CONSTELLATION BRANDS, INC.

Previous wording

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

Current wording

This section provides a description of our strategy, including our 2025 Restructuring Initiative, and a discussion of a recent development and certain acquisitions and divestitures.

Previous wording

This section provides an analysis of our results of operations presented on a business segment basis for the three months ended November 30, 2025, and November 30, 2024, and nine months ended November 30, 2025, and November 30, 2024. In addition, a brief description of significant transactions and other items that affect the comparability of the results is provided.

Current wording

This section provides an analysis of our results of operations presented on a business segment basis for the three months ended May 31, 2026, and May 31, 2025. In addition, a brief description of certain transactions and other items that affect the comparability of the results is provided.

Previous wording

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 dollar share gainers 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 overall U.S. beer market

Current wording

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, Victoria, Kim Crawford, Ruffino, The Prisoner Wine Company, Robert Mondavi Winery, Mi CAMPO, and High West. In the U.S., we are one of the top dollar share gainers 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 overall U.S. beer market and the #2 dollar share gainer in the high-end. Within wine and spirits, we have implemented a multi-year strategy that

Previous wording

and the #2 dollar share gainer in the high-end. 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.

Current wording

repositioned this business to a portfolio of exclusively higher-end brands that we believe is positioned for long-term growth, 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 and retailers. We conduct our business through entities we wholly own as well as through a variety of joint ventures and other entities.

Previous wording

Our internal management financial reporting consists oftwo business divisions: (i) Beer and (ii) Wine and Spirits andwe 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 aportfolio comprised ofexclusively 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.

Current wording

Our internal management financial reporting consists oftwo business divisions: (i) Beer and (ii) Wine and Spirits andwe 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 beer portfolio and to import, market, and sell such portfolio in the U.S. In the Wine and Spirits segment, we sell aportfolio comprised ofexclusively 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.

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

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

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

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

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

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

Previous wording

which we anticipate will continue to drive stronger growth rates relative to the industry. To continue capitalizing on consumer-led premiumization trends, become more competitive, and aim to 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.

Current wording

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 stronger growth rates relative to the industry. To capitalize on these ongoing trends and evolving consumer occasions and preferences, we will continue to employ our strategy dedicated to organic growth of our existing portfolio, supplemented by targeted investments and acquisitions. Our ongoing digital acceleration initiatives are aimed at driving results by enhancing our technology, data, and digital capabilities in key areas. Additionally, we believe our continued focus on maintaining a strong balance sheet provides a solid financial foundation to support our broader strategic initiatives.

Previous wording

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 seek 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. During the remainder of Fiscal 2026, we intend to continue to increase distribution for key brands, optimize growth through differentiated brand positioning, price pack architecture, and market prioritization as well as 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.

Current wording

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 seek 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 2027, we intend to continue to increase distribution for key brands,

Previous wording

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.

Current wording

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 dynamic and evolving consumer environment largely driven by ongoing economic uncertainty and additional headwinds from other socioeconomic factors. These factors may include subdued spend, depressed sentiment, value-seeking behaviors, higher consumer prices and reductions in the discretionary income available to purchase our products among consumers, including from increased gas prices, elevated unemployment, inflation, other unfavorable global and regional economic conditions, demographic trends in the U.S., global supply chain disruptions and constraints, geopolitical events and tensions, wars, and military conflicts, including the conflict in the Middle East.

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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, delayed, or suspended.

Current wording

Developments in international trade relations, including significant additional changes in U.S. trade policy and actions which may include threatened, new, and increased tariffs imposed by the U.S. government on other countries, retaliatory tariffs and actions imposed on certain U.S. goods, and subsequent modifications and delays to or invalidation of various tariffs as well as associated litigation and developments 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 certain product imports, including on aluminum and aluminum derivatives, and certain other countries have implemented tariffs and other actions on U.S. goods, such as boycotts and tariffs on certain product imports originating from the U.S. imposed by the Canadian federal and some provincial governments and retaliatory tariffs in other international markets, although some of these tariffs were subsequently modified, delayed, suspended, or invalidated. Various tariffs and other actions negatively impacted our Fiscal 2026 and First Quarter 2027 results of operations. In April 2026, the U.S. government removed beer made from malt, which includes our beer products, from the scope of the Section 232 aluminum and aluminum derivative tariffs that had been in place at various rates since February 2025.

Previous wording

We expect some or all of these market conditions and their impacts to continue during the remainder of 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.

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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.

Previous wording

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 now estimated to result in $110 million to $130 million of cumulative pre-tax costs once all phases are fully implemented. In connection with the 2025 Restructuring Initiative, we recognized $56.4 million of pre-tax restructuring costs in Nine Months 2026 and $106.1 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.

Current wording

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 was executed within Fiscal 2026. The 2025 Restructuring Initiative is estimated to result in nearly $130 million of cumulative pre-tax costs once all phases are fully implemented. In connection with the 2025 Restructuring Initiative, we recognized $0.6 million of pre-tax restructuring costs in First Quarter 2027 and $122.5 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 2.

Previous wording

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 $845.9 million, subject to certain post-closing adjustments. The net cash proceeds from the 2025 Wine Divestitures were used for the repayment of debt.

Current wording

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. We received $845.9 million of cash proceeds, which were used for the repayment of debt. This divestiture supports our strategic focus on consumer-led premiumization trends and meeting the evolving needs of our consumers.

Previous wording

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.

Current wording

References to organic throughout the following discussion exclude the impact of the 2025 Wine Divestitures, where appropriate.

Previous wording

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 led by a shipment volume decline.

Current wording

Net sales decreased 3% largely due to the lower net sales as a result of the 2025 Wine Divestitures, partially offset by an increase in Beer net sales driven primarily by shipment volume growth and favorable impact from pricing.

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Net income attributable to CBI and diluted net income per common share attributable to CBI decreased 18% and 15%, respectively, largely due to the items discussed above and a higher provision for income taxes, partially offset by a Third Quarter 2025 impairment of our Exchangeable Shares.

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Net income attributable to CBI and diluted net income per common share attributable to CBI increased 27% and 31%, respectively, largely due to the items discussed above.

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We recognized costs primarily in connection with losses on write-downs of excess inventory resulting from our initiatives to streamline, increase efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment (Third Quarter 2026, Nine Months 2026).

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We recognized net costs primarily in connection with losses on write-downs of excess inventory resulting from our initiatives to streamline operations, improve efficiencies, and reduce our cost structure primarily within our Wine and Spirits segment.

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We recognized costs in connection with an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of our business (Third Quarter 2026, Nine Months 2026).

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We recognized costs in connection with an enterprise-wide cost savings and restructuring initiative designed to help optimize the performance of our business.

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We recognized costs in connection with certain activities which are intended to streamline, increase efficiencies, and reduce our cost structure.

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We recognized net costs in connection with activities intended to streamline operations, improve efficiencies, and reduce our cost structure.

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Largely in connection with the 2025 Wine Divestitures we recognized contract liabilities and inventory obsolescence expenses, partially offset by changes in then-existing net assets held for sale (Nine Months 2026). For additional information, refer to Note 6.

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We recognized (i) an impairment on assets held for sale in connection with the New Zealand Wine Divestitures (First Quarter 2027) and (ii)contract liabilities and inventory obsolescence expenses associated with the 2025 Wine Divestitures, partially offset by changes in then-existing net assets held for sale (First Quarter 2026). For additional information, refer to Note 5.

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The decrease in Beer net sales is largely due to a (i) $341.6 million decline in shipment volume and (ii) $21.1 million of unfavorable product mix primarily from a shift in package types, partially offset by $116.5 million of favorable impact from pricing in select markets. We believe our net sales continue to be suppressed by the socioeconomic factors discussed above. Additionally, shipments trailed depletions as distributors rebalanced inventory levels led by softer consumer demand trends. We also continue to expect shipment volume to generally align with depletion volume for Fiscal 2026.

Current wording

The increase in Beer net sales is largely due to (i) $40.7 million of shipment volume growth and (ii) $17.6 million of favorable impact from pricing in select markets, partially offset by $9.3 million of unfavorable product mix primarily from a shift in package types. While our shipment volume growth benefited from consumer demand, we believe our net sales continued to be impacted by the economic uncertainty and socioeconomic factors discussed above.

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(2)Includes adjustments to remove volumes associated with the 2025 Wine Divestitures for the period June 2, 2024, through November 30, 2024.

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(1)Includes adjustments to remove volumes associated with the 2025 Wine Divestitures for the period March 1, 2025, through May 31, 2025.

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The decrease in Wine and Spirits net sales is due to $202.6 million from the Wine and Spirits Divestitures that are no longer part of our business and a $15.7 million decrease in organic net sales. The decrease in organic net sales is largely driven by (i) a $6.7 million decrease in contractual distributor payments as compared to Third Quarter 2025 and (ii) a $5.0 million decrease from strategic pricing actions taken on select brands. Additionally, we believe our branded wine and spirits shipment volume was negatively impacted by both tariffs imposed by the U.S. government and by retaliatory tariffs and actions in certain international markets.

Current wording

The decrease in Wine and Spirits net sales is due to $142.0 million from the 2025 Wine Divestitures that are no longer part of our business, partially offset by a $10.7 million increase in organic net sales. The increase in organic net sales is largely driven by $17.2 million of branded wine and spirits shipment volume growth, partially offset by a (i) $4.9 million decrease in non-branded net sales led by a decline in bulk sales and (ii) $3.2 million decrease from strategic pricing actions taken on select brands. Additionally, we believe our branded wine and spirits shipment volume was negatively impacted by both tariffs imposed by the U.S. government and by retaliatory tariffs and actions in certain international markets.

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The decrease in Wine and Spirits gross profit is due to $78.4 million from the Wine and Spirits Divestitures that is no longer part of our business and a $20.8 million decrease in organic gross profit. The decrease in organic gross profit is largely attributable to (i) $7.0 million of unfavorable product mix, (ii) the $6.7 million decrease in contractual distributor payments, (iii) the $5.0 million decrease from strategic pricing actions, and (iv) a $3.2 million increase in cost of product sold. The increase in cost of product sold is largely attributable to unfavorable fixed cost absorption related to decreased production levels as compared to Third Quarter 2025.

Current wording

The decrease in Wine and Spirits gross profit is due to $34.1 million from the 2025 Wine Divestitures that is no longer part of our business, partially offset by a $2.1 million increase in organic gross profit. The increase in organic gross profit is largely attributable to (i) $15.3 million of branded wine and spirits shipment volume growth and (ii) $2.1 million of decreased cost of product sold partially offset by (i) $12.7 million of unfavorable product mix and (ii) the $3.2 million decrease from strategic pricing actions. The decrease in cost of product sold is largely attributable to cost savings measures as a result of the 2025 Restructuring Initiative, partially offset by incremental U.S. tariffs imposed.

Previous wording

Gross profit as a percent of net sales increased to 53.2% for Third Quarter 2026 compared with 52.1% for Third Quarter 2025. This increase was largely driven by rate growth from (i) divestitures of lower-margin brands, contributing approximately 120 basis points, (ii) beer pricing, which contributed approximately 60 basis points, and (iii) a favorable change in Comparable Adjustments, contributing approximately 50 basis points. These increases were partially offset by (i) 55 basis points of rate decline from higher cost of product sold within the Beer segment, (ii) approximately 25 basis points as a result of lower contractual distributor payments and strategic pricing actions within the Wine and Spirits segment, and (iii) approximately 20 basis points of unfavorable product mix shift within the Wine and Spirits segment.

Current wording

Gross profit as a percent of net sales increased to 54.3% for First Quarter 2027 compared with 50.4% for First Quarter 2026. This increase was largely driven by rate growth from (i) a favorable change in Comparable Adjustments, contributing 220 basis points, (ii) divestitures of lower-margin brands, contributing approximately 160 basis points, (iii) favorable impact from beer pricing, contributing approximately 35 basis points, and (iv) organic branded wine and spirits shipment volume growth, contributing approximately 25 basis points. These increases were partially offset by 55 basis points of unfavorable product mix shift within the Wine and Spirits segment.

Previous wording

The decrease in Beer selling, general, and administrative expenses is largely due to $4.5 million and $2.7 million of decreased general and administrative expenses and marketing spend, respectively. The decrease in general and administrative expenses was driven by cost savings measures as a result of the 2025 Restructuring Initiative, lower short-term incentive accruals, and favorable foreign currency impact, partially offset by increased compensation and benefits. Marketing as a percentage of net sales is relatively flat year-over-year in continued support our high-end imported beer brands.

Current wording

The increase in Beer selling, general, and administrative expenses is largely due to $8.1 million and $5.2 million of increased general and administrative expenses and marketing spend, respectively. The increase in general and administrative expenses is primarily due to higher compensation and benefits and unfavorable foreign currency impact. Marketing as a percentage of net sales is flat year-over-year in continued support of our high-end imported beer brands.

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The decrease in Wine and Spirits selling, general, and administrative expenses is largely due to $28.1 million and $9.0 million of decreased marketing spend and general and administrative expenses, respectively. The decrease in marketing spend is primarily driven by our smaller portfolio of exclusively higher-end wine and spirits brands. The decrease in general and administrative expenses was largely driven by cost savings measures as a result of the 2025 Restructuring Initiative.

Current wording

The decrease in Wine and Spirits selling, general, and administrative expenses is largely due to $18.5 million and $17.2 million of decreased marketing spend and general and administrative expenses, respectively. The decrease in marketing spend is driven by our smaller portfolio of exclusively higher-end wine and spirits brands. The decrease in general and administrative expenses was largely driven by cost savings measures as a result of the 2025 Restructuring Initiative.

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The decrease in Corporate Operations and Other selling, general, and administrative expenses is largely due to a decrease in compensation and benefits, driven by lower (i) headcount resulting from the 2025 Restructuring Initiative and (ii) stock-based compensation expense as compared to Third Quarter 2025, partially offset by increased legal expenses.

Current wording

The decrease in Corporate Operations and Other selling, general, and administrative expenses is largely driven by cost savings measures as a result of the 2025 Restructuring Initiative, partially offset by higher stock-based compensation expense as compared to First Quarter 2026.

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Selling, general, and administrative expenses as a percent of net sales increased to 19.8% for Nine Months 2026 as compared with 18.0% for Nine Months 2025. Theincrease is largely driven by (i)115 basis points of unfavorable impact from the Wine and Spirits Divestitures, (ii) approximately 80 basis points of rate growth from higher Beer selling, general, and administrative expenses coupled with thedecline in Beer net sales, and (iii)an unfavorable change in Comparable Adjustments, contributing 65 basis points of rate growth, partially offset by 55 basis points and 25 basis points of rate decline from decreases in selling, general, and administrative expenses within the Wine and Spirits and Corporate Operations and Other segments, respectively.

Current wording

Selling, general, and administrative expenses as a percent of net sales decreased to 18.8% for First Quarter 2027 as compared to 19.9% for First Quarter 2026. Thedecrease is driven by rate declines from(i) lower selling, general, and administrative expenses in the Wine and Spirits segment, contributing approximately 170 basis points and (ii) a favorable change in Comparable Adjustments, contributing approximately 80 basis points, partially offset by (i) approximately 130 basis points of unfavorable impact from the 2025 Wine Divestitures and (ii) approximately 15 basis points of rate growth from higher selling, general, and administrative expenses in the Beer segment.

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As previously discussed, the decrease in Corporate Operations and Other operating loss is largely due to the decrease in compensation and benefits, partially offset by the Nine Months 2025 tax credit and higher depreciation expense.

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As previously discussed, the decrease in Corporate Operations and Other operating loss is largely attributable to the 2025 Restructuring Initiative, partially offset by higher stock-based compensation expense.

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Interest expense, net decreased to $83.2 million for Third Quarter 2026 as compared to $104.4 million for Third Quarter 2025. This decrease of $21.2 million, or 20%, is due to approximately $865 million of lower average borrowings and approximately 10 basis points of lower weighted average interest rates. For additional information, refer to Note 10.

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Interest expense, net decreased to $85.8 million for First Quarter 2027 as compared to $98.9 million for First Quarter 2026. This decrease of $13.1 million, or 13%, is due to approximately $905 million of lower average borrowings and five basis points of lower weighted average interest rates. For additional information, refer to Note 8.

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The provision for income taxes increased to $110.1 million for Third Quarter 2026 from $44.5 million for Third Quarter 2025. Our effective tax rate for Third Quarter 2026 was 17.4% as compared with 6.6% for Third Quarter 2025. In comparison to prior year, our effective tax rate was largely impacted by:

Current wording

The provision for income taxes increased to $88.1 million for First Quarter 2027 from $87.6 million for First Quarter 2026. Our effective tax rate for First Quarter 2027 was 11.6% as compared with 14.3% for First Quarter 2026. In comparison to prior year, our effective tax rate was largely impacted by:

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•a net income tax benefit resulting from the changes to valuation allowances related to net operating losses and tax legislation updates.

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•a net income tax benefit resulting from changes to valuation allowances; partially offset by

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We continue to expect our reported effective tax rate for Fiscal 2026 to be in the range of 17% to 19%, inclusive of (i) our evaluation of the OB3 Act and (ii) Pillar Two. We will continue to assess the implications of the OB3 Act and Pillar Two. As it relates to the OB3 Act, our income tax provision may continue to be impacted as additional clarifications or interpretive guidance related to the OB3 Act is released.

Current wording

We now expect our reported effective tax rate for Fiscal 2027 to be in the range of 16% to 18%.

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We have an agreement with a financial institution for payment services and to facilitate a voluntary supply chain finance program through this participating financial institution. The program is available to certain of our suppliers allowing them the option to manage their cash flow. We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. As of November 30, 2025, and February 28, 2025, the amount payable to this participating financial institution for suppliers who voluntarily participate in the supply chain finance program was $44.9 million and $39.4 million, respectively, and was included in accounts payable within our consolidated balance sheets. We account for payments made under the supply chain finance program the same as our other accounts payable, as a reduction to our cash flow from operating activities.

Current wording

We have an agreement with a financial institution for payment services and to facilitate a voluntary supply chain finance program through this participating financial institution. The program is available to certain of our suppliers allowing them the option to manage their cash flow. We are not a party to the agreements between the participating financial institution and the suppliers in connection with the program. Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. As of May 31, 2026, and February 28, 2026, the amount payable to this participating financial institution for suppliers who voluntarily participate in the supply chain finance program was $55.0 million and $50.7 million, respectively, and was included with accounts payable on our consolidated balance sheets. We account for payments made under the supply chain finance program the same as our other accounts payable, as a reduction to our cash flow from operating activities.

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The decrease in net cash provided by (used in) operating activities consists of:

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The increase in net cash provided by (used in) operating activities consists of:

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The $61.0 million net change in operating assets and liabilities was largely driven by higher accounts receivable for the Beer segment as a result of timing of sales and collections, as well as lower accounts payable for both the Beer and Wine and Spirits segments, driven by the timing of purchases and lower purchasing activity following the Wine and Spirits Divestitures, respectively. These changes were partially offset by lower accounts receivables for the Wine and Spirits segment due to lower net sales, reflecting the impact of the Wine and Spirits Divestitures. Additionally, net cash provided by operating activities was positively impacted by lower Nine Months 2026 income tax payments as compared to Nine Months 2025 following the resolution of various tax examinations and assessments.

Current wording

The $92.3 million net change in operating assets and liabilities was largely driven by lower shipment volume growth year-over-year in the Beer segment, resulting in a smaller increase in accounts receivable, partially offset by lower accounts receivables for the Wine and Spirits segment due to lower net sales, reflecting the impact of the 2025 Wine Divestitures. Additionally, net cash provided by operating activities was negatively impacted by higher First Quarter 2027 income tax payments as compared to First Quarter 2026 following the resolution of various tax examinations and assessments.

Previous wording

In October 2025, we issued the 4.95% October 2025 Senior Notes. Proceeds from this offering, net of discount and debt issuance costs, of $495.0 million were used for general corporate purposes, including the repayment of the 4.40% October 2018 Senior Notes.

Current wording

In May 2026, we issued the 4.85% May 2026 Senior Notes. Proceeds from this offering, net of discount and debt issuance costs, were $496.8 million.