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Brown-Forman Reports Strong Fiscal 2018 Results; Expects Momentum to Continue in Fiscal 2019

Louisville, KY, June 6, 2018 – Brown-Forman Corporation (NYSE: BFA, BFB) reported financial results for its fourth quarter and fiscal year ended April 30, 2018. For the fourth quarter, the company’s reported net sales1 increased 6% to $733 million (+5% on an underlying2 basis) compared to the same prior-year period. In the quarter, reported operating income declined 32% to $145 million (-4% on an underlying basis) and diluted earnings per share of $0.23 declined 24%. Fourth quarter reported operating income and earnings per share were both negatively impacted by the previously announced creation of a $70 million charitable foundation, as well as the phasing of operating expenses.

For the full year, the company’s reported net sales increased 8% to $3,248 million (+6% on an underlying basis) compared to the prior-year period. Reported net sales growth benefited by one percentage point from foreign exchange and one percentage point from estimated net changes in distributor inventories. In the year, reported operating income increased 5% to $1,039 million (+8% on an underlying basis) and diluted earnings per share of $1.48 increased 8%. Tax reform items in the third quarter and the creation of the foundation in the fourth quarter negatively impacted fiscal 2018 earnings per share by $0.19.

Paul Varga, the company’s Chief Executive Officer said, “Brown-Forman delivered excellent results in fiscal 2018, driven by underlying net sales growth of 6.5%, which more than doubled fiscal 2017’s rate of growth. Our results demonstrated an excellent balance across both geography and portfolio, while being driven once again by the Jack Daniel’s trademark and our premium American whiskey portfolio. Thoughtful resource allocation, high impact brand investments, and a heightened attention to cost efficiency yielded an operating margin of 32%, an ROIC2,4 of 20%, and a total shareholder return (TSR)5 of 53% in fiscal 2018.”

Fiscal 2018 Highlights

  • Underlying net sales grew 6% (+8% reported), with balanced geographic and portfolio contribution3:
    • Emerging markets grew underlying net sales by 13% (+18% reported), the United States grew underlying net sales by 5% (+7% reported) and developed markets outside of the United States also grew underlying net sales by 5% (+6% reported)
    • The Jack Daniel’s family of brands grew underlying net sales 6% (+8% reported), including 4% growth (+6% reported) for Jack Daniel’s Tennessee Whiskey
    • The company’s super-premium American whiskey brands grew underlying net sales +15% (+20% reported), including 22% growth from Woodford Reserve (+26% reported)
    • Herradura and el Jimador grew underlying net sales 19% and 9%, respectively (+17% and +14%, reported)
  • Underlying operating income grew 8% (+5% reported)
  • Returned $773 million to shareholders in the year, including a $1/share special dividend
  • Generated a 17% annual TSR over the last ten years

Fiscal 2018 Results By Market – Broad-Based Growth in Each Top Ten Market

The company delivered strong, and broad-based growth around the world, with balanced contribution from the main geographic clusters, including the United States, developed markets outside of the United States, and the emerging markets. Every one of the company’s top ten markets grew net sales and Travel Retail delivered 8% underlying net sales growth (+13% reported) for the year.

Brown-Forman Corporation – Top Ten Markets by Net Sales
Supplemental Information (Unaudited)
Twelve Months Ended April 30, 2018


% of Reported Net Sales

% Growth in Reported Net Sales

% Growth in Underlying Net Sales

United States




United Kingdom




































Top Ten Total




Other Markets




Total Worldwide




Note: See schedule C for reconciliation of reported net sales growth, which includes the impact from acquisitions and divestitures, changes in foreign exchange, and estimated net change in distributor inventories.
Totals may differ due to rounding

The underlying net sales growth in the United States was driven by broad-based gains from the Jack Daniel’s family of brands, including Tennessee Whiskey, Tennessee Honey, Tennessee Fire, Gentleman Jack and the portfolio of RTDs/RTP (RTDs3), as well as a solid mid-year launch of Jack Daniel’s Tennessee Rye. The company’s super-premium American whiskey portfolio continued to grow rapidly in the United States, including strong double-digit underlying net sales gains from Woodford Reserve and Old Forester. Herradura and el Jimador tequila also grew aggregate underlying net sales double-digits as both brands enjoyed strong growth in the on- and off-premise.

Underlying net sales in the company’s developed markets outside of the United States were solid. Germany and the United Kingdom grew underlying net sales by 10% (+14% reported) and 3% (+4% reported), respectively, while France’s underlying net sales increased 6% (+11% reported). Australia’s underlying net sales increased 8% (+8% reported) and Canada’s underlying net sales increased 3% (+2% reported). The company’s recent launch of owned distribution in Spain has resulted in double-digit underlying net sales gains.

Emerging markets continued to strengthen despite increasingly difficult comparisons. Mexico grew underlying net sales by 12% (+15% reported), fueled by strong growth in the tequila portfolio and continued demand for the Jack Daniel’s family of brands. Poland also delivered strong results with underlying net sales growth of 7% (+15% reported). Russia and Brazil grew underlying net sales 19% (+52% reported) and 28% (+34% reported), respectively, as both markets experienced improved economic conditions as well as reduced currency volatility. Other emerging markets, such as Turkey, China, Thailand, India, and Ukraine delivered double-digit growth in underlying net sales.

Travel Retail delivered another solid year of growth, with underlying net sales up 8% (+13% reported) following the 7% (+3% reported) underlying net sales growth registered in fiscal 2017. Jack Daniel’s Tennessee Whiskey grew well across Travel Retail, and other brands, such as Gentleman Jack and Woodford Reserve also enjoyed growth as consumers globally search for super-premium bourbons with heritage and authenticity. Travel Retail also benefited from higher passenger volumes throughout the year.

Fiscal 2018 Results By Brand – Strong Growth in Premium American Whiskey and Tequila

The company’s underlying net sales growth was led by the Jack Daniel’s family, up 6% (+8% reported). Jack Daniel’s Tennessee Whiskey experienced 4% underlying net sales growth globally (+6% reported), with strong volume gains in markets outside of the United States. Jack Daniel’s Tennessee Honey’s underlying net sales grew 9% (+10% reported), led by growth in the United States and France. Jack Daniel’s RTD business has delivered strong underlying net sales growth throughout the year, up 14% (+15% reported). Growth has been fueled by innovation, including Jack Daniel’s Cider in the United Kingdom, Jack Daniel’s American Serve in Australia, Jack Daniel’s Lynchburg Lemonade in Germany and Southern Peach Country Cocktails in the United States. Gentleman Jack grew underlying net sales 7% (+9% reported), as consumers responded favorably to the new advertising campaign and additional media spend. Jack Daniel’s Tennessee Fire increased underlying net sales 15% (+20% reported), led by continued growth in the United States and expansion into Brazil and Chile.

Brown-Forman’s portfolio of super-premium American whiskey brands, including Woodford Reserve, Jack Daniel’s Single Barrel and Gentleman Jack, delivered 15% underlying net sales growth (+20% reported). Woodford Reserve grew underlying net sales 22% (+26% reported). Old Forester grew at an even faster rate, powered by favorable mix shift to more premium offerings in addition to strong volumetric gains.

Finlandia vodka grew underlying net sales 5% (+10% reported). The increase in underlying net sales was primarily driven by higher realized prices in Russia due to our route-to-consumer change. These gains were partially offset by continued pressure in Poland due to the extremely competitive marketplace.

el Jimador grew underlying net sales by 9% (+14% reported), fueled by strong takeaway trends in the United States as the company continued to invest in building brand awareness through the combination of on- and off-premise activation. Herradura grew underlying net sales by 19% (+17% reported). Both the United States and Mexico experienced double-digit gains, and Mexico benefited from continued growth of Herradura Ultra. New Mix’s underlying net sales growth increased double-digits, helped by strong distribution gains and innovation.

Other P&L Items

Company-wide price/mix contributed nearly two percentage points to the 6% underlying net sales growth (+8% reported). Underlying gross profit also grew 6% in fiscal 2018 (+9% reported). As expected, the company experienced higher cost of goods in the second half of the year. Full-year reported gross margins increased 30bps due to favorable portfolio mix and foreign exchange tailwinds.

Underlying advertising spend increased 6% (+8% reported) for the full year, as the company continued to invest in the Jack Daniel’s family of brands, the fast growing bourbon and tequila brands, as well as brands such as Slane Irish whiskey, GlenDronach and BenRiach. Underlying SG&A grew 3% for the full year (+15% reported), driven by a 9% underlying increase (+50% reported) in SG&A in the fourth quarter. SG&A in the fourth quarter was negatively impacted by one-time items including special employee bonuses, while reported SG&A also included the $70 million contribution to the newly created Brown-Forman charitable foundation.

The company delivered underlying operating income growth of 8% (+5% reported). Operating leverage was driven by the company’s continued focus on tightly managing costs, including leveraging its assets and prior investments. Reported operating margin, which included funding the foundation, was 32%.

Financial Stewardship

As of April 30, 2018, total debt was $2,556 million, up from $2,149 million as of April 30, 2017. Through April 30, 2018, the company delivered a trailing twelve month ROIC of 20%.

On January 23, 2018, Brown-Forman declared a five for four stock split, paid on February 28, 2018. Also on January 23, 2018, Brown-Forman declared a special dividend of $1.00 on the split-adjusted Class A and Class B common stock. The special cash dividend was paid on April 23, 2018 to stockholders of record on April 2, 2018. On May 24, 2018, Brown-Forman declared a regular quarterly cash dividend of $0.158 per share on the split-adjusted Class A and Class B common stock, equating to an annualized cash dividend of $0.632 per share. The quarterly cash dividend is payable on July 3, 2018 to stockholders of record on June 6, 2018.

Brown-Forman has paid regular quarterly cash dividends for 72 consecutive years and has increased the dividend for 34 consecutive years.

Regarding the outlook for fiscal 2019, Varga added, “We are in the early days of capitalizing on our American Whiskey strategy, and believe we are extremely well-positioned to maintain the renewed momentum in our business. We have been investing over the last several years in our portfolio of brands, our route-to-market and our people, and our confidence is further bolstered by the significant actions and investments we chose to make in fiscal 2018, most notably during the fourth quarter. We expect fiscal 2019 to be another great year at Brown-Forman, with reported earnings per share gains of 18-25% fueled by strong growth in our business and the benefits of tax reform.”

Fiscal Year 2019 Outlook
The global economy has improved modestly over the last year, including improving conditions in many emerging markets. However, the competitive landscape in the developed world remains intense, not to mention concerns over potential retaliatory tariffs on American spirits. These factors make it difficult to accurately predict future results. Assuming current trends continue, the company expects:

1. Underlying net sales growth of 6% to 7%.
2. Flat underlying SG&A and underlying A&P up in line with underlying net sales growth.
3. Underlying operating income growth of 7% to 9%.
4. Diluted earnings per share of $1.75 to $1.85 incorporates a tax rate of 21% as well as approximately five cents of negative impact from higher interest expense, foreign exchange and anticipated changes in net inventories.


FY18 Reported EPS $ 1.48
Tax Reform Items and Foundation $0.19
Baseline FY18 EPS $ 1.67
Underlying Growth of 7-9% $0.11 – $0.16
Lower Tax Rate $0.04 – $0.05
Interest Expense, Foreign Exchange & Inventory ($0.07) – ($0.03)
FY19 Reported EPS Outlook $1.75 – $1.85
YOY Reported EPS Growth 18% – 25%

Conference Call Details

Brown-Forman will host a conference call to discuss the 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, http://localhost/, through a link to “Investors/Events & Presentations.” For those unable to participate in the live call, information regarding the digital audio recording of the conference call and the presentation slides will also be on the website. The replay 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 Jack Daniel’s Tennessee Whiskey, Jack Daniel’s & Cola, Jack Daniel’s Tennessee Honey, Jack Daniel’s Tennessee Fire, Gentleman Jack, Jack Daniel’s Single Barrel, Finlandia, Korbel, el Jimador, Woodford Reserve, Old Forester, Canadian Mist, Herradura, New Mix, Sonoma-Cutrer, Early Times, Chambord, BenRiach, GlenDronach and Slane. Brown-Forman’s brands are supported by over 4,800 employees and sold in more than 170 countries worldwide. For more information about the company, please visit http://localhost/.

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,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” and similar words identify 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 potential retaliatory tariffs on American spirits; 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, capital gains) or changes in related reserves, changes in tax rules or accounting standards, and the unpredictability and suddenness with which they can occur
  • 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 smaller distilleries or local producers, or away from brown spirits, our premium products, or spirits generally, and our ability to anticipate or react to them; bar, restaurant, travel, or other on-premise declines; shifts in demographic 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 products 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 implementation-related or fixed costs
  • Inventory fluctuations in our products by distributors, wholesalers, or retailers
  • Competitors’ 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 product quality issues
  • Significant legal disputes and proceedings; government investigations (particularly of industry or company business, trade, or marketing practices)
  • 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

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.

For Financial Results, click here