stz-20241130

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2024


☐			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)


Delaware			16-0716709
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

50 East Broad Street, Rochester, New York 14614

(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:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock	STZ	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.


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 180,704,555 shares of Class A Common Stock and 25,777 shares of Class 1 Common Stock outstanding as of December 31, 2024.

Table of Contents

TABLE OF CONTENTS


		Page

DEFINED TERMS		i

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets		1
Consolidated Statements of Comprehensive Income (Loss)		2
Consolidated Statements of Changes in Stockholders’ Equity		3
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements
	1. Basis of Presentation	7
	2. Inventories	7


	3. Derivative Instruments	7
	4. Fair Value of Financial Instruments	10
	5. Goodwill	13
	6. Intangible Assets	14

	7. Other Assets	15

	8. Borrowings	16
	9. Income Taxes	17
	10. Deferred Income Taxes and Other Liabilities	18

	11. Stockholders' Equity	18
	12. Net Income (Loss) Per Common Share Attributable to CBI	20
	13. Comprehensive Income (Loss) Attributable to CBI	21
	14. Business Segment Information	23
	15. Accounting Guidance Not Yet Adopted	26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3. Quantitative and Qualitative Disclosures About Market Risk		49
Item 4. Controls and Procedures		50

PART II – OTHER INFORMATION
Item 1. Legal Proceedings		51
Item 1A. Risk Factors		51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		52
Item 5. Other Information		52
Item 6. Exhibits		53

SIGNATURES		56

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. For further information regarding such forward-looking statements, risks, and uncertainties, please see “Information Regarding Forward-Looking Statements” under MD&A.

Table of Contents

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 Form 10-Q and in our Notes that are specific to us or are abbreviations that may not be commonly known or used.


Term						Meaning

$						U.S. dollars
10b5-1 Trading Plan						a pre-arranged trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act
2021 Authorization						authorization to repurchase up to $2.0 billion of our publicly traded common stock, approved by our Board of Directors in January 2021 and fully utilized in November 2024
2022 Credit Agreement						tenth amended and restated credit agreement, dated as of April 14, 2022, that provides for an aggregate revolving credit facility of $2.25 billion, inclusive of October 2022 Credit Agreement Amendment
2023 Authorization						authorization to repurchase up to $2.0 billion of our publicly traded common stock, approved by our Board of Directors in November 2023
2023 Canopy Promissory Note						C$100.0 million principal amount of 4.25% promissory note issued to us by Canopy in April 2023, exchanged, in part, for Exchangeable Shares in April 2024
2024 Annual Report						our Annual Report on Form 10-K for the fiscal year ended February 29, 2024
3.60% May 2022 Senior Notes						$550.0 million principal amount of 3.60% senior notes issued in May 2022, now repaid in full
3-tier						distribution channel where products are sold to a distributor (wholesaler) who then sells to a retailer; the retailer sells the products to a consumer
3-tier eCommerce						digital commerce experience for consumers to purchase beverage alcohol from retailers
4.75% November 2014 Senior Notes						$400.0 million principal amount of 4.75% senior notes issued in November 2014, now repaid in full
ABA						alternative beverage alcohol
Administrative Agent						Bank of America, N.A., as administrative agent for the senior credit facility


AOCI						accumulated other comprehensive income (loss)

C$						Canadian dollars
Canopy						Canopy Growth Corporation, an Ontario, Canada-based public company in which we have an investment
Canopy Debt Securities						debt securities issued by Canopy in June 2018, no longer outstanding
Canopy Equity Method Investment						an investment in Canopy common shares, no longer applicable following conversion of Canopy common shares into Exchangeable Shares in April 2024
CB International						CB International Finance S.à r.l., a wholly-owned subsidiary of ours
Class 1 Stock						our Class 1 Convertible Common Stock, par value $0.01 per share
Class A Stock						our Class A Common Stock, par value $0.01 per share
CODM						chief operating decision maker, our President and Chief Executive Officer
Comparable Adjustments						certain items affecting comparability that have been excluded by management
CPG						consumer packaged goods
Craft Beer Divestitures						the Four Corners Divestiture and the Funky Buddha Divestiture, collectively
Daleville Facility						production facility located in Roanoke, Virginia, sold in May 2023

Depletions						represent U.S. distributor shipments of our respective branded products to retail customers, based on third-party data
Digital Business Acceleration						a multi-year initiative by the Company to create a cohesive digital strategy and build an advanced digital business


Constellation Brands, Inc. Q3 FY 2025 Form 10-Q			#WORTHREACHINGFOR I i

Table of Contents


Term						Meaning

DTC						direct-to-consumer inclusive of (i) a digital commerce experience for consumers to purchase directly from brand websites with inventory coming straight from the supplier and (ii) consumer purchases at hospitality locations (tasting rooms and tap rooms) from the supplier
ESG						environmental, social, and governance
Exchangeable Shares						class of non-voting and non-participating exchangeable shares in Canopy which are convertible into common shares of Canopy on a one-for-one basis
Exchange Act						Securities Exchange Act of 1934, as amended
FASB						Financial Accounting Standards Board
Financial Statements						our consolidated financial statements and notes thereto included herein


Fiscal 2024						the Company’s fiscal year ended February 29, 2024
Fiscal 2025						the Company’s fiscal year ending February 28, 2025
Fiscal 2026						the Company’s fiscal year ending February 28, 2026
Fiscal 2027						the Company’s fiscal year ending February 28, 2027
Fiscal 2028						the Company’s fiscal year ending February 29, 2028
Fiscal 2029						the Company’s fiscal year ending February 28, 2029
Fiscal 2030						the Company’s fiscal year ending February 28, 2030
Form 10-Q						this Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2024, unless otherwise specified
Four Corners Divestiture						sale of the Four Corners craft beer business
Funky Buddha Divestiture						sale of the Funky Buddha craft beer business
GHG						greenhouse gas
IRA						Inflation Reduction Act of 2022
IT						information technology
MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations under Part I – Item 2. of this Form 10-Q
Mexicali Brewery						canceled brewery construction project located in Mexicali, Baja California, Mexico, sold the remaining assets classified as held for sale in July 2024
Mexico Beer Projects						expansion, optimization, and/or construction activities at the Obregón Brewery, Nava Brewery, and Veracruz Brewery
M&T						Manufacturers and Traders Trust Company
Nava						Nava, Coahuila, Mexico
Nava Brewery						brewery located in Nava
Nelson’s Green Brier						Nelson’s Green Brier craft spirits business, fully owned by us
Net sales						gross sales less promotions, returns and allowances, and excise taxes
Net Shares Received						the quantity of Class A Stock received by an individual net of shares withheld by us to satisfy taxes in connection with the net settlement of equity awards
Nine Months 2024						the Company’s nine months ended November 30, 2023
Nine Months 2025						the Company’s nine months ended November 30, 2024
NM						not meaningful
Note(s)						notes to the consolidated financial statements

Obregón						Obregón, Sonora, Mexico
Obregón Brewery						brewery located in Obregón
OCI						other comprehensive income (loss)
October 2022 Credit Agreement Amendment						amendment dated as of October 18, 2022, to the 2022 Credit Agreement, effective in April 2024
Pre-issuance hedge contracts						treasury lock and/or swap lock contracts designated as cash flow hedges entered into to hedge treasury rate volatility on future debt issuances


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Term						Meaning

Sands Family Stockholders						RES Master LLC, RES Business Holdings LP, SER Business Holdings LP, RHT 2015 Business Holdings LP, RSS Master LLC, RSS Business Holdings LP, SSR Business Holdings LP, RSS 2015 Business Holdings LP, RCT 2015 Business Holdings LP, RCT 2020 Investments LLC, NSDT 2009 STZ LLC, NSDT 2011 STZ LLC, RSS Business Management LLC, SSR Business Management LLC, LES Lauren Holdings LLC, MES Mackenzie Holdings LLC, Abigail Bennett, Zachary Stern, A&Z 2015 Business Holdings LP (subsequently liquidated), Marilyn Sands Master Trust, MAS Business Holdings LP, Sands Family Foundation, Richard Sands, Robert Sands, WildStar Partners LLC, Astra Legacy LLC, AJB Business Holdings LP, and ZMSS Business Holdings LP
Sea Smoke						Sea Smoke wine business, acquired by us
SEC						Securities and Exchange Commission


Securities Act						Securities Act of 1933, as amended


SOFR						secured overnight financing rate administered by the Federal Reserve Bank of New York
SVEDKA Divestiture						sale of the SVEDKA brand and related assets, primarily including inventory and equipment
Third Quarter 2024						the Company’s three months ended November 30, 2023
Third Quarter 2025						the Company’s three months ended November 30, 2024
U.S.						United States of America
Veracruz						Heroica Veracruz, Veracruz, Mexico
Veracruz Brewery						a new brewery being constructed in Veracruz


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FINANCIAL STATEMENTS			Table of Contents

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, 2024		February 29, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	73.7	$	152.4
Accounts receivable	836.2		832.8
Inventories	2,129.6		2,078.3
Prepaid expenses and other	590.0		666.0

Total current assets	3,629.5		3,729.5
Property, plant, and equipment	7,785.3		8,055.2
Goodwill	5,612.4		7,980.3
Intangible assets	2,718.2		2,731.7


Deferred income taxes	1,914.7		2,055.0

Other assets	1,146.1		1,140.0
Total assets	$	22,806.2	$	25,691.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	890.1	$	241.4
Current maturities of long-term debt	503.3		956.8
Accounts payable	1,055.9		1,107.1
Other accrued expenses and liabilities	839.7		836.4
Total current liabilities	3,289.0		3,141.7
Long-term debt, less current maturities	10,185.7		10,681.1

Deferred income taxes and other liabilities	1,259.8		1,804.3
Total liabilities	14,734.5		15,627.1
Commitments and contingencies
CBI stockholders’ equity:
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,698,298 shares and 212,698,298 shares, respectively	2.1		2.1
Additional paid-in capital	2,132.7		2,047.3
Retained earnings	13,159.7		13,417.2
Accumulated other comprehensive income (loss)	(724.7)		376.8
Class A Stock in treasury, at cost, 31,994,945 shares and 29,809,881 shares, respectively	(6,752.0)		(6,100.3)
Total CBI stockholders’ equity	7,817.8		9,743.1
Noncontrolling interests	253.9		321.5
Total stockholders’ equity	8,071.7		10,064.6
Total liabilities and stockholders’ equity	$	22,806.2	$	25,691.7

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

(unaudited)


	For the Nine Months Ended November 30,				For the Three Months Ended November 30,
	2024		2023		2024		2023
Sales	$	8,644.2	$	8,410.7	$	2,644.4	$	2,658.2
Excise taxes	(599.7)		(588.1)		(180.6)		(187.3)
Net sales	8,044.5		7,822.6		2,463.8		2,470.9
Cost of product sold	(3,844.6)		(3,844.3)		(1,179.5)		(1,200.3)
Gross profit	4,199.9		3,978.3		1,284.3		1,270.6
Selling, general, and administrative expenses	(1,444.7)		(1,438.0)		(491.3)		(473.7)
Goodwill impairment	(2,250.0)		—		—		—



Operating income (loss)	505.2		2,540.3		793.0		796.9
Income (loss) from unconsolidated investments	65.8		(477.4)		(15.0)		(41.8)
Interest expense, net	(311.2)		(333.7)		(104.4)		(104.2)

Income (loss) before income taxes	259.8		1,729.2		673.6		650.9
(Provision for) benefit from income taxes	79.7		(368.4)		(44.5)		(130.0)
Net income (loss)	339.5		1,360.8		629.1		520.9
Net (income) loss attributable to noncontrolling interests	(45.6)		(25.8)		(13.2)		(11.8)
Net income (loss) attributable to CBI	$	293.9	$	1,335.0	$	615.9	$	509.1

Comprehensive income (loss)	$	(810.4)	$	1,713.0	$	319.3	$	447.0
Comprehensive (income) loss attributable to noncontrolling interests	2.8		(42.1)		(1.1)		(7.9)
Comprehensive income (loss) attributable to CBI	$	(807.6)	$	1,670.9	$	318.2	$	439.1

Class A Stock:
Net income (loss) per common share attributable to CBI – basic	$	1.61	$	7.28	$	3.40	$	2.77
Net income (loss) per common share attributable to CBI – diluted	$	1.61	$	7.25	$	3.39	$	2.76

Weighted average common shares outstanding – basic	181.988		183.431		181.243		183.525
Weighted average common shares outstanding – diluted	182.555		184.096		181.753		184.170

Cash dividends declared per common share	$	3.03	$	2.67	$	1.01	$	0.89

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			Table of Contents


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

Comprehensive income (loss):
Net income (loss)	—		—		877.0		—		—		15.8		892.8
Other comprehensive income (loss), net of income tax effect	—		—		—		(9.0)		—		0.3		(8.7)
Comprehensive income (loss)													884.1
Repurchase of shares	—		—		—		—		(200.0)		—		(200.0)
Dividends declared	—		—		(184.7)		—		—		—		(184.7)
Noncontrolling interest distributions	—		—		—		—		—		(17.5)		(17.5)
Shares issued under equity compensation plans	—		5.7		—		—		2.4		—		8.1
Stock-based compensation	—		17.3		—		—		—		—		17.3
Balance at May 31, 2024	2.1		2,070.3		14,109.5		367.8		(6,297.9)		320.1		10,571.9
Comprehensive income (loss):
Net income (loss)	—		—		(1,199.0)		—		—		16.6		(1,182.4)
Other comprehensive income (loss), net of income tax effect	—		—		—		(794.8)		—		(36.6)		(831.4)
Comprehensive income (loss)													(2,013.8)
Repurchase of shares	—		—		—		—		(249.2)		—		(249.2)
Dividends declared	—		—		(183.3)		—		—		—		(183.3)
Noncontrolling interest distributions	—		—		—		—		—		(15.0)		(15.0)
Shares issued under equity compensation plans	—		21.2		—		—		0.4		—		21.6
Stock-based compensation	—		23.7		—		—		—		—		23.7
Balance at August 31, 2024	2.1		2,115.2		12,727.2		(427.0)		(6,546.7)		285.1		8,155.9
Comprehensive income (loss):
Net income (loss)	—		—		615.9		—		—		13.2		629.1
Other comprehensive income (loss), net of income tax effect	—		—		—		(297.7)		—		(12.1)		(309.8)
Comprehensive income (loss)													319.3
Repurchase of shares	—		—		—		—		(218.9)		—		(218.9)
Dividends declared	—		—		(183.4)		—		—		—		(183.4)
Noncontrolling interest distributions	—		—		—		—		—		(15.0)		(15.0)
Shares issued under equity compensation plans	—		5.8		—		—		13.6		—		19.4
Stock-based compensation	—		19.8		—		—		—		—		19.8
Purchase of noncontrolling interest	—		(8.1)		—		—		—		(17.3)		(25.4)
Balance at November 30, 2024	$	2.1	$	2,132.7	$	13,159.7	$	(724.7)	$	(6,752.0)	$	253.9	$	8,071.7


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

Comprehensive income (loss):
Net income (loss)	—		—		135.9		—		—		3.3		139.2
Other comprehensive income (loss), net of income tax effect	—		—		—		214.4		—		10.9		225.3
Comprehensive income (loss)													364.5
Repurchase of shares	—		—		—		—		(35.0)		—		(35.0)
Dividends declared	—		—		(163.1)		—		—		—		(163.1)
Noncontrolling interest distributions	—		—		—		—		—		(11.3)		(11.3)
Shares issued under equity compensation plans	—		0.6		—		—		4.1		—		4.7
Stock-based compensation	—		14.5		—		—		—		—		14.5
Balance at May 31, 2023	2.1		1,918.1		12,316.7		242.9		(5,894.8)		323.2		8,908.2
Comprehensive income (loss):
Net income (loss)	—		—		690.0		—		—		10.7		700.7
Other comprehensive income (loss), net of income tax effect	—		—		—		191.5		—		9.3		200.8
Comprehensive income (loss)													901.5

Dividends declared	—		—		(164.0)		—		—		—		(164.0)
Noncontrolling interest distributions	—		—		—		—		—		(10.0)		(10.0)
Shares issued under equity compensation plans	—		62.6		—		—		7.6		—		70.2
Stock-based compensation	—		18.1		—		—		—		—		18.1
Balance at August 31, 2023	2.1		1,998.8		12,842.7		434.4		(5,887.2)		333.2		9,724.0
Comprehensive income (loss):
Net income (loss)	—		—		509.1		—		—		11.8		520.9
Other comprehensive income (loss), net of income tax effect	—		—		—		(70.0)		—		(3.9)		(73.9)
Comprehensive income (loss)													447.0
Repurchase of shares	—		—		—		—		(214.7)		—		(214.7)
Dividends declared	—		—		(164.2)		—		—		—		(164.2)
Noncontrolling interest distributions	—		—		—		—		—		(13.7)		(13.7)
Shares issued under equity compensation plans	—		3.4		—		—		(0.4)		—		3.0
Stock-based compensation	—		17.0		—		—		—		—		17.0
Balance at November 30, 2023	$	2.1	$	2,019.2	$	13,187.6	$	364.4	$	(6,102.3)	$	327.4	$	9,798.4

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Nine Months Ended November 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	339.5	$	1,360.8
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	2.5		85.4
Deferred tax provision (benefit)	(184.2)		28.2
Depreciation	339.8		321.8
Stock-based compensation	60.7		49.5
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings	(25.8)		257.3
Noncash lease expense	85.2		62.9




Impairment of equity method investments	2.4		136.1






Net gain in connection with Exchangeable Shares	(44.7)		—
Goodwill impairment	2,250.0		—
Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable	(7.7)		6.9
Inventories	(54.2)		(90.4)
Prepaid expenses and other current assets	(47.2)		(49.1)
Accounts payable	117.4		24.5

Other accrued expenses and liabilities	(117.4)		37.1
Other	(158.8)		115.8
Total adjustments	2,218.0		986.0
Net cash provided by (used in) operating activities	2,557.5		2,346.8

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment	(931.5)		(911.9)
Purchase of business, net of cash acquired	(158.7)		(7.5)
Investments in equity method investees and securities	(31.1)		(34.6)
Proceeds from sale of assets	34.8		21.8

Proceeds from sale of business	—		5.4
Other investing activities	(11.7)		(3.1)
Net cash provided by (used in) investing activities	(1,098.2)		(929.9)


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Nine Months Ended November 30,
	2024		2023
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	—		744.8
Principal payments of long-term debt	(956.0)		(807.5)
Net proceeds from (repayments of) short-term borrowings	648.7		(706.4)
Dividends paid	(551.3)		(491.1)
Purchases of treasury stock	(668.1)		(249.7)
Proceeds from shares issued under equity compensation plans	66.2		89.0
Payments of minimum tax withholdings on stock-based payment awards	(13.8)		(11.2)
Payments of debt issuance, debt extinguishment, and other financing costs	(0.1)		(5.3)
Distributions to noncontrolling interests	(47.5)		(35.0)
Payment of contingent consideration	(0.7)		—
Purchase of noncontrolling interest	(16.2)		—




Net cash provided by (used in) financing activities	(1,538.8)		(1,472.4)

Effect of exchange rate changes on cash and cash equivalents	0.8		0.7

Net increase (decrease) in cash and cash equivalents	(78.7)		(54.8)
Cash and cash equivalents, beginning of period	152.4		133.5
Cash and cash equivalents, end of period	$	73.7	$	78.7

Supplemental disclosures of noncash investing and financing activities











Additions to property, plant, and equipment	$	111.3	$	178.1
Purchase of noncontrolling interest	$	9.2	$	—

The accompanying notes are an integral part of these statements.


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CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

NOVEMBER 30, 2024

(unaudited)

1. BASIS OF PRESENTATION

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

Reclassification

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

2. INVENTORIES

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


	November 30, 2024		February 29, 2024
(in millions)
Raw materials and supplies	$	244.8	$	254.1
In-process inventories	1,198.9		1,096.0
Finished case goods	685.9		728.2
	$	2,129.6	$	2,078.3

The inventories balance at November 30, 2024, exclude amounts reclassified to assets held for sale. See Notes 5 and 7 for further discussion.

3. DERIVATIVE INSTRUMENTS

Overview

Our risk management and derivative accounting policies are presented in Notes 1 and 6 of our consolidated financial statements included in our 2024 Annual Report and have not changed significantly for the nine months and three months ended November 30, 2024.


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


	November 30, 2024		February 29, 2024
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts	$	2,854.4	$	2,045.6


Pre-issuance hedge contracts	$	75.0	$	—

Derivative instruments not designated as hedging instruments
Foreign currency contracts	$	448.9	$	735.9
Commodity derivative contracts	$	337.9	$	397.5

Credit risk

We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the derivative contracts. To manage this risk, we contract only with major 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 November 30, 2024, the estimated fair value of derivative instruments in a net liability position due to counterparties was $60.1 million. If we were required to settle the net liability position under these derivative instruments on November 30, 2024, we would have had sufficient available liquidity on hand to satisfy this obligation.

Results of period derivative activity

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


Assets					Liabilities
	November 30, 2024		February 29, 2024			November 30, 2024		February 29, 2024
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	44.2	$	154.1	Other accrued expenses and liabilities	$	34.9	$	3.5
Other assets	$	43.4	$	153.5	Deferred income taxes and other liabilities	$	77.8	$	0.2



Pre-issuance hedge contracts:
Prepaid expenses and other	$	3.1	$	—	Other accrued expenses and liabilities	$	—	$	—


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Assets					Liabilities
	November 30, 2024		February 29, 2024			November 30, 2024		February 29, 2024
(in millions)
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	1.0	$	3.6	Other accrued expenses and liabilities	$	0.9	$	1.7
Commodity derivative contracts:
Prepaid expenses and other	$	5.7	$	4.8	Other accrued expenses and liabilities	$	18.7	$	27.9
Other assets	$	3.2	$	1.4	Deferred income taxes and other liabilities	$	6.1	$	8.1

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


Derivative Instruments in Designated Cash Flow Hedging Relationships	Net Gain (Loss) Recognized in OCI		Location of Net Gain (Loss) Reclassified from AOCI to Income (Loss)	Net Gain (Loss) Reclassified from AOCI to Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2024
Foreign currency contracts	$	(209.2)	Sales	$	0.6
			Cost of product sold	89.5


Pre-issuance hedge contracts	3.1		Interest expense, net	—
	$	(206.1)		$	90.1

For the Nine Months Ended November 30, 2023
Foreign currency contracts	$	177.1	Sales	$	(0.2)
			Cost of product sold	102.3

Pre-issuance hedge contracts	0.5		Interest expense, net	(0.4)
	$	177.6		$	101.7

For the Three Months Ended November 30, 2024
Foreign currency contracts	$	(62.0)	Sales	$	0.3
			Cost of product sold	18.9

Pre-issuance hedge contracts	3.1		Interest expense, net	—
	$	(58.9)		$	19.2

For the Three Months Ended November 30, 2023
Foreign currency contracts	$	27.2	Sales	$	—
			Cost of product sold	36.6

Pre-issuance hedge contracts	(0.1)		Interest expense, net	(0.1)
	$	27.1		$	36.5

We expect $8.3 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.


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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 Nine Months Ended November 30, 2024
Commodity derivative contracts	Cost of product sold	$	(10.5)
Foreign currency contracts	Selling, general, and administrative expenses	(31.0)

		$	(41.5)

For the Nine Months Ended November 30, 2023
Commodity derivative contracts	Cost of product sold	$	(28.9)
Foreign currency contracts	Selling, general, and administrative expenses	12.7

		$	(16.2)

For the Three Months Ended November 30, 2024
Commodity derivative contracts	Cost of product sold	$	(0.8)
Foreign currency contracts	Selling, general, and administrative expenses	(4.3)

		$	(5.1)

For the Three Months Ended November 30, 2023
Commodity derivative contracts	Cost of product sold	$	(13.3)
Foreign currency contracts	Selling, general, and administrative expenses	(9.8)

		$	(23.1)

4. FAIR VALUE OF FINANCIAL INSTRUMENTS

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

•Level 1 inputs are quoted prices in active markets for identical assets or liabilities;

•Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates, and yield curves that are observable for the asset or liability, either directly or indirectly; and

•Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

Fair value methodology

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

Foreign currency and commodity derivative contracts

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


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Interest rate swap 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).

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 November 30, 2024, the carrying amount of long-term debt, including the current portion, was $10,689.0 million, compared with an estimated fair value of $10,075.5 million. As of February 29, 2024, the carrying amount of long-term debt, including the current portion, was $11,637.9 million, compared with an estimated fair value of $10,775.8 million.

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value as of November 30, 2024, and February 29, 2024, due to the relatively short maturity of these instruments.

Recurring basis measurements

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


	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
(in millions)
November 30, 2024
Assets:
Foreign currency contracts	$	—	$	88.6	$	—	$	88.6
Commodity derivative contracts	$	—	$	8.9	$	—	$	8.9
Pre-issuance hedge contracts	$	—	$	3.1	$	—	$	3.1


Liabilities:
Foreign currency contracts	$	—	$	113.6	$	—	$	113.6
Commodity derivative contracts	$	—	$	24.8	$	—	$	24.8



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


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


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Nonrecurring basis measurements

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


	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Losses
(in millions)
For the Nine Months Ended November 30, 2024
Goodwill (1)	$	—	$	—	$	491.3	$	2,250.0
Equity method investments (2)	—		—		—		2.4
Total	$	—	$	—	$	491.3	$	2,252.4

For the Nine Months Ended November 30, 2023
Equity method investments (2)	$	94.8	$	0.6	$	0.6	$	136.1

(1)Fair value determined during our interim quantitative assessment, excluding goodwill reclassified to held for sale. See Notes 5 and 7 for further discussion.

(2)Included in other assets within our consolidated balance sheets.

Goodwill

As of August 31, 2024, in connection with negative trends within our Wine and Spirits business primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our mainstream and premium wine brands, management updated its Fiscal 2025 outlook for this reporting unit. The updated forecast indicated it was more likely than not the fair value of the Wine and Spirits reporting unit might be below its carrying value. Accordingly, we performed an interim quantitative assessment for goodwill impairment. This assessment indicated that the carrying value of the Wine and Spirits reporting unit exceeded its estimated fair value, resulting in a $2,250.0 million goodwill impairment. This loss from impairment was included in goodwill impairment within our consolidated results for the nine months ended November 30, 2024. See Notes 5, 6, and 9 for further discussion.

When performing a quantitative assessment for impairment of goodwill, we measure the amount of impairment by calculating the amount by which the carrying value exceeds its estimated fair value. The estimated fair value is determined based on the discounted cash flow calculation. The most significant assumptions used in the discounted cash flow calculation were: (i) a 9% discount rate, (ii) a 1.5% expected long-term growth rate, and (iii) the annual cash flow projections. If there are adverse deviations from our expectations about our Wine and Spirits business or the macroeconomic environment, which could be influenced by a variety of factors including if broader industry and market conditions continue to decline and/or our expectations of future performance as reflected in our current strategic operating plans are not fully realized, a future impairment of the Wine and Spirits goodwill is reasonably possible.

Equity method investments

As of August 31, 2024, and November 30, 2023, we evaluated certain equity method investments, made through our corporate venture capital function within the Corporate Operations and Other segment, and determined there were other-than-temporary impairments due to business underperformance. These losses from impairment were included in income (loss) from unconsolidated investments within our consolidated results for the respective periods. The estimated fair values were based largely on the cash flows expected to be generated by the investment using unobservable data points.

As of August 31, 2023, we evaluated certain equity method investments, made through our corporate venture capital function, and determined there were other-than-temporary impairments due to business


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underperformance. Investments with a $14.9 million carrying value were written down to $2.6 million, their estimated fair value, resulting in a $12.3 million impairment. These investments are part of the Corporate Operations and Other segment. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the nine months ended November 30, 2023. The estimated fair value was based largely on observable prices for similar assets. In October 2023, we exited one of these equity method investments in exchange for a note receivable.

We evaluated the Canopy Equity Method Investment as of May 31, 2023, and determined there was an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recorded significant costs in its fourth quarter of fiscal 2023 results designed to align its Canadian cannabis operations and resources in response to continued unfavorable market trends, (iii) the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, and (iv) Canopy’s identification of material misstatements in certain of its previously reported financial results related to sales in its BioSteel Sports Nutrition Inc. reporting unit that were accounted for incorrectly, including the recording of a goodwill impairment during its restated second quarter of fiscal 2023. As a result, the Canopy Equity Method Investment with a $266.2 million carrying value was written down to $142.7 million, its estimated fair value, resulting in a $123.5 million impairment. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the nine months ended November 30, 2023. The estimated fair value was determined based on the closing price of the underlying equity security as of May 31, 2023. We no longer apply the equity method to our investment in Canopy following the April 2024 conversion of our Canopy common shares to Exchangeable Shares. See Note 7 for further discussion.

5. GOODWILL

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


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

Foreign currency translation adjustments	49.3		(0.9)		48.4

Balance, February 29, 2024	5,238.2		2,742.1		7,980.3
Purchase accounting allocations (2)	—		71.1		71.1

Foreign currency translation adjustments	(117.1)		1.3		(115.8)

Goodwill impairment	—		(2,250.0)		(2,250.0)
Reclassified to assets held for sale (3)	—		(73.2)		(73.2)
Balance, November 30, 2024	$	5,121.1	$	491.3	$	5,612.4

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

(2)Preliminary purchase accounting allocations associated with the Sea Smoke acquisition.

(3)In connection with the SVEDKA Divestiture, goodwill associated with the business being sold was reclassified to assets held for sale based on the relative fair value of the portion of the business being sold and the remaining wine and spirits portfolio. The relative fair values were determined using the transaction price and the income approach based on assumptions, including projected revenue growth, terminal growth, and discount rates and other projected financial information. See “Subsequent event” below.

Acquisition

Sea Smoke

In June 2024, we acquired the Sea Smoke business, including a California-based luxury wine brand, vineyards, and a production facility for $158.7 million, net of closing and post-closing adjustments. This transaction


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also included the acquisition of goodwill, inventory, and a trademark. The results of operations of Sea Smoke are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

Divestitures

Craft Beer Divestitures

In June 2023, we completed the Craft Beer Divestitures. Prior to the Craft Beer Divestitures, we recorded the results of operations of such craft beer brands in the Beer segment.

Subsequent event

SVEDKA Divestiture

On January 6, 2025, we sold the SVEDKA brand and related assets, primarily including inventory and equipment. We received $409.2 million of cash proceeds, subject to certain post-closing adjustments, which will be used primarily for general corporate purposes. Prior to the completion of the SVEDKA Divestiture, we recorded the results of operations of the SVEDKA brand in the Wine and Spirits segment. We expect to recognize a gain of $250 million to $275 million in connection with this divestiture. This gain will be included within our consolidated results of operations for the year ended February 28, 2025. See Note 7 for further discussion.

6. INTANGIBLE ASSETS

The major components of intangible assets are as follows:


	November 30, 2024				February 29, 2024
	Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	85.3	$	15.2	$	85.3	$	16.2
Other	20.7		0.3		20.8		0.3
Total	$	106.0	15.5		$	106.1	16.5

Nonamortizable intangible assets
Trademarks			2,702.7				2,715.2
Total intangible assets			$	2,718.2			$	2,731.7

The intangible assets balance at November 30, 2024, exclude trademarks reclassified to assets held for sale. We did not incur costs to renew or extend the term of acquired intangible assets for the nine months and three months ended November 30, 2024, and November 30, 2023. Net carrying amount represents the gross carrying value net of accumulated amortization.

Additionally, as of August 31, 2024, in connection with the assessment of the same events and circumstances triggering the interim goodwill impairment test for the Wine and Spirits reporting unit, we completed an interim impairment test of our wine and spirits trademarks. We performed qualitative evaluations considering the results of the most recent fair value measurements as of January 1, 2024, and the likely impact of the negative trends for our Wine and Spirits business on the fair values of the trademarks and concluded it is more likely than not that the fair values of these intangible assets exceeded their carrying amounts.


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7. OTHER ASSETS

The major components of other assets are as follows:


	November 30, 2024		February 29, 2024
(in millions)

Operating lease right-of-use asset	$	545.0	$	615.3
Equity method investments	151.0		170.6
Assets held for sale	110.5		25.7
Other investments in debt and equity securities	100.9		73.0
Exchangeable Shares	58.7		—
Derivative assets	46.6		154.9
Other	133.4		100.5
	$	1,146.1	$	1,140.0

Equity method investments

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


	November 30, 2024		February 29, 2024
(in millions)
Canopy Equity Method Investment (1)	$	—	$	42.5
Other equity method investments	151.0		128.1
	$	151.0	$	170.6

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

Assets held for sale

Mexicali Brewery

In July 2024, we sold the remaining assets classified as held for sale at the canceled Mexicali Brewery. These net assets had met held for sale criteria as of February 29, 2024, and through the date of sale.

SVEDKA Divestiture

In January 2025, we completed the SVEDKA Divestiture and sold the related assets classified as held for sale. The SVEDKA net assets had met held for sale criteria as of November 30, 2024, and through the date of sale.

Other investments in debt and equity securities

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

Exchangeable Shares

As of November 30, 2024, we evaluated the Exchangeable Shares for impairment primarily due to the business and industry factors that led to the decline in Canopy’s common share price since the date of conversion and exchange. We concluded that an impairment did exist, and accordingly, the Exchangeable Shares with a $97.3 million carrying value were written down to $58.7 million, their estimated fair value, resulting in a $38.6 million impairment. The estimated fair value was determined using the same valuation model as of the date of conversion and exchange as noted below. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the nine months and three months ended November 30, 2024. Future impairments, if any, will also be reported in income (loss) from unconsolidated investments within our consolidated results.


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In April 2024, we elected to convert our 17.1 million Canopy common shares into Exchangeable Shares on a one-for-one basis. Additionally, in April 2024, we exchanged C$81.2 million of the principal amount of the C$100.0 million 4.25% promissory note issued to us by Canopy for 9.1 million Exchangeable Shares and forgave all accrued but unpaid interest together with the remaining principal amount of the note. As a result of these transactions, we (i) have 26.3 million Exchangeable Shares and (ii) recognized an $83.3 million net gain in income (loss) from unconsolidated investments within our consolidated results for the nine months ended November 30, 2024. The fair value of Exchangeable Shares on the date of the conversion and exchange was estimated using a valuation model based primarily on the following inputs: (i) Canopy’s common share price, (ii) the expected volatility of Canopy’s common shares, and (iii) the probability and timing of U.S. federal legalization of recreational cannabis. As the Exchangeable Shares are an equity security without a readily determinable fair value, we elected to account for the Exchangeable Shares under the measurement alternative method.

8. BORROWINGS

Borrowings consist of the following:


	November 30, 2024						February 29, 2024
	Current		Long-term		Total		Total
(in millions)
Short-term borrowings

Commercial paper	$	890.1					$	241.4

	$	890.1					$	241.4

Long-term debt


Senior notes	$	499.3	$	10,180.1	$	10,679.4	$	11,620.1
Other	4.0		5.6		9.6		17.8
	$	503.3	$	10,185.7	$	10,689.0	$	11,637.9

Bank facilities

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

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


	Outstanding borrowings		Interest rate		SOFR margin		Outstanding letters of credit		Remaining borrowing capacity (1)
(in millions)
November 30, 2024
Revolving credit facility (2) (3)	$	—	—	%	—	%	$	11.3	$	1,347.2

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

(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2022 Credit Agreement and outstanding borrowings under our commercial paper program of $891.5 million and $241.5 million (excluding unamortized discount) as of November 30, 2024 and February 29, 2024, respectively (see “Commercial paper program” below).


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

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

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

Commercial paper program

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


	November 30, 2024			February 29, 2024
(in millions)
Outstanding borrowings (1)	$	890.1		$	241.4
Weighted average annual interest rate	5.0		%	5.7		%
Weighted average remaining term	13 days			4 days

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

Debt payments

As of November 30, 2024, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $49.2 million and $21.4 million, respectively) for the remaining three months of Fiscal 2025 and for each of the five succeeding fiscal years and thereafter are as follows:


(in millions)
Fiscal 2025	$	1.0
Fiscal 2026	1,404.1
Fiscal 2027	603.1
Fiscal 2028	1,801.3
Fiscal 2029	900.0
Fiscal 2030	800.0
Thereafter	5,250.1
	$	10,759.6

9. INCOME TAXES

Our effective tax rate for the nine months ended November 30, 2024, was 30.7% of tax benefit compared with 21.3% of tax expense for the nine months ended November 30, 2023. Our effective tax rate for the three months ended November 30, 2024, and November 30, 2023, was 6.6% and 20.0%, respectively.

For the nine months ended November 30, 2024, our effective tax rate did not approximate the federal statutory rate of 21% largely due to (i) the benefit of lower effective tax rates applicable for foreign businesses, (ii) a net income tax benefit recognized as a result of the resolution of various tax examinations and assessments


Constellation Brands, Inc. Q3 FY 2025 Form 10-Q			#WORTHREACHINGFOR I 17


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

related to prior periods, and (iii) a net income tax benefit following the reversal of valuation allowances for capital loss carryforwards in connection with the SVEDKA Divestiture, partially offset by a net income tax impact resulting from the non-deductible portion of the Wine and Spirits goodwill impairment.

For the three months ended November 30, 2024, our effective tax rate did not approximate the federal statutory rate of 21% largely due to (i) a net income tax benefit following the reversal of valuation allowances for capital loss carryforwards in connection with the SVEDKA Divestiture and (ii) the benefit of lower effective tax rates applicable for foreign businesses.

For the nine months and three months ended November 30, 2023, our effective tax rate approximated the federal statutory rate of 21% as the increase in the valuation allowance related to our investment in Canopy was largely offset by the benefit of lower effective tax rates applicable to our foreign businesses.

The Organization for Economic Cooperation and Development introduced a framework under Pillar Two which includes a 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.

10. DEFERRED INCOME TAXES AND OTHER LIABILITIES

The major components of deferred income taxes and other liabilities are as follows:


	November 30, 2024		February 29, 2024
(in millions)
Operating lease liability	$	540.4	$	588.7
Unrecognized tax benefit liabilities