Financial Performance - Net sales for the first quarter of fiscal 2026 decreased 3% to $924 million, with a 1% increase on an organic basis compared to the prior-year period[1] - Operating income declined 7% to $260 million, with a 2% increase on an organic basis[1] - Diluted earnings per share decreased 13% to $0.36[1] - Reported net sales decreased by 3% compared to the prior-year period, with organic change in net sales showing a modest increase of 1%[26] - The company reported a 7% decline in operating income, while organic change in operating income was positive at 2%[26] - The total portfolio saw a reported net sales increase of 3% and a shipment increase of 6% compared to the prior-year period[27] - In the United States, reported net sales decreased by 8%, with an organic decline of 2%[29] - Emerging markets experienced a robust growth of 20% in reported net sales, with an organic increase of 25%[29] Gross Margin and Costs - Gross margin expanded by 40 basis points to 59.8%, driven by positive effects from divestitures, partially offset by higher costs and unfavorable price/mix[4] Cash Flow and Assets - Cash provided by operating activities rose significantly from $17 million in 2024 to $160 million in 2025, marking an increase of 841%[23] - The company’s cash and cash equivalents at the end of the period increased from $416 million to $471 million, a rise of 13.2%[23] - Total assets increased from $8,086 million on April 30, 2025, to $8,171 million on July 31, 2025, reflecting a growth of 1.05%[21] Liabilities and Debt - The total current liabilities increased from $1,080 million to $1,497 million, reflecting a rise of 38.6%[21] - The company’s long-term debt decreased from $2,421 million to $2,075 million, a reduction of 14.3%[21] Future Outlook and Challenges - The company anticipates a challenging operating environment for fiscal 2026, with low visibility due to macroeconomic and geopolitical volatility[10] - Capital expenditures are planned to be in the range of $125 to $135 million for fiscal 2026[14] - The effective tax rate is expected to be in the range of approximately 21% to 23% for fiscal 2026[14] Dividends and Shareholder Returns - The company declared a quarterly cash dividend of $0.2265 per share, payable on October 1, 2025[9] Restructuring and Other Charges - The company incurred $12 million in restructuring and other charges in the first quarter of fiscal 2026 related to a restructuring initiative that included a 12% workforce reduction[42] - A gain of $12 million was recognized on the sale of the Alabama cooperage in the first quarter of fiscal 2025, which was removed from operating income[39] - A $13 million franchise tax refund was recognized in the first quarter of fiscal 2025 due to a change in tax calculation methodology in Tennessee, impacting operating income[40] Sales and Market Changes - The company sold its Finlandia vodka and Sonoma-Cutrer wine businesses during fiscal 2024, impacting net sales and operating expenses for the first quarter of fiscal 2025[38] - The company ended its sales, marketing, and distribution relationship with Korbel Champagne Cellars effective June 30, 2025, which will affect future operating activities[40] Performance Metrics - The company emphasizes the importance of non-GAAP measures like "organic change" to assess performance consistently across periods, excluding foreign exchange impacts[43] - Changes in distributor inventories are considered significant for understanding performance trends, particularly in the U.S. market[44] - The company provides supplemental information on geographic and brand aggregations to highlight net sales performance in various markets[49] - The company defines "consumer takeaway" as a leading indicator of consumer demand trends, derived from retail sales value metrics[51]
Brown-Forman(BF_A) - 2026 Q1 - Quarterly Results