Constellation Brands Inc. (NYSE:STZ)

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

Constellation Brands Inc., effective income tax rate (EITR) reconciliation

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
Statutory U.S. federal income tax rate	21.00%	21.00%	21.00%	21.00%	32.70%	35.00%
State and local income taxes, net of federal income tax benefit	-25.00%	1.50%	8.70%	2.00%	0.70%	1.10%
Net income tax provision (benefit) from legislative changes	3.80%	0.40%	57.90%	-0.90%	-15.50%	0.00%
Earnings taxed at other than U.S. statutory rate	-10.70%	-3.20%	5.00%	-1.90%	-13.60%	-7.60%
Excess tax benefits from stock-based compensation awards	-15.50%	-1.20%	5.90%	-2.00%	-2.90%	0.00%
Net income tax provision (benefit) recognized for adjustment to valuation allowance	124.20%	1.10%	3.50%	-1.80%	0.00%	0.00%
Canadian Divestiture	0.00%	0.00%	0.00%	0.00%	0.00%	-1.20%
Miscellaneous items, net	1.90%	0.50%	0.30%	0.10%	-0.90%	-0.80%
Effective tax rate	99.70%	20.10%	102.30%	16.50%	0.50%	26.50%

The effective income tax rate exhibits extreme volatility over the analyzed six-year period, fluctuating from a low of 0.50% in 2018 to a peak of 102.30% in 2020. While the statutory U.S. federal income tax rate followed a clear downward trend—decreasing from 35.00% in 2017 to a stabilized 21.00% from 2019 through 2022—the actual tax burden was driven primarily by non-recurring adjustments and valuation changes rather than the statutory baseline.

Statutory Rate Stabilization: A significant reduction in the U.S. federal statutory rate is observed between 2017 and 2019, moving from 35.00% to 21.00%. This rate remained constant for the subsequent three fiscal years, establishing a consistent baseline against which other tax adjustments were measured.
Primary Drivers of Rate Volatility: The effective tax rate was heavily influenced by sporadic, high-impact items. Legislative changes caused a notable benefit of 15.50% in 2018 and a substantial provision of 57.90% in 2020. The most extreme variance occurred in 2022, where a net income tax provision for adjustments to the valuation allowance added 124.20% to the rate, nearly offsetting a 25.00% benefit from state and local income taxes.
Consistent Tax Mitigants: Earnings taxed at rates other than the U.S. statutory rate generally provided a downward adjustment to the effective tax rate in most years, particularly in 2018 (-13.60%) and 2022 (-10.70%). Similarly, excess tax benefits from stock-based compensation awards consistently reduced the tax burden, with the most significant impact seen in 2022 at -15.50%.
Anomalous Fiscal Year Performance: The fiscal years 2020 and 2022 stand out as anomalies where the effective tax rate exceeded 99%. These spikes were not the result of statutory increases but were driven by specific accounting adjustments, namely legislative changes in 2020 and valuation allowance adjustments in 2022.

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

Constellation Brands Inc., components of deferred tax assets and liabilities

US$ in thousands

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
Intangible assets	2,188,800)	1,852,000)	2,045,800)	1,616,700)	—)	—)
Loss carryforwards	349,800)	233,100)	225,900)	147,800)	106,000)	144,000)
Stock-based compensation	22,900)	30,100)	75,600)	33,400)	29,100)	43,200)
Lease liabilities	69,000)	83,100)	89,200)	—)	—)	—)
Inventory	51,800)	26,600)	32,400)	20,300)	18,300)	12,500)
Investments in unconsolidated investees	541,000)	36,700)	106,100)	—)	—)	—)
Other accruals	67,800)	33,700)	35,000)	93,400)	57,200)	36,100)
Gross deferred tax assets	3,291,100)	2,295,300)	2,610,000)	1,911,600)	210,600)	235,800)
Valuation allowances	(552,100)	(78,600)	(54,100)	(86,900)	(112,100)	(134,100)
Deferred tax assets, net	2,739,000)	2,216,700)	2,555,900)	1,824,700)	98,500)	101,700)
Intangible assets	(522,100)	—)	—)	—)	(499,800)	(720,600)
Property, plant, and equipment	(186,000)	(200,300)	(175,500)	(191,500)	(197,800)	(255,000)
Investments in unconsolidated investees	(58,900)	—)	—)	(448,900)	(78,200)	(24,200)
Provision for unremitted earnings	(26,000)	(23,000)	(27,500)	(22,800)	(21,200)	(229,300)
Right-of-use assets	(59,800)	(70,600)	(80,500)	—)	—)	—)
Other accruals	(50,500)	—)	—)	—)	—)	—)
Unrealized foreign exchange	—)	—)	—)	—)	—)	(4,100)
Derivative instruments	—)	—)	—)	(7,900)	(19,800)	(900)
Deferred tax liabilities	(903,300)	(293,900)	(283,500)	(671,100)	(816,800)	(1,234,100)
Deferred tax assets (liabilities), net	1,835,700)	1,922,800)	2,272,400)	1,153,600)	(718,300)	(1,132,400)

A fundamental transition in the deferred tax position is observed between February 2018 and February 2019, where the company shifted from a significant net deferred tax liability to a substantial net deferred tax asset. This reversal was primarily driven by the emergence of large deferred tax assets related to intangible assets and a simultaneous reduction in deferred tax liabilities.

Evolution of Deferred Tax Assets: Gross deferred tax assets grew from $235.8 million in 2017 to $3.29 billion in 2022. The primary catalyst for this expansion was the recognition of intangible assets, which contributed $1.62 billion in 2019 and reached $2.19 billion by 2022. Additionally, loss carryforwards showed a general upward trend, increasing from $144 million in 2017 to $349.8 million in 2022. Other contributing assets include a marked increase in investments in unconsolidated investees, which rose to $541 million in 2022 from negligible amounts in previous years.
Analysis of Deferred Tax Liabilities: Deferred tax liabilities exhibited high volatility, declining from $1.23 billion in 2017 to a low of $283.5 million in 2020, before increasing again to $903.3 million in 2022. The initial decrease was characterized by a reduction in liabilities linked to intangible assets and a sharp drop in the provision for unremitted earnings. The subsequent increase in 2022 is largely attributed to the reappearance of intangible asset liabilities ($522.1 million) and persistent liabilities related to property, plant, and equipment.
Valuation Allowance Trends: Valuation allowances remained relatively low and stable between 2017 and 2021, ranging from $54.1 million to $134.1 million. However, a significant spike occurred in February 2022, with the allowance increasing to $552.1 million. This substantial increase indicates a conservative adjustment, reflecting a decrease in the projected realizability of certain deferred tax assets.
Net Deferred Tax Position Shift: The net deferred tax position moved from a liability of $1.13 billion in 2017 to a net asset of $1.84 billion in 2022. The most critical inflection point occurred in 2019, when the net position flipped to a positive $1.15 billion. While the net asset position peaked in 2020 at $2.27 billion, it moderated slightly in 2021 and 2022 due to the combined impact of rising deferred tax liabilities and the increased valuation allowance.

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

Constellation Brands Inc., deferred tax assets and liabilities, classification

US$ in thousands

		Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
	Deferred tax assets	2,351,500)	2,492,500)	2,656,300)	2,183,300)	—)	1,200)
	Deferred tax liabilities	515,800)	569,700)	384,000)	1,029,700)	718,300)	1,133,600)

An analysis of the deferred tax positions reveals a significant structural shift in the balance sheet between 2017 and 2022. The company transitioned from a net deferred tax liability position to a substantial net deferred tax asset position, reflecting changes in the timing differences between taxable income and accounting profit.

Deferred Tax Asset Trends: A substantial increase in deferred tax assets is observed starting in 2019, rising from nominal levels in 2017 to a peak of US$ 2,656.3 million in 2020. Following this peak, a gradual downward trend is evident, with values decreasing to US$ 2,351.5 million by February 28, 2022.
Deferred Tax Liability Trends: Deferred tax liabilities exhibited volatility throughout the period. After an initial decline in 2018 and a subsequent rebound in 2019, a sharp reduction occurred in 2020, where liabilities reached a period low of US$ 384.0 million. Since 2020, these liabilities have remained relatively stable, fluctuating between US$ 384.0 million and US$ 569.7 million.
Net Deferred Tax Position: The overall tax position shifted from a net liability of approximately US$ 1.13 billion in 2017 to a strong net asset position. This net asset position peaked in 2020, driven by the simultaneous peak in deferred tax assets and the trough in deferred tax liabilities. As of February 28, 2022, the company maintains a significant net deferred tax asset balance, despite the slight contraction in assets since 2020.

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Constellation Brands Inc., Financial Data: Reported vs. Adjusted

Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

Constellation Brands Inc., adjustments to financial statements

US$ in thousands

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
Adjustment to Total Assets
Total assets (as reported)	25,855,800)	27,104,800)	27,323,200)	29,231,500)	20,538,700)	18,602,400)
Less: Noncurrent deferred tax assets, net	2,351,500)	2,492,500)	2,656,300)	2,183,300)	—)	1,200)
Total assets (adjusted)	23,504,300)	24,612,300)	24,666,900)	27,048,200)	20,538,700)	18,601,200)
Adjustment to Total Liabilities
Total liabilities (as reported)	13,808,000)	13,175,700)	14,848,900)	16,394,300)	12,476,000)	11,717,600)
Less: Noncurrent deferred tax liabilities, net	515,800)	569,700)	384,000)	1,029,700)	718,300)	1,133,600)
Total liabilities (adjusted)	13,292,200)	12,606,000)	14,464,900)	15,364,600)	11,757,700)	10,584,000)
Adjustment to Total CBI Stockholders’ Equity
Total CBI stockholders’ equity (as reported)	11,731,900)	13,598,900)	12,131,800)	12,551,000)	8,046,100)	6,891,200)
Less: Net deferred tax assets (liabilities)	1,835,700)	1,922,800)	2,272,400)	1,153,600)	(718,300)	(1,132,400)
Total CBI stockholders’ equity (adjusted)	9,896,200)	11,676,100)	9,859,400)	11,397,400)	8,764,400)	8,023,600)
Adjustment to Net Income (loss) Attributable To CBI
Net income (loss) attributable to CBI (as reported)	(40,400)	1,998,000)	(11,800)	3,435,900)	2,318,900)	1,535,100)
Add: Deferred income tax expense (benefit)	84,800)	336,400)	(1,153,700)	426,900)	(428,100)	128,700)
Net income (loss) attributable to CBI (adjusted)	44,400)	2,334,400)	(1,165,500)	3,862,800)	1,890,800)	1,663,800)

The adjustment of financial statements through the removal of deferred taxes reveals a consistent divergence between reported and adjusted balance sheet metrics from 2017 to 2022. The removal of these tax accounts results in a systemic reduction of both total assets and total liabilities, suggesting that deferred tax assets and liabilities constitute a significant portion of the reported financial position.

Asset and Liability Adjustments: Reported total assets peaked in February 2019 at approximately 29.23 billion USD, while adjusted total assets for the same period were lower at 27.05 billion USD. This gap persisted through 2022, where reported assets of 25.86 billion USD were adjusted down to 23.50 billion USD. Similarly, adjusted total liabilities remained consistently lower than reported liabilities throughout the period. The most pronounced difference occurred in 2019, where reported liabilities of 16.39 billion USD were adjusted to 15.36 billion USD, indicating a substantial deferred tax liability component.
Equity Position Volatility: The impact of tax adjustments on stockholders' equity varies over time. In February 2017, the adjusted equity of 8.02 billion USD was higher than the reported equity of 6.89 billion USD, suggesting that the removal of deferred tax liabilities outweighed the removal of deferred tax assets. However, by February 2020 and February 2022, the trend reversed; adjusted equity was lower than reported equity, specifically in 2022 where reported equity of 11.73 billion USD was adjusted down to 9.90 billion USD.
Net Income Variance: Significant fluctuations are observed when comparing reported net income to adjusted net income. In February 2020, reported net income showed a marginal loss of 11.8 million USD, while adjusted net income reflected a much larger loss of 1.17 billion USD. Conversely, in February 2022, a reported loss of 40.4 million USD was transformed into an adjusted profit of 44.4 million USD. These variances highlight that deferred tax accounting creates substantial volatility in reported earnings that is neutralized in the adjusted figures.

Overall, the removal of deferred taxes provides a more conservative view of the asset base and liability structure. The divergent trends between reported and adjusted net income suggest that non-cash tax accounting entries have significantly influenced the reported profitability of the entity over the six-year period.

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Constellation Brands Inc., Financial Ratios: Reported vs. Adjusted

Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

Constellation Brands Inc., adjusted financial ratios

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
Net Profit Margin
Reported net profit margin	-0.46%	23.19%	-0.14%	42.33%	30.57%	20.94%
Adjusted net profit margin	0.50%	27.10%	-13.97%	47.59%	24.93%	22.69%
Total Asset Turnover
Reported total asset turnover	0.34	0.32	0.31	0.28	0.37	0.39
Adjusted total asset turnover	0.38	0.35	0.34	0.30	0.37	0.39
Financial Leverage
Reported financial leverage	2.20	1.99	2.25	2.33	2.55	2.70
Adjusted financial leverage	2.38	2.11	2.50	2.37	2.34	2.32
Return on Equity (ROE)
Reported ROE	-0.34%	14.69%	-0.10%	27.38%	28.82%	22.28%
Adjusted ROE	0.45%	19.99%	-11.82%	33.89%	21.57%	20.74%
Return on Assets (ROA)
Reported ROA	-0.16%	7.37%	-0.04%	11.75%	11.29%	8.25%
Adjusted ROA	0.19%	9.48%	-4.72%	14.28%	9.21%	8.94%

Analysis of the financial ratios indicates a significant divergence between reported and adjusted performance metrics, particularly concerning profitability and returns. The removal of deferred taxes exposes higher volatility in the underlying operational performance, suggesting that deferred tax accounting has served to smooth the reported results over the six-year period.

Profitability and Return Metrics: The reported net profit margin exhibited extreme volatility, peaking at 42.33% in 2019 before dropping to negative values in 2020 and 2022. Adjusted margins amplified these swings; specifically, in 2020, the adjusted margin fell to -13.97% compared to a reported -0.14%. This pattern is mirrored in the Return on Equity (ROE) and Return on Assets (ROA), where adjusted figures show deeper contractions during downturns—most notably in 2020—and higher peaks during growth periods, such as the 33.89% adjusted ROE observed in 2019.
Asset Utilization and Efficiency: Total asset turnover remained relatively stable, though a decline was observed from 0.39 in 2017 to 0.28 in 2019 in reported terms. Adjusted total asset turnover consistently remained higher than reported figures from 2019 onward, ending at 0.38 in 2022, indicating a marginal improvement in asset efficiency when deferred tax effects are excluded.
Capital Structure and Leverage: Financial leverage showed a general downward trend in reported terms from 2.70 in 2017 to 1.99 in 2021, followed by a slight increase to 2.20 in 2022. The adjusted financial leverage remained more consistent, fluctuating within a range between 2.11 and 2.50. In 2020, the adjusted leverage was higher (2.50) than the reported leverage (2.25), suggesting that deferred tax liabilities may have reduced the reported leverage ratio during that period.

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to CBI	(40,400)	1,998,000)	(11,800)	3,435,900)	2,318,900)	1,535,100)
Net sales	8,820,700)	8,614,900)	8,343,500)	8,116,000)	7,585,000)	7,331,500)
Profitability Ratio
Net profit margin¹	-0.46%	23.19%	-0.14%	42.33%	30.57%	20.94%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to CBI	44,400)	2,334,400)	(1,165,500)	3,862,800)	1,890,800)	1,663,800)
Net sales	8,820,700)	8,614,900)	8,343,500)	8,116,000)	7,585,000)	7,331,500)
Profitability Ratio
Adjusted net profit margin²	0.50%	27.10%	-13.97%	47.59%	24.93%	22.69%

2022 Calculations

¹ Net profit margin = 100 × Net income (loss) attributable to CBI ÷ Net sales
= 100 × -40,400 ÷ 8,820,700 = -0.46%

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to CBI ÷ Net sales
= 100 × 44,400 ÷ 8,820,700 = 0.50%

The financial performance over the analyzed six-year period is characterized by significant volatility in both reported and adjusted profitability metrics, featuring a period of substantial growth followed by sharp contractions and subsequent partial recoveries.

Net Profit Margin Trends: A consistent upward trajectory was observed between February 2017 and February 2019. During this window, the reported net profit margin increased from 20.94% to a peak of 42.33%, while the adjusted net profit margin rose from 22.69% to 47.59%. This period represents the highest level of operational efficiency recorded in the dataset.
Profitability Volatility and Contractions: A severe downturn occurred in February 2020, where both reported and adjusted margins turned negative, reaching -0.14% and -13.97%, respectively. While a strong recovery was noted in February 2021, with the adjusted net profit margin returning to 27.10%, another decline followed in February 2022. By the end of the period, the reported net profit margin fell back into negative territory at -0.46%.
Analysis of Adjusted vs. Reported Performance: Significant variance is observed between reported and adjusted figures, particularly during periods of financial stress. In February 2020, the adjusted net income loss was substantially more severe than the reported loss, with the adjusted margin dropping to -13.97% compared to the reported -0.14%. In contrast, for February 2022, the adjusted net profit margin remained slightly positive at 0.50%, whereas the reported margin remained negative at -0.46%, suggesting that non-recurring items heavily influenced the reported bottom line.

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net sales	8,820,700)	8,614,900)	8,343,500)	8,116,000)	7,585,000)	7,331,500)
Total assets	25,855,800)	27,104,800)	27,323,200)	29,231,500)	20,538,700)	18,602,400)
Activity Ratio
Total asset turnover¹	0.34	0.32	0.31	0.28	0.37	0.39
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales	8,820,700)	8,614,900)	8,343,500)	8,116,000)	7,585,000)	7,331,500)
Adjusted total assets	23,504,300)	24,612,300)	24,666,900)	27,048,200)	20,538,700)	18,601,200)
Activity Ratio
Adjusted total asset turnover²	0.38	0.35	0.34	0.30	0.37	0.39

2022 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 8,820,700 ÷ 25,855,800 = 0.34

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 8,820,700 ÷ 23,504,300 = 0.38

The financial data reveals a cyclical trend in asset utilization and scale between February 2017 and February 2022. A significant expansion of the asset base occurred in 2019, followed by a period of gradual contraction and improved operational efficiency.

Asset Base Dynamics: Reported total assets increased from US$ 18.6 billion in 2017 to a peak of US$ 29.2 billion in 2019. Following this peak, a steady decline was observed, with assets reaching US$ 25.9 billion by 2022. Adjusted total assets followed a similar trajectory but remained consistently lower than reported figures from 2019 onward, concluding at US$ 23.5 billion in 2022.
Asset Turnover Trends: Reported total asset turnover experienced a decline from 0.39 in 2017 to a low of 0.28 in 2019, which coincided with the peak in total assets. Following this trough, the ratio improved steadily to 0.34 by 2022. Adjusted total asset turnover exhibited a more robust recovery; after dropping to 0.30 in 2019, it rose consistently to 0.38 by 2022, nearly returning to the initial 2017 baseline.
Comparative Analysis of Adjusted Metrics: A divergence between reported and adjusted asset turnover is evident from 2019 through 2022. The adjusted turnover ratio consistently exceeds the reported ratio during this period, indicating that the removal of specific asset components provides a more favorable view of operational efficiency. This suggests that the assets excluded from the adjusted calculation were not contributing proportionally to revenue generation.

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
As Reported
Selected Financial Data (US$ in thousands)
Total assets	25,855,800)	27,104,800)	27,323,200)	29,231,500)	20,538,700)	18,602,400)
Total CBI stockholders’ equity	11,731,900)	13,598,900)	12,131,800)	12,551,000)	8,046,100)	6,891,200)
Solvency Ratio
Financial leverage¹	2.20	1.99	2.25	2.33	2.55	2.70
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	23,504,300)	24,612,300)	24,666,900)	27,048,200)	20,538,700)	18,601,200)
Adjusted total CBI stockholders’ equity	9,896,200)	11,676,100)	9,859,400)	11,397,400)	8,764,400)	8,023,600)
Solvency Ratio
Adjusted financial leverage²	2.38	2.11	2.50	2.37	2.34	2.32

2022 Calculations

¹ Financial leverage = Total assets ÷ Total CBI stockholders’ equity
= 25,855,800 ÷ 11,731,900 = 2.20

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total CBI stockholders’ equity
= 23,504,300 ÷ 9,896,200 = 2.38

An analysis of the financial position between February 2017 and February 2022 reveals a period of significant expansion followed by a moderate contraction in the balance sheet. Total assets reached a peak in February 2019 before entering a gradual decline, while stockholders' equity exhibited more volatility, peaking in February 2021 on a reported basis.

Asset and Equity Trends: Reported total assets grew from US$ 18.6 billion in 2017 to a high of US$ 29.2 billion in 2019, subsequently decreasing to US$ 25.8 billion by 2022. Adjusted total assets followed a similar trajectory but remained consistently lower than reported figures from 2019 onward, ending at US$ 23.5 billion in 2022. Stockholders' equity showed a general upward trend until 2019, with reported equity reaching US$ 13.6 billion in 2021 before dropping to US$ 11.7 billion in 2022.
Reported Financial Leverage: The reported financial leverage ratio demonstrated a consistent downward trend for the majority of the period, decreasing from 2.70 in 2017 to a low of 1.99 in 2021. This indicates a reduction in the reliance on debt relative to equity during this window. However, a reversal occurred in February 2022, where the ratio increased to 2.20.
Adjusted Financial Leverage: The adjusted financial leverage ratio exhibited greater volatility compared to the reported figures. Starting at 2.32 in 2017, the ratio climbed steadily to a peak of 2.50 in February 2020. A significant reduction was observed in February 2021, where the ratio fell to 2.11, followed by a subsequent increase to 2.38 in February 2022.
Comparative Divergence: A notable divergence exists between reported and adjusted leverage. While reported leverage generally improved (decreased) between 2017 and 2020, adjusted leverage actually increased during the same period. This suggests that the adjustments applied to assets and equity had an inverse effect on the leverage profile. By 2022, the adjusted leverage of 2.38 was significantly higher than the reported leverage of 2.20, indicating that adjusted calculations present a more leveraged financial position than reported figures.

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to CBI	(40,400)	1,998,000)	(11,800)	3,435,900)	2,318,900)	1,535,100)
Total CBI stockholders’ equity	11,731,900)	13,598,900)	12,131,800)	12,551,000)	8,046,100)	6,891,200)
Profitability Ratio
ROE¹	-0.34%	14.69%	-0.10%	27.38%	28.82%	22.28%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to CBI	44,400)	2,334,400)	(1,165,500)	3,862,800)	1,890,800)	1,663,800)
Adjusted total CBI stockholders’ equity	9,896,200)	11,676,100)	9,859,400)	11,397,400)	8,764,400)	8,023,600)
Profitability Ratio
Adjusted ROE²	0.45%	19.99%	-11.82%	33.89%	21.57%	20.74%

2022 Calculations

¹ ROE = 100 × Net income (loss) attributable to CBI ÷ Total CBI stockholders’ equity
= 100 × -40,400 ÷ 11,731,900 = -0.34%

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to CBI ÷ Adjusted total CBI stockholders’ equity
= 100 × 44,400 ÷ 9,896,200 = 0.45%

Financial performance from February 2017 through February 2022 exhibits significant volatility in profitability and equity returns, characterized by a period of expansion followed by sharp fluctuations in the latter years.

Adjusted Net Income Trends: A positive growth trajectory was maintained from 2017 to 2019, peaking at 3.86 billion USD. This was followed by a substantial adjusted loss of 1.16 billion USD in 2020, a strong recovery to 2.33 billion USD in 2021, and a significant contraction to 44.4 million USD by February 2022.
Equity Base Evolution: Total stockholders' equity, on both a reported and adjusted basis, showed a general upward trend from 2017 to 2021. Adjusted equity grew from 8.02 billion USD in 2017 to a peak of 11.67 billion USD in 2021, before decreasing to 9.89 billion USD in 2022.
Adjusted Return on Equity (ROE): The adjusted ROE experienced a steady increase reaching a high of 33.89% in 2019. A severe decline occurred in 2020, with the ratio dropping to -11.82%, representing the lowest point in the analyzed period. While the ratio rebounded to 19.99% in 2021, it fell sharply to 0.45% in 2022.
Comparison Between Reported and Adjusted ROE: Discrepancies between reported and adjusted figures are most pronounced during periods of instability. In 2020, the reported ROE was nearly flat at -0.10%, whereas the adjusted ROE showed a much deeper decline to -11.82%. Conversely, in 2022, the adjusted ROE remained slightly positive at 0.45% despite a reported ROE of -0.34%, indicating that adjustments removed significant negative impacts from the operational performance metric.

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Based on: 10-K (reporting date: 2022-02-28), 10-K (reporting date: 2021-02-28), 10-K (reporting date: 2020-02-29), 10-K (reporting date: 2019-02-28), 10-K (reporting date: 2018-02-28), 10-K (reporting date: 2017-02-28).

	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020	Feb 28, 2019	Feb 28, 2018	Feb 28, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income (loss) attributable to CBI	(40,400)	1,998,000)	(11,800)	3,435,900)	2,318,900)	1,535,100)
Total assets	25,855,800)	27,104,800)	27,323,200)	29,231,500)	20,538,700)	18,602,400)
Profitability Ratio
ROA¹	-0.16%	7.37%	-0.04%	11.75%	11.29%	8.25%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income (loss) attributable to CBI	44,400)	2,334,400)	(1,165,500)	3,862,800)	1,890,800)	1,663,800)
Adjusted total assets	23,504,300)	24,612,300)	24,666,900)	27,048,200)	20,538,700)	18,601,200)
Profitability Ratio
Adjusted ROA²	0.19%	9.48%	-4.72%	14.28%	9.21%	8.94%

2022 Calculations

¹ ROA = 100 × Net income (loss) attributable to CBI ÷ Total assets
= 100 × -40,400 ÷ 25,855,800 = -0.16%

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to CBI ÷ Adjusted total assets
= 100 × 44,400 ÷ 23,504,300 = 0.19%

The financial performance between February 2017 and February 2022 is characterized by significant volatility in profitability and asset utilization. Adjusted Return on Assets (ROA) experienced a period of growth, followed by a sharp contraction and a partial recovery, reflecting substantial fluctuations in adjusted net income relative to the adjusted asset base.

Growth and Peak Performance (2017–2019): A consistent upward trend in efficiency is observed from 2017 to 2019. Adjusted ROA increased from 8.94% to a peak of 14.28%. This growth was driven by a substantial rise in adjusted net income, which grew from 1.66 billion US dollars in 2017 to 3.86 billion US dollars in 2019, outpacing the growth in adjusted total assets.
Contraction and Volatility (2020–2021): A severe decline occurred in February 2020, where adjusted net income dropped to negative 1.17 billion US dollars, resulting in an adjusted ROA of -4.72%. This represents the lowest point in the analyzed period. A strong recovery followed by February 2021, with adjusted ROA returning to 9.48%, supported by a rebound in adjusted net income to 2.33 billion US dollars.
Recent Performance Decay (2022): The period ending February 2022 shows a marked decrease in asset productivity. While adjusted net income remained positive at 44.4 million US dollars, the adjusted ROA fell to 0.19%. This indicates a near-complete erosion of the profitability gains observed in the previous year, despite a slight reduction in the adjusted total asset base to 23.50 billion US dollars.
Comparison of Reported versus Adjusted Metrics: Adjusted ROA generally exhibits higher volatility than reported ROA. In peak years, such as 2019, adjusted ROA (14.28%) significantly exceeded reported ROA (11.75%). Conversely, during the 2020 downturn, the adjusted ROA (-4.72%) showed a much deeper decline than the reported ROA (-0.04%), suggesting that adjustments for non-recurring items had a magnifying effect on the perceived loss of efficiency during that period.

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