01—Abstract
Summary
Summary of the 10-K filed April 20, 2021. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. reported net sales of $8,614.9 milliona for the fiscal year ended February 28, 2021, up from $8,343.5 million in Fiscal 2020, with Beer net sales of $6,074.6 million and Wine and Spirits net sales of $2,540.3 million.
Operating income rose to $2,791.1 millionb from $2,154.5 million, largely due to Fiscal 2020 charges tied to the business transformation strategy within Wine and Spirits and volume growth in Beer. Net income attributable to CBI was $1,998.0 million, compared with a net loss of $(11.8) million in Fiscal 2020, reflecting an unrealized net gain of $802.0 million on the Canopy investment in Fiscal 2021 versus an unrealized net loss in Fiscal 2020. The company completed several divestitures during the year, including the Wine and Spirits Divestitures for net cash proceeds of $538.4 million (with up to $250 million of contingent consideration) and the Paul Masson Divestiture for $267.4 million.
Cash and cash equivalents rose to $460.6 millionc, and net cash provided by operating activities was $2,806.5 million. Total debt outstanding was $10,442.3 million at February 28, 2021, down $1,742.3 million from the prior year end. The company paid $575.0 million in dividends and expects to return approximately $580 million to stockholders in Fiscal 2022.
The filing highlights significant forward-looking items for investors, including a expected long-lived asset impairment of approximately $650 million to $680 milliond in the first quarter of fiscal 2022 related to the Mexicali Brewery, capital expenditures of $1.0 billion to $1.1 billion planned for Fiscal 2022, and ongoing Mexico Beer Projects expected to be completed by Fiscal 2025. Investors should also weigh the volatility of the Canopy Growth investment, which is carried at a fair value of $1,816.0 million for the Canopy warrants and convertible debt securities, and the pending lawsuit over the use of the Corona brand name on Corona Hard Seltzer.
02—Key points
Key Highlights
- Net sales rose to $8,614.9 million from $8,343.5 million, with Beer net sales up to $6,074.6 million and Wine and Spirits net sales down to $2,540.3 million.
- Operating income increased to $2,791.1 million from $2,154.5 million, largely due to Fiscal 2020 charges in the Wine and Spirits segment and Beer volume growth.
- Net income attributable to CBI was $1,998.0 million, versus a net loss of $(11.8) million in Fiscal 2020, driven by a $802.0 million unrealized net gain on the Canopy investment.
- Net cash provided by operating activities was $2,806.5 million, and cash and cash equivalents ended the year at $460.6 million.
- Total debt outstanding declined by $1,742.3 million to $10,442.3 million, and the company paid $575.0 million in dividends during the year.
- The company expects a long-lived asset impairment of approximately $650 million to $680 million in the first quarter of fiscal 2022 related to the Mexicali Brewery, which was authorized for sale or abandonment in April 2021.
- Planned Fiscal 2022 capital expenditures are $1.0 billion to $1.1 billion, including approximately $900 million for the Beer segment, primarily for the Mexico Beer Projects.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Constellation Brands kept $0.23.
- Revenue$8.61B100.0%
- Cost of revenue−$4.15B48.2%
- Gross profit$4.47B51.8%
- Operating costs−$1.67B19.4%
- Operating income$2.79B32.4%
- Interest, other & tax−$793.1M9.2%
- Net income$2.00B23.2%
Where FY2021 revenue went
$8.61B- Cost of revenue: $4.15B, 48% of revenue
- Net income: $2.00B, 23% of revenue
- SG&A: $1.67B, 19% of revenue
- Interest, other & tax: $793.1M, 9.2% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed April 20, 2021Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $8.61B$8.34B | +3.3% |
| Cost of Revenue | $4.15B$4.19B | −1.0% |
| Gross Profit | $4.47B$4.15B | +7.6% |
| SG&A Expenses | $1.67B$1.62B | +3.3% |
| Operating Income | $2.79B$2.15B | +29.5% |
| Net Income | $2.00B-$11.80M | +17032.2% |
05—Questions
Frequently Asked Questions
What drove the increase in operating income for Fiscal 2021?
Operating income increased 30% to $2,791.1 million, largely because Fiscal 2020 included charges tied to the Wine and Spirits business transformation, including an impairment of long-lived assets held for sale. Beer net sales growth driven by volume also contributed, partially offset by divestitures.
How did the Canopy investment affect reported results?
The Canopy investment produced an unrealized net gain of $802.0 million in Fiscal 2021, compared with an unrealized net loss of $(2,126.4) million in Fiscal 2020. Equity in earnings (losses) from Canopy and related activities was $(679.0) million in Fiscal 2021. The fair value of the Canopy warrants and convertible debt securities was $1,816.0 million at February 28, 2021.
What divestitures did the company complete in Fiscal 2021 and what proceeds did they generate?
The company sold the Paul Masson Grande Amber Brandy brand for cash proceeds of $267.4 million and completed the Wine and Spirits Divestitures for net cash proceeds of $538.4 million, plus up to $250 million of contingent consideration over two years. It also sold the Nobilo Wine brand for $129.0 million and the Concentrate business, and recognized a net loss of $35.7 million on the Wine and Spirits Divestitures.
What is the outlook for the Mexicali Brewery and related capital spending?
In April 2021, the Board authorized management to sell or abandon the Mexicali Brewery, and the company expects a long-lived asset impairment of approximately $650 million to $680 million in the first quarter of fiscal 2022. Capital expenditures are planned at $1.0 billion to $1.1 billion for Fiscal 2022, including approximately $900 million for the Beer segment, primarily for the Mexico Beer Projects.
How is the company returning capital to shareholders?
The company paid dividends of $575.0 million in Fiscal 2021 and declared a quarterly cash dividend of $0.76 per Class A share in April 2021, expecting to return approximately $580 million through dividends in Fiscal 2022. It has returned $1,194.2 million under its publicly announced intent to return $5 billion through Fiscal 2023, and no shares were repurchased in Fiscal 2021 under the 2021 Authorization.
06—Continue