Louisville, KY, March 7, 2017
– Brown-Forman Corporation (NYSE:BFA, BFB) reported financial results for its third quarter and the first nine months of fiscal 2017 ended January 31, 2017. For the third quarter, the company’s reported net sales1 were essentially flat at $808 million (+4% on an underlying basis2) compared to the prior-year period. Reported operating income decreased 2% in the quarter to $273 million (+3% on an underlying basis). Diluted earnings per share of $0.47 increased 1%.

For the first nine months of the fiscal year, reported net sales decreased 3% to $2,299 million (+3% on an underlying basis). Reported net sales growth was adversely impacted by three percentage points due to the divestiture of Southern Comfort and Tuaca in the prior fiscal year, and two percentage points due to foreign exchange. Reported operating income declined 4% to $778 million (+5% on an underlying basis), and diluted earnings per share increased 1% to $1.34.

Paul Varga, the company’s Chief Executive Officer said, “Against a continued challenging global backdrop for consumer staples, our third quarter underlying sales growth accelerated nicely relative to our first half. We expect our fourth quarter underlying sales to have a similar favorable comparison to the first half, though we now anticipate full year underlying results at the lower end of our original forecast.” Varga continued, “We are pleased with the sequential organic sales improvement we’ve been witnessing and note that the drag on reported results due to 2016’s portfolio reshaping has begun to abate.”

Year-to-date Fiscal 2017 Highlights
• Underlying net sales increased 3%, driven by a sequential improvement in the third quarter’s growth:
◦ Developed markets grew year-to-date underlying net sales by 4% (-2% reported) and emerging markets grew underlying net sales by 1% (-8% reported)
▪ Emerging markets continued to improve in the third quarter, growing underlying net sales 5% (-1% reported)
◦ The Jack Daniel’s family of brands grew underlying net sales 3% (+1% reported), with Tennessee Honey up 3% (+1% reported) and Tennessee Fire up double-digits
◦ The company’s super- and ultra-premium North American whiskey brands3 experienced strong underlying net sales growth, including 20% growth from Woodford Reserve (+15% reported)
◦ Herradura grew underlying net sales 18% (+11% reported), el Jimador grew underlying net sales 7% (flat reported) and New Mix RTDs grew underlying net sales 16% (flat reported)
• Underlying operating income grew 5%, helped by a 2% decline in underlying SG&A (-4% reported)
• The company returned $764 million to shareholders through $561 million of stock repurchases and $203 million of dividends.

Year-to-date Fiscal 2017 Performance By Market
Year-to-date underlying net sales grew 4% (-1% reported) in the United States. Sales growth was driven by continued gains for the Jack Daniel’s family of brands, including Tennessee Whiskey, Tennessee Honey and Gentleman Jack. Jack Daniel’s Tennessee Whiskey’s 4% underlying net sales growth (+4% reported) was driven by volume gains plus modest price increases. The company’s bourbon brands delivered continued growth, including double-digit underlying net sales growth from Woodford Reserve and Old Forester. Herradura and el Jimador tequila grew underlying net sales double digits in the United States as they continue to benefit from sustained investments the company has been making behind these brands since acquiring them a decade ago. Sonoma-Cutrer grew underlying net sales high single-digits and Korbel was up low single-digits.

The company’s developed markets outside of the United States grew year-to-date underlying net sales by 3% (-3% reported). As expected, underlying net sales growth in Europe accelerated from -1% during the second quarter to 6% in the third quarter, as timing of promotional activity and customer purchases in the United Kingdom and Germany reversed. Australia’s year-to-date underlying net sales were flat year over year due to a weak economy and high excise tax environment. Japan’s results, while still growing nicely, decelerated in the quarter following buy-ins related to the large price increases the company implemented this past fall.

The company’s underlying net sales in the emerging markets continued to improve in the third quarter to 5% growth (-1% reported), pulling up year-to-date underlying net sales growth to 1% (-8% reported). Mexico and Poland continued to deliver strong underlying net sales growth, with results in both countries driven by growth of Jack Daniel’s Tennessee Whiskey. Mexico also benefited from solid growth for New Mix RTDs, Herradura and Jack Daniel’s RTDs. Underlying and reported net sales in Russia and Turkey remain down over the last nine months due to the sluggish start to the year, but Russia returned to underlying growth in the third quarter and Turkey’s third quarter underlying results appear to have stabilized. Underlying net sales in China, Brazil, and Thailand declined double digits, while Ukraine enjoyed solid double-digit gains. The company believes that weaker economic conditions combined with an appreciated US dollar have negatively impacted consumer’s purchasing power in many of the emerging markets.

Global Travel Retail’s results have enjoyed a solid rebound from last year’s depressed levels, with net sales up 7% on an underlying basis (+1% reported). Results benefited from distribution gains for Woodford Reserve and activation of the Jack Daniel’s Family of Brands around the 150th anniversary of the brand. The company believes that Global Travel Retail has experienced more normal trading patterns this year compared to the prior year.

The company’s non-branded business, primarily comprised of selling used barrels, experienced a 22% year-to-date decline in net sales, excluding the impact from acquisition and divestiture activity (+16% reported). The reduction in net sales was due largely to declines in used barrel sales reflecting lower prices and volumes as a result of weaker demand from blended Scotch industry buyers and pricing pressures due to the increased supply of used barrels in the market.

Year-to-date Fiscal 2017 Performance By Brand

The company’s underlying net sales growth was led by the Jack Daniel’s family, up 3% (+1% reported), with stronger growth in the United States than outside the United States. Jack Daniel’s Tennessee Honey’s underlying net sales grew 3% (+1% reported), with continued growth in most markets. Jack Daniel’s Tennessee Fire’s underlying net sales grew double digits, as the brand’s continued rollout outside of the United States and strong growth in the on-premise in the United States more than offset the off-premise declines associated with last year’s national launch in the United States. Jack Daniel’s RTD/RTP business and Gentleman Jack grew underlying net sales mid single-digits, with both brands powered by continued growth outside of the United States.

Brown-Forman’s portfolio of super- and ultra-premium whiskey brands, including Woodford Reserve and Woodford Reserve Double Oaked, Jack Daniel’s Single Barrel, and Gentleman Jack, continue to deliver strong rates of aggregate growth. The company has also increased pricing on some of its bourbon brands, including Old Forester and Woodford Reserve, to reinforce their premium positioning in the market. Woodford Reserve grew underlying net sales 20% (+15% reported), and Old Forester grew at an even faster rate.

While Finlandia vodka experienced a 1% year-to-date decline in underlying net sales (-10% reported), the brand grew both underlying and reported net sales in the third quarter, helped by its return to growth in Russia. Finlandia’s year-to-date underlying net sales in Poland were down given the challenging economic backdrop and an extremely competitive marketplace for premium vodka.

el Jimador grew underlying net sales by 7% (0% reported), fueled by gains in the United States. El Jimador’s underlying net sales in Mexico were down due to modest volume declines as the company continues to reposition the brand through multi-year price increases. New Mix’s underlying net sales increased 16% (0% reported), with sustained growth in takeaway trends. Herradura grew underlying net sales by 18% (+11% reported), driven by double-digit gains in both the United States and Mexico.

Other P&L Items
Year-to-date company-wide price/mix improvements contributed approximately one percentage point of underlying net sales growth, with volume growth accounting for the other two points. Year-to-date underlying gross profit grew 2% while reported gross profit declined 6%, primarily due to acquisition and divestiture activity and adverse foreign exchange.

Year-to-date underlying A&P spend increased 4% (-8% reported), with the third quarter’s 10% underlying increase (-4% reported) impacted by the timing of spend during the back half of the fiscal year. Underlying SG&A decreased 2% (-4% reported), driven by the company’s tight focus on discretionary spend and lower compensation related expenses. The company delivered underlying operating income growth of 5% (-4% reported) during the first nine months of the year.

Financial Stewardship
On January 24, 2017, Brown-Forman declared a regular quarterly cash dividend of $0.1825 per share on the Class A and Class B common stock, resulting in an annualized cash dividend of $0.73 per share. The cash dividend is payable on April 3, 2017 to stockholders of record on March 6, 2017. Brown-Forman has paid regular quarterly cash dividends for 71 consecutive years and has increased the dividend for 33 consecutive years.

During the first nine months of fiscal 2017, the company repurchased a total of 11.8 million Class A and Class B shares for $561 million, at an average price of $47 per share. As of January 31, 2017, the remaining share repurchase authorization under the existing program totaled $330 million.

As of January 31, 2017, total debt was $2,226 million, up from $1,501 million as of April 30, 2016. The increase is primarily related to the issuance of two bonds in June of 2016, including €300M 1.2% 10-year notes and £300M 2.6% 12-year notes.

Fiscal Year 2017 Outlook

The company believes that fiscal 2017 is on track to be another year of continued growth in underlying net sales and operating income, despite the significant uncertainty that currently exists around the global economic and geopolitical environment, not to mention foreign exchange volatility. Assuming no further deterioration in the global economy, the company anticipates:
1. Underlying net sales growth of 3% to 4%
2. Underlying operating income growth of 5% to 7%
3. Reported diluted earnings per share of $1.71 to $1.76 in fiscal 2017, including foreign exchange headwinds of approximately $0.06 given current spot rates.

Conference Call Details
Brown-Forman will host a conference call to discuss the 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, https://www.brown-forman.com/, 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 available on the website.

For more than 145 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 and GlenDronach. Brown-Forman’s brands are supported by over 4,600 employees and sold in approximately 160 countries worldwide. For more information about the company, please visit https://www.brown-forman.com/.

1 Percentage growth rates are compared to prior-year periods, unless otherwise noted. Beginning in the first quarter of fiscal 2017, we changed our presentation of excise taxes from the gross method (included in sales and costs) to the net method (excluded from sales). As a result, the amounts presented as “net sales” in our financial statements now exclude excise taxes. We believe the change in presentation to the net method is preferable because it is more representative of the internal financial information reviewed by management in assessing our performance and more consistent with the presentation used by our major competitors in their external financial statements.
2 We present changes in certain income statement line-items that are adjusted to an “underlying” basis, which we believe assists in understanding both our performance from period to period on a consistent basis and the trends of our business. Non-GAAP “underlying” measures include changes in (a) underlying net sales, (b) underlying gross profit, (c) underlying advertising expenses, (d) underlying selling, general and administrative expenses and (e) underlying operating income. A reconciliation of these non-GAAP measures for the three- and nine-month periods ended January 31, 2017, to the most closely comparable GAAP measure, and the reasons why management believes these adjustments to be useful, are included in Schedule A and B in this press release.
3 Super/Ultra-premium North American whiskey brands include Woodford Reserve, Jack Daniel’s Single Barrel, Gentleman Jack, Sinatra Select, No. 27 Gold, and Collingwood.

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; 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 (for example, LIFO, foreign income deferral, U.S. manufacturing and other deductions) 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; 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, or 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 SEC.

Use of Non-GAAP Financial Information: This press release includes measures not derived in accordance with U.S. generally accepted accounting principles (“GAAP”), including underlying net sales, underlying gross profit, underlying advertising expense, underlying SG&A, and underlying operating income. These measures should not be considered in isolation or as a substitute for any measure derived in accordance with GAAP, and also may be inconsistent with similar measures presented by other companies. Reconciliations of these measures to the most closely comparable GAAP measures, and reasons for the company’s use of these measures, are presented on Schedules A and B attached hereto.