CONSTELLATION BRANDS, INC. [STZ] Filings

10-Q 1 stz-20240831.htm 10-Q stz-20240831

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 August 31, 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 181,536,392 shares of Class A Common Stock and 25,541 shares of Class 1 Common Stock outstanding as of September 30, 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	13

	7. Other Assets	14

	8. Borrowings	15
	9. Income Taxes	16
	10. Deferred Income Taxes and Other Liabilities	17

	11. Stockholders' Equity	17
	12. Net Income (Loss) Per Common Share Attributable to CBI	19
	13. Comprehensive Income (Loss) Attributable to CBI	19
	14. Business Segment Information	22
	15. Accounting Guidance Not Yet Adopted	25

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		26
Item 3. Quantitative and Qualitative Disclosures About Market Risk		47
Item 4. Controls and Procedures		48

PART II – OTHER INFORMATION
Item 1. Legal Proceedings		49
Item 1A. Risk Factors		49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 5. Other Information		50
Item 6. Exhibits		50

SIGNATURES		54

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
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
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
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
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


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I i

Table of Contents


Term						Meaning

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 August 31, 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
NA						not applicable
Nava						Nava, Coahuila, Mexico
Nava Brewery						brewery located in Nava
Net sales						gross sales less promotions, returns and allowances, and excise taxes


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


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


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I ii

Table of Contents


Term						Meaning

SEC						Securities and Exchange Commission
Second Quarter 2024						the Company’s three months ended August 31, 2023
Second Quarter 2025						the Company’s three months ended August 31, 2024
Securities Act						Securities Act of 1933, as amended
Six Months 2024						the Company’s six months ended August 31, 2023
Six Months 2025						the Company’s six months ended August 31, 2024
SOFR						secured overnight financing rate administered by the Federal Reserve Bank of New York
U.S.						United States of America
Veracruz						Heroica Veracruz, Veracruz, Mexico
Veracruz Brewery						a new brewery being constructed in Veracruz


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I iii


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)


	August 31, 2024		February 29, 2024
ASSETS
Current assets:
Cash and cash equivalents	$	64.6	$	152.4
Accounts receivable	871.3		832.8
Inventories	2,098.6		2,078.3
Prepaid expenses and other	612.3		666.0

Total current assets	3,646.8		3,729.5
Property, plant, and equipment	7,898.8		8,055.2
Goodwill	5,715.4		7,980.3
Intangible assets	2,763.0		2,731.7


Deferred income taxes	1,963.9		2,055.0

Other assets	1,091.2		1,140.0
Total assets	$	23,079.1	$	25,691.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	508.1	$	241.4
Current maturities of long-term debt	404.7		956.8
Accounts payable	1,099.4		1,107.1
Other accrued expenses and liabilities	901.6		836.4
Total current liabilities	2,913.8		3,141.7
Long-term debt, less current maturities	10,683.6		10,681.1

Deferred income taxes and other liabilities	1,325.8		1,804.3
Total liabilities	14,923.2		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	2,115.2		2,047.3
Retained earnings	12,727.2		13,417.2
Accumulated other comprehensive income (loss)	(427.0)		376.8
Class A Stock in treasury, at cost, 31,207,194 shares and 29,809,881 shares, respectively	(6,546.7)		(6,100.3)
Total CBI stockholders’ equity	7,870.8		9,743.1
Noncontrolling interests	285.1		321.5
Total stockholders’ equity	8,155.9		10,064.6
Total liabilities and stockholders’ equity	$	23,079.1	$	25,691.7

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I 1


FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

(unaudited)


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2024		2023		2024		2023
Sales	$	5,999.8	$	5,752.5	$	3,139.1	$	3,053.0
Excise taxes	(419.1)		(400.8)		(220.2)		(216.2)
Net sales	5,580.7		5,351.7		2,918.9		2,836.8
Cost of product sold	(2,665.1)		(2,644.0)		(1,407.1)		(1,386.9)
Gross profit	2,915.6		2,707.7		1,511.8		1,449.9
Selling, general, and administrative expenses	(953.4)		(964.3)		(491.2)		(471.2)
Goodwill impairment	(2,250.0)		—		(2,250.0)		—



Operating income (loss)	(287.8)		1,743.4		(1,229.4)		978.7
Income (loss) from unconsolidated investments	80.8		(435.6)		(1.2)		(20.2)
Interest expense, net	(206.8)		(229.5)		(104.0)		(110.6)

Income (loss) before income taxes	(413.8)		1,078.3		(1,334.6)		847.9
(Provision for) benefit from income taxes	124.2		(238.4)		152.2		(147.2)
Net income (loss)	(289.6)		839.9		(1,182.4)		700.7
Net (income) loss attributable to noncontrolling interests	(32.4)		(14.0)		(16.6)		(10.7)
Net income (loss) attributable to CBI	$	(322.0)	$	825.9	$	(1,199.0)	$	690.0

Comprehensive income (loss)	$	(1,129.7)	$	1,266.0	$	(2,013.8)	$	901.5
Comprehensive (income) loss attributable to noncontrolling interests	3.9		(34.2)		20.0		(20.0)
Comprehensive income (loss) attributable to CBI	$	(1,125.8)	$	1,231.8	$	(1,993.8)	$	881.5

Class A Stock:
Net income (loss) per common share attributable to CBI – basic	$	(1.77)	$	4.50	$	(6.59)	$	3.76
Net income (loss) per common share attributable to CBI – diluted	$	(1.77)	$	4.49	$	(6.59)	$	3.74

Weighted average common shares outstanding – basic	182.356		183.384		181.947		183.498
Weighted average common shares outstanding – diluted	182.356		184.074		181.947		184.277

Cash dividends declared per common share	$	2.02	$	1.78	$	1.01	$	0.89

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I 2


FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	Class A Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
Balance at February 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


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I 3


FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	Class A Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
Balance at February 28, 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

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 Six Months Ended August 31,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(289.6)	$	839.9
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		74.4
Deferred tax provision (benefit)	(178.5)		26.3
Depreciation	220.8		213.7
Stock-based compensation	41.0		32.5
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings	(1.9)		226.5
Noncash lease expense	57.7		43.3




Impairment of equity method investments	2.1		135.8






Net gain on conversion and exchange to Exchangeable Shares	(83.3)		—
Goodwill impairment	2,250.0		—
Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable	(40.6)		(30.0)
Inventories	14.7		81.3
Prepaid expenses and other current assets	(77.7)		(47.9)
Accounts payable	134.5		(56.4)
Deferred revenue	9.7		17.6
Other accrued expenses and liabilities	(55.4)		(33.9)
Other	(133.7)		98.9
Total adjustments	2,161.9		782.1
Net cash provided by (used in) operating activities	1,872.3		1,622.0

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment	(703.1)		(582.0)
Purchase of business, net of cash acquired	(158.3)		(7.5)
Investments in equity method investees and securities	(19.0)		(27.6)
Proceeds from sale of assets	32.8		14.8

Proceeds from sale of business	—		5.4
Other investing activities	(10.0)		(4.0)
Net cash provided by (used in) investing activities	(857.6)		(600.9)


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Six Months Ended August 31,
	2024		2023
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	—		744.8
Principal payments of long-term debt	(554.3)		(805.1)
Net proceeds from (repayments of) short-term borrowings	266.7		(697.9)
Dividends paid	(368.6)		(327.6)
Purchases of treasury stock	(449.2)		(35.0)
Proceeds from shares issued under equity compensation plans	48.4		86.2
Payments of minimum tax withholdings on stock-based payment awards	(13.8)		(11.2)
Payments of debt issuance, debt extinguishment, and other financing costs	—		(5.3)
Distributions to noncontrolling interests	(32.5)		(21.3)
Payment of contingent consideration	(0.7)		—





Net cash provided by (used in) financing activities	(1,104.0)		(1,072.4)

Effect of exchange rate changes on cash and cash equivalents	1.5		1.1

Net increase (decrease) in cash and cash equivalents	(87.8)		(50.2)
Cash and cash equivalents, beginning of period	152.4		133.5
Cash and cash equivalents, end of period	$	64.6	$	83.3

Supplemental disclosures of noncash investing and financing activities











Additions to property, plant, and equipment	$	114.7	$	206.0

The accompanying notes are an integral part of these statements.


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I 6


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

AUGUST 31, 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:


	August 31, 2024		February 29, 2024
(in millions)
Raw materials and supplies	$	238.2	$	254.1
In-process inventories	1,121.4		1,096.0
Finished case goods	739.0		728.2
	$	2,098.6	$	2,078.3

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 six months and three months ended August 31, 2024.

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


	August 31, 2024		February 29, 2024
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts	$	2,659.3	$	2,045.6




Derivative instruments not designated as hedging instruments
Foreign currency contracts	$	944.7	$	735.9
Commodity derivative contracts	$	342.8	$	397.5


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Credit risk

We are exposed to credit-related losses if the counterparties to our derivative contracts default. This credit risk is limited to the fair value of the derivative contracts. To manage this risk, we contract only with major financial institutions that have earned investment-grade credit ratings and with whom we have standard International Swaps and Derivatives Association agreements which allow for net settlement of the derivative contracts. We have also established counterparty credit guidelines that are regularly monitored. Because of these safeguards, we believe the risk of loss from counterparty default to be immaterial.

In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of August 31, 2024, the estimated fair value of derivative instruments in a net liability position due to counterparties was $21.0 million. If we were required to settle the net liability position under these derivative instruments on August 31, 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
	August 31, 2024		February 29, 2024			August 31, 2024		February 29, 2024
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	64.6	$	154.1	Other accrued expenses and liabilities	$	19.9	$	3.5
Other assets	$	64.8	$	153.5	Deferred income taxes and other liabilities	$	47.7	$	0.2









Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	5.0	$	3.6	Other accrued expenses and liabilities	$	13.5	$	1.7
Commodity derivative contracts:
Prepaid expenses and other	$	3.7	$	4.8	Other accrued expenses and liabilities	$	23.8	$	27.9
Other assets	$	3.1	$	1.4	Deferred income taxes and other liabilities	$	6.9	$	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 Six Months Ended August 31, 2024
Foreign currency contracts	$	(147.2)	Sales	$	0.3
			Cost of product sold	70.6



	$	(147.2)		$	70.9


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Derivative Instruments in Designated Cash Flow Hedging Relationships	Net Gain (Loss) Recognized in OCI		Location of Net Gain (Loss) Reclassified from AOCI to Income (Loss)	Net Gain (Loss) Reclassified from AOCI to Income (Loss)
(in millions)
For the Six Months Ended August 31, 2023
Foreign currency contracts	$	149.9	Sales	$	(0.2)
			Cost of product sold	65.7

Pre-issuance hedge contracts	0.6		Interest expense, net	(0.3)
	$	150.5		$	65.2

For the Three Months Ended August 31, 2024
Foreign currency contracts	$	(173.3)	Sales	$	0.2
			Cost of product sold	31.5


	$	(173.3)		$	31.7

For the Three Months Ended August 31, 2023
Foreign currency contracts	$	70.6	Sales	$	(0.2)
			Cost of product sold	39.3

Pre-issuance hedge contracts	—		Interest expense, net	(0.1)
	$	70.6		$	39.0

We expect $39.2 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.

The effect of our undesignated derivative instruments on our results of operations is as follows:


Derivative Instruments Not Designated as Hedging Instruments	Location of Net Gain (Loss) Recognized in Income (Loss)	Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Six Months Ended August 31, 2024
Commodity derivative contracts	Cost of product sold	$	(9.7)
Foreign currency contracts	Selling, general, and administrative expenses	(26.7)

		$	(36.4)

For the Six Months Ended August 31, 2023
Commodity derivative contracts	Cost of product sold	$	(15.6)
Foreign currency contracts	Selling, general, and administrative expenses	22.5

		$	6.9

For the Three Months Ended August 31, 2024
Commodity derivative contracts	Cost of product sold	$	(24.3)
Foreign currency contracts	Selling, general, and administrative expenses	(30.7)

		$	(55.0)


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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 Three Months Ended August 31, 2023

Commodity derivative contracts

Cost of product sold

19.1

Foreign currency contracts

Selling, general, and administrative expenses

9.8

28.9

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).

Short-term borrowings

Our short-term borrowings consist of our commercial paper program and the revolving credit facility under our senior credit facility. The revolving credit facility is a variable interest rate bearing note with a fixed margin, adjustable based upon our debt rating (as defined in our senior credit facility). For these short-term borrowings, the carrying value approximates the fair value.

Long-term debt

The fair value of our fixed interest rate long-term debt is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement). As of August 31, 2024, the carrying amount of long-term debt, including the current portion, was $11,088.3 million, compared with an estimated fair value of $10,516.2 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 August 31, 2024, and February 29, 2024, due to the relatively short maturity of these instruments.


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Recurring basis measurements

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


	Fair Value Measurements Using
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
(in millions)
August 31, 2024
Assets:
Foreign currency contracts	$	—	$	134.4	$	—	$	134.4
Commodity derivative contracts	$	—	$	6.8	$	—	$	6.8


Liabilities:
Foreign currency contracts	$	—	$	81.1	$	—	$	81.1
Commodity derivative contracts	$	—	$	30.7	$	—	$	30.7




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

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 Six Months Ended August 31, 2024
Goodwill	$	—	$	—	$	564.8	$	2,250.0
Equity method investments	—		—		—		2.1

Total	$	—	$	—	$	564.8	$	2,252.1

For the Six Months Ended August 31, 2023
Equity method investments	$	97.8	$	2.6	$	—	$	135.8

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


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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 six months and three months ended August 31, 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, we evaluated an equity method investment, made through our corporate venture capital function, and determined there was an other-than-temporary impairment due to business underperformance. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the six months and three months ended August 31, 2024. The estimated fair value was 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 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 six months and three months ended August 31, 2023. The estimated fair value was based largely on observable prices for similar assets.

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 six months ended August 31, 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.


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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)	—		70.7		70.7

Foreign currency translation adjustments	(87.6)		2.0		(85.6)

Goodwill impairment	—		(2,250.0)		(2,250.0)
Balance, August 31, 2024	$	5,150.6	$	564.8	$	5,715.4

(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.

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 $170.0 million, subject to adjustments. This transaction 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.

Divestiture

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.

6. INTANGIBLE ASSETS

The major components of intangible assets are as follows:


	August 31, 2024				February 29, 2024
	Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	85.4	$	15.5	$	85.3	$	16.2
Other	20.8		0.3		20.8		0.3
Total	$	106.2	15.8		$	106.1	16.5

Nonamortizable intangible assets
Trademarks			2,747.2				2,715.2
Total intangible assets			$	2,763.0			$	2,731.7


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We did not incur costs to renew or extend the term of acquired intangible assets for the six months and three months ended August 31, 2024, and August 31, 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.

7. OTHER ASSETS

The major components of other assets are as follows:


	August 31, 2024		February 29, 2024
(in millions)

Operating lease right-of-use asset	$	579.5	$	615.3
Equity method investments	128.7		170.6
Exchangeable Shares	97.3		—
Other investments in debt and equity securities	90.5		73.0
Derivative assets	67.9		154.9
Assets held for sale	—		25.7
Other	127.3		100.5
	$	1,091.2	$	1,140.0

Equity method investments

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


	August 31, 2024		February 29, 2024
(in millions)
Canopy Equity Method Investment (1)	$	—	$	42.5
Other equity method investments	128.7		128.1
	$	128.7	$	170.6

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

Exchangeable Shares

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 of operations for the six months ended August 31, 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. Future impairments, if any, will also be reported in income (loss) from unconsolidated investments within our consolidated results.


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Other investments in debt and equity securities

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

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.

8. BORROWINGS

Borrowings consist of the following:


	August 31, 2024						February 29, 2024
	Current		Long-term		Total		Total
(in millions)
Short-term borrowings

Commercial paper	$	508.1					$	241.4

	$	508.1					$	241.4

Long-term debt


Senior notes	$	399.9	$	10,676.6	$	11,076.5	$	11,620.1
Other	4.8		7.0		11.8		17.8
	$	404.7	$	10,683.6	$	11,088.3	$	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 (i) the amendment by Canopy of its Articles of Incorporation, (ii) the conversion of our Canopy common shares into Exchangeable Shares, and (iii) the 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)
August 31, 2024
Revolving credit facility (2) (3)	$	—	—	%	—	%	$	11.3	$	1,729.7

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 $509.0 million and $241.5 million (excluding unamortized discount) as of August 31, 2024 and February 29, 2024, respectively (see “Commercial paper program” below).

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

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


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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:


	August 31, 2024			February 29, 2024
(in millions)
Outstanding borrowings (1)	$	508.1		$	241.4
Weighted average annual interest rate	5.7		%	5.7		%
Weighted average remaining term	12 days			4 days

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

Debt payments

As of August 31, 2024, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $51.4 million and $22.1 million, respectively) for the remaining six months of Fiscal 2025 and for each of the five succeeding fiscal years and thereafter are as follows:


(in millions)
Fiscal 2025	$	402.8
Fiscal 2026	1,404.3
Fiscal 2027	603.3
Fiscal 2028	1,801.3
Fiscal 2029	900.0
Fiscal 2030	800.0
Thereafter	5,250.1
	$	11,161.8

9. INCOME TAXES

Our effective tax rate for the six months ended August 31, 2024, was 30.0% of tax benefit compared with 22.1% of tax expense for the six months ended August 31, 2023. Our effective tax rate for the three months ended August 31, 2024, was 11.4% of tax benefit compared with 17.4% of tax expense for the three months ended August 31, 2023.

For the six months ended August 31, 2024, our effective tax rate did not approximate the federal statutory rate of 21% largely due to (i) a net income tax benefit recognized as a result of the resolution of various tax examinations and assessments related to prior periods and (ii) the benefit of lower effective tax rates applicable for foreign businesses, partially offset by a net income tax impact resulting from the non-deductible portion of the Wine and Spirits goodwill impairment.


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For the three months ended August 31, 2024, our effective tax rate did not approximate the federal statutory rate of 21% largely due to a net income tax impact resulting from the non-deductible portion of the Wine and Spirits goodwill impairment.

For the six months ended August 31, 2023, our effective tax rate was higher than the federal statutory rate of 21% primarily due to an increase in the valuation allowance related to our investment in Canopy, partially offset by (i) the benefit of lower effective tax rates applicable to our foreign businesses and (ii) a net income tax benefit recognized as a result of a change in tax entity classification.

For the three months ended August 31, 2023, our effective tax rate was lower than the federal statutory rate of 21% primarily due to 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:


	August 31, 2024		February 29, 2024
(in millions)
Operating lease liability	$	568.5	$	588.7
Deferred income taxes	290.8		591.5
Unrecognized tax benefit liabilities	244.0		407.9
Deferred revenue	74.3		80.2

Other	148.2		136.0
	$	1,325.8	$	1,804.3

11. STOCKHOLDERS’ EQUITY

Common stock

The number of shares of common stock issued and treasury stock, and associated share activity, are as follows:


	Class A Stock	Class 1 Stock	Class A Stock in Treasury
Balance at February 29, 2024	212,698,298	23,661	29,809,881
Share repurchases	—	—	775,334

Exercise of stock options	—	1,880	(149,324)


Vesting of restricted stock units (1)	—	—	(85,650)
Vesting of performance share units (1)	—	—	(8,757)

Balance at May 31, 2024	212,698,298	25,541	30,341,484
Share repurchases	—	—	1,002,947

Exercise of stock options	—	—	(103,561)
Employee stock purchases	—	—	(28,472)
Vesting of restricted stock units (1)	—	—	(5,204)


Balance at August 31, 2024	212,698,298	25,541	31,207,194


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	Class A Stock	Class 1 Stock	Class A Stock in Treasury
Balance at February 28, 2023	212,697,428	22,705	29,498,426
Share repurchases	—	—	153,937
Conversion of shares	80	(80)	—
Exercise of stock options	—	800	(129,595)


Vesting of restricted stock units (1)	—	—	(71,189)
Vesting of performance share units (1)	—	—	(13,113)

Balance at May 31, 2023	212,697,508	23,425	29,438,466

Conversion of shares	220	(220)	—
Exercise of stock options	—	606	(364,530)
Employee stock purchases	—	—	(30,172)
Vesting of restricted stock units (1)	—	—	(5,172)


Balance at August 31, 2023	212,697,728	23,811	29,038,592

(1)Net of the following shares withheld to satisfy tax withholding requirements:


	For the Three Months Ended May 31,	For the Three Months Ended August 31,	For the Six Months Ended August 31,
2024
Restricted Stock Units	48,501	147	48,648
Performance Share Units	5,728	—	5,728

2023
Restricted Stock Units	39,839	170	40,009
Performance Share Units	8,735	—	8,735

Stock repurchases

In each of January 2021 and November 2023, our Board of Directors authorized the repurchase of up to $2.0 billion of our publicly traded common stock. The Board of Directors did not specify a date upon which these authorizations would expire. Shares repurchased under these authorizations become treasury shares.

For the six months ended August 31, 2024, we repurchased 1,778,281 shares of Class A Stock pursuant to the 2021 Authorization through open market transactions at an aggregate cost of $449.2 million.

As of August 31, 2024, total shares repurchased under our board authorizations are as follows:


			Class A Stock
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)


2021 Authorization (1)	$	2,000.0	$	1,835.5	7,653,557
2023 Authorization (1)	$	2,000.0	$	—	—

(1)As of August 31, 2024, an aggregate of $2,164.5 million remains available for future share repurchases, excluding the impact of Federal excise tax owed pursuant to the IRA.


Constellation Brands, Inc. Q2 FY 2025 Form 10-Q			#WORTHREACHINGFOR I 18


FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

12. NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO CBI

Net income (loss) per common share – basic for Class A Stock has been computed based on the weighted average shares of common stock outstanding during the period. Net income (loss) per common share – diluted for Class A Stock reflects the weighted average shares of common stock plus the effect of dilutive securities outstanding during the period using the treasury stock method. The effect of dilutive securities includes the impact of outstanding stock-based awards. The dilutive computation does not assume conversion, exercise, or contingent issuance of securities that would have an anti-dilutive effect on the net income (loss) per common share attributable to CBI. The computation of basic and diluted net income (loss) per common share for Class A Stock are as follows:


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2024		2023		2024		2023
(in millions, except per share data)
Net income (loss) attributable to CBI	$	(322.0)	$	825.9	$	(1,199.0)	$	690.0

Weighted average common shares outstanding – basic	182.356		183.384		181.947		183.498
Stock-based awards, primarily stock options (1)	—		0.690		—		0.779
Weighted average common shares outstanding – diluted