Net Sales | Operating Income | Earnings Before Interest & Taxes (EBIT) | Diluted Net Income (Loss) Per Share Attributable to CBI (EPS) | Diluted EPS Excluding Canopy | |||||||||||||
Second Quarter Fiscal Year 2021 Financial Highlights (1) | In millions, except per share data | |||||||||||||||||
Reported | $2,260 | $839 | NA | $2.62 | NA | ||||||||||||
% Change | (4%) | 17% | NA | 195% | NA | ||||||||||||
Comparable | $2,260 | $798 | $762 | $2.76 | $2.91 | ||||||||||||
% Change | (4%) | 1% | 3% | 1% | —% |
“Despite the ongoing challenges of the pandemic, we delivered excellent Q2 results, as we continued to invest in brands and capabilities to drive sustainable long-term growth. We remain confident in the resiliency of our business, our brand health and consumer takeaway remain strong, and we are well positioned to deliver a solid year of organic growth in fiscal 21.” | “We continue to generate strong financial results despite headwinds related to COVID-19. Double-digit free cash flow growth has enabled ongoing debt reduction and progress in achieving our targeted leverage goal.” | |||||||||||||||||||
Bill Newlands | Garth Hankinson | |||||||||||||||||||
President and Chief Executive Officer | Chief Financial Officer |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 1 |
beer | ||||||||||||||||||||
Shipment Volume | Organic Shipment Volume (2) | Depletion Volume (2) | Net Sales (3) | Organic Net Sales (1) | Operating Income (3) | |||||||||||||||
Three Months Ended | In millions; branded product, 24-pack, 12-ounce case equivalents | ||||||||||||||||||||
August 31, 2020 | 90.4 | 90.4 | $1,635.9 | $1,635.9 | $695.7 | |||||||||||||||
August 31, 2019 | 91.9 | 91.2 | $1,640.4 | $1,615.7 | $685.3 | |||||||||||||||
% Change | (1.6%) | (0.9%) | 4.7% | —% | 1% | 2% |
•The COVID-19 related slowdown of beer production in Mexico earlier in the fiscal year impacted shipment volumes and distributor inventory levels. Product inventories are expected to return to more normal levels by the end of the third quarter fiscal 2021 as shipment volume is expected to outpace depletion volume. •Operating margin increased 70 basis points to 42.5%, as benefits from favorable pricing and reduced marketing spend were partially offset by increased COGS. | |||||
wine and spirits | ||||||||||||||||||||
Shipment Volume | Organic Shipment Volume (4) | Depletion Volume (4) | Net Sales (5) | Organic Net Sales (1) | Operating Income (5) | |||||||||||||||
Three Months Ended | In millions; branded product, 9-liter case equivalents | ||||||||||||||||||||
August 31, 2020 | 11.6 | 11.6 | $624.5 | $624.5 | $161.5 | |||||||||||||||
August 31, 2019 | 14.4 | 13.9 | $703.6 | $684.3 | $160.4 | |||||||||||||||
% Change | (19.4%) | (16.5%) | (3.3%) | (11%) | (9%) | 1% |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 2 |
Information Related to the Wine and Spirits Businesses to be Sold | |||||||||||||||||||||||
Estimated Information for Wine and Spirits Businesses to be Sold | FY20 Q3 | FY20 Q4 | FY21 Q1 | FY21 Q2 | ||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||
Shipment volume (9-liter case equivalents) | 4.7 | 6.1 | 4.5 | 4.6 | ||||||||||||||||||||||
Net sales | $179 | $237 | $187 | $181 | ||||||||||||||||||||||
CAM (gross profit less marketing) | $62 | $84 | $77 | $67 |
EAT, EXPENSE, AND EMPOWER THROUGH #THEGREATAMERICANTAKEOUT: EMPLOYEES IN ACTION |
Constellation Brands is committed to achieving greater equity for African American/Black colleagues at Constellation, within the beverage alcohol industry, and within the communities we operate in. As the restaurant and bar industry continues to face substantial COVID-19 challenges, Constellation proudly sponsored The Great American Takeout’s Employees in Action initiative. From Thursday, August 27 through Sunday, August 30 Constellation encouraged all of its U.S. employees to order meals and drinks from the Constellation Brands portfolio from Black-owned restaurants and bars and covered the costs. With the backing of distributor partners like RNDC and SGWS, Focus on Female Founders partners Austin Cocktails, and businesses big and small across the country, more than 30,000 employees were empowered to #SupportBlackOwnedRestaurants. | |||||||||||
The COVID-19 crisis, which has hit Black-owned businesses disproportionately, has devastated the restaurant industry. From small independent pizzerias, sandwich shops, and taco stands, to big chain restaurants, these establishments have become reliant on takeout and delivery to survive. The Great American Takeout has generated widespread buzz, reaching more than 117 million people nationwide, and raised $400,000 to date for charitable organizations. | |||||||||||
AWARDS & RECOGNITION |
The World’s Best Vineyards released their 2020 rankings in July and for the second year in a row, Robert Mondavi Winery has been named the Best Vineyard in North America. In addition, it moved up the rankings from the #12 vineyard worldwide in 2019 to #5 this year, making it the 5th best winery to visit in the world. | Shanken News recognized Constellation Brands with five IMPACT Hot Brand Awards: Modelo Especial, Modelo Chelada, Pacifico, Corona Premier, and Corona Refresca. All awards are given based on sales from the prior calendar year (2019). | |||||||
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 3 |
At Constellation, one way our diversity comes to life is through our growing community of business resource groups. As we continue our celebration of Hispanic Heritage Month across the business through October 15th, we invite you to learn more about ¡SALUD! – standing for Supporting and Attracting Latinos United for Diversity & Development – and its talented leaders who work each and every day to connect, attract, support and empower the Hispanic and Latinx communities within Constellation Brands. | |||||
Empowering our People: ¡SALUD! Overview Video |
ABOUT CONSTELLATION BRANDS At Constellation Brands (NYSE: STZ and STZ.B), our mission is to build brands that people love because we believe sharing a toast, unwinding after a day, celebrating milestones, and helping people connect, are Worth Reaching For. It’s worth our dedication, hard work, and the bold calculated risks we take to deliver more for our consumers, trade partners, shareholders, and communities in which we live and work. It’s what has made us one of the fastest-growing large CPG companies in the U.S. at retail, and it drives our pursuit to deliver what’s next. Today, we are a leading international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy. Every day, people reach for our high-end, iconic imported beer brands such as Corona Extra, Corona Light, Corona Premier, Modelo Especial, Modelo Negra, and Pacifico, and our high-quality premium wine and spirits brands, including the Robert Mondavi Brand Family, Kim Crawford, Meiomi, The Prisoner Brand Family, SVEDKA Vodka, Casa Noble Tequila, and High West Whiskey. But we won’t stop here. Our visionary leadership team and passionate employees from barrel room to boardroom are reaching for the next level, to explore the boundaries of the beverage alcohol industry and beyond. Join us in discovering what’s Worth Reaching For. To learn more, follow us on Twitter @cbrands and visit www.cbrands.com. |
MEDIA CONTACTS | INVESTOR RELATIONS CONTACTS | ||||||||||||||||
Mike McGrew | 773-251-4934 | michael.mcgrew@cbrands.com | Patty Yahn-Urlaub | 585-678-7483 | patty.yahn-urlaub@cbrands.com | ||||||||||||
Amy Martin | 585-678-7141 | amy.martin@cbrands.com | Bob Czudak | 585-678-7170 | bob.czudak@cbrands.com | ||||||||||||
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 4 |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 5 |
August 31, 2020 | February 29, 2020 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 204.6 | $ | 81.4 | |||||||
Accounts receivable | 926.3 | 864.8 | |||||||||
Inventories | 1,328.4 | 1,373.6 | |||||||||
Prepaid expenses and other | 497.1 | 535.8 | |||||||||
Assets held for sale - current | 580.8 | 628.5 | |||||||||
Total current assets | 3,537.2 | 3,484.1 | |||||||||
Property, plant, and equipment | 5,184.9 | 5,333.0 | |||||||||
Goodwill | 7,717.4 | 7,757.1 | |||||||||
Intangible assets | 2,738.3 | 2,718.9 | |||||||||
Equity method investments | 2,931.9 | 3,093.9 | |||||||||
Securities measured at fair value | 764.0 | 1,117.1 | |||||||||
Deferred income taxes | 2,574.8 | 2,656.3 | |||||||||
Assets held for sale | 416.6 | 552.1 | |||||||||
Other assets | 597.4 | 610.7 | |||||||||
Total assets | $ | 26,462.5 | $ | 27,323.2 | |||||||
LIABILITIES AND STOCKHOLDER’S EQUITY | |||||||||||
Current liabilities: | |||||||||||
Short-term borrowings | $ | — | $ | 238.9 | |||||||
Current maturities of long-term debt | 533.8 | 734.9 | |||||||||
Accounts payable | 651.2 | 557.6 | |||||||||
Other accrued expenses and liabilities | 724.9 | 780.4 | |||||||||
Total current liabilities | 1,909.9 | 2,311.8 | |||||||||
Long-term debt, less current maturities | 11,066.8 | 11,210.8 | |||||||||
Deferred income taxes and other liabilities | 1,482.0 | 1,326.3 | |||||||||
Total liabilities | 14,458.7 | 14,848.9 | |||||||||
CBI stockholders’ equity | 11,688.0 | 12,131.8 | |||||||||
Noncontrolling interests | 315.8 | 342.5 | |||||||||
Total stockholders’ equity | 12,003.8 | 12,474.3 | |||||||||
Total liabilities and stockholders’ equity | $ | 26,462.5 | $ | 27,323.2 |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 6 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | ||||||||||||||||||||
Sales | $ | 2,459.7 | $ | 2,573.4 | $ | 4,591.4 | $ | 4,855.9 | |||||||||||||||
Excise taxes | (199.3) | (229.4) | (367.6) | (414.7) | |||||||||||||||||||
Net sales | 2,260.4 | 2,344.0 | 4,223.8 | 4,441.2 | |||||||||||||||||||
Cost of product sold | (1,044.6) | (1,158.1) | (2,019.7) | (2,226.6) | |||||||||||||||||||
Gross profit | 1,215.8 | 1,185.9 | 2,204.1 | 2,214.6 | |||||||||||||||||||
Selling, general, and administrative expenses | (399.1) | (439.4) | (752.4) | (845.4) | |||||||||||||||||||
Impairment of assets held for sale | 22.0 | (27.0) | (3.0) | (27.0) | |||||||||||||||||||
Operating income (loss) | 838.7 | 719.5 | 1,448.7 | 1,342.2 | |||||||||||||||||||
Income (loss) from unconsolidated investments | (80.7) | (1,324.7) | (651.9) | (2,255.3) | |||||||||||||||||||
Interest expense | (100.2) | (111.6) | (200.2) | (226.2) | |||||||||||||||||||
Loss on extinguishment of debt | (0.6) | (2.4) | (7.6) | (2.4) | |||||||||||||||||||
Income (loss) before income taxes | 657.2 | (719.2) | 589.0 | (1,141.7) | |||||||||||||||||||
(Provision for) benefit from income taxes | (135.4) | 202.2 | (239.8) | 387.6 | |||||||||||||||||||
Net income (loss) | 521.8 | (517.0) | 349.2 | (754.1) | |||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | (9.7) | (8.2) | (15.0) | (16.5) | |||||||||||||||||||
Net income (loss) attributable to CBI | $ | 512.1 | $ | (525.2) | $ | 334.2 | $ | (770.6) | |||||||||||||||
Net income (loss) per common share attributable to CBI: | |||||||||||||||||||||||
Basic – Class A Common Stock | $ | 2.68 | $ | (2.77) | $ | 1.74 | $ | (4.08) | |||||||||||||||
Basic – Class B Convertible Common Stock | $ | 2.43 | $ | (2.52) | $ | 1.58 | $ | (3.71) | |||||||||||||||
Diluted – Class A Common Stock | $ | 2.62 | $ | (2.77) | $ | 1.71 | $ | (4.08) | |||||||||||||||
Diluted – Class B Convertible Common Stock | $ | 2.42 | $ | (2.52) | $ | 1.58 | $ | (3.71) | |||||||||||||||
Weighted average common shares outstanding: | |||||||||||||||||||||||
Basic – Class A Common Stock | 170.078 | 168.310 | 169.841 | 168.215 | |||||||||||||||||||
Basic – Class B Convertible Common Stock | 23.284 | 23.316 | 23.289 | 23.316 | |||||||||||||||||||
Diluted – Class A Common Stock | 195.142 | 168.310 | 194.962 | 168.215 | |||||||||||||||||||
Diluted – Class B Convertible Common Stock | 23.284 | 23.316 | 23.289 | 23.316 | |||||||||||||||||||
Cash dividends declared per common share: | |||||||||||||||||||||||
Class A Common Stock | $ | 0.75 | $ | 0.75 | $ | 1.50 | $ | 1.50 | |||||||||||||||
Class B Convertible Common Stock | $ | 0.68 | $ | 0.68 | $ | 1.36 | $ | 1.36 |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 7 |
Six Months Ended | |||||||||||
August 31, 2020 | August 31, 2019 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||
Net income (loss) | $ | 349.2 | $ | (754.1) | |||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
Unrealized net (gain) loss on securities measured at fair value | 244.9 | 1,666.6 | |||||||||
Deferred tax provision (benefit) | 196.1 | (452.7) | |||||||||
Depreciation | 142.7 | 169.1 | |||||||||
Stock-based compensation | 34.0 | 33.6 | |||||||||
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings | 408.1 | 580.3 | |||||||||
Noncash lease expense | 41.3 | 44.8 | |||||||||
Impairment and amortization of intangible assets | 2.7 | 13.9 | |||||||||
Impairment of assets held for sale | 3.0 | 27.0 | |||||||||
Loss on inventory and related contracts | 25.1 | 61.0 | |||||||||
Loss on settlement of treasury lock contracts | (29.3) | — | |||||||||
Change in operating assets and liabilities, net of effects from purchases of businesses: | |||||||||||
Accounts receivable | (56.1) | (106.2) | |||||||||
Inventories | 73.0 | 92.7 | |||||||||
Prepaid expenses and other current assets | 51.3 | 32.2 | |||||||||
Accounts payable | 116.7 | 3.9 | |||||||||
Deferred revenue | 21.8 | 34.0 | |||||||||
Other accrued expenses and liabilities | (141.3) | (61.0) | |||||||||
Other | (38.3) | 34.3 | |||||||||
Total adjustments | 1,095.7 | 2,173.5 | |||||||||
Net cash provided by (used in) operating activities | 1,444.9 | 1,419.4 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
Purchases of property, plant, and equipment | (277.8) | (355.2) | |||||||||
Purchases of businesses, net of cash acquired | (19.9) | (36.2) | |||||||||
Investments in equity method investees and securities | (217.4) | (33.0) | |||||||||
Proceed from sales of assets | 18.1 | — | |||||||||
Proceeds from sale of business | 41.1 | — | |||||||||
Other investing activities | 0.6 | (1.3) | |||||||||
Net cash provided by (used in) investing activities | (455.3) | (425.7) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||
Proceeds from issuance of long-term debt | 1,194.6 | 1,291.3 | |||||||||
Principal payments of long-term debt | (1,536.4) | (1,331.5) | |||||||||
Net proceeds from (repayments of) short-term borrowings | (238.9) | (640.5) | |||||||||
Dividends paid | (287.6) | (285.0) | |||||||||
Purchases of treasury stock | — | (50.0) | |||||||||
Proceeds from shares issued under equity compensation plans | 32.0 | 32.9 | |||||||||
Payments of minimum tax withholdings on stock-based payment awards | (7.6) | (14.2) | |||||||||
Payments of debt issuance, debt extinguishment, and other financing costs | (18.2) | (8.0) | |||||||||
Distributions to noncontrolling interests | (10.0) | — | |||||||||
Net cash provided by (used in) financing activities | (872.1) | (1,005.0) | |||||||||
Effect of exchange rate changes on cash and cash equivalents | 5.7 | (1.0) | |||||||||
Net increase (decrease) in cash and cash equivalents | 123.2 | (12.3) | |||||||||
Cash and cash equivalents, beginning of period | 81.4 | 93.6 | |||||||||
Cash and cash equivalents, end of period | $ | 204.6 | $ | 81.3 |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 8 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | Percent Change | August 31, 2020 | August 31, 2019 | Percent Change | ||||||||||||||||||||||||||||||
Consolidated net sales | $ | 2,260.4 | $ | 2,344.0 | (4 | %) | $ | 4,223.8 | $ | 4,441.2 | (5 | %) | |||||||||||||||||||||||
Less: Black Velvet Divestiture (1) | — | (19.3) | — | (38.0) | |||||||||||||||||||||||||||||||
Less: Ballast Point Divestiture (2) | — | (24.7) | — | (53.3) | |||||||||||||||||||||||||||||||
Consolidated organic net sales | $ | 2,260.4 | $ | 2,300.0 | (2 | %) | $ | 4,223.8 | $ | 4,349.9 | (3 | %) | |||||||||||||||||||||||
Beer net sales | $ | 1,635.9 | $ | 1,640.4 | — | % | $ | 3,020.0 | $ | 3,117.8 | (3 | %) | |||||||||||||||||||||||
Less: Ballast Point Divestiture (2) | — | (24.7) | — | (53.3) | |||||||||||||||||||||||||||||||
Beer organic net sales | $ | 1,635.9 | $ | 1,615.7 | 1 | % | 3,020.0 | 3,064.5 | (1 | %) | |||||||||||||||||||||||||
Wine and Spirits net sales | $ | 624.5 | $ | 703.6 | (11 | %) | $ | 1,203.8 | $ | 1,323.4 | (9 | %) | |||||||||||||||||||||||
Less: Black Velvet Divestiture (1) | — | (19.3) | — | (38.0) | |||||||||||||||||||||||||||||||
Wine and Spirits organic net sales | $ | 624.5 | $ | 684.3 | (9 | %) | $ | 1,203.8 | $ | 1,285.4 | (6 | %) |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 9 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | Percent Change | August 31, 2020 | August 31, 2019 | Percent Change | ||||||||||||||||||||||||||||||
Beer | |||||||||||||||||||||||||||||||||||
(in millions, branded product, 24-pack, 12-ounce case equivalents) | |||||||||||||||||||||||||||||||||||
Shipment volume | 90.4 | 91.9 | (1.6 | %) | 166.6 | 174.0 | (4.3 | %) | |||||||||||||||||||||||||||
Organic shipment volume (1) | 90.4 | 91.2 | (0.9 | %) | 166.6 | 172.5 | (3.4 | %) | |||||||||||||||||||||||||||
Depletion volume (2) (3) | 4.7 | % | 5.1 | % | |||||||||||||||||||||||||||||||
Wine and Spirits | |||||||||||||||||||||||||||||||||||
(in millions, branded product, 9-liter case equivalents) | |||||||||||||||||||||||||||||||||||
Shipment volume | 11.6 | 14.4 | (19.4 | %) | 22.4 | 26.8 | (16.4 | %) | |||||||||||||||||||||||||||
Organic shipment volume (4) | 11.6 | 13.9 | (16.5 | %) | 22.4 | 25.8 | (13.2 | %) | |||||||||||||||||||||||||||
U.S. Domestic shipment volume | 10.7 | 13.5 | (20.7 | %) | 20.6 | 24.8 | (16.9 | %) | |||||||||||||||||||||||||||
U.S. Domestic organic shipment volume (4) | 10.7 | 12.9 | (17.1 | %) | 20.6 | 23.7 | (13.1 | %) | |||||||||||||||||||||||||||
U.S. Domestic Power Brands shipment volume (5) | 5.7 | 6.3 | (9.5 | %) | 10.7 | 10.8 | (0.9 | %) | |||||||||||||||||||||||||||
U.S. Domestic depletion volume (2) (6) | (3.3 | %) | (2.2 | %) | |||||||||||||||||||||||||||||||
U.S. Domestic Power Brands depletion volume (2) (5) | (0.6 | %) | 1.8 | % |
(1) | Includes an adjustment to remove shipment volume associated with the Ballast Point Divestiture for the periods June 1, 2019, through August 31, 2019, and March 2, 2019, through August 31, 2019, for the three months and six months ended August 31, 2019, respectively. | ||||||||||||||||||||||
(2) | Depletions represent distributor shipments of our respective branded products to retail customers, based on third-party data. | ||||||||||||||||||||||
(3) | Includes an adjustment to remove depletion volume associated with the Ballast Point Divestiture for the periods June 1, 2019, through August 31, 2019, and March 2, 2019, through August 31, 2019, for the three months and six months ended August 31, 2019, respectively. | ||||||||||||||||||||||
(4) | Includes an adjustment to remove shipment volume associated with the Black Velvet Divestiture for the periods June 1, 2019, through August 31, 2019, and March 1, 2019, through August 31, 2019, for the three months and six months ended August 31, 2019, respectively. | ||||||||||||||||||||||
(5) | U.S. Domestic Power Brands include the following brands and/or portfolio of brands: | ||||||||||||||||||||||
Wine Brands | Wine Portfolio of Brands | Spirits Brands | |||||||||||||||||||||
● 7 Moons | ● Drylands | ● SIMI | ● Charles Smith | ● Casa Noble | |||||||||||||||||||
● Auros | ● Kim Crawford | ● Spoken Barrel | ● Prisoner | ● High West | |||||||||||||||||||
● Champagne Palmer & Co | ● Meiomi | ● Robert Mondavi | ● Mi CAMPO | ||||||||||||||||||||
● Cooper & Thief | ● Mount Veeder | ● Schrader | ● Nelson’s Green Brier | ||||||||||||||||||||
● Crafters Union | ● Nobilo (7) | ● SVEDKA | |||||||||||||||||||||
● Cuvée Sauvage | ● Ruffino | ● The Real McCoy | |||||||||||||||||||||
(6) | Includes an adjustment to remove depletion volume associated with the Black Velvet Divestiture for the periods June 1, 2019, through August 31, 2019, and March 1, 2019, through August 31, 2019, for the three months and six months ended August 31, 2019, respectively. | ||||||||||||||||||||||
(7) | Brand is expected to be divested by the end of third quarter of fiscal 2021. |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 10 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | Percent Change | August 31, 2020 | August 31, 2019 | Percent Change | ||||||||||||||||||||||||||||||
Beer | |||||||||||||||||||||||||||||||||||
Segment net sales | $ | 1,635.9 | $ | 1,640.4 | — | % | $ | 3,020.0 | $ | 3,117.8 | (3 | %) | |||||||||||||||||||||||
Segment gross profit | $ | 910.5 | $ | 913.3 | — | % | $ | 1,680.2 | $ | 1,732.8 | (3 | %) | |||||||||||||||||||||||
% Net sales | 55.7 | % | 55.7 | % | 55.6 | % | 55.6 | % | |||||||||||||||||||||||||||
Segment operating income (loss) | $ | 695.7 | $ | 685.3 | 2 | % | $ | 1,273.5 | $ | 1,265.9 | 1 | % | |||||||||||||||||||||||
% Net sales | 42.5 | % | 41.8 | % | 42.2 | % | 40.6 | % | |||||||||||||||||||||||||||
Wine and Spirits | |||||||||||||||||||||||||||||||||||
Wine net sales | $ | 544.9 | $ | 611.1 | (11 | %) | $ | 1,044.5 | $ | 1,146.1 | (9 | %) | |||||||||||||||||||||||
Spirits net sales | 79.6 | 92.5 | (14 | %) | 159.3 | 177.3 | (10 | %) | |||||||||||||||||||||||||||
Segment net sales | $ | 624.5 | $ | 703.6 | (11 | %) | $ | 1,203.8 | $ | 1,323.4 | (9 | %) | |||||||||||||||||||||||
Segment gross profit | $ | 276.5 | $ | 292.1 | (5 | %) | $ | 540.4 | $ | 563.8 | (4 | %) | |||||||||||||||||||||||
% Net sales | 44.3 | % | 41.5 | % | 44.9 | % | 42.6 | % | |||||||||||||||||||||||||||
Segment operating income (loss) | $ | 161.5 | $ | 160.4 | 1 | % | $ | 325.5 | $ | 321.2 | 1 | % | |||||||||||||||||||||||
% Net sales | 25.9 | % | 22.8 | % | 27.0 | % | 24.3 | % | |||||||||||||||||||||||||||
Segment income (loss) from unconsolidated investments | $ | (2.4) | $ | (1.0) | NM | $ | 1.1 | $ | 3.0 | (63 | %) | ||||||||||||||||||||||||
Corporate Operations and Other | |||||||||||||||||||||||||||||||||||
Segment operating income (loss) | $ | (59.4) | $ | (53.7) | (11 | %) | $ | (109.9) | $ | (97.4) | (13 | %) | |||||||||||||||||||||||
Segment income (loss) from unconsolidated investments | $ | 0.3 | $ | (0.2) | NM | $ | 0.5 | $ | (1.3) | NM | |||||||||||||||||||||||||
Canopy equity earnings (losses) (1) | $ | (34.1) | $ | (54.7) | 38 | % | $ | (65.8) | $ | (109.1) | 40 | % | |||||||||||||||||||||||
Consolidated operating income (loss) | $ | 838.7 | $ | 719.5 | 17 | % | $ | 1,448.7 | $ | 1,342.2 | 8 | % | |||||||||||||||||||||||
Comparable Adjustments | (40.9) | 72.5 | NM | 40.4 | 147.5 | NM | |||||||||||||||||||||||||||||
Comparable operating income (loss) | $ | 797.8 | $ | 792.0 | 1 | % | $ | 1,489.1 | $ | 1,489.7 | — | % | |||||||||||||||||||||||
Consolidated income (loss) from unconsolidated investments | $ | (80.7) | $ | (1,324.7) | 94 | % | $ | (651.9) | $ | (2,255.3) | 71 | % | |||||||||||||||||||||||
Comparable Adjustments | 44.5 | 1,268.8 | NM | 587.7 | 2,147.9 | NM | |||||||||||||||||||||||||||||
Comparable income (loss) from unconsolidated investments | $ | (36.2) | $ | (55.9) | 35 | % | $ | (64.2) | $ | (107.4) | 40 | % | |||||||||||||||||||||||
Consolidated EBIT | $ | 761.6 | $ | 736.1 | 3 | % | $ | 1,424.9 | $ | 1,382.3 | 3 | % | |||||||||||||||||||||||
(1) | We recognize our equity in earnings (losses) for Canopy on a two-month lag. The summarized financial information below represents 100% of Canopy’s reported results, prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”), and converted from Canadian dollars to U.S. dollars using the applicable weighted average exchange rates. | |||||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | |||||||||||||||||||||||||||||
Net sales | $ | 79.7 | $ | 67.7 | $ | 160.0 | $ | 138.4 | ||||||||||||||||||||||||
Gross profit (loss) | $ | 4.7 | $ | 9.8 | $ | (52.6) | $ | 21.1 | ||||||||||||||||||||||||
% Net sales | 5.9 | % | 14.5 | % | (32.9) | % | 15.2 | % | ||||||||||||||||||||||||
Operating income (loss) | $ | (124.4) | $ | (160.5) | $ | (857.6) | $ | (330.5) | ||||||||||||||||||||||||
% Net sales | NM | NM | NM | NM |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 11 |
Three Months Ended August 31, 2020 | Three Months Ended August 31, 2019 | Percent Change - Reported Basis (GAAP) | Percent Change - Comparable Basis (Non-GAAP) | ||||||||||||||||||||||||||||||||
Reported Basis (GAAP) | Comparable Adjustments | Comparable Basis (Non-GAAP) | Reported Basis (GAAP) | Comparable Adjustments | Comparable Basis (Non-GAAP) | ||||||||||||||||||||||||||||||
Net sales | $ | 2,260.4 | $ | 2,260.4 | $ | 2,344.0 | $ | 2,344.0 | (4 | %) | (4 | %) | |||||||||||||||||||||||
Cost of product sold | (1,044.6) | $ | (28.8) | (1,158.1) | $ | 19.5 | |||||||||||||||||||||||||||||
Gross profit | 1,215.8 | (28.8) | $ | 1,187.0 | 1,185.9 | 19.5 | $ | 1,205.4 | 3 | % | (2 | %) | |||||||||||||||||||||||
Selling, general, and administrative expenses | (399.1) | 9.9 | (439.4) | 26.0 | |||||||||||||||||||||||||||||||
Impairment of assets held for sale | 22.0 | (22.0) | (27.0) | 27.0 | |||||||||||||||||||||||||||||||
Operating income (loss) | 838.7 | (40.9) | $ | 797.8 | 719.5 | 72.5 | $ | 792.0 | 17 | % | 1 | % | |||||||||||||||||||||||
Income (loss) from unconsolidated investments | (80.7) | 44.5 | (1,324.7) | 1,268.8 | |||||||||||||||||||||||||||||||
EBIT | $ | 761.6 | $ | 736.1 | NA | 3 | % | ||||||||||||||||||||||||||||
Interest expense | (100.2) | (111.6) | |||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (0.6) | 0.6 | (2.4) | 2.4 | |||||||||||||||||||||||||||||||
Income (loss) before income taxes | 657.2 | 4.2 | $ | 661.4 | (719.2) | 1,343.7 | $ | 624.5 | 191 | % | 6 | % | |||||||||||||||||||||||
(Provision for) benefit from income taxes (1) | (135.4) | 23.0 | 202.2 | (289.1) | |||||||||||||||||||||||||||||||
Net income (loss) | 521.8 | 27.2 | (517.0) | 1,054.6 | |||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | (9.7) | (8.2) | |||||||||||||||||||||||||||||||||
Net income (loss) attributable to CBI | $ | 512.1 | $ | 27.2 | $ | 539.3 | $ | (525.2) | $ | 1,054.6 | $ | 529.4 | 198 | % | 2 | % | |||||||||||||||||||
EPS (2) | $ | 2.62 | $ | 0.14 | $ | 2.76 | $ | (2.77) | $ | 5.41 | $ | 2.72 | 195 | % | 1 | % | |||||||||||||||||||
Weighted average common shares outstanding – diluted (3) | 195.142 | 195.142 | 168.310 | 26.621 | 194.931 | ||||||||||||||||||||||||||||||
Gross margin | 53.8 | % | 52.5 | % | 50.6 | % | 51.4 | % | |||||||||||||||||||||||||||
Operating margin | 37.1 | % | 35.3 | % | 30.7 | % | 33.8 | % | |||||||||||||||||||||||||||
Effective tax rate | 20.6 | % | 17.0 | % | 28.1 | % | 13.9 | % |
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q | #WORTHREACHINGFOR I 12 |
Three Months Ended August 31, 2020 | Three Months Ended August 31, 2019 | ||||||||||||||||||||||||||||
Comparable Adjustments | Acquisitions, Divestitures, and Related Costs (4) | Restructuring and Other Strategic Business Development Costs (5) | Other (6) | Total | Acquisitions, Divestitures, and Related Costs (4) | Restructuring and Other Strategic Business Development Costs (5) | Other (6) | Total | |||||||||||||||||||||
Cost of product sold | $ | (0.1) | $ | (0.8) | $ | 29.7 | $ | 28.8 | $ | (0.8) | $ | (19.8) | $ | 1.1 | $ | (19.5) | |||||||||||||
Selling, general, and administrative expenses | $ | (6.0) | $ | (5.8) | $ | 1.9 | $ | (9.9) | $ | (3.2) | $ | 0.5 | $ | (23.3) | $ | (26.0) | |||||||||||||
Impairment of assets held for sale | $ | — | $ | 22.0 | $ | — | $ | 22.0 | $ | — | $ | (27.0) | $ | — | $ | (27.0) | |||||||||||||
Operating income (loss) | $ | (6.1) | $ | 15.4 | $ | 31.6 | $ | 40.9 | $ | (4.0) | $ | (46.3) | $ | (22.2) | $ | (72.5) | |||||||||||||
Income (loss) from unconsolidated investments | $ | (0.4) | $ | (3.4) | $ | (40.7) | $ | (44.5) | $ | (9.7) | $ | — | $ | (1,259.1) | $ | (1,268.8) | |||||||||||||
Loss on extinguishment of debt | $ | — | $ | — | $ | (0.6) | $ | (0.6) | $ | — | $ | — | $ | (2.4) | $ | (2.4) | |||||||||||||
(Provision for) benefit from income taxes (1) | $ | 0.5 | $ | (8.7) | $ | (14.8) | $ | (23.0) | $ | 3.3 | $ | 11.1 | $ | 274.7 | $ | 289.1 | |||||||||||||
Net income (loss) attributable to CBI | $ | (6.0) | $ | 3.3 | $ | (24.5) | $ | (27.2) | $ | (10.4) | $ | (35.2) | $ | (1,009.0) | $ | (1,054.6) | |||||||||||||
EPS (2) | $ | (0.03) | $ | 0.02 | $ | (0.13) | $ | (0.14) | $ | (0.05) | $ | (0.18) | $ | (5.18) | $ | (5.41) |
For the Three Months Ended | For the Six Months Ended | ||||||||||
August 31, 2019 | August 31, 2019 | ||||||||||
Class B Convertible Common Stock | 23.316 | 23.317 | |||||||||
Stock-based awards, primarily stock options | 3.305 | 3.368 |
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q | #WORTHREACHINGFOR I 13 |
Six Months Ended August 31, 2020 | Six Months Ended August 31, 2019 | Percent Change - Reported Basis (GAAP) | Percent Change - Comparable Basis (Non-GAAP) | ||||||||||||||||||||||||||||||||
Reported Basis (GAAP) | Comparable Adjustments | Comparable Basis (Non-GAAP) | Reported Basis (GAAP) | Comparable Adjustments | Comparable Basis (Non-GAAP) | ||||||||||||||||||||||||||||||
Net sales | $ | 4,223.8 | $ | 4,223.8 | $ | 4,441.2 | $ | 4,441.2 | (5 | %) | (5 | %) | |||||||||||||||||||||||
Cost of product sold | (2,019.7) | $ | 16.5 | (2,226.6) | $ | 82.0 | |||||||||||||||||||||||||||||
Gross profit | 2,204.1 | 16.5 | $ | 2,220.6 | 2,214.6 | 82.0 | $ | 2,296.6 | — | % | (3 | %) | |||||||||||||||||||||||
Selling, general, and administrative expenses | (752.4) | 20.9 | (845.4) | 38.5 | |||||||||||||||||||||||||||||||
Impairment of assets held for sale | (3.0) | 3.0 | (27.0) | 27.0 | |||||||||||||||||||||||||||||||
Operating income (loss) | 1,448.7 | 40.4 | $ | 1,489.1 | 1,342.2 | 147.5 | $ | 1,489.7 | 8 | % | — | % | |||||||||||||||||||||||
Income (loss) from unconsolidated investments | (651.9) | 587.7 | (2,255.3) | 2,147.9 | |||||||||||||||||||||||||||||||
EBIT | $ | 1,424.9 | $ | 1,382.3 | NA | 3 | % | ||||||||||||||||||||||||||||
Interest expense | (200.2) | (226.2) | |||||||||||||||||||||||||||||||||
Loss on extinguishment of debt | (7.6) | 7.6 | (2.4) | 2.4 | |||||||||||||||||||||||||||||||
Income (loss) before income taxes | 589.0 | 635.7 | $ | 1,224.7 | (1,141.7) | 2,297.8 | $ | 1,156.1 | 152 | % | 6 | % | |||||||||||||||||||||||
(Provision for) benefit from income taxes (1) | (239.8) | 17.1 | 387.6 | (568.0) | |||||||||||||||||||||||||||||||
Net income (loss) | 349.2 | 652.8 | (754.1) | 1,729.8 | |||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | (15.0) | (16.5) | |||||||||||||||||||||||||||||||||
Net income (loss) attributable to CBI | $ | 334.2 | $ | 652.8 | $ | 987.0 | $ | (770.6) | $ | 1,729.8 | $ | 959.2 | 143 | % | 3 | % | |||||||||||||||||||
EPS (2) | $ | 1.71 | $ | 3.35 | $ | 5.06 | $ | (4.08) | $ | 8.88 | $ | 4.92 | 142 | % | 3 | % | |||||||||||||||||||
Weighted average common shares outstanding – diluted (3) | 194.962 | 194.962 | 168.215 | 26.684 | 194.899 | ||||||||||||||||||||||||||||||
Gross margin | 52.2 | % | 52.6 | % | 49.9 | % | 51.7 | % | |||||||||||||||||||||||||||
Operating margin | 34.3 | % | 35.3 | % | 30.2 | % | 33.5 | % | |||||||||||||||||||||||||||
Effective tax rate | 40.7 | % | 18.2 | % | 33.9 | % | 15.6 | % |
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q | #WORTHREACHINGFOR I 14 |
Six Months Ended August 31, 2020 | Six Months Ended August 31, 2019 | ||||||||||||||||||||||||||||
Comparable Adjustments | Acquisitions, Divestitures, and Related Costs (7) | Restructuring and Other Strategic Business Development Costs (8) | Other (9) | Total | Acquisitions, Divestitures, and Related Costs (7) | Restructuring and Other Strategic Business Development Costs (8) | Other (9) | Total | |||||||||||||||||||||
Cost of product sold | $ | (0.1) | $ | (25.1) | $ | 8.7 | $ | (16.5) | $ | (1.2) | $ | (67.8) | $ | (13.0) | $ | (82.0) | |||||||||||||
Selling, general, and administrative expenses | $ | (7.4) | $ | (8.9) | $ | (4.6) | $ | (20.9) | $ | 6.0 | $ | (23.1) | $ | (21.4) | $ | (38.5) | |||||||||||||
Impairment of assets held for sale | $ | — | $ | (3.0) | $ | — | $ | (3.0) | $ | — | $ | (27.0) | $ | — | $ | (27.0) | |||||||||||||
Operating income (loss) | $ | (7.5) | $ | (37.0) | $ | 4.1 | $ | (40.4) | $ | 4.8 | $ | (117.9) | $ | (34.4) | $ | (147.5) | |||||||||||||
Income (loss) from unconsolidated investments | $ | (0.9) | $ | (238.8) | $ | (348.0) | $ | (587.7) | $ | (19.0) | $ | — | $ | (2,128.9) | $ | (2,147.9) | |||||||||||||
Loss on extinguishment of debt | $ | — | $ | — | $ | (7.6) | $ | (7.6) | $ | — | $ | — | $ | (2.4) | $ | (2.4) | |||||||||||||
(Provision for) benefit from income taxes (1) | $ | (23.1) | $ | 13.2 | $ | (7.2) | $ | (17.1) | $ | 57.5 | $ | 28.5 | $ | 482.0 | $ | 568.0 | |||||||||||||
Net income (loss) attributable to CBI | $ | (31.5) | $ | (262.6) | $ | (358.7) | $ | (652.8) | $ | 43.3 | $ | (89.4) | $ | (1,683.7) | $ | (1,729.8) | |||||||||||||
EPS (2) | $ | (0.16) | $ | (1.35) | $ | (1.84) | $ | (3.35) | $ | 0.22 | $ | (0.46) | $ | (8.64) | $ | (8.88) |
Constellation Brands, Inc. Q2 FY 2021 Form 10-Q | #WORTHREACHINGFOR I 15 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | ||||||||||||||||||||
Equity earnings (losses) and related activities- reported basis, Canopy EIE (GAAP) (1) | $ | (31.0) | $ | (484.4) | $ | (408.6) | $ | (590.4) | |||||||||||||||
Comparable Adjustments (2)(3) | (3.1) | 429.7 | 342.8 | 481.3 | |||||||||||||||||||
Equity losses and related activities - comparable basis, Canopy EIE (Non-GAAP) | (34.1) | (54.7) | (65.8) | (109.1) | |||||||||||||||||||
(Provision for) benefit from income taxes (3) | 5.3 | 16.3 | 9.9 | 31.9 | |||||||||||||||||||
Net income (loss) attributable to CBI - comparable basis, Canopy EIE (Non-GAAP) | $ | (28.8) | $ | (38.4) | $ | (55.9) | $ | (77.2) |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | ||||||||||||||||||||
EPS - reported basis, Canopy EIE (GAAP) | $ | (0.13) | $ | (1.93) | $ | (2.06) | $ | (2.35) | |||||||||||||||
Comparable Adjustments - Canopy EIE (Non-GAAP) | (0.02) | 1.68 | 1.72 | 1.89 | |||||||||||||||||||
EPS - comparable basis, Canopy EIE (Non-GAAP) (4) | $ | (0.15) | $ | (0.20) | $ | (0.29) | $ | (0.40) |
Three Months Ended | |||||||||||||||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | ||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | (Provision for) benefit from income taxes (3) | Effective tax rate (6) | Income (loss) before income taxes | (Provision for) benefit from income taxes (3) | Effective tax rate (6) | ||||||||||||||||||||||||||||||
Reported basis (GAAP) | $ | 657.2 | $ | (135.4) | 20.6 | % | (719.2) | 202.2 | 28.1 | % | |||||||||||||||||||||||||
Comparable Adjustments - (Non-GAAP) | 4.2 | 23.0 | 1,343.7 | (289.1) | |||||||||||||||||||||||||||||||
Comparable basis (Non-GAAP) | 661.4 | (112.4) | 17.0 | % | $ | 624.5 | $ | (86.9) | 13.9 | % | |||||||||||||||||||||||||
Comparable basis, Canopy EIE (Non-GAAP) | (34.1) | 5.3 | (54.7) | 16.3 | |||||||||||||||||||||||||||||||
Comparable basis, excluding Canopy EIE (Non-GAAP) | $ | 695.5 | $ | (117.7) | 16.9 | % | $ | 679.2 | $ | (103.2) | 15.2 | % | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | ||||||||||||||||||||
EPS - comparable basis (Non-GAAP) (5) | $ | 2.76 | $ | 2.72 | $ | 5.06 | $ | 4.92 | |||||||||||||||
Comparable basis, Canopy EIE (Non-GAAP) | (0.15) | (0.20) | (0.29) | (0.40) | |||||||||||||||||||
EPS - comparable basis, excluding Canopy EIE (Non-GAAP) (4) | $ | 2.91 | $ | 2.91 | $ | 5.35 | $ | 5.32 |
(1) | Equity earnings (losses) and related activities are included in income (loss) from unconsolidated investments. | |||||||||||||
(2) | Comparable Adjustments, Canopy EIE include: restructuring and other strategic business development costs, unrealized net (gain) loss from the mark to fair value of securities measured at fair value and related activities, flow through of inventory step-up, share-based compensation expense related to acquisition milestones, acquisition costs, loss on dilution due to Canopy’s issuance of additional stock, and other (gains) losses. |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 16 |
(3) | The Comparable Adjustment effective tax rate applied to each Comparable Adjustment amount is generally based upon the jurisdiction in which the adjustment was recognized. The benefit from income taxes effective tax rate applied to our equity in earnings (losses) of Canopy is generally based on the tax rates of the legal entities that hold our investment. | |||||||||||||
(4) | May not sum due to rounding as each item is computed independently. For the three months and six months ended August 31, 2019, the comparable adjustments and comparable basis diluted net income per share are calculated on a fully dilutive basis. | |||||||||||||
(5) | ||||||||||||||
(6) | Effective tax rate is not considered a GAAP financial measure, for purposes of this reconciliation, we derived the reported GAAP measure based on GAAP results, which serves as the basis for the reconciliation to the comparable non-GAAP financial measure. |
Free Cash Flow Free cash flow, as defined in the reconciliation below, is considered a liquidity measure and is considered to provide useful information to investors about the amount of cash generated, which can then be used, after required debt service and dividend payments, for other general corporate purposes. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Free cash flow should be considered in addition to, not as a substitute for, or superior to, cash flow from operating activities prepared in accordance with GAAP. | |||||||||||
Six Months Ended | |||||||||||
August 31, 2020 | August 31, 2019 | ||||||||||
Net cash provided by operating activities (GAAP) | $ | 1,444.9 | $ | 1,419.4 | |||||||
Purchases of property, plant, and equipment | (277.8) | (355.2) | |||||||||
Free cash flow (Non-GAAP) | $ | 1,167.1 | $ | 1,064.2 |
Constellation Brands, Inc. Q2 FY2021 Earnings Release | #WORTHREACHINGFOR I 17 |