Brown Forman Inc · NYSE:BF.A
Brown Forman — Q3 2020 Earnings Presentation
20 slides from Brown Forman's earnings presentation, Mar 4, 2020
Slide 1: YTD20 Results & Fiscal 2020 Outlook
YTD20 Results & Fiscal 2020 Outlook March 4, 2020
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation 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,” “exp
Slide 3: YTD20 Highlights & Fiscal 2020 Outlook
YTD20 Highlights & Fiscal 2020 Outlook Operating Income Consistent Net Gross Margin & Diluted EPS Fiscal Sales Growth Pressure Continued Improved 2020 Outlook • Net Sales +3% (Reported & • Declined 220bps • Operating income • Revised Underlying1) ◦ Higher agave and wood (1)% (Reported & ◦ Tempered c
Slide 4: YTD20 Net Sales Growth Led by the United States
YTD20 Net Sales Growth Led by the United States Reported Underlying* +7% +6% +6% +4% +3% +3% +2% —% -3% -4% United Developed Emerging Travel Retail Total** United Developed Emerging Travel Retail Total ** States International States International * See appendix for additional details ** Total includ
Slide 5: YTD20 Net Sales Growth Led by the United States
YTD20 Net Sales Growth Led by the United States Reported (Underlying*) United States France +7% (+6%) +3% (+3%) Growth led by premium Led by higher JDTH volumes bourbons, the launch of JDTA, and JD RTD launch and tequilas United Kingdom Poland -9% (-7%) +3% (+6%) Growth driven by Short-term disrupti
Slide 6: Jack Daniel's Family of Brands
Jack Daniel's Family of Brands YTD20 Net Sales Growth +2% Reported (+3% Underlying*) * See appendix for additional details 6
Slide 7: Premium Bourbons
Premium Bourbons YTD20 Net Sales Growth +25% Reported (+22% Underlying*) * See appendix for additional details 7
Slide 8: Tequilas
Tequilas YTD20 Net Sales Growth +9% Reported (+10% Underlying*) * See appendix for additional details 8
Slide 9: YTD20 Gross Margin Compression
YTD20 Gross Margin Compression 220 bps decline due primarily to higher input costs & tariffs 65.3% 0.3% (1.0)% 63.1% (1.5)% FY19 Price/Mix Tariffs Cost of Sales FY20 9
Slide 10: YTD20 - Maintained Top-line Growth; Continued Investment
YTD20 - Maintained Top-line Growth; Continued Investment Reported Acquisitions Foreign Estimated Underlying Change & Divestitures Exchange Net Change In Change (%) (+/-) Impact Distributor (%)* (+/-) Inventories (+/-) Net Sales 3% —% —% —% 3% Gross Profit -1% —% —% —% —% Advertising 1% —% 1% —% 3% S
Slide 11: Fiscal 2020 Outlook
Fiscal 2020 Outlook Tempered expectations in some international markets as well as increasingly uncertain macroeconomic and geopolitical environment Underlying* Change Net Sales Operating Income Diluted EPS Low-single Flat to modest $1.75 - $1.80 digit increase decline 1 - 4% Growth 11 * See appendi
Slide 12: Brown-Forman's Strategic Framework
Brown-Forman's Strategic Framework
Slide 13: Appendix
Appendix 13
Slide 14: Non-GAAP Reconciliation
Non-GAAP Reconciliation We use certain financial measures in this presentation that are not measures of financial performance under U.S. 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
Slide 15: Definitions
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 spirits category. Below
Slide 16: Definitions
Definitions Other Metrics. • “Depletions.” We generally record revenues when we ship our products to our customers. “Depletions” is a term commonly used in the beverage alcohol industry to describe volume. Depending on the context, “depletions” means either (a) our shipments directly to retail or wh
Slide 17: Reconciliation – YTD20 Net Sales Growth by Top Markets
Reconciliation – YTD20 Net Sales Growth by Top Markets* Nine months ended January 31, 2020 Estimated Net Change in Geographic Area Reported Foreign Exchange (+/-) Underlying Distributor Inventories (+/-) United States 7% —% -2% 6% Developed International —% 1% 1% 2% United Kingdom -9% 1% —% -7% Aust
Slide 18: Reconciliation – YTD20 Net Sales Growth for Brand Aggregations
Reconciliation – YTD20 Net Sales Growth for Brand Aggregations* Nine months ended January 31, 2020 Estimated Net Change in Aggregated Brands Reported Foreign Exchange (+/-) Distributor Inventories Underlying (+/-) Jack Daniel's Family of 2% —% —% 3% Brands JDTW -2% —% 1% —% Premium bourbons 25% —% -
Slide 19: Reconciliation – 3Q20 Underlying Change
Reconciliation – 3Q20 Underlying Change Three Months Ending January 31, 2020 Estimated Net Change in Acquisition & Divestitures Reported (+/-) Foreign Exchange (+/-) Distributor Inventories Underlying (+/-) Net Sales —% —% 1% 3% 3% Gross Profit -2% —% 1% 4% 3% Advertising —% —% —% —% —% SG&A 2% -1%
Slide 20: Reconciliation – YTD19 Underlying Change
Reconciliation – YTD19 Underlying Change Nine Months Ending January 31, 2019 Estimated Net Change in New Accounting Standard Reported (+/-) Foreign Exchange (+/-) Distributor Inventories Underlying (+/-) Net Sales 3% 1% 3% -1% 5% Totals may differ due to rounding 20