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LOUISVILLE, Ky.–(BUSINESS WIRE)–Brown-Forman Corporation (NYSE: BFA, BFB) reported financial results for its third quarter and nine months ended January 31, 2022. For the third quarter, the company’s reported net sales1 of $1,037 million increased 14% (+22% on an organic* basis2) compared to the same prior-year period. In the quarter, reported operating income increased 24% to $347 million (+43% on an organic basis) and diluted earnings per share increased 19% to $0.54.
For the first nine months of the fiscal year, the company’s reported net sales increased 11% to $2,937 million (+14% on an organic basis) compared to the same prior-year period. Year-to-date reported operating income decreased 4% to $958 million (+19% on an organic basis) and diluted earnings per share declined 12% to $1.43, primarily due to the gain from the sale of the Canadian Mist, Early Times, and Collingwood brands in the prior fiscal year.
Lawson Whiting, Brown-Forman’s President and Chief Executive Officer said, “Brown-Forman’s business remained strong as we delivered double-digit net sales growth year-to-date, even amid significant supply chain constraints, most notably glass supply.” He added, “The agility and resilience of our people, backed by the increased demand for our brands, allowed us to build on the momentum from the first half of the year to deliver a strong third quarter. We believe our accelerated rate of growth keeps us on track to deliver high quality results for fiscal 2022.”
*As of the third quarter ended January 31, 2022, we changed certain non-GAAP financial measures that we have historically used. We will no longer report “underlying changes” in certain measures of the statements of operations; instead, we will now report “organic change” in certain measures of the statements of operations. As more fully described in “Non-GAAP Financial Measures” in Note 2, “organic change” includes all of the non-GAAP adjustments that we have historically made in adjusting GAAP to “underlying change” results, except that “organic change” does not include an adjustment for “estimated net change in distributor inventories.”
Year-to-Date Fiscal 2022 Highlights
Year-to-Date Fiscal 2022 Brand Results
Year-to-Date Fiscal 2022 Market Results
Year-to-Date Fiscal 2022 Other P&L Items
Year-to-Date Fiscal 2022 Financial Stewardship
Fiscal Year 2022 Outlook
The fiscal 2022 outlook is presented on an “organic” basis, therefore, it is not directly comparable to the previously presented outlook.
The current global economic and geopolitical uncertainties continue to create a challenging operating environment. Amid these uncertainties, we are optimistic in our ability to deliver strong full year results.
The outlook is as follows:
Conference Call Details
Brown-Forman will host a conference call to discuss these results at 10:00 a.m. (ET) today. All interested parties in the United States are invited to join the conference call by dialing 833-962-1472 and asking for the Brown-Forman call. International callers should dial +1-442-268-1255. The company suggests that participants dial in 10 minutes in advance of the 10:00 a.m. (ET) start of the conference call. A live audio broadcast of the conference call, and the accompanying presentation slides, will also be available via Brown-Forman’s Internet website, http://www.brown-forman.com/, through a link to “Investors/Events & Presentations.” A digital audio recording of the conference call and the presentation slides will also be posted on the website and will be available for at least 30 days following the conference call.
For over 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including Jack Daniel’s Tennessee Whiskey, Jack Daniel’s Tennessee RTDs, Jack Daniel’s Tennessee Honey, Jack Daniel’s Tennessee Fire, Jack Daniel’s Tennessee Apple, Gentleman Jack, Jack Daniel’s Single Barrel, Woodford Reserve, Old Forester, Coopers’ Craft, GlenDronach, Benriach, Glenglassaugh, Slane, Herradura, el Jimador, New Mix, Korbel, Sonoma-Cutrer, Finlandia, Chambord, and Fords Gin. Brown-Forman’s brands are supported by approximately 4,700 employees and sold in more than 170 countries worldwide. For more information about the company, please visit http://www.brown-forman.com/.
Important Information on Forward-Looking Statements:
This press release contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “anticipate,” “aspire,” “believe,” “can,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “would,” and similar words indicate forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include, but are not limited to:
For further information on these and other risks, please refer to our public filings, including the “Risk Factors” section of our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.
Brown-Forman Corporation Unaudited Consolidated Statements of Operations For the Three Months Ended January 31, 2021 and 2022 (Dollars in millions, except per share amounts) |
|||||||||
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|
|
|
|
|||||
|
2021 |
|
2022 |
|
Change |
||||
|
|
|
|
|
|
||||
Net sales |
$ |
911 |
|
|
$ |
1,037 |
|
|
14% |
Cost of sales |
|
361 |
|
|
|
415 |
|
|
15% |
Gross profit |
|
550 |
|
|
|
622 |
|
|
13% |
Advertising expenses |
|
121 |
|
|
|
117 |
|
|
(4%) |
Selling, general, and administrative expenses |
|
157 |
|
|
|
162 |
|
|
4% |
Other expense (income), net |
|
(9 |
) |
|
|
(4 |
) |
|
|
Operating income |
|
281 |
|
|
|
347 |
|
|
24% |
Non-operating postretirement expense |
|
1 |
|
|
|
— |
|
|
|
Interest expense, net |
|
21 |
|
|
|
19 |
|
|
|
Income before income taxes |
|
259 |
|
|
|
328 |
|
|
26% |
Income taxes |
|
40 |
|
|
|
69 |
|
|
|
Net income |
$ |
219 |
|
|
$ |
259 |
|
|
18% |
|
|
|
|
|
|
||||
Earnings per share: |
|
|
|
|
|
||||
Basic |
$ |
0.46 |
|
|
$ |
0.54 |
|
|
18% |
Diluted |
$ |
0.45 |
|
|
$ |
0.54 |
|
|
19% |
|
|
|
|
|
|
||||
Gross margin |
|
60.4 |
% |
|
|
60.0 |
% |
|
|
Operating margin |
|
30.9 |
% |
|
|
33.5 |
% |
|
|
|
|
|
|
|
|
||||
Effective tax rate |
|
15.7 |
% |
|
|
21.0 |
% |
|
|
|
|
|
|
|
|
||||
Cash dividends paid per common share |
$ |
0.1795 |
|
|
$ |
1.1885 |
|
|
|
|
|
|
|
|
|
||||
Shares (in thousands) used in the |
|
|
|
|
|
||||
calculation of earnings per share |
|
|
|
|
|
||||
Basic |
|
478,599 |
|
|
|
478,887 |
|
|
|
Diluted |
|
480,836 |
|
|
|
480,567 |
|
|
|
Brown-Forman Corporation Unaudited Consolidated Statements of Operations For the Nine Months Ended January 31, 2021 and 2022 (Dollars in millions, except per share amounts) |
|||||||||
|
|
|
|
|
|||||
|
2021 |
|
2022 |
|
Change |
||||
|
|
|
|
|
|
||||
Net sales |
$ |
2,649 |
|
|
$ |
2,937 |
|
|
11% |
Cost of sales |
|
1,053 |
|
|
|
1,172 |
|
|
11% |
Gross profit |
|
1,596 |
|
|
|
1,765 |
|
|
11% |
Advertising expenses |
|
278 |
|
|
|
311 |
|
|
12% |
Selling, general, and administrative expenses |
|
460 |
|
|
|
495 |
|
|
8% |
Gain on sale of business |
|
(127 |
) |
|
|
— |
|
|
|
Other expense (income), net |
|
(13 |
) |
|
|
1 |
|
|
|
Operating income |
|
998 |
|
|
|
958 |
|
|
(4%) |
Non-operating postretirement expense |
|
4 |
|
|
|
2 |
|
|
|
Interest expense, net |
|
60 |
|
|
|
58 |
|
|
|
Income before income taxes |
|
934 |
|
|
|
898 |
|
|
(4%) |
Income taxes |
|
151 |
|
|
|
211 |
|
|
|
Net income |
$ |
783 |
|
|
$ |
687 |
|
|
(12%) |
|
|
|
|
|
|
||||
Earnings per share: |
|
|
|
|
|
||||
Basic |
$ |
1.64 |
|
|
$ |
1.43 |
|
|
(12%) |
Diluted |
$ |
1.63 |
|
|
$ |
1.43 |
|
|
(12%) |
|
|
|
|
|
|
||||
Gross margin |
|
60.3 |
% |
|
|
60.1 |
% |
|
|
Operating margin |
|
37.7 |
% |
|
|
32.6 |
% |
|
|
|
|
|
|
|
|
||||
Effective tax rate |
|
16.2 |
% |
|
|
23.4 |
% |
|
|
|
|
|
|
|
|
||||
Cash dividends paid per common share |
$ |
0.5281 |
|
|
$ |
1.5475 |
|
|
|
|
|
|
|
|
|
||||
Shares (in thousands) used in the |
|
|
|
|
|
||||
calculation of earnings per share |
|
|
|
|
|
||||
Basic |
|
478,471 |
|
|
|
478,844 |
|
|
|
Diluted |
|
480,665 |
|
|
|
480,599 |
|
|
|
Brown-Forman Corporation Unaudited Condensed Consolidated Balance Sheets (Dollars in millions) |
|||||
|
April 30, |
|
January 31, |
||
Assets: |
|
|
|
||
Cash and cash equivalents |
$ |
1,150 |
|
$ |
812 |
Accounts receivable, net |
|
753 |
|
|
796 |
Inventories |
|
1,751 |
|
|
1,769 |
Other current assets |
|
263 |
|
|
276 |
Total current assets |
|
3,917 |
|
|
3,653 |
|
|
|
|
||
Property, plant, and equipment, net |
|
832 |
|
|
818 |
Goodwill |
|
779 |
|
|
771 |
Other intangible assets |
|
676 |
|
|
652 |
Other assets |
|
318 |
|
|
332 |
Total assets |
$ |
6,522 |
|
$ |
6,226 |
|
|
|
|
||
Liabilities: |
|
|
|
||
Accounts payable and accrued expenses |
$ |
679 |
|
$ |
629 |
Dividends payable |
|
— |
|
|
90 |
Accrued income taxes |
|
34 |
|
|
64 |
Short-term borrowings |
|
205 |
|
|
16 |
Current portion of long-term debt |
|
— |
|
|
250 |
Total current liabilities |
|
918 |
|
|
1,049 |
|
|
|
|
||
Long-term debt |
|
2,354 |
|
|
2,061 |
Deferred income taxes |
|
169 |
|
|
190 |
Accrued postretirement benefits |
|
219 |
|
|
216 |
Other liabilities |
|
206 |
|
|
191 |
Total liabilities |
|
3,866 |
|
|
3,707 |
|
|
|
|
||
Stockholders’ equity |
|
2,656 |
|
|
2,519 |
|
|
|
|
||
Total liabilities and stockholders’ equity |
$ |
6,522 |
|
$ |
6,226 |
Brown-Forman Corporation Unaudited Condensed Consolidated Statements of Cash Flows For the Nine Months Ended January 31, 2021 and 2022 (Dollars in millions) |
|||||||
|
2021 |
|
2022 |
||||
|
|
|
|
||||
Cash provided by operating activities |
$ |
572 |
|
|
$ |
683 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Proceeds from sale of business |
|
177 |
|
|
|
— |
|
Acquisition of business, net of cash acquired |
|
(14 |
) |
|
|
— |
|
Additions to property, plant, and equipment |
|
(41 |
) |
|
|
(62 |
) |
Other |
|
(2 |
) |
|
|
(1 |
) |
Cash provided by (used for) investing activities |
|
120 |
|
|
|
(63 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Net change in short-term borrowings |
|
(23 |
) |
|
|
(181 |
) |
Dividends paid |
|
(253 |
) |
|
|
(741 |
) |
Other |
|
(18 |
) |
|
|
(8 |
) |
Cash used for financing activities |
|
(294 |
) |
|
|
(930 |
) |
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents |
|
33 |
|
|
|
(28 |
) |
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents |
|
431 |
|
|
|
(338 |
) |
|
|
|
|
||||
Cash and cash equivalents, beginning of period |
|
675 |
|
|
|
1,150 |
|
|
|
|
|
||||
Cash and cash equivalents, end of period |
$ |
1,106 |
|
|
$ |
812 |
|
|
|
|
|
Schedule A |
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Brown-Forman Corporation |
||||||
Supplemental Statement of Operations Information (Unaudited) |
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
Fiscal Year Ended |
|
|
January 31, 2022 |
|
January 31, 2022 |
|
April 30, 2021 |
|
|
|
|
|
|
|
Reported change in net sales |
|
14% |
|
11% |
|
3% |
Acquisitions and divestitures |
|
2% |
|
2% |
|
—% |
Foreign exchange |
|
6% |
|
2% |
|
(1)% |
Organic change in net sales2 |
|
22% |
|
14% |
|
2% |
|
|
|
|
|
|
|
Reported change in gross profit |
|
13% |
|
11% |
|
(2)% |
Acquisitions and divestitures |
|
1% |
|
1% |
|
1% |
Foreign exchange |
|
8% |
|
2% |
|
(1)% |
Organic change in gross profit2 |
|
22% |
|
14% |
|
(2)% |
|
|
|
|
|
|
|
Reported change in advertising expenses |
|
(4)% |
|
12% |
|
4% |
Foreign exchange |
|
2% |
|
—% |
|
(2)% |
Organic change in advertising expenses2 |
|
(2)% |
|
12% |
|
2% |
|
|
|
|
|
|
|
Reported change in SG&A |
|
4% |
|
8% |
|
4% |
Foundation |
|
—% |
|
—% |
|
(3)% |
Foreign exchange |
|
2% |
|
—% |
|
(1)% |
Organic change in SG&A2 |
|
6% |
|
8% |
|
—% |
|
|
|
|
|
|
|
Reported change in operating income |
|
24% |
|
(4)% |
|
7% |
Acquisitions and divestitures |
|
2% |
|
16% |
|
(10)% |
Foundation |
|
—% |
|
—% |
|
2% |
Impairment Charges |
|
—% |
|
1% |
|
(1)% |
Foreign exchange |
|
18% |
|
6% |
|
(2)% |
Organic change in operating income2 |
|
43% |
|
19% |
|
(5)% |
|
|
|
|
|
|
|
Note: Totals may differ due to rounding |
|
|
|
|
|
|
See “Note 2 – Non-GAAP Financial Measures” for details on our use of Non-GAAP financial measures, how these measures are calculated and the reasons why we believe this information is useful to readers.
Schedule B |
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Brown-Forman Corporation Supplemental Brand Information (Unaudited) Nine Months Ended January 31, 2022 |
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|
% Change vs. Prior Year Period |
|||||
Brand3 |
Depletions3 |
Net Sales |
||||
9-Liter4 |
Drinks |
Reported |
Acquisitions |
Foreign |
Organic2 |
|
Whiskey |
10% |
10% |
10% |
2% |
2% |
14% |
Jack Daniel’s family of brands |
9% |
10% |
12% |
—% |
2% |
14% |
Jack Daniel’s Tennessee Whiskey |
12% |
12% |
17% |
—% |
3% |
20% |
Jack Daniel’s RTD and RTP |
8% |
8% |
6% |
—% |
—% |
6% |
Jack Daniel’s Tennessee Honey |
3% |
3% |
(1)% |
—% |
2% |
1% |
Gentleman Jack |
(8)% |
(8)% |
(9)% |
—% |
2% |
(7)% |
Jack Daniel’s Tennessee Fire |
2% |
2% |
9% |
—% |
1% |
11% |
Jack Daniel’s Tennessee Apple |
31% |
31% |
41% |
—% |
4% |
45% |
Other Jack Daniel’s Whiskey Brands |
2% |
2% |
5% |
—% |
1% |
7% |
Woodford Reserve |
14% |
14% |
9% |
—% |
—% |
9% |
Rest of Whiskey |
17% |
17% |
(21)% |
43% |
—% |
22% |
Tequila |
(5)% |
11% |
19% |
—% |
(2)% |
17% |
el Jimador |
21% |
21% |
21% |
—% |
(1)% |
20% |
Herradura |
29% |
29% |
31% |
—% |
(2)% |
29% |
Rest of Tequila |
(11)% |
(11)% |
1% |
—% |
(4)% |
(3)% |
Wine |
5% |
5% |
8% |
—% |
—% |
8% |
Vodka |
14% |
14% |
21% |
—% |
2% |
23% |
Rest of Portfolio |
5% |
5% |
9% |
(3)% |
18% |
23% |
Non-Branded and Bulk |
NM |
NM |
11% |
7% |
1% |
18% |
Total Portfolio |
6% |
10% |
11% |
2% |
2% |
14% |
Other Brand Aggregations |
|
|
|
|
|
|
American whiskey |
10% |
10% |
11% |
1% |
2% |
14% |
Premium bourbons |
14% |
14% |
10% |
—% |
—% |
10% |
See “Note 2 – Non-GAAP Financial Measures” for details on our use of Non-GAAP financial measures, how these measures are calculated and the reasons why we believe this information is useful to readers.
Contacts
ROB FREDERICK
VICE PRESIDENT
CORPORATE COMMUNICATIONS
502-774-7707
SUE PERRAM
DIRECTOR
INVESTOR RELATIONS
502-774-6862
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