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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2023
or
☐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
image_color.jpg
CONSTELLATION BRANDS, INC.
(Exact name of registrant as specified in its charter)
Delaware16-0716709
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
207 High Point Drive, Building 100, Victor, New York 14564
(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 ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Class A Common StockSTZNew 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 182,796,408 shares of Class A Common Stock and 23,661 shares of Class 1 Common Stock outstanding as of December 31, 2023.

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TABLE OF CONTENTS
Page
DEFINED TERMS
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Comprehensive Income (Loss)
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
1. Basis of Presentation
2. Inventories
3. Derivative Instruments
4. Fair Value of Financial Instruments
5. Goodwill
6. Intangible Assets
7. Equity Method Investments
8. Borrowings
9. Income Taxes
10. Stockholders' Equity
11. Net Income (Loss) Per Common Share Attributable to CBI
12. Comprehensive Income (Loss) Attributable to CBI
13. Business Segment Information
14. Subsequent Event
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
SIGNATURES






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 the Company’s control, that 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.
TermMeaning
$U.S. dollars
3.20% February 2018 Senior Notes$600.0 million principal amount of 3.20% senior notes issued in February 2018, partially tendered in May 2022, and fully redeemed in June 2022, prior to maturity
4.25% May 2013 Senior Notes$1,050.0 million principal amount of 4.25% senior notes issued in May 2013, partially tendered in May 2022, and fully redeemed in June 2022, prior to maturity
2021 Authorizationauthority to repurchase up to $2.0 billion of our publicly traded common stock, authorized in January 2021 by our Board of Directors
2022 Credit Agreementtenth amended and restated credit agreement, dated as of April 14, 2022, that provides for an aggregate revolving credit facility of $2.25 billion
2023 Annual Reportour Annual Report on Form 10-K for the fiscal year ended February 28, 2023
2023 Authorization
authority to repurchase up to $2.0 billion of our publicly traded common stock, authorized in November 2023 by our Board of Directors
2023 Canopy Promissory NoteC$100.0 million principal amount of 4.25% promissory note issued to us by Canopy in April 2023
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 eCommercedigital commerce experience for consumers to purchase beverage alcohol from retailers
ABAalternative beverage alcohol
Administrative AgentBank of America, N.A., as administrative agent for the senior credit facility and term loan credit agreements
Amended and Restated By-Lawsour amended and restated by-laws which became effective at the Effective Time
Amended and Restated Charterour amended and restated certificate of incorporation which effectuated the Reclassification at the Effective Time
AOCIaccumulated other comprehensive income (loss)
April 2022 Term Credit Agreement
amended and restated term loan credit agreement, dated as of March 26, 2020, that provided for aggregate facilities of $491.3 million, consisting of a five-year term loan facility, inclusive of amendments dated as of June 10, 2021, and April 14, 2022, now repaid in full
August 2022 Term Credit Agreement
term loan credit agreement, dated as of August 9, 2022, that provided for a $1.0 billion unsecured delayed draw three-year term loan facility, now repaid in full
Austin Cocktailswe made an initial investment in the Austin Cocktails business and subsequently acquired the remaining ownership interest
BioSteel
BioSteel Sports Nutrition Inc., formerly a subsidiary of Canopy
C$Canadian dollars
Canopy
we made an investment in Canopy Growth Corporation, an Ontario, Canada-based public company
Canopy Amendmenta proposed resolution authorizing amending Canopy’s share capital to create Exchangeable Shares and providing for the conversion of Canopy common shares into Exchangeable Shares on a one-for-one basis at any time and at the option of the holder of such shares
Canopy Debt Securitiesdebt securities issued by Canopy in June 2018
Canopy Equity Method Investmentan investment in Canopy common shares
Canopy Strategic Transaction(s)any potential acquisition, divestiture, investment, or other similar transaction made by Canopy, including but not limited to the Canopy Transaction
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    i
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TermMeaning
Canopy Transaction
proposed corporate transaction by Canopy, including the creation of Exchangeable Shares, designed to consolidate its U.S. cannabis assets into Canopy USA
Canopy USA
a U.S. holding company formed by Canopy
CB International
CB International Finance S.à r.l., a wholly-owned subsidiary of ours
Class 1 Stockour Class 1 Convertible Common Stock, par value $0.01 per share
Class A Stockour Class A Common Stock, par value $0.01 per share
Class B Stockour Class B Convertible Common Stock, par value $0.01 per share, eliminated on November 10, 2022, pursuant to the Reclassification
CODMchief operating decision maker
Comparable Adjustmentscertain items affecting comparability that have been excluded by management
Consent Agreementan agreement between Canopy and (i) Greenstar Canada Investment Limited Partnership and (ii) CBG Holdings LLC, our indirect, wholly-owned subsidiaries
CPGconsumer packaged goods
Craft Beer Divestituresthe Four Corners Divestiture and the Funky Buddha Divestiture, collectively
Daleville Facilityproduction facility located in Roanoke, Virginia
DEI
diversity, equity, and inclusion
Depletions
represent U.S. domestic distributor shipments of our respective branded products to retail customers, based on third-party data
Digital Business Accelerationa phased initiative by the Company to create a cohesive digital strategy and build an advanced digital business in the coming years
DTCdirect-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
Effective Timethe time that the Amended and Restated Charter was duly filed with the Secretary of State of the State of Delaware on November 10, 2022
ESGenvironmental, social, and governance
Exchangeable Sharesproposed new class of non-voting and non-participating exchangeable shares in Canopy which will be convertible into common shares of Canopy
Exchange ActSecurities Exchange Act of 1934, as amended
Financial Statements
our consolidated financial statements and notes thereto included herein
Fiscal 2023the Company’s fiscal year ended February 28, 2023
Fiscal 2024the Company’s fiscal year ending February 29, 2024
Fiscal 2025the Company’s fiscal year ending February 28, 2025
Fiscal 2026the Company’s fiscal year ending February 28, 2026
Fiscal 2027the Company’s fiscal year ending February 28, 2027
Fiscal 2028the Company’s fiscal year ending February 29, 2028
Fiscal 2029the Company’s fiscal year ending February 28, 2029
Form 10-Q
this Quarterly Report on Form 10-Q for the quarterly period ended November 30, 2023, unless otherwise specified
Four Corners Divestituresale of the Four Corners Brewing Company LLC business
Funky Buddha Divestituresale of the Funky Buddha Brewery LLC business
GHGgreenhouse gas
IRAInflation Reduction Act of 2022, signed into law in the U.S. on August 16, 2022
ITinformation technology
Lingua FrancaLingua Franca, LLC business, acquired by us
May 2023 Senior Notes$750.0 million aggregate principal amount of senior notes issued in May 2023
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    ii
Table of Contents
TermMeaning
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
Mexico Beer Projectsexpansion, optimization, and/or construction activities at the Obregon Brewery, Nava Brewery, and Veracruz Brewery
M&TManufacturers and Traders Trust Company
NAnot applicable
NavaNava, Coahuila, Mexico
Nava Brewerybrewery located in Nava
Net salesgross sales less promotions, returns and allowances, and excise taxes
Nine Months 2023
the Company’s nine months ended November 30, 2022
Nine Months 2024
the Company’s nine months ended November 30, 2023
NMnot meaningful
Note(s)notes to the consolidated financial statements
November 2018 Canopy Warrants
warrants acquired in November 2018 which gave us the option to purchase common shares of Canopy, now expired
ObregonObregon, Sonora, Mexico
Obregon Brewery
brewery located in Obregon
OCIother comprehensive income (loss)
October 2022 Credit Agreement Amendment
amendment dated as of October 18, 2022, to the 2022 Credit Agreement
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
Reclassification
the reclassification, exchange, and conversion of the Company’s common stock to eliminate the Class B Stock pursuant to the terms and conditions of the Reclassification Agreement
Reclassification Agreement
reclassification agreement in support of the Reclassification, dated June 30, 2022, among the Company and the Sands Family Stockholders
RTDready-to-drink
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
SECSecurities and Exchange Commission
Securities ActSecurities Act of 1933, as amended
SOFR
secured overnight financing rate administered by the Federal Reserve Bank of New York
Third Quarter 2023
the Company’s three months ended November 30, 2022
Third Quarter 2024
the Company’s three months ended November 30, 2023
U.S.United States of America
VeracruzHeroica Veracruz, Veracruz, Mexico
Veracruz Brewerya new brewery being constructed in Veracruz
Wine Divestiture
sale of certain mainstream and premium wine brands and related inventory
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    iii
FINANCIAL STATEMENTS
PART I – FINANCIAL INFORMATION
Item 1.    Financial Statements.
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)
November 30,
2023		February 28,
2023
ASSETS
Current assets:
Cash and cash equivalents$78.7 $133.5 
Accounts receivable897.3 901.6 
Inventories1,988.0 1,898.7 
Prepaid expenses and other587.4 562.3 
Total current assets3,551.4 3,496.1 
Property, plant, and equipment7,713.5 6,865.2 
Goodwill7,978.2 7,925.4 
Intangible assets2,732.2 2,728.1 
Equity method investments233.3 663.3 
Deferred income taxes2,086.1 2,193.3 
Other assets762.7 790.9 
Total assets$25,057.4 $24,662.3 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings$458.9 $1,165.3 
Current maturities of long-term debt957.3 9.5 
Accounts payable1,028.8 941.5 
Other accrued expenses and liabilities934.9 852.0 
Total current liabilities3,379.9 2,968.3 
Long-term debt, less current maturities10,282.3 11,286.5 
Deferred income taxes and other liabilities1,596.8 1,673.6 
Total liabilities15,259.0 15,928.4 
Commitments and contingencies
CBI stockholders’ equity:
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,698,298 shares and 212,697,428 shares, respectively
2.1 2.1 
Additional paid-in capital2,019.2 1,903.0 
Retained earnings13,187.6 12,343.9 
Accumulated other comprehensive income (loss)364.4 28.5 
15,573.3 14,277.5 
Less: Treasury stock –
Class A Stock, at cost, 29,905,366 shares and 29,498,426 shares, respectively
(6,102.3)(5,863.9)
Total CBI stockholders’ equity9,471.0 8,413.6 
Noncontrolling interests327.4 320.3 
Total stockholders’ equity9,798.4 8,733.9 
Total liabilities and stockholders’ equity$25,057.4 $24,662.3 
The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    1
FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in millions, except per share data)
(unaudited)
For the Nine Months
Ended November 30,		For the Three Months
Ended November 30,
2023202220232022
Sales$8,410.7 $8,029.6 $2,658.2 $2,624.6 
Excise taxes(588.1)(574.8)(187.3)(188.1)
Net sales7,822.6 7,454.8 2,470.9 2,436.5 
Cost of product sold(3,844.3)(3,647.0)(1,200.3)(1,209.6)
Gross profit3,978.3 3,807.8 1,270.6 1,226.9 
Selling, general, and administrative expenses(1,438.0)(1,431.6)(473.7)(480.2)
Operating income (loss)2,540.3 2,376.2 796.9 746.7 
Income (loss) from unconsolidated investments(477.4)(1,944.2)(41.8)(37.2)
Interest expense(333.0)(281.5)(104.2)(98.7)
Loss on extinguishment of debt(0.7)(23.3)— — 
Income (loss) before income taxes1,729.2 127.2 650.9 610.8 
(Provision for) benefit from income taxes(368.4)(388.9)(130.0)(131.1)
Net income (loss)1,360.8 (261.7)520.9 479.7 
Net (income) loss attributable to noncontrolling interests(25.8)(32.3)(11.8)(12.0)
Net income (loss) attributable to CBI$1,335.0 $(294.0)$509.1 $467.7 
Comprehensive income (loss)$1,713.0 $(32.8)$447.0 $643.1 
Comprehensive (income) loss attributable to noncontrolling interests(42.1)(49.4)(7.9)(20.9)
Comprehensive income (loss) attributable to CBI$1,670.9 $(82.2)$439.1 $622.2 
Net income (loss) per common share attributable to CBI:
Basic – Class A Stock$7.28 $(1.48)$2.77 $2.58 
Basic – Class B StockNA$(2.01)NA$1.78 
Diluted – Class A Stock$7.25 $(1.48)$2.76 $2.52 
Diluted – Class B StockNA$(2.01)NA$1.78 
Weighted average common shares outstanding:
Basic – Class A Stock183.431 164.573 183.525 166.677 
Basic – Class B StockNA23.206 NA23.206 
Diluted – Class A Stock184.096 164.573 184.170 185.291 
Diluted – Class B StockNA23.206 NA23.206 
Cash dividends declared per common share:
Class A Stock$2.67 $2.40 $0.89 $0.80 
Class B StockNA$2.16 NA$0.72 

The accompanying notes are an integral part of these statements.



Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    2
FINANCIAL STATEMENTS
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, 20232.1 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, 20232.1 1,998.8 12,842.7 434.4 (5,887.2)333.2 9,724.0 
Comprehensive income (loss):
Net income (loss)— — 509.1 — — 11.8 520.9 
Other comprehensive income (loss), net of income tax effect— — — (70.0)— (3.9)(73.9)
Comprehensive income (loss)447.0 
Repurchase of shares— — — — (214.7)— (214.7)
Dividends declared— — (164.2)— — — (164.2)
Noncontrolling interest distributions— — — — — (13.7)(13.7)
Shares issued under equity compensation plans— 3.4 — — (0.4)— 3.0 
Stock-based compensation— 17.0 — — — — 17.0 
Balance at November 30, 2023$2.1 $2,019.2 $13,187.6 $364.4 $(6,102.3)$327.4 $9,798.4 
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    3
FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in millions)
(unaudited)
StockAdditional
Paid-in
Capital		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)		Treasury
Stock		Non-controlling
Interests		Total
Class AClass B
Balance at February 28, 2022$1.9 $0.3 $1,808.9 $14,505.4 $(412.7)$(4,171.9)$315.9 $12,047.8 
Comprehensive income (loss):
Net income (loss)— — — 389.5 — — 9.8 399.3 
Other comprehensive income (loss), net of income tax effect— — — — 246.4 — 12.6 259.0 
Comprehensive income (loss)658.3 
Repurchase of shares— — — — — (1,007.6)— (1,007.6)
Dividends declared— — — (148.7)— — — (148.7)
Noncontrolling interest distributions— — — — — — (11.2)(11.2)
Shares issued under equity compensation plans— — (0.6)— — 3.8 — 3.2 
Stock-based compensation— — 16.7 — — — — 16.7 
Balance at May 31, 20221.9 0.3 1,825.0 14,746.2 (166.3)(5,175.7)327.1 11,558.5 
Comprehensive income (loss):
Net income (loss)— — — (1,151.2)— — 10.5 (1,140.7)
Other comprehensive income (loss), net of income tax effect— — — — (189.1)— (4.4)(193.5)
Comprehensive income (loss)(1,334.2)
Repurchase of shares— — — — — (392.9)— (392.9)
Dividends declared— — — (146.6)— — — (146.6)
Noncontrolling interest distributions— — — — — — (11.3)(11.3)
Shares issued under equity compensation plans— — 14.5 — — 2.0 — 16.5 
Stock-based compensation— — 20.9 — — — — 20.9 
Balance at August 31, 20221.9 0.3 1,860.4 13,448.4 (355.4)(5,566.6)321.9 9,710.9 
Comprehensive income (loss):
Net income (loss)— — — 467.7 — — 12.0 479.7 
Other comprehensive income (loss), net of income tax effect— — — — 154.5 — 8.9 163.4 
Comprehensive income (loss)643.1 
Reclassification payment— — — (1,500.0)— — — (1,500.0)
Retirement of treasury shares— (0.1)— (2.2)— 2.3 — — 
Conversion of common shares0.2 (0.2)— — — — — — 
Dividends declared— — — (146.1)— — — (146.1)
Noncontrolling interest distributions— — — — — — (15.6)(15.6)
Shares issued under equity compensation plans— — 4.9 — — 1.2 — 6.1 
Stock-based compensation— — 18.3 — — — — 18.3 
Balance at November 30, 2022$2.1 $— $1,883.6 $12,267.8 $(200.9)$(5,563.1)$327.2 $8,716.7 

The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    4
FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
For the Nine Months
Ended November 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)$1,360.8 $(261.7)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Unrealized net (gain) loss on securities measured at fair value85.4 39.1 
Deferred tax provision (benefit)28.2 218.4 
Depreciation321.8 278.4 
Stock-based compensation49.5 56.1 
Equity in (earnings) losses of equity method investees and related activities, net of distributed earnings257.3 845.4 
Noncash lease expense62.9 66.7 
Amortization of debt issuance costs and loss on extinguishment of debt8.9 31.1 
Impairment of equity method investments
136.1 1,060.3 
(Gain) loss on sale of business15.1 (13.8)
Gain (loss) on settlement of Pre-issuance hedge contracts1.4 20.7 
Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable6.9 (25.3)
Inventories(90.4)(259.3)
Prepaid expenses and other current assets(49.1)204.7 
Accounts payable24.5 187.4 
Other accrued expenses and liabilities37.1 (247.0)
Other90.4 79.4 
Total adjustments986.0 2,542.3 
Net cash provided by (used in) operating activities2,346.8 2,280.6 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment(911.9)(683.8)
Purchase of business, net of cash acquired(7.5)(37.1)
Investments in equity method investees and securities(34.6)(29.5)
Proceeds from sale of assets21.8 6.6 
Proceeds from sale of business5.4 96.7 
Other investing activities(3.1)0.5 
Net cash provided by (used in) investing activities(929.9)(646.6)
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    5
FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
For the Nine Months
Ended November 30,
20232022
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt744.8 2,845.8 
Principal payments of long-term debt(807.5)(1,657.3)
Net proceeds from (repayments of) short-term borrowings(706.4)552.6 
Dividends paid(491.1)(441.1)
Purchases of treasury stock(249.7)(1,400.5)
Proceeds from shares issued under equity compensation plans89.0 36.7 
Payments of minimum tax withholdings on stock-based payment awards(11.2)(10.5)
Payments of debt issuance, debt extinguishment, and other financing costs(5.3)(34.1)
Distributions to noncontrolling interests(35.0)(37.5)
Payment to holders of Class B Stock in connection with the Reclassification— (1,500.0)
Net cash provided by (used in) financing activities(1,472.4)(1,645.9)
Effect of exchange rate changes on cash and cash equivalents0.7 (2.5)
Net increase (decrease) in cash and cash equivalents(54.8)(14.4)
Cash and cash equivalents, beginning of period133.5 199.4 
Cash and cash equivalents, end of period$78.7 $185.0 
Supplemental disclosures of noncash investing and financing activities
Additions to property, plant, and equipment$178.1 $174.6 

The accompanying notes are an integral part of these statements.
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    6
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
NOVEMBER 30, 2023
(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 2023 Annual Report. Results of operations for interim periods are not necessarily indicative of annual results.

Effective May 31, 2023, we changed our internal management financial reporting to consist of two business divisions: (i) Beer and (ii) Wine and Spirits and we now report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other following the removal of the Canopy operating segment. All financial information for the nine months and three months ended November 30, 2022, has been restated to conform to the new segment presentation. For additional information, refer to Note 13.

2.    INVENTORIES

Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor, and overhead and consist of the following:
November 30,
2023		February 28,
2023
(in millions)
Raw materials and supplies$244.0 $245.5 
In-process inventories1,098.9 967.8 
Finished case goods645.1 685.4 
$1,988.0 $1,898.7 

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 2023 Annual Report and have not changed significantly for the nine months and three months ended November 30, 2023.

The aggregate notional value of outstanding derivative instruments is as follows:
November 30,
2023		February 28,
2023
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts$2,233.3 $1,969.5 
Pre-issuance hedge contracts$125.0 $— 
Derivative instruments not designated as hedging instruments
Foreign currency contracts$578.9 $831.7 
Commodity derivative contracts$383.9 $416.5 
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    7
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of November 30, 2023, the estimated fair value of derivative instruments in a net liability position due to counterparties was $1.5 million. If we were required to settle the net liability position under these derivative instruments on November 30, 2023, 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):
AssetsLiabilities
November 30,
2023		February 28,
2023		November 30,
2023		February 28,
2023
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other$152.6 $109.1 Other accrued expenses and liabilities$4.3 $9.8 
Other assets$166.2 $134.5 Deferred income taxes and other liabilities$0.4 $3.5 
Pre-issuance hedge contracts:
Prepaid expenses and other$— $— Other accrued expenses and liabilities$0.1 $— 
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other$8.1 $5.9 Other accrued expenses and liabilities$5.7 $3.9 
Commodity derivative contracts:
Prepaid expenses and other$6.7 $21.2 Other accrued expenses and liabilities$24.9 $19.5 
Other assets$2.8 $4.6 Deferred income taxes and other liabilities$6.4 $8.3 

Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    8
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as OCI, net of income tax effect, is as follows:
Derivative Instruments in
Designated Cash Flow
Hedging Relationships		Net
Gain (Loss)
Recognized
in OCI		Location of Net Gain (Loss)
Reclassified from
AOCI to Income (Loss)		Net
Gain (Loss)
Reclassified
from AOCI
to Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2023
Foreign currency contracts$177.1 Sales$(0.2)
Cost of product sold102.3 
Pre-issuance hedge contracts0.5 Interest expense(0.4)
$177.6 $101.7 
For the Nine Months Ended November 30, 2022
Foreign currency contracts$146.6 Sales$(1.4)
Cost of product sold34.0 
Pre-issuance hedge contracts15.7 Interest expense(0.8)
$162.3 $31.8 
For the Three Months Ended November 30, 2023
Foreign currency contracts$27.2 Sales$— 
Cost of product sold36.6 
Pre-issuance hedge contracts(0.1)Interest expense(0.1)
$27.1 $36.5 
For the Three Months Ended November 30, 2022
Foreign currency contracts$75.3 Sales$(0.2)
Cost of product sold12.1 
Pre-issuance hedge contracts— Interest expense(0.2)
$75.3 $11.7 

We expect $130.2 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 Nine Months Ended November 30, 2023
Commodity derivative contractsCost of product sold$(28.9)
Foreign currency contractsSelling, general, and administrative expenses12.7 
$(16.2)
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
#WORTHREACHINGFOR    I    9
FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Derivative Instruments Not
Designated as Hedging Instruments		Location of Net Gain (Loss)
Recognized in Income (Loss)		Net
Gain (Loss)
Recognized
in Income (Loss)
(in millions)
For the Nine Months Ended November 30, 2022
Commodity derivative contractsCost of product sold$25.3 
Foreign currency contractsSelling, general, and administrative expenses(11.9)
$13.4 
For the Three Months Ended November 30, 2023
Commodity derivative contractsCost of product sold$(13.3)
Foreign currency contractsSelling, general, and administrative expenses(9.8)
$(23.1)
For the Three Months Ended November 30, 2022
Commodity derivative contractsCost of product sold$(7.8)
Foreign currency contractsSelling, general, and administrative expenses(9.3)
$(17.1)

4.    FAIR VALUE OF FINANCIAL INSTRUMENTS

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

•Level 1 inputs are quoted prices in active markets for identical assets or liabilities;
•Level 2 inputs include data points that are observable such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical assets or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) such as volatility, interest rates, and yield curves that are observable for the asset or liability, either directly or indirectly; and
•Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

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

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

Interest rate swap and Pre-issuance hedge contracts
The fair value is estimated based on quoted market prices from respective counterparties. Quotes are corroborated by using discounted cash flow calculations based upon forward interest-rate yield curves, which are obtained from independent pricing services (Level 2 fair value measurement).

Canopy investment
On November 1, 2023, the initial tranche of the November 2018 Canopy Warrants expired in accordance with its terms. The remaining tranches of the November 2018 Canopy Warrants were conditioned on the exercise, in full, of the expired warrants. As such, there are no longer any outstanding November 2018 Canopy Warrants. In
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 2023, we extended the maturity of the remaining C$100.0 million principal amount of our Canopy Debt Securities by exchanging them for the 2023 Canopy Promissory Note. As such, our investment in Canopy is currently comprised of (i) the Canopy Equity Method Investment and (ii) the 2023 Canopy Promissory Note. The 2023 Canopy Promissory Note is measured at fair value. Effective as of May 31, 2023, we determined that this instrument did not have future economic value given the substantial doubt about Canopy’s ability to continue as a going concern, as disclosed by Canopy, prior to the maturity of the note. Accordingly, the fair value of the remaining balance for this instrument was determined to be zero. This reduction in fair value is included in income (loss) from unconsolidated investments within our consolidated results of operations for the nine months ended November 30, 2023. If the Canopy Amendment is authorized by Canopy’s shareholders, we intend to negotiate an exchange of the 2023 Canopy Promissory Note for Exchangeable Shares, although neither we nor Canopy has any binding obligation to do so.

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

Long-term debt
The fair value of our fixed interest rate long-term debt is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement). As of November 30, 2023, the carrying amount of long-term debt, including the current portion, was $11,239.6 million, compared with an estimated fair value of $10,320.7 million. As of February 28, 2023, the carrying amount of long-term debt, including the current portion, was $11,296.0 million, compared with an estimated fair value of $10,236.0 million.

The carrying amounts of certain of our financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable, approximate fair value as of November 30, 2023, and February 28, 2023, due to the relatively short maturity of these instruments.

Recurring basis measurements
The following table presents our financial assets and liabilities measured at estimated fair value on a recurring basis:
Fair Value Measurements Using
Quoted
Prices in
Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
(in millions)
November 30, 2023
Assets:
Foreign currency contracts$— $326.9 $— $326.9 
Commodity derivative contracts$— $9.5 $— $9.5 
Liabilities:
Foreign currency contracts$— $10.4 $— $10.4 
Commodity derivative contracts$— $31.3 $— $31.3 
Pre-issuance hedge contracts
$— $0.1 $— $0.1 
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fair Value Measurements Using
Quoted
Prices in
Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
(in millions)
February 28, 2023
Assets:
Foreign currency contracts$— $249.5 $— $249.5 
Commodity derivative contracts$— $25.8 $— $25.8 
November 2018 Canopy Warrants$— $0.2 $— $0.2 
Canopy Debt Securities$— $69.6 $— $69.6 
Liabilities:
Foreign currency contracts$— $17.2 $— $17.2 
Commodity derivative contracts$— $27.8 $— $27.8 

Nonrecurring basis measurements
The following table presents our assets and liabilities measured at estimated fair value on a nonrecurring basis for which an impairment assessment was performed for the periods presented:
Fair Value Measurements Using
Quoted
Prices in
Active
Markets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total Losses
(in millions)
For the Nine Months Ended November 30, 2023
Equity method investments
$94.8 $0.6 $0.6 $136.1 
For the Nine Months Ended November 30, 2022
Equity method investments$621.4 $— $— $1,060.3 

Equity method investments
As of November 30, 2023, we evaluated a certain equity method investment, made through our corporate venture capital function within the Corporate Operations and Other segment, and determined there was an other-than-temporary impairment due to business underperformance. 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 carrying value of $14.9 million were written down to an estimated fair value of $2.6 million, resulting in an impairment of $12.3 million. These investments are part of the Corporate Operations and Other segment. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the nine months ended November 30, 2023. The estimated fair value was based largely on observable prices for similar assets. In October 2023, we exited one of these equity method investments in exchange for a note receivable.

We evaluated the Canopy Equity Method Investment as of May 31, 2023, and determined there was an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) the fair value being less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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 carrying value of $266.2 million was written down to its estimated fair value of $142.7 million, resulting in an impairment of $123.5 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the nine months ended November 30, 2023. The estimated fair value was determined based on the closing price of the underlying equity security as of May 31, 2023.

We evaluated the Canopy Equity Method Investment as of August 31, 2022, and determined there was an other-than-temporary impairment based on several contributing factors, including: (i) the period of time for which the fair value had been less than the carrying value and the uncertainty surrounding Canopy’s stock price recovering in the near-term, (ii) Canopy recording a significant impairment of goodwill related to its cannabis operations during its first quarter of fiscal 2023, and (iii) the uncertainty of U.S. federal cannabis permissibility. As a result, the Canopy Equity Method Investment with a carrying value of $1,695.1 million was written down to its estimated fair value of $634.8 million, resulting in an impairment of $1,060.3 million. This loss from impairment was included in income (loss) from unconsolidated investments within our consolidated results for the nine months ended November 30, 2022. The estimated fair value was determined based on the closing price of the underlying equity security as of August 31, 2022.

5.    GOODWILL

The changes in the carrying amount of goodwill are as follows:
BeerWine and SpiritsConsolidated
(in millions)
Balance, February 28, 2022$5,120.7 $2,741.7 $7,862.4 
Purchase accounting allocations (1)
— 26.3 26.3 
Wine Divestiture— (24.5)(24.5)
Foreign currency translation adjustments68.2 (7.0)61.2 
Balance, February 28, 20235,188.9 2,736.5 7,925.4 
Purchase accounting allocations (2)
— 6.5 6.5 
Foreign currency translation adjustments46.3 — 46.3 
Balance, November 30, 2023$5,235.2 $2,743.0 $7,978.2 
(1)Purchase accounting allocations associated with the acquisitions of Austin Cocktails, Lingua Franca, and My Favorite Neighbor, LLC.
(2)Preliminary purchase accounting allocation associated with the June 2023 acquisition of the Domaine Curry wine business.

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

Wine Divestiture
On October 6, 2022, we sold certain of our mainstream and premium wine brands and related inventory. The net cash proceeds from the Wine Divestiture were utilized primarily to reduce outstanding borrowings. Prior to the Wine Divestiture, we recorded the results of operations of these brands in the Wine and Spirits segment.
Constellation Brands, Inc. Q3 FY 2024 Form 10-Q
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FINANCIAL STATEMENTSNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the net gain recognized in connection with this divestiture for the nine months and three months ended November 30, 2022:
(in millions)
Cash received from buyer$96.7 
Net assets sold(68.1)
Direct costs to sell (1)
(14.8)
Gain on sale of business (2)
$13.8 
(1)Includes certain contract termination costs.
(2)Included in selling, general, and administrative expenses within our consolidated results of operations.