← Home
Brown-Forman 
Beverages / Spirits and wine
📢 Press Releases
| Date | Press release |
|---|---|
| 2022-12-07 08:00:00 | Brown-forman Delivers Double-digit Net Sales Growth In The First Half And Raises Full Year Outlook Louisville, ky.--(business wire)--brown-forman corporation (nyse: bfa, bfb) reported financial results for its second quarter and the first half of fiscal 2023. for the second quarter, reported net sales1 increased 10% to $1.1 billion (+16% on an organic basis2) compared to the same prior-year period. reported operating income decreased 2% to $313 million (+8% on an organic basis) in the quarter, and diluted earnings per share decreased 4% to $0.47. for the first six months of the fiscal year, reported net sales increased 11% to $2.1 billion (+17% on an organic basis) compared to the same prior-year period. reported net sales growth was negatively impacted by six percentage points of foreign currency exchange. in the first half, reported operating income increased 8% to $656 million (+19% on an organic basis) and diluted earnings per share increased 11% to $0.99. lawson whiting, brown-forman’s president and chief executive officer stated, “brown-forman has once again displayed tremendous resolve, delivering double-digit revenue growth for the first half of fiscal 2023. consumer demand for our brands remains strong, and we have set the organization on a path for continued growth with our sustained brand investments, recently announced acquisitions, product innovation, and strategic relationships.” whiting added, “despite foreign exchange and inflationary headwinds, brown-forman is on track to deliver another solid year of growth in fiscal 2023. the board’s recent approval of a 9% increase in the regular quarterly cash dividend reinforces our shared confidence in the long-term health of our business.” first half of fiscal 2023 highlights delivered broad-based reported net sales growth across all geographic clusters and the travel retail channel driven by strong consumer demand and the continued rebuilding of distributor inventories portfolio growth was led by: jack daniel’s tennessee whiskey with reported net sales growth of 9% (+18% organic), sustained double-digit growth of woodford reserve with reported net sales of 39% (+40% organic), and ready-to-drinks3 (rtds) with double-digit reported net sales growth of 14% (+20% organic) propelled by jack daniel’s rtds and new mix jack daniel’s tennessee whiskey with reported net sales growth of 9% (+18% organic), sustained double-digit growth of woodford reserve with reported net sales of 39% (+40% organic), and ready-to-drinks3 (rtds) with double-digit reported net sales growth of 14% (+20% organic) propelled by jack daniel’s rtds and new mix reported gross margin contracted 130 basis points driven by inflation, supply chain disruption costs, and foreign exchange reported advertising expense increased 19% (+25% organic) diluted earnings per share increased 11% first half of fiscal 2023 brand results the jack daniel’s family of brands’ reported net sales growth of 9% (+17% organic) was fueled by jack daniel’s tennessee whiskey, which experienced broad-based growth across all geographic clusters and the travel retail channel. higher pricing and an estimated net increase in distributor inventories positively impacted reported net sales, partially offset by the negative effect of foreign exchange. continued consumer desire for convenience and flavor drove gains in jack daniel’s rtds, jack daniel’s tennessee honey, and jack daniel’s tennessee fire. innovation also contributed to net sales growth with the launch of the jack daniel’s bonded series. premium bourbons3, propelled by woodford reserve and old forester, delivered 39% reported net sales growth (+40% organic) driven by higher volumes in the united states, which included an estimated net increase in distributor inventories as glass supply constraints eased. ready-to-drinks delivered double-digit reported net sales growth driven by consumer preference for convenience and flavor. jack daniel’s rtds/ready-to-pours (rtps) grew reported net sales 9% (+15% organic) led by australia and germany, partially offset by the negative effect of foreign exchange. new mix delivered 48% reported net sales growth (+46% organic) fueled by mexico with market share gains in the rtd category. reported net sales for the tequila portfolio increased 10% (+11% organic) led by el jimador and herradura. el jimador grew reported net sales 16% (+18% organic) and herradura increased reported net sales 9% (+9% organic) driven by volumetric growth in the united states. herradura’s reported net sales were positively impacted by an estimated net increase in distributor inventories as supply constraints eased. first half of fiscal 2023 market results reported net sales grew across all geographic clusters and the travel retail channel driven by continued consumer demand, brand strength, and the rebuilding of distributor inventories with some easing of supply chain constraints compared to the first half of fiscal 2022. this broad-based growth was partially offset by foreign exchange headwinds. reported net sales in the united states grew 11% (+11% organic) with volumetric gains, favorable mix, and higher pricing across the portfolio. growth was led by higher volume and pricing from woodford reserve and jack daniel’s tennessee whiskey. korbel california champagne partially offset the growth due to the combination of higher pricing and lower volumes. developed international3 markets experienced strong consumer demand as reported net sales increased 3% (+14% organic) due to volumetric growth from jack daniel’s tennessee whiskey and jack daniel’s rtds. reported net sales growth in developed international markets was led by spain, korea, and canada. emerging3 markets’ reported net sales increased 14% (+27% organic) led by the growth of jack daniel’s tennessee whiskey in brazil and sub-saharan africa, as well as sustained double-digit growth in mexico fueled by new mix. the travel retail channel continued to deliver strong growth with a reported net sales increase of 60% (+67% organic) driven by higher volumes across much of the portfolio as travel continued to rebound. first half of fiscal 2023 other p&l items reported gross profit increased 8% (+17% organic). gross margin contracted 130 basis points to 58.8%, driven by the impact of inflation on input costs, costs related to supply chain disruptions, and the negative effect of foreign exchange. this decline was partially offset by favorable price/mix and the removal of e.u. and u.k. tariffs on american whiskey. reported advertising expense grew 19% (+25% organic) driven by increased investment in the united states to support jack daniel’s tennessee whiskey, herradura, the launch of the jack daniel’s bonded series, and woodford reserve. reported selling, general, and administrative expenses increased 7% (+11% organic), largely driven by higher compensation-related expenses. the company’s reported operating income increased by 8% (+19% organic). earnings per share increased 11% to $0.99 driven by the increase in reported operating income and the benefit of a lower effective tax rate. first half of fiscal 2023 financial stewardship on november 17, 2022, the brown-forman board of directors approved a 9% increase in the regular quarterly cash dividend to $0.2055 per share on its class a and class b common stock. the dividend is payable on january 3, 2023, to stockholders of record on december 2, 2022. brown-forman has paid regular quarterly cash dividends for 79 consecutive years and has increased the regular cash dividend for 39 consecutive years. fiscal 2023 outlook the company anticipates stronger growth in fiscal 2023 despite global macroeconomic and geopolitical uncertainties. accordingly, we update our guidance for fiscal 2023 as follows: reflecting the strength of our portfolio of brands, stronger consumer demand, and the easing of supply chain constraints, we expect organic net sales growth in the high-single digit range. the reported gross margin decline during the first half of fiscal 2023 was driven by higher inflation, supply chain disruption costs, and the negative effect of foreign exchange. for the full year, we expect reported gross margin to be consistent with the first half of fiscal 2023. based on the above expectations, we anticipate high-single digit organic operating income growth. we expect our fiscal 2023 effective tax rate to be in the range of approximately 22% to 23%. capital expenditures are planned to be in the range of $190 to $210 million. 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 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, fords gin, and gin mare. 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,” “outlook,” “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: our substantial dependence upon the continued growth of the jack daniel’s family of brands substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; shifts in consumer purchase practices; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation production facility, aging warehouse, or supply chain disruption imprecision in supply/demand forecasting higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor impact of health epidemics and pandemics, including the covid-19 pandemic, and the risk of the resulting negative economic impacts and related governmental actions unfavorable global or regional economic conditions, particularly related to the covid-19 pandemic, and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations product recalls or other product liability claims, product tampering, contamination, or quality issues negative publicity related to our company, products, brands, marketing, executive leadership, employees, board of directors, family stockholders, operations, business performance, or prospects failure to attract or retain key executive or employee talent risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value risks associated with being a u.s.-based company with a global business, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including new retaliatory tariffs on american whiskeys and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism; and health pandemics failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations fluctuations in foreign currency exchange rates, particularly a stronger u.s. dollar changes in laws, regulatory measures, or governmental policies – especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur decline in the social acceptability of beverage alcohol in significant markets significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products counterfeiting and inadequate protection of our intellectual property rights significant legal disputes and proceedings, or government investigations cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or direct and indirect business partners, or failure to comply with personal data protection laws our status as a family “controlled company” under new york stock exchange rules, and our dual-class share structure 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. unaudited consolidated statements of operations for the three months ended october 31, 2021 and 2022 (dollars in millions, except per share amounts) 2021 2022 change net sales $ 994 $ 1,094 10 % cost of sales 404 481 19 % gross profit 590 613 4 % advertising expenses 104 121 16 % selling, general, and administrative expenses 165 180 9 % other expense (income), net (1 ) (1 ) operating income 322 313 (2 %) non-operating postretirement expense 2 — interest expense, net 19 15 income before income taxes 301 298 (1 %) income taxes 65 71 net income $ 236 $ 227 (4 %) earnings per share: basic $ 0.49 $ 0.47 (4 %) diluted $ 0.49 $ 0.47 (4 %) gross margin 59.3 % 56.0 % operating margin 32.3 % 28.7 % effective tax rate 21.6 % 23.7 % cash dividends paid per common share $ 0.1795 $ 0.1885 shares (in thousands) used in the calculation of earnings per share basic 478,857 479,138 diluted 480,518 480,549 brown-forman corporation unaudited consolidated statements of operations for the six months ended october 31, 2021 and 2022 (dollars in millions, except per share amounts) 2021 2022 change net sales $ 1,900 $ 2,101 11 % cost of sales 757 866 14 % gross profit 1,143 1,235 8 % advertising expenses 194 231 19 % selling, general, and administrative expenses 333 355 7 % other expense (income), net 5 (7 ) operating income 611 656 8 % non-operating postretirement expense 2 — interest expense, net 39 32 income before income taxes 570 624 10 % income taxes 142 148 net income $ 428 $ 476 11 % earnings per share: basic $ 0.89 $ 0.99 11 % diluted $ 0.89 $ 0.99 11 % gross margin 60.1 % 58.8 % operating margin 32.1 % 31.2 % effective tax rate 24.9 % 23.7 % cash dividends paid per common share $ 0.3590 $ 0.3770 shares (in thousands) used in the calculation of earnings per share basic 478,822 479,106 diluted 480,615 480,494 brown-forman corporation unaudited condensed consolidated balance sheets (dollars in millions) april 30, 2022 october 31, 2022 assets: cash and cash equivalents $ 868 $ 1,087 accounts receivable, net 813 894 inventories 1,818 1,995 other current assets 277 282 total current assets 3,776 4,258 property, plant, and equipment, net 875 890 goodwill 761 748 other intangible assets 586 571 other assets 375 385 total assets $ 6,373 $ 6,852 liabilities: accounts payable and accrued expenses $ 703 $ 750 accrued income taxes 81 57 short-term borrowings — 186 current portion of long-term debt 250 250 total current liabilities 1,034 1,243 long-term debt 2,019 1,974 deferred income taxes 219 234 accrued postretirement benefits 183 183 other liabilities 181 178 total liabilities 3,636 3,812 stockholders’ equity 2,737 3,040 total liabilities and stockholders’ equity $ 6,373 $ 6,852 brown-forman corporation unaudited condensed consolidated statements of cash flows for the six months ended october 31, 2021 and 2022 (dollars in millions) 2021 2022 cash provided by operating activities $ 335 $ 316 cash flows from investing activities: additions to property, plant, and equipment (33 ) (61 ) other (2 ) 3 cash provided by (used for) investing activities (35 ) (58 ) cash flows from financing activities: net change in short-term borrowings (184 ) 186 dividends paid (172 ) (180 ) other (6 ) (5 ) cash provided by (used for) financing activities (362 ) 1 effect of exchange rate changes (15 ) (37 ) net increase (decrease) in cash, cash equivalents, and restricted cash (77 ) 222 cash, cash equivalents, and restricted cash at beginning of period 1,150 874 cash, cash equivalents, and restricted cash at end of period 1,073 1,096 less: restricted cash at end of period — (9 ) cash and cash equivalents at end of period $ 1,073 $ 1,087 brown-forman corporation supplemental statement of operations information (unaudited) three months ended six months ended fiscal year ended october 31, 2022 october 31, 2022 april 30, 2022 reported change in net sales 10% 11% 14% acquisitions and divestitures —% —% 2% foreign exchange 6% 6% 2% organic change in net sales2 16% 17% 17% reported change in gross profit 4% 8% 14% acquisitions and divestitures —% —% 1% foreign exchange 9% 9% 3% organic change in gross profit2 13% 17% 17% reported change in advertising expenses 16% 19% 10% foreign exchange 7% 6% 2% organic change in advertising expenses2 22% 25% 11% reported change in sg&a 9% 7% 3% foundation —% —% 3% foreign exchange 6% 5% 1% organic change in sg&a2 15% 11% 7% reported change in operating income (2)% 8% 3% acquisitions and divestitures (1)% —% 14% foundation —% —% (2)% impairment charges (1)% (1)% 6% foreign exchange 12% 14% 6% organic change in operating income2 8% 19% 27% 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 b brown-forman corporation supplemental brand information (unaudited) six months ended october 31, 2022 brand3 supplemental information - depletions3 shipments net sales % change vs. prior year period 9-liter (millions) % change vs. prior year period 9-liter (millions) % change vs. prior year period reported acquisitions and divestitures foreign exchange organic2 whiskey 10.8 8% 11.5 15% 13% —% 7% 20% jdtw 7.4 8% 7.8 14% 9% —% 8% 18% jdth 1.1 —% 1.1 8% 6% —% 6% 12% gentleman jack 0.4 5% 0.4 20% 14% —% 7% 21% jdtf 0.3 15% 0.4 24% 23% —% 5% 28% jdta 0.4 (4)% 0.3 (11)% (16)% —% 6% (10)% woodford reserve 0.8 15% 0.9 34% 39% —% 1% 40% old forester 0.2 8% 0.3 35% 39% —% —% 39% rest of whiskey 0.3 24% 0.3 36% 19% 1% 8% 27% ready-to-drink 10.8 22% 12.6 17% 14% —% 6% 20% jd rtd/rtp 6.1 16% 7.9 10% 9% —% 7% 15% new mix 4.6 32% 4.6 32% 48% —% (2)% 46% tequila 1.3 5% 1.3 5% 10% —% 1% 11% herradura 0.3 (13)% 0.4 (2)% 9% —% —% 9% el jimador 0.9 11% 0.9 16% 16% —% 2% 18% wine 0.9 (7)% 1.0 (16)% (9)% —% —% (9)% vodka (finlandia) 1.3 5% 1.3 2% (17)% —% 12% (4)% rest of portfolio 0.3 1% 0.3 1% 1% —% 6% 8% non-branded and bulk nm nm nm nm 16% 11% 3% 30% total portfolio 25.4 12% 28.0 13% 11% —% 6% 17% other brand aggregations jack daniel’s family of brands 15.9 10% 18.2 12% 9% —% 8% 17% american whiskey 10.7 8% 11.4 15% 13% —% 7% 20% premium bourbons 1.0 13% 1.1 34% 39% —% 1% 40% 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) six months ended october 31, 2022 % change vs. prior-year period geographic area3 net sales reported acquisitions and divestitures foreign exchange organic2 united states 11% —% —% 11% developed international 3% —% 11% 14% germany 1% —% 13% 14% australia 3% —% 6% 9% united kingdom (8)% —% 10% 2% france (18)% —% 10% (8)% canada 33% —% 6% 39% rest of developed international 20% —% 17% 37% emerging 14% —% 13% 27% mexico 23% —% (2)% 21% poland 7% —% 20% 27% brazil 44% —% 2% 45% chile (17)% —% —% (17)% rest of emerging 8% —% 23% 30% travel retail 60% —% 7% 67% non-branded and bulk 16% 11% 3% 30% 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) six months ended october 31, 2022 estimated net change in distributor inventories3 geographic area3 - net sales united states 7% developed international 2% emerging 3% travel retail 13% non-branded and bulk —% brand3 - net sales whiskey 8% jdtw 5% jdth 9% gentleman jack 13% jdtf 10% jdta (8)% woodford reserve 20% old forester 26% rest of whiskey 10% ready-to-drink (1)% jd rtd/rtp (1)% new mix —% tequila 3% herradura 12% el jimador 2% wine (10)% vodka (finlandia) (3)% rest of portfolio (2)% non-branded and bulk —% statement of operations line items net sales 5% cost of sales 2% gross profit 6% operating income 11% 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: (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, (3) impairment changes and (4) a commitment to our charitable foundation. we explain these adjustments below. “acquisitions and divestitures.” this adjustment removes (a) the gain or loss recognized on sale of divested brands, (b) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs), and (c) the effects of operating activity related to acquired and divested brands for periods not comparable year over year (non-comparable periods). excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year. during fiscal 2021, we sold our early times, canadian mist, and collingwood brands and related assets, which resulted in a pre-tax gain of $127 million, and entered into a related tsa for these brands. this adjustment removes (a) transaction and integration costs related to the divestitures, (b) the gain on sale of early times, canadian mist, and collingwood and related assets, (c) operating activity for the non-comparable periods for early times, canadian mist, and collingwood, and (d) the net sales and operating expenses recognized pursuant to the tsa related to (i) contract bottling services and (ii) distribution services in certain markets. with respect to comparisons of fiscal 2022 and fiscal 2021, the non-comparable period is the first quarter of fiscal 2021. with respect to comparisons of the first half of fiscal 2023 and the first half of fiscal 2022, the non-comparable period is the first quarter of fiscal 2022. during the third quarter of fiscal 2021, we acquired part time rangers holdings limited, which owns part time rangers rtds. this adjustment removes (a) transaction and integration costs related to the acquisition and (b) operating activity for the acquired business for the non-comparable period. with respect to comparisons of fiscal 2022 to fiscal 2021, the non-comparable period is primarily activity in the first and second quarters of fiscal 2022. “foreign exchange.” we calculate the percentage change in certain line items of the statements of operations in accordance with gaap and adjust to exclude the cost or benefit of currency fluctuations. adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the organic trend both positively and negatively. (in this press release,“dollar” always means the u.s. dollar unless stated otherwise.) to eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year periods. “impairment charges.” this adjustment removes the impact of impairment charges from our results of operations. during the first half of fiscal 2022, we recognized non-cash impairment charges of $9 million for certain fixed assets. during the fourth quarter of fiscal 2022, we recognized a non-cash impairment charge of $52 million for our finlandia brand name. we believe that these adjustments allow for us to better understand our organic results on a comparable basis. “foundation.” during the fourth quarter of fiscal 2021, we committed $20 million to the brown-forman foundation (the foundation) to support the communities where our employees live and work. this adjustment removes the $20 million commitment to the foundation from our organic sg&a expenses and organic operating income to present our organic results on a comparable basis. we use the non-gaap measure “organic change,” along with other metrics, to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the board of directors, stockholders, and investment community. we have consistently applied the adjustments within our reconciliations in arriving at each non-gaap measure. we believe these non-gaap measures are useful to readers and investors because they enhance the understanding of our historical financial performance and comparability between periods. when we provide guidance for organic change in certain measures of the statements of operations we do not provide guidance for the corresponding gaap change because the gaap measure will include items that are difficult to quantify or predict with reasonable certainty, such as foreign exchange, which could have a significant impact on our gaap income statement measures. as of the third quarter ended january 31, 2022, we changed certain non-gaap financial measures that we have historically used. we no longer report “underlying changes” in certain measures of the statements of operations; instead, we now report “organic change” for certain measures of the statements of operations. “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,” which reflected the estimated net effect of changes in distributor inventories on changes in certain line items of the statements of operations. this change to our non-gaap financial measures was in response to comments from and discussions with the staff of the securities and exchange commission. although we no longer provide non-gaap financial measures that adjust for “estimated net change in distributor inventories,” we still believe that our results are affected by changes in distributor inventories, particularly in our largest market, the united states, where the spirits industry is subject to regulations that essentially mandate a so-called “three-tier system,” with a value chain that includes suppliers, distributors and retailers. accordingly, we continue to provide information concerning fluctuations in distributor inventories. we believe such information is useful in understanding our performance and trends as it provides relevant information regarding customers’ demand for our products. note 3 - definitions from time to time, to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate markets according to stage of economic development as defined by the international monetary fund (imf), and we aggregate brands by beverage alcohol category. below, we define the geographic and brand aggregations used in this release. in schedule c and schedule d, we provide supplemental information for our largest markets ranked by percentage of total fiscal 2022 reported net sales. due to our decision to suspend commercial operations in russia, it is no longer considered one of our largest markets. in addition to markets that are listed by country name, we include the following aggregations: “developed international” markets are “advanced economies” as defined by the imf, excluding the united states. our largest developed international markets are germany, australia, the united kingdom, france, and canada. this aggregation represents our net sales of branded products in these markets. “emerging” markets are “emerging and developing economies” as defined by the imf. our largest emerging markets are mexico, poland, brazil, and chile. this aggregation represents our net sales of branded products in these markets. “travel retail” represents our net sales of branded products to global duty-free customers, other travel retail customers, and the u.s. military, regardless of customer location. “non-branded and bulk” includes our net sales of used barrels, contract bottling, and bulk whiskey and wine, regardless of customer location. brand aggregations. in schedule b and schedule d, we provide supplemental information for our largest brands ranked by percentage of total fiscal 2022 reported net sales. in addition to brands that are listed by name, we include the following aggregations outlined below. beginning in fiscal 2023, we began presenting “ready-to-drink” products as a separate aggregation due to its more significant contribution to our growth in recent years and industry-wide category growth trends. “whiskey” no longer contains jack daniel’s ready-to-drink (rtd) and ready-to-pour (rtp), and “tequila” no longer includes new mix. these brands are now included in the “ready-to-drink” brand aggregation. “whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs. the brands included in this category are the jack daniel’s family of brands (excluding the “ready-to-drink” products defined below), the woodford reserve family of brands (woodford reserve), the old forester family of brands (old forester), glendronach, benriach, glenglassaugh, slane irish whiskey, and coopers’ craft. “american whiskey” includes the jack daniel’s family of brands (excluding the “ready-to-drink” products defined below) and premium bourbons (defined below). “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “super-premium american whiskey” includes woodford reserve, gentleman jack, and other super-premium jack daniel’s expressions. “ready-to-drink” includes all ready-to-drink (rtd) and ready-to-pour (rtp) products. the brands included in this category are jack daniel’s rtd and rtp products (jd rtd/rtp), new mix, and other rtd/rtp products. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s double jack, and other malt- and spirit-based jack daniel’s rtds along with jack daniel’s winter jack rtp. “tequila” includes the herradura family of brands (herradura), el jimador, and other tequilas. “wine” includes korbel california champagne and sonoma-cutrer wines. “vodka” includes finlandia. “non-branded and bulk” includes our net sales of used barrels, contract bottling, and bulk whiskey and wine. “jack daniel’s family of brands” includes jack daniel’s tennessee whiskey (jdtw), jack daniel’s rtd and rtp products (jd rtd/rtp), jack daniel’s tennessee honey (jdth), gentleman jack, jack daniel’s tennessee fire (jdtf), jack daniel’s tennessee apple (jdta), jack daniel’s single barrel collection (jdsb), jack daniel’s tennessee rye whiskey (jdtr), jack daniel’s sinatra select, jack daniel’s bonded, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, jack daniel’s 10 years old, and jack daniel’s triple mash. other metrics. “shipments.” we generally record revenues when we ship or deliver our products to our customers. in this document, unless otherwise specified, we refer to shipments when discussing volume. “depletions.” this is a term commonly used in the beverage alcohol industry to describe volume. depending on the context, depletions usually means either (a) our shipments directly to retail or wholesale customers for owned distribution markets or (b) shipments from our distributor customers to retailers and wholesalers in other markets. we believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do. “consumer takeaway.” when discussing trends in the market, we refer to consumer takeaway, a term commonly used in the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets, including products purchased through e-premise channels, as measured by volume or retail sales value. this information is provided by third parties, such as nielsen and the national alcohol beverage control association (nabca). our estimates of market share or changes in market share are derived from consumer takeaway data using the retail sales value metric. we believe consumer takeaway is a leading indicator of how consumer demand is trending. “estimated net change in distributor inventories.” we generally recognize revenue when our products are shipped or delivered to customers. in the united states and certain other markets, our customers are distributors that sell downstream to retailers and consumers. we believe that our distributors’ downstream sales more closely reflect actual consumer demand than do our shipments to distributors. our shipments increase distributors’ inventories, while distributors’ depletions (as described above) reduce their inventories. therefore, it is possible that our shipments do not coincide with distributors’ downstream depletions and merely reflect changes in distributors’ inventories. because changes in distributors’ inventories could affect our trends, we believe it is useful for investors to understand those changes in the context of our operating results. we perform the following calculation to determine the “estimated net change in distributor inventories”: for both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by (a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion volumes. we subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year percentage change of the organic amount to calculate the “estimated net change in distributor inventories.” a positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends could decrease as distributors’ reduce inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories. |
| 2022-08-31 08:00:00 | Brown-forman Reports Continued Momentum With Strong First Quarter Fiscal 2023 Results 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 reported net sales grew 11% (+17% organic) and were positively impacted by an estimated net increase in distributor inventories. the jack daniel’s family of brands3 delivered 11% reported net sales growth (+19% organic), driven by 10% reported net sales growth (+21% organic) from jack daniel’s tennessee whiskey. woodford reserve grew reported net sales 38% (+39% organic). ready-to-drink3 (rtd) was fueled by jack daniel’s rtds and new mix with reported net sales growth of 17% (+21% organic). all geographic clusters and the travel retail3 channel benefited from strong growth. the jack daniel’s family of brands3 delivered 11% reported net sales growth (+19% organic), driven by 10% reported net sales growth (+21% organic) from jack daniel’s tennessee whiskey. woodford reserve grew reported net sales 38% (+39% organic). ready-to-drink3 (rtd) was fueled by jack daniel’s rtds and new mix with reported net sales growth of 17% (+21% organic). all geographic clusters and the travel retail3 channel benefited from strong growth. reported gross margin expanded 80 basis points. marketing investment increased 23% (+28% organic). first quarter of fiscal 2023 brand results the jack daniel’s family of brands delivered double-digit reported net sales growth of 11% (+19% organic) led by jack daniel’s tennessee whiskey, reflecting strong demand and higher prices in emerging markets, developed international markets, and the travel retail channel. an estimated net increase in distributor inventories positively impacted reported net sales. this growth was partially offset by the negative effect of foreign exchange. continued consumer desire for flavor drove gains in jack daniel’s tennessee honey, jack daniel’s rtds, and jack daniel’s tennessee fire. innovation also contributed to net sales growth with the introduction of the jack daniel’s bonded series. premium bourbons3, propelled by woodford reserve and old forester, delivered 35% reported net sales growth (+36% organic) driven by higher volumes in the united states. an estimated increase in distributor inventories positively impacted woodford reserve’s and old forester’s reported net sales. ready-to-drink beverages delivered double-digit reported net sales growth. consumer preference for convenience spurred jack daniel’s rtds/ready-to-pours (rtps) as reported net sales grew 12% (+17% organic) driven by australia and germany. new mix grew reported net sales 44% (+41% organic) fueled by growth in mexico as we gained market share in the rtd category. herradura’s reported net sales declined 4% (-5% organic) due to cycling significant growth during the same prior-year period in the united states and the current year impact of supply chain challenges. first quarter of fiscal 2023 market results all geographic clusters and the travel retail channel benefited from strong reported net sales growth driven by higher volumes. this growth was partially offset by foreign exchange headwinds. an estimated net increase in distributor inventories positively impacted reported net sales. reported net sales in the united states grew 7% (+7% organic) with volumetric gains of woodford reserve, jack daniel’s tennessee honey, and jack daniel’s tennessee fire. these gains were partially offset by lower volumes for jack daniel’s tennessee whiskey and korbel california champagne due to strong comparisons in the same period last year. developed international3 markets experienced recovery of the on-trade channel and the return of travel and tourism as reported net sales increased 9% (+19% organic) due to volumetric growth from jack daniel’s tennessee whiskey and jack daniel’s rtds. reported net sales growth in developed international markets was led by australia, germany, and spain. emerging3 markets reported net sales increased 17% (+34% organic) reflecting the growth of jack daniel’s tennessee whiskey in sub-saharan africa, brazil, and chile, as well as new mix in mexico. the travel retail channel surged with reported net sales growth of 77% (+85% organic) driven primarily by higher volumes across much of the portfolio as travel continued to rebound. first quarter of fiscal 2023 other p&l items reported gross profit increased 13% (+21% organic). gross margin expanded 80 basis points to 61.8%, driven primarily by favorable price/mix and the removal of the eu and u.k. tariffs on american whiskey, partially offset by the negative effect of foreign exchange, higher costs related to supply chain disruptions, and input cost inflation. reported advertising expense grew 23% (+28% organic) driven by increased marketing investment in the united states to support jack daniel’s tennessee whiskey, herradura, the launch of the jack daniel’s bonded series, and woodford reserve. reported selling, general, and administrative expenses increased 4% (+7% organic), largely driven by higher compensation-related expenses. the company’s reported operating income increased by 19% (+32% organic). earnings per share increased 30.0% to $0.52 driven by the increase in reported operating income and the benefit of a lower effective tax rate. first quarter of fiscal 2023 financial stewardship on july 28, 2022, the brown-forman board of directors declared a regular quarterly cash dividend of $0.1885 cents per share on its class a and class b common stock. the dividend is payable on october 3, 2022, to stockholders of record on september 6, 2022. brown-forman has paid regular quarterly cash dividends for 78 consecutive years and has increased the regular cash dividend for 38 consecutive years. 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: with the strength of our portfolio of brands and strong consumer demand, we expect organic net sales growth in the mid-single digit range. considering the net effect of inflation and the removal of the eu and u.k. tariffs on american whiskey, we project reported gross margin to increase slightly. based on the above expectations, we anticipate mid-single digit organic operating income growth. we expect our fiscal 2023 effective tax rate to be in the range of approximately 22% to 23%. capital expenditures are planned to be in the range of $190 to $210 million. 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: our substantial dependence upon the continued growth of the jack daniel’s family of brands substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; shifts in consumer purchase practices; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation production facility, aging warehouse, or supply chain disruption imprecision in supply/demand forecasting higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor impact of health epidemics and pandemics, including the covid-19 pandemic, and the risk of the resulting negative economic impacts and related governmental actions unfavorable global or regional economic conditions, particularly related to the covid-19 pandemic, and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations product recalls or other product liability claims, product tampering, contamination, or quality issues negative publicity related to our company, products, brands, marketing, executive leadership, employees, board of directors, family stockholders, operations, business performance, or prospects failure to attract or retain key executive or employee talent risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value risks associated with being a u.s.-based company with a global business, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including additional retaliatory tariffs on american whiskeys and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism; and health pandemics failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations fluctuations in foreign currency exchange rates, particularly a stronger u.s. dollar changes in laws, regulatory measures, or governmental policies – especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur decline in the social acceptability of beverage alcohol in significant markets significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products counterfeiting and inadequate protection of our intellectual property rights significant legal disputes and proceedings, or government investigations cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or direct and indirect business partners, or failure to comply with personal data protection laws our status as a family “controlled company” under new york stock exchange rules, and our dual-class share structure 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, 2022 july 31, 2022 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 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 (millions) % change vs. prior year period 9-liter (millions) % change vs. prior year period reported acquisitions and divestitures foreign exchange 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 aggregations 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 and divestitures foreign exchange 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. “acquisitions and divestitures.” this adjustment removes (a) the gain or loss recognized on sale of divested brands, (b) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs), and (c) the effects of operating activity related to acquired and divested brands for periods not comparable year over year (non-comparable periods). excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year. during fiscal 2021, we sold our early times, canadian mist, and collingwood brands and related assets, and entered into a related transition services agreement (tsa) for these brands. this adjustment removes the net sales and operating expenses recognized pursuant to the tsa for the non-comparable period, which is activity during the first quarter of fiscal 2022. we believe this adjustment allows for us to better understand our organic results on a comparable basis. “foreign exchange.” we calculate the percentage change in certain line items of the statements of operations in accordance with gaap and adjust to exclude the cost or benefit of currency fluctuations. adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the organic trend both positively and negatively. (in this press release,“dollar” always means the u.s. dollar unless stated otherwise.) to eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year periods. “impairment charges.” this adjustment removes the impact of impairment charges from our results of operations. during the first quarter of fiscal 2022, we recognized a non-cash impairment charge of $6 million for certain fixed assets. we believe that this adjustment allows for us to better understand our organic results on a comparable basis. we use the non-gaap measure “organic change”, along with other metrics, to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the board of directors, stockholders, and investment community. we have consistently applied the adjustments within our reconciliations in arriving at each non-gaap measure. we believe these non-gaap measures are useful to readers and investors because they enhance the understanding of our historical financial performance and comparability between periods. when we provide guidance for organic change in certain measures of the statements of operations we do not provide guidance for the corresponding gaap change because the gaap measure will include items that are difficult to quantify or predict with reasonable certainty, such as foreign exchange, which could have a significant impact to our gaap income statement measures. as of the third quarter ended january 31, 2022, we changed certain non-gaap financial measures that we have historically used. we no longer report “underlying changes” in certain measures of the statements of operations; instead, we now report “organic change” for certain measures of the statements of operations. “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,” which reflected the estimated net effect of changes in distributor inventories on changes in certain line items of the statements of operations. this change to our non-gaap financial measures was in response to comments from and discussions with the staff of the securities and exchange commission. although we no longer provide non-gaap financial measures that adjust for “estimated net change in distributor inventories,” we still believe that our results are affected by changes in distributor inventories, particularly in our largest market, the united states, where the spirits industry is subject to regulations that essentially mandate a so-called “three-tier system,” with a value chain that includes suppliers, distributors and retailers. accordingly, we continue to provide information concerning fluctuations in distributor inventories. we believe such information is useful in understanding our performance and trends as it provides relevant information regarding customers’ demand for our products. note 3 - definitions from time to time, to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate markets according to stage of economic development as defined by the international monetary fund (imf), and we aggregate brands by beverage alcohol category. below, we define the geographic and brand aggregations used in this release. in schedule c and schedule d, we provide supplemental information for our largest markets ranked by percentage of total fiscal 2022 reported net sales. due to our decision to suspend commercial operations in russia, it is no longer considered one of our largest markets. in addition to markets that are listed by country name, we include the following aggregations: “developed international” markets are “advanced economies” as defined by the imf, excluding the united states. our largest developed international markets are germany, australia, the united kingdom, france, and canada. this aggregation represents our net sales of branded products to these markets. “emerging” markets are “emerging and developing economies” as defined by the imf. our largest emerging markets are mexico, poland, brazil, and chile. this aggregation represents our net sales of branded products to these markets. “travel retail” represents our net sales of branded products to global duty-free customers, other travel retail customers, and the u.s. military, regardless of customer location. “non-branded and bulk” includes our net sales of used barrels, contract bottling, and bulk whiskey and wine, regardless of customer location. brand aggregations. in schedule b and schedule d, we provide supplemental information for our largest brands ranked by percentage of total fiscal 2022 reported net sales. in addition to brands that are listed by name, we include the following aggregations outlined below. beginning in fiscal 2023, we added “ready-to-drink” as a brand aggregation due to its contribution to our growth in recent years and industry-wide category growth trends. “whiskey” no longer contains jack daniel’s ready-to-drink (rtd) and ready-to-pour (rtp), and “tequila” no longer includes new mix. these brands are now included in the “ready-to-drink” brand aggregation. “whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs. the brands included in this category are the jack daniel’s family of brands (excluding the “ready-to-drink” products defined below), the woodford reserve family of brands (woodford reserve), the old forester family of brands (old forester), glendronach, benriach, glenglassaugh, slane irish whiskey, and coopers’ craft. “american whiskey” includes the jack daniel’s family of brands (excluding the “ready-to-drink” products defined below) and premium bourbons (defined below). “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “super-premium american whiskey” includes woodford reserve, gentleman jack, and other super-premium jack daniel’s expressions. “american whiskey” includes the jack daniel’s family of brands (excluding the “ready-to-drink” products defined below) and premium bourbons (defined below). “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “super-premium american whiskey” includes woodford reserve, gentleman jack, and other super-premium jack daniel’s expressions. “ready-to-drink” includes all ready-to-drink (rtd) and ready-to-pour (rtp) products. the brands included in this category are jack daniel’s rtd and rtp products (jd rtd/rtp), new mix, and other rtd/rtp products. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s double jack, and other malt- and spirit-based jack daniel’s rtds along with jack daniel’s winter jack rtp. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s double jack, and other malt- and spirit-based jack daniel’s rtds along with jack daniel’s winter jack rtp. “tequila” includes the herradura family of brands (herradura), el jimador, and other tequilas. “wine” includes korbel california champagne and sonoma-cutrer wines. “vodka” includes finlandia. “non-branded and bulk” includes our net sales of used barrels, contract bottling, and bulk whiskey and wine. “jack daniel’s family of brands” includes jack daniel’s tennessee whiskey (jdtw), jack daniel’s rtd and rtp products (jd rtd/rtp), jack daniel’s tennessee honey (jdth), gentleman jack, jack daniel’s tennessee fire (jdtf), jack daniel’s tennessee apple (jdta), jack daniel’s single barrel collection (jdsb), jack daniel’s tennessee rye whiskey (jdtr), jack daniel’s sinatra select, jack daniel’s bonded, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, jack daniel’s 10 years old, and jack daniel’s triple mash. other metrics. “shipments.” we generally record revenues when we ship or deliver our products to our customers. in this document, unless otherwise specified, we refer to shipments when discussing volume. “depletions.” this is a term commonly used in the beverage alcohol industry to describe volume. depending on the context, depletions usually means either (a) our shipments directly to retail or wholesale customers for owned distribution markets or (b) shipments from our distributor customers to retailers and wholesalers in other markets. we believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do. “consumer takeaway.” when discussing trends in the market, we refer to consumer takeaway, a term commonly used in the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets, including products purchased through e-premise channels, as measured by volume or retail sales value. this information is provided by third parties, such as nielsen and the national alcohol beverage control association (nabca). our estimates of market share or changes in market share are derived from consumer takeaway data using the retail sales value metric. we believe consumer takeaway is a leading indicator of how consumer demand is trending. “estimated net change in distributor inventories.” we generally recognize revenue when our products are shipped or delivered to customers. in the united states and certain other markets, our customers are distributors that sell downstream to retailers and consumers. we believe that our distributors’ downstream sales more closely reflect actual consumer demand than do our shipments to distributors. our shipments increase distributors’ inventories, while distributors’ depletions (as described above) reduce their inventories. therefore, it is possible that our shipments do not coincide with distributors’ downstream depletions and merely reflect changes in distributors’ inventories. because changes in distributors’ inventories could affect our trends, we believe it is useful for investors to understand those changes in the context of our operating results. we perform the following calculation to determine the “estimated net change in distributor inventories”: for both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by (a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion volumes. we subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year percentage change of the organic amount to calculate the “estimated net change in distributor inventories.” a positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends could decrease as distributors’ reduce inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories. |
| 2022-06-08 08:00:00 | Brown-forman Reports Very Strong, Broad-based Fiscal 2022 Performance; Expects Momentum To Continue In Fiscal 2023 Louisville, ky.--(business wire)--brown-forman corporation (nyse: bfa, bfb) reported financial results for its fourth quarter and fiscal year ended april 30, 2022. for the fourth quarter, the company’s reported net sales1 of $996 million increased 23% (+27% on an organic basis2). in the quarter, reported operating income increased 46% to $246 million (+62% on an organic basis) and diluted earnings per share increased 26% to $0.31. for the full year, the company’s reported net sales increased 14% to $3,933 million (+17% on an organic basis). reported operating income increased 3% to $1,204 million (+27% on an organic basis) in the fiscal year, while diluted earnings per share decreased 7% to $1.74 primarily due to higher income taxes partially offset by the increase in reported operating income. earnings per share in fiscal 2021 included an estimated $0.20 per share benefit from the gain on the sale of the early times, canadian mist, and collingwood brands and related assets. lawson whiting, brown-forman’s president and chief executive officer stated, “i am proud of our exceptional results, our strategic progress, and yet another year of growth despite numerous headwinds. we achieved these results due in large part to the resurgence of jack daniel’s tennessee whiskey, which experienced strong consumer demand as the on-premise channel reopened around the world. equally important, we believe we are well positioned for continued growth in the fiscal year ahead given our strategic initiatives and our talented teams.” fiscal 2022 highlights reported net sales grew 14% (+17% organic) building on our fiscal 2021 growth. all geographic clusters contributed meaningfully to strong reported net sales growth. jack daniel’s tennessee whiskey fueled overall company performance with 20% reported net sales growth (+23% organic). premium bourbons, led by woodford reserve and old forester, grew reported net sales 17% (+17% organic). the tequila portfolio, driven by herradura and el jimador, grew reported net sales 22% (+20% organic). gross margin expanded 30 basis points. reported advertising expense increased 10% (+11% organic) as we continued to invest for growth across the brand portfolio. returned $831 million to stockholders, which included a special cash dividend of $1 per share, or approximately $480 million, and $351 million in regular dividends. all geographic clusters contributed meaningfully to strong reported net sales growth. jack daniel’s tennessee whiskey fueled overall company performance with 20% reported net sales growth (+23% organic). premium bourbons, led by woodford reserve and old forester, grew reported net sales 17% (+17% organic). the tequila portfolio, driven by herradura and el jimador, grew reported net sales 22% (+20% organic). gross margin expanded 30 basis points. reported advertising expense increased 10% (+11% organic) as we continued to invest for growth across the brand portfolio. returned $831 million to stockholders, which included a special cash dividend of $1 per share, or approximately $480 million, and $351 million in regular dividends. fiscal 2022 brand results the jack daniel’s family of brands delivered double-digit reported net sales growth of 15% (+17% organic) fueled by a strong, broad-based resurgence of jack daniel’s tennessee whiskey, reflecting higher volumes and a favorable channel mix shift to the on-premise channel. an estimated net increase in distributor inventories positively impacted reported net sales. further gains for the jack daniel’s family of brands were delivered by the continued international launch of jack daniel’s tennessee apple and the international growth of jack daniel’s rtds. supply chain disruptions adversely impacted fiscal 2022 results for jack daniel’s tennessee whiskey, jack daniel’s tennessee honey, and jack daniel’s tennessee fire. premium bourbons, propelled by woodford reserve and old forester, delivered 17% reported net sales growth (+17% organic). gains for woodford reserve, the leader by volume and value in the super-premium american whiskey category, were driven by higher volumes and pricing in the united states and higher volumes in the travel retail channel. woodford reserve’s reported net sales were negatively impacted by supply chain disruptions. old forester sustained double-digit reported net sales growth and surpassed 400,000 nine-liter cases in fiscal 2022. our tequilas delivered double-digit reported net sales growth of 22% (+21% organic) driven by the broad-based growth of herradura and el jimador, led by the united states. fiscal 2022 market results the company delivered strong, broad-based reported net sales growth across all geographic clusters and the travel retail channel. supply chain disruptions had an adverse effect on results. reported net sales in the united states3 grew 10% (+12% organic) led by jack daniel’s tennessee whiskey, higher volumes and price increases for our premium bourbons, woodford reserve, and old forester, and volumetric growth of herradura and el jimador. an estimated net increase in distributor inventories positively impacted reported net sales. reported net sales growth was partially offset by the effect of acquisitions and divestitures in the prior year along with lower volumes for jack daniel’s tennessee honey, which was adversely impacted by supply chain disruptions. developed international3 markets grew reported net sales 12% (+16% organic) with broad-based volumetric growth from jack daniel’s tennessee whiskey and higher volumes and prices of jack daniel’s rtds. an estimated net increase in distributor inventories positively impacted reported net sales. reported net sales growth was partially offset by the negative effect of foreign exchange. emerging markets3 grew reported net sales 24% (+29% organic) reflecting the broad-based growth of jack daniel’s tennessee whiskey and the continued international launch of jack daniel’s tennessee apple, partially offset by the negative effect of foreign exchange. an estimated net increase in distributor inventories positively impacted reported net sales. the travel retail3 channel rebounded with reported net sales growth of 65% (+67% organic) as we cycled against significant declines during the same prior year period. fiscal 2022 other p&l items reported gross profit increased 14% (+17% organic). gross margin expanded 30 basis points to 60.8%, driven primarily by favorable price/mix and the effect of acquisitions and divestitures, largely offset by higher costs. reported advertising expense increased 10% (+11% organic) as the company continued to fuel momentum and invest for future growth. reported selling, general, and administrative expenses increased 3% (+7% organic) due to higher discretionary spend and one-time items including a special employee bonus and costs related to the impact of russia’s invasion of ukraine. during the fourth quarter, we recognized a $52 million non-cash impairment charge for our finlandia brand name. the impairment reflects a decline in our long-term outlook for finlandia due to our suspension of operations in russia, a key market for the brand. the company’s reported operating income increased by 3% (+27% organic). fiscal 2022 financial stewardship during fiscal 2022, the company returned nearly $831 million to stockholders through its regular quarterly dividend as well as a $480 million special dividend paid during the third quarter of fiscal 2022. brown-forman, a member of the prestigious s&p 500 dividend aristocrats index, has paid regular quarterly cash dividends for 78 consecutive years and has increased the regular dividend for 38 consecutive years. fiscal year 2023 outlook the company anticipates continued growth in fiscal 2023 despite global macroeconomic and geopolitical uncertainties. accordingly, we expect the following in fiscal 2023: with the strength of our portfolio of brands and strong consumer demand, we expect organic net sales growth in the mid-single digit range. considering the net effect of inflation and the removal of the eu and uk tariffs on american whiskey, we project reported gross margin to expand slightly. based on the above expectations, we anticipate mid-single digit organic operating income growth. we expect our fiscal 2023 effective tax rate to be in the range of approximately 22% to 23%. capital expenditures are planned to be in the range of $190 to $210 million. 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: our substantial dependence upon the continued growth of the jack daniel’s family of brands substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; shifts in consumer purchase practices; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation production facility, aging warehouse, or supply chain disruption imprecision in supply/demand forecasting higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor impact of health epidemics and pandemics, including the covid-19 pandemic, and the risk of the resulting negative economic impact and related governmental actions unfavorable global or regional economic conditions, particularly related to the covid-19 pandemic, and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations product recalls or other product liability claims, product tampering, contamination, or quality issues negative publicity related to our company, products, brands, marketing, executive leadership, employees, board of directors, family stockholders, operations, business performance, or prospects failure to attract or retain key executive or employee talent risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value risks associated with being a u.s.-based company with a global business, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including additional retaliatory tariffs on american whiskeys and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism; and health pandemics failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations fluctuations in foreign currency exchange rates, particularly a stronger u.s. dollar changes in laws, regulatory measures, or governmental policies – especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur decline in the social acceptability of beverage alcohol in significant markets significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products counterfeiting and inadequate protection of our intellectual property rights significant legal disputes and proceedings, or government investigations cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or direct and indirect business partners, or failure to comply with personal data protection laws our status as a family “controlled company” under new york stock exchange rules, and our dual-class share structure 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 april 30, 2021 and 2022 (dollars in millions, except per share amounts) 2021 2022 change net sales $ 812 $ 996 23% cost of sales 314 370 18% gross profit 498 626 26% advertising expenses 121 127 6% selling, general, and administrative expenses 211 195 (8%) other expense (income), net (2 ) 58 operating income 168 246 46% non-operating postretirement expense 2 11 interest expense, net 19 19 income before income taxes 147 216 47% income taxes 27 65 net income $ 120 $ 151 26% earnings per share: basic $ 0.25 $ 0.32 26% diluted $ 0.25 $ 0.31 26% gross margin 61.4 % 62.8 % operating margin 20.7 % 24.7 % effective tax rate 18.4 % 30.2 % cash dividends paid per common share $ 0.1795 $ 0.1885 shares (in thousands) used in the calculation of earnings per share basic 478,696 478,976 diluted 480,713 480,456 brown-forman corporation unaudited consolidated statements of operations for the twelve months ended april 30, 2021 and 2022 (dollars in millions, except per share amounts) 2021 2022 change net sales $ 3,461 $ 3,933 14% cost of sales 1,367 1,542 13% gross profit 2,094 2,391 14% advertising expenses 399 438 10% selling, general, and administrative expenses 671 690 3% gain on sale of business (127 ) — other expense (income), net (15 ) 59 operating income 1,166 1,204 3% non-operating postretirement expense 6 13 interest expense, net 79 77 income before income taxes 1,081 1,114 3% income taxes 178 276 net income $ 903 $ 838 (7%) earnings per share: basic $ 1.89 $ 1.75 (7%) diluted $ 1.88 $ 1.74 (7%) gross margin 60.5 % 60.8 % operating margin 33.7 % 30.6 % effective tax rate 16.5 % 24.8 % cash dividends paid per common share $ 0.7076 $ 1.7360 shares (in thousands) used in the calculation of earnings per share basic 478,527 478,879 diluted 480,677 480,565 brown-forman corporation unaudited condensed consolidated balance sheets (dollars in millions) april 30, 2021 april 30, 2022 assets: cash and cash equivalents $ 1,150 $ 868 accounts receivable, net 753 813 inventories 1,751 1,818 other current assets 263 277 total current assets 3,917 3,776 property, plant, and equipment, net 832 875 goodwill 779 761 other intangible assets 676 586 other assets 318 375 total assets $ 6,522 $ 6,373 liabilities: accounts payable and accrued expenses $ 679 $ 703 dividends payable — — accrued income taxes 34 81 short-term borrowings 205 — current portion of long-term debt — 250 total current liabilities 918 1,034 long-term debt 2,354 2,019 deferred income taxes 169 219 accrued postretirement benefits 219 183 other liabilities 206 181 total liabilities 3,866 3,636 stockholders’ equity 2,656 2,737 total liabilities and stockholders’ equity $ 6,522 $ 6,373 brown-forman corporation unaudited condensed consolidated statements of cash flows for the twelve months ended april 30, 2021 and 2022 (dollars in millions) 2021 2022 cash provided by operating activities $ 817 $ 936 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 (62 ) (138 ) other (3 ) 11 cash provided by (used for) investing activities 98 (127 ) cash flows from financing activities: net change in short-term borrowings (126 ) (196 ) dividends paid (338 ) (831 ) other (21 ) (11 ) cash used for financing activities (485 ) (1,038 ) effect of exchange rate changes 45 (47 ) net increase (decrease) in cash, cash equivalents, and restricted cash 475 (276 ) cash, cash equivalents, and restricted cash at beginning of period 675 1,150 cash, cash equivalents, and restricted cash at end of period 1,150 874 less: restricted cash at end of period — (6 ) cash and cash equivalents at end of period $ 1,150 $ 868 schedule a brown-forman corporation supplemental statement of operations information (unaudited) three months ended twelve months ended fiscal year ended april 30, 2022 april 30, 2022 april 30, 2021 reported change in net sales 23% 14% 3% acquisitions and divestitures 1% 2% —% foreign exchange 3% 2% (1)% organic change in net sales2 27% 17% 2% reported change in gross profit 26% 14% (2)% acquisitions and divestitures —% 1% 1% foreign exchange 3% 3% (1)% organic change in gross profit2 28% 17% (2)% reported change in advertising expenses 6% 10% 4% foreign exchange 5% 2% (2)% organic change in advertising expenses2 10% 11% 2% reported change in sg&a (8)% 3% 4% foundation 10% 3% (3)% foreign exchange 3% 1% (1)% organic change in sg&a2 4% 7% —% reported change in operating income 46% 3% 7% acquisitions and divestitures (1)% 14% (10)% foundation (19)% (2)% 2% impairment charges 31% 6% (1)% foreign exchange 4% 6% (2)% organic change in operating income2 62% 27% (5)% 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) twelve months ended april 30, 2022 % change vs. prior year period brand3 depletions (millions) depletions3 net sales 9-liter drinks equivalent3 9-liter4 drinks equivalent3 reported acquisitions and divestitures foreign exchange organic2 whiskey 31.3 21.7 10% 10% 13% 2% 2% 18% jack daniel’s family of brands 29.2 19.6 9% 9% 15% —% 3% 17% jack daniel’s tennessee whiskey 14.0 14.0 12% 12% 20% —% 4% 23% jack daniel’s rtd and rtp 10.7 1.1 9% 9% 6% —% 1% 7% jack daniel’s tennessee honey 2.1 2.1 1% 1% —% —% 2% 2% gentleman jack 0.8 0.8 (8)% (8)% (3)% —% 2% —% jack daniel’s tennessee fire 0.6 0.6 0% 0% 16% —% (2)% 13% jack daniel’s tennessee apple 0.7 0.7 23% 23% 44% —% 2% 46% other jack daniel’s whiskey brands 0.3 0.3 0% 0% 17% —% 2% 19% woodford reserve 1.4 1.4 14% 14% 16% —% —% 16% rest of whiskey 0.6 0.6 17% 17% (10)% 37% 1% 28% tequila 10.4 3.3 1% 14% 22% —% (2)% 20% el jimador 1.6 1.6 25% 25% 27% —% (1)% 27% herradura 0.7 0.7 27% 27% 29% —% (1)% 28% rest of tequila 8.1 1.0 (4)% (6)% 6% —% (3)% 3% wine 2.1 2.1 1% 1% 6% —% —% 6% vodka 2.6 2.6 12% 12% 21% —% 2% 23% rest of portfolio 0.7 0.7 6% 6% 10% (2)% 14% 22% non-branded and bulk nm nm nm nm 6% 18% 1% 25% total portfolio 47.1 30.4 7% 10% 14% 2% 2% 17% other brand aggregations american whiskey 31.1 21.5 10% 10% 14% 1% 2% 17% premium bourbons 1.9 1.9 14% 14% 17% —% —% 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 c brown-forman corporation supplemental geographic information (unaudited) twelve months ended april 30, 2022 % change vs. prior-year period geographic area3 net sales reported acquisitions and divestitures foreign exchange organic2 united states 10% 2% —% 12% developed international 12% —% 4% 16% germany 11% —% 3% 14% australia 5% —% 2% 7% united kingdom 7% —% 9% 15% france (1)% —% 3% 2% rest of developed international 32% 2% 3% 37% emerging 24% —% 5% 29% mexico 19% —% (4)% 15% poland 9% —% 4% 13% brazil 22% —% (1)% 21% russia 7% —% 6% 13% chile 64% —% —% 64% rest of emerging 34% —% 15% 49% travel retail 65% 2% 1% 67% non-branded and bulk 6% 18% 1% 25% total 14% 2% 2% 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 free cash flow information (unaudited) (dollars in millions) twelve months ended april 30, 2021 april 30, 2022 cash provided by operating activities $ 817 $ 936 additions to property, plant, and equipment (62 ) (138 ) free cash flow2 $ 755 $ 798 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 e brown-forman corporation supplemental geographic, product, and operations information (unaudited) twelve months ended april 30, 2022 estimated net change in distributor inventories3 geographic area3 - net sales united states 5% developed international 3% emerging 4% travel retail 11% non-branded and bulk —% brand3 - net sales whiskey 5% jack daniel’s family of brands 6% jdtw 7% jd rtd/rtp (2)% jdth —% gentleman jack 5% jdtf 13% jdta 24% other jack daniel’s whiskey brands 14% woodford reserve (1)% rest of whiskey 5% tequila (1)% el jimador 2% herradura (5)% rest of tequila 1% wine 3% vodka (finlandia) 4% rest of portfolio 3% non-branded and bulk —% statement of operations line items net sales 4% cost of sales 2% gross profit 6% operating income 12% 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. see updated language below. note 2 - non-gaap financial measures use of non-gaap financial information. we use some financial measures in this press release 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, (3) impairment charges, and (4) a commitment to our charitable foundation. we explain these adjustments below. “acquisitions and divestitures.” this adjustment removes (a) the gain or loss recognized on sale of divested brands, (b) any non-recurring expenses or income related to our acquisitions and divestitures (e.g., transaction costs, integration costs, and transition service costs or income), and (c) the operating activity of acquired and divested brands for periods that are not comparable (non-comparable periods). excluding non-comparable periods enhances our understanding of the trends in our business. during fiscal 2021, we sold our early times, canadian mist, and collingwood brands and related assets, which resulted in a pre-tax gain of $127 million, and entered into a related transition services agreement (tsa) for these brands. also, during fiscal 2021, we acquired part time rangers limited, which owns part time rangers rtds. this adjustment removes (a) transaction and integration costs related to the acquisitions and divestitures, (b) the gain on sale of early times, canadian mist, and collingwood and related assets, (c) operating activity for the non-comparable period for early times, canadian mist, and collingwood, which is activity in the first quarter of fiscal 2021, (d) the net sales and operating expenses recognized pursuant to the tsa related to (i) contract bottling services and (ii) distribution services in certain markets, and (e) operating activity for part time rangers holdings limited for the non-comparable period, which is primarily activity in the first two quarters of fiscal 2022. we believe that these adjustments allow for us to better understand our organic results on a comparable basis “foreign exchange.” we calculate the percentage change in certain line items of the statements of operations in accordance with gaap and adjust to exclude the cost or benefit of currency fluctuations. adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the organic trend both positively and negatively. (in this press release,“dollar” always means the u.s. dollar unless stated otherwise.) to eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year periods. “impairment charges.” this adjustment removes the impact of impairment charges from our results of operations. during the first three quarters of fiscal 2022, we recognized non-cash impairment charges of $9 million for certain fixed assets. during the fourth quarter of fiscal 2022, we recognized a non-cash impairment charge of $52 million for our finlandia brand name. we believe that these adjustments allow for us to better understand our organic results on a comparable basis. “foundation.” during the fourth quarter of fiscal 2021, we committed $20 million to the brown-forman foundation (the foundation) to support the communities where our employees live and work. this adjustment removes the $20 million commitment to the foundation from our organic sg&a expenses and organic operating income to present our organic results on a comparable basis. * organic operating expenses include organic advertising expense, organic sg&a expense, and organic other expense (income), net. we use the non-gaap measure “organic change,” along with other metrics, to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the board of directors, stockholders, and investment community. we have consistently applied the adjustments within our reconciliations in arriving at each non-gaap measure. we believe these non-gaap measures are useful to readers and investors because they enhance the understanding of our historical financial performance and comparability between periods. during the third quarter of fiscal 2022, we changed certain non-gaap financial measures that we have historically used. we no longer report “underlying changes” in certain measures of the statements of operations; instead, we now report “organic change” for certain measures of the statements of operations. “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,” which reflected the estimated net effect of changes in distributor inventories on changes in certain line items of the statements of operations. this change to our non-gaap financial measures was in response to comments from and discussions with the staff of the securities and exchange commission. although we no longer provide non-gaap financial measures that adjust for “estimated net change in distributor inventories,” we still believe that our results are affected by changes in distributor inventories, particularly in our largest market, the united states, where the spirits industry is subject to regulations that essentially mandate a so-called “three-tier system,” with a value chain that includes suppliers, distributors and retailers. accordingly, we will continue to provide information concerning fluctuations in distributor inventories. we believe such information is useful in understanding our performance and trends as it provides relevant information regarding customers’ demand for our products. “return on average invested capital.” this measure refers to the sum of net income and after-tax interest expense, divided by average invested capital. average invested capital equals assets less liabilities, excluding interest-bearing debt, and is calculated using the average of the most recent 13 month-end balances. after-tax interest expense equals interest expense multiplied by one minus our effective tax rate. we use this non-gaap measure because we consider it to be a meaningful indicator of how effectively and efficiently we invest capital in our business. “free cash flow.” this measure refers to the cash provided by operating activities less additions to property, plant, and equipment on the unaudited condensed consolidated statements of cash flows above. in schedule d, we provide this calculation for the relevant periods. we use this non-gaap measure in evaluating the company’s financial performance, which measures our ability to generate additional cash from our business operations. free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. note 3 - definitions from time to time, to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate markets according to the stage of economic development as defined by the international monetary fund (imf), and we aggregate brands by beverage alcohol category. below, we define aggregations used in this press release. geographic aggregations. in schedule c and schedule e, we provide supplemental information for our geographic aggregations. in addition to markets that are listed by country name, we include the following aggregations: “developed international” markets are “advanced economies” as defined by the imf, excluding the united states. in fiscal 2022, our largest developed international markets were germany, australia, the united kingdom, and france. this aggregation represents our net sales of branded products to these markets. “emerging” markets are “emerging and developing economies” as defined by the imf. in fiscal 2022, our largest emerging markets were mexico, poland, brazil, russia, and chile. this aggregation represents our net sales of branded products to these markets. “travel retail” represents our net sales of branded products to global duty-free customers, other travel retail customers, and the u.s. military, regardless of customer location. “non-branded and bulk” includes our net sales of used barrels, contract bottling, and bulk whiskey and wine, regardless of customer location. brand aggregations. in schedule b and schedule e, we provide supplemental information for our largest brands ranked by percentage of total fiscal 2022 reported net sales. in addition to brands that are listed by name, we include the following aggregations: “whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink (rtd), and ready-to-pour products (rtp). the brands included in this category are the jack daniel’s family of brands, the woodford reserve family of brands (woodford reserve), the old forester family of brands (old forester), glendronach, benriach, glenglassaugh, slane irish whiskey, and coopers’ craft. “american whiskey” includes the jack daniel’s family of brands, premium bourbons (defined below), and super-premium american whiskey (defined below). “jack daniel’s family of brands” includes jack daniel’s tennessee whiskey (jdtw), jack daniel’s rtd and rtp products (jd rtd/rtp), jack daniel’s tennessee honey (jdth), gentleman jack, jack daniel’s tennessee fire (jdtf), jack daniel’s tennessee apple (jdta), jack daniel’s single barrel collection (jdsb), jack daniel’s tennessee rye whiskey (jdtr), jack daniel’s sinatra select, jack daniel’s single barrel rye, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, and jack daniel’s 10 year old. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s double jack, and other malt / spirit based jack daniel’s rtds. “super-premium american whiskey” includes woodford reserve, gentleman jack, jdsb, jdtr, jack daniel’s sinatra select, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, and jack daniel’s 10 year old. “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “american whiskey” includes the jack daniel’s family of brands, premium bourbons (defined below), and super-premium american whiskey (defined below). “jack daniel’s family of brands” includes jack daniel’s tennessee whiskey (jdtw), jack daniel’s rtd and rtp products (jd rtd/rtp), jack daniel’s tennessee honey (jdth), gentleman jack, jack daniel’s tennessee fire (jdtf), jack daniel’s tennessee apple (jdta), jack daniel’s single barrel collection (jdsb), jack daniel’s tennessee rye whiskey (jdtr), jack daniel’s sinatra select, jack daniel’s single barrel rye, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, and jack daniel’s 10 year old. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s double jack, and other malt / spirit based jack daniel’s rtds. “super-premium american whiskey” includes woodford reserve, gentleman jack, jdsb, jdtr, jack daniel’s sinatra select, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, and jack daniel’s 10 year old. “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “jack daniel’s family of brands” includes jack daniel’s tennessee whiskey (jdtw), jack daniel’s rtd and rtp products (jd rtd/rtp), jack daniel’s tennessee honey (jdth), gentleman jack, jack daniel’s tennessee fire (jdtf), jack daniel’s tennessee apple (jdta), jack daniel’s single barrel collection (jdsb), jack daniel’s tennessee rye whiskey (jdtr), jack daniel’s sinatra select, jack daniel’s single barrel rye, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, and jack daniel’s 10 year old. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s double jack, and other malt / spirit based jack daniel’s rtds. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s double jack, and other malt / spirit based jack daniel’s rtds. “super-premium american whiskey” includes woodford reserve, gentleman jack, jdsb, jdtr, jack daniel’s sinatra select, jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s bottled-in-bond, and jack daniel’s 10 year old. “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “tequila” includes the herradura family of brands (herradura), el jimador, new mix, and other tequilas. “wine” includes korbel champagnes and sonoma-cutrer wines. “vodka” includes finlandia. “non-branded and bulk” includes our net sales of used barrels, contract bottling, and bulk whiskey and wine. other metrics. “shipments.” we generally record revenues when we ship or deliver our products to our customers. in this document, unless otherwise specified, we refer to shipments when discussing volume. “depletions.” this is a term commonly used in the beverage alcohol industry to describe volume. depending on the context, depletions usually means either (a) our shipments directly to retail or wholesale customers for owned distribution markets or (b) shipments from our distributor customers to retailers and wholesalers in other markets. we believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do. “consumer takeaway.” when discussing trends in the market, we refer to consumer takeaway, a term commonly used in the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets, including products purchased through e-commerce channels, as measured by volume or retail sales value. this information is provided by third parties, such as nielsen and the national alcohol beverage control association (nabca). our estimates of market share or changes in market share are derived from consumer takeaway data using the retail sales value metric. we believe consumer takeaway is a leading indicator consumer demand trends. “estimated net change in distributor inventories.” we generally recognize revenue when our products are shipped or delivered to customers. in the united states and certain other markets, our customers are distributors that sell downstream to retailers and consumers. we believe that our distributors’ downstream sales more closely reflect actual consumer demand than do our shipments to distributors. our shipments increase distributors’ inventories, while distributors’ depletions (as described above) reduce their inventories. therefore, it is possible that our shipments do not coincide with distributors’ downstream depletions and merely reflect changes in distributors’ inventories. because changes in distributors’ inventories could affect our trends, we believe it is useful for investors to understand those changes in the context of our operating results. we perform the following calculation to determine the “estimated net change in distributor inventories”: for both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by (a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion volumes. we subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year percentage change of the organic amount to calculate the “estimated net change in distributor inventories.” a positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends could decrease as distributors’ reduce inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories. for both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by (a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion volumes. we subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year percentage change of the organic amount to calculate the “estimated net change in distributor inventories.” a positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends could decrease as distributors’ reduce inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories. “drinks-equivalent.” volume is discussed on a nine-liter equivalent unit basis (nine-liter cases) unless otherwise specified. at times, we use a “drinks-equivalent” measure for volume when comparing single-serve ready-to-drink or ready-to-pour brands to a parent spirits brand. “drinks equivalent” depletions are rtd and rtp nine-liter cases converted to nine-liter cases of a parent brand on the basis of the number of drinks in one nine-liter case of the parent brand. to convert rtd volumes from a nine-liter case basis to a drinks-equivalent nine-liter case basis, rtd nine-liter case volumes are divided by 10, while rtp nine-liter case volumes are divided by five. note 4 - jack daniel’s country cocktails 9l depletions effective april 1, 2021, we created an alliance with pabst brewing company for the supply, sales, and distribution of jack daniel’s country cocktails in the united states. consequently, our fiscal 2022 results include net sales, but do not include 9l depletions for this brand. to share results on a comparable basis for fiscal 2022, we excluded fiscal 2021 9l depletions for jack daniel’s country cocktails in the united states. |
| 2022-03-03 07:45:00 | Brown-forman Delivers Strong Year-to-date Results And Revises Full Year Outlook 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 reported net sales grew 11% (+14% organic). driven by strong double-digit reported net sales growth led by our emerging and developed international markets, with solid growth in the united states and a rebound in our travel retail channel. the jack daniel’s family of brands grew reported net sales 12% (+14% organic) powered by 17% reported net sales growth (+20% organic) from jack daniel’s tennessee whiskey. premium bourbons, led by woodford reserve and old forester, grew reported net sales 10% (+10% organic). the tequila portfolio grew reported net sales 19% (+17% organic) driven by double-digit growth from herradura and el jimador. driven by strong double-digit reported net sales growth led by our emerging and developed international markets, with solid growth in the united states and a rebound in our travel retail channel. the jack daniel’s family of brands grew reported net sales 12% (+14% organic) powered by 17% reported net sales growth (+20% organic) from jack daniel’s tennessee whiskey. premium bourbons, led by woodford reserve and old forester, grew reported net sales 10% (+10% organic). the tequila portfolio grew reported net sales 19% (+17% organic) driven by double-digit growth from herradura and el jimador. year-to-date fiscal 2022 brand results the jack daniel’s family of brands delivered double-digit reported net sales growth of 12% (+14% organic) fueled by jack daniel’s tennessee whiskey, which benefited from volume growth globally and favorable channel mix supported by the ongoing reopening of the on-premise channel. additionally, the continued international launch of jack daniel’s tennessee apple and strong consumer demand for jack daniel’s rtds were significant contributors to growth. supply chain disruptions adversely impacted the results for jack daniel’s tennessee whiskey, jack daniel’s tennessee honey, jack daniel’s tennessee fire, and gentleman jack during the first nine months of the fiscal year. reported net sales were positively impacted by an estimated net increase in distributor inventories. premium bourbons, led by woodford reserve and old forester, maintained double-digit reported net sales growth of 10% (+10% organic) led by gains in the united states, travel retail, and the united kingdom. woodford reserve’s reported net sales moderated driven by supply chain disruptions resulting in a net decrease in distributor inventories. the tequila portfolio’s double-digit reported net sales growth of 19% (+17% organic) was propelled by herradura and el jimador. herradura grew volumes in the united states and mexico due to strong consumer demand while mexico also benefited as it cycled against a favorable prior-year comparison. el jimador’s reported net sales growth was driven by broad-based volume gains in the united states, colombia, and the united kingdom. year-to-date fiscal 2022 market results reported net sales in the united states3 grew 5% (+8% organic). gains were driven by jack daniel’s tennessee whiskey, which benefited from volume growth and the continued reopening of the on-premise channel, along with strong consumer demand for our tequilas and premium bourbons. an estimated net increase in distributor inventories positively impacted reported net sales. this growth was partially offset by the effect of acquisitions and divestitures in the prior year along with lower volumes for jack daniel’s tennessee honey and gentleman jack. reported net sales were adversely impacted by supply chain disruptions. developed international3 markets grew reported net sales 12% (+15% organic) fueled by broad-based growth largely due to the continued reopening of the on-premise channel as well as a rebound of travel and tourism in some markets. gains were led by jack daniel’s tennessee whiskey and jack daniel’s rtds. this growth was partially offset by the negative effect of foreign exchange. an estimated net increase in distributor inventories positively impacted reported net sales. emerging markets3 maintained double-digit reported net sales growth of 22% (+27% organic) propelled by volume gains across most markets largely due to a favorable prior-year comparisons. an estimated net increase in distributor inventories positively impacted reported net sales. results were powered by jack daniel’s tennessee whiskey and jack daniel’s tennessee apple. this growth was partially offset by the negative effect of foreign exchange. reported net sales in the travel retail3 channel increased 57% (+58% organic) primarily due to a favorable prior-year comparison as the business continues to recover from pandemic-related travel bans and restrictions. year-to-date fiscal 2022 other p&l items reported gross profit increased 11% (+14% organic). as expected, year-to-date gross margins contracted slightly, driven primarily by supply chain disruptions and input costs, largely related to agave and grain, as well as the negative effect of foreign exchange. this impact was primarily offset by favorable price/mix, driven by the continued reopening of the on-premise, and the divestiture of the canadian mist, early times, and collingwood brands in the prior fiscal year. reported advertising expense increased 12% (+12% organic) as the company continued to invest behind its brands and cycled last year’s covid-19 related phasing of spend which was more heavily weighted to the second half of the year. reported selling, general, and administrative expenses increased 8% (+8% organic) led by compensation related expenses. the company’s reported operating income decreased by 4% (+19% organic) and diluted earnings per share decreased 12% to $1.43, largely driven by the $0.19 per share impact from the gain on the sale of the canadian mist, early times, and collingwood brands. year-to-date fiscal 2022 financial stewardship on january 25, 2022, brown-forman’s board of directors declared a regular quarterly cash dividend of $0.1885 per share on the class a and class b common stock. the quarterly cash dividend is payable on april 1, 2022 to stockholders of record on march 8, 2022. brown-forman, a member of the prestigious s&p 500 dividend aristocrats index, has paid regular quarterly cash dividends for 78 consecutive years and has increased the regular dividend for 38 consecutive years. 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: with our strong year-to-date performance and consumer demand along with supply chain constraints continuing to ease enabling some rebuild of inventory, we expect organic net sales growth of 11% to 13% for the full year. we project the costs associated with supply chain disruptions and inflationary cost headwinds will continue to have a negative impact on our gross margin, largely offset by a modest positive impact from the removal of tariffs in the eu. therefore, we continue to expect reported gross margin to be flat or slightly down for the full year compared to fiscal 2021. we expect our organic operating expenses, which include advertising and sg&a, to increase in the 7% to 9% range. we anticipate organic advertising expense to be slightly below our organic net sales growth. based on the above expectations, we anticipate organic income growth of 12% to 16% for the full year. we continue to expect our fiscal 2022 effective tax rate to be in the range of approximately 22% to 23%. 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: our substantial dependence upon the continued growth of the jack daniel’s family of brands substantial competition from new entrants, consolidations by competitors and retailers, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets or distribution networks route-to-consumer changes that affect the timing of our sales, temporarily disrupt the marketing or sale of our products, or result in higher fixed costs disruption of our distribution network or inventory fluctuations in our products by distributors, wholesalers, or retailers changes in consumer preferences, consumption, or purchase patterns – particularly away from larger producers in favor of small distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; further legalization of marijuana; shifts in consumer purchase practices; bar, restaurant, travel, or other on-premise declines; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, line extensions, package changes, product reformulations, or other product innovation production facility, aging warehouse, or supply chain disruptions imprecision in supply/demand forecasting higher costs, lower quality, or unavailability of energy, water, raw materials, product ingredients, or labor impact of health epidemics and pandemics, including the covid-19 pandemic, and the risk of the resulting negative economic impact and related governmental actions unfavorable global or regional economic conditions, particularly related to the covid-19 pandemic, and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, deflation, lower returns on pension assets, or lower discount rates for pension obligations product recalls or other product liability claims, product tampering, contamination, or quality issues negative publicity related to our company, products, brands, marketing, executive leadership, employees, board of directors, family stockholders, operations, business performance, or prospects failure to attract or retain key executive or employee talent risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value risks associated with being a u.s.-based company with a global business, including commercial, political, and financial risks; local labor policies and conditions; protectionist trade policies, or economic or trade sanctions, including additional retaliatory tariffs on american whiskeys and the effectiveness of our actions to mitigate the negative impact on our margins, sales, and distributors; compliance with local trade practices and other regulations; terrorism; and health pandemics failure to comply with anti-corruption laws, trade sanctions and restrictions, or similar laws or regulations fluctuations in foreign currency exchange rates, particularly a stronger u.s. dollar changes in laws, regulatory measures, or governmental policies – especially those that affect the production, importation, marketing, labeling, pricing, distribution, sale, or consumption of our beverage alcohol products tax rate changes (including excise, corporate, sales or value-added taxes, property taxes, payroll taxes, import and export duties, and tariffs) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur decline in the social acceptability of beverage alcohol in significant markets significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products counterfeiting and inadequate protection of our intellectual property rights significant legal disputes and proceedings, or government investigations cyber breach or failure or corruption of our key information technology systems or those of our suppliers, customers, or direct and indirect business partners, or failure to comply with personal data protection laws our status as a family “controlled company” under new york stock exchange rules, and our dual-class share structure 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) 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, 2021 january 31, 2022 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 brown-forman corporation supplemental statement of operations information (unaudited) 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 brown-forman corporation supplemental brand information (unaudited) nine months ended january 31, 2022 % change vs. prior year period brand3 depletions3 net sales 9-liter4 drinks equivalent3 reported acquisitions and divestitures foreign exchange 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. note: totals may differ due to rounding schedule c brown-forman corporation supplemental geographic information (unaudited) nine months ended january 31, 2022 % change vs. prior-year period geographic area3 net sales reported acquisitions and divestitures foreign exchange organic2 united states 5% 3% —% 8% developed international 12% —% 3% 15% australia 4% —% 1% 5% germany 16% —% 2% 18% united kingdom 5% —% 7% 12% france 5% —% 2% 7% canada (10)% 1% (4)% (13)% rest of developed international 33% 3% 2% 39% emerging 22% —% 5% 27% mexico 13% —% (5)% 9% poland 7% —% 3% 10% brazil 14% —% 2% 16% russia 26% 1% 6% 32% rest of emerging 37% —% 15% 52% travel retail 57% 2% (1)% 58% non-branded and bulk 11% 7% 1% 18% total 11% 2% 2% 14% 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 free cash flow information (unaudited) (dollars in millions) nine months ended january 31, 2021 january 31, 2022 cash provided by operating activities $ 572 $ 683 additions to property, plant, and equipment (41 ) (62 ) free cash flow2 $ 531 $ 621 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 e brown-forman corporation supplemental geographic, product, and operations information (unaudited) nine months ended january 31, 2022 estimated net change in distributor inventories3 geographic area3 - net sales united states 2% developed international 2% emerging 4% travel retail 8% non-branded and bulk —% brand3 - net sales whiskey 2% jack daniel’s family of brands 3% jdtw 5% jd rtd/rtp (2)% jdth (2)% gentleman jack —% jdtf 9% jdta 18% other jack daniel’s whiskey brands 1% woodford reserve (6)% tequila (3)% herradura (5)% el jimador (4)% wine 3% vodka (finlandia) 4% rest of portfolio 6% non-branded and bulk —% statement of operations line items net sales 2% cost of sales 1% gross profit 3% operating income 5% 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 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, (3) foundation, and (4) impairment charges. we explain these adjustments below. “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, (3) impairment charges, and (4) foundation. we explain these adjustments below. “acquisitions and divestitures.” this adjustment removes (a) the gain or loss recognized on sale of divested brands, (b) any non-recurring effects related to our acquisitions and divestitures (e.g., transaction, transition, and integration costs), and (c) the effects of operating activity related to acquired and divested brands for periods not comparable year over year (non-comparable periods). excluding non-comparable periods allows us to include the effects of acquired and divested brands only to the extent that results are comparable year over year. during fiscal 2021, we sold our early times, canadian mist, and collingwood brands and related assets, which resulted in a pre-tax gain of $127 million, and entered into a related transition services agreement (tsa) for these brands. also, during fiscal 2021, we acquired part time rangers limited, which owns part time rangers rtds. this adjustment removes (a) transaction and integration costs related to the acquisitions and divestitures, (b) the gain on the sale of the early times, canadian mist, and collingwood brands and related assets, (c) operating activity for the non-comparable period for early times, canadian mist, and collingwood, which is activity in the first quarter of fiscal 2021, (d) the net sales and operating expenses recognized pursuant to the tsa related to (i) contract bottling services and (ii) distribution services in certain markets, and (e) operating activity for part time rangers holdings limited for the non-comparable period, which is primarily activity in the first two quarters of fiscal 2022. we believe that these adjustments allow for us to better understand our organic results on a comparable basis. “foreign exchange.” we calculate the percentage change in certain line items of the statements of operations in accordance with gaap and adjust to exclude the cost or benefit of currency fluctuations. adjusting for foreign exchange allows us to understand our business on a constant-dollar basis, as fluctuations in exchange rates can distort the organic trend both positively and negatively. (in this report, “dollar” always means the u.s. dollar unless stated otherwise.) to eliminate the effect of foreign exchange fluctuations when comparing across periods, we translate current-year results at prior-year rates and remove transactional and hedging foreign exchange gains and losses from current- and prior-year periods. “impairment charges.” this adjustment removes the impact of impairment charges from our results of operations. during the first three quarters of fiscal 2022, we recognized non-cash impairment charges of $9 million for certain fixed assets. we believe that this adjustment allows for us to better understand our organic results on a comparable basis. “foundation.” in the fourth quarter of fiscal 2021, we committed $20 million to the brown-forman foundation (the foundation) to support the company’s charitable giving program in the communities where our employees live and work. this adjustment removes the $20 million commitment to the foundation from our underlying sg&a expenses and underlying operating income to present our underlying results on a comparable basis. we use the non-gaap measure “organic change”, along with other metrics, to: (a) understand our performance from period to period on a consistent basis; (b) compare our performance to that of our competitors; (c) calculate components of management incentive compensation; (d) plan and forecast; and (e) communicate our financial performance to the board of directors, stockholders, and investment community. we provide reconciliations of the “organic change” in certain line items of the statements of operations to their nearest gaap measures in the tables on schedules a, b, and c above. we have consistently applied the adjustments within our reconciliations in arriving at each non-gaap measure. we believe these non-gaap measures are useful to readers and investors because they enhance the understanding of our historical financial performance and comparability between periods. 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. “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,” which reflected the estimated net effect of changes in distributor inventories on changes in certain line items of the statements of operations. this change to our non-gaap financial measures is in response to comments from and discussions with the staff of the securities and exchange commission. although we will no longer provide non-gaap financial measures that adjust for “estimated net change in distributor inventories,” we still believe that our results are affected by changes in distributor inventories, particularly in our largest market, the united states, where the spirits industry is subject to regulations that essentially mandate a so-called “three tier system,” with a value chain that includes suppliers, distributors and retailers. accordingly, as shown in schedule e, we will continue to provide information concerning fluctuations in distributor inventories. we believe such information is useful in understanding our performance and trends as it provides relevant information regarding customers’ demand for our products. when we provide guidance for organic change in certain measures of the statements of operations, we do not provide guidance for the corresponding gaap change because the gaap measure will include items that are difficult to quantify or predict with reasonable certainty, such as foreign exchange, which could have a significant impact to our gaap income statement measures. free cash flow. this measure refers to the cash provided by operating activities less additions to property, plant, and equipment on the unaudited condensed consolidated statements of cash flows above. in schedule d, we provide this calculation for the relevant periods. we use this non-gaap measure in evaluating the company’s financial performance, which measures our ability to generate additional cash from our business operations. free cash flow should be considered in addition to, rather than as a substitute for, net income as a measure of our performance and net cash provided by operating activities as a measure of our liquidity. *operating expenses include advertising expense, sg&a expense, and other expense (income), net. note 3 - definitions from time to time, to explain our results of operations or to highlight trends and uncertainties affecting our business, we aggregate markets according to the stage of economic development as defined by the international monetary fund (imf), and we aggregate brands by beverage alcohol category. below, we define aggregations used in this press release. geographic aggregations. in schedule c, we provide supplemental information for our largest markets ranked by percentage of total fiscal 2021 net sales. in addition to markets that are listed by country name, we include the following aggregations: “developed international” markets are “advanced economies” as defined by the imf, excluding the united states. our largest developed international markets are australia, germany, the united kingdom, france, and canada. this aggregation represents our net sales of branded products to these markets. “emerging” markets are “emerging and developing economies” as defined by the imf. our largest emerging markets are mexico, poland, brazil, and russia. this aggregation represents our net sales of branded products to these markets. “travel retail” represents our net sales of branded products to global duty-free customers, other travel retail customers, and the u.s. military, regardless of customer location. “non-branded and bulk” includes our net sales of used barrels, bulk whiskey and wine, and contract bottling, regardless of customer location. brand aggregations. in schedule b, we provide supplemental information for our largest brands ranked by percentage of total fiscal 2021 net sales. in addition to brands that are listed by name, we include the following aggregations: “whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs, ready-to-drink (rtd), and ready-to-pour products (rtp). the brands included in this category are the jack daniel’s family of brands, the woodford reserve family of brands (woodford reserve), the old forester family of brands (old forester), glendronach, benriach, glenglassaugh, slane irish whiskey, and coopers’ craft. “american whiskey” includes the jack daniel’s family of brands, premium bourbons (defined below), and super-premium american whiskey (defined below). “jack daniel’s family of brands” includes jack daniel’s tennessee whiskey (jdtw), jack daniel’s rtd and rtp products (jd rtd/rtp), jack daniel’s tennessee honey (jdth), gentleman jack, jack daniel’s tennessee fire (jdtf), jack daniel’s tennessee apple (jdta), jack daniel’s single barrel collection (jdsb), jack daniel’s tennessee rye whiskey (jdtr), jack daniel’s no. 27 gold tennessee whiskey, jack daniel’s sinatra select, and jack daniel’s bottled-in-bond. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s & diet cola, jack & ginger, jack daniel’s double jack, gentleman jack & cola, jack daniel’s american serve, jack daniel’s tennessee honey rtd, jack daniel’s berry, jack daniel’s lynchburg lemonade, jack daniel’s whiskey & seltzer, and the seasonal jack daniel’s winter jack rtp. “jack daniel’s rtd and rtp” products include all rtd line extensions of jack daniel’s, such as jack daniel’s & cola, jack daniel’s country cocktails, jack daniel’s & diet cola, jack & ginger, jack daniel’s double jack, gentleman jack & cola, jack daniel’s american serve, jack daniel’s tennessee honey rtd, jack daniel’s berry, jack daniel’s lynchburg lemonade, jack daniel’s whiskey & seltzer, and the seasonal jack daniel’s winter jack rtp. “premium bourbons” includes woodford reserve, old forester, and coopers’ craft. “super-premium american whiskey” includes woodford reserve, gentleman jack, jdsb, jdtr, jack daniel’s no. 27 gold tennessee whiskey, and jack daniel’s sinatra select. “tequila” includes the herradura family of brands (herradura), el jimador, new mix, pepe lopez, and antiguo. “wine” includes korbel champagnes and sonoma-cutrer wines. “vodka” includes finlandia. “non-branded and bulk” includes our net sales of used barrels, bulk whiskey and wine, and contract bottling regardless of customer location. other metrics. “shipments.” we generally record revenues when we ship or deliver our products to our customers. in this document, unless otherwise specified, we refer to shipments when discussing volume. “depletions.” this is a term commonly used in the beverage alcohol industry to describe volume. depending on the context, depletions usually means either (a) our shipments directly to retail or wholesale customers for owned distribution markets or (b) shipments from our distributor customers to retailers and wholesalers in other markets. we believe that depletions measure volume in a way that more closely reflects consumer demand than our shipments to distributor customers do. “consumer takeaway.” when discussing trends in the market, we refer to consumer takeaway, a term commonly used in the beverage alcohol industry that refers to the purchase of product by consumers from retail outlets, including products purchased through e-premise channels, as measured by volume or retail sales value. this information is provided by third parties, such as nielsen and the national alcohol beverage control association (nabca). our estimates of market share or changes in market share are derived from consumer takeaway data using the retail sales value metric. we believe consumer takeaway is a leading indicator of how consumer demand is trending. “estimated net change in distributor inventories.” we generally recognize revenue when our products are shipped or delivered to customers. in the united states and certain other markets, our customers are distributors that sell downstream to retailers and consumers. we believe that our distributors’ downstream sales more closely reflect actual consumer demand than do our shipments to distributors. our shipments increase distributors’ inventories, while distributors’ depletions (as described above) reduce their inventories. therefore, it is possible that our shipments do not coincide with distributors’ downstream depletions and merely reflect changes in distributors’ inventories. because changes in distributors’ inventories could affect our trends, we believe it is useful for investors to understand those changes in the context of our operating results. we perform the following calculation to determine the “estimated net change in distributor inventories”: for both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by (a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion volumes. we subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year percentage change of the organic amount to calculate the “estimated net change in distributor inventories”. a positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends could decrease as distributors’ reduce inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories. for both the current-year period and the comparable prior-year period, we calculate a “depletion-based” amount by (a) dividing the organic dollar amount (e.g. organic net sales) by the corresponding shipment volumes to arrive at a shipment per case amount, and (b) multiplying the resulting shipment per case amount by the corresponding depletion volumes. we subtract the year-over-year percentage change of the “depletion-based” amount from the year-over-year percentage change of the organic amount to calculate the “estimated net change in distributor inventories”. a positive difference is interpreted as a net increase in distributors’ inventories, which implies that organic trends could decrease as distributors’ reduce inventories; whereas, a negative difference is interpreted as a net decrease in distributors’ inventories, which implies that organic trends could increase as distributors rebuild inventories. note 4 - jack daniel’s country cocktails 9l depletions effective april 1, 2021, we entered into a partnership with pabst brewing company for the supply, sales, and distribution of jack daniel’s country cocktails in the united states. consequently, our fiscal 2022 results include net sales, but do not include 9l depletions for this brand. to share results on a comparable basis for fiscal 2022, we excluded fiscal 2021 9l depletions for jack daniel’s country cocktails in the united states. |
| 2021-11-10 16:15:00 | Brown-forman Second Quarter Earnings Release And Conference Call Scheduled For December 8, 2021 Louisville, ky.--(business wire)--brown-forman corporation will release its financial results for the second quarter and first half of fiscal year 2022 on december 8, 2021 by 8:00 a.m. (est), followed by a conference call to discuss the results at 10:00 a.m. (est). a live audio broadcast of the conference call will be available via brown-forman’s internet website, www.brown-forman.com, through a link to ’investors/events & presentations.’ a digital audio recording of the conference call will be available on the website approximately two hours after the conclusion of the conference call. the replay will be available for at least 30 days following the conference call. interested parties in the u.s. are also invited to join the conference call by dialing 833-962-1472 and asking for the brown-forman call. international callers should dial 442-268-1255. the company suggests that participants dial in approximately ten minutes in advance of the 10:00 a.m. (est) start. 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/. |
| 2021-08-19 16:05:00 |
|
| 2021-08-11 16:05:00 |
|
| 2021-05-19 16:01:00 |
|
| 2021-02-16 17:18:00 |
|
| 2020-11-17 16:01:00 |
|
| 2020-10-21 00:00:00 |
|
| 2020-10-16 00:00:00 |
|
| 2020-10-08 00:00:00 |
|
| 2020-10-07 00:00:00 |
|
| 2020-10-06 00:00:00 |
|
📰 Browse additional press releases for Brown-Forman!
Sign up for free or log in🔓 Unlock our free guide: "The Checklist Value Investor — A Smarter Way to Pick Stocks"