Brown Forman Inc · NYSE:BF.A
Brown Forman — Q4 FY2017 Earnings Presentation
31 slides from Brown Forman's earnings presentation, Jun 7, 2017
Slide 1: Brown-Forman 4Q17 and FY17 Results
Brown-Forman 4Q17 and FY17 Results June 7, 2017 * The following slides accompany the June 7, 2017 earnings call to discuss Brown-Forman Corporation’s financial results for the fourth fiscal quarter and twelve month period ending April 30, 2017. This information should be read in conjunction with the
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,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectatio
Slide 3: Highlights
Highlights Reported Underlying Operating Fiscal 2018 Results Net Sales Leverage Outlook Reported results Underlying(1) net sales Operating expense Expect 4-5% growth in negatively impacted growth accelerated leverage continued underlying net sales, by acquisitions and sequentially throughout through
Slide 4: Net Sales by Geography – Stronger Results in 2H17
Net Sales by Geography – Stronger Results in 2H17 Reported Underlying 11% 1H17 2H17 1H17 2H17 12% 8% -1% -1% -1% -2% -3% 5% 5% -4% 4% -5% -5% 4% 2% 2% 2% -13% -1% US Developed - Emerging Global Travel Total US Developed - Emerging Global Travel Total ex US Retail ex US Retail * See appendix for addi
Slide 5: FY17 Income Statement
FY17 Income Statement Foreign Net Change Reported Acquisitions & In Estimated Underlying Exchange Change Divestitures Distributor Change (%) +/- Impact Inventories (%) (+/-) (+/-) Sales -3% 3% 2% 1% 3% Gross Profit -6% 4% 3% 1% 3% Advertising -8% 8% 2% 0% 2% SG&A -3% 0% 1% 0% -2% Operating -35% 35%
Slide 6: FY17 Reconciliation of Sales Growth
FY17 Reconciliation of Sales Growth 4% +3% +1% +2% 0% -3% +3% -4% Reported Acquisitions & Foreign Exchange Net Change in Underlying Divestitures Estimated Distributor Inventories 6
Slide 7: FY17 Reconciliation of Operating Income Growth
FY17 Reconciliation of Operating Income Growth 40% 20% +7% +4% +3% 0% -20% -40% -35% +35% Reported Acquisitions & Foreign Exchange Net Change in Underlying Divestitures Estimated Distributor Inventories 7
Slide 8: FY17 Sales Change in Top Markets
FY17 Sales Change in Top Markets Reported/Underlying United States France -3%/+4% +5%/+10% Continued growth Sustained strong growth United Kingdom Poland -12%/+5% +5%/+9% Balanced growth Strong JDTW growth, soft Finlandia Australia Japan -2%/+2% +30%/+18% Soft economy and high Volume growth and exci
Slide 9: FY17 Underlying Sales Growth Highlights
FY17 Underlying Sales Growth Highlights +3% +20% * See appendix for additional details +12% 9
Slide 10: FY17 Gross Margin
FY17 Gross Margin 69.4% -90 bps -70 bps -30 bps 67.5% FY16 Acquisitions & Foreign Exchange Underlying FY17 Divestitures Change/Other 10
Slide 11: Summary of Operating Performance
Summary of Operating Performance Three Months Twelve Months Ended April 30, 2017 Ended April 30, 2017 Reported Change Underlying Change Reported Change Underlying Change (%) (%) (%) (%) Net Sales -5% 4% -3% 3% Gross Profit -6% 4% -6% 3% Advertising -9% -7% -8% 2% SG&A -1% 1% -3% -2% Operating Income
Slide 12: EPS Growth in Fiscal 2017
EPS Growth in Fiscal 2017 4TH Quarter EPS Fiscal Year EPS 2016 2017 2016 2017 Reported EPS (GAAP) $1.30 $0.37 $2.61 $1.71 Year over Year Growth -71% -34% Sale of Southern Comfort ($0.89) ($0.88) and Tuaca Earnings contribution from acquired and divested ($0.01) $0.01 ($0.10) $0.01 brands Adjusted EP
Slide 13: Multi-year Resource Reallocation: Accelerate the Top-Line and Drive Sustainable Cost Savings
Multi-year Resource Reallocation: Accelerate the Top-Line and Drive Sustainable Cost Savings • FY18-FY20 Focus Areas: a. Revenue Management (Analytics to create an ideal balance of volume growth and price increases, discounting and promotional activity and trade terms) b. Cost of Goods Sold (Strateg
Slide 14: FY18 Outlook
FY18 Outlook Underlying Underlying Net Operating Diluted EPS Sales Income 4 – 5% 6 – 8% $1.80 - $1.90 14
Slide 15: Emerging Markets’ Trends Have Improved
Emerging Markets’ Trends Have Improved Emerging Markets Underlying Sales Contribution 4% 3% 2% 1% 0% -1% -2% 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Source: Company reports Notes – Net of excise taxes and excludes Soco and Tuaca 15
Slide 16: Appendix
Appendix
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation We use certain financial measures in this report that are not measures of financial performance under GAAP. These non-GAAP measures, which are defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under G
Slide 18: Reconciliation
Reconciliation Fiscal 2017 Net Sales Growth by Geography Three Months Ending April 30, 2017 Acquisitions & Net Change in Estimated Geographic area Reported (%) Foreign Exchange (+/-) Underlying (%) Divestitures (+/-) Distributor Inventories (+/-) US -9% 2% 0% 8% 1% Developed – ex US -2% 3% 8% -2% 7%
Slide 19: Reconciliation
Reconciliation Fiscal 2017 Net Sales Growth by Geography Six Months Ending October 31, 2016 (First Half) Acquisitions & Net Change in Estimated Geographic area Reported (%) Foreign Exchange (+/-) Underlying (%) Divestitures (+/-) Distributor Inventories (+/-) US -1% 6% 0% 0% 5% Developed – ex US -5%
Slide 20: Reconciliation
Reconciliation FY 2017 Net Sales Growth by Top Markets Net Change in Acquisitions & Geographic area Reported % Foreign Exchange +/- Estimated Distributor Underlying % Divestitures +/- Inventories +/- United States -3% 5% 0% 2% 4% United Kingdom -12% 10% 6% 0% 5% Germany -1% 1% 6% 0% 6% Poland 5% -1%
Slide 21: Reconciliation
Reconciliation FY 2017 Net Sales Growth for Aggregated Brands Net Change in Aggregated Acquisitions & Foreign Estimated Reported % Underlying % Brands Divestitures +/- Exchange +/- Distributor Inventories +/- Old Forester & Woodford 15% 0% 0% 5% 20% Reserve el Jimador, Herradura, & New 3% 0% 8% 1% 1
Slide 22: Reconciliation
Reconciliation 4Q17 Income Statement Foreign Net Change Reported Acquisitions & In Estimated Underlying Exchange Change Divestitures Distributor Change (%) +/- Impact Inventories (%) (+/-) (+/-) Sales -5% 2% 3% 4% 4% Gross Profit -6% 2% 4% 4% 4% Advertising -9% 1% 1% 0% -7% SG&A -1% 1% 1% 0% 1% Oper
Slide 23: Summary Slides from Investor Day
Summary Slides from Investor Day
Slide 24: 30 Year CAGR for Jack Daniel’s FOB of 5%
30 Year CAGR for Jack Daniel’s FOB of 5% JD FoB 10yr CAGR = 3% JD FoB 10yr CAGR = 5% JD FoB 10yr CAGR = 6% JDTW 10yr CAGR = 3% JDTW 10yr CAGR = 5% JDTW 10yr CAGR = 4% 14 brands 20 m +240% 18 m 8 brands 16 m +288% 14 m 12 m 10 m 15 brands 8m 3 brands +54% 6m 2 brands 4m 2 m 2 brands m 1985 1990 1995
Slide 25: Growth Through Evolved Global Footprint
Growth Through Evolved Global Footprint 1M+ 501K – 1M 201K – 500K 50K – 200K South Africa Russia Greece Indonesia Bulgaria China Belgium Austria India Emerging Africa Romania Chile Netherlands Turkey Spain Switzerland Ukraine Italy Czech Republic U.A.E. Philippines Source: IWSR, 9L Depletions 2015 2
Slide 26: Consistent Revenue Growth
Consistent Revenue Growth Brown-Forman CAGRs 5 Year CAGR vs. Benchmarks 3% +7% Underlying 3% 6% 5% 5% 4% +4% Reported 4% 4% 4% 2% 35-Year 25-Year 10-Year 5-Year S&P500 Staples Comp Set B-F 26
Slide 27: Balanced Geographic Growth Drivers
Balanced Geographic Growth Drivers US Developed Emerging 8% +7% 6% 2% 4% 2% 2% 3% 0% 5 Year CAGR Source: Factset and company information. The competitive set is a weighted average based upon the last five fiscal years sales growth, and includes Diageo, Pernod, Campari, and Remy. See Brown-Forman Cor
Slide 28: Strong and Improved Operating Margins
Strong and Improved Operating Margins Brown-Forman Reported Operating Margin Financial Attractiveness (2006 – 2016) 30% 35% ROIC 30% 15% CONSUMER STAPLES COMPETITIVE SET 25% S&P 500 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 0% 0% 20% 40% Operating Margin Source: Factset and company info
Slide 29: Consistent Investments Behind Brands and People
Consistent Investments Behind Brands and People Underlying A&P and SG&A Growth 6% 5% A&P SG&A A 5 Yr CAGR 5 YEAR CAGR Source: Factset and company information. The competitive set is a weighted average based upon the last five fiscal years sales growth, and includes Diageo, Pernod, Campari, and Remy.
Slide 30: Consistent Long-Term Operating Income Growth
Consistent Long-Term Operating Income Growth Brown-Forman CAGRs 5 Year CAGR vs. Benchmarks 5% +10% Underlying 5% 7% 7% 6% 5% +5% Reported 5% 4% 2% 2% 35-Year 25-Year 10-Year 5-Year S&P500 Staples Comp Set B-F Source: Factset and company information. The competitive set is a weighted average based up
Slide 31: Shareholder-Friendly Capital Allocation
Shareholder-Friendly Capital Allocation Average Annual ‘Yield’ of 4.6% Over Last Decade; 46% Return of Capital Million $'s Return % of Mkt Cap $1,500 10% $1,250 7% 7% 7% $1,000 4% 5% $750 5% 4% 3% 4% 3% $500 1% $250 $0 0% FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Dividends Special Dividends