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LOUISVILLE, Ky.–(BUSINESS WIRE)–Brown-Forman Corporation (NYSE: BFA, BFB) reported financial results for its first quarter of fiscal 2023 with reported net sales1 increasing 11% to $1.0 billion (+17% on an organic basis2) compared to the same prior-year period. In the quarter, reported operating income increased 19% to $343 million (+32% on an organic basis) and diluted earnings per share increased 30% to $0.52.
Lawson Whiting, Brown-Forman’s President and Chief Executive Officer stated, “Building on our exceptional fiscal 2022 results, Brown-Forman is off to a great start in fiscal 2023. Our strong strategic position, premium portfolio, continued innovation, and investment behind our brands have once again delivered double-digit revenue growth. While there is continued uncertainty in the market, I remain optimistic we can continue this momentum and deliver on both short- and long-term growth ambitions.”
First Quarter of Fiscal 2023 Highlights
First Quarter of Fiscal 2023 Brand Results
First Quarter of Fiscal 2023 Market Results
First Quarter of Fiscal 2023 Other P&L Items
First Quarter of Fiscal 2023 Financial Stewardship
Fiscal Year 2023 Outlook
The company anticipates continued growth in fiscal 2023 despite global macroeconomic and geopolitical uncertainties. Accordingly, we reiterate our guidance and continue to expect the following in fiscal 2023:
Conference Call Details
Brown-Forman will host a conference call to discuss these results at 10:00 a.m. (ET) today. A live audio broadcast of the conference call, and the accompanying presentation slides, will be available via Brown-Forman’s website, 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, The 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 5,200 employees globally and sold in more than 170 countries worldwide. For more information about the company, please visit 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 July 31, 2021 and 2022 (Dollars in millions, except per share amounts) |
|||||||||
|
2021 |
|
2022 |
|
Change |
||||
|
|
|
|
|
|
||||
Net sales |
$ |
906 |
|
|
$ |
1,007 |
|
|
11% |
Cost of sales |
|
353 |
|
|
|
385 |
|
|
9% |
Gross profit |
|
553 |
|
|
|
622 |
|
|
13% |
Advertising expenses |
|
90 |
|
|
|
110 |
|
|
23% |
Selling, general, and administrative expenses |
|
168 |
|
|
|
175 |
|
|
4% |
Other expense (income), net |
|
6 |
|
|
|
(6 |
) |
|
|
Operating income |
|
289 |
|
|
|
343 |
|
|
19% |
Interest expense, net |
|
20 |
|
|
|
17 |
|
|
|
Income before income taxes |
|
269 |
|
|
|
326 |
|
|
22% |
Income taxes |
|
77 |
|
|
|
77 |
|
|
|
Net income |
$ |
192 |
|
|
$ |
249 |
|
|
30% |
|
|
|
|
|
|
||||
Earnings per share: |
|
|
|
|
|
||||
Basic |
$ |
0.40 |
|
|
$ |
0.52 |
|
|
30% |
Diluted |
$ |
0.40 |
|
|
$ |
0.52 |
|
|
30% |
|
|
|
|
|
|
||||
Gross margin |
|
61.0 |
% |
|
|
61.8 |
% |
|
|
Operating margin |
|
31.9 |
% |
|
|
34.0 |
% |
|
|
|
|
|
|
|
|
||||
Effective tax rate |
|
28.5 |
% |
|
|
23.6 |
% |
|
|
|
|
|
|
|
|
||||
Cash dividends paid per common share |
$ |
0.1795 |
|
|
$ |
0.1885 |
|
|
|
|
|
|
|
|
|
||||
Shares (in thousands) used in the |
|
|
|
|
|
||||
calculation of earnings per share |
|
|
|
|
|
||||
Basic |
|
478,793 |
|
|
|
479,079 |
|
|
|
Diluted |
|
480,718 |
|
|
|
480,444 |
|
|
|
Brown-Forman Corporation Unaudited Condensed Consolidated Balance Sheets (Dollars in millions) |
|||||
|
April 30, |
|
July 31, |
||
Assets: |
|
|
|
||
Cash and cash equivalents |
$ |
868 |
|
$ |
899 |
Accounts receivable, net |
|
813 |
|
|
841 |
Inventories |
|
1,818 |
|
|
1,912 |
Other current assets |
|
277 |
|
|
271 |
Total current assets |
|
3,776 |
|
|
3,923 |
|
|
|
|
||
Property, plant, and equipment, net |
|
875 |
|
|
880 |
Goodwill |
|
761 |
|
|
756 |
Other intangible assets |
|
586 |
|
|
578 |
Other assets |
|
375 |
|
|
384 |
Total assets |
$ |
6,373 |
|
$ |
6,521 |
|
|
|
|
||
Liabilities: |
|
|
|
||
Accounts payable and accrued expenses |
$ |
703 |
|
$ |
644 |
Dividends payable |
|
— |
|
|
90 |
Accrued income taxes |
|
81 |
|
|
126 |
Current portion of long-term debt |
|
250 |
|
|
250 |
Total current liabilities |
|
1,034 |
|
|
1,110 |
|
|
|
|
||
Long-term debt |
|
2,019 |
|
|
1,998 |
Deferred income taxes |
|
219 |
|
|
236 |
Accrued postretirement benefits |
|
183 |
|
|
183 |
Other liabilities |
|
181 |
|
|
187 |
Total liabilities |
|
3,636 |
|
|
3,714 |
|
|
|
|
||
Stockholders’ equity |
|
2,737 |
|
|
2,807 |
|
|
|
|
||
Total liabilities and stockholders’ equity |
$ |
6,373 |
|
$ |
6,521 |
|
|
|
|
Brown-Forman Corporation Unaudited Condensed Consolidated Statements of Cash Flows For the Three Months Ended July 31, 2021 and 2022 (Dollars in millions) |
|||||||
|
2021 |
|
2022 |
||||
|
|
|
|
||||
Cash provided by operating activities |
$ |
185 |
|
|
$ |
173 |
|
|
|
|
|
||||
Cash flows from investing activities: |
|
|
|
||||
Additions to property, plant, and equipment |
|
(14 |
) |
|
|
(33 |
) |
Other |
|
(1 |
) |
|
|
(1 |
) |
Cash provided by (used for) investing activities |
|
(15 |
) |
|
|
(34 |
) |
|
|
|
|
||||
Cash flows from financing activities: |
|
|
|
||||
Net change in short-term borrowings |
|
(50 |
) |
|
|
— |
|
Dividends paid |
|
(86 |
) |
|
|
(90 |
) |
Other |
|
(5 |
) |
|
|
(4 |
) |
Cash used for financing activities |
|
(141 |
) |
|
|
(94 |
) |
|
|
|
|
||||
Effect of exchange rate changes |
|
(7 |
) |
|
|
(14 |
) |
|
|
|
|
||||
Net increase (decrease) in cash, cash equivalents, and restricted cash |
|
22 |
|
|
|
31 |
|
|
|
|
|
||||
Cash, cash equivalents, and restricted cash at beginning of period |
|
1,150 |
|
|
|
874 |
|
|
|
|
|
||||
Cash, cash equivalents, and restricted cash at end of period |
|
1,172 |
|
|
|
905 |
|
Less: Restricted cash at end of period |
|
— |
|
|
|
(6 |
) |
Cash and cash equivalents at end of period |
$ |
1,172 |
|
|
$ |
899 |
|
|
|
|
|
Schedule A | |||||
Brown-Forman Corporation |
|||||
Supplemental Statement of Operations Information (Unaudited) |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Fiscal Year Ended |
|
|
July 31, 2022 |
|
|
April 30, 2022 |
|
|
|
|
|
|
Reported change in net sales |
|
11% |
|
|
14% |
Acquisitions and divestitures |
|
—% |
|
|
2% |
Foreign exchange |
|
6% |
|
|
2% |
Organic change in net sales2 |
|
17% |
|
|
17% |
|
|
|
|
|
|
Reported change in gross profit |
|
13% |
|
|
14% |
Acquisitions and divestitures |
|
—% |
|
|
1% |
Foreign exchange |
|
8% |
|
|
3% |
Organic change in gross profit2 |
|
21% |
|
|
17% |
|
|
|
|
|
|
Reported change in advertising expenses |
|
23% |
|
|
10% |
Foreign exchange |
|
6% |
|
|
2% |
Organic change in advertising expenses2 |
|
28% |
|
|
11% |
|
|
|
|
|
|
Reported change in SG&A |
|
4% |
|
|
3% |
Foundation |
|
—% |
|
|
3% |
Foreign exchange |
|
3% |
|
|
1% |
Organic change in SG&A2 |
|
7% |
|
|
7% |
|
|
|
|
|
|
Reported change in operating income |
|
19% |
|
|
3% |
Acquisitions and divestitures |
|
—% |
|
|
14% |
Foundation |
|
—% |
|
|
(2)% |
Impairment Charges |
|
(2)% |
|
|
6% |
Foreign exchange |
|
16% |
|
|
6% |
Organic change in operating income2 |
|
32% |
|
|
27% |
|
|
|
|
|
|
Note: Totals may differ due to rounding to match the format of other schedules |
|
|
|
|
|
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 |
|||||||||
Brown-Forman Corporation Supplemental Brand Information (Unaudited) Three Months Ended July 31, 2022 |
|||||||||
Brand3 |
Supplemental Information -Depletions3 |
|
Shipments |
Net Sales % Change vs. Prior Year Period |
|||||
9-Liter |
% Change |
|
9-Liter |
% Change |
Reported |
Acquisitions |
Foreign |
Organic2 |
|
Whiskey |
5.2 |
8% |
|
5.5 |
16% |
15% |
—% |
7% |
22% |
JDTW |
3.6 |
11% |
|
3.8 |
16% |
10% |
—% |
11% |
21% |
JDTH |
0.5 |
(9)% |
|
0.5 |
10% |
26% |
—% |
(9)% |
16% |
Gentleman Jack |
0.2 |
(1)% |
|
0.2 |
12% |
8% |
—% |
9% |
17% |
JDTF |
0.2 |
15% |
|
0.2 |
33% |
35% |
—% |
5% |
41% |
JDTA |
0.2 |
(11)% |
|
0.2 |
(24)% |
(29)% |
—% |
6% |
(22)% |
Woodford Reserve |
0.4 |
12% |
|
0.4 |
30% |
38% |
—% |
1% |
39% |
Old Forester |
0.1 |
1% |
|
0.1 |
18% |
22% |
—% |
—% |
22% |
Rest of Whiskey |
0.2 |
40% |
|
0.1 |
40% |
19% |
1% |
8% |
28% |
Ready-to-drink |
5.4 |
23% |
|
6.4 |
16% |
17% |
—% |
4% |
21% |
JD RTD/RTP |
3.0 |
17% |
|
4.1 |
9% |
12% |
—% |
5% |
17% |
New Mix |
2.3 |
32% |
|
2.3 |
32% |
44% |
—% |
(3)% |
41% |
Tequila |
0.6 |
(1)% |
|
0.6 |
(8)% |
(4)% |
—% |
—% |
(3)% |
Herradura |
0.1 |
(20)% |
|
0.2 |
(16)% |
(4)% |
—% |
—% |
(5)% |
el Jimador |
0.4 |
8% |
|
0.4 |
2% |
3% |
—% |
1% |
4% |
Wine |
0.4 |
(10)% |
|
0.4 |
(22)% |
(13)% |
—% |
—% |
(12)% |
Vodka (Finlandia) |
0.6 |
19% |
|
0.6 |
10% |
(10)% |
—% |
13% |
3% |
Rest of Portfolio |
0.1 |
3% |
|
0.2 |
20% |
21% |
—% |
8% |
29% |
Non-branded and bulk |
NM |
NM |
|
NM |
NM |
7% |
23% |
1% |
32% |
Total Portfolio |
12.4 |
13% |
|
13.7 |
13% |
11% |
—% |
6% |
17% |
Other Brand |
|
|
|
|
|
|
|
|
|
Jack Daniel’s Family of Brands |
7.8 |
11% |
|
9.0 |
12% |
11% |
—% |
8% |
19% |
American Whiskey |
5.2 |
8% |
|
5.5 |
16% |
15% |
—% |
7% |
22% |
Premium Bourbons |
0.5 |
9% |
|
0.6 |
27% |
35% |
—% |
1% |
36% |
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. |
Note: Totals may differ due to rounding |
Schedule C |
||||
Brown-Forman Corporation Supplemental Geographic Information (Unaudited) Three Months Ended July 31, 2022 |
||||
|
% Change vs. Prior-Year Period |
|||
Geographic Area3 |
Net Sales |
|||
Reported |
Acquisitions |
Foreign |
Organic2 |
|
United States |
7% |
—% |
—% |
7% |
Developed International |
9% |
—% |
10% |
19% |
Germany |
13% |
—% |
14% |
26% |
Australia |
15% |
—% |
1% |
16% |
United Kingdom |
(8)% |
—% |
10% |
2% |
France |
(24)% |
—% |
9% |
(15)% |
Canada |
34% |
—% |
8% |
41% |
Rest of Developed International |
32% |
—% |
15% |
47% |
Emerging |
17% |
—% |
16% |
34% |
Mexico |
13% |
—% |
(3)% |
10% |
Poland |
6% |
—% |
18% |
24% |
Brazil |
34% |
—% |
6% |
39% |
Chile |
91% |
—% |
—% |
91% |
Rest of Emerging |
14% |
—% |
32% |
47% |
Travel Retail |
77% |
—% |
8% |
85% |
Non-branded and bulk |
7% |
23% |
1% |
32% |
Total |
11% |
—% |
6% |
17% |
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. |
Note: Totals may differ due to rounding |
Schedule D |
|
Brown-Forman Corporation Supplemental Geographic, Product, and Operations Information (Unaudited) Three Months Ended July 31, 2022 |
|
|
Estimated Net Change in Distributor Inventories3 |
Geographic Area3 – Net Sales |
|
United States |
5% |
Developed International |
2% |
Emerging |
8% |
Travel Retail |
25% |
Non-Branded and Bulk |
—% |
Brand3 – Net Sales |
|
Whiskey |
9% |
JDTW |
5% |
JDTH |
22% |
Gentleman Jack |
15% |
JDTF |
24% |
JDTA |
(14)% |
Woodford Reserve |
21% |
Old Forester |
17% |
Rest of Whiskey |
(3)% |
Ready-to-drink |
—% |
JD RTD/RTP |
—% |
New Mix |
—% |
Tequila |
(4)% |
Herradura |
6% |
el Jimador |
(5)% |
Wine |
(12)% |
Vodka (Finlandia) |
(6)% |
Rest of Portfolio |
23% |
Non-branded and bulk |
—% |
Statement of Operations Line Items |
|
Net Sales |
5% |
Cost of Sales |
2% |
Gross Profit |
7% |
Operating Income |
13% |
A positive difference is interpreted as a net increase in distributors’ inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories. |
Note: Totals may differ due to rounding |
Note 1 – Percentage growth rates are compared to the same prior-year periods, unless otherwise noted.
Note 2 – Non-GAAP Financial Measures
Use of Non-GAAP Financial Information. We use some financial measures in this report that are not measures of financial performance under U.S. generally accepted accounting principles (GAAP). These non-GAAP measures, defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under GAAP. Other companies may not define or calculate these non-GAAP measures in the same way. Reconciliations of these non-GAAP measures to the most closely comparable GAAP measures are presented on Schedules A, B, and C of this press release.
“Organic change” in measures of statements of operations. We present changes in certain measures, or line items, of the statements of operations that are adjusted to an “organic” basis. We use “organic change” for the following measures of the statements of operations: (a) organic net sales; (b) organic cost of sales; (c) organic gross profit; (d) organic advertising expenses; (e) organic selling, general, and administrative (SG&A) expenses; (f) organic other expense (income) net; (g) organic operating expenses*; and (h) organic operating income. To calculate these measures, we adjust, as applicable, for (1) acquisitions and divestitures, (2) foreign exchange, and (3) impairment charges. We explain these adjustments below.
Contacts
ROB FREDERICK
VICE PRESIDENT
CORPORATE COMMUNICATIONS
502-774-7707
SUE PERRAM
DIRECTOR
INVESTOR RELATIONS
502-774-6862
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