Total current assets | 3,376.6 | | | 3,044.5 | |
Property, plant, and equipment | 5,519.3 | | | 5,821.6 | |
Goodwill | 7,848.1 | | | 7,793.5 | |
Intangible assets | 2,756.7 | | | 2,732.1 | |
Equity method investments | 2,756.4 | | | 2,788.4 | |
Securities measured at fair value | 292.9 | | | 1,818.1 | |
Deferred income taxes | 2,414.2 | | | 2,492.5 | |
| | | |
Other assets | 563.1 | | | 614.1 | |
Total assets | $ | 25,527.3 | | | $ | 27,104.8 | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Short-term borrowings | $ | 243.0 | | | $ | — | |
Current maturities of long-term debt | 5.7 | | | 29.2 | |
Accounts payable | 945.4 | | | 460.0 | |
Other accrued expenses and liabilities | 1,054.5 | | | 779.9 | |
Total current liabilities | 2,248.6 | | | 1,269.1 | |
Long-term debt, less current maturities | 10,083.8 | | | 10,413.1 | |
| | | |
Deferred income taxes and other liabilities | 1,648.5 | | | 1,493.5 | |
Total liabilities | 13,980.9 | | | 13,175.7 | |
Commitments and contingencies | | | |
CBI stockholders’ equity: | | | |
Class A Common Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 187,247,721 shares and 187,204,280 shares, respectively | 1.9 | | | 1.9 | |
Class B Convertible Common Stock, $0.01 par value – Authorized, 30,000,000 shares; Issued, 28,227,478 shares and 28,270,288 shares, respectively | 0.3 | | | 0.3 | |
Additional paid-in capital | 1,781.8 | | | 1,604.2 | |
Retained earnings | 14,251.6 | | | 15,117.8 | |
Accumulated other comprehensive income (loss) | (623.1) | | | (335.5) | |
| 15,412.5 | | | 16,388.7 | |
Less: Treasury stock – | | | |
Class A Common Stock, at cost, 22,947,122 shares and 17,070,550 shares, respectively | (4,172.0) | | | (2,787.6) | |
Class B Convertible Common Stock, at cost, 5,005,800 shares | (2.2) | | | (2.2) | |
| (4,174.2) | | | (2,789.8) | |
Total CBI stockholders’ equity | 11,238.3 | | | 13,598.9 | |
Noncontrolling interests | 308.1 | | | 330.2 | |
Total stockholders’ equity | 11,546.4 | | | 13,929.1 | |
Total liabilities and stockholders’ equity | $ | 25,527.3 | | | $ | 27,104.8 | |
The accompanying notes are an integral part of these statements.
| | | | | |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I 1 |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | | | | | | | | |
| For the Nine Months Ended November 30, | | For the Three Months Ended November 30, |
| 2021 | | 2020 | | 2021 | | 2020 |
Sales | $ | 7,260.3 | | | $ | 7,235.1 | | | $ | 2,507.0 | | | $ | 2,643.7 | |
Excise taxes | (542.1) | | | (573.2) | | | (186.4) | | | (205.6) | |
Net sales | 6,718.2 | | | 6,661.9 | | | 2,320.6 | | | 2,438.1 | |
Cost of product sold | (3,143.5) | | | (3,189.6) | | | (1,094.9) | | | (1,169.9) | |
Gross profit | 3,574.7 | | | 3,472.3 | | | 1,225.7 | | | 1,268.2 | |
Selling, general, and administrative expenses | (1,254.6) | | | (1,216.5) | | | (385.8) | | | (464.1) | |
Impairment of brewery construction in progress | (665.9) | | | — | | | — | | | — | |
Impairment of assets held for sale | — | | | (24.0) | | | — | | | (21.0) | |
| | | | | | | |
Operating income (loss) | 1,654.2 | | | 2,231.8 | | | 839.9 | | | 783.1 | |
Income (loss) from unconsolidated investments | (1,541.8) | | | 130.5 | | | (171.8) | | | 782.4 | |
Interest expense | (270.5) | | | (295.9) | | | (88.0) | | | (95.7) | |
Loss on extinguishment of debt | (29.4) | | | (8.8) | | | — | | | (1.2) | |
Income (loss) before income taxes | (187.5) | | | 2,057.6 | | | 580.1 | | | 1,468.6 | |
(Provision for) benefit from income taxes | (217.1) | | | (416.4) | | | (99.3) | | | (176.6) | |
Net income (loss) | (404.6) | | | 1,641.2 | | | 480.8 | | | 1,292.0 | |
Net (income) loss attributable to noncontrolling interests | (31.2) | | | (26.1) | | | (10.0) | | | (11.1) | |
Net income (loss) attributable to CBI | $ | (435.8) | | | $ | 1,615.1 | | | $ | 470.8 | | | $ | 1,280.9 | |
| | | | | | | |
Comprehensive income (loss) | $ | (708.6) | | | $ | 1,544.4 | | | $ | 130.0 | | | $ | 1,776.1 | |
Comprehensive (income) loss attributable to noncontrolling interests | (14.8) | | | (20.4) | | | 8.1 | | | (37.1) | |
Comprehensive income (loss) attributable to CBI | $ | (723.4) | | | $ | 1,524.0 | | | $ | 138.1 | | | $ | 1,739.0 | |
| | | | | | | |
Net income (loss) per common share attributable to CBI: | | | | | | | |
Basic – Class A Common Stock | $ | (2.31) | | | $ | 8.44 | | | $ | 2.53 | | | $ | 6.68 | |
Basic – Class B Convertible Common Stock | $ | (2.10) | | | $ | 7.67 | | | $ | 2.30 | | | $ | 6.07 | |
| | | | | | | |
Diluted – Class A Common Stock | $ | (2.31) | | | $ | 8.28 | | | $ | 2.48 | | | $ | 6.55 | |
Diluted – Class B Convertible Common Stock | $ | (2.10) | | | $ | 7.62 | | | $ | 2.29 | | | $ | 6.03 | |
| | | | | | | |
Weighted average common shares outstanding: | | | | | | | |
Basic – Class A Common Stock | 167.692 | | | 170.083 | | | 164.999 | | | 170.571 | |
Basic – Class B Convertible Common Stock | 23.230 | | | 23.284 | | | 23.222 | | | 23.274 | |
| | | | | | | |
Diluted – Class A Common Stock | 167.692 | | | 195.101 | | | 189.939 | | | 195.444 | |
Diluted – Class B Convertible Common Stock | 23.230 | | | 23.284 | | | 23.222 | | | 23.274 | |
| | | | | | | |
Cash dividends declared per common share: | | | | | | | |
Class A Common Stock | $ | 2.28 | | | $ | 2.25 | | | $ | 0.76 | | | $ | 0.75 | |
Class B Convertible Common Stock | $ | 2.07 | | | $ | 2.04 | | | $ | 0.69 | | | $ | 0.68 | |
The accompanying notes are an integral part of these statements.
| | | | | |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I 2 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited) |
| Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Stock | | Non-controlling Interests | | Total |
| Class A | | Class B | |
Balance at February 28, 2021 | $ | 1.9 | | | $ | 0.3 | | | $ | 1,604.2 | | | $ | 15,117.8 | | | $ | (335.5) | | | $ | (2,789.8) | | | $ | 330.2 | | | $ | 13,929.1 | |
| | | | | | | | | | | | | | | |
Comprehensive income (loss): | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | — | | | (908.1) | | | — | | | — | | | 10.8 | | | (897.3) | |
Other comprehensive income (loss), net of income tax effect | — | | | — | | | — | | | — | | | 98.9 | | | — | | | 5.6 | | | 104.5 | |
Comprehensive income (loss) | | | | | | | | | | | | | | | (792.8) | |
Repurchase of shares | — | | | — | | | — | | | — | | | — | | | (400.8) | | | — | | | (400.8) | |
Dividends declared | — | | | — | | | — | | | (146.1) | | | — | | | — | | | — | | | (146.1) | |
Noncontrolling interest distributions | — | | | — | | | — | | | — | | | — | | | — | | | (10.6) | | | (10.6) | |
Shares issued under equity compensation plans | — | | | — | | | (0.9) | | | — | | | — | | | 3.8 | | | — | | | 2.9 | |
Stock-based compensation | — | | | — | | | 15.9 | | | — | | | — | | | — | | | — | | | 15.9 | |
Balance at May 31, 2021 | 1.9 | | | 0.3 | | | 1,619.2 | | | 14,063.6 | | | (236.6) | | | (3,186.8) | | | 336.0 | | | 12,597.6 | |
Comprehensive income (loss): | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | — | | | 1.5 | | | — | | | — | | | 10.4 | | | 11.9 | |
Other comprehensive income (loss), net of income tax effect | — | | | — | | | — | | | — | | | (53.8) | | | — | | | (3.9) | | | (57.7) | |
Comprehensive income (loss) | | | | | | | | | | | | | | | (45.8) | |
Repurchase of shares | — | | | — | | | — | | | — | | | — | | | (904.2) | | | — | | | (904.2) | |
Dividends declared | — | | | — | | | — | | | (142.9) | | | — | | | — | | | — | | | (142.9) | |
| | | | | | | | | | | | | | | |
Noncontrolling interest distributions | — | | | — | | | — | | | — | | | — | | | — | | | (10.6) | | | (10.6) | |
Shares issued under equity compensation plans | — | | | — | | | 8.9 | | | — | | | — | | | 1.4 | | | — | | | 10.3 | |
Stock-based compensation | — | | | — | | | 20.2 | | | — | | | — | | | — | | | — | | | 20.2 | |
Balance at August 31, 2021 | 1.9 | | | 0.3 | | | 1,648.3 | | | 13,922.2 | | | (290.4) | | | (4,089.6) | | | 331.9 | | | 11,524.6 | |
Comprehensive income (loss): | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | — | | | 470.8 | | | — | | | — | | | 10.0 | | | 480.8 | |
Other comprehensive income (loss), net of income tax effect | — | | | — | | | — | | | — | | | (332.7) | | | — | | | (18.1) | | | (350.8) | |
Comprehensive income (loss) | | | | | | | | | | | | | | | 130.0 | |
| | | | | | | | | | | | | | | |
Repurchase of shares | — | | | — | | | — | | | — | | | — | | | (85.5) | | | — | | | (85.5) | |
Dividends declared | — | | | — | | | — | | | (141.4) | | | — | | | — | | | — | | | (141.4) | |
Noncontrolling interest distributions | — | | | — | | | — | | | — | | | — | | | — | | | (15.7) | | | (15.7) | |
Shares issued under equity compensation plans | — | | | — | | | 135.8 | | | — | | | — | | | 0.9 | | | — | | | 136.7 | |
Stock-based compensation | — | | | — | | | (2.3) | | | — | | | — | | | — | | | — | | | (2.3) | |
Balance at November 30, 2021 | $ | 1.9 | | | $ | 0.3 | | | $ | 1,781.8 | | | $ | 14,251.6 | | | $ | (623.1) | | | $ | (4,174.2) | | | $ | 308.1 | | | $ | 11,546.4 | |
| | | | | | | | | | | | | | | |
| | | | | |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I 3 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited) |
| Common Stock | | Additional Paid-in Capital | | Retained Earnings | | Accumulated Other Comprehensive Income (Loss) | | Treasury Stock | | Non-controlling Interests | | Total |
| Class A | | Class B | |
Balance at February 29, 2020 | $ | 1.9 | | | $ | 0.3 | | | $ | 1,514.6 | | | $ | 13,695.3 | | | $ | (266.3) | | | $ | (2,814.0) | | | $ | 342.5 | | | $ | 12,474.3 | |
| | | | | | | | | | | | | | | |
Comprehensive income (loss): | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | — | | | (177.9) | | | — | | | — | | | 5.3 | | | (172.6) | |
Other comprehensive income (loss), net of income tax effect | — | | | — | | | — | | | — | | | (756.1) | | | — | | | (36.2) | | | (792.3) | |
Comprehensive income (loss) | | | | | | | | | | | | | | | (964.9) | |
| | | | | | | | | | | | | | | |
Dividends declared | — | | | — | | | — | | | (143.3) | | | — | | | — | | | — | | | (143.3) | |
| | | | | | | | | | | | | | | |
Shares issued under equity compensation plans | — | | | — | | | (6.0) | | | — | | | — | | | 2.8 | | | — | | | (3.2) | |
Stock-based compensation | — | | | — | | | 14.7 | | | — | | | — | | | — | | | — | | | 14.7 | |
Balance at May 31, 2020 | 1.9 | | | 0.3 | | | 1,523.3 | | | 13,374.1 | | | (1,022.4) | | | (2,811.2) | | | 311.6 | | | 11,377.6 | |
Comprehensive income (loss): | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | — | | | 512.1 | | | — | | | — | | | 9.7 | | | 521.8 | |
Other comprehensive income (loss), net of income tax effect | — | | | — | | | — | | | — | | | 206.9 | | | — | | | 4.5 | | | 211.4 | |
Comprehensive income (loss) | | | | | | | | | | | | | | | 733.2 | |
| | | | | | | | | | | | | | | |
Dividends declared | — | | | — | | | — | | | (144.0) | | | — | | | — | | | — | | | (144.0) | |
| | | | | | | | | | | | | | | |
Noncontrolling interest distributions | — | | | — | | | — | | | — | | | — | | | — | | | (10.0) | | | (10.0) | |
Shares issued under equity compensation plans | — | | | — | | | 10.9 | | | — | | | — | | | 16.7 | | | — | | | 27.6 | |
Stock-based compensation | — | | | — | | | 19.4 | | | — | | | — | | | — | | | — | | | 19.4 | |
Balance at August 31, 2020 | 1.9 | | | 0.3 | | | 1,553.6 | | | 13,742.2 | | | (815.5) | | | (2,794.5) | | | 315.8 | | | 12,003.8 | |
Comprehensive income (loss): | | | | | | | | | | | | | | | |
Net income (loss) | — | | | — | | | — | | | 1,280.9 | | | — | | | — | | | 11.1 | | | 1,292.0 | |
Other comprehensive income (loss), net of income tax effect | — | | | — | | | — | | | — | | | 458.1 | | | — | | | 26.0 | | | 484.1 | |
Comprehensive income (loss) | | | | | | | | | | | | | | | 1,776.1 | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Dividends declared | — | | | — | | | — | | | (144.0) | | | — | | | — | | | — | | | (144.0) | |
Noncontrolling interest distributions | — | | | — | | | — | | | — | | | — | | | — | | | (12.5) | | | (12.5) | |
Shares issued under equity compensation plans | — | | | — | | | 8.8 | | | — | | | — | | | 2.3 | | | — | | | 11.1 | |
Stock-based compensation | — | | | — | | | 18.0 | | | — | | | — | | | — | | | — | | | 18.0 | |
Balance at November 30, 2020 | $ | 1.9 | | | $ | 0.3 | | | $ | 1,580.4 | | | $ | 14,879.1 | | | $ | (357.4) | | | $ | (2,792.2) | | | $ | 340.4 | | | $ | 13,652.5 | |
| | | | | | | | | | | | | | | |
The accompanying notes are an integral part of these statements.
| | | | | |
Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I 4 |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
| | | | | | | | | | | |
| For the Nine Months Ended November 30, |
| 2021 | | 2020 |
CASH FLOWS FROM OPERATING ACTIVITIES | | | |
Net income (loss) | $ | (404.6) | | | $ | 1,641.2 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | |
Unrealized net (gain) loss on securities measured at fair value | 1,534.8 | | | (524.7) | |
Deferred tax provision (benefit) | 58.5 | | | 287.0 | |
Depreciation | 248.6 | | | 219.2 | |
Stock-based compensation | 33.8 | | | 52.0 | |
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings | 6.0 | | | 403.0 | |
Noncash lease expense | 60.9 | | | 63.0 | |
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Amortization of debt issuance costs and loss on extinguishment of debt | 37.5 | | | 17.7 | |
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Impairment of brewery construction in progress | 665.9 | | | — | |
Impairment of assets held for sale | — | | | 24.0 | |
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Loss on inventory and related contracts associated with business optimization | — | | | 25.8 | |
Loss on settlement of treasury lock contracts | — | | | (29.3) | |
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Change in operating assets and liabilities, net of effects from purchase and sale of business: | | | |
Accounts receivable | (134.8) | | | (44.1) | |
Inventories | (218.4) | | | 75.2 | |
Prepaid expenses and other current assets | (114.7) | | | 67.4 | |
Accounts payable | 340.5 | | | 146.8 | |
Deferred revenue | 124.3 | | | 3.6 | |
Other accrued expenses and liabilities | 200.9 | | | (29.7) | |
Other | 4.9 | | | (34.5) | |
Total adjustments | 2,848.7 | | | 722.4 | |
Net cash provided by (used in) operating activities | 2,444.1 | | | 2,363.6 | |
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CASH FLOWS FROM INVESTING ACTIVITIES | | | |
Purchase of property, plant, and equipment | (598.7) | | | (467.7) | |
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Purchase of business, net of cash acquired | (53.5) | | | (19.9) | |
Investments in equity method investees and securities | (28.6) | | | (217.4) | |
Proceeds from sale of assets | 4.0 | | | 18.3 | |
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Proceeds from sale of business | 4.6 | | | 42.9 | |
Other investing activities | (2.0) | | | 0.6 | |
Net cash provided by (used in) investing activities | (674.2) | | | (643.2) | |
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Constellation Brands, Inc. Q3 FY 2022 Form 10-Q | #WORTHREACHINGFOR I 5 |
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
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| For the Nine Months Ended November 30, |
| 2021 | | 2020 |
CASH FLOWS FROM FINANCING ACTIVITIES | | | |
Proceeds from issuance of long-term debt | 995.6 | | | 1,194.7 | |
Principal payments of long-term debt | (1,363.5) | | | (2,214.0) | |
Net proceeds from (repayments of) short-term borrowings | 243.0 | | | (198.9) | |
Dividends paid | (430.5) | | | (431.2) | |
Purchases of treasury stock | (1,390.5) | | | — | |
Proceeds from shares issued under equity compensation plans | 159.7 | | | 43.2 | |
Payments of minimum tax withholdings on stock-based payment awards | (9.8) | | | (7.7) | |
Payments of debt issuance, debt extinguishment, and other financing costs | (35.0) | | | (18.3) | |
Distributions to noncontrolling interests | (36.9) | | | (22.5) | |
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Net cash provided by (used in) financing activities | (1,867.9) | | | (1,654.7) | |
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Effect of exchange rate changes on cash and cash equivalents | (1.3) | | | 5.8 | |
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Net increase (decrease) in cash and cash equivalents | (99.3) | | | 71.5 | |
Cash and cash equivalents, beginning of period | 460.6 | | | 81.4 | |
Cash and cash equivalents, end of period | $ | |