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]
Brown-Forman(BF_B) - 2024 Q1 - Quarterly Report