BROWN FORMAN CORP
For the period ended Jul 31, 2024. Filed Aug 29, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 31, 2024 · Filed Aug 29, 2024
BF-A$31.47-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-01-31; filed 2024-03-06.
0000014693-24-000016
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-31; filed 2024-08-29.
0000014693-24-000156
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
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A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (52)
Current report
•“Other Items.”Other Items include the additional items outlined below.
Current report
“Jack Daniel’s Country Cocktails business model change (JDCC).”In fiscal 2021, we entered into a partnership with the Pabst Brewing Company for the supply, sales, and distribution of Jack Daniel's Country Cocktails in the United States while Brown-Forman continued to produce certain products. During fiscal 2024, this production fully transitioned to Pabst Brewing Company for the Jack Daniel’s Country Cocktails products. This adjustment removes
Current report
the non-comparable operating activity related to the sales of Brown-Forman-produced Jack Daniel’s Country Cocktails products for the first quarter of fiscal 2024 and fiscal 2025.
Current report
“Franchise Tax Refund.” During the first quarter of fiscal 2025, we recognized a $13 million franchise tax refund due to a change in franchise tax calculation methodology for the state of Tennessee. This modification lowered our annual franchise tax obligation and was retroactively applied to franchise taxes paid during fiscal 2020 through fiscal 2023. This adjustment removes the franchise tax refund from our other expense (income), net and operating income.
Current report
•“Spain”includes Spain and certain other surrounding territories.
Current report
•“Brazil”includes Brazil, Uruguay, Paraguay, and certain other surrounding territories.
Current report
Beginning in fiscal 2025, we aggregated the “Wine” and “Vodka” product categories into “Rest of Portfolio,” due to the divestitures of Sonoma-Cutrer and Finlandia. Please refer to the new definition of "Rest of Portfolio” for more information. The fiscal 2024 "Rest of Portfolio" amounts have been adjusted accordingly for comparison purposes.
Current report
•“Rest of Portfolio” includes Sonoma-Cutrer, Korbel California Champagnes, Diplomático, Gin Mare, Chambord, Finlandia Vodka, Fords Gin, and Korbel Brandy.
Current report
Unless otherwise indicated, all related commentary is on a reported basis and is for the three months ended July 31, 2024 compared to the same period last year.
Current report
Divestitures
Current report
During the third quarter of fiscal 2024, we sold the Finlandia vodka business for $196 million cash and entered into a TSA for this business. During the fourth quarter of fiscal 2024, we sold the Sonoma-Cutrer wine business in exchange for an ownership percentage of 21.4% in Duckhorn along with $50 million cash and entered into a TSA for this business. The TSAs for these divestitures negatively impacted our gross margin for the three months ended July 31, 2024.
Current report
•We delivered net sales of $1.0 billion for the three months ended July 31, 2024, a decrease of 8%. The decrease was driven by (a) lower volumes; (b) the negative effect of acquisitions and divestitures; (c) the negative effect of foreign exchange; and (d) the impact of the Jack Daniel’s Country Cocktails business model change (JDCC), partially offset by favorable price/mix.
Current report
◦From a brand perspective, net sales declines were led by JDTW and the Finlandia divestiture.
Current report
◦From a geographic perspective, the declines in net sales were across all geographic aggregations.
Current report
•We delivered gross profit of $565 million for the three months ended July 31, 2024, a decrease of $86 million, or 13%. Gross margin decreased 3.3 percentage points to 59.4% from 62.7% in the same period last year. The decrease in gross margin was largely driven by the timing of input cost fluctuations coupled with high inventory levels, as well as the impact of the TSAs for the divestitures (as described above), partially offset by favorable price/mix and the impact of JDCC.
Current report
•We delivered operating income of $281 million for the three months ended July 31, 2024, a decrease of 14% largely driven by the timing of input cost fluctuations coupled with high inventory levels, the impact of the TSAs for the divestitures (as described above), and the negative effect of foreign exchange. The decrease was partially offset by the gain on sale of the Alabama cooperage, Franchise Tax Refund, and favorable price/mix.
Current report
2“JDCC” is included in “Other Items”. See “Non-GAAP Financial Measures” above for additional details.
Current report
The United States’ net sales declined 5% driven by lower volumes, led by JDTW and el Jimador, along with the negative impact of JDCC. The declines were partially offset by higher volumes of Woodford Reserve, reflecting an estimated net increase in distributor inventories.
Current report
•Germany’s net sales declined 6% driven by lower volumes of JDTW, partially offset by the positive contribution from Diplomático.
Current report
•The United Kingdom’s net sales declined 21% driven by lower volumes, led by JDTW, partially due to the buy-in ahead of an excise tax increase in the same prior-year period.
Current report
•France’s net sales declined 5% driven by declines across our Jack Daniel’s family of brands and the negative effect of foreign exchange, partially offset by the positive contribution from Diplomático.
Current report
•Canada’s net sales declined 8% driven by the negative effect of foreign exchange and the divestitures of Sonoma-Cutrer and Finlandia.
Current report
•Spain’snet sales declined 14% driven by lower volumes of JDTW, partially offset by the positive contributions from Diplomático and Gin Mare.
Current report
•Net sales in the Rest of Developed International declined 9% driven by the Finlandia divestiture, the negative effect of foreign exchange, and lower volumes of Gin Mare in Italy. The declines were partially offset by higher JDTW volumes in Japan primarily due to changes in distributor ordering patterns in the same prior-year period (we transitioned to owned distribution April 1, 2024).
Current report
•Mexico’s net sales declined 18% led by lower volumes of Herradura and New Mix.
Current report
•Poland’s net sales declined 21% driven by the Finlandia divestiture and lower volumes of JDTW, partially offset by the positive effect of foreign exchange.
Current report
•Brazil’s net sales increased 18% driven by higher volumes across the portfolio, led by JDTA, JDTW, and JDTH. The growth was partially offset by the negative effect of foreign exchange.
Current report
Travel Retail’snet sales declined 11% driven by lower volumes of the other super-premium Jack Daniel’s expressions and Woodford Reserve, as well as the Finlandia divestiture. The declines were partially offset by the growth of Diplomático.
Current report
Non-branded and bulk’snet sales increased 27% driven by higher prices for used barrels.
Current report
2“JDCC” is included in “Other Items”. See “Non-GAAP Financial Measures” above for additional details.
Current report
•Net sales for JDTH were flat driven by growth in Brazil and Türkiye, offset by the negative effect of foreign exchange. An estimated net increase in distributor inventories positively impacted net sales.
Current report
•Net sales for JDTA declined 1% driven by the negative effect of foreign exchange and declines in South Korea following the continued product launch in the same prior-year period, partially offset by higher volumes in Brazil.
Current report
•Woodford Reserve’snet sales increased 3% driven by higher volumes in the United States, partially offset by lower volumes in Travel Retail.
Current report
•Old Forester’s net sales increased 16% driven by higher prices and volumes in the United States.
Current report
•Net sales for the JD RTD/RTPbrands declined 13% led by the impact of JDCC and the negative effect of foreign exchange.
Current report
•New Mixnet sales declined 11% driven by lower volumes.
Current report
•el Jimador’snet sales declined 26% driven by lower volumes in the United States, Colombia, and Mexico. The declines were partially offset by higher prices in the United States.
Current report
•Herradura’s net sales declined 15% led by lower volumes in Mexico.
Current report
Net sales for Rest of Portfolio declined 18% driven by the Finlandia divestiture and the negative effect of foreign exchange, partially offset by the positive contribution from Diplomático due to timing of order patterns in the same prior-year period. An estimated net increase in distributor inventories positively impacted net sales.
Current report
Non-branded and bulk’snet sales increased 27% driven by higher prices for used barrels.
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Removed paragraphs (60)
Previous report
During the third quarter of fiscal 2023, we acquired (a) International Rum and Spirits Distributors Unipessoal, Lda., (b) Diplomático Branding Unipessoal Lda., (c) International Bottling Services, S.A., (d) International Rum & Spirits Marketing Solutions, S.L., and (e) certain assets of Destilerias Unidas Corp., which collectively own the Diplomático Rum brand and related assets (Diplomático). This adjustment removes (a) the transaction, transition, and integration costs related to the acquisition, and (b) operating activity for the non-comparable periods, which is primarily activity in the first three quarters of fiscal 2024.
Previous report
During the third quarter of fiscal 2024, we reached an agreement to sell our Sonoma-Cutrer wine business to The Duckhorn Portfolio, Inc. This transaction is expected to close in the fourth quarter of fiscal 2024. This adjustment removes the transaction costs related to the pending disposition.
Previous report
•“Impairment charges.”This adjustment removes the impact of impairment charges from our results of operations. During the third quarter of fiscal 2023, we recognized a non-cash impairment charge of $96 million for the Finlandia brand name. We believe that this adjustment allows for us to better understand our organic results on a comparable basis.
Previous report
In fiscal 2023, we began presenting “Ready-to-Drink” products as a separate aggregation due to its more significant contribution to our growth in recent years and industry-wide category growth trends. “Whiskey” no longer contains Jack Daniel’s ready-to-drink (RTD) and ready-to-pour (RTP), and “Tequila” no longer includes New Mix. These brands are now included in the “Ready-to-Drink” brand aggregation.
Previous report
•“Wine” includes Korbel California Champagnes and Sonoma-Cutrer wines.
Previous report
•“Vodka” includes Finlandia, which we divested on November 1, 2023. See Note 15 to the Condensed Consolidated Financial Statements and Non-GAAP Financial Measures above for more details.
Previous report
•“Rest of Portfolio” includes Chambord, Gin Mare, Korbel Brandy, Diplomático, and Fords Gin.
Previous report
For the nine months ended January 31, 2024, reported net sales growth in emerging markets and Travel Retail was partially offset by declines in developed international and the United States.
Previous report
Acquisitions and Divestitures
Previous report
During the third quarter of fiscal 2023, we acquired the Gin Mare brand and the Diplomático brand and related assets. These brands positively contributed to our reported net sales growth and reported operating income for the nine months and three months ended January 31, 2024.
Previous report
During the third quarter of fiscal 2024, we sold our Finlandia vodka business, which resulted in a pre-tax gain of $90 million, and entered into a related TSA for this business. The TSA negatively impacted our reported gross margin for the nine months and three months ended January 31, 2024.
Previous report
During the third quarter of fiscal 2024, we reached an agreement to sell our Sonoma-Cutrer wine business. This transaction is expected to close in the fourth quarter of fiscal 2024. The transaction costs associated with this pending disposition negatively impacted reported operating income for the three months ended January 31, 2024.
Previous report
•We delivered 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. The increase was driven by favorable price/mix and the positive effect of acquisitions and divestitures, largely offset by lower volumes. An estimated net decrease in distributor inventories negatively impacted reported net sales.
Previous report
◦From a brand perspective, reported net sales growth was driven by the recently acquired brands, Diplomático and Gin Mare, and the growth of New Mix and JDTA, largely offset by declines of JDTW.
Previous report
◦From a geographic perspective, emerging markets and Travel Retail contributed to reported net sales growth, partially offset by declines in developed international and the United States.
Previous report
•We delivered reported gross profit of $2.0 billion for the nine months ended January 31, 2024, an increase of $98 million, or 5%, compared to the same period last year. Gross margin increased 2.5 percentage points to 60.9% from 58.4% in the same period last year. The increase in gross margin was driven by favorable price/mix, lower supply chain disruption related costs, and lower tariff-related costs, partially offset by higher input costs, the negative effect of foreign exchange, and the impact of the Finlandia TSA (as described above).
Previous report
•We delivered 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 driven by the positive effect of acquisitions and divestitures, higher gross margin, and the absence of the prior year period Finlandia non-cash impairment, partially offset by operating expense growth and the negative effect of foreign exchange.
Previous report
The United States’ reported net sales declined 1% driven by lower volumes partially reflecting an estimated net decrease in distributor inventories. The decline was largely offset by higher prices across our portfolio led by JDTW and el Jimador, the growth of our super-premium Jack Daniel’s expressions, and the acquisition of Diplomático.
Previous report
•Germany’s reported net sales increased 12% driven by the launch of the Jack Daniel’s & Coca-Cola RTD, the positive effect of foreign exchange, and the acquisitions of Diplomático and Gin Mare, partially offset by lower volumes of Jack Daniel’s & Cola.
Previous report
•Australia’s reported net sales declined 8% driven by lower volumes of JD RTDs and the negative effect of foreign exchange, partially offset by higher prices for JD RTDs.
Previous report
•The United Kingdom’s reported net sales declined 9% driven by lower volumes of Jack Daniel’s & Cola, which we previously distributed, due to the introduction of the Jack Daniel’s & Coca-Cola RTD that we do not distribute in this market. The decline was partially offset by the positive effect of foreign exchange.
Previous report
•France’s reported net sales declined 1% driven by lower volumes of JDTW and JDTH, largely offset by higher prices of JDTW, the acquisition of Diplomático, and the positive effect of foreign exchange.
Previous report
•Canada’sreported net sales increased 6% driven by higher volumes of JD RTDs.
Previous report
•Japan’sreported net sales declined 100% driven by lower volumes across our portfolio due to an estimated net decrease in distributor inventories following a significant inventory build in the second half of fiscal 2023. This decrease includes the buyback of inventory from our distributor in preparation for the transition to owned distribution beginning April 1, 2024.
Previous report
•Reported net sales in the Rest of Developed International increased 11% led by the acquisitions of Gin Mare and Diplomático, the launch of JDTA in South Korea, and Glenglassaugh old and rare cask sales. An estimated net decrease in distributor inventories negatively impacted reported net sales.
Previous report
•Mexico’s reported net sales increased 22% driven by the positive effect of foreign exchange and higher prices of New Mix, partially offset by lower volumes of el Jimador.
Previous report
•Poland’s reported net sales increased 24% led by favorable price/mix and higher volumes of JDTW, as well as the positive effect of foreign exchange.
Previous report
•Brazil’s reported net sales increased 12% led by higher volumes of JDTA along with the positive effect of foreign exchange, partially offset by lower JDTW volumes reflecting an estimated net decrease in distributor inventories.
Previous report
Travel Retail’sreported net sales increased 3% driven by growth of our super-premium American whiskey portfolio, as well as the acquisition of Gin Mare, partially offset by lower volumes of JDTW and JDTH.
Previous report
•Reported net sales for JDTW decreased 6% led by declines in Japan, the United States, and Sub-Saharan Africa, along with the negative effect of foreign exchange, primarily reflecting the strengthening of the dollar against the Turkish lira. These declines were partially offset by higher prices and volumes in Türkiye. An estimated net decrease in distributor inventories negatively impacted reported net sales.
Previous report
•Reported net sales for JDTH declined 6% driven by lower volumes, largely reflecting an estimated net decrease in distributor inventories.
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•Reported net sales for JDTA increased 44% led by higher volumes in Brazil and the product launch in South Korea.
Previous report
•Woodford Reserve’sreported net sales increased 2% driven by favorable price/mix, partially offset by lower volumes.
Previous report
•Old Forester’s reported net sales increased 5% driven by higher prices in the United States.
Previous report
•Reported net sales for the JD RTD/RTPbrands increased 1% led by the launch of the Jack Daniel’s & Coca-Cola RTD, largely offset by lower volumes of Jack Daniel’s & Cola.
Previous report
•New Mixgrew reported net sales 34%, fueled by higher prices in Mexico and the positive effect of foreign exchange.
Previous report
•Herradura’sreported net sales declined 7% driven by lower volumes in the United States, primarily due to an estimated net decrease in distributor inventories, partially offset by the positive effect of foreign exchange.
Previous report
•el Jimador’s reported net sales increased 5% driven by higher prices, led by the United States, partially offset by lower volumes in Mexico and the United States.
Previous report
Reported net sales for our Wines increased 3% driven by higher volumes of Sonoma-Cutrer, partially offset by declines of Korbel California Champagne in the United States.
Previous report
Reported net sales for Rest of Portfolio increased 79% largely driven by the acquisitions of Gin Mare and Diplomático.
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Reworded paragraphs (37)
Previous wording
You should read the following discussion and analysis in conjunction with both our unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended April 30, 2023 (2023 Form 10-K). Note that the results of operations for the nine months ended January 31, 2024, are not necessarily indicative of future or annual results. In this Item, “we,” “us,” “our,” “Brown-Forman,” and the “Company” refer to Brown-Forman Corporation and its consolidated subsidiaries, collectively.
Current wording
You should read the following discussion and analysis in conjunction with both our unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended April 30, 2024 (2024 Form 10-K). Note that the results of operations for the three months ended July 31, 2024, are not necessarily indicative of future or annual results. In this Item, “we,” “us,” “our,” “Brown-Forman,” and the “Company” refer to Brown-Forman Corporation and its consolidated subsidiaries, collectively.
Previous wording
We use some financial measures in this report that are not measures of financial performance under U.S. generally accepted accounting principles (GAAP). These non-GAAP measures, defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under GAAP. Other companies may define or calculate these non-GAAP measures differently.
Current wording
We report our financial results in accordance with U.S. generally accepted accounting principles (GAAP). Additionally, we use some financial measures in this report that are not measures of financial performance under GAAP. These non-GAAP measures, defined below, should be viewed as supplements to (not substitutes for) our results of operations and other measures reported under GAAP. Other companies may define or calculate these non-GAAP measures differently.
Previous wording
“Organic change” in measures of statements of operations. We present changes in certain measures, or line items, of the statements of operations that are adjusted to an “organic” basis. We use “organic change” for the following measures: (a) organic net sales; (b) organic cost of sales; (c) organic gross profit; (d) organic advertising expenses; (e) organic selling, general, and administrative (SG&A) expenses; (f) organic other expense (income), net; (g) organic operating expenses 1; and (h) organic operating income. To calculate these measures, we adjust, as applicable, for (1) acquisitions and divestitures, (2) foreign exchange, and (3) impairment charges. We explain these adjustments below.
Current wording
“Organic change” in measures of statements of operations. We present changes in certain measures, or line items, of the statements of operations that are adjusted to an “organic” basis. We use “organic change” for the following measures: (a) organic net sales; (b) organic cost of sales; (c) organic gross profit; (d) organic advertising expenses; (e) organic selling, general, and administrative (SG&A) expenses; (f) organic other expense (income), net; (g) organic operating expenses 1; and (h) organic operating income. To calculate these measures, we adjust, as applicable, for (1) acquisitions and divestitures, (2) other items, and (3) foreign exchange. We explain these adjustments below.
Previous wording
During the third quarter of fiscal 2023, we acquired Gin Mare Brand, S.L.U. and Mareliquid Vantguard, S.L.U., which owned the Gin Mare brand (Gin Mare). This adjustment removes (a) the transaction, transition, and integration costs related to the acquisition, (b) operating activity for the non-comparable periods, which is activity in the first and second quarters of fiscal 2024, and (c) fair value adjustments to Gin Mare’s earn-out contingent consideration liability that is payable in cash no earlier than July 2024 and no later than July 2027.
Current wording
During fiscal 2023, we acquired Gin Mare Brand, S.L.U. and Mareliquid Vantguard, S.L.U., which owned the Gin Mare brand (Gin Mare). This adjustment removes the fair value adjustments to Gin Mare’s earn-out contingent consideration liability that is payable in cash no earlier than July 2024 and no later than July 2027.
Previous wording
During the third quarter of fiscal 2024, we sold our Finlandia vodka business, which resulted in a pre-tax gain of $90 million, and entered into a related transition services agreement (TSA) for this business. This adjustment removes the (a) transaction costs related to the divestiture, (b) the gain on sale of the Finlandia vodka business, (c) operating activity for the non-comparable period, which is activity in the third and fourth quarters of fiscal 2023, and (d) net sales, cost of sales, and operating expenses 1 recognized pursuant to the TSA related to distribution services in certain markets.
Current wording
During fiscal 2024, we sold our Finlandia vodka business, which resulted in a pre-tax gain of $92 million, and entered into a related transition services agreement (TSA) for this business. This adjustment removes the (a) transaction costs related to the divestiture, (b) operating activity for the non-comparable period, which is activity in the first quarter of fiscal 2024, and (c) net sales, cost of sales, and operating expenses 1 recognized pursuant to the TSA related to distribution services in certain markets.
Previous wording
During the second quarter of fiscal 2024, we recognized a gain of $7 million on the sale of certain fixed assets. This adjustment removes the gain from our other expense (income), net and operating income to present our organic results on a comparable basis.
Current wording
During the first quarter of fiscal 2025, we recognized a gain of $13 million on the sale of the Alabama cooperage. This adjustment removes this gain from our other expense (income), net and operating income.
Previous wording
In “Results of Operations - Fiscal 2024 Year-to-Date Highlights,” we provide supplemental information for our top markets ranked by percentage of reported net sales. In addition to markets listed by country name, we include the following aggregations:
Current wording
In “Results of Operations - Fiscal 2025 Year-to-Date Highlights,” we provide supplemental information for our top markets ranked by percentage of net sales. In addition to markets listed by country name, we include the following aggregations:
Previous wording
•“Developed International”markets are “advanced economies” as defined by the IMF, excluding the United States. Our top developed international markets were Germany, Australia, the United Kingdom, France, Canada, and Japan. This aggregation represents our net sales of branded products to these markets.
Current wording
•“Developed International”markets are “advanced economies” as defined by the IMF, excluding the United States. Our top developed international markets were Germany, Australia, the United Kingdom, France, Canada, and Spain. This aggregation represents our net sales of branded products to these markets.
Previous wording
•“Non-branded and bulk” includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey and wine, regardless of customer location.
Current wording
•“Non-branded and bulk” includes net sales of used barrels, contract bottling services, and non-branded bulk whiskey, regardless of customer location.
Previous wording
In “Results of Operations - Fiscal 2024 Year-to-Date Highlights,” we provide supplemental information for our top brands ranked by percentage of reported net sales. In addition to brands listed by name, we include the following aggregations outlined below.
Current wording
In “Results of Operations - Fiscal 2025 Year-to-Date Highlights,” we provide supplemental information for our top brands ranked by percentage of net sales. In addition to brands listed by name, we include the following aggregations outlined below.
Previous wording
•“Whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs. The brands included in this category are the Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products defined below), the Woodford Reserve family of brands (Woodford Reserve), the Old Forester family of brands (Old Forester), GlenDronach, Benriach, Glenglassaugh, Slane Irish Whiskey, and Coopers’ Craft.
Current wording
•“Whiskey” includes all whiskey spirits and whiskey-based flavored liqueurs. The brands included in this category are the Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products defined below), the Woodford Reserve family of brands (Woodford Reserve), the Old Forester family of brands (Old Forester), The Glendronach, Glenglassaugh, Benriach, Slane Irish Whiskey, and Coopers’ Craft.
Previous wording
•“American whiskey” includes the Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products defined below) and premium bourbons (defined below).
Current wording
•“American whiskey” includes the Jack Daniel’s family of brands (excluding the “Ready-to-Drink” products defined below), Woodford Reserve, Old Forester, and Coopers’ Craft.
Previous wording
•“Jack Daniel’s RTD/RTP” products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Cola, Jack Daniel’s Country Cocktails, Jack Daniel’s Double Jack, Jack Daniel’s & Coca-Cola RTD, and other malt- and spirit-based Jack Daniel’s RTDs, along with Jack Daniel’s Winter Jack RTP.
Current wording
•“Jack Daniel’s RTD/RTP” products include all RTD line extensions of Jack Daniel’s, such as Jack Daniel’s & Cola, Jack Daniel’s & Coca-Cola RTD, Jack Daniel’s Country Cocktails, Jack Daniel’s Double Jack, and other malt- and spirit-based Jack Daniel’s RTDs, along with Jack Daniel’s Winter Jack RTP.
Previous wording
•“Jack Daniel’s & Coca-Cola RTD” includes all Jack Daniel’s and Coca-Cola RTD products and Jack Daniel’s bulk whiskey shipments for the production of this product.
Current wording
•“Jack Daniel’s & Coca-Cola RTD” includes all Jack Daniel’s & Coca-Cola RTD products and Jack Daniel’s bulk whiskey shipments for the production of these products.
Previous wording
•“Tequila” includes the Herradura family of brands (Herradura), el Jimador, and other tequilas.
Current wording
•“Tequila”includes el Jimador, the Herradura family of brands (Herradura), and other tequilas.
Previous wording
•“Jack Daniel’s family of brands” includes Jack Daniel’s Tennessee Whiskey (JDTW), JD RTD/RTP, Jack Daniel’s Tennessee Honey (JDTH), Gentleman Jack, Jack Daniel’s Tennessee Fire (JDTF), Jack Daniel’s Tennessee Apple (JDTA), Jack Daniel’s Single Barrel Collection (JDSB), Jack Daniel’s Bonded Tennessee Whiskey, Jack Daniel’s Sinatra Select, Jack Daniel’s Tennessee Rye Whiskey (JDTR), Jack Daniel’s Bottled-in-Bond, Jack Daniel’s Triple Mash Blended Straight Whiskey, Jack Daniel’s No. 27 Gold Tennessee Whiskey, Jack Daniel’s 10 Years Old, Jack Daniel’s 12 Years Old, and other Jack Daniel’s expressions.
Current wording
•“Jack Daniel’s family of brands” includes Jack Daniel’s Tennessee Whiskey (JDTW), JD RTD/RTP, Jack Daniel’s Tennessee Honey (JDTH), Gentleman Jack, Jack Daniel’s Tennessee Apple (JDTA), Jack Daniel’s Tennessee Fire (JDTF), Jack Daniel’s Single Barrel Collection (JDSB), Jack Daniel’s Bonded Tennessee Whiskey, Jack Daniel’s Sinatra Select, Jack Daniel’s Tennessee Rye Whiskey (JDTR), Jack Daniel’s Triple Mash Blended Straight Whiskey, Jack Daniel’s Bottled-in-Bond, Jack Daniel’s American Single Malt, Jack Daniel’s 12 Year Old, Jack Daniel’s 10 Year Old, and other Jack Daniel’s expressions.
Previous wording
This report contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “anticipate,” “aspire,” “believe,” “can,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “would,” and similar words indicate forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include, but are not limited to:
Current wording
This report contains statements, estimates, and projections that are “forward-looking statements” as defined under U.S. federal securities laws. Words such as “aim,” “ambition,” “anticipate,” “aspire,” “believe,” “can,” “continue,” “could,” “envision,” “estimate,” “expect,” “expectation,” “intend,” “may,” “might,” “plan,” “potential,” “project,” “pursue,” “see,” “seek,” “should,” “will,” “would,” and similar words indicate forward-looking statements, which speak only as of the date we make them. Except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. These risks and uncertainties include, but are not limited to:
Previous wording
•We delivered diluted earnings per share of $1.58 for the nine months ended January 31, 2024, an increase of 32% from the $1.20 reported for the same period last year, driven primarily by the increase in reported operating income.
Current wording
•We delivered diluted earnings per share of $0.41 for the three months ended July 31, 2024, a decrease of 14% from the $0.48 reported for the same period last year, driven primarily by the decrease in operating income.
Previous wording
The following table provides supplemental information for our largest markets. We discuss results of the markets most affecting our performance below the table. Unless otherwise indicated, all related commentary is for the nine months ended January 31, 2024 compared to the same period last year.
Current wording
The following table provides supplemental information for our largest markets. We discuss results of the markets most affecting our performance below the table. Unless otherwise indicated, all related commentary is on a reported basis and is for the three months ended July 31, 2024 compared to the same period last year.
Previous wording
2 See “Non-GAAP Financial Measures” above for details on our use of “organic change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.
Current wording
3 See “Non-GAAP Financial Measures” above for details on our use of “organic change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.
Previous wording
•Reported net sales in the Rest of Emerging declined 3% driven by the negative effect of foreign exchange, reflecting the strengthening of the dollar primarily against the Turkish lira, and lower JDTW volumes in Sub-Saharan Africa. These declines were partially offset by JDTW growth in Türkiye and Ukraine. An estimated net decrease in distributor inventories negatively impacted reported net sales.
Current wording
•Net sales in the Rest of Emerging declined 23% led by (a) lower JDTW volumes in the United Arab Emirates, due to an estimated net decrease in distributor inventories; (b) lower volumes of el Jimador in Colombia; (c) the Finlandia divestiture; and (d) the negative effect of foreign exchange (reflecting the strengthening of the dollar primarily against the Turkish lira). These declines were partially offset by JDTW growth in Türkiye and Sub-Saharan Africa.
Previous wording
The following table provides supplemental information for our largest brands. We discuss results of the brands most affecting our performance below the table. Unless otherwise indicated, all related commentary is for the nine months ended January 31, 2024 compared to the same period last year.
Current wording
The following table provides supplemental information for our largest brands. We discuss results of the brands most affecting our performance below the table. Unless otherwise indicated, all related commentary is on a reported basis and is for the three months ended July 31, 2024 compared to the same period last year.
Previous wording
2 See “Non-GAAP Financial Measures” above for details on our use of “organic change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.
Current wording
3 See “Non-GAAP Financial Measures” above for details on our use of “organic change” in net sales, including how we calculate this measure and why we believe this information is useful to readers.
Previous wording
•Reported net sales for Gentleman Jack declined 4% led by lower volumes in the United States and the negative effect of foreign exchange, primarily reflecting the strengthening of the dollar against the Turkish lira. The decline was partially offset by higher prices in Türkiye.
Current wording
•Net sales for JDTW declined 8% driven by lower volumes, led by the United States, the United Arab Emirates, and the United Kingdom, along with the negative effect of foreign exchange (primarily reflecting the strengthening of the dollar against the Turkish lira). The declines were partially offset by higher volumes in Japan following the transition to owned-distribution and higher prices in Türkiye, in response to high inflation and currency devaluation.
Previous wording
•Reported net sales for JDTF declined 9% driven by lower volumes in the United States largely reflecting an estimated net decrease in distributor inventories.
Current wording
•Net sales for JDTF declined 1% driven by the negative effect of foreign exchange.
Previous wording
•Reported net sales for Rest of Whiskey increased 18% driven by the growth of our other super-premium Jack Daniel's expressions and Glenglassaugh old and rare cask sales.
Current wording
•Net sales for Rest of Whiskey declined 20% driven by lower volumes of the other super-premium Jack Daniel's expressions and Glendronach.
Previous wording
For the nine months ended January 31, 2024, reported net sales were $3.2 billion, an increase of $31 million, or 1%, compared to the same period last year driven by favorable price/mix and the positive effect of acquisitions and divestitures, largely offset by lower volumes. Price/mix largely reflects higher prices across much of our portfolio led by JDTW, most notably in Türkiye in response to high inflation and currency devaluation. Lower volumes were led by JDTW reflecting an estimated net decrease in distributor inventories and Jack Daniel’s & Cola due to the introduction of the Jack Daniel’s & Coca-Cola RTD. See “Results of Operations - Fiscal 2024 Year-to-Date Highlights” above for further details on net sales for the nine months ended January 31, 2024.
Current wording
For the three months ended July 31, 2024, net sales were $1.0 billion, a decrease of $87 million, or 8%, driven by (a) lower volumes; (b) the negative effect of acquisitions and divestitures; (c) the negative effect of foreign exchange; and (d) the impact of JDCC, partially offset by favorable price/mix. Lower volumes were led by JDTW, our RTD portfolio, and el Jimador. Price/mix reflects higher prices, led by Türkiye (in response to high inflation and currency devaluation) and the United States, as well as favorable product mix. See “Results of Operations - Fiscal 2025 Year-to-Date Highlights” above for further details on net sales for the three months ended July 31, 2024.
Previous wording
•Reported SG&A expense increased 9% for the three months ended January 31, 2024 led by higher compensation and benefit-related expenses.
Current wording
•SG&A expense decreased 6% for the three months ended July 31, 2024 driven by lower compensation-related expenses, discretionary spend, and benefit-related expenses.
Previous wording
Theeffective tax rate for the three months ended January 31, 2024 was 16.5% compared to 19.5% for the same period last year. The decrease in our effective tax rate was driven primarily by lower state taxes and the beneficial impact of tax rate differences on the sale of the Finlandia vodka business, which was partially offset by withholding taxes and a lower benefit from reversal of valuation allowances in the current period.
Current wording
Theeffective tax rate for the three months ended July 31, 2024 was 23.1% compared to 22.9% for the same period last year. The increase in our effective tax rate was driven primarily by a larger impact of state taxes, which was partially offset by the net impact of discrete items.
Previous wording
•Based on the above organic net sales growth outlook, and our expectation of gross margin improvement, we anticipate organic operating income growth in the 0% to 2% range.
Current wording
•Organic operating income growth in the 2% to 4% range.
Previous wording
•We expect our fiscal 2024 effective tax rate to be in the range of approximately 20% to 22%.
Current wording
•Our effective tax rate to be in the range of approximately 21% to 23%.
Previous wording
•Capital expenditures are now planned to be in the range of $230 to $240 million.
Current wording
•Capital expenditures planned to be in the range of $195 to $205 million.
Previous wording
Our cash flows from operations are supplemented by our cash and cash equivalent balances, as well as access to other liquidity sources. Cash and cash equivalents were $374 million at April 30, 2023, and $589 million at January 31, 2024. As of January 31, 2024, approximately 28% of our cash and cash equivalents were held by our foreign subsidiaries whose earnings we expect to reinvest indefinitely outside of the United States. We continue to evaluate our future cash requirements and may decide to repatriate additional cash held by our foreign subsidiaries, which may require us to provide for and pay additional taxes.
Current wording
Our cash flows from operations are supplemented by our cash and cash equivalent balances, as well as access to other liquidity sources. Cash and cash equivalents were $446 million at April 30, 2024, and $416 million at July 31, 2024. As of July 31, 2024, approximately 41% of our cash and cash equivalents were held by our foreign subsidiaries whose earnings we expect to reinvest indefinitely outside of the United States. We continue to evaluate our future cash requirements and may decide to repatriate additional cash held by our foreign subsidiaries, which may require us to provide for and pay additional taxes.
Previous wording
We have a $900 million commercial paper program that we use, together with our cash flows from operations, to fund our short-term operational needs. See Note 6 to the Condensed Consolidated Financial Statements for outstanding commercial paper balances, interest rates, and days to maturity at April 30, 2023, and January 31, 2024. The average balances, interest rates, and original maturities during the periods ended January 31, 2023 and 2024, are presented below.
Current wording
We have a $900 million commercial paper program that we use, together with our cash flows from operations, to fund our short-term operational needs. See Note 7 to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for outstanding commercial paper balances, interest rates, and days to maturity at April 30, 2024, and July 31, 2024. The average balances, interest rates, and original maturities during the periods ended July 31, 2023 and 2024, are presented below.
Previous wording
Our most significant short-term cash requirements relate primarily to funding our operations (such as expenditures for raw materials, production and distribution, advertising and promotion, and current taxes), dividend payments, and capital investments. We expect to meet our planned short-term liquidity needs largely through cash generated from operations and borrowings under our commercial paper program. If we have additional liquidity needs, we believe that we could access financing in the capital markets. Our most significant longer-term cash requirements primarily include payments related to our long-term debt, employee benefit obligations, and deferred tax liabilities.
Current wording
Our most significant short-term cash requirements relate primarily to funding our operations (such as expenditures for raw materials, production and distribution, advertising and promotion, and current taxes), repayment of our notes maturing in April 2025, dividend payments, and capital investments. We expect to meet our planned short-term liquidity needs largely through cash generated from operations and borrowings under our commercial paper program. If we have additional liquidity needs, we believe that we could access financing in the capital markets. Our most significant longer-term cash requirements primarily include payments related to our long-term debt, employee benefit obligations, and deferred tax liabilities.
Previous wording
Cash provided by investing activities was $63 million during the nine months ended January 31, 2024, compared to $1,300 million used for investing activities during the same period last year. The $1,363 million change largely reflects $1,195 million in cash used to acquire Gin Mare and Diplomático during the third quarter of last fiscal year and proceeds of $194 million received from our divestiture of Finlandia in November 2023. The change also reflects a $32 million increase in capital expenditures.
Current wording
Cash provided by investing activities was $10 million during the three months ended July 31, 2024, compared to $44 million used for investing activities during the same period last year. The $54 million change largely reflects proceeds of $51 million received from the sale of our Alabama cooperage in May 2024.
Previous wording
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 during the same prior-year period. The $680 million change largely reflects a $510 million decrease in net proceeds from short-term borrowings and a $400 million increase in share repurchases, partially offset by a $250 million decrease in repayments of long-term debt.
Current wording
Cash used for financing activities was $51 million during the three months ended July 31, 2024, compared to $50 million in cash provided by financing activities during the same prior-year period. The $101 million change largely reflects a $99 million decrease in net proceeds from short-term borrowings.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
During fiscal 2024, we sold the Sonoma-Cutrer wine business in exchange for an ownership percentage of 21.4% in The Duckhorn Portfolio Inc. (Duckhorn) along with $50 million cash and entered into a related TSA for this business. This transaction resulted in a pre-tax gain of $175 million. This adjustment removes the (a) transaction costs related to the divestiture, (b) operating activity for the non-comparable period, which is activity in the first quarter of fiscal 2024, and (c) net sales, cost of sales, and operating expenses 1 recognized pursuant to the TSA related to distribution services in certain markets.
Current report — wording carried from elsewhere
•Australia’s net sales declined 4% led by the negative effect of foreign exchange.
Current report — wording carried from elsewhere
•Net sales for Gentleman Jack declined 1% driven by the negative effect of foreign exchange.
Current report — wording carried from elsewhere
2 Operating expenses include advertising expense, SG&A expense, and other expense (income), net.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•“Premium bourbons” includes Woodford Reserve, Old Forester, and Coopers’ Craft.