Financial Performance - Reported net sales for Q3 2026 increased 2% to $1.1 billion, with organic growth of 1% compared to the prior-year period[2] - Year-to-date net sales for fiscal 2026 decreased 2% to $3.0 billion, remaining flat on an organic basis[3] - Operating income for Q3 2026 increased 21% to $340 million, while diluted earnings per share rose 1% to $0.58[2] - Net sales for the nine months ended January 31, 2026, decreased by 2% to $3,016 million compared to $3,081 million in the prior year[25] - Gross profit for the same period decreased by 1% to $1,807 million, with a gross margin of 59.9%[25] - Operating income remained flat at $905 million, with an operating margin of 30.0%[25] - Net income for the nine months ended January 31, 2026, decreased by 9% to $661 million, resulting in diluted earnings per share of $1.41, down 8% from $1.53[25] - Operating income increased by 4% compared to the prior-year period[39] Cash Flow and Assets - Cash flows from operations grew by $263 million to $709 million, and free cash flow increased by $299 million to $628 million[3] - Cash provided by operating activities increased significantly to $709 million from $446 million in the prior year[29] - Free cash flow for the nine months ended January 31, 2026, was $628 million, up from $329 million in the prior year[40] - Total assets increased to $8,302 million as of January 31, 2026, up from $8,086 million[27] - Total liabilities rose to $4,220 million, compared to $4,093 million in the previous year[27] Market Performance - Net sales for the Tequila portfolio decreased 6% (-7% organic), with Herradura's net sales declining 11% (-12% organic)[7] - Net sales in Emerging markets increased 16% (+15% organic), driven by strong growth of New Mix in Mexico[8] - In the United States, net sales declined by 8%, with an organic change of -1%[35] - The company experienced a 60% decline in net sales in Canada, with an organic change of -59%[35] - The whiskey category saw an overall growth of 2%, with Old Forester growing by 6%[38] Future Outlook - The company anticipates organic net sales and operating income to decline in the low-single digit range for fiscal 2026[15] - Capital expenditures are planned to be in the range of $110 to $120 million for fiscal 2026[15] Shareholder Returns - The company completed a $400 million share repurchase program in December 2025[3] - Cash dividends paid per common share increased to $0.6840 from $0.6621[25] Inventory and Demand Insights - Estimated net change in distributor inventories in the United States was up by 2%[37] - A positive difference in estimated net change indicates a net increase in distributors' inventories, potentially leading to decreased organic trends[62] - A negative difference suggests a net decrease in distributors' inventories, which may result in increased organic trends[62] - The calculation of "depletion-based" amounts helps in understanding the relationship between shipments and actual consumer demand[62] - "Depletions" measure volume reflecting consumer demand more accurately than shipments to distributors[62] - Consumer takeaway data, sourced from Nielsen and NABCA, serves as a leading indicator of consumer demand trends[62] - The company recognizes revenue upon shipment or delivery to customers, impacting inventory assessments[62] Strategic Changes - The company plans to manage the supply, sales, marketing, and distribution of JDCC starting July 7, 2026, after ending its relationship with Pabst Brewing Company[58] - The restructuring initiative incurred $19 million in charges during the first nine months of fiscal 2026[51] - The Korbel relationship will end effective June 30, 2025[62] - "Tequila" includes el Jimador and the Herradura family of brands, contributing to overall portfolio diversity[62] - "Rest of Portfolio" includes brands like Korbel California Champagnes and Finlandia Vodka, which was divested on November 1, 2023[62]
Brown-Forman(BF_B) - 2026 Q3 - Quarterly Results