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Brown-Forman Reports First Half Results; Reaffirms Full Year Earnings Per Share outlook for Fiscal 2020

Louisville, KY, December 5, 2019 – Brown-Forman Corporation (NYSE: BFA, BFB) reported financial results for its second quarter and first half of fiscal 2020. For the second quarter, the company’s reported net sales1 were up 9% to $989 million (+6% on an underlying basis2) compared to the same prior-year period. In the quarter, reported operating income increased 6% to $352 million (-3% on an underlying basis) and diluted earnings per share rose 14% to $0.59.

For the first six months of the fiscal year, the company’s reported net sales increased 5% to $1.8 billion (+3% on an underlying basis). Reported net sales benefited approximately 1% due to the net change in distributor inventories related largely to the launch of Jack Daniel’s Tennessee Apple. Year-to-date reported operating income increased 1% to $600 million (-5% on an underlying basis) and diluted earnings per share increased 5% to $0.97.

Lawson Whiting, the company’s President and Chief Executive Officer said, “As expected, our results improved during the second quarter. We continue to deliver solid underlying growth from both a geographic and portfolio perspective, despite the uncertain global economic and geopolitical environment. Today, we reaffirmed our underlying net sales outlook for the year and remain on track to deliver another year of mid-single digit growth in underlying net sales led by the Jack Daniel’s family of brands, including the launch of Jack Daniel’s Tennessee Apple in the United States, as well as sustained double-digit growth from our premium bourbon and tequila portfolios.”

Whiting further added, “We continue to build our business for the long-term. Our takeaway trends3 remain healthy in many major markets as we continue to invest in consumer momentum by absorbing most tariff-related costs. We believe this, coupled with increased investments in advertising and route-to-consumer changes in certain markets, position us well for the next generation of growth.”

Year-to-Date Fiscal 2020 Highlights
• Underlying net sales grew 3% (+5% reported), improving to 6% (+9% reported) in 2Q:
◦ The United States grew underlying net sales 6% (+10% reported), emerging markets grew underlying net sales 5% (+4% reported), and our developed international markets grew underlying net sales 2% (+1% reported)
◦ Jack Daniel’s family of brands underlying net sales grew 2% (+5% reported) bolstered by the October launch of Jack Daniel’s Tennessee Apple in the United States, partially offset by a 1% underlying net sales decline (+1% reported) of Jack Daniel’s Tennessee Whiskey, which is largely timing related
◦ The company’s premium bourbons grew underlying net sales 22% (+28% reported) driven by Woodford Reserve’s 20% underlying net sales growth (+25% reported) and even stronger rate of growth from Old Forester
◦ Our tequila portfolio grew underlying net sales 11% (+10% reported), led by Herradura’s 19% underlying net sales growth (+21% reported) and el Jimador’s 13% underlying net sales growth (+8% reported)
• Diluted earnings per share increased 5% to $0.97

Year-to-Date Fiscal 2020 Results By Market – Net Sales Growth Led by the United States
The United States grew underlying net sales 6% (+10% reported) driven by sustained double-digit growth from our premium bourbons, Woodford Reserve and Old Forester, and double-digit underlying net sales gains in aggregate from our tequilas, Herradura and el Jimador. Underlying net sales growth for the Jack Daniel’s family of brands accelerated to mid-single digits for the first half of fiscal 2020 driven by the launch of Jack Daniel’s Tennessee Apple and double-digit growth of Jack Daniel’s RTDs3.

Underlying net sales in the company’s emerging markets grew 5% (+4% reported) on top of last year’s double-digit underlying net sales growth. Russia’s 22% increase in underlying net sales (+27% reported) reflected higher volumes of Jack Daniel’s Tennessee Whiskey and Finlandia due in part to favorable comparisons to the late fiscal 2018 route-to-consumer change as well as strong consumer demand for both brands. Despite the ongoing macroeconomic slowdown, Mexico grew underlying net sales 4% (+2% reported), fueled largely by pricing gains and volume growth for Herradura. Brazil’s underlying net sales grew 7% (+16% reported) on top of the prior year’s strong performance driven by growing demand for Jack Daniel’s Tennessee Whiskey and Jack Daniel’s Tennessee Fire. Poland’s underlying net sales declined 4% (-7% reported) largely driven by lower volumes and net prices for Finlandia.

Developed international markets increased underlying net sales 2% (+1% reported). In the United Kingdom, underlying net sales declined 1% (-2% reported) due to lower volumes in one channel and unfavorable mix for Jack Daniel’s Tennessee Whiskey compared to the same period last year. Germany’s underlying net sales were flat (+2% reported) as lower volumes of Jack Daniel’s Tennessee Whiskey, due in part to timing associated with order patterns of certain customers in the same period last year, were offset by the continued volume growth of Jack Daniel’s RTDs. France grew underlying net sales 3% (+4% reported) led by volume gains for Jack Daniel’s Tennessee Honey and the launch of Jack Daniel’s RTDs. Australia’s underlying net sales grew 2% (flat reported) led by higher prices and increased volumes of Jack Daniel’s Tennessee Whiskey, while Spain grew reported and underlying net sales in the high-single digits driven by the Jack Daniel’s family of brands.

Travel Retail’s underlying net sales declined 8% (-9% reported) driven primarily by lower volumes for the Jack Daniel’s family of brands largely due to the phasing of customer orders in the same period last year.

Year-to-Date Fiscal 2020 Results By Brand
Jack Daniel’s family of brands underlying net sales increased 2% (+5% reported) as growth was propelled by the launch of Jack Daniel’s Tennessee Apple in the United States and broad-based growth for Jack Daniel’s RTDs and Jack Daniel’s Tennessee Honey. Jack Daniel’s Tennessee Whiskey experienced a 1% decline in underlying net sales (+1% reported) due to lower volumes in certain developed international markets and Travel Retail, which offset volume growth in emerging markets led by Russia and China. Jack Daniel’s RTDs delivered volumetric gains producing underlying net sales growth of 7% (+6% reported). Jack Daniel’s Tennessee Honey grew underlying net sales 7% (+3% reported) with volume growth led by France, the United States, and Poland.

Brown-Forman’s portfolio of premium bourbon brands, including Woodford Reserve and Old Forester, continued their strong double-digit underlying net sales growth of 22% (+28% reported). Woodford Reserve, the leader in the super-premium bourbon category, grew underlying net sales 20% (+25% reported) fueled by the United States, where volumetric growth was supported by expanding consumer demand. Old Forester sustained an even faster rate of underlying net sales growth powered by volumetric gains and favorable mix.

The company’s tequila brands sustained double-digit underlying net sales growth led by Herradura 19% (+21% reported) and el Jimador 13% (+8% reported). Herradura’s underlying net sales growth was driven by higher volumes and pricing in the United States and Mexico. el Jimador’s underlying net sales growth was driven by higher volumes in the United States, as consumer takeaway trends remain strong, higher pricing in Mexico, and volume growth and higher pricing in a number of other international markets.

Finlandia vodka’s underlying net sales declined 7% (-8% reported) as lower volumes and prices in Poland were partially offset by volume gains in Russia.

Year-to-Date Fiscal 2020 Other P&L Items
Company-wide price/mix increased 1% due to faster growth from our higher-priced brands. Underlying gross profit declined 2% (flat reported) and reported gross margin contracted 270 bps to 63.7% driven primarily by tariff-related costs and higher input costs.

Underlying advertising investment grew 4% (+2% reported) reflecting increased investment to support the launch of Jack Daniel’s Tennessee Apple in the United States as well as higher spend behind Woodford Reserve, Jack Daniel’s Tennessee Whiskey, and Gentleman Jack. In the first half of fiscal 2020, underlying SG&A decreased 1% (-2% reported) driven by lower compensation-related expenses. Underlying operating income declined 5% (+1% reported).

Financial Stewardship
On November 21, 2019, the Brown-Forman Board of Directors declared a regular quarterly cash dividend of $0.1743 per share on the Class A and Class B common stock, a 5% increase over the prior-year dividend, resulting in an annualized cash dividend of $0.6972 per share. The quarterly cash dividend is payable on January 2, 2020 to stockholders of record on December 5, 2019. Brown-Forman has paid regular quarterly cash dividends for 74 consecutive years and has increased the dividend for 36 consecutive years.

Fiscal Year 2020 Outlook
The company reaffirmed its full year fiscal 2020 guidance for underlying net sales growth and diluted earnings per share. As a result of the uncertainty in the current economic and geopolitical environment in certain emerging markets and the Travel Retail channel as well as higher input costs, the company modestly reduced its underlying operating income growth range by one percentage point.

• Underlying net sales growth of 5% to 7%
• Underlying operating income growth of 2% to 4%
• Diluted earnings per share of $1.75 to $1.85

Conference Call Details
Brown-Forman will host a conference call to discuss these results at 10:00 a.m. (EST) today. All interested parties in the United States are invited to join the conference call by dialing 888-624-9285 and asking for the Brown-Forman call. International callers should dial +1-706-679-3410. The company suggests that participants dial in ten minutes in advance of the 10:00 a.m. (EST) 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,, 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 nearly 150 years, Brown-Forman Corporation has enriched the experience of life by responsibly building fine quality beverage alcohol brands, including the Jack Daniel’s Family of Brands, Finlandia, Korbel, el Jimador, Woodford Reserve, Old Forester, Coopers’ Craft, Canadian Mist, Herradura, New Mix, Sonoma-Cutrer, Early Times, Chambord, BenRiach, GlenDronach, Slane, 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

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:

• Unfavorable global or regional economic conditions and related 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
• Risks associated with being a U.S.-based company with global operations, 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 spirits 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, including anti-corruption laws; terrorism; and health pandemics
• Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar
• Changes in laws, regulations, or 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, sales, VAT, tariffs, duties, corporate, individual income, dividends, or capital gains) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur
• The impact of U.S. tax reform legislation, including as a result of future clarifications and guidance interpreting the statute
• Dependence upon the continued growth of the Jack Daniel’s family of brands
• 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; legalization of marijuana use on a more widespread basis; shifts in consumer purchase practices from traditional to e-commerce retailers; 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
• Decline in the social acceptability of beverage alcohol in significant markets
• 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, labor, or finished goods
• 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
• Inventory fluctuations in our products by distributors, wholesalers, or retailers
• Competitors’ and retailers’ consolidation or 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
• Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value
• Inadequate protection of our intellectual property rights
• Product recalls or other product liability claims, product counterfeiting, tampering, contamination, or quality issues
• Significant legal disputes and proceedings, or government investigations
• Failure or breach of key information technology systems
• Negative publicity related to our company, brands, marketing, personnel, operations, business performance, or prospects
• Failure to attract or retain key executive or employee talent
• 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 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.

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