On June 5, 2024, Brown-Forman Corp (BF.B, Financial) released its 8-K filing reporting financial results for its fourth quarter and fiscal year ended April 30, 2024. Brown-Forman, a U.S.-based manufacturer of premium distilled spirits, generates close to 70% of its revenues in the whiskey category, under well-known brands such as Jack Daniel's, Woodford Reserve, and Old Forester. The company also manufactures and distributes tequila, vodka, rum, gin, and premium wines, with 47% of sales from its home market and significant international revenues from Europe, Australia, and Latin America.
Performance Overview
For the fourth quarter, Brown-Forman reported a net sales decrease of 8% to $1.0 billion, falling short of the estimated revenue of $1.028 billion. However, the company exceeded earnings expectations with a diluted earnings per share (EPS) of $0.56, surpassing the analyst estimate of $0.41. Operating income for the quarter increased by 26% to $375 million.
For the full fiscal year, net sales decreased by 1% to $4.2 billion, aligning closely with the annual revenue estimate of $4.244 billion. The company reported a 32% increase in diluted EPS to $2.14, exceeding the annual estimate of $1.99. Operating income for the year rose by 25% to $1.4 billion.
Key Financial Achievements
Brown-Forman's financial achievements include a reported gross profit increase of 1% for the fiscal year, with a gross margin expansion of 150 basis points to 60.5%. The company also increased its advertising expenses by 4% to support key brands such as Jack Daniel’s Tennessee Whiskey, Diplomático, and Gin Mare. Additionally, Brown-Forman returned $804 million to stockholders through dividends and share repurchases.
Income Statement Highlights
| Metric | Q4 2023 | Q4 2024 | Change |
|---|---|---|---|
| Net Sales | $1,046 million | $964 million | -8% |
| Gross Profit | $635 million | $569 million | -10% |
| Operating Income | $298 million | $375 million | 26% |
| Net Income | $207 million | $266 million | 29% |
| Diluted EPS | $0.43 | $0.56 | 31% |
Challenges and Market Performance
Despite the overall positive financial performance, Brown-Forman faced challenges such as inventory reductions across the spirits value chain. Reported net sales for the Whiskey category declined by 3%, driven by lower volumes for Jack Daniel’s Tennessee Whiskey and Jack Daniel’s Tennessee Honey. The Tequila portfolio also saw a 4% decrease in reported net sales, primarily due to lower volumes in the United States.
However, the company experienced growth in Emerging markets and the Travel Retail channel. Notably, the Rest of Portfolio, driven by brands like Diplomático and Gin Mare, saw a significant increase in reported net sales by 61%.
CEO Commentary
"In a challenging year within the spirits industry, Brown-Forman remained agile and focused on the long-term growth of our brands and our business. While our fiscal 2024 organic results reflect the inventory reductions across the entire spirits value chain, when you adjust for the changes in distributor inventory, we feel good about the results we delivered and are confident in the strength of our strategy, brands, and business." - Lawson Whiting, President and CEO
Financial Stewardship
Brown-Forman demonstrated strong financial stewardship by returning $804 million to stockholders through dividends and share repurchases. The company has a long history of paying regular quarterly cash dividends for 80 consecutive years and increasing the regular dividend for 40 consecutive years.
For more detailed insights and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Brown-Forman Corp for further details.
