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]
Brown-Forman(BF_B) - 2023 Q4 - Annual Report