Slide 1: 1Q20 Results & FY20 Outlook
1Q20 Results & FY20 Outlook August 28, 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: 1Q20 Highlights & FY20 Outlook
1Q20 Highlights & FY20 Outlook Sales Gross Operating Income Reaffirm Fiscal Margin & Diluted EPS 2020 Outlook • Flat net sales growth • Declined 330bps • Reported operating • 5-7% Underlying1 net sales (Reported & Underlying1) ◦ ~ 2/3's related to tariffs income decreased by 6% growth ◦ Tariffs ▪ Pr
Slide 4: 1Q20 Results Impacted by Tariffs and Timing of Customer Orders
1Q20 Results Impacted by Tariffs and Timing of Customer Orders Reported Underlying* Tariffs 3% point drag Tariffs 3% point drag +6% +4% Tariffs 6% +3% point drag —% +1% —% -3% -5% -14% -15% United Developed Emerging Travel Retail Total United Developed Emerging Travel Retail Total States Internation
Slide 5: Developed International Markets & Travel Retail Impacted by Tariffs & Timing
Developed International Markets & Travel Retail Impacted by Tariffs & Timing 1Q20 Net Sales Growth - Reported (Underlying*) United States France +7% (+6%) +6% (+4%) Growth led by premium Led by launch of JD RTDs and bourbons, JDFOB led by JDTW, higher JDTH volumes and tequilas United Kingdom Poland
Slide 6: Jack Daniel's Family of Brands
Jack Daniel's Family of Brands 1Q20 Net Sales Growth -1% Reported (-1% Underlying*) * See appendix for additional details 6
Slide 7: Premium Bourbons
Premium Bourbons 1Q20 Net Sales Growth +23% Reported (+16% Underlying*) * See appendix for additional details 7
Slide 8: Double Digit Underlying Net Sales Growth for our Tequilas
Double Digit Underlying Net Sales Growth for our Tequilas 1Q20 Net Sales Growth +9% Reported (+12% Underlying*) * See appendix for additional details 8
Slide 9: 1Q20 Results - Impacted by Tariffs & Timing of Certain Customer Orders
1Q20 Results - Impacted by Tariffs & Timing of Certain Customer Orders Reported Foreign Estimated Underlying Change Exchange Net Change In Change (%) Impact Distributor (%) (+/-) Inventories (+/-) Net Sales —% —% —% —% Gross Profit -5% —% —% -5% Advertising -6% 2% —% -4% SG&A -2% 2% —% -1% Operating
Slide 10: 1Q20 Gross Margin - 330 bps decline due primarily to tariffs & higher input costs
1Q20 Gross Margin - 330 bps decline due primarily to tariffs & higher input costs 68.2% 0.5% (2.1)% 64.9% (1.5)% (0.2)% FY19 Price/Mix Tariffs Cost of Sales Foreign Exchange FY20 10
Slide 11: Reaffirm FY20 Outlook
Reaffirm FY20 Outlook Underlying Growth Net Sales Operating Income Diluted EPS 5 - 7% 3 - 5% $1.75 - $1.85 1 - 7% Growth 11
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. 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 17: Reconciliation – 1Q20 Net Sales Growth by Top Markets
Reconciliation – 1Q20 Net Sales Growth by Top Markets Three Months Ending July 31, 2019 Estimated Net Change in Geographic Area Reported Foreign Exchange (+/-) Distributor Inventories Underlying (+/-) United States 6% —% -1% 4% Developed International -5% 1% 1% -3% United Kingdom -21% 7% —% -14% Aus
Slide 18: Reconciliation – 1Q20 Net Sales Growth for Brand Aggregations
Reconciliation – 1Q20 Net Sales Growth for Brand Aggregations Three Months Ending July 31, 2019 Estimated Net Change in Aggregated Brands Reported Foreign Exchange (+/-) Distributor Inventories Underlying (+/-) Jack Daniel's Family of -1% —% -1% -1% Brands Premium bourbons 23% —% -7% 16% Tequila 9%
Slide 19: Reconciliation – 1Q19 & FY19 Net Sales Growth
Reconciliation – 1Q19 & FY19 Net Sales Growth Three Months Ending July 31, 2018 Estimated Net Change in New Accounting Geographic Area Reported Foreign Exchange (+/-) Distributor Inventories Underlying Standard* (+/-) (+/-) Brown-Forman Corporation 6% 1% 2% -1% 9% Developed International 12% 2% 6% -