STZ 10-Q

Constellation Brands, Inc. (STZ)

10-Q 2026-10-07 For: 2026-08-31

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Added on October 07, 2026

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Delaware			16-0716709
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock	STZ	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


		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. Restructuring	7
	3. Inventories	8


	4. Derivative Instruments	8
	5. Fair Value of Financial Instruments	11
	6. Goodwill	14
	7. Intangible Assets	15



	8. Borrowings	15
	9. Income Taxes	17


	10. Stockholders' Equity	19
	11. Net Income (Loss) Per Common Share Attributable to CBI	20
	12. Comprehensive Income (Loss) Attributable to CBI	21
	13. Business Segment Information	24
	14. Accounting Guidance Not Yet Adopted	27

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		28
Item 3. Quantitative and Qualitative Disclosures About Market Risk		49
Item 4. Controls and Procedures		50

PART II – OTHER INFORMATION
Item 1. Legal Proceedings		51

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		52
Item 5. Other Information		52
Item 6. Exhibits		52

SIGNATURES		56


TERM						MEANING
$						U.S. dollars

10b5-1 Trading Plan						a pre-arranged trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act

2025 Authorization						authorization to repurchase up to $4.0 billion of our publicly traded common stock, approved by our Board of Directors in April 2025

2025 Credit Agreement						eleventh amended and restated credit agreement, dated as of April 28, 2025, that provides for a $2.25 billion aggregate revolving credit facility

2025 Restructuring Initiative						an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of our business, including through enhanced organizational efficiency and optimized expenditures across our organization, with the majority of the work executed within Fiscal 2026 and net annualized cost savings expected to be fully realized by Fiscal 2028

2025 Wine Divestitures						sale and, in certain instances, exclusive license to use the trademarks of a portion of our wine and spirits business, primarily centered around our then-owned mainstream wine brands and associated inventory, wineries, vineyards, offices, and facilities on June 2, 2025

2026 Annual Report						our Annual Report on Form 10-K for the fiscal year ended February 28, 2026

2026 Term Credit Agreement						term loan credit agreement, dated as of September 18, 2026, that provides for a $300.0 million unsecured delayed draw term loan facility

3-tier						U.S. distribution channel where products are sold to a distributor (wholesaler) who then sells to a retailer; the retailer sells the products to a consumer; however, in control states, the state government performs the role of wholesaler and retailer



3.70% December 2016 Senior Notes						$600.0 million principal amount of 3.70% senior notes issued in December 2016, now redeemed in full

4.35% May 2022 Senior Notes						$600.0 million principal amount of 4.35% senior notes issued in May 2022, now redeemed in full

4.85% May 2026 Senior Notes						$500.0 million aggregate principal amount of senior notes issued in May 2026

ABA						alternative beverage alcohol

Administrative Agent						Bank of America, N.A., as administrative agent for our senior credit facility

AOCI						accumulated other comprehensive income (loss)



Brewery Projects						modular capacity addition activities at the Nava Brewery, Obregón Brewery, and Veracruz Brewery

CB International						CB International Finance S.à r.l., a wholly-owned subsidiary of ours

CircanaTM						Industry market research publication used by consumer packaged goods companies

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


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I i


TERM						MEANING
Comparable Adjustments						certain items affecting comparability that have been excluded because management uses this information in monitoring and evaluating the results and underlying business trends of the core operations of the Company and/or in internal goal setting



CSR						corporate social responsibility

Customers						wholesale distributors, retailers (generally outside of 3-tier), state alcohol beverage control agencies which sell to consumers, and DTC purchasers

Depletions						represent U.S. distributor shipments of our respective branded products to retail customers, based on third-party data

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



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 2026						the Company’s fiscal year ended 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

Fiscal 2031						the Company’s fiscal year ending February 28, 2031

Fiscal 2032						the Company’s fiscal year ending February 29, 2032

Form 10-Q						this Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2026, unless otherwise specified

IRA						Inflation Reduction Act of 2022



IT						information technology

mainstream						wine that sells less than $11.00 per bottle at retail and sparkling wine and all other wine that sells less than $13.00 per bottle at retail, as defined by Circana™

MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations under Part I – Item 2. of this Form 10-Q

M&T						Manufacturers and Traders Trust Company

Nava						Nava, Coahuila, Mexico

Nava Brewery						our brewery located in Nava

Net sales						gross sales less promotions, returns and allowances, and excise taxes





New Zealand Wine Divestitures						sale of eight small-scale domestic-market New Zealand mainstream wine brands and associated inventory, equipment, a winery, and vineyards in June 2026

NM						not meaningful

Non-GAAP						financial measures not calculated in accordance with U.S. GAAP, for example, comparable operating income (loss)

Note(s)						notes to the consolidated financial statements


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I ii


TERM						MEANING
OB3 Act						One Big Beautiful Bill Act, signed into U.S. law on July 4, 2025

Obregón						Obregón, Sonora, Mexico

Obregón Brewery						our brewery located in Obregón

OCI						other comprehensive income (loss)

OECD						Organization for Economic Cooperation and Development

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



retailers						on- and off-premise locations that sell products to consumers

RTD						ready-to-drink

SEC						Securities and Exchange Commission

Second Quarter 2026						the Company’s three months ended August 31, 2025

Second Quarter 2027						the Company’s three months ended August 31, 2026

Section 232						tariffs imposed under Section 232 of the Trade Expansion Act of 1962, notably on aluminum and aluminum derivative product imports

Securities Act						Securities Act of 1933, as amended

Six Months 2026						the Company’s six months ended August 31, 2025

Six Months 2027						the Company’s six months ended August 31, 2026





U.S.						United States of America

U.S. GAAP						generally accepted accounting principles in the U.S.

Veracruz						Heroica Veracruz, Veracruz, Mexico

Veracruz Brewery						our new brewery being constructed in Veracruz


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I iii


	August 31, 2026		February 28, 2026
ASSETS
Current assets:
Cash and cash equivalents	$	98.5	$	102.4
Accounts receivable	678.1		658.2
Inventories	1,378.6		1,433.9
Prepaid expenses and other	804.3		711.8

Total current assets	2,959.5		2,906.3
Property, plant, and equipment, net of accumulated depreciation of $3,254.7 and $3,095.1, respectively	8,653.2		8,520.9
Goodwill	5,269.3		5,233.9
Intangible assets	2,531.2		2,533.0


Deferred income taxes	1,339.3		1,370.3

Other assets	1,311.2		1,336.1
Total assets	$	22,063.7	$	21,900.5

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	116.5	$	272.0
Current maturities of long-term debt	1,103.0		603.6
Accounts payable	999.4		960.2
Other accrued expenses and liabilities	744.9		854.0
Total current liabilities	2,963.8		2,689.8
Long-term debt, less current maturities	9,096.2		9,692.9

Deferred income taxes and other liabilities	1,124.3		1,130.9
Total liabilities	13,184.3		13,513.6
Commitments and contingencies
CBI stockholders’ equity:
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,699,732 shares and 212,699,542 shares, respectively	2.1		2.1
Additional paid-in capital	2,185.0		2,185.7
Retained earnings	14,440.1		13,574.4
Accumulated other comprehensive income (loss)	489.5		423.2
Class A Stock in treasury, at cost, 42,893,874 shares and 39,927,096 shares, respectively	(8,529.8)		(8,103.0)
Total CBI stockholders’ equity	8,586.9		8,082.4
Noncontrolling interests	292.5		304.5
Total stockholders’ equity	8,879.4		8,386.9
Total liabilities and stockholders’ equity	$	22,063.7	$	21,900.5


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 1


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2026		2025		2026		2025
NET INCOME (LOSS) ATTRIBUTABLE TO CBI
Sales	$	5,407.1	$	5,331.4	$	2,816.7	$	2,653.9
Excise taxes	(341.4)		(335.4)		(183.7)		(172.9)
Net sales	5,065.7		4,996.0		2,633.0		2,481.0
Cost of product sold	(2,352.1)		(2,419.4)		(1,240.0)		(1,171.0)
Gross profit	2,713.6		2,576.6		1,393.0		1,310.0
Selling, general, and administrative expenses	(995.2)		(936.7)		(538.2)		(436.0)


Asset impairment and related expenses	(68.1)		(52.1)		(49.8)		—

Operating income (loss)	1,650.3		1,587.8		805.0		874.0
Income (loss) from unconsolidated investments	8.3		(7.0)		7.8		(3.5)
Interest expense, net	(169.2)		(186.5)		(83.4)		(87.6)

Income (loss) before income taxes	1,489.4		1,394.3		729.4		782.9
(Provision for) benefit from income taxes	(235.2)		(384.4)		(147.1)		(296.8)
Net income (loss)	1,254.2		1,009.9		582.3		486.1
Net (income) loss attributable to noncontrolling interests	(34.6)		(27.8)		(16.5)		(20.1)
Net income (loss) attributable to CBI	$	1,219.6	$	982.1	$	565.8	$	466.0

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI
Comprehensive income (loss)	$	1,323.9	$	1,603.1	$	740.8	$	715.0
Comprehensive (income) loss attributable to noncontrolling interests	(38.0)		(50.6)		(23.3)		(29.3)
Comprehensive income (loss) attributable to CBI	$	1,285.9	$	1,552.5	$	717.5	$	685.7

CLASS A STOCK
Net income (loss) per common share attributable to CBI – basic	$	7.12	$	5.55	$	3.32	$	2.65
Net income (loss) per common share attributable to CBI – diluted	$	7.11	$	5.55	$	3.32	$	2.65
Weighted average common shares outstanding – basic	171.323		176.804		170.460		175.821
Weighted average common shares outstanding – diluted	171.503		176.957		170.601		175.938
Cash dividends declared per common share	$	2.06	$	2.04	$	1.03	$	1.02


FINANCIAL STATEMENTS			Table of Contents


FINANCIAL STATEMENTS			Table of Contents


FINANCIAL STATEMENTS			Table of Contents


FINANCIAL STATEMENTS			Table of Contents


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 2


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, 2026	$	2.1	$	2,185.7	$	13,574.4	$	423.2	$	(8,103.0)	$	304.5	$	8,386.9

Comprehensive income (loss):
Net income (loss)	—		—		653.8		—		—		18.1		671.9
Other comprehensive income (loss), net of income tax effect	—		—		—		(85.4)		—		(3.4)		(88.8)
Comprehensive income (loss)													583.1
Repurchase of shares	—		—		—		—		(223.8)		—		(223.8)
Dividends declared	—		—		(177.9)		—		—		—		(177.9)
Noncontrolling interest distributions	—		—		—		—		—		(25.0)		(25.0)
Shares issued under equity compensation plans	—		(31.7)		—		—		23.5		—		(8.2)
Stock-based compensation	—		14.7		—		—		—		—		14.7
Balance at May 31, 2026	2.1		2,168.7		14,050.3		337.8		(8,303.3)		294.2		8,549.8
Comprehensive income (loss):
Net income (loss)	—		—		565.8		—		—		16.5		582.3
Other comprehensive income (loss), net of income tax effect	—		—		—		151.7		—		6.8		158.5
Comprehensive income (loss)													740.8
Repurchase of shares	—		—		—		—		(230.9)		—		(230.9)
Dividends declared	—		—		(176.0)		—		—		—		(176.0)
Noncontrolling interest distributions	—		—		—		—		—		(25.0)		(25.0)
Shares issued under equity compensation plans	—		(3.2)		—		—		4.4		—		1.2
Stock-based compensation	—		19.5		—		—		—		—		19.5
Balance at August 31, 2026	$	2.1	$	2,185.0	$	14,440.1	$	489.5	$	(8,529.8)	$	292.5	$	8,879.4


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 3


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 4


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 5


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 6


	Cumulative Costs as of August 31, 2026		Percent of Total Costs
(in millions)


Employee termination	$	62.0	49	%
Consulting services	59.8		47	%
Other	5.6		4	%
	$	127.4	100	%


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 7


	Employee Termination		Consulting Services		Other		Total
(in millions)
Balance at February 28, 2026 (1)	$	18.6	$	29.9	$	4.2	$	52.7
Restructuring costs	—		4.3		0.1		4.4
Cash payments	(13.4)		(30.6)		(3.9)		(47.9)

Balance at August 31, 2026 (1)	$	5.2	$	3.6	$	0.4	$	9.2


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 8


Assets					Liabilities
	August 31, 2026		February 28, 2026			August 31, 2026		February 28, 2026
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	140.9	$	156.7	Other accrued expenses and liabilities	$	0.5	$	0.1
Other assets	$	202.4	$	177.6	Deferred income taxes and other liabilities	$	0.3	$	0.1








Net investment hedge contracts:

Other assets	$	—	$	—	Deferred income taxes and other liabilities	$	4.8	$	6.7
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	1.0	$	0.4	Other accrued expenses and liabilities	$	1.8	$	0.9


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 9


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, 2026
Foreign currency contracts	$	81.0	Sales	$	0.2
			Cost of product sold	72.6

Pre-issuance hedge contracts	1.8		Interest expense, net	(0.2)
	$	82.8		$	72.6
For the Six Months Ended August 31, 2025
Foreign currency contracts	$	202.7	Sales	$	0.6
			Cost of product sold	23.0
			Selling, general, and administrative expenses	0.2
Pre-issuance hedge contracts	(3.4)		Interest expense, net	(0.1)
	$	199.3		$	23.7
For the Three Months Ended August 31, 2026
Foreign currency contracts	$	72.6	Sales	$	0.1
			Cost of product sold	38.4

Pre-issuance hedge contracts	—		Interest expense, net	(0.1)
	$	72.6		$	38.4
For the Three Months Ended August 31, 2025
Foreign currency contracts	$	79.1	Sales	$	0.3
			Cost of product sold	17.8

Pre-issuance hedge contracts	—		Interest expense, net	(0.1)
	$	79.1		$	18.0


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 10


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, 2026
Commodity derivative contracts	Cost of product sold	$	52.7
Foreign currency contracts	Selling, general, and administrative expenses	(7.8)

		$	44.9

For the Six Months Ended August 31, 2025
Commodity derivative contracts	Cost of product sold	$	(4.7)
Foreign currency contracts	Selling, general, and administrative expenses	7.3
		$	2.6
For the Three Months Ended August 31, 2026
Commodity derivative contracts	Cost of product sold	$	3.4
Foreign currency contracts	Selling, general, and administrative expenses	(4.9)

		$	(1.5)
For the Three Months Ended August 31, 2025
Commodity derivative contracts	Cost of product sold	$	13.0
Foreign currency contracts	Selling, general, and administrative expenses	2.3
		$	15.3


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 11


	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, 2026
Assets:
Foreign currency contracts	$	—	$	344.3	$	—	$	344.3
Commodity derivative contracts	$	—	$	60.4	$	—	$	60.4




Liabilities:
Foreign currency contracts	$	—	$	2.6	$	—	$	2.6
Commodity derivative contracts	$	—	$	9.8	$	—	$	9.8
Net investment hedge contracts	$	—	$	4.8	$	—	$	4.8


February 28, 2026
Assets:
Foreign currency contracts	$	—	$	334.7	$	—	$	334.7
Commodity derivative contracts	$	—	$	31.2	$	—	$	31.2



Liabilities:
Foreign currency contracts	$	—	$	1.1	$	—	$	1.1
Commodity derivative contracts	$	—	$	7.4	$	—	$	7.4
Net investment hedge contracts	$	—	$	6.7	$	—	$	6.7


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 12


		Fair Value Measurements Using
	Balance Sheet Classification	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, 2026

Assets held for sale and related net assets	Prepaid expenses and other	$	—	$	5.0	$	—	$	68.1


For the Six Months Ended August 31, 2025
Assets held for sale and related net assets	Assets held for sale	$	—	$	—	$	—	$	52.1

Equity method investments	Other assets	—		—		—		1.5
Total		$	—	$	—	$	—	$	53.6


Constellation Brands, Inc. Q2 FY 2027 Form 10-Q			#WORTHREACHINGFOR I 13