Brown Forman Inc · NYSE:BF.A
Brown Forman — Investor Day (December 2016)
59 slides from Brown Forman's investor day presentation, Dec 14, 2016
Slide 1: 2016 Brown-Forman Investor Day
2016 Brown-Forman Investor Day Jay Koval, VP Investor & Community Relations
Slide 2: Forward-Looking Statements
Forward-Looking Statements This press release 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,” “expectati
Slide 3: Investor Day Agenda
Investor Day Agenda 1:00PM Jack Daniel’s Experience Jack Daniel’s Team Members 2:00PM Presentations 2:00-2:10PM Paul Varga – Chairman and Chief Executive Officer 2:10-2:40PM Mark McCallum – EVP, President, Jack Daniel’s Brands 2:40-3:00PM Lawson Whiting – EVP, Chief Brands and Strategy Officer 3:00P
Slide 4: 2016 Brown-Forman Investor Day
2016 Brown-Forman Investor Day Paul Varga, Chairman & CEO
Slide 5: Jack Daniel's Growth Opportunity, Portfolio Growth, Capital Allocation
The Jack Daniel’s Growth Opportunity Portfolio Shareholder- Growth & Friendly Development Capital Allocation
Slide 6: Brown-Forman – A Leading Global Spirits Company
Brown-Forman – A Leading Global Spirits Company Jack Daniel’s - Premium, Track Record of Financial Shareholder- The Brown Family A Global Growth Focused Portfolio Brand Building Attractiveness Friendly Capital and our Long- Opportunity Allocation Term View 6
Slide 7: Why American Whiskey?
Why American Whiskey? 7
Slide 8: Jack Daniel Distillery Anniversary
7 ANNIVERSARY © OF THE Pe ae ) = ae JACK DANIEL DISTILLERY aie
Slide 9: The Jack Daniel's Growth Opportunity
The Jack Daniel’s Growth Opportunity Mark McCallum, EVP, President Jack Daniel’s Brands
Slide 10: 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 11: Confident In Future Opportunities
Confident In Future Opportunities E arth B irth 1.5 billion new middle class consumers globally by 2025* G irth W orth *Source: OECD 11
Slide 12: Growth Through Evolved Global Footprint
Growth Through Evolved Global Footprint 1M+ United States United Kingdom 12 Source: IWSR, 9L Depletions 2015
Slide 13: Growth Through Evolved Global Footprint
Growth Through Evolved Global Footprint 1M+ 501K – 1M Germany France Australia Global Travel Retail 13 Source: IWSR, 9L Depletions 2015
Slide 14: Growth Through Evolved Global Footprint
Growth Through Evolved Global Footprint 1M+ 501K – 1M 201K – 500K Canada Poland Mexico Japan Brazil 14 Source: IWSR, 9L Depletions 2015
Slide 15: 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 15 Source: IWSR, 9L Depletions 201
Slide 16: Thoughtful Innovation
Thoughtful Innovation 1989 1997 1998 2011 2014 16
Slide 17: Continued Thoughtful Innovation
Continued Thoughtful Innovation 17
Slide 18: We Predict Continued Opportunity For Growth
We Predict Continued Opportunity For Growth JD FoB 10yr CAGR = 3% JD FoB 10yr CAGR = 5% JD FoB 10yr CAGR = 6% JD FoB 10yr CAGR = see below JDTW 10yr CAGR = 3% JDTW 10yr CAGR = 5% JDTW 10yr CAGR = 4% 10yr CAGR +3.4% 5% 10yr CAGR 4% +6.3% 3% 10yr CAGR 10yr CAGR +1.4% +1.6% JD FoB Scenario 1 Scenario 2
Slide 19: What Makes Jack Special
What Makes Jack Special GLOBAL CONSUMER CONNECTION AND ICONIC NAME AND PACKAGE BRAND PASSION A SPECIAL PRODUCT TRADEMARK GIRTH REAL STORIES FOCUSED AND DEDICATED RTC DISTINCT VOICE EXCELLENT BUSINESS MODEL 19
Slide 20: Jack Daniel's "His Way" Video
Jack Daniel’s “His Way” Video
Slide 21: Jack Daniel's "Our Town" Video
Jack Daniel’s “Our Town” Video
Slide 22: We Send Them All Over!
We Send Them All Over! Your friends at JACK DANIEL’S remind you to drink responsibly.
Slide 23: Portfolio Growth & Development
Portfolio Growth & Development Lawson Whiting, EVP, Chief Brands and Strategy Officer, B-F Brands
Slide 24: Disciplined Approach to Brand Value Creation
Disciplined Approach to Brand Value Creation Active Premium History of Seeding Portfolio Spirit Excellent For The Management Focus Brand Future Building 24
Slide 25: 10+ Years of Active Portfolio Management - Dispositions
10+ Years of Active Portfolio Management - Dispositions 25
Slide 26: 10+ Years of Active Portfolio Management
10+ Years of Active Portfolio Management 26
Slide 27: Focused, Premium Portfolio
Focused, Premium Portfolio $40 $30 $20 $10 50 100 150 200 200 Source: ISWR
Slide 28: History of Excellent Brand Building
History of Excellent Brand Building 28
Slide 29: Woodford Reserve Video
Woodford Reserve Video 29
Slide 30: 30
30
Slide 31: Woodford Reserve – Net Sales
Woodford Reserve –Net Sales 32% 29% 26% 27% 27% CAGR 2012 to 2016 21% 2012 2013 2014 2015 2016 Und Net Sales YOY Growth Source: Company information. See appendix for additional details on non-GAAP disclosures. 31
Slide 32: Old Forester Distillery Opening in 2018
“ees . pest R DISTILLERY. _ OPENING IN 2018. OLDFORESTER.COM
Slide 33: Old Forester – Net Sales
Old Forester – Net Sales 52% 39% 22% 20% CAGR 2012 to 2016 10% -2% 2012 2013 2014 2015 2016 Und Net Sales YOY Growth Source: Company Information. See appendix for additional details on non-GAAP disclosures. 33
Slide 34: Herradura
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Slide 35: Herradura Tequila – Net Sales
Herradura Tequila – Net Sales 21% 16% 15% 12% CAGR 2012 to 2016 9% 4% 2012 2013 2014 2015 2016 Und Net Sales YOY Growth Source: Company Information. See appendix for additional details on non-GAAP disclosures. 35
Slide 36: El Jimador Tequila – Net Sales
El Jimador Tequila – Net Sales 8% 7% 4% 4% CAGR 2012 to 2016 1% 1% 2012 2013 2014 2015 2016 Und Net Sales YOY Growth Source: Company Information. See appendix for additional details on non-GAAP disclosures. 36
Slide 37: Creating the Next Woodford-Like Growth Drivers
Creating the Next Woodford-Like Growth Drivers 500k 3 year CAGR 26% 400k 5 year CAGR 25% 300k 10 year CAGR 9L Depletions 19% 200k 100k k FY97 F98 F97 FY98 F99 FY99 F00 FY00F01 FY01 F02 FY02 F03 FY03 F04 FY04 F05 FY05 FY06 F06 FY07 F07 FY08 F08 FY09 F09 FY10 F10 FY11 F11 FY12 F12 FY13 F13 FY14 F14 FY
Slide 38: Seeding for the Future
Seeding for the Future f eo | —_— mE PP 9 s tie booers /\ Pe craet. ERS “} , we Se i we —~ ht
Slide 39: Seeding for the Future
Seeding for the Future 39
Slide 40: Seeding for the Future
Seeding for the Future 40
Slide 41: Disciplined Approach to Brand Value Creation
Disciplined Approach to Brand Value Creation Active Spirit History of Seeding Portfolio Category Excellent For The Management Focus Brand Future Building 41
Slide 42: Excellent Business Enables Shareholder-Friendly Capital Allocation
Excellent Business Enables Shareholder-Friendly Capital Allocation Jane Morreau, EVP, Chief Financial Officer
Slide 43: An Excellent Business for Shareholders
An Excellent Business for Shareholders Consistent, Industry- Capital Shareholder- Balanced Leading Efficiency Friendly Capital Growth Margins Allocation 43
Slide 44: 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 44
Slide 45: 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 appendix for add
Slide 46: 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 47: 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 48: 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 49: Generating Significant Cash Over the Past Decade
Generating Significant Cash Over the Past Decade Share Repurchase = $2.4B $5.6B Special Dividends = $1.2B $8.1B Regular Dividends = $2.0B Acquisitions = $1.0B $2.5B Capex & Working Capital = $1.5B Sources of Cash Uses of Cash Source: Company information (FY07 – FY16) 49
Slide 50: Reinvesting To Support Future Growth
Reinvesting To Support Future Growth Million $s Gross PP&E W/C $3,000 +$867 $2,000 +$376 $1,000 $- FY06 FY11 FY16 Free cash flow yield should improve as capex returns toward historic levels after FY18 Source: Company information 50
Slide 51: Shareholder-Friendly Capital Allocation
Shareholder-Friendly Capital Allocation Average Annual ‘Yield’ of 4.3% Over Last Decade; 43% Return of Capital Million $s Return % of Mkt Cap $1,500 10% $1,250 7% 7% 7% $1,000 $750 5% 4% 4% 4% $500 3% 3% $250 2% 1% $0 0% FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 Dividends Special Dividends &
Slide 52: Driving Top-Tier, Long-Term Returns for Shareholders
Driving Top-Tier, Long-Term Returns for Shareholders $350 Brown-Forman, $319 $300 Consumer Staples, $290 $250 Competitive Set, $245 $200 S&P500, $195 $150 $100 $50 $0 Source: Factset, as of April 30, 2016, in local currency, assuming dividends reinvested. Note – the Competitive set is a weighted ave
Slide 53: 2025 Aspirations
2025 Aspirations Expect mid single-digit growth from Jack Daniel’s FoB and even faster growth from other brands Expect growth outside of the U.S. to outpace U.S. growth -Emerging Markets approaching 30% of total revenues -Route To Consumer - continued investment opportunity Strong margins and consis
Slide 54: 2025 Aspirations
2025 Aspirations 54
Slide 55: Family Perspective
Family Perspective Geo. Garvin Brown IV Chairman of the Board Remarks only.
Slide 56: Closing Comments
Closing Comments Paul Varga, Chairman & CEO
Slide 57: Brown-Forman – A Leading Global Spirits Company
Brown-Forman – A Leading Global Spirits Company Jack Daniel’s - Premium, Track Record of Financial Shareholder- The Brown Family A Global Growth Focused Portfolio Brand Building Attractiveness Friendly Capital and our Long- Opportunity Allocation Term View 57
Slide 58: 10 Year and 20 Year Total Shareholder Return CAGR
10 Year and 20 Year Total Shareholder Return CAGR 10 Year TSR (CAGR) 20 Year TSR (CAGR) BFB 12% BFB 14% Consumer Staples 11% Pernod 12% Diageo 11% Comp Set 11% Campari 10% Diageo 10% Comp Set 9% Consumer Staples 10% Remy 8% S&P 500 7% Remy 9% Pernod 7% S&P 500 8% Source: Factset, as of April 30, 201
Slide 59: 2016 Brown-Forman Investor Day
2016 Brown-Forman Investor Day