Brown Forman Inc · NYSE:BF.A
Brown Forman — FY2019 Earnings Presentation
20 slides from Brown Forman's earnings presentation, Jun 5, 2019
Slide 1: FY19 Results & FY20 Outlook
FY19 Results & FY20 Outlook June 5, 2019
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: FY19 Highlights & FY20 Outlook
1 FY19 Highlights & FY20 Outlook Reported Gross Operating Fiscal 2020 Results Margin Leverage Outlook • Net sales +2% • Declined 260bps • Underlying operating • 5-7% Underlying net sales ◦ +5% Underlying* net sales growth ◦ 160bps impact from tariff income +5% growth ▪ Tariff related lower net • 3-5
Slide 4: Broad-based Geographic Gains; Growth Fueled by the Emerging Markets
Broad-based Geographic Gains; Growth Fueled by the Emerging Markets Reported Underlying +11% +6% +5% +4% +4% +3% +2% +2% +1% +1% United Developed Emerging Travel Retail Total United Developed Emerging Travel Retail Total States International States International 4
Slide 5: FY19 Results - Solid Growth Despite Tariffs
FY19 Results - Solid Growth Despite Tariffs Reported New Foreign Estimated Underlying Change Accounting Foundation Exchange Net Change In Change (%) Standard* (+/-) Impact Distributor (%) (+/-) (+/-) Inventories (+/-) Net Sales 2% 1% —% 2% —% 5% Gross Profit -2% 1% —% 2% —% 2% Advertising -2% 4% —%
Slide 6: Growth In Each of Our Top Ten Markets
Growth In Each of Our Top Ten Markets FY19 Net Sales Growth - Reported (Underlying) United States France +2% (+3%) -1% (+2%) Growth led by bourbons and Led by higher JDTH volumes and tequilas launch of JDTR United Kingdom Poland -4% (+3%) +9% (+10%) Growth led by JD FOB Led by volume growth for JDTW
Slide 7: Jack Daniel's Family of Brands
Jack Daniel's Family of Brands FY19 Net Sales Growth +1% Reported (+4% Underlying) 7
Slide 8: Premium Bourbons
Premium Bourbons FY19 Net Sales Growth +19% Reported (+23% Underlying) 8
Slide 9: Tequila - Herradura, el Jimador & New Mix
Tequila - Herradura, el Jimador & New Mix FY19 Net Sales Growth +6% Reported (+12% Underlying) 9
Slide 10: FY19 Gross Margins - 260 bps decline due primarily to tariffs
FY19 Gross Margins - 260 bps decline due primarily to tariffs 67.8% (0.5)% (1.6)% 65.2% (0.2)% (0.3)% FY18 Price/Mix Tariffs Foreign New Accounting FY19 & Cost Exchange Standard 10
Slide 11: FY19 Underlying Operating Income Growth Driven by Sustained Top-Line Growth and SG&A Leverage
FY19 Underlying Operating Income Growth Driven by Sustained Top-Line Growth and SG&A Leverage Three Months Twelve Months Ended April 30, 2019 Ended April 30, 2019 Reported Change Underlying Change Reported Change Underlying Change (%) (%) (%) (%) Net Sales 1% 5% 2% 5% Gross Profit -6% -1% -2% 2% Adv
Slide 12: FY20 Outlook
FY20 Outlook Underlying Growth Net Sales Operating Income Diluted EPS 5 - 7% 3 - 5% $1.75 - $1.85 1 - 7% Growth 12
Slide 13: Portfolio Geography Investment People
Portfolio Geography Investment People 13
Slide 14: Appendix
Appendix 14
Slide 15: Non-GAAP Reconciliation
Non-GAAP Reconciliation We use some 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 GAA
Slide 16: 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 17: Definitions
Definitions Other Metrics. • “Depletions.” We generally record revenues when we ship our products to our customers. Depending on our route-to-consumer (RTC), we ship products to either (a) retail or wholesale customers in owned distribution markets or (b) our distributor customers in other markets.
Slide 18: Reconciliation
Reconciliation FY19 Net Sales Growth by Top Markets Twelve Months Ending April 30, 2019 Estimated Net Change in New Accounting Geographic Area Reported Foreign Exchange (+/-) Distributor Inventories Underlying Standard* (+/-) (+/-) United States 2% 1% —% —% 3% Developed International 1% —% 4% -2% 4%
Slide 19: Reconciliation
Reconciliation FY19 Net Sales Growth for Brand Aggregations Twelve Months Ending April 30, 2019 Estimated Net Change in New Accounting Aggregated Brands Reported Foreign Exchange (+/-) Distributor Inventories Underlying Standard* (+/-) (+/-) Jack Daniel's Family of 1% 1% 2% —% 4% Brands Premium bour
Slide 20: Reconciliation
Reconciliation 4Q19 Underlying Change Three Months Ending April 30, 2019 Estimated Net Change in New Accounting Reported Foundation Foreign Exchange (+/-) Distributor Inventories Underlying Standard* (+/-) (+/-) Net Sales 1% 1% —% 1% 1% 5% Gross Profit -6% 2% —% 2% 1% -1% Advertising -5% 4% —% 4% —%