Quarterly report pursuant to Section 13 or 15(d)

Business Segment Information

v3.23.3
Business Segment Information
 6 Months Ended
Aug. 31, 2023
Segment Reporting [Abstract]  
BUSINESS SEGMENT INFORMATION BUSINESS SEGMENT INFORMATION
Prior to May 31, 2023, our internal management financial reporting consisted of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) Canopy and we reported our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy. Due to several factors occurring as of May 31, 2023, including those which led to the additional Canopy Equity Method Investment impairment combined with Canopy’s financial results no longer being provided to, or reviewed by, our CODM, and no longer being used to make strategic decisions, allocate resources, or assess performance, we have removed Canopy as a reportable segment. Accordingly, effective May 31, 2023, 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 import, market, and sell our Mexican beer portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio that includes higher-margin, higher-growth wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, corporate growth and strategy, human resources, internal audit, investor relations, IT, legal, and public relations, as well as our Canopy investment and investments made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by, our CODM as it is not used to make strategic decisions, allocate resources, or assess performance.

In addition, management excludes Comparable Adjustments from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating income (loss) which does not include the impact of these Comparable Adjustments.
We evaluate segment operating performance based on operating income (loss) of the respective business units. Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2023 2022 2023 2022
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts $ (15.6) $ 33.1  $ 19.1  $ (15.4)
Flow through of inventory step-up (1.5) (1.9) (0.8) (0.9)
Settlements of undesignated commodity derivative contracts 6.2  (54.6) 5.6  (31.3)
Net flow through of reserved inventory —  1.2  —  1.2 
Recovery of (loss on) inventory write-down —  0.2  —  — 
Comparable Adjustments, Cost of product sold (10.9) (22.0) 23.9  (46.4)
Selling, general, and administrative expenses
Restructuring and other strategic business development costs (18.3) (2.6) (3.4) (1.2)
Transition services agreements activity (12.7) (7.9) (7.0) (4.5)
Transaction, integration, and other acquisition-related costs (0.6) (0.7) (0.3) (0.5)
Costs associated with the Reclassification 0.2  (21.3) —  (20.6)
Other gains (losses) (1)
(9.3) 8.8  (2.3) 3.6 
Comparable Adjustments, Selling, general, and administrative expenses (40.7) (23.7) (13.0) (23.2)
Comparable Adjustments, Operating income (loss) $ (51.6) $ (45.7) $ 10.9  $ (69.6)
(1)
 Primarily includes the following:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2023 2022 2023 2022
(in millions)
Gain (loss) on sale of business $ (14.9) $ —  $ (7.9) $ — 
Recognition of a previously deferred gain upon release of a related indemnity
 $ 5.6  $ —  $ 5.6  $ — 
Gain from remeasurement of previously held equity method investments $ —  $ 5.2  $ —  $ — 
Decreases in estimated fair values of contingent liabilities associated with prior period acquisitions $ —  $ 4.4  $ —  $ 4.4 

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 2023 Annual Report. Segment information is as follows:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2023 2022 2023 2022
(in millions)
Beer
Net sales $ 4,491.3  $ 4,037.5  $ 2,392.7  $ 2,139.3 
Segment operating income (loss) $ 1,751.7  $ 1,628.4  $ 953.9  $ 865.6 
Capital expenditures $ 440.3  $ 357.8  $ 234.7  $ 196.0 
Depreciation and amortization $ 160.2  $ 135.2  $ 81.4  $ 67.0 
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2023 2022 2023 2022
(in millions)
Wine and Spirits
Net sales:
Wine $ 744.9  $ 846.1  $ 383.9  $ 442.0 
Spirits 115.5  134.7  60.2  73.8 
Net sales $ 860.4  $ 980.8  $ 444.1  $ 515.8 
Segment operating income (loss) $ 160.0  $ 190.4  $ 80.7  $ 99.4 
Income (loss) from unconsolidated investments $ 10.6  $ 4.9  $ 8.3  $ 3.4 
Equity method investments $ 104.4  $ 100.5  $ 104.4  $ 100.5 
Capital expenditures $ 77.5  $ 51.6  $ 38.9  $ 21.8 
Depreciation and amortization $ 45.6  $ 43.3  $ 23.1  $ 21.0 
Corporate Operations and Other
Segment operating income (loss) $ (116.7) $ (143.6) $ (66.8) $ (82.3)
Income (loss) from unconsolidated investments $ (54.4) $ (91.0) $ (21.1) $ (37.0)
Equity method investments $ 172.7  $ 732.9  $ 172.7  $ 732.9 
Capital expenditures $ 64.2  $ 25.6  $ 31.4  $ 20.6 
Depreciation and amortization $ 8.6  $ 6.9  $ 4.2  $ 3.7 
Comparable Adjustments
Operating income (loss) $ (51.6) $ (45.7) $ 10.9  $ (69.6)
Income (loss) from unconsolidated investments $ (391.8) $ (1,820.9) $ (7.4) $ (1,685.5)
Consolidated
Net sales $ 5,351.7  $ 5,018.3  $ 2,836.8  $ 2,655.1 
Operating income (loss) $ 1,743.4  $ 1,629.5  $ 978.7  $ 813.1 
Income (loss) from unconsolidated investments (1)
$ (435.6) $ (1,907.0) $ (20.2) $ (1,719.1)
Equity method investments $ 277.1  $ 833.4  $ 277.1  $ 833.4 
Capital expenditures $ 582.0  $ 435.0  $ 305.0  $ 238.4 
Depreciation and amortization $ 214.4  $ 185.4  $ 108.7  $ 91.7 
(1)
 Income (loss) from unconsolidated investments consists of:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2023 2022 2023 2022
(in millions)
Impairment of equity method investments
 $ (135.8) $ (1,060.3) $ (12.3) $ (1,060.3)
Unrealized net gain (loss) on securities measured at fair value (74.4) (31.7) (2.6) (9.3)
Equity in earnings (losses) from Canopy and related activities (231.8) (815.7) (12.0) (650.7)
Equity in earnings (losses) from other equity method investees and related activities 6.4  0.7  6.7  1.2 
$ (435.6) $ (1,907.0) $ (20.2) $ (1,719.1)