September 02, 2020 Brown–Forman Reports Solid First Quarter Results Amidst Continued Uncertainty

Louisville, KY – Brown‑Forman Corporation (NYSE: BFA, BFB) announced financial results for its first quarter of fiscal 2021 with reported net sales1 down 2% to $753 million (+3% on an underlying basis2) compared to the same prior-year period. Further, reported operating income increased 56% to $387 million (+15% on an underlying basis) and diluted earnings per share grew 73% to $0.67.

“I am very pleased with our performance at the start of this fiscal year and thankful to our 4,800 employees worldwide who made these results possible,” said Lawson Whiting, President and Chief Executive Officer. He added, “Despite being faced with significant ongoing challenges, our business performed well during the quarter though much uncertainty remains in the current environment. We believe we are well positioned to navigate the headwinds we face today and emerge from the COVID-19 environment in a stronger position.”

First Quarter of Fiscal 2021 Highlights
  • Underlying net sales grew 3% (-2% reported)
  • The United States and developed international markets grew underlying net sales 9% (+3% reported) and 12% (+13% reported), respectively, while underlying net sales in emerging markets declined 3% (-20% reported)
  • Jack Daniel’s family of brands underlying net sales grew 3% (-2% reported). Underlying net sales growth from Jack Daniel’s RTDs3, Jack Daniel’s Tennessee Apple, Jack Daniel’s Tennessee Honey, and Gentleman Jack was partially offset by an unfavorable channel mix shift in Jack Daniel’s Tennessee Whiskey
  • Premium bourbons grew underlying net sales 18% (+15% reported) driven by Woodford Reserve’s 14% underlying net sales growth (+11% reported) and sustained high double-digit underlying net sales growth from Old Forester
  • The tequila portfolio grew underlying net sales 16% (flat reported) led by strong volume-driven underlying net sales growth from New Mix in Mexico and double-digit underlying net sales growth from el Jimador. Herradura’s underlying net sales declined 16% (-25% reported) as double-digit growth in the United States was more than offset by declines in Mexico
  • Non-branded and bulk underlying net sales declined 32% (-31% reported) primarily reflecting lower demand and pricing for used barrels
First Quarter of Fiscal 2021 Brand Results

The Jack Daniel’s family of brands provided positive underlying net sales growth driven by Jack Daniel’s RTDs, the ongoing launch of Jack Daniel’s Tennessee Apple, and broad-based volume growth from Jack Daniel’s Tennessee Honey. Gentleman Jack contributed volumetric gains in the United States partially offset by unfavorable channel mix. Underlying net sales declines for Jack Daniel’s Tennessee Whiskey were driven by lower volumes in emerging markets and Travel Retail reflecting travel bans and other restrictions related to COVID-19, along with unfavorable channel mix in the United States and developed international markets due to significant restrictions in the on-premise channel.

Brown‑Forman’s portfolio of premium bourbon brands, including Woodford Reserve and Old Forester, maintained their double-digit underlying net sales growth. Woodford Reserve’s gains were driven by volumetric growth in the United States, partially offset by volume declines in Travel Retail. Old Forester’s strong double-digit underlying net sales growth was powered by ongoing volumetric gains and favorable mix from the brand’s high-end expressions.

The company’s tequila brands provided strong underlying net sales growth led by higher volumes of New Mix supported by increased consumer demand in Mexico. el Jimador’s underlying net sales were fueled by higher volumes and pricing in the United States and Mexico, while Herradura’s underlying net sales decline was driven by lower volumes and unfavorable mix in Mexico, partially offset by higher prices, favorable product mix, and higher volumes in the United States.

First Quarter of Fiscal 2021 Market Results

From a geographic perspective, underlying net sales growth in the United States and our developed international markets was partially offset by declines in Travel Retail, used barrels, and emerging markets.

In the United States, underlying net sales growth was driven by:

  • expanding consumer demand for Jack Daniel’s RTDs, including the launch of new spirits-based RTDs
  • premium bourbons, led by Woodford Reserve and Old Forester
  • the ongoing launch of Jack Daniel’s Tennessee Apple
  • and Jack Daniel’s Tennessee Honey

This growth was partially offset by declines in Jack Daniel’s Tennessee Whiskey reflecting an unfavorable channel mix shift from the on-premise business due to COVID-19 related restrictions and closures in this channel.
Underlying net sales growth in our developed international markets was fueled by Jack Daniel’s RTDs, the launch of Jack Daniel’s Tennessee Apple in a number of countries, and Jack Daniel’s Tennessee Honey.

Broad-based declines registered in the company’s emerging markets were led by Russia, Southeast Asia, sub-Saharan Africa, and India, as COVID-19 driven challenges adversely impacted first quarter results. Partially offsetting these declines were underlying net sales growth in Mexico, Brazil, and Poland.

Underlying net sales results in Travel Retail continued to be significantly impacted by COVID-19 reflecting the unprecedented continuation of travel bans and other restrictions.

First Quarter of Fiscal 2021 Other P&L Items

Volumes grew 22% in the first quarter driven by New Mix, the Jack Daniel’s family of brands, and Woodford Reserve. Company-wide price/mix decreased 19% reflecting unfavorable portfolio mix with growth from lower-priced brands (New Mix & Jack Daniel’s RTDs) and unfavorable channel mix resulting from COVID-19 related restrictions in the on-premise channel.

Underlying gross profit declined 1% (-7% reported) and reported gross margin contracted 320 basis points to 61.7% driven by higher input costs and unfavorable mix primarily reflecting COVID-19 related closures in the on-premise channel and the significant increase in sales of ready-to-drink products.

The company’s investment in underlying advertising declined 34% (-33% reported) reflecting the phasing of spending, a reduction in on-premise activations, and the cancellation of consumer events and sponsorships given the current environment. The company expects advertising investments to accelerate over the balance of the fiscal year. Underlying SG&A declined 10% (-10% reported) driven by lower discretionary spend as the company maintained its cost discipline focus.

Underlying operating income increased 15% (+56% reported) driven primarily by operating expense leverage.

Diluted earnings per share increased 73% to $0.67 including an estimated $0.19 per share gain from the sale of the Canadian Mist, Early Times, and Collingwood brands and $0.08 per share benefit related to a discrete tax item recognized in the quarter.

Financial Stewardship

On July 23, 2020, 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. This marks the company’s 75th consecutive year of paying and 36th year of uninterrupted increases in their regular quarterly cash dividend. The quarterly cash dividend is payable on October 1, 2020, to stockholders of record on September 4, 2020.

Fiscal Year 2021 Outlook

The company continues to face substantial uncertainty due to the rapidly evolving environment with the COVID-19 pandemic and its effect on the global economy. As a result of this ongoing uncertainty and expected volatility, the company remains unable to provide quantitative guidance for fiscal year 2021. Jane Morreau, Executive Vice President and Chief Financial Officer, added, “We believe that we continue to be in a strong financial position and that our capacity to generate solid operating cash flows remain sound, allowing us to navigate this pandemic as circumstances evolve.” As a result, the company maintains expectations to fully fund ongoing investments in the business and pay regular dividends. “Longer term, we are confident about the growth opportunities for our brands and the resilience of our business. We believe the actions we have taken solidify our foundation to continue to grow consistently as we have done for decades,” added Lawson Whiting, President and Chief Executive Officer.

Conference Call Details

Brown‑Forman will host a conference call to discuss these results at 10:00 a.m. (EDT) 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. (EDT) 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.

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:

  • Impact of health epidemics and pandemics, including the COVID-19 pandemic, and the resulting negative economic impact and related governmental actions
  • 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; 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, 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
  • 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
  • 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
  • Significant additional labeling or warning requirements or limitations on availability of our beverage alcohol products
  • 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
  • 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
  • Risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value
  • Counterfeiting and inadequate protection of our intellectual property rights
  • Product recalls or other product liability claims, product tampering, contamination, or quality issues
  • Significant legal disputes and proceedings, or government investigations
  • Cyber breach or failure or corruption of key information technology systems, or failure to comply with personal data protection laws
  • 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
  • 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.

See our Financial Results

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