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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 August 31, 2025


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

For the transition period from_____________to_____________

Commission File Number: 001-08495

CONSTELLATION BRANDS, INC.

(Exact name of registrant as specified in its charter)


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

50 East Broad Street, Rochester, New York 14614

(Address of principal executive offices) (Zip code)

(585) 678-7100

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were 175,013,336 shares of Class A Common Stock and 27,167 shares of Class 1 Common Stock outstanding as of September 30, 2025.

Table of Contents

TABLE OF CONTENTS


		Page

DEFINED TERMS		i

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets		1
Consolidated Statements of Comprehensive Income (Loss)		2
Consolidated Statements of Changes in Stockholders’ Equity		3
Consolidated Statements of Cash Flows		5
Notes to Consolidated Financial Statements
	1. Basis of Presentation	7
	2. Acquisitions and Divestitures	7
	3. Restructuring	8
	4. Inventories	9

	5. Prepaid Expenses and Other	9
	6. Derivative Instruments	9
	7. Fair Value of Financial Instruments	12
	8. Goodwill	15
	9. Intangible Assets	16

	10. Other Assets	16

	11. Borrowings	17
	12. Income Taxes	19


	13. Stockholders' Equity	20
	14. Net Income (Loss) Per Common Share Attributable to CBI	22
	15. Comprehensive Income (Loss) Attributable to CBI	22
	16. Business Segment Information	25
	17. Accounting Guidance Not Yet Adopted	29

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		30
Item 3. Quantitative and Qualitative Disclosures About Market Risk		52
Item 4. Controls and Procedures		53

PART II – OTHER INFORMATION
Item 1. Legal Proceedings		54

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		55
Item 5. Other Information		55
Item 6. Exhibits		55

SIGNATURES		59

This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those set forth in, or implied by, such forward-looking statements. For further information regarding such forward-looking statements, risks, and uncertainties, please see “Information Regarding Forward-Looking Statements” under MD&A.

Market positions and industry data discussed in this Form 10-Q are for the 52-weeks ending August 31, 2025.

Table of Contents

DEFINED TERMS

Unless the context otherwise requires, the terms “Company,” “CBI,” “we,” “our,” or “us” refer to Constellation Brands, Inc. and its subsidiaries. We use terms in this Form 10-Q and in our Notes that are specific to us or are abbreviations that may not be commonly known or used.


TERM						MEANING
$						U.S. dollars

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 Annual Report						our Annual Report on Form 10-K for the fiscal year ended February 28, 2025

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 expected to be completed within Fiscal 2026 and net annualized cost savings expected to be fully realized by Fiscal 2028

2025 Term Credit Agreement						term loan credit agreement, dated as of May 9, 2025, that provides for a $500.0 million unsecured delayed draw term loan facility

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

3-tier						distribution channel where products are sold to a distributor (wholesaler) who then sells to a retailer; the retailer sells the products to a consumer

3-tier eCommerce						digital commerce experience for consumers to purchase beverage alcohol from retailers

4.75% December 2015 Senior Notes						$400.0 million principal amount of 4.75% senior notes issued in December 2015, now repaid in full

4.80% May 2025 Senior Notes						$500.0 million aggregate principal amount of senior notes issued in May 2025

5.00% February 2023 Senior Notes						$500.0 million principal amount of 5.00% senior notes issued in February 2023, now repaid in full

ABA						alternative beverage alcohol

Administrative Agent						Bank of America, N.A., as administrative agent for the senior credit facility and the 2025 Term Credit Agreement

AOCI						accumulated other comprehensive income (loss)




Canopy						Canopy Growth Corporation, an Ontario, Canada-based public company in which we have an investment

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

Class 1 Stock						our Class 1 Convertible Common Stock, par value $0.01 per share

Class A Stock						our Class A Common Stock, par value $0.01 per share


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Table of Contents


TERM						MEANING
CODM						chief operating decision maker, our President and Chief Executive Officer

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

CPG						consumer packaged goods

CSR						corporate social responsibility

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



Exchangeable Shares						class of non-voting and non-participating exchangeable shares in Canopy which are convertible into common shares of Canopy on a one-for-one basis

Exchange Act						Securities Exchange Act of 1934, as amended

FASB						Financial Accounting Standards Board

Financial Statements						our consolidated financial statements and notes thereto included herein





Fiscal 2025						the Company’s fiscal year ended February 28, 2025

Fiscal 2026						the Company’s fiscal year ending February 28, 2026

Fiscal 2027						the Company’s fiscal year ending February 28, 2027

Fiscal 2028						the Company’s fiscal year ending February 29, 2028

Fiscal 2029						the Company’s fiscal year ending February 28, 2029

Fiscal 2030						the Company’s fiscal year ending February 28, 2030

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

Form 10-Q						this Quarterly Report on Form 10-Q for the quarterly period ended August 31, 2025, 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

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

Mexicali Brewery						canceled brewery construction project located in Mexicali, Baja California, Mexico, sold the remaining assets classified as held for sale in July 2024

Mexico Beer Projects						expansion, optimization, and/or construction activities at the Obregón Brewery, Nava Brewery, and Veracruz Brewery

M&T						Manufacturers and Traders Trust Company

Nava						Nava, Coahuila, Mexico


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Table of Contents


TERM						MEANING
Nava Brewery						our brewery located in Nava

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



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

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

OECD						Organization for Economic Cooperation and Development

OCI						other comprehensive income (loss)

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


Premium						wine that sells between $11.00 to $24.99 per bottle at retail and sparkling wine that sells between $13.00 to $34.99 per bottle at retail



SEC						Securities and Exchange Commission

Second Quarter 2025						the Company’s three months ended August 31, 2024

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

Securities Act						Securities Act of 1933, as amended

Six Months 2025						the Company’s six months ended August 31, 2024

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

SOFR						secured overnight financing rate administered by the Federal Reserve Bank of New York

SVEDKA Divestiture						sale of the SVEDKA brand and related assets, primarily including inventory and equipment on January 6, 2025



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

Wine and Spirits Divestitures						the 2025 Wine Divestitures and the SVEDKA Divestiture, collectively


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FINANCIAL STATEMENTS			Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
(unaudited)


	August 31, 2025		February 28, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	72.0	$	68.1
Accounts receivable	667.6		736.5
Inventories	1,439.7		1,437.2
Prepaid expenses and other	699.6		561.1
Assets held for sale	—		913.5
Total current assets	2,878.9		3,716.4
Property, plant, and equipment, net of accumulated depreciation of $2,831.0 and $2,547.9, respectively	8,002.2		7,409.8
Goodwill	5,179.3		5,126.8
Intangible assets	2,533.4		2,532.3


Deferred income taxes	1,588.4		1,805.3

Other assets	1,237.2		1,061.7
Total assets	$	21,419.4	$	21,652.3

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term borrowings	$	252.5	$	806.7
Current maturities of long-term debt	504.1		1,402.0
Accounts payable	1,023.2		939.8
Other accrued expenses and liabilities	879.6		886.7
Total current liabilities	2,659.4		4,035.2
Long-term debt, less current maturities	9,788.3		9,289.0

Deferred income taxes and other liabilities	1,185.4		1,193.3
Total liabilities	13,633.1		14,517.5
Commitments and contingencies
CBI stockholders’ equity:
Class A Stock, $0.01 par value – Authorized, 322,000,000 shares; Issued, 212,698,298 shares and 212,698,298 shares, respectively	2.1		2.1
Additional paid-in capital	2,150.5		2,144.6
Retained earnings	13,225.5		12,603.4
Accumulated other comprehensive income (loss)	(92.3)		(662.7)
Class A Stock in treasury, at cost, 37,684,962 shares and 34,505,141 shares, respectively	(7,785.4)		(7,205.4)
Total CBI stockholders’ equity	7,500.4		6,882.0
Noncontrolling interests	285.9		252.8
Total stockholders’ equity	7,786.3		7,134.8
Total liabilities and stockholders’ equity	$	21,419.4	$	21,652.3

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions, except per share data)

(unaudited)


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2025		2024		2025		2024
NET INCOME (LOSS) ATTRIBUTABLE TO CBI
Sales	$	5,331.4	$	5,999.8	$	2,653.9	$	3,139.1
Excise taxes	(335.4)		(419.1)		(172.9)		(220.2)
Net sales	4,996.0		5,580.7		2,481.0		2,918.9
Cost of product sold	(2,419.4)		(2,665.1)		(1,171.0)		(1,407.1)
Gross profit	2,576.6		2,915.6		1,310.0		1,511.8
Selling, general, and administrative expenses	(936.7)		(953.4)		(436.0)		(491.2)
Goodwill impairment	—		(2,250.0)		—		(2,250.0)

Asset impairment and related expenses	(52.1)		—		—		—

Operating income (loss)	1,587.8		(287.8)		874.0		(1,229.4)
Income (loss) from unconsolidated investments	(7.0)		80.8		(3.5)		(1.2)
Interest expense, net	(186.5)		(206.8)		(87.6)		(104.0)

Income (loss) before income taxes	1,394.3		(413.8)		782.9		(1,334.6)
(Provision for) benefit from income taxes	(384.4)		124.2		(296.8)		152.2
Net income (loss)	1,009.9		(289.6)		486.1		(1,182.4)
Net (income) loss attributable to noncontrolling interests	(27.8)		(32.4)		(20.1)		(16.6)
Net income (loss) attributable to CBI	$	982.1	$	(322.0)	$	466.0	$	(1,199.0)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI
Comprehensive income (loss)	$	1,603.1	$	(1,129.7)	$	715.0	$	(2,013.8)
Comprehensive (income) loss attributable to noncontrolling interests	(50.6)		3.9		(29.3)		20.0
Comprehensive income (loss) attributable to CBI	$	1,552.5	$	(1,125.8)	$	685.7	$	(1,993.8)

CLASS A STOCK
Net income (loss) per common share attributable to CBI – basic	$	5.55	$	(1.77)	$	2.65	$	(6.59)
Net income (loss) per common share attributable to CBI – diluted	$	5.55	$	(1.77)	$	2.65	$	(6.59)
Weighted average common shares outstanding – basic	176.804		182.356		175.821		181.947
Weighted average common shares outstanding – diluted	176.957		182.356		175.938		181.947
Cash dividends declared per common share	$	2.04	$	2.02	$	1.02	$	1.01

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF 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, 2025	$	2.1	$	2,144.6	$	12,603.4	$	(662.7)	$	(7,205.4)	$	252.8	$	7,134.8

Comprehensive income (loss):
Net income (loss)	—		—		516.1		—		—		7.7		523.8
Other comprehensive income (loss), net of income tax effect	—		—		—		350.7		—		13.6		364.3
Comprehensive income (loss)													888.1
Repurchase of shares	—		—		—		—		(306.1)		—		(306.1)
Dividends declared	—		—		(180.6)		—		—		—		(180.6)
Noncontrolling interest distributions	—		—		—		—		—		(7.5)		(7.5)
Shares issued under equity compensation plans	—		(24.3)		—		—		17.4		—		(6.9)
Stock-based compensation	—		10.3		—		—		—		—		10.3
Balance at May 31, 2025	2.1		2,130.6		12,938.9		(312.0)		(7,494.1)		266.6		7,532.1
Comprehensive income (loss):
Net income (loss)	—		—		466.0		—		—		20.1		486.1
Other comprehensive income (loss), net of income tax effect	—		—		—		219.7		—		9.2		228.9
Comprehensive income (loss)													715.0
Repurchase of shares	—		—		—		—		(297.9)		—		(297.9)
Dividends declared	—		—		(179.4)		—		—		—		(179.4)
Noncontrolling interest distributions	—		—		—		—		—		(10.0)		(10.0)
Shares issued under equity compensation plans	—		(1.8)		—		—		6.6		—		4.8
Stock-based compensation	—		21.7		—		—		—		—		21.7
Balance at August 31, 2025	$	2.1	$	2,150.5	$	13,225.5	$	(92.3)	$	(7,785.4)	$	285.9	$	7,786.3


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FINANCIAL STATEMENTS			Table of Contents


CONSTELLATION BRANDS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in millions) (unaudited)
	Class A Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Non-controlling Interests		Total
Balance at February 29, 2024	$	2.1	$	2,047.3	$	13,417.2	$	376.8	$	(6,100.3)	$	321.5	$	10,064.6

Comprehensive income (loss):
Net income (loss)	—		—		877.0		—		—		15.8		892.8
Other comprehensive income (loss), net of income tax effect	—		—		—		(9.0)		—		0.3		(8.7)
Comprehensive income (loss)													884.1
Repurchase of shares	—		—		—		—		(200.0)		—		(200.0)
Dividends declared	—		—		(184.7)		—		—		—		(184.7)
Noncontrolling interest distributions	—		—		—		—		—		(17.5)		(17.5)
Shares issued under equity compensation plans	—		5.7		—		—		2.4		—		8.1
Stock-based compensation	—		17.3		—		—		—		—		17.3
Balance at May 31, 2024	2.1		2,070.3		14,109.5		367.8		(6,297.9)		320.1		10,571.9
Comprehensive income (loss):
Net income (loss)	—		—		(1,199.0)		—		—		16.6		(1,182.4)
Other comprehensive income (loss), net of income tax effect	—		—		—		(794.8)		—		(36.6)		(831.4)
Comprehensive income (loss)													(2,013.8)
Repurchase of shares	—		—		—		—		(249.2)		—		(249.2)
Dividends declared	—		—		(183.3)		—		—		—		(183.3)
Noncontrolling interest distributions	—		—		—		—		—		(15.0)		(15.0)
Shares issued under equity compensation plans	—		21.2		—		—		0.4		—		21.6
Stock-based compensation	—		23.7		—		—		—		—		23.7
Balance at August 31, 2024	$	2.1	$	2,115.2	$	12,727.2	$	(427.0)	$	(6,546.7)	$	285.1	$	8,155.9

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Six Months Ended August 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	1,009.9	$	(289.6)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Deferred tax provision (benefit)	277.6		(178.5)
Depreciation	207.9		220.8
Stock-based compensation	32.1		41.0

Noncash lease expense	62.6		57.7






Asset impairment and related expenses	52.1		—




Net gain in connection with Exchangeable Shares	—		(83.3)
Goodwill impairment	—		2,250.0
Change in operating assets and liabilities, net of effects from purchase and sale of business:
Accounts receivable	72.2		(40.6)
Inventories	(48.3)		14.7
Prepaid expenses and other current assets	(56.8)		(77.7)
Accounts payable	53.0		134.5
Contract liabilities	(50.4)		9.7
Other accrued expenses and liabilities	(57.0)		(55.4)
Other	(65.6)		(131.0)
Total adjustments	479.4		2,161.9
Net cash provided by (used in) operating activities	1,489.3		1,872.3

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant, and equipment	(410.1)		(703.1)
Purchase of business, net of cash acquired	—		(158.3)
Investments in equity method investees and securities	(7.0)		(19.0)
Proceeds from sale of assets	30.8		32.8

Proceeds from sale of business	851.1		—
Other investing activities	—		(10.0)
Net cash provided by (used in) investing activities	464.8		(857.6)


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FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


	For the Six Months Ended August 31,
	2025		2024
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt	499.1		—
Principal payments of long-term debt	(902.1)		(554.3)
Net proceeds from (repayments of) short-term borrowings	(554.2)		266.7
Dividends paid	(361.1)		(368.6)
Purchases of treasury stock	(604.0)		(449.2)
Proceeds from shares issued under equity compensation plans	3.1		48.4
Payments of minimum tax withholdings on stock-based payment awards	(9.5)		(13.8)
Payments of debt issuance, debt extinguishment, and other financing costs	(5.4)		—
Distributions to noncontrolling interests	(17.5)		(32.5)
Payment of contingent consideration	(1.5)		(0.7)





Net cash provided by (used in) financing activities	(1,953.1)		(1,104.0)

Effect of exchange rate changes on cash and cash equivalents	2.9		1.5

Net increase (decrease) in cash and cash equivalents	3.9		(87.8)
Cash and cash equivalents, beginning of period	68.1		152.4
Cash and cash equivalents, end of period	$	72.0	$	64.6

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES












Additions to property, plant, and equipment	$	62.5	$	114.7

The accompanying notes are an integral part of these statements.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

CONSTELLATION BRANDS, INC. AND SUBSIDIARIES

AUGUST 31, 2025

(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 2025 Annual Report. Results of operations for interim periods are not necessarily indicative of annual results.

2. ACQUISITIONS AND DIVESTITURES

ACQUISITION

Sea Smoke

In June 2024, we acquired the Sea Smoke business, including a California-based luxury wine brand, vineyards, and a production facility for $158.7 million, net of closing and post-closing adjustments. This transaction also included the acquisition of goodwill, inventory, and a trademark. The results of operations of Sea Smoke are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

DIVESTITURES

2025 Wine Divestitures

On June 2, 2025, we sold and, in certain instances, exclusively licensed 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. The net cash proceeds from the 2025 Wine Divestitures were used for repayment of debt (see Note 11). Prior to the completion of the 2025 Wine Divestitures, we recorded the results of operations of the divested and exclusively licensed brands in the Wine and Spirits segment. The following table summarizes the net loss recognized in connection with this transaction:


(in millions)
Cash received from buyer	$	846.5
Net assets sold	(859.7)
Direct costs to sell	(2.5)
Loss on sale of business (1)	$	(15.7)

(1)Included in selling, general, and administrative expenses within our consolidated results of operations.

SVEDKA Divestiture

On January 6, 2025, we sold the SVEDKA brand and related assets, primarily including inventory and equipment. The net cash proceeds from the SVEDKA Divestiture were used for general corporate purposes, including funding share repurchases, capital expenditures, and repayment of debt. Prior to the SVEDKA Divestiture, we recorded the results of operations of the SVEDKA brand in the Wine and Spirits segment.

Mexicali Brewery sale

In July 2024, we sold the remaining assets classified as held for sale at the canceled Mexicali Brewery.


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Assets held for sale

Certain wine and spirits net assets met the held for sale criteria largely in connection with the 2025 Wine Divestitures. The carrying values of these assets held for sale consisted of the following:


	February 28, 2025
(in millions)
ASSETS
Inventories	$	788.7
Prepaid expenses and other	0.5


Property, plant, and equipment	474.4

Intangible assets	127.9

Less: Asset impairment	(478.0)
Assets held for sale	913.5

LIABILITIES
Other accrued expenses and liabilities (1)	33.7


Net assets held for sale	$	879.8

(1)Liabilities held for sale are included in the consolidated balance sheets within other accrued expenses and liabilities.

3. RESTRUCTURING

The 2025 Restructuring Initiative is 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. The majority of the work associated with the 2025 Restructuring Initiative is expected to be completed within the year ending February 28, 2026, and is estimated to result in $80 million to $100 million of cumulative pre-tax costs once all phases are fully implemented. This range is estimated to be comprised of (i) employee termination costs (60%) and (ii) consulting services as well as other costs, which primarily include contract termination costs (40%).

We recognized pre-tax restructuring costs in connection with the 2025 Restructuring Initiative as follows:


	Results of Operations Location	For the Six Months Ended August 31, 2025		For the Three Months Ended August 31, 2025
(in millions)



Consulting services	Selling, general, and administrative expenses	$	21.5	$	8.2
Other costs	Selling, general, and administrative expenses	0.1		0.1
		$	21.6	$	8.3

Since the inception of the 2025 Restructuring Initiative, we have incurred the following pre-tax restructuring costs:


	Cumulative Costs as of August 31, 2025		Percent of Total Costs
(in millions)


Employee termination	$	46.9	66	%
Consulting services	24.3		34	%
Other costs	0.1		0	%
	$	71.3	100	%


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The activity for the restructuring costs discussed above and the related accruals are as follows:


	Employee Termination		Consulting Services		Other		Total
(in millions)
Balance at February 28, 2025	$	46.9	$	2.8	$	—	$	49.7
Restructuring costs	—		21.5		0.1		21.6
Cash payments	(28.8)		(13.7)		—		(42.5)

Balance at August 31, 2025 (1)	$	18.1	$	10.6	$	0.1	$	28.8

(1)The total accrual was recorded in accrued restructuring within other accrued expenses and liabilities in our consolidated balance sheets.

4. INVENTORIES

Inventories are stated at the lower of cost (primarily computed in accordance with the first-in, first-out method) or net realizable value. Elements of cost include materials, labor, and overhead and consist of the following:


	August 31, 2025		February 28, 2025
(in millions)
Raw materials and supplies	$	216.2	$	230.2
In-process inventories	499.4		540.9
Finished case goods	724.1		666.1
	$	1,439.7	$	1,437.2

5. PREPAID EXPENSES AND OTHER

The major components of prepaid expenses and other are as follows:


	August 31, 2025		February 28, 2025
(in millions)
Value added taxes receivable	$	278.4	$	241.3

Prepaid excise and sales taxes	157.1		150.4
Derivative assets	131.1		67.2

Prepaid advertising	30.5		16.6
Prepaid insurance	22.0		9.7
Other	80.5		75.9
	$	699.6	$	561.1

6. 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 2025 Annual Report and have not changed significantly for the six months and three months ended August 31, 2025.


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


	August 31, 2025		February 28, 2025
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts	$	2,776.6	$	2,843.6


Pre-issuance hedge contracts	$	—	$	275.0
Net investment hedge contracts	$	145.5	$	—
Derivative instruments not designated as hedging instruments
Foreign currency contracts	$	487.2	$	378.2
Commodity derivative contracts	$	327.1	$	322.1

Net investment hedge contracts

In April 2025, we entered into cross-currency swaps to hedge portions of our net investment in certain of our non-U.S. operations against fluctuations in foreign currency exchange rates. These cross-currency swaps are designated as net investment hedges and mature between April 2028 and April 2029. The changes in the fair value of these swaps are recognized as a component of other comprehensive income (loss) and reported in accumulated other comprehensive income (loss) in our consolidated balance sheets. The gain or loss will be subsequently reclassified into net earnings when the hedged net investment is either sold, liquidated, or substantially liquidated. We assess the effectiveness of our cross-currency swaps using the spot method. Under this method, the periodic interest settlements are recorded directly in earnings through interest expense, net. Accordingly, we recorded interest income of $0.8 million and $0.5 million during the six months and three months ended August 31, 2025, respectively.

Credit risk

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

In addition, our derivative instruments are not subject to credit rating contingencies or collateral requirements. As of August 31, 2025, the estimated fair value of derivative instruments in a net liability position due to counterparties was $0.6 million. If we were required to settle the net liability position under these derivative instruments on August 31, 2025, 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 7):


Assets					Liabilities
	August 31, 2025		February 28, 2025			August 31, 2025		February 28, 2025
(in millions)
Derivative instruments designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	125.8	$	56.2	Other accrued expenses and liabilities	$	17.6	$	36.9
Other assets	$	109.8	$	39.3	Deferred income taxes and other liabilities	$	0.9	$	38.6


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Assets					Liabilities
	August 31, 2025		February 28, 2025			August 31, 2025		February 28, 2025
(in millions)
Pre-issuance hedge contracts:
Prepaid expenses and other	$	—	$	2.2	Other accrued expenses and liabilities	$	—	$	—



Net investment hedge contracts:

Other assets	$	—	$	—	Deferred income taxes and other liabilities	$	5.6	$	—
Derivative instruments not designated as hedging instruments
Foreign currency contracts:
Prepaid expenses and other	$	0.5	$	1.5	Other accrued expenses and liabilities	$	1.0	$	0.9
Commodity derivative contracts:
Prepaid expenses and other	$	4.8	$	7.3	Other accrued expenses and liabilities	$	7.8	$	8.8
Other assets	$	3.8	$	2.3	Deferred income taxes and other liabilities	$	2.0	$	4.0

The principal effect of our derivative instruments designated in cash flow hedging relationships on our results of operations, as well as OCI, net of income tax effect, is as follows:


Derivative Instruments in Designated Cash Flow Hedging Relationships	Net Gain (Loss) Recognized in OCI		Location of Net Gain (Loss) Reclassified from AOCI to Income (Loss)	Net Gain (Loss) Reclassified from AOCI to Income (Loss)
(in millions)
For the Six Months Ended August 31, 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 Six Months Ended August 31, 2024
Foreign currency contracts	$	(147.2)	Sales	$	0.3
			Cost of product sold	70.6


	$	(147.2)		$	70.9
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


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Derivative Instruments in Designated Cash Flow Hedging Relationships	Net Gain (Loss) Recognized in OCI		Location of Net Gain (Loss) Reclassified from AOCI to Income (Loss)	Net Gain (Loss) Reclassified from AOCI to Income (Loss)
(in millions)
For the Three Months Ended August 31, 2024
Foreign currency contracts	$	(173.3)	Sales	$	0.2
			Cost of product sold	31.5


	$	(173.3)		$	31.7

We expect $66.4 million of net gains, net of income tax effect, to be reclassified from AOCI to our results of operations within the next 12 months.

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


Derivative Instruments Not Designated as Hedging Instruments	Location of Net Gain (Loss) Recognized in Income (Loss)	Net Gain (Loss) Recognized in Income (Loss)
(in millions)
For the Six Months Ended August 31, 2025
Commodity derivative contracts	Cost of product sold	$	(4.7)
Foreign currency contracts	Selling, general, and administrative expenses	7.3
Interest rate swap contracts	Interest expense, net	(0.2)
		$	2.4

For the Six Months Ended August 31, 2024
Commodity derivative contracts	Cost of product sold	$	(9.7)
Foreign currency contracts	Selling, general, and administrative expenses	(26.7)

		$	(36.4)

For the 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
Interest rate swap contracts	Interest expense, net	(0.2)
		$	15.1
For the Three Months Ended August 31, 2024
Commodity derivative contracts	Cost of product sold	$	(24.3)
Foreign currency contracts	Selling, general, and administrative expenses	(30.7)

		$	(55.0)

7. 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,


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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:

Derivative instruments

Our derivative instruments consist of foreign currency forward and option contracts, commodity swap contracts, cross-currency swap contracts, interest rate swap contracts, 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).

Short-term borrowings

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

Long-term debt

The fair value of our fixed interest rate long-term debt is estimated by discounting cash flows using interest rates currently available for debt with similar terms and maturities (Level 2 fair value measurement). As of August 31, 2025, the carrying amount of long-term debt, including the current portion, was $10,292.4 million, compared with an estimated fair value of $9,677.9 million. As of February 28, 2025, the carrying amount of long-term debt, including the current portion, was $10,691.0 million, compared with an estimated fair value of $9,999.0 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 August 31, 2025, and February 28, 2025, 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)
August 31, 2025
Assets:
Foreign currency contracts	$	—	$	236.1	$	—	$	236.1
Commodity derivative contracts	$	—	$	8.6	$	—	$	8.6




Liabilities:
Foreign currency contracts	$	—	$	19.5	$	—	$	19.5
Commodity derivative contracts	$	—	$	9.8	$	—	$	9.8
Net investment hedge contracts	$	—	$	5.6	$	—	$	5.6


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	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, 2025
Assets:
Foreign currency contracts	$	—	$	97.0	$	—	$	97.0
Commodity derivative contracts	$	—	$	9.6	$	—	$	9.6
Pre-issuance hedge contracts	$	—	$	2.2	$	—	$	2.2


Liabilities:
Foreign currency contracts	$	—	$	76.4	$	—	$	76.4
Commodity derivative contracts	$	—	$	12.8	$	—	$	12.8

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 period presented:


		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, 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
For the Six Months Ended August 31, 2024
Goodwill	Goodwill	$	—	$	—	$	564.8	$	2,250.0
Equity method investments	Other assets	—		—		—		2.1
Total		$	—	$	—	$	564.8	$	2,252.1

Assets held for sale and related net assets

For the three months ended May 31, 2025, largely in connection with the 2025 Wine Divestitures, then-existing assets held for sale and related net assets were adjusted to their current estimated fair value of $897.7 million, less costs to sell, resulting in a $52.1 million net loss. This net loss was included in asset impairment and related expenses within our consolidated results for the six months ended August 31, 2025. Our estimated fair value of the then-existing assets held for sale was largely based on the expected proceeds from the 2025 Wine Divestitures as of May 31, 2025.

Goodwill

As of August 31, 2024, in connection with negative trends within our Wine and Spirits business primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our then-owned mainstream and premium wine brands, management updated its Fiscal 2025 outlook for this reporting unit. The updated forecast indicated it was more likely than not the fair value of the Wine and Spirits reporting unit might be below its carrying value. Accordingly, we performed an interim quantitative assessment for goodwill impairment. This assessment indicated that the carrying value of the Wine and Spirits reporting unit exceeded its estimated fair value, resulting in a


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$2,250.0 million goodwill impairment. This loss from impairment was included in goodwill impairment within our consolidated results for the six months and three months ended August 31, 2024. See Notes 8 and 12 for further discussion.

When performing a quantitative assessment for impairment of goodwill, we measure the amount of impairment by calculating the amount by which the carrying value of the reporting unit exceeds its estimated fair value. The estimated fair value is determined based on the discounted cash flow calculation. The most significant assumptions used in the discounted cash flow calculation were: (i) a 9% discount rate, (ii) a 1.5% expected long-term growth rate, and (iii) the annual cash flow projections.

Equity method investments

As of August 31, 2025, and August 31, 2024, we evaluated certain equity method investments, made through our corporate venture capital function within the Corporate Operations and Other segment, and determined there were other-than-temporary impairments due to business underperformance. These losses from impairment were included in income (loss) from unconsolidated investments within our consolidated results for the respective periods. The estimated fair values were based largely on the cash flows expected to be generated by the investment using unobservable data points.

8. GOODWILL

The changes in the carrying amount of goodwill are as follows:


	Beer		Wine and Spirits		Consolidated
(in millions)
Balance at February 29, 2024	$	5,238.2	$	2,742.1	$	7,980.3
Purchase accounting allocations (1)	—		71.2		71.2
Foreign currency translation adjustments	(111.4)		0.6		(110.8)
Goodwill impairment (2)	—		(2,740.7)		(2,740.7)
SVEDKA Divestiture (3)	—		(73.2)		(73.2)

Balance at February 28, 2025	5,126.8		—		5,126.8


Foreign currency translation adjustments	52.5		—		52.5



Balance at August 31, 2025	$	5,179.3	$	—	$	5,179.3

(1)Purchase accounting allocations associated with the Sea Smoke acquisition.

(2)In connection with continued negative trends within our Wine and Spirits business primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our then-owned mainstream and premium wine brands, management updated its Fiscal 2025 outlook and financial projections for this reporting unit. Based on the aforementioned factors, we performed quantitative assessments that led to goodwill impairments which resulted in the carrying value being written down to zero.

(3)Amount was based on the relative fair value of the portion of the business sold and the remaining wine and spirits portfolio. The relative fair values were determined using the transaction price and the income approach based on assumptions, including projected revenue growth, terminal growth, and discount rates and other projected financial information.


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9. INTANGIBLE ASSETS

The major components of intangible assets are as follows:


	August 31, 2025				February 28, 2025
	Gross Carrying Amount		Net Carrying Amount		Gross Carrying Amount		Net Carrying Amount
(in millions)
Amortizable intangible assets
Customer relationships	$	85.3	$	14.2	$	85.3	$	14.9
Other	20.8		0.3		20.7		0.3
Total	$	106.1	14.5		$	106.0	15.2
Nonamortizable intangible assets
Trademarks			2,518.9				2,517.1
Total intangible assets			$	2,533.4			$	2,532.3

We did not incur costs to renew or extend the term of acquired intangible assets for the six months and three months ended August 31, 2025, and August 31, 2024. Net carrying amount represents the gross carrying value net of accumulated amortization.

10. OTHER ASSETS

The major components of other assets are as follows:


	August 31, 2025		February 28, 2025
(in millions)

Operating lease right-of-use asset	$	606.3	$	545.7
Income taxes receivable	153.3		135.5
Equity method investments	124.8		124.5

Derivative assets	113.6		41.6
Other investments in debt and equity securities	62.5		60.3
Exchangeable Shares	21.2		21.2
Other	155.5		132.9
	$	1,237.2	$	1,061.7

Equity method investments

We acquired several investments which are being accounted for under the equity method, largely in connection with prior Wine and Spirits segment acquisitions. The primary investment consists of Opus One Winery, a 50% owned joint venture arrangement.

Other investments in debt and equity securities

We have multiple investments through our corporate venture capital function in debt and equity securities. As of August 31, 2025, and February 28, 2025, we evaluated certain investments, primarily driven by business underperformance and solvency concerns, and concluded they should be written down to zero.

Exchangeable Shares

Following the April 2024 conversion of our Canopy common shares and exchange a portion of the principal amount of a promissory note issued to us by Canopy, we (i) have 26.3 million Exchangeable Shares and (ii) recognized an


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$83.3 million net gain in income (loss) from unconsolidated investments within our consolidated results for the six months ended August 31, 2024. The fair value of Exchangeable Shares on the date of the conversion and exchange was estimated using a valuation model based primarily on the following inputs: (i) Canopy’s common share price, (ii) the expected volatility of Canopy’s common shares, and (iii) the probability and timing of U.S. federal legalization of recreational cannabis. As the Exchangeable Shares are an equity security without a readily determinable fair value, we elected to account for the Exchangeable Shares under the measurement alternative method. As of February 28, 2025, we evaluated the Exchangeable Shares for impairment primarily due to the continued decline in Canopy’s common share price. We concluded that an impairment did exist, and accordingly, the Exchangeable Shares were written down to their estimated fair value of $21.2 million. The estimated fair value was determined using the same valuation model as of the date of conversion and exchange as noted above. Future impairments, if any, will also be reported in income (loss) from unconsolidated investments within our consolidated results.

11. BORROWINGS

Borrowings consist of the following:


	August 31, 2025						February 28, 2025
	Current		Long-term		Total		Total
(in millions)
Short-term borrowings

Commercial paper	$	252.5					$	806.7

	$	252.5					$	806.7

Long-term debt


Senior notes	$	499.8	$	9,785.3	$	10,285.1	$	10,682.3
Other	4.3		3.0		7.3		8.7
	$	504.1	$	9,788.3	$	10,292.4	$	10,691.0

BANK FACILITIES

2025 Credit Agreement

In April 2025, the Company, CB International, the Administrative Agent, and certain other lenders entered into the 2025 Restatement Agreement that amended and restated our then-existing credit facility (as amended and restated by the 2025 Restatement Agreement, the 2025 Credit Agreement). The principal changes effected by the 2025 Restatement Agreement were (i) refinancing the existing $2.25 billion revolving credit facility, (ii) extending its maturity to April 28, 2030, and (iii) refining certain negative covenants.

2025 Term Credit Agreement

In May 2025, the Company, the Administrative Agent, and certain other lenders entered into the 2025 Term Credit Agreement. The 2025 Term Credit Agreement provides for a six-month delayed draw $500.0 million term loan facility, available in up to two draws. The balance is due and payable two years after the initial funding date, if any, occurs. The proceeds, if drawn, from the 2025 Term Credit Agreement are intended to be used for general corporate purposes, including the repayment of debt.


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Information with respect to borrowings under our bank facilities is as follows:


	Outstanding borrowings		Interest rate		SOFR margin		Outstanding letters of credit		Remaining borrowing capacity
(in millions)
August 31, 2025
Revolving credit facility (1) (2) (3)	$	—	—	%	—	%	$	11.3	$	1,986.0


February 28, 2025
Revolving credit facility (2) (3) (4)	$	—	—	%	—	%	$	11.3	$	1,430.7

(1)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under the 2025 Credit Agreement, and outstanding borrowings under our commercial paper program of $252.7 million (excluding unamortized discount) (see “Commercial paper program” below).

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

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

(4)Net of outstanding revolving credit facility borrowings and outstanding letters of credit under our then-existing senior credit facility, and outstanding borrowings under our commercial paper program of $808.0 million (excluding unamortized discount) (see “Commercial paper program” below).

We and our subsidiaries are subject to covenants that are contained in the 2025 Credit Agreement and the 2025 Term Credit Agreement, including those restricting the incurrence of additional subsidiary indebtedness, additional liens, mergers and consolidations, transactions with affiliates, and sale and leaseback transactions, in each case subject to numerous conditions, exceptions, and thresholds. The financial covenants are limited to a minimum interest coverage ratio and a maximum net leverage ratio.

Commercial paper program

We have a commercial paper program which provides for the issuance of up to an aggregate principal amount of $2.25 billion of commercial paper. Our commercial paper program is backed by unused commitments under our revolving credit facility under our 2025 Credit Agreement. Accordingly, outstanding borrowings under our commercial paper program reduce the amount available under our revolving credit facility. Information with respect to our outstanding commercial paper borrowings is as follows:


	August 31, 2025			February 28, 2025
(in millions)
Outstanding borrowings (1)	$	252.5		$	806.7
Weighted average annual interest rate	4.6		%	4.7		%
Weighted average remaining term	9 days			13 days

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

Senior notes

In May 2025, we issued $500.0 million aggregate principal amount of 4.80% senior notes due May 2030. Proceeds from this offering, net of discount and debt issuance costs, were $496.0 million. Interest on the 4.80% May 2025 Senior Notes is payable semiannually on May 1 and November 1 of each year, beginning November 1, 2025. The 4.80% May 2025 Senior Notes are redeemable, in whole or in part, at our option at any time prior to April 1, 2030, at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest and a make-


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whole payment based on the present value of the future payments at the adjusted treasury rate, as defined in the applicable indenture, plus 20 basis points. On or after April 1, 2030, we may redeem the 4.80% May 2025 Senior Notes, in whole or in part, at our option at any time at a redemption price equal to 100% of the outstanding principal amount, plus accrued and unpaid interest. The 4.80% May 2025 Senior Notes are senior unsecured obligations which rank equally in right of payment to all of our existing and future senior unsecured indebtedness.

On July 2, 2025, we repaid in full $400.0 million aggregate principal amount of 4.75% December 2015 Senior Notes, using proceeds from the 2025 Wine Divestitures and cash on hand. On June 12, 2025, we repaid in full $500.0 million aggregate principal amount of 5.00% February 2023 Senior Notes, using proceeds from the 2025 Wine Divestitures. Each of these notes were redeemed prior to maturity at a redemption price equal to 100% of the outstanding principal amount plus accrued and unpaid interest.

Debt payments

As of August 31, 2025, the required principal repayments under long-term debt obligations (excluding unamortized debt issuance costs and unamortized discounts of $44.9 million and $20.0 million, respectively) for the remaining six months of Fiscal 2026 and for each of the five succeeding fiscal years and thereafter are as follows:


(in millions)
Fiscal 2026	$	502.3
Fiscal 2027	603.5
Fiscal 2028	1,801.4
Fiscal 2029	900.0
Fiscal 2030	800.0
Fiscal 2031	1,100.0
Thereafter	4,650.1
	$	10,357.3

12. INCOME TAXES

Overview

Our effective tax rate for the six months ended August 31, 2025, was 27.6% of tax expense compared with 30.0% of tax benefit for the six months ended August 31, 2024. Our effective tax rate for the three months ended August 31, 2025, was 37.9% of tax expense compared with 11.4% of tax benefit for the three months ended August 31, 2024.

For the six months and three months ended August 31, 2025, our effective tax rate was higher than the federal statutory rate of 21% largely due to changes in valuation allowances related to net operating losses and tax legislation updates, partially offset by (i) a net income tax benefit recognized as a result of the resolution of various tax examinations and assessments related to prior periods and (ii) the benefit of lower effective tax rates applicable to our foreign businesses.

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

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


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

Tax Legislation

OB3 Act

On July 4, 2025, the OB3 Act was signed into U.S. law. The OB3 Act extends and modifies several provisions originally introduced under the Tax Cuts and Jobs Act of 2017, while also implementing additional changes to U.S. federal tax law. Key provisions of the OB3 Act include (i) the permanent extension of 100% bonus depreciation for qualifying assets, (ii) the elimination of the requirement to capitalize and amortize U.S.-based research and experimental expenditures, allowing for immediate expensing, (iii) changes to the limitation on the deductibility of interest expense, and (iv) modifications to the taxation of foreign earnings and other international income tax provisions. The OB3 Act contains multiple effective dates, with certain provisions taking effect beginning in calendar year 2025 and others phased in through calendar year 2027.

We have performed an initial evaluation of the impact of the OB3 Act on our consolidated financial statements, including the effects on our annual effective tax rate, deferred tax assets and liabilities, and cash flows. Based on this initial analysis and activities performed in response to the legislation, we believe there will be a negative impact on our effective tax rate for Fiscal 2026, primarily driven by the changes to the limitation on the deductibility of interest expense.

Additionally, for the six months and three months ended August 31, 2025, we recognized a valuation allowance against our deferred tax asset related to prior year interest expense limitations. We will continue to assess the implications of the OB3 Act, and our income tax provision may continue to be impacted as additional clarifications or interpretive guidance related to the OB3 Act is released.

Pillar Two

The OECD introduced a framework under Pillar Two which includes a 15% global minimum tax rate. Many jurisdictions in which we do business have started to enact laws implementing Pillar Two. We are monitoring these developments and currently do not believe these rules will have a material impact on our financial condition and/or consolidated results.

13. STOCKHOLDERS’ EQUITY

Common stock

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


	Class A Stock	Class 1 Stock	Class A Stock in Treasury
Balance at February 28, 2025	212,698,298	27,037	34,505,141
Share repurchases	—	—	1,634,718

Exercise of stock options	—	130	(38,775)

Vesting of restricted stock units (1)	—	—	(98,959)


Balance at May 31, 2025	212,698,298	27,167	36,002,125
Share repurchases	—	—	1,740,884

Exercise of stock options	—	—	(18,337)
Employee stock purchases	—	—	(34,341)
Vesting of restricted stock units (1)	—	—	(5,369)


Balance at August 31, 2025	212,698,298	27,167	37,684,962


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

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

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

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

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


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

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


	For the Three Months Ended May 31,	For the Three Months Ended August 31,	For the Six Months Ended August 31,
2025
Restricted Stock Units	50,720	146	50,866

2024
Restricted Stock Units	48,501	147	48,648
Performance Share Units	5,728	—	5,728

Stock repurchases

In April 2025, our Board of Directors authorized the repurchase of up to $4.0 billion of our publicly traded common stock under the 2025 Authorization, which expires in February 2028. Shares repurchased under this authorization become treasury shares. For the six months ended August 31, 2025, we repurchased 3,375,602 shares of Class A Stock pursuant to the 2025 Authorization through open market transactions at an aggregate cost of $604.0 million.

As of August 31, 2025, total shares repurchased under our board authorization is as follows:


			Class A Stock
	Repurchase Authorization		Dollar Value of Shares Repurchased		Number of Shares Repurchased
(in millions, except share data)
2025 Authorization (1)	$	4,000.0	$	604.0	3,375,602

(1)As of August 31, 2025, $3,396.0 million remains available for future share repurchases, excluding the impact of Federal excise tax owed pursuant to the IRA.


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

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


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2025		2024		2025		2024
(in millions, except per share data)
Net income (loss) attributable to CBI	$	982.1	$	(322.0)	$	466.0	$	(1,199.0)

Weighted average common shares outstanding – basic	176.804		182.356		175.821		181.947
Stock-based awards, primarily stock options (1)	0.153		—		0.117		—
Weighted average common shares outstanding – diluted	176.957		182.356		175.938		181.947

Net income (loss) per common share attributable to CBI – basic	$	5.55	$	(1.77)	$	2.65	$	(6.59)
Net income (loss) per common share attributable to CBI – diluted	$	5.55	$	(1.77)	$	2.65	$	(6.59)

(1)We have excluded the following weighted average common shares outstanding from the calculation of diluted net loss per common share, as the effect of including these would have been anti-dilutive, in millions:


	For the Six Months Ended August 31, 2024	For the Three Months Ended August 31, 2024


Stock-based awards, primarily stock options	0.604		0.539

15. COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO CBI

Comprehensive income (loss) consists of net income (loss), foreign currency translation adjustments, unrealized net gain (loss) on derivative instruments, including cash flow and net investment hedges, pension/postretirement adjustments, and our share of OCI of equity method investments. The reconciliation of net income (loss) attributable to CBI to comprehensive income (loss) attributable to CBI is as follows:


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
For the Six Months Ended August 31, 2025
Net income (loss) attributable to CBI					$	982.1
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	408.3	$	—	408.3
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	408.3		—		408.3


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	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
Unrealized gain (loss) on cash flow hedges:
Net cash flow hedge gain (loss)	216.0		(26.3)		189.7
Amounts reclassified	(25.0)		2.8		(22.2)
Net gain (loss) recognized in other comprehensive income (loss)	191.0		(23.5)		167.5
Unrealized gain (loss) on net investment hedges:
Net investment hedge gain (loss)	(5.6)		1.4		(4.2)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(5.6)		1.4		(4.2)
Pension/postretirement adjustments:
Net actuarial gain (loss)	(0.1)		—		(0.1)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(0.1)		—		(0.1)
Share of OCI of equity method investments:
Net gain (loss)	—		—		—
Amounts reclassified	(1.5)		0.4		(1.1)
Net gain (loss) recognized in other comprehensive income (loss)	(1.5)		0.4		(1.1)
Other comprehensive income (loss) attributable to CBI	$	592.1	$	(21.7)	570.4
Comprehensive income (loss) attributable to CBI					$	1,552.5
For the Six Months Ended August 31, 2024
Net income (loss) attributable to CBI					$	(322.0)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(587.0)	$	—	(587.0)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(587.0)		—		(587.0)
Unrealized gain (loss) on cash flow hedges:
Net cash flow hedge gain (loss)	(157.5)		18.3		(139.2)
Amounts reclassified	(76.9)		9.1		(67.8)
Net gain (loss) recognized in other comprehensive income (loss)	(234.4)		27.4		(207.0)




Pension/postretirement adjustments:
Net actuarial gain (loss)	0.5		(0.2)		0.3
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	0.5		(0.2)		0.3
Share of OCI of equity method investments:
Net gain (loss)	—		—		—
Amounts reclassified	(10.0)		(0.1)		(10.1)
Net gain (loss) recognized in other comprehensive income (loss)	(10.0)		(0.1)		(10.1)
Other comprehensive income (loss) attributable to CBI	$	(830.9)	$	27.1	(803.8)
Comprehensive income (loss) attributable to CBI					$	(1,125.8)


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
For the Three Months Ended August 31, 2025
Net income (loss) attributable to CBI					$	466.0
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	164.8	$	—	164.8
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	164.8		—		164.8
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	85.4		(10.2)		75.2
Amounts reclassified	(19.3)		2.3		(17.0)
Net gain (loss) recognized in other comprehensive income (loss)	66.1		(7.9)		58.2
Unrealized gain (loss) on net investment hedges:
Net investment hedge gain (loss)	(2.6)		0.7		(1.9)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(2.6)		0.7		(1.9)
Pension/postretirement adjustments:
Net actuarial gain (loss)	(0.1)		—		(0.1)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(0.1)		—		(0.1)
Share of OCI of equity method investments:
Net gain (loss)	—		—		—
Amounts reclassified	(1.8)		0.5		(1.3)
Net gain (loss) recognized in other comprehensive income (loss)	(1.8)		0.5		(1.3)
Other comprehensive income (loss) attributable to CBI	$	226.4	$	(6.7)	219.7
Comprehensive income (loss) attributable to CBI					$	685.7
For the Three Months Ended August 31, 2024
Net income (loss) attributable to CBI					$	(1,199.0)
Other comprehensive income (loss) attributable to CBI:
Foreign currency translation adjustments:
Net gain (loss)	$	(600.5)	$	—	(600.5)
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	(600.5)		—		(600.5)
Unrealized gain (loss) on cash flow hedges:
Net derivative gain (loss)	(185.7)		21.6		(164.1)
Amounts reclassified	(34.8)		4.1		(30.7)
Net gain (loss) recognized in other comprehensive income (loss)	(220.5)		25.7		(194.8)




Pension/postretirement adjustments:
Net actuarial gain (loss)	0.5		(0.2)		0.3
Amounts reclassified	—		—		—
Net gain (loss) recognized in other comprehensive income (loss)	0.5		(0.2)		0.3


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents


	Before Tax Amount		Tax (Expense) Benefit		Net of Tax Amount
(in millions)
Share of OCI of equity method investments:
Net gain (loss)	—		—		—
Amounts reclassified	0.3		(0.1)		0.2
Net gain (loss) recognized in other comprehensive income (loss)	0.3		(0.1)		0.2
Other comprehensive income (loss) attributable to CBI	$	(820.2)	$	25.4	(794.8)
Comprehensive income (loss) attributable to CBI					$	(1,993.8)

Accumulated other comprehensive income (loss), net of income tax effect, includes the following components:


	Foreign Currency Translation Adjustments		Unrealized Net Gain (Loss) on Derivative Instruments		Pension/ Postretirement Adjustments		Share of OCI of Equity Method Investments		Accumulated Other Comprehensive Income (Loss)
(in millions)
Balance at February 28, 2025	$	(683.8)	$	21.8	$	(0.4)	$	(0.3)	$	(662.7)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	408.3		185.5		(0.1)		—		593.7
Amounts reclassified from accumulated other comprehensive income (loss)	—		(22.2)		—		(1.1)		(23.3)
Other comprehensive income (loss)	408.3		163.3		(0.1)		(1.1)		570.4
Balance at August 31, 2025	$	(275.5)	$	185.1	$	(0.5)	$	(1.4)	$	(92.3)

16. BUSINESS SEGMENT INFORMATION

Our internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits and we report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio comprised of exclusively higher-end wine and spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate communications, corporate development, corporate finance, corporate strategy, executive management, human resources, internal audit, investor relations, IT, legal, and public affairs, as well as our investments such as those made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. Our CODM is our President and Chief Executive Officer. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting. Long-lived tangible assets and total asset information by segment is not provided to, or reviewed by, our CODM as it is not used to make strategic decisions, allocate resources, or assess performance. Our CODM utilizes segment comparable operating income (loss) performance in deciding how to deploy capital in line with disciplined and balanced priorities. These priorities largely include investing in our people and our brands, making capital investments


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and strategic acquisitions, providing a cash dividend program, and from time-time time, repurchasing shares of our common stock. Our CODM also monitors budgeted versus actual results in assessing segment operating performance and understanding underlying business trends.

Management excludes Comparable Adjustments from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating income (loss) which does not include the impact of these Comparable Adjustments, collectively referred to as comparable operating income (loss). We evaluate segment operating performance based on comparable operating income (loss) of the respective business units.

The accounting policies of the segments are the same as those described for the Company in Note 1 of our consolidated financial statements included in our 2025 Annual Report. Segment information is as follows:


	Beer			Wine and Spirits			Corporate Operations and Other		Consolidated
(in millions)
For the Six Months Ended August 31, 2025
Net sales	$	4,579.5		$	416.5		$	—	$	4,996.0
Cost of product sold (1)	(2,152.5)			(265.6)			—
Marketing	(391.2)			(54.9)			—
% Net sales	8.5		%	13.2		%
General and administrative expenses (1)	(210.8)			(121.8)			(103.1)
Comparable operating income (loss) (1)	1,825.0			(25.8)			(103.1)		1,696.1
Operating margin	39.9		%	(6.2)		%
Comparable adjustments (2)									(108.3)
Operating income (loss)									1,587.8
Income (loss) from unconsolidated investments (3)									(7.0)
Interest expense, net (4)									(186.5)
Income (loss) before income taxes									$	1,394.3

Capital expenditures	$	370.2		$	37.5		$	2.4	$	410.1
Depreciation and amortization	$	159.4		$	36.5		$	12.7	$	208.6
% Net sales	3.5		%	8.8		%
For the Six Months Ended August 31, 2024
Net sales	$	4,803.0		$	777.7		$	—	$	5,580.7
Cost of product sold (1)	(2,223.5)			(445.0)			—
Marketing	(383.8)			(76.9)			—
% Net sales	8.0		%	9.9		%
General and administrative expenses (1)	(195.0)			(125.6)			(117.1)
Comparable operating income (loss) (1)	2,000.7			130.2			(117.1)		2,013.8
Operating margin	41.7		%	16.7		%
Comparable adjustments (2)									(2,301.6)
Operating income (loss)									(287.8)
Income (loss) from unconsolidated investments (3)									80.8
Interest expense, net (4)									(206.8)
Income (loss) before income taxes									$	(413.8)


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	Beer			Wine and Spirits			Corporate Operations and Other		Consolidated
(in millions)
Capital expenditures	$	571.6		$	90.6		$	40.9	$	703.1
Depreciation and amortization	$	168.9		$	42.8		$	9.8	$	221.5
% Net sales	3.5		%	5.5		%
For the Three Months Ended August 31, 2025
Net sales	$	2,345.0		$	136.0		$	—	$	2,481.0
Cost of product sold (1)	(1,105.0)			(81.2)			—
Marketing	(190.7)			(20.0)			—
% Net sales	8.1		%	14.7		%
General and administrative expenses (1)	(97.7)			(54.6)			(45.6)
Comparable operating income (loss) (1)	951.6			(19.8)			(45.6)		886.2
Operating margin	40.6		%	(14.6)		%
Comparable adjustments (2)									(12.2)
Operating income (loss)									874.0
Income (loss) from unconsolidated investments (3)									(3.5)
Interest expense, net (4)									(87.6)
Income (loss) before income taxes									$	782.9

Capital expenditures	$	197.0		$	19.5		$	0.8	$	217.3
Depreciation and amortization	$	82.6		$	14.3		$	6.2	$	103.1
% Net sales	3.5		%	10.5		%
For the Three Months Ended August 31, 2024
Net sales	$	2,530.2		$	388.7		$	—	$	2,918.9
Cost of product sold (1)	(1,163.8)			(224.7)			—
Marketing	(193.5)			(36.0)			—
% Net sales	7.6		%	9.3		%
General and administrative expenses (1)	(95.2)			(57.5)			(58.4)
Comparable operating income (loss) (1)	1,077.7			70.5			(58.4)		1,089.8
Operating margin	42.6		%	18.1		%
Comparable adjustments (2)									(2,319.2)
Operating income (loss)									(1,229.4)
Income (loss) from unconsolidated investments (3)									(1.2)
Interest expense, net (4)									(104.0)
Income (loss) before income taxes									$	(1,334.6)

Capital expenditures	$	257.2		$	41.0		$	29.6	$	327.8
Depreciation and amortization	$	82.5		$	21.5		$	5.6	$	109.6
% Net sales	3.3		%	5.5		%

(1)Amounts are determined and presented on a non-GAAP basis and are intended to reflect our core operations.


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(2)Comparable Adjustments that impacted comparability in our segment operating income (loss) for each period are as follows:


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2025		2024		2025		2024
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts	$	(4.7)	$	(9.7)	$	13.0	$	(24.3)
Flow through of inventory step-up	(1.7)		(2.4)		(0.8)		(1.3)
Strategic business development costs	(1.6)		—		(1.2)		—
Settlements of undesignated commodity derivative contracts	6.7		15.5		4.2		7.0





Comparable Adjustments, Cost of product sold	(1.3)		3.4		15.2		(18.6)
Selling, general, and administrative expenses
2025 Restructuring Initiative	(21.6)		—		(8.3)		—
Transition services agreements activity	(15.5)		(7.6)		(10.0)		(4.8)
Strategic business reconfiguration costs	(5.2)		(26.3)		—		(24.5)
Gain (loss) on sale of business	(16.3)		—		(14.9)		—


Other gains (losses) (i)	3.7		(21.1)		5.8		(21.3)
Comparable Adjustments, selling, general, and administrative expenses	(54.9)		(55.0)		(27.4)		(50.6)
Goodwill impairment	—		(2,250.0)		—		(2,250.0)

Asset impairment and related expenses	(52.1)		—		—		—

Comparable Adjustments, Operating income (loss)	$	(108.3)	$	(2,301.6)	$	(12.2)	$	(2,319.2)

(i)Primarily includes the following:


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2025		2024		2025		2024
(in millions)

Gain (loss) on sale of assets	$	4.1	$	—	$	4.1	$	—
Net loss on foreign currency as a result of the resolution of various tax examinations and assessments	$	—	$	(20.7)	$	—	$	(20.7)

(3)Income (loss) from unconsolidated investments consists of:


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2025		2024		2025		2024
(in millions)
Equity in earnings (losses) from equity method investees and related activities	$	(0.5)	$	2.1	$	3.0	$	3.4
Net gain in connection with Exchangeable Shares	—		83.3		—		—

Impairment of equity method investments	(1.5)		(2.1)		(1.5)		(2.1)
Unrealized net gain (loss) on securities measured at fair value	(5.0)		(2.5)		(5.0)		(2.5)
	$	(7.0)	$	80.8	$	(3.5)	$	(1.2)


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FINANCIAL STATEMENTS			NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			Table of Contents

(4)Interest expense, net consists of:


	For the Six Months Ended August 31,				For the Three Months Ended August 31,
	2025		2024		2025		2024
(in millions)
Interest expense	$	(189.6)	$	(210.6)	$	(89.0)	$	(105.8)
Interest income	4.1		3.8		2.4		1.8
Loss on extinguishment of debt	(1.0)		—		(1.0)		—
	$	(186.5)	$	(206.8)	$	(87.6)	$	(104.0)

17. ACCOUNTING GUIDANCE NOT YET ADOPTED

Income taxes

In December 2023, the FASB issued a standard to enhance the transparency and decision usefulness of income tax disclosures. This standard requires public companies to disclose (i) specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold, (ii) the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by material individual jurisdictions, and (iii) income from continuing operations before income tax expense disaggregated between domestic and foreign and income tax expense from continuing operations disaggregated by federal, state, and foreign. We are required to adopt these disclosures for our annual period ending February 28, 2026, with early adoption permitted and this standard may be applied retrospectively. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.

Disaggregation of income statement expenses

In November 2024, the FASB issued a standard requiring disaggregated information about certain income statement expense line items to be disclosed on an annual and interim basis. We are required to adopt these disclosures for our annual period ending February 29, 2028, with early adoption permitted and this standard may be applied retrospectively. We expect this standard to impact our disclosures with no material impacts to our results of operations, cash flows, or financial condition.


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MD&A			Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

INTRODUCTION

This MD&A provides additional information on our businesses, current developments, financial condition, cash flows, and results of operations. It should be read in conjunction with our Financial Statements and with our consolidated financial statements and notes included in our 2025 Annual Report. This MD&A is organized as follows:

Overview

This section provides a general description of our business, which we believe is important in understanding the results of our operations, financial condition, and potential future trends.

Strategy

This section provides a description of our strategy, including our 2025 Restructuring Initiative, and significant divestitures, acquisitions, and investments.

Results of operations

This section provides an analysis of our results of operations presented on a business segment basis for the three months ended August 31, 2025, and August 31, 2024, and six months ended August 31, 2025, and August 31, 2024. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.

Liquidity and capital resources

This section provides an analysis of our cash flows, outstanding debt, and liquidity position. Included in the analysis of outstanding debt is a discussion of the financial capacity available to fund our on-going operations and future commitments, as well as a discussion of other financing arrangements.

OVERVIEW

We are an international producer and marketer of beer, wine, and spirits with operations in the U.S., Mexico, New Zealand, and Italy with powerful, consumer-connected, high-quality brands like Modelo Especial, Corona Extra, Pacifico, Robert Mondavi Winery, Kim Crawford, The Prisoner Wine Company, High West, Casa Noble, and Mi CAMPO. In the U.S., we are one of the top growth contributors at retail among beverage alcohol suppliers. We are also the second-largest beer company and have the #1 beer brand, Modelo Especial, in dollar sales in the U.S. We continued to strengthen our leadership position in the U.S. beer market as the #1 dollar share gainer in the high-end and the overall


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U.S. beer market. Within wine and spirits, we have implemented a multi-year strategy that repositioned this business to a portfolio of exclusively higher-end brands that we believe will generate higher growth and higher margins, aligned to our focus on consumer-led premiumization trends, and we continue to progressively expand our supply channels through DTC and international markets. The strength of our brands makes us a supplier of choice to many of our consumers and our customers, which include wholesale distributors, retailers, and on-premise locations. We conduct our business through entities we wholly own as well as through a variety of joint ventures and other entities.

Our internal management financial reporting consists of two business divisions: (i) Beer and (ii) Wine and Spirits and we report our operating results in three segments: (i) Beer, (ii) Wine and Spirits, and (iii) Corporate Operations and Other. In the Beer segment, our portfolio consists of high-end imported beer brands and ABAs. We have an exclusive perpetual brand license to produce our Mexican beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell a portfolio comprised of exclusively higher-end wine and spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of corporate communications, corporate development, corporate finance, corporate strategy, executive management, human resources, internal audit, investor relations, IT, legal, and public affairs, as well as our investments such as those made through our corporate venture capital function. All costs included in the Corporate Operations and Other segment are general costs that are applicable to the consolidated group and are, therefore, not allocated to the other reportable segments. All costs reported within the Corporate Operations and Other segment are not included in our CODM’s evaluation of the operating income (loss) performance of the other reportable segments. The business segments reflect how our operations are managed, how resources are allocated, how operating performance is evaluated by senior management, and the structure of our internal financial reporting.

Goodwill impairment

As of August 31, 2024, in connection with negative trends within our Wine and Spirits business primarily attributable to our U.S. wholesale market, driven by declines in both the overall wine market and in our then-owned mainstream and premium wine brands, management updated its Fiscal 2025 outlook for this reporting unit. Based on the aforementioned factors, we performed an interim quantitative assessment for goodwill impairment which indicated that the carrying value of the Wine and Spirits reporting unit exceeded its estimated fair value, resulting in a $2,250.0 million goodwill impairment. This loss from impairment was included in goodwill impairment within our consolidated results for Second Quarter 2025 and Six Months 2025. See Notes 7, 8, and 12 for further discussion.

STRATEGY

Our overall strategic vision is to consistently deliver industry-leading total stockholder returns over the long-term through a focus on these key pillars:

•continue building strong brands people love with advantaged routes to market;

•build a culture that is consumer-obsessed and leverages robust innovation capabilities to stay on the forefront of consumer trends;

•deploy capital in line with disciplined and balanced priorities;

•deliver on impactful environmental, social, and governance initiatives that we believe are not only good business, but also good for the world; and

•empower the whole enterprise to achieve best-in-class operational efficiency.

We will continue to strive for success by ensuring consumer-led decision making drives all aspects of our business; building a strong talent pipeline with best-in-class people development; investing in infrastructure that supports and enables our business, including data systems and architecture; and exemplifying intentional and proactive fiscal management. We place focus on positioning our portfolio on higher-margin, higher-growth categories of the beverage alcohol industry to align with our strategy to address consumer-led premiumization, product, and purchasing trends, which we anticipate will continue to drive faster growth rates relative to the industry. To continue capitalizing on


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consumer-led premiumization trends, become more competitive, and grow our business, we have employed a strategy dedicated to organic growth and supplemented by targeted investments and acquisitions. Our ongoing digital acceleration initiatives are aimed at driving results by enhancing our technology capabilities in key areas. In Fiscal 2026, we continue to focus on end-to-end digital supply chain planning, logistics, procurement, revenue growth management, and consumer insights and analytics. Additionally, we believe our continued focus on maintaining a strong balance sheet provides a solid financial foundation to support our broader strategic initiatives.

Our business strategy for the Beer segment focuses on upholding our leadership position in the U.S. beer market, including as a leader in the high-end segment, and continuing to grow our high-end imported beer brands through maintenance of leading margins, enhancements to our results of operations and operating cash flow, and exploring new avenues for growth. In Fiscal 2026, we intend to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization as well as continue to invest in the next phase of modular capacity additions necessary to support our anticipated future growth expectations. Expansion, optimization, and/or construction activities continue under our Mexico Beer Projects. Additionally, we continue to focus on consumer-led innovation by creating new line extensions behind celebrated, trusted brands and package formats, as well as new to world brands, that are intended to meet emerging needs.

Our business strategy for the Wine and Spirits segment continues to focus on delivering growth and improving margins beyond Fiscal 2026 by driving our higher-end brands and operating efficiencies. We have repositioned this business to a portfolio of exclusively higher-end wine and spirits brands that we believe will generate higher growth and higher margins. We remain a key supplier in U.S. 3-tier brick-and-mortar distribution. In addition, we are advancing our aim to become a global, omni-channel competitor in line with evolving consumer preferences as we continue our efforts to progressively expand into international markets, DTC channels (including hospitality), and 3-tier eCommerce.

Marketing, sales, and distribution of our products are primarily managed on a geographic basis allowing us to leverage leading market positions. In addition, market dynamics and consumer trends vary across each of our markets. Within our primary market in the U.S., we offer a range of beverage alcohol products across the imported beer, ABA, and branded wine and spirits categories, with generally separate distribution networks utilized for (i) our beer portfolio and (ii) our wine and spirits portfolio. The environment for our products is competitive in each of our markets.

We remain committed to our long-term financial model of: growing sales, expanding margins, and increasing cash flow in order to continue to achieve comparable earnings per share growth as well as our target ratios for (i) comparable net leverage and (ii) dividend payout; investing to support the growth of our business; and delivering additional returns to stockholders through periodic share repurchases. Our results of operations and financial condition have been and may continue to be affected by the evolving consumer demand environment largely driven by what we believe to be ongoing socioeconomic factors. These factors may include subdued spend, depressed sentiment, value-seeking behaviors, and reductions in the discretionary income available to purchase our products among consumers, elevated unemployment, changing prices, inflation, other unfavorable global and regional economic conditions, demographic trends in the U.S., global supply chain disruptions and constraints, and geopolitical events, including the impact of military conflicts.

Recent developments in international trade relations, including significant changes in U.S. trade policy and actions which include threatened, new, and increased tariffs on other countries and retaliatory tariffs and actions imposed on certain U.S. goods have produced heightened uncertainty with respect to trade and tariff policies and regulations affecting trade between the U.S. and other countries, which could continue to alter the global trade environment. For example, the U.S. government has imposed tariffs on product imports, including on raw and packaging materials, from certain countries (such as Mexico, the European Union including Italy, and New Zealand) and certain other countries have implemented tariffs on U.S. goods, such as the tariffs on certain product imports originating from the U.S. imposed by the Canadian government, although some of these tariffs were subsequently modified or delayed.


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We expect some or all of these market conditions and their impacts to continue in Fiscal 2026 which could have a material impact on our results of operations and financial condition. We intend to continue to monitor the evolving consumer demand and socioeconomic environments and their impacts on our business. In addition, we have implemented the 2025 Restructuring Initiative, which is 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. We also intend to continue our commodity and foreign exchange hedging programs. However, there can be no assurance that we will be able to adequately respond to softer consumer demand trends or fully mitigate rising costs, including as a result of new or increased tariffs, through increased selling prices, cost, productivity, efficiency, and inventory management initiatives, optimized marketing plans, and/or our commodity and foreign exchange hedging programs. Furthermore, to the extent severe weather events that impact our business, such as wildfires, droughts, floods, extreme heat, and/or late frosts, or other weather conditions that constrain purchasing occasions for our consumers, continue to occur or accelerate in future periods, it could have a material impact on our results of operations and financial condition.

2025 Restructuring Initiative

We have implemented the 2025 Restructuring Initiative which is expected to yield over $200 million in net annualized cost savings by Fiscal 2028. The majority of the work associated with the 2025 Restructuring Initiative is expected to be completed within Fiscal 2026 and is estimated to result in $80 million to $100 million of cumulative pre-tax costs once all phases are fully implemented. In connection with the 2025 Restructuring Initiative, we recognized $21.6 million of pre-tax restructuring costs in Six Months 2026 and $71.3 million of cumulative pre-tax costs since the inception of this initiative. These costs were included in selling, general, and administrative costs within our consolidated results. For additional information on the 2025 Restructuring Initiative, refer to Note 3.

Divestitures, Acquisitions, and Investments

Beer segment

Mexicali Brewery sale

In July 2024, we sold the remaining assets classified as held for sale at the canceled Mexicali Brewery.

Wine and Spirits segment

2025 Wine Divestitures

On June 2, 2025, we sold and, in certain instances, exclusively licensed 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 for $846.5 million, subject to certain post-closing adjustments. The net cash proceeds from the 2025 Wine Divestitures were used for the repayment of debt. Prior to the completion of the 2025 Wine Divestitures, we recorded the results of operations of the divested and exclusively licensed brands in the Wine and Spirits segment.

SVEDKA Divestiture

On January 6, 2025, we sold the SVEDKA brand and related assets, primarily including inventory and equipment. The net cash proceeds were used for general corporate purposes, including funding share repurchases, capital expenditures, and repayment of debt. Prior to the completion of the SVEDKA Divestiture, we recorded the results of operations of the SVEDKA brand in the Wine and Spirits segment.

Nelson’s Green Brier investment

In October 2024, we purchased the remaining 25% noncontrolling interest in Nelson’s Green Brier, a portfolio of Tennessee-based craft bourbon and whiskey products.


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Sea Smoke acquisition

In June 2024, we acquired the Sea Smoke business, including a California-based luxury wine brand, vineyards, and a production facility. This transaction also included the acquisition of goodwill, inventory, and a trademark. The results of operations of Sea Smoke are reported in the Wine and Spirits segment and have been included in our consolidated results of operations from the date of acquisition.

These Wine and Spirits segment activities support our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumers.

Corporate Operations and Other segment

Corporate ventures investments

As of August 31, 2025, and August 31, 2024, 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, for the respective periods.

Canopy investment

We have an investment in Canopy, a North American cannabis and CPG company providing medical and adult-use cannabis products, which expands our portfolio into adjacent categories.

Exchangeable Shares

In April 2024, we elected to convert our Canopy common shares and exchange a portion of the principal amount of a promissory note issued to us by Canopy. As a result of these transactions, we (i) have 26.3 million Exchangeable Shares and (ii) recognized an $83.3 million net gain based on the fair value of Exchangeable Shares on the date of the conversion and exchange. This net gain is included in income (loss) from unconsolidated investments within our consolidated results for Six Months 2025.

As of February 28, 2025, we evaluated the Exchangeable Shares for impairment primarily due to the continued decline in Canopy’s common share price. We concluded that an impairment did exist, and accordingly, the Exchangeable Shares were written down to their estimated fair value of $21.2 million.

For additional information on these divestitures, acquisitions, and investments refer to Notes 2, 10, and 11.

RESULTS OF OPERATIONS

Financial Highlights

References to organic throughout the following discussion exclude the impacts of the 2025 Wine Divestitures and the SVEDKA Divestiture, collectively referred to as the “Wine and Spirits Divestitures,” where appropriate.

Second Quarter 2026 compared to Second Quarter 2025

Net sales decreased 15% due to (i) the loss of net sales as a result of the Wine and Spirits Divestitures, (ii) a decrease in Beer net sales driven primarily by a shipment volume decline, partially offset by a favorable impact from pricing, and (iii) a decline in organic Wine and Spirits net sales driven by changes in financial and volume related contractual obligations with distributors.

Operating income increased 171% largely due to a Second Quarter 2025 Wine and Spirits goodwill impairment and a successful execution of efficiency and cost optimization initiatives within the Beer segment, partially offset by the (i) loss of net sales as a result of the Wine and Spirits Divestitures and (ii) declines in Beer and organic Wine and Spirits segments net sales.


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Net income attributable to CBI and diluted net income per common share attributable to CBI increased 139% and 140%, respectively, largely due to the items discussed above, partially offset by a Second Quarter 2026 provision for income taxes as compared to a benefit from income taxes for Second Quarter 2025.

Six Months 2026 compared to Six Months 2025

Net sales decreased 10% due to (i) the loss of net sales as a result of the Wine and Spirits Divestitures, (ii) a decrease in Beer net sales driven primarily by a shipment volume decline, partially offset by a favorable impact from pricing, and (iii) a decline in organic Wine and Spirits net sales driven by changes in financial and volume related contractual obligations with distributors.

Operating income increased 652% largely due to the Six Months 2025 Wine and Spirits goodwill impairment and a successful execution of efficiency and cost optimization initiatives within the Beer segment, partially offset by the (i) loss of net sales as a result of the Wine and Spirits Divestitures, (ii) declines in Beer and organic Wine and Spirits segments net sales, and (iii) losses associated with asset impairment and related expenses.

Net income attributable to CBI and diluted net income per common share attributable to CBI increased 405% and 414%, respectively, largely due to the items discussed above, partially offset by (i) a Six Months 2026 provision for income taxes as compared to a benefit from income taxes for Six Months 2025 and (ii) a Six Months 2025 net gain in connection with Exchangeable Shares.

Comparable Adjustments

Management excludes items that affect comparability from its evaluation of the results of each operating segment as these Comparable Adjustments are not reflective of core operations of the segments. Segment operating performance and the incentive compensation of segment management are evaluated based on core segment operating income (loss) which does not include the impact of these Comparable Adjustments.

As more fully described herein and in the related Notes, the Comparable Adjustments that impacted comparability in our segment results for each period are as follows:


	Second Quarter 2026		Second Quarter 2025		Six Months 2026		Six Months 2025
(in millions)
Cost of product sold
Net gain (loss) on undesignated commodity derivative contracts	$	13.0	$	(24.3)	$	(4.7)	$	(9.7)
Settlements of undesignated commodity derivative contracts	4.2		7.0		6.7		15.5
Strategic business reconfiguration costs	(1.2)		—		(1.6)		—
Flow through of inventory step-up	(0.8)		(1.3)		(1.7)		(2.4)



Comparable Adjustments, Cost of product sold	15.2		(18.6)		(1.3)		3.4
Selling, general, and administrative expenses
Gain (loss) on sale of business	(14.9)		—

CONSTELLATION BRANDS, INC. 10-Q