Brown Forman Inc · NYSE:BF.A
Brown Forman — Q2 2020 Earnings Presentation
19 slides from Brown Forman's earnings presentation, Dec 5, 2019
Slide 1: 1H20 Results & FY20 Outlook
1H20 Results & FY20 Outlook December 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: 1H20 Highlights & FY20 Outlook
1H20 Highlights & FY20 Outlook Operating Income Net Sales Growth Gross Margin & Diluted EPS Fiscal Accelerated Pressure Continued Improved 2020 Outlook • +5% Reported • Declined 270bps • Operating income +1% • 5-7% Underlying1 net sales ◦ Tariffs and higher input cost Reported growth • +3% Underlyin
Slide 4: 1H20 Net Sales Growth Led by the United States
1H20 Net Sales Growth Led by the United States Reported Underlying* +10% +6% +5% +5% +4% +3% +2% +1% -8% -9% United Developed Emerging Travel Retail Total United Developed Emerging Travel Retail Total States International States International * See appendix for additional details 4
Slide 5: 1H20 Net Sales Growth Led by the United States
1H20 Net Sales Growth Led by the United States Reported (Underlying*) United States France +4% (+3%) +10% (+6%) Growth led by JDFOB fueled by Led by higher JDTH volumes introduction of JDTA, premium and the launch of JD RTDs bourbons, and tequilas United Kingdom Poland -2% (-1%) -7% (-4%) Declines d
Slide 6: Jack Daniel's Family of Brands
Jack Daniel's Family of Brands 1H20 Net Sales Growth +5% Reported (+2% Underlying*) * See appendix for additional details 6
Slide 7: Premium Bourbons
Premium Bourbons 1H20 Net Sales Growth +28% Reported (+22% Underlying*) * See appendix for additional details 7
Slide 8: Tequilas
Tequilas 1H20 Net Sales Growth +10% Reported (+11% Underlying*) * See appendix for additional details 8
Slide 9: 1H20 Gross Margin Compression due primarily to tariffs & higher input costs
1H20 Gross Margin Compression due primarily to tariffs & higher input costs 0.8% 66.4% (2.0)% 0.2% 63.7% (1.7)% FY19 Price/Mix Tariffs Cost of Sales Foreign Exchange FY20 9
Slide 10: 1H20 - Reported Results Impacted by Net Change in Distributor Inventories
1H20 - Reported Results Impacted by Net Change in Distributor Inventories Largely Related to the Launch of Jack Daniel's Tennessee Apple Reported Foreign Estimated Underlying Change Exchange Net Change In Change (%) Impact Distributor (%)* (+/-) Inventories (+/-) Net Sales 5% —% -1% 3% Gross Profit
Slide 11: FY20 Outlook
FY20 Outlook Reaffirm Full Year Underlying Net Sales and Diluted Earnings Per Share Growth; Solid Underlying Operating Income Growth Underlying* Growth Net Sales Operating Income Diluted EPS 5 - 7% 2 - 4% $1.75 - $1.85 1 - 7% Growth 11 * See appendix for additional details
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 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 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 – 1H20 Net Sales Growth by Top Markets
Reconciliation – 1H20 Net Sales Growth by Top Markets* Six months ended October 31, 2019 Estimated Net Change in Geographic Area Reported Foreign Exchange (+/-) Underlying Distributor Inventories (+/-) United States 10% —% -4% 6% Developed International 1% —% 1% 2% United Kingdom -2% 1% —% -1% Austr
Slide 18: Reconciliation – 1H20 Net Sales Growth for Brand Aggregations
Reconciliation – 1H20 Net Sales Growth for Brand Aggregations* Six months ended October 31, 2019 Estimated Net Change in Aggregated Brands Reported Foreign Exchange (+/-) Distributor Inventories Underlying (+/-) Jack Daniel's Family of 5% —% -2% 2% Brands JDTW 1% —% -2% -1% Premium bourbons 28% —% -
Slide 19: Reconciliation – 2Q20, 1Q20, & 1H19 Net Sales Growth
Reconciliation – 2Q20, 1Q20, & 1H19 Net Sales Growth Three Months Ended October 31, 2019 Estimated Net Change in Geographic Area Reported Foreign Exchange (+/-) Distributor Inventories Underlying (+/-) Total Brown-Forman 9% —% -3% 6% Developed International 6% —% 1% 8% Three Months Ended July 31, 20