Divestitures and Acquisitions - In fiscal 2024, the company sold the Sonoma-Cutrer wine business for a pre-tax gain of $175 million, receiving $50 million in cash and a 21.4% ownership in The Duckhorn Portfolio Inc.[57] - The divestiture of the Finlandia vodka business resulted in a pre-tax gain of $92 million during fiscal 2024[58] - The company acquired Gin Mare Brand, S.L.U. in fiscal 2023, with adjustments related to earn-out contingent consideration liabilities[57] - The company divested the Finlandia vodka business for $196 million and the Sonoma-Cutrer wine business for $50 million cash, impacting gross margin negatively[74] Financial Performance - For the three months ended July 31, 2024, net sales were $1.0 billion, a decrease of 8% compared to the same period last year, driven by lower volumes and the negative effects of acquisitions and divestitures[75] - Gross profit for the same period was $565 million, a decrease of $86 million or 13%, with gross margin declining to 59.4% from 62.7%[75] - Operating income decreased by 14% to $281 million, impacted by input cost fluctuations and the effects of divestitures[75] - Diluted earnings per share were $0.41, down 14% from $0.48 in the prior year[75] - Operating income totaled $281 million, a decrease of $46 million, or 14%, with an operating margin decrease to 29.6% from 31.5% in the same period last year[104] - Diluted earnings per share decreased 14% to $0.41 from $0.48 reported for the same period last year, primarily due to the decrease in operating income[105] - Gross profit was $565 million, a decrease of $86 million, or 13%, with gross margin decreasing 3.3 percentage points to 59.4%[100] Market Performance - The United States market saw a 5% decline in net sales, primarily due to lower volumes from JDTW and el Jimador[80] - The United Kingdom experienced a significant 21% decline in net sales, attributed to lower volumes and prior-year buy-in ahead of an excise tax increase[81] - Brazil's net sales increased by 18%, driven by higher volumes across the portfolio, particularly from JDTA, JDTW, and JDTH[83] - Travel Retail's net sales declined 11% due to lower volumes of super-premium Jack Daniel's expressions and the Finlandia divestiture[84] Operational Metrics - The company uses "depletions" as a key metric to measure consumer demand, reflecting sales from distributors to retailers[67] - Estimated net change in distributor inventories is calculated to understand the impact of inventory changes on organic trends[69] - The company aggregates markets by economic development stages and brands by beverage alcohol categories for performance analysis[62][64] - The "Rest of Portfolio" category now includes brands like Gin Mare and excludes divested brands, reflecting changes in the product lineup[64] Cost and Expenses - Gross margin decreased by 3.3 percentage points, largely due to high inventory levels and the timing of input cost fluctuations[75] - Advertising expenses decreased by 4% due to lower spending on Jack Daniel's and Coca-Cola RTD compared to the prior-year period[102] - SG&A expenses decreased by 6% driven by lower compensation-related expenses and discretionary spending[102] Future Projections - Fiscal 2025 organic net sales growth is expected to be in the range of 2% to 4%[106] - Fiscal 2025 organic operating income growth is also anticipated to be in the range of 2% to 4%[106] - The effective tax rate for fiscal 2025 is projected to be approximately 21% to 23%[106] - Planned capital expenditures for fiscal 2025 are estimated to be between $195 million and $205 million[106] Cash and Financing - Cash and cash equivalents were $446 million at April 30, 2024, and decreased to $416 million at July 31, 2024[109] - Cash provided by operations for the three months ended July 31, 2024, was $17 million, a decline of $21 million from the same period last year[112] - Cash used for financing activities was $51 million during the three months ended July 31, 2024, compared to $50 million provided in the same prior-year period[113] - The average interest rate on commercial paper increased from 5.27% in 2023 to 5.52% in 2024[107] - The company has a $900 million commercial paper program to fund short-term operational needs[110] - Approximately 41% of cash and cash equivalents were held by foreign subsidiaries, with plans to potentially repatriate additional cash[109]

Financial Performance - Net sales decreased 8% to $1.0 billion (-4% organic) in Q1 fiscal 2025 compared to the prior year period[1] - Operating income declined 14% to $281 million (-13% organic) and diluted EPS decreased 14% to $0.41[1] - Gross profit declined 13% (-8% organic) with gross margin down 330 basis points to 59.4%[9] - Net sales decreased by 8% to $951 million in Q2 2024 compared to $1,038 million in Q2 2023[19] - Gross profit declined by 13% to $565 million in Q2 2024 from $651 million in Q2 2023[19] - Net income dropped by 16% to $195 million in Q2 2024 from $231 million in Q2 2023[19] - Operating income decreased by 14% to $281 million in Q2 2024 from $327 million in Q2 2023[19] - Gross margin fell to 59.4% in Q2 2024 from 62.7% in Q2 2023[19] - Operating margin declined to 29.6% in Q2 2024 from 31.5% in Q2 2023[19] - Cash and cash equivalents decreased to $416 million in Q2 2024 from $446 million in Q2 2023[21] - Accounts receivable increased to $806 million in Q2 2024 from $769 million in Q2 2023[21] - Inventories rose to $2,596 million in Q2 2024 from $2,556 million in Q2 2023[21] - Cash provided by operating activities decreased to $17 million in Q2 2024 from $38 million in Q2 2023[22] - Total portfolio depletions decreased by 9% to 10.9 million cases, with net sales declining by 8% on a reported basis and 4% organically[26] - Jack Daniel's Family depletions fell by 8% to 7.1 million cases, with net sales down 8% reported and 4% organically[26] - Ready-to-Drink category depletions dropped by 9% to 4.9 million cases, with net sales declining 12% reported and 4% organically[26] - Tequila category depletions decreased by 21% to 0.5 million cases, with net sales down 23% both reported and organically[26] - United States net sales declined by 5% reported and 4% organically, while Developed International markets saw a 9% reported and 6% organic decline[28] - Emerging markets net sales fell by 16% reported but only 5% organically, with Brazil showing strong growth of 18% reported and 29% organically[28] - Estimated net change in distributor inventories showed a 3% increase in the United States and a 4% increase in Developed International markets[30] Product Performance - Whiskey net sales decreased 5% (-3% organic), led by lower Jack Daniel's Tennessee Whiskey volumes[4] - Tequila portfolio net sales declined 23% (-23% organic), with el Jimador down 26% (-26% organic)[4] - Ready-to-Drink portfolio net sales declined 12% (-4% organic), with Jack Daniel's RTD/RTP down 13% (-2% organic)[5] - US net sales declined 5% (-4% organic), with Jack Daniel's Tennessee Whiskey, el Jimador and Korbel leading the decrease[5] - Developed International markets net sales declined 9% (-6% organic), led by lower Jack Daniel's volumes[6] - Emerging markets net sales declined 16% (-5% organic), impacted by foreign exchange and Finlandia divestiture[8] - Diplomático brand shipments increased by 84% with net sales growth of 142% reported and 134% organically[26] - Non-branded and bulk sales grew by 27% both reported and organically[26][28] - Old Forester brand shipments increased by 7% with net sales growth of 16% both reported and organically[26] Market Performance - Developed International markets include Germany, Australia, the UK, France, Canada, and Spain, representing net sales of branded products[43] - Top emerging markets include Mexico, Poland, and Brazil, with Brazil also encompassing Uruguay, Paraguay, and surrounding territories[43] - Travel Retail represents net sales to global duty-free customers, travel retail customers, and the U.S. military[43] Category Definitions - Whiskey category includes Jack Daniel's family of brands, Woodford Reserve, Old Forester, and others, with American whiskey and super-premium American whiskey as subcategories[45][46] - Ready-to-Drink (RTD) category includes Jack Daniel's RTD/RTP products, New Mix, and other RTD/RTP products, with Jack Daniel's & Coca-Cola RTD as a specific subcategory[46] - Tequila category includes el Jimador, Herradura, and other tequilas, while Rest of Portfolio includes divested brands like Sonoma-Cutrer and Finlandia[47] Operational and Strategic Updates - Jack Daniel's Country Cocktails production fully transitioned to Pabst Brewing Company in fiscal 2024, removing non-comparable operating activity related to Brown-Forman-produced products for fiscal 2024 and 2025[38] - Recognized a $13 million franchise tax refund in Q1 fiscal 2025 due to a change in Tennessee franchise tax calculation methodology, retroactively applied to fiscal 2020-2023[38] Data and Methodology - Consumer takeaway data, sourced from Nielsen and NABCA, measures consumer purchases from retail outlets and e-commerce channels, reflecting demand trends[50] - Estimated net change in distributor inventories calculated by comparing organic dollar amounts to depletion volumes, indicating potential inventory adjustments[51] Outlook - Fiscal 2025 outlook expects organic net sales growth of 2-4% and organic operating income growth of 2-4%[13]

Financial Performance - For the fiscal year ended April 30, 2024, net sales were $4,178 million, a decrease of 1.2% compared to $4,228 million in 2023[36] - Gross profit for the same period was $2,526 million, reflecting an increase of 1.3% from $2,494 million in 2023[36] - Operating income increased to $1,414 million in 2024, up 25.5% from $1,127 million in 2023[36] - Net income for the fiscal year 2024 was $1,024 million, representing a 30.9% increase from $783 million in 2023[36] - Basic earnings per share rose to $2.15 in 2024, compared to $1.63 in 2023, marking a 32% increase[36] Cash and Debt Management - Cash and cash equivalents were reported at $446 million, with short-term commercial paper borrowings of $429 million exposed to interest rate changes[25] - The company has a committed revolving credit agreement of $900 million, expiring in May 2028, with no borrowings outstanding as of April 30, 2024[77] Shareholder Information - As of April 30, 2024, total shares outstanding are 472,600 thousand, a decrease from 479,316 thousand in 2023, reflecting a reduction of approximately 1.5%[78] - The company has approximately 11,269,000 shares available for issuance under the 2022 Omnibus Compensation Plan as of April 30, 2024[115] Pension and Benefits - The funded status of pension benefits as of April 30, 2024, shows a net liability of $103 million, down from $125 million in 2023[86] - The company projects pension benefits of $54 million for 2025 and 2026, with a gradual increase to $57 million by 2029[82] - The company has recognized a net actuarial gain of $20 million for pension benefits in 2024, following a loss of $29 million in 2023[87] - The total fair value of pension plan assets decreased from $606 million as of April 30, 2023, to $576 million as of April 30, 2024[105] Revenue Growth - Revenue from the United States increased from $1,917 million in 2022 to $1,968 million in 2023, representing a growth of approximately 2.7%[79] - The total revenue for 2023 was $4,228 million, up from $3,933 million in 2022, indicating a year-over-year increase of about 7.5%[80] - Whiskey sales for 2023 reached $2,915 million, a rise from $2,756 million in 2022, marking an increase of approximately 5.8%[80] - The company plans to continue expanding its market presence, particularly in emerging markets, where revenue grew from $714 million in 2022 to $842 million in 2023, an increase of approximately 17.9%[79] Risks and Challenges - The company faces potential adverse effects from unfavorable economic conditions, including inflation and economic slowdowns, which could reduce consumer demand for its products[117] - The company’s financial results could be negatively impacted by product recalls or liability claims, affecting brand reputation and sales[119] - The company operates in over 170 countries, facing commercial, political, and financial risks that could disrupt business operations and affect stock prices[124] - Tariffs imposed in 2018 negatively impacted the business until they were removed or suspended in late fiscal 2022 and early fiscal 2023, highlighting the vulnerability to international trade policies[125] - The company faces risks related to the availability and cost of raw materials, which could adversely affect financial results if not managed effectively[141] - The company may incur increased costs due to health epidemics or pandemics, which could materially affect operations and financial results[152] - Health epidemics and pandemics pose risks that could materially and adversely affect the company's operations and financial results[151] - The company is significantly dependent on the health of the Jack Daniel's family of brands, which could impact sales and marketing efforts[166] - Changes in consumer preferences and a potential decline in the social acceptability of beverage alcohol could negatively affect business results[158] - The company faces substantial competition from new entrants and consolidations by competitors, which may lead to pricing pressures and affect financial results[166] Regulatory and Compliance - The company is committed to compliance with anti-corruption laws, with potential violations leading to investigations and financial penalties[126] - The company is subject to extensive regulatory requirements that could lead to increased costs or limit business activities[161] - Regulatory changes regarding greenhouse gas emissions and environmental issues could increase operating costs, impacting profitability[154] - The U.S. Inflation Reduction Act of 2022 implemented a 15% minimum tax on book income for large corporations, which could adversely affect the company's effective tax rate and net earnings[155] - Potential changes in global tax rules, including a proposed global minimum tax rate of 15%, could have a material adverse impact on net income and cash flows[162] Operational Challenges - The company experienced supply chain disruptions that increased production costs and constrained product availability, prompting actions to diversify suppliers[143] - Disruptions in the distribution network or inventory fluctuations could negatively affect sales and financial performance[157] - The company may not succeed in its strategies for acquisitions and investments, which could lead to financial losses or integration challenges[148] - The company’s growth strategy relies on product innovation, but there is no assurance that successful new products or line extensions will continue to be developed[160] - The company recorded a $7 million impairment charge related to the write-off of an immaterial discontinued brand name during fiscal 2024[97] - The company recognized a non-cash impairment charge of $96 million for the Finlandia brand name during fiscal 2023, primarily due to higher discount rates and input costs[97] Currency Exposure - The company’s net exposure to foreign currency changes is significant, as foreign currency revenues exceed foreign currency expenses, impacting financial results based on the strength of the U.S. dollar[91] - Fluctuations in foreign currency exchange rates relative to the U.S. dollar could materially impact financial results due to the global nature of operations[127]

Financial Performance - For fiscal 2024, reported net sales decreased 1% to $4.2 billion, with an organic basis decline of 1%[25] - Reported operating income increased 25% to $1.4 billion, while organic operating income decreased by 2%[25] - Diluted earnings per share rose 32% to $2.14, reflecting strong operating performance[25] - The company anticipates organic operating income growth in the range of 2% to 4% for fiscal 2025[14] - The company returned $804 million to stockholders through dividends and share repurchase programs[29] - For the three months ended April 30, 2024, reported net sales decreased by 8% compared to the prior year, with organic net sales down by 5%[70] - Gross profit reported a decrease of 10%, while organic gross profit declined by 8% for the same period[70] - Operating income increased by 26%, with an organic change in operating income showing a decrease of 16%[70] - The company recognized a pre-tax gain of $175 million from the sale of its Sonoma-Cutrer wine business, along with $50 million in cash[79] - The company sold its Finlandia vodka business, resulting in a pre-tax gain of $92 million[97] Sales and Market Performance - The Tequila portfolio reported net sales decline of 4% (-7% organic), with Herradura's sales down 10% (-13% organic)[6] - Emerging markets saw reported net sales growth of 5% (+8% organic), driven by strong performance in Mexico and Brazil[9] - Whiskey depletions decreased by 2% to 21.7 million cases, with a reported net sales decline of 3%[49] - Ready-to-Drink category saw a 3% decrease in depletions to 21.0 million cases, with net sales growth of 2%[49] - Tequila depletions fell by 11% to 2.3 million cases, resulting in a 4% decline in net sales[49] - Vodka depletions decreased by 6% to 1.2 million cases, with a significant net sales drop of 16%[49] - The total portfolio's other brand depletions aggregated to 48.8 million cases, reflecting a 2% decrease[49] - The United States market experienced a reported net sales decline of 4%, with organic sales also down by 4%[73] - Emerging markets reported a net sales increase of 5%, with organic sales growth of 8%[73] Expenses and Investments - Gross profit increased 1% (+2% organic) with gross margin expansion of 150 basis points to 60.5%[10] - Reported advertising expense grew 4% (+2% organic), reflecting increased investment in key brands[34] - Advertising expenses reported a decrease of 14%, while organic advertising expenses decreased by 12%[70] - Capital expenditures are planned to be between $195 million and $205 million for fiscal 2025[15] Community and Corporate Responsibility - The company committed $23 million to the Brown-Forman Foundation and Dendrifund to support community initiatives[58] Acquisitions and Strategic Moves - The acquisition of Diplomático Rum and related assets occurred during the third quarter of fiscal 2023, impacting future performance metrics[55] Financial Position and Assets - Total assets increased from $7,777 million in April 2023 to $8,166 million in April 2024[67] - Cash and cash equivalents rose from $374 million in April 2023 to $446 million in April 2024[67] - Total liabilities increased from $4,509 million in April 2023 to $4,649 million in April 2024[67] - Cash dividends paid per common share increased from $0.2055 in 2023 to $0.2178 in 2024[65] - The company reported a 29% increase in income before income taxes, rising from $269 million in 2023 to $347 million in 2024[65] Inventory and Demand Insights - The estimated net change in distributor inventories showed a decrease of 4% in the United States and 12% in emerging markets[75] - The company provides information on estimated fluctuations in distributor inventories, particularly in the United States, which is crucial for understanding performance and trends[101] - The estimated net change in distributor inventories is calculated to provide insights into actual consumer demand versus shipments[115] - The depletion-based amount is calculated to assess the impact of inventory changes on organic net sales[116] Employee and Global Operations - The company operates globally with approximately 5,700 employees and sells products in over 170 countries[63] Brand Performance - The Jack Daniel's family of brands continues to be a significant contributor, with various expressions showing mixed performance in sales trends[96] - The company categorizes its whiskey products, including brands like Jack Daniel's, Woodford Reserve, and Old Forester, which are significant contributors to net sales[107] - The "Ready-to-Drink" category includes products such as Jack Daniel's RTD and RTP, indicating a growing segment in the portfolio[109] - Organic change measures are used to assess performance consistently and compare with competitors[59]

Financial Performance - Reported net sales of $3.2 billion for the nine months ended January 31, 2024, an increase of 1% compared to the same period last year, driven by favorable price/mix and acquisitions, partially offset by lower volumes [175]. - Reported gross profit of $2.0 billion for the nine months ended January 31, 2024, an increase of $98 million, or 5%, with gross margin increasing 2.5 percentage points to 60.9% [175]. - Reported operating income of $1.0 billion for the nine months ended January 31, 2024, an increase of 25% compared to the same period last year [175]. - Diluted earnings per share of $1.58 for the nine months ended January 31, 2024, an increase of 32% from $1.20 reported for the same period last year [175]. - Reported net sales for the nine months ended January 31, 2024, were $3,214 million, reflecting a 1% increase compared to the prior year [204]. - Gross profit for the three months ended January 31, 2024, was $635 million, a 2% increase from the previous year, with a gross profit margin of 59.4% [204]. - Operating income for the three months ended January 31, 2024, was $373 million, a significant increase of 116% compared to the same period last year [204]. - The effective tax rate for the three months ended January 31, 2024, was 16.5%, a decrease of 3.0 percentage points from the previous year [204]. - The effective tax rate for the nine months ended January 31, 2024, was 20.3%, down from 23.0% for the same period last year [225]. - Reported gross profit for the nine months ended January 31, 2024, was $2.0 billion, an increase of $98 million, or 5% compared to the same period last year [220]. - Reported gross profit for the three months ended January 31, 2024, was $635 million, an increase of $11 million, or 2%, with gross margin rising 1.8 percentage points to 59.4% [250]. Sales Performance by Region - Germany's reported net sales increased 12% driven by the launch of Jack Daniel's & Coca-Cola RTD and acquisitions, partially offset by lower volumes [178]. - Mexico's reported net sales increased 22% driven by higher prices of New Mix and positive foreign exchange effects, partially offset by lower volumes of el Jimador [179]. - Brazil's reported net sales increased 12% led by higher volumes of JDTA and positive foreign exchange effects, partially offset by lower JDTW volumes [179]. - Reported net sales growth in emerging markets and Travel Retail was partially offset by declines in developed international and the United States [173]. - Emerging markets, including Mexico, Poland, and Brazil, showed strong growth with net sales increases of 22%, 24%, and 12% respectively [205]. - Reported net sales in Japan declined 100% due to lower volumes and an estimated net decrease in distributor inventories [207]. - Reported net sales in the Rest of Developed International increased 11%, driven by acquisitions and new product launches [207]. - Travel Retail's reported net sales increased 3%, supported by growth in the super-premium American whiskey portfolio [208]. - JDTA reported net sales increased 44%, attributed to higher volumes in Brazil and a product launch in South Korea [241]. - Reported net sales for JDTW decreased 6%, impacted by declines in multiple regions and an estimated net decrease in distributor inventories [239]. Acquisitions and Divestitures - During the third quarter of fiscal 2024, the company sold its Finlandia vodka business, resulting in a pre-tax gain of $90 million [174]. - The company reached an agreement to sell its Sonoma-Cutrer wine business, expected to close in the fourth quarter of fiscal 2024 [180]. - The company acquired the Gin Mare and Diplomático brands, contributing positively to net sales growth and operating income for the nine months ended January 31, 2024 [202]. - Reported net sales for the Rest of Portfolio increased 79%, largely driven by acquisitions [246]. Expenses and Cash Flow - Total operating expenses decreased by 42% for the three months ended January 31, 2024, compared to the same period last year [204]. - Reported operating expenses totaled $918 million for the nine months ended January 31, 2024, a decrease of $112 million, or 11%, compared to the same period last year [253]. - Cash flows from operations were $362 million for the nine months ended January 31, 2024, a decline of $48 million from the same period last year [259]. - Cash used for financing activities was $212 million during the nine months ended January 31, 2024, compared to $468 million in cash provided by financing activities in the prior-year period [260]. - Cash and cash equivalents increased from $374 million at April 30, 2023, to $589 million at January 31, 2024 [257]. Future Outlook - The company expects organic net sales to be flat for fiscal 2024, with organic operating income growth anticipated in the 0% to 2% range [256]. - Capital expenditures for fiscal 2024 are planned to be in the range of $230 to $240 million [256]. - The Board of Directors authorized a share repurchase program of up to $400 million from October 2, 2023, through October 1, 2024 [261].

Financial Performance - Third quarter reported net sales decreased 1% to $1.1 billion (-2% organic) compared to the prior-year period[1] - Reported operating income increased 116% to $373 million (+5% organic) and diluted earnings per share increased 189% to $0.60[1] - Year-to-date reported net sales increased 1% to $3.2 billion (flat on an organic basis) compared to the same prior-year period[7] - Year-to-date reported operating income increased 25% to $1.0 billion (+2% organic) and diluted earnings per share increased 32% to $1.58[7] - Reported net sales for the nine months ended January 31, 2024, were $3,214 million, reflecting a 1% increase compared to $3,182 million in the prior year[37] - Operating income rose by 25% to $1,039 million, compared to $829 million in the same period last year[37] - Net income for the nine months ended January 31, 2024, was $758 million, a 32% increase from $576 million[37] - Earnings per share (diluted) increased by 32% to $1.58 for the nine months ended January 31, 2024, compared to $1.20 in the prior year[37] Sales Growth - The recently acquired brands, Gin Mare and Diplomático, drove Rest of Portfolio's reported net sales growth of 79% (+11% organic)[2] - Jack Daniel's Tennessee Apple delivered double-digit reported net sales growth of 44% (+45% organic)[3] - New Mix brand reported a strong net sales growth of 34%, with 17% organic growth[40] - The company experienced reported net sales growth in Emerging markets and the Travel Retail channel, offset by declines in Developed International markets and the United States[42] - The emerging markets, particularly Mexico, Poland, and Brazil, showed strong growth with net sales increasing by 22%, 24%, and 12% respectively[64] Cost and Profitability - Reported gross profit increased 5% (+6% organic) with gross margin expansion of 250 basis points to 60.9%[27] - Gross profit increased by 5% to $1,957 million for the nine months ended January 31, 2024, up from $1,859 million[37] - The company reported a 4% decrease in the cost of sales, contributing to a gross profit decline of 5%[82] Market Trends - The Jack Daniel's family of brands reported depletions of 23.4 million, reflecting a 4% decrease compared to the prior-year period[78] - The company’s "Tequila" category, including brands like Herradura and el Jimador, experienced a 9% decrease in depletions[78] - Consumer takeaway data indicates trends in market demand, with estimates derived from retail sales value metrics[103] Strategic Actions - The sale of the Finlandia vodka brand generated a pre-tax gain of $90 million[4] - The $400 million share repurchase program was completed as of December 31, 2023[4] - The company reached an agreement to sell its Sonoma-Cutrer wine business, expected to close in the fourth quarter of fiscal 2024, with transaction costs related to this disposition being adjusted out[71] - The company acquired Gin Mare Brand, S.L.U. and Mareliquid Vantguard, S.L.U. during the third quarter of fiscal 2023, impacting financial results[84] Tax and Financial Adjustments - The effective tax rate decreased to 20.3% for the nine months ended January 31, 2024, down from 23.0% in the prior year[37] - Organic net sales adjustments are made to account for acquisitions, divestitures, foreign exchange, and impairment charges[83] - A non-cash impairment charge of $96 million for the Finlandia brand name was recognized during the third quarter of fiscal 2023, which was adjusted for organic results[74] - A gain of $7 million was recognized on the sale of certain fixed assets during the second quarter of fiscal 2024, which was also adjusted for organic results[72] Future Outlook - The company expects organic net sales to be flat for fiscal 2024, with organic operating income growth anticipated in the 0% to 2% range[15] - Capital expenditures are now planned to be in the range of $230 to $240 million[44] - The company recognized that changes in distributor inventories can affect organic trends, with a positive difference indicating a net increase in inventories[95]

Financial Performance - For the six months ended October 31, 2023, reported net sales in the United States decreased by 4%, with an organic change of -5%[206]. - Reported net sales for the six months ended October 31, 2023, were $2.1 billion, a 2% increase compared to the same period last year, driven by favorable price/mix and acquisitions[228]. - Gross profit for the same period was $1.3 billion, an increase of $87 million or 7%, with gross margin rising to 61.6% from 58.8%[228]. - Operating income for the six months ended October 31, 2023, was $666 million, reflecting a 1% increase year-over-year[228]. - Diluted earnings per share decreased by 1% to $0.98, primarily due to higher interest expenses[228]. - Reported net sales in Japan declined by 79% due to lower volumes of JDTW, with plans to distribute own brands starting April 1, 2024[231]. - Reported net sales in the Rest of Developed International increased by 23%, driven by acquisitions and new product launches[231]. - Travel Retail's reported net sales increased by 3%, supported by growth in the super-premium American whiskey portfolio[232]. - Woodford Reserve's reported net sales decreased by 3%, impacted by lower volumes in the United States[234]. - JDTH reported net sales decreased by 7%, primarily due to volumetric declines in the United States and a net decrease in distributor inventories[254]. - Gentleman Jack's net sales also decreased by 7%, attributed to lower volumes in the United States and negative foreign exchange effects, partially offset by higher volumes in emerging markets[254]. - JDTA's net sales increased by 51%, driven by a product launch in South Korea and higher volumes in Brazil[255]. - JD RTD/RTP brands saw a 2% increase in net sales, supported by the launch of Jack Daniel's & Coca-Cola RTD and favorable foreign exchange effects[256]. - Herradura's net sales declined by 5%, impacted by lower volumes in the United States and an unfavorable portfolio mix shift, though partially offset by positive foreign exchange and higher prices in Mexico[257]. Acquisitions and Divestitures - The Diplomático acquisition was completed for a total cash price of $723 million, reflecting a post-closing working capital adjustment of $4 million[185]. - The company agreed to sell its Finlandia vodka business to Coca-Cola HBC AG for $220 million, with an estimated adjusted sales price of $194 million as of October 31, 2023[188]. - The Sonoma-Cutrer wine business is set to be sold to The Duckhorn Portfolio, Inc. for $50 million in cash and a 21.5% ownership stake[190]. Market Performance - Emerging markets saw a 17% increase in reported net sales, with Mexico growing by 30% and Poland by 26%[206]. - Vodka (Finlandia) reported a 4% increase in net sales, driven by growth in Ukraine and Poland[212]. Expenses and Costs - Reported cost of sales for the three months ended October 31, 2023, was $436 million, a decrease of $45 million or 9% compared to the same period last year[259]. - SG&A expenses increased by 10% for the six months ended October 31, 2023, primarily due to higher compensation and benefit-related expenses[262]. - Total operating expenses increased by 11% year-over-year, with organic growth contributing 8%[261]. Taxation - The effective tax rate for the three months ended October 31, 2023, was 22.0%, down from 23.7% in the prior year[243]. - The effective tax rate for the six months ended October 31, 2023, was 22.4%, down from 23.7% in the same period last year, mainly due to decreased state tax impacts[263]. Asset and Liability Overview - The total assets as of October 31, 2023, were reported at $779 million, with total liabilities of $56 million[186]. - Cash used for investing activities was $61 million during the six months ended October 31, 2023, reflecting an increase in capital expenditures[248]. Operational Adjustments - The company uses "organic change" to adjust financial measures for acquisitions and divestitures, providing a clearer view of operational performance[216]. - The company has effective disclosure controls and procedures in place to ensure timely and accurate reporting of required information[168].

Financial Performance - Net income for the quarter ended July 31, 2023, was $231 million, a decrease of 7.2% compared to $249 million for the same period in 2022[17] - Basic earnings per share decreased to $0.48 for the quarter ended July 31, 2023, down from $0.52 in the same quarter of 2022, a decline of 7.7%[25] - Operating income for the three months ended July 31, 2023, was $327 million, down from $343 million in the same period last year, indicating a decrease of 4.7%[40] - The effective tax rate for the three months ended July 31, 2023, was 22.9%, higher than the expected rate of 21.5% for the fiscal year, primarily due to tax rate changes[51] - The company reported a comprehensive income of $267 million for the three months ended July 31, 2023, compared to $250 million in the same period last year[43] - Diluted earnings per share for the three months ended July 31, 2023, were $0.48, a decrease of 7% from $0.52 in the same period last year[79] - The effective tax rate for the three months ended July 31, 2023, was 22.9%, a decrease from 23.6% in the same period last year[157] Revenue and Sales - Net sales for the three months ended July 31, 2023, were $1,038 million, a 3.1% increase from $1,007 million in the same period last year[40] - The net sales by product category showed a decline in whiskey sales to $697 million from $707 million, while ready-to-drink products increased to $138 million from $126 million[58] - Reported net sales in the United States decreased by 8%, driven by lower volumes and an estimated net decrease in distributor inventories[87] - Germany's reported net sales increased by 7%, supported by higher volumes and prices of JD RTDs, along with the positive effect of foreign exchange[88] - The United Kingdom's reported net sales rose by 21%, primarily due to higher volumes of JDTW and the positive effect of foreign exchange[88] - Japan's reported net sales declined by 83%, attributed to lower volumes of JDTW and a net decrease in distributor inventories[90] - Mexico's reported net sales increased by 44%, driven by higher volumes and prices of New Mix, along with favorable foreign exchange effects[91] - JDTA's reported net sales surged by 49%, reflecting strong demand and a 52% organic growth[101] - Non-branded and bulk's reported net sales increased by 21%, driven by higher prices for used barrels[97] - Travel Retail's reported net sales grew by 13%, primarily due to higher volumes of Woodford Reserve and recent acquisitions[97] - The total reported net sales increased by 3%, with a 2% organic change[85] - Reported net sales for Gentleman Jack decreased by 16%, primarily due to declines in the United States, partially offset by higher volumes in emerging markets[112] - Reported net sales for JDTA increased by 49%, driven by the product launch in Korea and higher volumes in Brazil[113] - Reported net sales for the Rest of Portfolio increased by 97%, largely driven by the acquisitions of Gin Mare and Diplomático[128] Assets and Liabilities - Total assets increased to $8,086 million as of July 31, 2023, up from $7,777 million at April 30, 2023, representing a growth of 3.9%[19] - Total liabilities rose to $4,748 million as of July 31, 2023, compared to $4,509 million at April 30, 2023, marking an increase of 5.3%[19] - Stockholders' equity increased to $3,338 million as of July 31, 2023, up from $3,268 million at the end of April 2023[190] Cash Flow and Liquidity - Cash provided by operating activities significantly dropped to $38 million in Q1 2023 from $173 million in Q1 2022, reflecting a decline of 78.0%[17] - Cash and cash equivalents at the end of the period were $426 million, up from $384 million at the beginning of the period, indicating an increase of 10.9%[20] - The company reported a net increase in cash of $52 million for the quarter ended July 31, 2023, compared to a net increase of $31 million in the same quarter of 2022[20] - The company expects to meet its short-term liquidity needs primarily through cash generated from operations and borrowings under its $900 million commercial paper program[198] - The company’s total short-term borrowings under the commercial paper program rose from $235 million to $390 million between April 30, 2023, and July 31, 2023[182] - Approximately 43% of cash and cash equivalents as of July 31, 2023, were held by foreign subsidiaries, with plans to potentially repatriate additional cash[203] - The company maintains strong cash flows from operations, supporting current obligations and capital expenditures[202] Expenses - Total operating expenses for the same period were $324 million, an increase of $45 million, or 16%, driven by a 19% increase in advertising expenses and a 14% increase in SG&A expenses[155] - Advertising expenses increased by 19% to $131 million, while SG&A expenses rose by 14% to $200 million[80] Acquisitions and Investments - The purchase price for the Gin Mare acquisition was $523 million, which included $468 million in cash and $55 million in contingent consideration[134] - Goodwill recorded for acquisitions includes $386 million for Diplomático, with $108 million expected to be deductible for tax purposes[163] - The company allocated $727 million in net assets acquired, with adjustments reflecting revised valuations for trademarks and brand names[148] - During Q3 fiscal 2023, the company acquired Gin Mare Brand, S.L.U. and several entities related to the Diplomático Rum brand, enhancing its portfolio[180] Market Outlook - The company anticipates continued growth in consumer demand, as indicated by positive trends in depletions and consumer takeaway data[59] - The company expects organic net sales growth in the range of 5% to 7% for fiscal 2024, following two years of double-digit growth[201] - Anticipated organic operating income growth is projected to be between 6% and 8% for fiscal 2024[201] - The effective tax rate for fiscal 2024 is expected to be approximately 21% to 23%[201] - Planned capital expenditures are estimated to be between $250 million and $270 million[201] Risk Management - The company faces market risks from foreign currency exchange rates, commodity prices, and interest rates, managed through procurement strategies and financial instruments[205] - No material changes to market risks or risk management programs have occurred since April 30, 2023[205]

Financial Performance - Net income for the year ended April 30, 2023, was $783 million, a decrease of 6.6% from $838 million in 2022[31] - Comprehensive income for 2023 was $900 million, down from $908 million in 2022, reflecting a decline of 0.9%[31] - Cash provided by operating activities decreased to $640 million in 2023 from $936 million in 2022, a decline of 31.7%[33] - Net income available to common stockholders decreased from $838 million in 2022 to $783 million in 2023, representing a decline of approximately 6.6%[74] - Basic earnings per share (EPS) fell from $1.75 in 2022 to $1.63 in 2023, a decrease of about 6.9%[74] - Total net sales increased from $3,933 million in 2022 to $4,000 million in 2023, reflecting a growth of approximately 1.7%[80] - The company recognized a total of $1,017 million in revenue for 2023, a decrease from $1,114 million in 2022, indicating a decline of 8.7%[119] Assets and Liabilities - Total assets increased to $7,777 million in 2023, up from $6,373 million in 2022, representing a growth of 22.0%[32] - Total liabilities rose to $4,509 million in 2023, compared to $3,636 million in 2022, marking an increase of 24.0%[32] - Long-term debt increased to $2,678 million in 2023, up from $2,019 million in 2022, representing a rise of 32.5%[32] - The company's accounts payable increased from $218 million in 2022 to $308 million in 2023, indicating a rise in short-term liabilities[73] - The company reported a pension benefit obligation of $190 million in 2023, up from $150 million in 2022[86] - The net actuarial loss for pension benefits was $29 million in 2023, compared to a gain of $62 million in 2022[88] - The net cost of pension benefits increased from $39 million in 2022 to $48 million in 2023, reflecting a rise of 23.1%[110] Acquisitions and Investments - The company completed the acquisition of Diplomático for $727 million in cash and Gin Mare for $468 million in cash plus contingent consideration of $56 million[56] - The company acquired the Gin Mare and Gin Mare Capri brands for a total purchase price of $524 million, including $468 million in cash and $56 million in contingent consideration[98] - The contingent consideration for the acquisition of Gin Mare could reach up to €90 million (approximately $89 million), depending on net sales targets achieved by the sellers[99] - The company plans to continue seeking acquisition opportunities to enhance long-term shareholder value, though such efforts involve risks and uncertainties[149] - The company is actively seeking acquisition and investment opportunities to enhance long-term stockholder value, but faces risks related to integration and potential overvaluation[149] Marketing and Sales - Advertising and promotion expenses rose from $200 million in 2022 to $216 million in 2023, reflecting increased marketing efforts[73] - The company’s net sales predominantly reflect global sales of beverage alcohol consumer products, with revenue recognition based on contracts with distributors, wholesalers, or retailers[38] - In fiscal 2023, the United States accounted for 47% of the company's net sales, while international markets contributed 53%[179] - Approximately 31%, 29%, and 27% of reported net sales for fiscal 2021, 2022, and 2023, respectively, occurred in the fourth calendar quarter, indicating a peak season for the business[181] Regulatory and Economic Environment - The company is subject to various personal data protection laws, which may incur additional costs and affect operational practices[53] - Regulatory changes regarding production, marketing, and distribution could increase costs and limit business activities, particularly in beverage alcohol markets[129] - Increased regulation addressing climate change and environmental issues could raise operating costs, particularly related to CO2 emissions and energy[130] - Changes in tax rules, including the potential impact of the Inflation Reduction Act, could adversely affect financial results, particularly regarding corporate income tax rates[131] - The U.S. enacted the Inflation Reduction Act of 2022, implementing a 15% minimum tax on book income for certain large corporations, but the company anticipates its impact will not be material to operating results or cash flows[131] - In fiscal 2023, the company observed excise tax increases in Türkiye and Romania, and annual increases in France and Australia tied to the consumer price index[133] Risks and Challenges - The company faces risks from health epidemics and pandemics that could materially impact operations and financial results[152] - The company may encounter difficulties in selling assets or businesses that no longer meet financial or strategic objectives[151] - Negative publicity related to the company's products or practices could adversely affect corporate reputation and financial results[158] - The company faces substantial competition from both new entrants and established brands, particularly in the premium-and-above price points[182] - The company is exposed to risks from product counterfeiting and trademark infringement, which could harm brand equity and financial results[139] - The company may face litigation risks that could affect its ability to sell products and lead to negative publicity, impacting financial results[140] - Supply chain challenges, including the availability of raw materials and logistics, could adversely affect production capabilities and financial results[145] - Geopolitical events, such as sanctions related to Russia's invasion of Ukraine, could impact raw material costs and availability, affecting profitability[147] - The quality and availability of water are critical for production; extended droughts could adversely affect business operations and financial results[148] Brand Recognition and Portfolio - Jack Daniel's Tennessee Whiskey was named the most valuable spirits brand in the world in the 2022 Interbrand "Best Global Brands" rankings[176] - Jack Daniel's Bonded Tennessee Whiskey was awarded "2022 Whisky of the Year" by Whisky Advocate[176] - Woodford Reserve and Old Forester were selected for the Impact "Hot Brands" list for ten and five consecutive years, respectively[176] - Herradura tequila received two Gold medals at the San Francisco World Spirits competition in 2023[176] - The company has a portfolio of over 40 brands, including premium bourbons and super premium tequila[176] Currency and Market Fluctuations - Fluctuations in foreign currency exchange rates relative to the U.S. dollar could adversely impact financial results, as foreign currency revenues exceed expenses[128] - The company relies on a diverse range of raw materials, including agave, barley, corn, and sugar, for its products[183] - The company anticipates growth opportunities despite a highly competitive market environment, focusing on brand-building and creative marketing strategies[182] - Fluctuations in foreign currency exchange rates relative to the U.S. dollar could materially affect the company's financial results, with a stronger dollar negatively impacting reported results[128]

Financial Performance - For the third quarter of fiscal 2023, the company reported net sales of $1,081 million, representing a 4% increase compared to $1,037 million in the same period last year, with organic net sales growth of 5%[136] - The cost of sales increased by 10% to $457 million from $415 million year-over-year, while organic cost of sales also grew by 10%[136] - Gross profit remained relatively stable at $624 million, with a slight organic growth of 2%[136] - Diluted earnings per share decreased by 61% to $0.21 from $0.54 in the same period last year, primarily due to a decrease in reported operating income and a $27 million pension settlement charge[135] - Reported net sales for the nine months ended January 31, 2023, were $3.2 billion, an increase of 8% compared to the same period last year, driven by higher volumes and favorable price/mix[142] - Reported operating income for the same period was $829 million, a decrease of 13% year-over-year, attributed to lower gross margin and a non-cash impairment charge of $96 million for the Finlandia brand[142] - Reported gross profit for the nine months ended January 31, 2023, was $1.9 billion, an increase of $94 million, or 5%, with a gross margin decrease of 1.7 percentage points to 58.4%[160] - Operating income for the three months ended January 31, 2023, was $173 million, a decrease of $174 million, or 50%, with an operating margin decrease of 17.6 percentage points to 15.9%[164] - For the nine months ended January 31, 2023, reported operating income totaled $829 million, a decrease of $129 million, or 13%, compared to the same period last year, with an operating margin decrease of 6.6 percentage points to 26.0% from 32.6%[216] Sales Growth - The United States reported net sales growth of 4%, driven by higher volumes of Woodford Reserve and price increases across the portfolio, particularly for Jack Daniel's brands[144] - Emerging markets saw a reported net sales increase of 18%, with significant contributions from Mexico (30%) and Brazil (61%)[144] - Travel Retail channel reported a 48% increase in net sales, reflecting a rebound in travel demand post-COVID-19 restrictions[146] - Non-branded and bulk reported net sales increased by 34%, driven by higher prices for used barrels[148] - Premium bourbons, JDTW, and Ready-to-Drinks were key drivers of reported net sales growth[142] - Reported net sales for JDTW increased 6%, driven by higher volumes in emerging markets and developed international markets[176] - Reported net sales for Woodford Reserve increased 34%, driven by higher volumes in the United States[179] - Reported net sales for el Jimador increased 18%, led by growth in the United States and Mexico[182] Expenses and Charges - Total operating expenses increased by 64% to $451 million, with organic operating expenses growing by 18%[136] - A non-cash impairment charge of $96 million was recognized for the Finlandia brand name during the third quarter of fiscal 2023 due to macroeconomic conditions[169] - Reported operating expenses for the three months ended January 31, 2023, totaled $451 million, an increase of $176 million, or 64%, primarily due to a non-cash impairment charge for the Finlandia brand[162] Tax and Cash Flow - The effective tax rate for the quarter was 19.5%, a decrease of 1.5 percentage points from the previous year[136] - The effective tax rate for the nine months ended January 31, 2023, was 23.0%, a slight decrease from 23.4% for the same period last year[165] - Cash provided by operations was $410 million during the nine months ended January 31, 2023, a decline of $273 million from the same period last year, mainly due to increased working capital and $50 million in transaction costs related to acquisitions[226] Acquisitions and Financing - The company acquired the Gin Mare and Diplomático brands, which had a negative impact of $42 million on reported operating income due to transaction expenses[131] - Cash used for investing activities was $1,300 million during the nine months ended January 31, 2023, compared to $63 million for the same period last year, largely reflecting acquisitions of Gin Mare ($468 million) and Diplomático ($727 million)[204] - The company entered into a $600 million senior unsecured 364-day term loan credit agreement on January 3, 2023, to be used for working capital and general corporate purposes[200] - The company has an $800 million commercial paper program to fund short-term operational needs, with an average interest rate of 4.61% as of January 31, 2023[201] - The company repaid the $250 million principal amount of 2.25% notes on their maturity date of January 15, 2023[224] Market Conditions and Risks - The removal of tariffs on American whiskey positively impacted reported net sales growth by approximately 0.5% and reduced cost of sales growth by about 4%[130] - Foreign exchange fluctuations negatively impacted results, primarily due to a stronger U.S. dollar against the euro, Turkish lira, pound sterling, and Polish zloty[140] - Supply chain disruptions continued to affect the business, although glass supply improved during the nine months ended January 31, 2023[141] - The company faced various risks including competition, changes in consumer preferences, and potential impacts from geopolitical events such as Russia's invasion of Ukraine[139] Future Outlook - The company expects organic net sales growth in the range of 8-10% for the full year, with reported gross margin anticipated to be consistent with the first half of fiscal 2023[219] - The effective tax rate expectation for the full year is in the range of approximately 22% to 23%[219]