Quarterly report pursuant to Section 13 or 15(d)

Business Segment Information

v3.24.3
Business Segment Information
 6 Months Ended
Aug. 31, 2024
Segment Reporting [Abstract]  
BUSINESS SEGMENT INFORMATION BUSINESS SEGMENT INFORMATION
Our internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits and we report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio that includes higher-end wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate development, corporate finance, corporate strategy, executive management, growth, 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,
2024 2023 2024 2023
(in millions)
Cost of product sold
Settlements of undesignated commodity derivative contracts $ 15.5  $ 6.2  $ 7.0  $ 5.6 
Net gain (loss) on undesignated commodity derivative contracts (9.7) (15.6) (24.3) 19.1 
Flow through of inventory step-up (2.4) (1.5) (1.3) (0.8)
Comparable Adjustments, Cost of product sold 3.4  (10.9) (18.6) 23.9 
Selling, general, and administrative expenses
Restructuring and other strategic business development costs (26.3) (18.3) (24.5) (3.4)
Transition services agreements activity (7.6) (12.7) (4.8) (7.0)
Transaction, integration, and other acquisition-related costs (0.8) (0.6) (0.6) (0.3)
Other gains (losses) (1)
(20.3) (9.1) (20.7) (2.3)
Comparable Adjustments, Selling, general, and administrative expenses (55.0) (40.7) (50.6) (13.0)
Goodwill impairment
 (2,250.0) —  (2,250.0) — 
Comparable Adjustments, Operating income (loss) $ (2,301.6) $ (51.6) $ (2,319.2) $ 10.9 
(1)
 Primarily includes the following:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2024 2023 2024 2023
(in millions)
Net loss on foreign currency as a result of the resolution of various tax examinations and assessments
 $ (20.7) $ —  $ (20.7) $ — 
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 
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 2024 Annual Report. Segment information is as follows:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2024 2023 2024 2023
(in millions)
Beer
Net sales $ 4,803.0  $ 4,491.3  $ 2,530.2  $ 2,392.7 
Segment operating income (loss) $ 2,000.7  $ 1,751.7  $ 1,077.7  $ 953.9 
Capital expenditures $ 571.6  $ 440.3  $ 257.2  $ 234.7 
Depreciation and amortization $ 168.9  $ 160.2  $ 82.5  $ 81.4 
Wine and Spirits
Net sales:
Wine $ 665.5  $ 744.9  $ 336.2  $ 383.9 
Spirits 112.2  115.5  52.5  60.2 
Net sales $ 777.7  $ 860.4  $ 388.7  $ 444.1 
Segment operating income (loss) $ 130.2  $ 160.0  $ 70.5  $ 80.7 
Income (loss) from unconsolidated investments $ 5.8  $ 10.6  $ 5.4  $ 8.3 
Equity method investments $ 106.7  $ 104.4  $ 106.7  $ 104.4 
Capital expenditures $ 90.6  $ 77.5  $ 41.0  $ 38.9 
Depreciation and amortization $ 42.8  $ 45.6  $ 21.5  $ 23.1 
Corporate Operations and Other
Segment operating income (loss) $ (117.1) $ (116.7) $ (58.4) $ (66.8)
Income (loss) from unconsolidated investments $ (3.8) $ (54.4) $ (2.1) $ (21.1)
Equity method investments $ 22.0  $ 172.7  $ 22.0  $ 172.7 
Capital expenditures $ 40.9  $ 64.2  $ 29.6  $ 31.4 
Depreciation and amortization $ 9.8  $ 8.6  $ 5.6  $ 4.2 
Comparable Adjustments
Operating income (loss) $ (2,301.6) $ (51.6) $ (2,319.2) $ 10.9 
Income (loss) from unconsolidated investments $ 78.8  $ (391.8) $ (4.5) $ (7.4)
Consolidated
Net sales $ 5,580.7  $ 5,351.7  $ 2,918.9  $ 2,836.8 
Operating income (loss) $ (287.8) $ 1,743.4  $ (1,229.4) $ 978.7 
Income (loss) from unconsolidated investments (1)
$ 80.8  $ (435.6) $ (1.2) $ (20.2)
Equity method investments $ 128.7  $ 277.1  $ 128.7  $ 277.1 
Capital expenditures $ 703.1  $ 582.0  $ 327.8  $ 305.0 
Depreciation and amortization $ 221.5  $ 214.4  $ 109.6  $ 108.7 
(1)
 Income (loss) from unconsolidated investments consists of:
For the Six Months
Ended August 31,		 For the Three Months
Ended August 31,
2024 2023 2024 2023
(in millions)
Net gain on conversion and exchange to Exchangeable Shares (i)
$ 83.3  $ —  $ —  $ — 
Equity in earnings (losses) from other equity method investees and related activities 2.1  6.4  3.4  6.7 
Equity in earnings (losses) from Canopy and related activities —  (231.8) —  (12.0)
Impairment of equity method investments
 (2.1) (135.8) (2.1) (12.3)
Unrealized net gain (loss) on securities measured at fair value (i)
(2.5) (74.4) (2.5) (2.6)
$ 80.8  $ (435.6) $ (1.2) $ (20.2)
(i)Effective as of May 31, 2023, we determined that the 2023 Canopy Promissory Note did not have future economic value given the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, prior to the maturity of the note. Accordingly, the fair value of the remaining balance for this instrument was determined to be zero. In April 2024, we exchanged the 2023 Canopy Promissory Note for Exchangeable Shares.