Constellation Brands : First Quarter Fiscal 2021 Segment Financial History

Business Segment Information

Organic Net Sales

Through February 28, 2019, our internal management financial reporting consisted of two business divisions: (i) Beer and (ii) Wine and Spirits. Beginning March 1, 2019, as a result of our November 2018 Canopy Investment and a change in our chief operating decision maker ("CODM") on March 1, 2019, we have changed our internal management financial reporting to consist of three business divisions: (i) Beer, (ii) Wine and Spirits, and (iii) Canopy. Consequently, as of May 31, 2019, we report our operating results in four segments: (i) Beer, (ii) Wine and Spirits, (iii) Corporate Operations and Other, and (iv) Canopy. The Canopy Equity Method Investment makes up the Canopy segment.

In the Beer segment, our portfolio consists of high-end imported and craft beer brands. We have an exclusive perpetual brand license to import, market, and sell in the U.S. our Mexican beer portfolio. In the Wine and Spirits segment, we sell a portfolio that includes higher-margin, higher-growth wine brands complemented by certain higher-end spirits brands. Amounts included in the Corporate Operations and Other segment consist of costs of executive management, corporate development, corporate finance, corporate growth and strategy, human resources, internal audit, investor relations, legal, public relations, and information technology, as well as our investments 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.

Amounts included for the Canopy segment represent 100% of Canopy's reported results on a two-month lag, prepared in accordance with U.S. GAAP, and converted from Canadian dollars to U.S. dollars. Although we own less than 100% of the outstanding shares of Canopy, 100% of the Canopy results are included in the information below and subsequently eliminated in order to reconcile to our consolidated financial statements.

In addition, management excludes items that affect comparability ("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 segment management compensation are evaluated based upon core segment operating income (loss).

Organic and Constant Currency

For periods of acquisition, the Company defines organic as current period reported less products of acquired businesses reported for the current period, as appropriate. For periods of divestiture, the Company defines organic as prior period reported less products of divested businesses reported for the prior period, as appropriate. The Company provides organic net sales and organic shipment volumes, and historically provided percentage change in constant currency net sales (which excludes the impact of year-over-year currency exchange rate fluctuations), because the Company uses this information in monitoring and evaluating the underlying business trends of its core operations. In addition, the Company believes this information provides investors valuable insight on underlying business trends and results in order to evaluate year-over-year financial performance.

Transaction	Segment	Date of Transaction	Organic Adjustment Period
Acquisition
Mark West	Wine and Spirits	July 16, 2012	July 16, 2012 - July 15, 2013
Beer Business	Beer	June 7, 2013	June 7, 2013 - June 6, 2014
Meiomi	Wine and Spirits	August 3, 2015	August 3, 2015 - August 2, 2016
Ballast Point	Beer	December 16, 2015	December 16, 2015 - December 15, 2016
Prisoner	Wine and Spirits	April 29, 2016	April 29, 2016 - April 28, 2017
High West (1)	Wine and Spirits	October 14, 2016	October 14, 2016 - October 13, 2017
Charles Smith (1)	Wine and Spirits	October 19, 2016	October 19, 2016 - October 18, 2017
Divestiture
Canadian business	Wine and Spirits	December 17, 2016	December 17, 2015 - December 16, 2016
Black Velvet Divestiture	Wine and Spirits	November 1, 2019	November 1, 2018 - October 31, 2019
Ballast Point Divestiture	Beer	March 2, 2020	March 2, 2019 - March 1, 2020

(1) Collectively, the October Wine and Spirits Acquisitions.

Depletions

Depletions represent distributor shipments of the Company's respective branded products to retail customers, based on third-party data. For periods of acquisition, depletion volume includes depletion of products of acquired businesses for the prior comparable period, as appropriate. For periods of divestiture, depletion volume excludes depletion of products of divested businesses for the prior comparable period, as appropriate.

Transaction	Segment	Date of Transaction	Organic Adjustment Period
Acquisition
Mark West	Wine and Spirits	July 16, 2012	July 16, 2011 - July 15, 2012
Beer Business	Beer	June 7, 2013	June 7, 2012 - June 6, 2013
Meiomi	Wine and Spirits	August 3, 2015	August 3, 2014 - August 2, 2015
Ballast Point	Beer	December 16, 2015	December 16, 2014 - December 15, 2015
Prisoner	Wine and Spirits	April 29, 2016	April 29, 2015 - April 28, 2016
High West (1)	Wine and Spirits	October 14, 2016	October 14, 2015 - October 13, 2016
Charles Smith (1)	Wine and Spirits	October 19, 2016	October 19, 2015 - October 18, 2016
Divestiture
Canadian business	Wine and Spirits	December 17, 2016	N/A (2)
Black Velvet Divestiture	Wine and Spirits	November 1, 2019	November 1, 2018 - October 31, 2019
Ballast Point Divestiture	Beer	March 2, 2020	March 2, 2019 - March 1, 2020

(2) Depletion data is only available for product sold domestically in the U.S.

(in millions)

Net Sales

Beer

Wine and Spirits

Wine

Spirits

Wine and Spirits Canopy

Consolidation and Eliminations Comparable Adjustments

Consolidated Net Sales

Gross Profit

Beer

Wine and Spirits

Corporate Operations and Other Canopy

Consolidation and Eliminations Comparable Adjustments

Consolidated Gross Profit

Operating Income (Loss) Beer (A)

Wine and Spirits (A)

Corporate Operations and Other (A) Canopy (A)

Consolidation and Eliminations (A) Comparable Adjustments

Consolidated Operating Income (Loss)

Income (Loss) from Unconsolidated Investments Beer (B)

Wine and Spirits (B)

Corporate Operations and Other (B) Canopy (B)

Consolidation and Eliminations (B) Comparable Adjustments

Consolidated Income (Loss) from Unconsolidated InvestmentsComparable Earnings (Losses) Before Interest and Taxes (A+B)

535.0 611.1 601.2 620.2 2,367.5 499.6

First Quarter

2021

• $ 1,384.1

  360.1 79.7 2,727.6 579.3

  290.2 80.3

  (290.2) (80.3)

  -

• $ 1,963.4

• $ 769.7

  314.6 1,189.0 263.9

  -45.4 (57.3)

  (45.4) 57.3

  (162.3) (45.3)

• $ 988.3

• $ 577.8

  180.4 206.8 708.4 164.0

  (51.3) (75.2) (223.9) (50.5)

  (210.8) (144.5) (685.8) (733.2)

  210.8 144.5 685.8 733.2

  (376.8) (53.6) (577.9) (81.3)

• $ 610.0

  $

  -

  36.4 3.5

  (3.2) 0.2

  -

  (221.7) (31.7)

  (2,480.1) (543.2)

• $ (571.2)

• $ 663.3

Fiscal	Fiscal	Fiscal	First
Year	Year	Year	Quarter
2017	2018	2019	2021
Year Over Year Growth in Net Sales:
Beer	10%	12%	7%	7%	8%	9%	8%	(6%)
Wine and Spirits	(6%)	(0%)	(8%)	(9%)	(10%)	1%	(6%)	(7%)
Canopy	NM	NM	NM	NM	NM	NM	NM	NM
Consolidation and Eliminations	NM	NM	NM	NM	NM	NM	NM	NM
Consolidated Net Sales	4%	7%	2%	2%	1%	6%	3%	(6%)
Year Over Year Growth in Gross Profit:
Beer	18%	12%	9%	8%	13%	12%	10%	(6%)
Wine and Spirits	(3%)	(2%)	(7%)	(13%)	(9%)	1%	(7%)	(3%)
Canopy	NM	NM	NM	NM	NM	NM	NM	NM
Consolidation and Eliminations	NM	NM	NM	NM	NM	NM	NM	NM
Consolidated Gross Profit	8%	7%	(2%)	2%	2%	6%	2%	(4%)
Year Over Year Growth in Operating Income (Loss):
Beer	20%	11%	12%	9%	14%	6%	10%	(0%)
Wine and Spirits	0%	(3%)	(4%)	(20%)	(12%)	6%	(8%)	2%
Corporate Operations and Other	19%	19%	(13%)	5%	14%	46%	13%	(16%)
Canopy	NM	NM	NM	NM	NM	NM	NM	NM
Consolidation and Eliminations	NM	NM	NM	NM	NM	NM	NM	NM
Consolidated Operating Income (Loss)	(5%)	6%	(0%)	(6%)	(52%)	17%	(11%)	(2%)
Gross Profit as a Percent of Net Sales:
Beer	50.8%	54.3%	54.4%	55.5%	55.7%	56.1%	55.3%	55.6%	55.6%
Wine and Spirits	43.7%	44.8%	43.9%	43.8%	41.5%	45.1%	44.0%	43.6%	45.6%
Canopy	NM	NM	23.0%	16.0%	14.5%	(12.6%)	33.7%	15.6%	(71.4%)
Consolidation and Eliminations	NM	NM	23.0%	16.0%	14.5%	(12.6%)	33.7%	15.6%	(71.4%)
Consolidated Gross Profit	48.1%	50.3%	50.3%	49.1%	50.6%	49.4%	49.9%	49.8%	50.3%
Operating Income (Loss) as a Percent of Net Sales:
Beer	36.3%	39.5%	39.3%	39.3%	41.8%	39.3%	39.3%	40.0%	41.7%
Wine and Spirits	25.6%	27.2%	26.5%	25.9%	22.8%	26.2%	28.9%	26.0%	28.3%
Corporate Operations and Other	(1.9%)	(2.2%)	(2.4%)	(2.1%)	(2.3%)	(2.6%)	(4.0%)	(2.7%)	(2.6%)
Canopy	NM	NM	(170.2%)	NM	NM	NM	NM	NM	NM
Consolidation and Eliminations	NM	NM	(170.2%)	NM	NM	NM	NM	NM	NM
Consolidated Operating Income (Loss)	32.6%	30.1%	29.7%	29.7%	30.7%	13.4%	28.6%	25.8%	31.1%

First Quarter

2020

Second Quarter

2020

Third Quarter

2020

Fourth Quarter

2020

Fiscal Year 2020

(1) Effective March 1, 2018, we adopted the FASB amended guidance regarding the recognition of revenue from contracts with customers using the retrospective application method. Accordingly, financial information for fiscal year 2017 and fiscal year 2018 presented herein has been adjusted to reflect the adoption of this amended guidance. Periods prior to fiscal year 2017 have not been adjusted to reflect the adoption of this amended guidance as the impact is not deemed material.

NM = Not Meaningful

BUSINESS SEGMENT INFORMATION (AS PREVIOUSLY REPORTED (1))

(in millions)

Net Sales

Beer (2)

Wine and Spirits

Wine

Spirits

Wine and Spirits

Corporate Operations and Other Consolidation and Eliminations (2) Comparable Adjustments

Consolidated Net Sales

Gross Profit

Beer (2)

Wine and Spirits

Corporate Operations and Other Consolidation and Eliminations (2) Comparable Adjustments

Consolidated Gross Profit

Operating Income Beer (2) (A)

Wine and Spirits (A)

Corporate Operations and Other (A) Consolidation and Eliminations (2) (A) Comparable Adjustments

Consolidated Operating Income

Income (Loss) from Unconsolidated Investments Crown Imports (2) (B)

Wine and Spirits (B)

Corporate Operations and Other (B) Comparable Adjustments

Consolidated Income (Loss) from Unconsolidated InvestmentsComparable Earnings Before Interest and Taxes (A+B)

Year Over Year Growth in Net Sales:
Beer (2)	12%
Wine and Spirits	(0%)
Consolidation and Eliminations (2)	(100%)
Consolidated Net Sales	24%
Year Over Year Growth in Gross Profit:
Beer (2)	29%
Wine and Spirits	5%
Consolidation and Eliminations (2)	(100%)
Consolidated Gross Profit	29%
Year Over Year Growth in Operating Income:
Beer (2)	32%
Wine and Spirits	6%
Corporate Operations and Other	9%
Consolidation and Eliminations (2)	(100%)
Consolidated Operating Income	(38%)
Gross Profit as a Percent of Net Sales:
Beer (2)	46.0%
Wine and Spirits	41.3%
Consolidation and Eliminations (2)	0.0%
Consolidated Gross Profit	42.8%
Operating Income as a Percent of Net Sales:
Beer (2)	31.9%
Wine and Spirits	23.7%
Corporate Operations and Other	(1.8%)
Consolidation and Eliminations (2)	0.0%
Consolidated Operating Income	24.9%

BUSINESS SEGMENT INFORMATION (AS PREVIOUSLY REPORTED (1))
Fiscal	Fiscal	Fiscal	Fiscal
Year	Year	Year	Year
2015	2016	2017	2018
14%	17%	10%
3%	6%	(6%)
0%	0%	0%
9%	12%	3%
21%	21%	18%
5%	10%	(3%)
0%	0%	0%
14%	20%	8%
24%	21%	20%
8%	10%	(0%)
15%	11%	19%
0%	0%	0%
18%	36%	(5%)
49.0%	50.9%	54.3%
42.2%	43.9%	45.0%
0.0%	0.0%	0.0%
44.9%	48.1%	50.3%
34.9%	36.3%	39.5%
24.8%	25.8%	27.4%
(1.9%)	(1.9%)	(2.2%)
0.0%	0.0%	0.0%
27.0%	32.7%	30.1%

(1)

Effective March 1, 2018, we adopted the FASB amended guidance regarding the recognition of revenue from contracts with customers using the retrospective application method. Financial information for the historical annual and interim periods presented herein are as previously reported and have not been adjusted to reflect the adoption of this amended guidance.

(2)

Prior to the acquisition of our import beer business in June 2013, we had a 50% equity interest in Crown Imports, which was accounted for under the equity method of accounting. Additionally, prior to the acquisition, Crown Imports was a reportable segment.