Analysis of Geographic Areas
Constellation Brands Inc. operates in 2 regions: U.S. and Non-U.S..
Area Asset Turnover
Constellation Brands Inc., asset turnover by geographic area
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | |
|---|---|---|---|---|---|---|
| U.S. | 7.86 | 8.35 | 9.04 | 7.00 | 6.52 | 6.56 |
| Non-U.S. | 0.05 | 0.05 | 0.05 | 0.05 | 0.07 | 0.18 |
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).
A comparative analysis of geographic asset turnover reveals a stark divergence in operational efficiency between domestic and international markets over the six-year period ending February 28, 2022. The U.S. segment consistently maintains a high ratio of revenue generation per unit of asset, while the Non-U.S. segment demonstrates minimal and declining asset productivity.
- U.S. Asset Turnover Performance
- The U.S. market exhibited a general upward trend in asset efficiency from 2017 to 2020, starting at 6.56 and reaching a peak of 9.04. Following this peak, a moderate contraction occurred, with the ratio declining to 8.35 in 2021 and further to 7.86 by 2022. Despite the recent decline, the U.S. asset turnover remains substantially higher than the 2017 baseline, indicating an overall improvement in the capacity to generate sales from its domestic asset base.
- Non-U.S. Asset Turnover Performance
- International operations showed a significant reduction in asset turnover early in the observed period, dropping from 0.18 in 2017 to 0.05 by February 28, 2019. From 2019 through 2022, the ratio remained stagnant at 0.05. This indicates a period of prolonged inefficiency or a strategic shift in how non-domestic assets are utilized, resulting in negligible revenue generation relative to the asset base in these regions.
- Geographic Efficiency Disparity
- A profound gap exists between the two geographic areas. While the U.S. segment operates with high asset velocity, the Non-U.S. segment operates at a fraction of that efficiency. This disparity widened significantly after 2017, as U.S. efficiency generally improved while international efficiency plummeted and reached a plateau.
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Area Asset Turnover: U.S.
Constellation Brands Inc.; U.S.; area asset turnover calculation
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 8,585,800) | 8,396,500) | 8,116,200) | 7,894,800) | 7,330,100) | 6,807,700) |
| Long-lived tangible assets | 1,092,000) | 1,005,300) | 897,700) | 1,127,700) | 1,124,500) | 1,037,600) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 7.86 | 8.35 | 9.04 | 7.00 | 6.52 | 6.56 |
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).
1 2022 Calculation
Area asset turnover = Net sales ÷ Long-lived tangible assets
= 8,585,800 ÷ 1,092,000 = 7.86
A consistent upward trajectory in net sales is observed from February 2017 through February 2022, with revenue growing from 6.8 billion to 8.6 billion. This sustained growth occurred alongside fluctuating levels of long-lived tangible assets, resulting in a general improvement in asset utilization efficiency over the six-year period.
- Net Sales Growth
- Revenue exhibited steady year-over-year increases, maintaining a positive growth trend throughout the entire period. The most significant gains occurred in the early years of the analysis, with growth continuing at a more moderated pace from 2020 to 2022.
- Long-lived Tangible Asset Dynamics
- Asset levels remained relatively stable between 2017 and 2019, peaking at approximately 1.13 billion. A notable contraction occurred in February 2020, where assets dropped to 897.7 million. Following this decline, a recovery phase was observed, with assets increasing steadily to 1.09 billion by February 2022.
- Area Asset Turnover Efficiency
- The asset turnover ratio reflects a period of increasing efficiency, peaking at 9.04 in February 2020. This peak was driven primarily by the sharp reduction in the asset base occurring simultaneously with rising net sales. Although the ratio moderated to 7.86 by February 2022 as the company reinvested in tangible assets, the efficiency level remained structurally higher than the 6.52 to 7.00 range recorded between 2017 and 2019.
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Area Asset Turnover: Non-U.S.
Constellation Brands Inc.; Non-U.S.; area asset turnover calculation
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 234,900) | 218,400) | 227,300) | 221,200) | 254,900) | 523,800) |
| Long-lived tangible assets | 4,967,600) | 4,816,300) | 4,435,300) | 4,139,600) | 3,665,200) | 2,895,200) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 0.05 | 0.05 | 0.05 | 0.05 | 0.07 | 0.18 |
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).
1 2022 Calculation
Area asset turnover = Net sales ÷ Long-lived tangible assets
= 234,900 ÷ 4,967,600 = 0.05
An analysis of the non-U.S. geographic segment reveals a significant decline in asset productivity between February 2017 and February 2022. The period is characterized by a sharp contraction in revenue coupled with a continuous expansion of the long-lived tangible asset base, resulting in a sustained depression of the asset turnover ratio.
- Net Sales Trends
- A substantial decrease in net sales occurred after February 2017, with revenue dropping from 523.8 million to 254.9 million by February 2018. Following this sharp decline, sales remained relatively stagnant, fluctuating within a narrow range between 218.4 million and 234.9 million through February 2022.
- Long-lived Tangible Asset Growth
- In contrast to the sales trajectory, long-lived tangible assets exhibited consistent growth. The asset base increased annually, rising from 2.895 billion in February 2017 to 4.967 billion by February 2022, indicating a steady increase in capital commitment within non-U.S. operations.
- Area Asset Turnover Performance
- The area asset turnover ratio experienced a precipitous drop from 0.18 in February 2017 to 0.07 in February 2018, eventually flattening at 0.05 from February 2019 through February 2022. This trend demonstrates a marked reduction in the efficiency of asset utilization, as the growth in the asset base failed to generate corresponding increases in net sales.
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Net sales
Constellation Brands Inc., net sales by geographic area
US$ in thousands
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | |
|---|---|---|---|---|---|---|
| U.S. | 8,585,800) | 8,396,500) | 8,116,200) | 7,894,800) | 7,330,100) | 6,807,700) |
| Non-U.S. | 234,900) | 218,400) | 227,300) | 221,200) | 254,900) | 523,800) |
| Total | 8,820,700) | 8,614,900) | 8,343,500) | 8,116,000) | 7,585,000) | 7,331,500) |
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).
Total net sales demonstrate a consistent upward trajectory from fiscal year 2017 to 2022, increasing from $7.33 billion to $8.82 billion. This growth is driven almost exclusively by the domestic market, which has expanded steadily while international revenues experienced a significant early contraction followed by a period of stagnation.
- U.S. Market Performance
- Domestic net sales exhibited uninterrupted year-over-year growth throughout the observed period. Revenues rose from $6.81 billion in 2017 to $8.59 billion in 2022, representing an overall increase of approximately 26.1%. The most pronounced growth occurred between 2017 and 2019, after which the rate of increase moderated but remained positive.
- Non-U.S. Market Volatility
- International operations saw a sharp decline in net sales between 2017 and 2018, with revenues dropping from $523.8 million to $254.9 million. Following this precipitous decline, non-U.S. sales remained relatively flat, fluctuating between a low of $218.4 million in 2021 and a high of $234.9 million in 2022.
- Geographic Revenue Concentration
- A significant shift in revenue distribution is observable, characterized by an increasing reliance on the U.S. market. The U.S. share of total net sales grew from approximately 92.8% in 2017 to approximately 97.3% by 2022. This indicates that the company's overall financial performance is now almost entirely contingent upon its domestic operations.
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Long-lived tangible assets
Constellation Brands Inc., long-lived tangible assets by geographic area
US$ in thousands
| Feb 28, 2022 | Feb 28, 2021 | Feb 29, 2020 | Feb 28, 2019 | Feb 28, 2018 | Feb 28, 2017 | |
|---|---|---|---|---|---|---|
| U.S. | 1,092,000) | 1,005,300) | 897,700) | 1,127,700) | 1,124,500) | 1,037,600) |
| Non-U.S. | 4,967,600) | 4,816,300) | 4,435,300) | 4,139,600) | 3,665,200) | 2,895,200) |
| Total | 6,059,600) | 5,821,600) | 5,333,000) | 5,267,300) | 4,789,700) | 3,932,800) |
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).
Total long-lived tangible assets exhibited a consistent upward trajectory over the six-year period ending February 28, 2022. The aggregate value grew from 3.93 billion USD in 2017 to 6.06 billion USD in 2022, representing a total increase of approximately 54.1%.
- Non-U.S. Asset Expansion
- The primary driver of growth was the expansion of non-U.S. long-lived tangible assets. This segment grew steadily from 2.90 billion USD in 2017 to 4.97 billion USD in 2022. The most significant growth occurred between 2017 and 2019, followed by a period of sustained, moderate increases through 2022.
- U.S. Asset Volatility
- Long-lived tangible assets within the U.S. demonstrated greater volatility compared to international assets. While values increased slightly between 2017 and 2019, a notable contraction occurred in 2020, where assets decreased to 897.7 million USD. Subsequent years showed a recovery, with the 2022 value of 1.09 billion USD returning to and slightly exceeding 2018 levels.
- Geographic Concentration Shift
- A clear shift in geographic asset allocation is observed. In 2017, non-U.S. assets comprised approximately 73.6% of the total long-lived tangible asset base. By February 28, 2022, this concentration increased to approximately 82%, indicating a strategic prioritization of investment in non-U.S. jurisdictions.
- Overall Growth Correlation
- The total asset growth closely mirrors the trend of non-U.S. assets, suggesting that international capital expenditures have effectively offset the fluctuations and periodic declines experienced within the U.S. asset portfolio.
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