Brown Forman Inc · NYSE:BF.A
Brown Forman — Q2 FY2017 Earnings Presentation
21 slides from Brown Forman's earnings presentation, Dec 7, 2016
Slide 1: Brown-Forman's 2Q17 and 1H17 Results
Brown-Forman’s 2Q17 and 1H17 Results December 7, 2016 * The following slides accompany a December 7, 2016 earnings call to discuss Brown-Forman Corporation’s financial results for the second fiscal quarter and six month period ended October 31, 2016. This information should be read in conjunction wi
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 results continued to be negatively impacted by acquisitions and divestitures as well as foreign exchange • Underlying(1) net sales and operating income growth accelerated from 1Q17 to 2Q17 • Operating expense leverage through SG&A • Reaffirmed fiscal 2017 EPS outlook Use of Non
Slide 4: 1H17 Income Statement
1H17 Income Statement Net Change A&D Foreign in Estimated Reported Underlying Impact Exchange Distributor Change (%) Change (%) (+/-) Impact (+/-) Inventories (+/-) Sales -4% 3% 2% 1% 2% Gross Profit -7% 5% 3% 1% 2% Advertising -10% 9% 2% 0% 1% SG&A -4% 0% 2% 0% -3% Operating -5% 7% 3% 2% 7% Income
Slide 5: Net Sales by Region
Net Sales by Region 2Q17 1H17 5% 6% 3% 3% 2% 2% 0% 0% -1% -1% -3% -4% -4% -5% -9% US Developed - Emerging Total -13% ex US US Developed - Emerging Total ex US Reported Underlying * See appendix for additional details 5
Slide 6: 1H17 Sales Change in Top Markets
1H17 Sales Change in Top Markets Reported/Underlying UK -23%/+3% Russia -76%/-14% Canada -11%/+3% France +5%/+8% Poland +8%/+11% US -1%/+5% Germany -7%/+1% Turkey -20%/-15% Mexico +3%/+18% Australia +1%/+1% * See appendix for additional details 6
Slide 7: Brands – 1H17 Net Sales
Brands – 1H17 Net Sales Reported Foreign Exchange Net Change in Estimated Brand Underlying Change (%) Change (%) Impact (+/-) Distributor Inventories (+/-) JD Family -1% 3% 0% 2% JDTW -2% 3% 1% 2% JDTH 0% 3% -1% 2% Other JD Whiskey 6% 2% -3% 5% Brands JD RTD/RTP 0% 5% 0% 5% Finlandia -17% 2% 11% -4%
Slide 8: Gross Margin
Gross Margin 2Q 1H FY16 Reported 68.6% 69.4% Gross Margin FY17 Reported 66.5% 67.4% Gross Margin Change -2.1% points -2.0% points Major Drivers: A&D -1.4% points -1.4% points FX -0.6% points -0.6% points 8
Slide 9: Summary of Operating Performance
Summary of Operating Performance Three Months Six Months Ended October 31, 2016 Ended October 31, 2016 Reported Underlying Reported Underlying Change Change Change Change Net Sales -3% 3% -4% 2% Cost of Sales 4% 4% 2% 3% Gross Profit -6% 2% -7% 2% Advertising -6% 4% -10% 1% SG&A -5% -3% -4% -3% Oper
Slide 10: Revised FY17 Outlook
Revised FY17 Outlook • For Fiscal 2017, we expect the following: Underlying Net Sales 4 - 5% Underlying Operating 6 - 8% Income Diluted EPS $1.71 - $1.81 * See appendix for additional details 10
Slide 11: Emerging Markets' Trends Appear to be Improving
Emerging Markets’ Trends Appear to be Improving Emerging Markets Underlying Sales Contribution 4% 3% 2% 1% 0% -1% -2% 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Source: Company reports 11 Notes – Net of excise taxes and excludes Soco and Tuaca
Slide 12: Appendix
@) sRowN-FORMAN Appendix DEEP ROOTS. DYNAMIC VISION.
Slide 13: Non-GAAP Reconciliation
Non-GAAP Reconciliation We present changes in certain income statement line-items that are adjusted to an “underlying” basis, which are non-GAAP measures that we believe assists in understanding both our performance from period to period on a consistent basis, and the trends of our business. To calc
Slide 14: Reconciliation: Net Sales Growth by Geography
Reconciliation Fiscal 2017 Net Sales Growth by Geography Three Months Ending October 31, 2016 Acquisitions & Net Change in Estimated Geographic area Reported (%) Foreign Exchange (+/-) Underlying (%) Divestitures (+/-) Distributor Inventories (+/-) US 0% 6% 0% 0% 6% Developed – ex US -4% 2% 5% -3% 0
Slide 15: Reconciliation: Net Sales Growth by Top Markets
Reconciliation Fiscal 2017 Net Sales Growth by Top Markets Acquisitions & Foreign Net Change in Estimated Geographic area Reported % Underlying % Divestitures +/- Exchange +/- Distributor Inventories +/- United States -1% 6% 0% 0% 5% United Kingdom -23% 9% 17% 0% 3% Germany -7% 2% 6% 0% 1% Poland 8%
Slide 16: Pro-forma net sales growth rate disclosure
Pro-forma net sales growth rate disclosure Q1 16
Slide 17: Pro-forma net sales growth rate disclosure
Pro-forma net sales growth rate disclosure Q2 and YTD October 17
Slide 18: Pro-forma net sales growth rate disclosure
Pro-forma net sales growth rate disclosure Q3 and YTD January 18
Slide 19: Pro-forma net sales growth rate disclosure
Pro-forma net sales growth rate disclosure Q4 and Full Year 19
Slide 20: Reconciliation: 2Q17 Income Statement
Reconciliation 2Q17 Income Statement Net Change in Foreign Exchange Estimated Reported Change (%) A&D Impact (+/-) Underlying Change (%) Impact (+/-) Distributor Inventories (+/-) Sales -3% 2% 3% 1% 3% Gross Profit -6% 4% 3% 0% 2% Advertising -6% 9% 1% 0% 4% SG&A -5% 0% 1% 0% -3% Operating Income -4
Slide 21: Reconciliation: Cost of Sales
Reconciliation Cost of Sales Net Change in Foreign Exchange Estimated Reported Change (%) A&D Impact (+/-) Underlying Change (%) Impact (+/-) Distributor Inventories (+/-) 2Q17 4% -2% 1% 1% 4% Net Change in Foreign Exchange Estimated Reported Change (%) A&D Impact (+/-) Underlying Change (%) Impact