01—Abstract
Summary
Summary of the 10-K filed April 21, 2022. Cited figures are marked; the original filing is the authoritative source.
Constellation Brands, Inc. reported fiscal 2022 (year ended February 28, 2022) net sales of $8.82 billiona, up from $8.61 billion in fiscal 2021, driven by Beer net sales of $6.75 billion.
Beer net sales rose $677.0 millionb, reflecting $534.8 million of Mexican beer volume growth and $182.4 million of favorable pricing. Wine and Spirits net sales declined to $2.07 billion from $2.54 billion, largely due to divestitures. Operating income fell to $2.33 billion from $2.79 billion, reflecting a $665.9 million impairment of brewery construction in progress at the Mexicali Brewery and the decline in Wine and Spirits sales.
Net income attributable to CBI was $(40.4) million, compared with $1.998c.0 million in fiscal 2021, mainly due to a $1.64 billion unrealized net loss on the Canopy investment. Cash flow from operations was $2.71 billion, and capital expenditures were $1.03 billion, largely for the Mexico Beer Projects. The company expects to spend $5.0 billion to $5.5 billion on Beer capital projects over fiscal 2023 through 2026.
Cash returned to stockholders included $573.0 milliond in dividends and $1.39 billion in share repurchases during the year. Total debt was $10.42 billion at February 28, 2022. In April 2022, the Sands family made a non-binding proposal to convert each Class B share into 1.35 Class A shares, which a Special Committee is evaluating.
02—Key points
Key Highlights
- Consolidated net sales rose to $8,820.7 million from $8,614.9 million, with Beer net sales up $677.0 million to $6,751.6 million.
- Wine and Spirits net sales fell $471.2 million to $2,069.1 million, largely due to the Wine and Spirits Divestitures.
- Operating income declined to $2,331.7 million from $2,791.1 million, including a $665.9 million impairment of Mexicali Brewery construction in progress.
- Net income (loss) attributable to CBI was $(40.4) million, versus $1,998.0 million in fiscal 2021, due largely to a $1,644.7 million unrealized net loss on the Canopy investment.
- Operating cash flow was $2,705.4 million; capital expenditures were $1,026.8 million, including $849.5 million for the Beer segment.
- The company repurchased shares for $1,390.5 million and paid $573.0 million in dividends during fiscal 2022.
- In April 2022, the company received a proposal from the Sands family to convert Class B Stock into 1.35 shares of Class A Stock per share; a Special Committee is evaluating it.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2022, Constellation Brands lost $0.00.
- Revenue$8.82B100.0%
- Cost of revenue−$4.11B46.6%
- Gross profit$4.71B53.4%
- Operating costs−$2.38B26.9%
- Operating income$2.33B26.4%
- Interest, other & tax−$2.37B26.9%
- Net income−$40.4M0.5%
Where FY2022 revenue went
$8.82B- Cost of revenue: $4.11B, 47% of revenue
- Operating income: $2.33B, 26% of revenue
- SG&A: $1.71B, 19% of revenue
- Other operating costs: $665.9M, 7.5% of revenue
Kept 26% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed April 21, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $8.82B$8.61B | +2.4% |
| Cost of Revenue | $4.11B$4.15B | −0.9% |
| Gross Profit | $4.71B$4.47B | +5.4% |
| SG&A Expenses | $1.71B$1.67B | +2.1% |
| Operating Income | $2.33B$2.79B | −16.5% |
| Net Income | -$40.40M$2.00B | −102.0% |
05—Questions
Frequently Asked Questions
Why did net income fall so sharply in fiscal 2022?
Net income attributable to CBI was $(40.4) million versus $1,998.0 million in fiscal 2021. The filing attributes the decline largely to an unrealized net loss of $1,644.7 million on the Canopy investment, compared with an unrealized gain in fiscal 2021, along with the Mexicali Brewery impairment of $665.9 million and lower Wine and Spirits net sales.
How much is the company spending on its Mexico beer capacity?
The company invested over $5.6 billion in the Mexico Beer Projects since 2013, with about $800 million spent during fiscal 2022. It expects to spend an additional $5.0 billion to $5.5 billion over fiscal 2023 through fiscal 2026, and expects to increase Mexican production capacity to approximately 64 to 69 million hectoliters by the end of fiscal 2026.
What happened to the Mexicali Brewery?
Following a negative result from a public consultation held in Mexico in March 2020, construction was suspended. In April 2021 the Board authorized management to sell or abandon the brewery, and a $665.9 million impairment was recognized in the first quarter of fiscal 2022. The company continues to work with Mexican government officials on next steps and possible recovery of capitalized costs, though there is no assurance of recovery.
What is the Class B Stock proposal and what does it mean for shareholders?
On April 2, 2022, the company received a non-binding proposal from the Sands family and entities they control to convert each Class B Share into 1.35 Class A Shares. The Sands family would remain the largest stockholder if the transaction were completed on these terms. Any definitive agreement requires approval by the Special Committee and the Board, plus a majority of the Class A shares not held by Class B holders. No definitive agreement had been entered into as of the filing.
What is the company's capital return outlook?
The company expects to return approximately $600 million to stockholders through cash dividends in fiscal 2023, based on an April 2022 quarterly dividend of $0.80 per Class A share. It has publicly stated an intent to return $5 billion in value to stockholders from fiscal 2020 through fiscal 2023, and has returned $3,157.7 million through fiscal 2022. As of April 21, 2022, $2,936.4 million of the $3.0 billion 2018 Authorization had been used.
06—Continue