Brown Forman Inc · NYSE:BF.A
Brown Forman — H1 FY2021 Earnings Presentation
16 slides from Brown Forman's earnings presentation, Dec 8, 2020
Slide 1: First Half of Fiscal 2021 Earnings Call
First Half of Fiscal 2021 Earnings Call December 8, 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: Turbulent Times
Turbulent Times 1920 1970 2020 3
Slide 4: Positive Stories of Resilience
Positive Stories of Resilience Resilience 4 4
Slide 5: New Creative
A FESTIVE yp Daeg; FASHIONED M AKE IT & es ' oh OLb. WHISKEY - — WORTH — KNOWING i“ ZF LIKE A CLASSIC VINYL ALBUM. : BUT BOURBON. FORESTER NEVER GETS OLD —
Slide 6: First Half of Fiscal 2021 Highlights
First Half of Fiscal 2021 Highlights Net Sales Gross Margin Operating Income & Diluted EPS • Underlying1 net sales grew 4% (-1% Reported) • Declined 350bps • Underlying Operating Income grew 11% (+19% • Key drivers: Reported1) ◦ Higher input costs ◦ Developed Markets (U.S. & International) ◦ A&P pha
Slide 7: Solid Underlying Net Sales Results
Solid Underlying Net Sales Results 1H20 Change 1H21 Change U.S. 6% U.S. 9% Developed Developed 2% 10% International International Emerging 5% Emerging —% Travel Retail -8% Travel Retail -59% Note - Change versus prior year period See appendix for non-GAAP to GAAP reconciliations, definitions, and ad
Slide 8: First Half of Fiscal 2021 Gross Margin
First Half of Fiscal 2021Gross Margin 350 bps decline due primarily to higher input costs, lower fixed cost absorption, and mix shifts 63.7% (1.1)% 60.2% (2.2)% (0.1)% (0.1)% 1H20 Price/Mix Cost Acquisition & Foreign 1H21 Divestiture Exchange 8
Slide 9: Solid First Half of Fiscal 2021 Results Amidst Continued Uncertainty
Solid First Half of Fiscal 2021 Results Amidst Continued Uncertainty Reported Acquisitions Foreign Estimated Underlying Change & Divestitures Exchange Net Change In Change (%) (+/-) Impact Distributor (%) (+/-) Inventories (+/-) Net Sales -1% —% 1% 4% 4% Gross Profit -6% —% 1% 5% -1% Advertising -23
Slide 10: Fiscal 2021 Outlook
Fiscal 2021 Outlook • Substantial uncertainty and volatility remains • The company is not providing quantitative guidance • We believe our business and financial fundamentals remains strong: ◦ A1 and A- ratings by Moody's and Standard & Poor’s, respectively ◦ Net Cash position $606M (cash and cash e
Slide 11: Capital Deployment Strategy
Capital Deployment Strategy Capacity Expansion Dividends Portfolio 11
Slide 12: Appendix
Appendix 12
Slide 13: 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 14: 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 15: 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 16: Reconciliation – First Half of Fiscal 2021 Net Sales Growth by Geographic Area
Reconciliation – First Half of Fiscal 2021 Net Sales Growth by Geographic Area* Six months ended October 31, 2020 Estimated Net Acquisitions & Foreign Exchange Geographic Area Reported Change in Distributor Underlying Divestitures (+/-) (+/-) Inventories (+/-) United States 3% —% —% 6% 9% Developed